The Wealth of Nations by Adam Smith

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Adam Smith: Father of Economics by Jesse Norman

active measures, Alan Greenspan, Andrei Shleifer, balance sheet recession, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, Berlin Wall, Black Swan, Branko Milanovic, Bretton Woods, British Empire, Broken windows theory, business cycle, business process, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, centre right, cognitive dissonance, collateralized debt obligation, colonial exploitation, Corn Laws, Cornelius Vanderbilt, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, David Ricardo: comparative advantage, deindustrialization, electricity market, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, Fellow of the Royal Society, financial engineering, financial intermediation, frictionless, frictionless market, future of work, George Akerlof, Glass-Steagall Act, Hyman Minsky, income inequality, incomplete markets, information asymmetry, intangible asset, invention of the telescope, invisible hand, Isaac Newton, Jean Tirole, John Nash: game theory, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, lateral thinking, loss aversion, low interest rates, market bubble, market fundamentalism, Martin Wolf, means of production, mirror neurons, money market fund, Mont Pelerin Society, moral hazard, moral panic, Naomi Klein, negative equity, Network effects, new economy, non-tariff barriers, Northern Rock, Pareto efficiency, Paul Samuelson, Peter Thiel, Philip Mirowski, price mechanism, principal–agent problem, profit maximization, public intellectual, purchasing power parity, random walk, rent-seeking, Richard Thaler, Robert Shiller, Robert Solow, Ronald Coase, scientific worldview, seigniorage, Socratic dialogue, South Sea Bubble, special economic zone, speech recognition, Steven Pinker, The Chicago School, The Myth of the Rational Market, The Nature of the Firm, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Malthus, Thorstein Veblen, time value of money, transaction costs, transfer pricing, Veblen good, Vilfredo Pareto, Washington Consensus, working poor, zero-sum game

ALSO BY JESSE NORMAN Edmund Burke: The First Conservative The Big Society: The Anatomy of the New Politics BIBLIOGRAPHY WORKS BY ADAM SMITH Correspondence of Adam Smith, ed. Ernest Campbell Mossner and Ian Simpson Ross, Liberty Fund 1987 An Early Draft of Part of The Wealth of Nations, in LJ Essays on Philosophical Subjects, ed. W. P. D. Wightman and J. C. Bryce, Liberty Fund [1795] 1980 An Inquiry into the Nature and Causes of the Wealth of Nations, ed. R. H. Campbell, A. S. Skinner and W. B. Todd, 2 vols., Liberty Fund [1776] 1981 Lectures on Jurisprudence, ed. R. L. Meek, D. D. Raphael and P.

In the words of the Chicago School economist Jacob Viner on The Wealth of Nations, ‘Traces of every conceivable sort of doctrine are to be found in that most catholic book, and an economist must have peculiar theories indeed who cannot quote from The Wealth of Nations to support his special purposes.’ So it has proven. One example of this tendency will suffice, and from Viner’s most famous student no less. In a famous article of 1977 for Challenge magazine, Milton Friedman, fresh from winning a Nobel Prize in the previous year, undertook to spell out ‘Adam Smith’s Relevance for Today’. For Friedman, Smith was ‘a radical and revolutionary’ in his own time—just as Friedman was in his.

MYTH 3: ADAM SMITH WAS PRO-RICH The Wealth of Nations was published at a time when Scotland was in the early stages of one of the longest and most rapid periods of national economic growth ever recorded. Vast fortunes were being made by Scottish merchants and industrialists, and the book serves in part not merely to explain but to ratify and defend emerging ideas of a commercial system based on free markets. As a result, Smith’s name is often invoked today to justify extreme inequalities of wealth and income as the supposedly natural results of such a system. Yes, The Wealth of Nations is a hymn to the possibility of ‘universal opulence’—that is, material advancement for all sections of society.


pages: 330 words: 77,729

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

Albert Einstein, banking crisis, behavioural economics, Berlin Wall, Bretton Woods, business climate, business cycle, creative destruction, David Ricardo: comparative advantage, delayed gratification, experimental economics, financial independence, Financial Instability Hypothesis, foreign exchange controls, 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, Kenneth Arrow, laissez-faire capitalism, liberation theology, liquidity trap, low interest rates, means of production, Meghnad Desai, microcredit, minimum wage unemployment, money market fund, open economy, paradox of thrift, Pareto efficiency, Paul Samuelson, Phillips curve, Post-Keynesian economics, price stability, pushing on a string, rent control, Richard Thaler, rising living standards, road to serfdom, Robert Shiller, Robert Solow, rolodex, Ronald Coase, Ronald Reagan, school choice, secular stagnation, Simon Kuznets, The Chicago School, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tobin tax, Tragedy of the Commons, unorthodox policies, Vilfredo Pareto, zero-sum game

My preference is the 1937 (latest reprint, 1994) Modern Library edition, edited by Edwin Cannan. The significance of The Wealth of Nations has reached such biblical proportions that a complete concordance was prepared by Fred R. Glahe (1993), economics professor at the University of Colorado. Oh, the wonders of computers! Did you know that the word "a" appears 6,691 times in The Wealth of Nations? A concordance is undoubtedly valuable, especially for scholars. For example, "de-5.1 recommend the book Adam Smith Across Nations: Translations and Receptions of The Wealth of Nations, edited by Cheng-chung Lai (2000), for a fascinating account of the influence of Adam Smith's book over the centuries.

In Essays on John Maynard Keynes, ed. Milo Keynes, 132-41. Cambridge, UK: Cambridge University Press. Garrison, Roger B. 1985. "West's 'Cantillon and Adam Smith': A Comment." Journal of Libertarian Studies 7, 2 (Fall): 287-94. . 2001. Time and Money. London: Routledge. Glahe, Fred R., ed. 1978. Adam Smith and the Wealth of Nations: 1776-1976 Bi-centennial Essays. Boulder: Colorado Associated University Press. . 1993. Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations: A Concordance. Landam, MD: Rowman and Littlefield. Gordon, H. Scott. 1967. "Discussion on Das Kapital: A Centenary Appreciation."

On March 9, 1776, the London printers William Strahan and Thomas Cadell released a 1,000-page, two-volume work entitled An Inquiry into the Nature and Causes of the Wealth of Nations. It was a fat book with a long title destined to have gargantuan global impact. The author was Dr. Adam Smith, a quiet, absent-minded professor who taught "moral philosophy" at the University of Glasgow. The Wealth of Nations was the intellectual shot heard around the world. Adam Smith, a leader in the Scottish Enlightenment, had put on paper a universal formula for prosperity and financial independence that would, over the course of the next century, revolutionize the way citizens and leaders thought about and practiced economics and trade.


pages: 288 words: 89,781

The Classical School by Callum Williams

"Friedman doctrine" OR "shareholder theory", bank run, banking crisis, basic income, Brexit referendum, British Empire, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Charles Babbage, complexity theory, Corn Laws, David Ricardo: comparative advantage, death from overwork, deindustrialization, Donald Trump, double entry bookkeeping, falling living standards, Fellow of the Royal Society, full employment, Gini coefficient, Gordon Gekko, greed is good, helicopter parent, income inequality, invisible hand, Jevons paradox, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, land reform, low skilled workers, Mahatma Gandhi, Martin Wolf, means of production, Meghnad Desai, minimum wage unemployment, Modern Monetary Theory, new economy, New Journalism, non-tariff barriers, Paul Samuelson, Post-Keynesian economics, purchasing power parity, Ronald Coase, secular stagnation, Silicon Valley, spinning jenny, The Wealth of Nations by Adam Smith, Thomas Malthus, universal basic income

It is little wonder that conservative economists have embraced Smith as one of their own. Newspaper columnists love drawing on Smith if ever they advocate tax cuts. The Adam Smith Institute, a libertarian think tank, was set up in 1977, a time when free-market philosophies were gaining intellectual ground. Homo economicus on the ropes Yet Smith’s outlook was more complex than the pithy quotations above suggest. It is here that one must do what Smith wanted us to do, and read the Wealth of Nations in conjunction with Moral Sentiments.4 If the Wealth of Nations is a blueprint for how the economy works, Moral Sentiments is a guidebook for how people navigate it.

Marx would surely have incorporated them into the later volumes of Capital if he had lived long enough. Ricardo had been looking forward to meeting Jean-Baptiste Say, but was ultimately left underwhelmed. Harriet Martineau seemed to know pretty much everybody. Even if they did not know each other personally, the 20 were constantly criticising and critiquing each other. Adam Smith published the Wealth of Nations in 1776 in opposition to the “mercantile system” of Jean-Baptiste Colbert, France’s finance minister from 1661 to 1683. John Stuart Mill at first slavishly adhered to Ricardo, but would later come to reject much of what he had written. Alfred Marshall, the final economist profiled in this book, constantly referred to Sir William Petty, one of the first.

Empirical evidence was hard to get hold of, was unreliable, and, thanks to David Hume, there were lingering doubts as to whether it was possible to draw general statements from the analysis of data. According to Schumpeter, Petty’s guiding principle that “generalisations [be] the joint product of figures and reasoning” fell out of fashion with Adam Smith (who does not once namecheck Petty in the Wealth of Nations). David Ricardo had no time for empirical research. Karl Marx believed that data and statistics were grubby–and did not bother with the question of whether his analysis of capitalism was in any way testable against the real world. If Petty had come back to life in 1900 he would have been disappointed with the progress that his profession had made.


Phil Thornton by The Great Economists Ten Economists whose thinking changed the way we live-FT Publishing International (2014)

Alan Greenspan, availability heuristic, behavioural economics, Berlin Wall, bitcoin, Bretton Woods, British Empire, business cycle, business process, call centre, capital controls, Cass Sunstein, choice architecture, cognitive bias, collapse of Lehman Brothers, Corn Laws, creative destruction, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, double helix, endogenous growth, endowment effect, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, fiat currency, financial deregulation, fixed income, Ford Model T, full employment, hindsight bias, income inequality, inflation targeting, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Kenneth Arrow, Kenneth Rogoff, Kickstarter, liquidity trap, loss aversion, mass immigration, means of production, mental accounting, Myron Scholes, paradox of thrift, Pareto efficiency, Paul Samuelson, Post-Keynesian economics, price mechanism, pushing on a string, quantitative easing, Richard Thaler, road to serfdom, Ronald Coase, Ronald Reagan, school vouchers, Simon Kuznets, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, Toyota Production System, trade route, transaction costs, unorthodox policies, Vilfredo Pareto, women in the workforce

Readers can dip in and out: each chapter is a self-contained story about one original thinker and their impact on the development of economic thinking. CHAPTER 1 Adam Smith– the ‘founding father’ of economics 1 2 The Great Economists ‘It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.’ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Book 1, ch. 2 Every Briton should know who Adam Smith is – or least what he looks like. This is not because he is a celebrity or a national treasure but because since 2007 his face has adorned the £20 banknote.

According to a popular urban myth, Thatcher was said to carry a copy of The Wealth of Nations in her famous handbag, and in her own book, Statecraft, she described Adam Smith’s invisible hand as a ‘bracing blast of freedom itself’. 20 The Great Economists According to Bruce Chapman, one of Reagan’s Deputy Assistants in the White House, Smith was a hero to Reagan since he studied classical economics at college. Speaking at a memorial service for Reagan, Chapman also recalled that ties with little Adam Smith busts on them ‘festooned every male conservative chest in Washington. You had a wide range of choices: there were green Adam Smith neckties, maroon Adam Smith neckties, red, white and blue Adam Smith neckties.

With 40 per cent of the UK economy taken by the state in the form of social security benefits, the National Health Service and the education system among others, it is clear we have moved a long way from The Wealth of Nations. Chapter 1 • Adam Smith25 What you should take away Adam Smith is justifiably known as the father of economics and his reputation will last long after he has disappeared from British banknotes. The Wealth of Nations has become the template for all the major textbooks that have followed it up to the present day. His key ideas, which influence modern thinking within economics and business, include: • Real wealth is the sum of the annual produce of the land and labour of the whole country rather than the monetary wealth it hoards.


pages: 453 words: 117,893

What Would the Great Economists Do?: How Twelve Brilliant Minds Would Solve Today's Biggest Problems by Linda Yueh

3D printing, additive manufacturing, Asian financial crisis, augmented reality, bank run, banking crisis, basic income, Bear Stearns, Ben Bernanke: helicopter money, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, bike sharing, bitcoin, Branko Milanovic, Bretton Woods, BRICs, business cycle, Capital in the Twenty-First Century by Thomas Piketty, clean water, collective bargaining, computer age, Corn Laws, creative destruction, credit crunch, Credit Default Swap, cryptocurrency, currency peg, dark matter, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, Deng Xiaoping, Doha Development Round, Donald Trump, endogenous growth, everywhere but in the productivity statistics, export processing zone, Fall of the Berlin Wall, fear of failure, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, fixed income, forward guidance, full employment, general purpose technology, Gini coefficient, Glass-Steagall Act, global supply chain, Great Leap Forward, Gunnar Myrdal, Hyman Minsky, income inequality, index card, indoor plumbing, industrial robot, information asymmetry, intangible asset, invisible hand, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, laissez-faire capitalism, land reform, lateral thinking, life extension, low interest rates, low-wage service sector, manufacturing employment, market bubble, means of production, middle-income trap, mittelstand, Money creation, Mont Pelerin Society, moral hazard, mortgage debt, negative equity, Nelson Mandela, non-tariff barriers, Northern Rock, Occupy movement, oil shale / tar sands, open economy, paradox of thrift, Paul Samuelson, price mechanism, price stability, Productivity paradox, purchasing power parity, quantitative easing, RAND corporation, rent control, rent-seeking, reserve currency, reshoring, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, school vouchers, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, special economic zone, Steve Jobs, technological determinism, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, total factor productivity, trade liberalization, universal basic income, unorthodox policies, Washington Consensus, We are the 99%, women in the workforce, working-age population

Introduction: Great Economists on Our Economic Challenges 1.    Adam Smith, 1979 [1776], An Inquiry into the Nature and Causes of the Wealth of Nations, eds. R. H. Campbell, A. S. Skinner and W. B. Todd, Oxford: Clarendon Press, bk II, ch. 3, para 2. 2.    Alvin H. Hansen, 1939, ‘Economic Progress and Declining Population Growth’, American Economic Review, 29(1), pt I, pp. 1–15. 1 – Adam Smith: Should the Government Rebalance the Economy? 1.    Adam Smith, 1979 [1776], An Inquiry into the Nature and Causes of the Wealth of Nations, ed. R. H. Campbell, A. S. Skinner and W. B. Todd, Oxford: Clarendon Press, bk IV, ch. 2, para. 10. 2.    

Perhaps their insights can help guide our economic future too. 1 Adam Smith: Should the Government Rebalance the Economy? Widely viewed as the seminal figure in economics, Adam Smith witnessed the beginning of the Industrial Revolution, which fundamentally changed the Western world. During this time and in the decades that followed, Britain became the world’s first industrialized economy. This extraordinary period formed the backdrop to one of the most influential books in economics. Adam Smith’s magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, took a decade to write. It sets out the concept of the ‘invisible hand’, which refers to the unseen market forces that set prices by equating supply and demand.

Stein, Oxford: Clarendon Press ________, 1979 [1776], An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith, eds. R. H. Campbell, A. S. Skinner and W. B. Todd, Oxford: Clarendon Press Solow, Robert, 1956, ‘A Contribution to the Theory of Economic Growth’, Quarterly Journal of Economics, 70(1), pp. 65–94 ________, 1957, ‘Technical Change and the Aggregate Production Function’, Review of Economics and Statistics, 39(3), pp. 312–20 Sperber, Jonathan, 2013, Karl Marx: A Nineteenth-Century Life, New York: Liveright Stewart, Dugald, 1793, ‘Account of the Life and Writings of Adam Smith’, read to the Royal Society of Edinburgh and published in Adam Smith’s posthumous Essays on Philosophical Subjects of 1795, London and Edinburgh: T.


pages: 374 words: 113,126

The Great Economists: How Their Ideas Can Help Us Today by Linda Yueh

3D printing, additive manufacturing, Asian financial crisis, augmented reality, bank run, banking crisis, basic income, Bear Stearns, Ben Bernanke: helicopter money, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, bike sharing, bitcoin, Branko Milanovic, Bretton Woods, BRICs, business cycle, Capital in the Twenty-First Century by Thomas Piketty, clean water, collective bargaining, computer age, Corn Laws, creative destruction, credit crunch, Credit Default Swap, cryptocurrency, currency peg, dark matter, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, Deng Xiaoping, Doha Development Round, Donald Trump, endogenous growth, everywhere but in the productivity statistics, export processing zone, Fall of the Berlin Wall, fear of failure, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, fixed income, forward guidance, full employment, general purpose technology, Gini coefficient, Glass-Steagall Act, global supply chain, Great Leap Forward, Gunnar Myrdal, Hyman Minsky, income inequality, index card, indoor plumbing, industrial robot, information asymmetry, intangible asset, invisible hand, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, laissez-faire capitalism, land reform, lateral thinking, life extension, low interest rates, manufacturing employment, market bubble, means of production, middle-income trap, mittelstand, Money creation, Mont Pelerin Society, moral hazard, mortgage debt, negative equity, Nelson Mandela, non-tariff barriers, Northern Rock, Occupy movement, oil shale / tar sands, open economy, paradox of thrift, Paul Samuelson, price mechanism, price stability, Productivity paradox, purchasing power parity, quantitative easing, RAND corporation, rent control, rent-seeking, reserve currency, reshoring, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, school vouchers, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, special economic zone, Steve Jobs, technological determinism, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, total factor productivity, trade liberalization, universal basic income, unorthodox policies, Washington Consensus, We are the 99%, women in the workforce, working-age population

Notes Introduction: Great Economists on Our Economic Challenges 1. Adam Smith, 1979 [1776], An Inquiry into the Nature and Causes of the Wealth of Nations, eds. R. H. Campbell, A. S. Skinner and W. B. Todd, Oxford: Clarendon Press, bk II, ch. 3, para 2. 2. Alvin H. Hansen, 1939, ‘Economic Progress and Declining Population Growth’, American Economic Review, 29(1), pt I, pp. 1–15. Chapter 1 – Adam Smith: Should the Government Rebalance the Economy? 1. Adam Smith, 1979 [1776], An Inquiry into the Nature and Causes of the Wealth of Nations, ed. R. H. Campbell, A. S. Skinner and W. B. Todd, Oxford: Clarendon Press, bk IV, ch. 2, para. 10. 2.

Perhaps their insights can help guide our economic future too. CHAPTER 1 Adam Smith: Should the Government Rebalance the Economy? Widely viewed as the seminal figure in economics, Adam Smith witnessed the beginning of the Industrial Revolution, which fundamentally changed the Western world. During this time and in the decades that followed, Britain became the world’s first industrialized economy. This extraordinary period formed the backdrop to one of the most influential books in economics. Adam Smith’s magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, took a decade to write. It sets out the concept of the ‘invisible hand’, which refers to the unseen market forces that set prices by equating supply and demand.

Joseph Schumpeter, 1997 [1954], History of Economic Analysis, London: Routledge, pp. 472–3. 12. Adam Smith, 1979 [1776], An Inquiry into the Nature and Causes of the Wealth of Nations, eds. R. H. Campbell, A. S. Skinner and W. B. Todd, Oxford: Clarendon Press, bk IV, ch. 2, para 12. 13. Ricardo, Works and Correspondence, IV, p. 23. 14. Ibid., p. 21. 15. King, David Ricardo, p. 88. 16. Ricardo, Works and Correspondence, IV, pp. 28, 32. 17. Ibid., p. 35. 18. Ibid., p. 33. 19. Ibid., p. 41. 20. Ricardo Hausmann and Federico Sturzenegger, 2007, ‘The Missing Dark Matter in the Wealth of Nations and Its Implications for Global Imbalances’, Economic Policy, 22(51), pp. 470–518. 21.


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How the Scots Invented the Modern World: The True Story of How Western Europe's Poorest Nation Created Our World and Everything in It by Arthur Herman

British Empire, California gold rush, classic study, creative destruction, do-ocracy, Edward Jenner, financial independence, gentleman farmer, global village, invisible hand, Isaac Newton, James Watt: steam engine, Joan Didion, joint-stock company, laissez-faire capitalism, land tenure, mass immigration, means of production, new economy, New Urbanism, North Sea oil, oil shale / tar sands, Republic of Letters, Robert Mercer, spinning jenny, The Wealth of Nations by Adam Smith, tontine, transcontinental railway, trickle-down economics, urban planning, urban renewal, vertical integration, working poor

William Robertson used Smith’s lectures on natural law and the four-stage theory of civil society for his own history of Europe—so much so that Smith privately accused him of plagiarism! All this shows that long before he published his Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith was a prominent and influential figure in Edinburgh circles. He attended the meetings of the Select Society and the Poker Club, and went to the dinner parties of even nonintellectual citizens. As a guest he could be trying. He rarely spoke, but when he did, it was usually at great length. Alexander Carlyle remembered Adam Smith as “the most absent man in Company that I ever saw, Moving his Lips and talking to himself, and Smiling, in the midst of large Company’s.”

Muller’s Adam Smith in His Time—And Ours (New York, 1993). Ian Ross’s biography of Smith (see Chapter Three, above), was of course crucial for writing this chapter, as was Dugald Stewart’s Biographical Memoir of Adam Smith, which first appeared in 1793 but which was reprinted from the collected works of Dugald Stewart in 1966. Adam Smith’s two major works, An Inquiry Into the Nature and Causes of the Wealth of Nations and The Theory of Moral Sentiments, are generally available, while even his lectures on jurisprudence and Lectures on Rhetoric and Belles Lettres, both of which are based on notes by former students, can be found in modern editions.

One of these was John Millar, who served as tutor to Kames’s son, then became the University of Glasgow’s first Professor of Civil Law. As a teacher and scholar, Millar would virtually invent modern political history. Another was Adam Smith, who came to Edinburgh in 1746 looking for an academic job. Because none was available, Kames arranged for him to deliver a series of public lectures on rhetoric, literature, and the subject dear to Kames’s heart, civil jurisprudence. Those lectures, delivered between 1748 and 1751, would become the foundation for the Wealth of Nations. A third was James Boswell, the son of Kames’s colleague on the Court of Session bench, Lord Auchinleck. The headstrong James quarreled frequently with his cold, reproachful father, and looked to the rough but affectionate Kames as his intermediary when things were going badly at home.


pages: 772 words: 203,182

What Went Wrong: How the 1% Hijacked the American Middle Class . . . And What Other Countries Got Right by George R. Tyler

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 8-hour work day, active measures, activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, benefit corporation, Black Swan, blood diamond, blue-collar work, Bolshevik threat, bonus culture, British Empire, business cycle, business process, buy and hold, capital controls, Carmen Reinhart, carried interest, cognitive dissonance, collateralized debt obligation, collective bargaining, commoditize, company town, compensation consultant, corporate governance, corporate personhood, corporate raider, corporate social responsibility, creative destruction, credit crunch, crony capitalism, crowdsourcing, currency manipulation / currency intervention, David Brooks, David Graeber, David Ricardo: comparative advantage, declining real wages, deindustrialization, Diane Coyle, disruptive innovation, Double Irish / Dutch Sandwich, eurozone crisis, financial deregulation, financial engineering, financial innovation, fixed income, Ford Model T, Francis Fukuyama: the end of history, full employment, George Akerlof, George Gilder, Gini coefficient, Glass-Steagall Act, Gordon Gekko, Greenspan put, hiring and firing, Ida Tarbell, income inequality, independent contractor, invisible hand, job satisfaction, John Markoff, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, lake wobegon effect, light touch regulation, Long Term Capital Management, low interest rates, manufacturing employment, market clearing, market fundamentalism, Martin Wolf, minimum wage unemployment, mittelstand, Money creation, moral hazard, Myron Scholes, Naomi Klein, Northern Rock, obamacare, offshore financial centre, Paul Samuelson, Paul Volcker talking about ATMs, pension reform, performance metric, Pershing Square Capital Management, pirate software, plutocrats, Ponzi scheme, precariat, price stability, profit maximization, profit motive, prosperity theology / prosperity gospel / gospel of success, purchasing power parity, race to the bottom, Ralph Nader, rent-seeking, reshoring, Richard Thaler, rising living standards, road to serfdom, Robert Gordon, Robert Shiller, rolling blackouts, Ronald Reagan, Sand Hill Road, Savings and loan crisis, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, Steve Ballmer, Steve Jobs, stock buybacks, subprime mortgage crisis, The Chicago School, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transcontinental railway, transfer pricing, trickle-down economics, tulip mania, Tyler Cowen, Tyler Cowen: Great Stagnation, union organizing, Upton Sinclair, upwardly mobile, women in the workforce, working poor, zero-sum game

Mary Visot, “Areva, the Candidate of Juniac ‘Incompatible,’” Le Figaro, Dec. 15, 2010. 92 “Bonus Windfall Tax,” Editorial, Financial Times, Nov. 20, 2009. 93 Adam Smith, The Wealth of Nations (New York: Oxford University Press Classics), 376. 94 P.J. O’Rourke, “Adam Smith Gets the Last Laugh,” Financial Times, Feb. 10, 2009. 95 Ibid. 96 Adam Smith, The Wealth of Nations, 129. 97 Adam Smith, The Wealth of Nations, 188. 98 Trevor Manuel, “Let Fairness Triumph over Corporate Profits,” Financial Times, March 16, 2009. 99 Nicholas Phillipson, Adam Smith: An Enlightened Life (Hartford, CT: Yale University Press, 2010). 100 James K. Galbraith, Predator State, 162. 101 “Bonus Points,” Editorial, Financial Times, Dec. 7, 2009. 102 David Brown, “Blood Levels of Trans Fats Plunge after Food-Labeling Decree,” Washington Post, Feb. 9, 2012. 103 Michael E.

For us today in interpreting Adam Smith, an especially important bubble arose in 1772 in Scotland, when the giant Ayr Bank and others collapsed, impoverishing Scotland for years. P.J. O’Rourke explained the environment in which Smith wrote the Wealth of Nations in a February 2009 column in the Financial Times: “The Mississippi Scheme and the South Sea Bubble had both collapsed in 1720, three years before his (Smith’s) birth. In 1772, while Smith was writing The Wealth of Nations, a bank run occurred in Scotland. Only three of Edinburgh’s 30 private banks survived.”94 As he looked out his study window, Adam Smith could scarcely avoid the financial news of the day, and realized the barrier such abuses posed to his hopes for advancing the condition of his day.95* That accounts for his abiding support for prudent government regulation to channel the business community’s greed into competition.

Meckling, “Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure,” Journal of Financial Economics, vol. 3, no. 4, 1976. 24 John Plender, “Investing: Rules of Engagement,” Financial Times, July 11, 2010. 25 Justin Baer, Francesco Guerrera, and Richard Milne “A Need to Reconnect,” Financial Times, March 13, 2009. 26 Rakesh Khurana and Nitin Nohria, “Management Needs to Become a Profession,” Financial Times, Oct. 20, 2008. 27 Adam Smith, The Wealth of Nations, 368–69. 28 Joe Nocera, “Nice Wasn’t Part of the Deal,” New York Times, Aug. 1, 2009. 29 Adam Smith, The Wealth of Nations. 30 Milton Friedman, “Rethinking the Social Responsibility of Business,” Reason, October 2005. 31 David Magee, Jeff Immelt and the New GE Way (New York: McGraw-Hill Professional, 2009). 32 John P. Hussman, “Misallocating Funds,” Weekly Market Comment, July 12, 2010, hussmanfunds.com, http://www.hussmanfunds.com/wmc/wmc100712.htm. 33 Truman F.


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Private Government: How Employers Rule Our Lives (And Why We Don't Talk About It) by Elizabeth S. Anderson

Affordable Care Act / Obamacare, barriers to entry, call centre, collective bargaining, corporate governance, correlation does not imply causation, declining real wages, deskilling, feminist movement, Frederick Winslow Taylor, full employment, independent contractor, invisible hand, Jeremy Corbyn, manufacturing employment, means of production, Panopticon Jeremy Bentham, principal–agent problem, profit motive, Ronald Coase, scientific management, shareholder value, Socratic dialogue, spinning jenny, The Nature of the Firm, The Wealth of Nations by Adam Smith, trickle-down economics, Tyler Cowen

Smith, in particular, has been misread as a theorist of benign “invisible hand” self-interest and socially disembedded, selfequilibriating markets. Bromwich rightly invokes Polanyi against such illusions, but wrongly supposes that Smith held them. For corrections, see Gavin Kennedy, “Adam Smith: Some Popular Uses and Abuses,” in Adam Smith: His Life, Thought, and Legacy, edited by Ryan Hanley (Princeton, NJ: Princeton University Press, 2016), 461–77. 2. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Vol. 1, Glasgow Edition of the Works and Correspondence of Adam Smith (Indianapolis: Liberty Fund, 1981), I.10.2.61. Nor did Locke support unregulated labor markets. Although he prescribed harsh measures for dealing with those among the poor whom he imagined to be voluntarily unemployed, he also argued that property owners should be required to hire the involuntarily unemployed at a state-prescribed minimum wage.

But it serves to fix ideas. I hasten to add that some egalitarians of the seventeenth and eighteenth centuries—notably, the Diggers and Rousseau—rejected market society. My focus in this lecture is on those who embraced it. 2. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, vol. 1, Glasgow Edition of the Works and Correspondence of Adam Smith (Indianapolis: Liberty Fund, 1981), I.ii.2. 3. Karl Marx, Capital: A Critique of Political Economy, edited by Frederick Engels, translated by Samuel Moore and Edward Aveling (Chicago: Charles H. Kerr, 1912), 195–96. 4. This is not just cynicism on Smith’s part.

He did not appeal to racist premises to justify his position. On this point, see Jeremy Waldron, God, Locke, and Equality: Christian Foundations of John Locke’s Political Thought (Cambridge and New York: Cambridge University Press, 2002), Kindle loc. 2256–2335, 2402–15. 5. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Vol. 2, Glasgow Edition of the Works and Correspondence of Adam Smith (Indianapolis: Liberty Fund, 1981), V.1.f.61. 6. Locke contradicted himself on this point. Notoriously, he invested in the slave trade, and probably helped draft The Fundamental Constitutions of Carolina, 1669, http://avalon.law.yale.edu/17th_century/nc05.asp, which upheld slavery.


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The Rational Optimist: How Prosperity Evolves by Matt Ridley

"World Economic Forum" Davos, 23andMe, Abraham Maslow, agricultural Revolution, air freight, back-to-the-land, banking crisis, barriers to entry, Bernie Madoff, British Empire, call centre, carbon credits, carbon footprint, carbon tax, Cesare Marchetti: Marchetti’s constant, charter city, clean water, cloud computing, cognitive dissonance, collateralized debt obligation, colonial exploitation, colonial rule, Corn Laws, Cornelius Vanderbilt, cotton gin, creative destruction, credit crunch, David Ricardo: comparative advantage, decarbonisation, dematerialisation, demographic dividend, demographic transition, double entry bookkeeping, Easter island, Edward Glaeser, Edward Jenner, electricity market, en.wikipedia.org, everywhere but in the productivity statistics, falling living standards, feminist movement, financial innovation, flying shuttle, Flynn Effect, food miles, Ford Model T, Garrett Hardin, Gordon Gekko, greed is good, Hans Rosling, happiness index / gross national happiness, haute cuisine, hedonic treadmill, Herbert Marcuse, Hernando de Soto, income inequality, income per capita, Indoor air pollution, informal economy, Intergovernmental Panel on Climate Change (IPCC), invention of agriculture, invisible hand, James Hargreaves, James Watt: steam engine, Jane Jacobs, Jevons paradox, John Nash: game theory, joint-stock limited liability company, Joseph Schumpeter, Kevin Kelly, Kickstarter, knowledge worker, Kula ring, Large Hadron Collider, Mark Zuckerberg, Medieval Warm Period, meta-analysis, mutually assured destruction, Naomi Klein, Northern Rock, nuclear winter, ocean acidification, oil shale / tar sands, out of africa, packet switching, patent troll, Pax Mongolica, Peter Thiel, phenotype, plutocrats, Ponzi scheme, precautionary principle, Productivity paradox, profit motive, purchasing power parity, race to the bottom, Ray Kurzweil, rent-seeking, rising living standards, Robert Solow, Silicon Valley, spice trade, spinning jenny, stem cell, Steve Jobs, Steven Pinker, Stewart Brand, supervolcano, technological singularity, Thales and the olive presses, Thales of Miletus, the long tail, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, Tragedy of the Commons, transaction costs, ultimatum game, upwardly mobile, urban sprawl, Vernor Vinge, Vilfredo Pareto, wage slave, working poor, working-age population, world market for maybe five computers, Y2K, Yogi Berra, zero-sum game

p. 37 ‘In civilized society,’ wrote Adam Smith’. Smith, A. 1776. The Wealth of Nations. p. 38 ‘Leonard Read’s classic 1958 essay “I, Pencil”’. Read, L.E. 1958. I, Pencil. The Freeman, December 1958. For a fine modern rerun of the same subject see the novel by Roberts, R. 2008. The Price of Everything. Princeton University Press. p. 38 ‘As Friedrich Hayek first clearly saw’. Hayek, F.A. 1945. The use of knowledge in society. American Economic Review 35:519–30. p. 39 ‘a smaller quantity of labour produce a greater quantity of work’. Smith, A. 1776. The Wealth of Nations. p. 39 ‘you would have spent your after-tax income in roughly the following way’.

Current Biology 17:1908–12. p. 57 ‘as Leda Cosmides and John Tooby put it’. Cosmides, L. and Tooby, J. 1992. Cognitive adaptations for social exchange. In The Adapted Mind (eds J.H. Barkow, L. Cosmides and J. Tooby). Oxford University Press. p. 57 ‘In Adam Smith’s words’. Both Adam Smith quotes are from book 1, part 2, of The Wealth of Nations (1776). p. 57 ‘In the grasslands of Cameroon’. Rowland and Warnier, quoted in Shennan, S. 2002. Genes, Memes and Human History. Thames & Hudson. p. 59 ‘The primatologist Sarah Brosnan tried to teach two different groups of chimpanzees about barter’.

Arnold, J.E. 2001. The Origins of a Pacific Coast Chiefdom: The Chumash of the Channel Islands. University of Utah Press. p. 93 ‘Das Adam Smith Problem’. Coase, R. H. 1995. Adam Smith’s view of man. In Essays on Economics and Economists. University of Chicago Press. p. 93 ‘How selfish soever man may be supposed’. Smith, A. 1759. The Theory of Moral Sentiments. p. 93 ‘Man has almost constant occasion for the help of his brethren’. Smith, A. 1776. The Wealth of Nations. p. 93 ‘honorary friends’. Seabright, P. 2004. The Company of Strangers. Princeton University Press. p. 94 ‘As the philosopher Robert Solomon put it’.


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Value of Everything: An Antidote to Chaos The by Mariana Mazzucato

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, Alan Greenspan, bank run, banks create money, Basel III, behavioural economics, Berlin Wall, Big bang: deregulation of the City of London, bonus culture, Bretton Woods, business cycle, butterfly effect, buy and hold, Buy land – they’re not making it any more, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Carmen Reinhart, carried interest, clean tech, Corn Laws, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, David Ricardo: comparative advantage, debt deflation, European colonialism, Evgeny Morozov, fear of failure, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, full employment, G4S, George Akerlof, Glass-Steagall Act, Google Hangouts, Growth in a Time of Debt, high net worth, Hyman Minsky, income inequality, independent contractor, index fund, informal economy, interest rate derivative, Internet of things, invisible hand, John Bogle, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labour market flexibility, laissez-faire capitalism, light touch regulation, liquidity trap, London Interbank Offered Rate, low interest rates, margin call, Mark Zuckerberg, market bubble, means of production, military-industrial complex, Minsky moment, Money creation, money market fund, negative equity, Network effects, new economy, Northern Rock, obamacare, offshore financial centre, Pareto efficiency, patent troll, Paul Samuelson, peer-to-peer lending, Peter Thiel, Post-Keynesian economics, profit maximization, proprietary trading, quantitative easing, quantitative trading / quantitative finance, QWERTY keyboard, rent control, rent-seeking, Robert Solow, Sand Hill Road, shareholder value, sharing economy, short selling, Silicon Valley, Simon Kuznets, smart meter, Social Responsibility of Business Is to Increase Its Profits, software patent, Solyndra, stem cell, Steve Jobs, The Great Moderation, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, too big to fail, trade route, transaction costs, two and twenty, two-sided market, very high income, Vilfredo Pareto, wealth creators, Works Progress Administration, you are the product, zero-sum game

Marx, we will see, was more subtle in his understanding of this distinction. Adam Smith: The Birth of the Labour Theory of Value Born in 1723 into a family of customs officials in Kirkcaldy, in the county of Fife, Scotland, Adam Smith became Professor of Moral Philosophy at the University of Glasgow before turning his mind to what we now call economic questions, although at the time such questions were deeply influenced by philosophy and political thought. With Britain well on the path to industrial capitalism, Smith's The Wealth of Nations highlighted the role of the division of labour in manufacturing. His account of pin-manufacturing continues to be cited today as one of the first examples of organizational and technological change at the centre of the economic growth process.

And to choose a different path among the many that are available. 1 A Brief History of Value There is one sort of labour which adds to the value of the subject upon which it is bestowed: there is another which has no such effect. The former, as it produces a value, may be called productive; the latter, unproductive labour. Adam Smith, The Wealth of Nations (1776) Today we take increasing prosperity for granted. We assume that by and large the next generation will be better off than the last. But it was not always so. For most of human history people had no such expectations and, partly because living standards improved at best very slowly, few thinkers devoted much time to asking why some economies grow and others do not.

This normative and moral view of price, linked to cheating or criminal behaviour, began to fade after the seventeenth century - the time of Petty and King - but lingered on until firmly supplanted by the concept of individual utility, which held that it was not about good or bad but how common goals could be reached through each individual trying to maximize the benefit to him- or herself. In 1776 - the year that Adam Smith published The Wealth of Nations - the Englishman Jeremy Bentham argued that ‘the greatest happiness of the greatest number' should be the ‘measure of right and wrong'.5 In other words, an action should be evaluated according to its consequences in a particular context: killing may be justified if it prevents more killing.


pages: 1,205 words: 308,891

Bourgeois Dignity: Why Economics Can't Explain the Modern World by Deirdre N. McCloskey

"Friedman doctrine" OR "shareholder theory", Airbnb, Akira Okazaki, antiwork, behavioural economics, big-box store, Black Swan, book scanning, British Empire, business cycle, buy low sell high, Capital in the Twenty-First Century by Thomas Piketty, classic study, clean water, Columbian Exchange, conceptual framework, correlation does not imply causation, Costa Concordia, creative destruction, critique of consumerism, crony capitalism, dark matter, Dava Sobel, David Graeber, David Ricardo: comparative advantage, deindustrialization, demographic transition, Deng Xiaoping, do well by doing good, Donald Trump, double entry bookkeeping, electricity market, en.wikipedia.org, epigenetics, Erik Brynjolfsson, experimental economics, Ferguson, Missouri, food desert, Ford Model T, fundamental attribution error, Garrett Hardin, Georg Cantor, George Akerlof, George Gilder, germ theory of disease, Gini coefficient, God and Mammon, Great Leap Forward, greed is good, Gunnar Myrdal, Hans Rosling, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Hernando de Soto, immigration reform, income inequality, interchangeable parts, invention of agriculture, invention of writing, invisible hand, Isaac Newton, Islamic Golden Age, James Watt: steam engine, Jane Jacobs, John Harrison: Longitude, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Arrow, knowledge economy, labor-force participation, lake wobegon effect, land reform, liberation theology, lone genius, Lyft, Mahatma Gandhi, Mark Zuckerberg, market fundamentalism, means of production, middle-income trap, military-industrial complex, Naomi Klein, new economy, Nick Bostrom, North Sea oil, Occupy movement, open economy, out of africa, Pareto efficiency, Paul Samuelson, Pax Mongolica, Peace of Westphalia, peak oil, Peter Singer: altruism, Philip Mirowski, Pier Paolo Pasolini, pink-collar, plutocrats, positional goods, profit maximization, profit motive, public intellectual, purchasing power parity, race to the bottom, refrigerator car, rent control, rent-seeking, Republic of Letters, road to serfdom, Robert Gordon, Robert Shiller, Ronald Coase, Scientific racism, Scramble for Africa, Second Machine Age, secular stagnation, seminal paper, Simon Kuznets, Social Responsibility of Business Is to Increase Its Profits, spinning jenny, stakhanovite, Steve Jobs, tacit knowledge, TED Talk, the Cathedral and the Bazaar, The Chicago School, The Market for Lemons, the rule of 72, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, total factor productivity, Toyota Production System, Tragedy of the Commons, transaction costs, transatlantic slave trade, Tyler Cowen, Tyler Cowen: Great Stagnation, uber lyft, union organizing, very high income, wage slave, Washington Consensus, working poor, Yogi Berra

A woman is willing to punish defectors in ways that entail even the sacrifice (from the Latin, “make holy”) of her own profits.19 Humans have a sense of justice (as the primatologist Frans de Waal argues, so also do some other animals, if less elaborately), a sense of appropriate behavior toward other people and especially in other people. They will go to lengths to praise and reward manifestations of the virtues—prudence, temperance, courage, justice, faith, hope, and love—and to blame and punish the corresponding vices. The Blessed Adam Smith called such matters of internalized ethics the “impartial spectator”—though a spectator who then gets up on stage to act, for the moral sentiments and the wealth of nations. A society can craft an official rule against cheating in business. Such a rule would be a “good institution.” It’s even necessary, to discourage the simplest game-theoretic defections and to generate “Schelling points” around which business can gather.

The three virtues of the classical and Christian seven that are missing from Austen—transcendent hope and faith and love of God—are the same one’s missing from Adam Smith. (Austen appears to have got the gist of Smith only indirectly, if at all. Her father’s considerable library of five hundred books might possibly have contained one of the two books Smith published. Waterman, who has gone into the matter of the circulation of The Wealth of Nations in detail, doubts it.) That is, she is not a Romantic novelist, even though she concerned herself exclusively with romance in its recent sense of “affairs of the heart.”

Smith was inclined to “offices of secret charity,” a most bourgeois inclination.18 The Duke of Buccleuch, in whose entourage Smith traveled the Continent 1764–1766, admired him for “every private virtue,” the sort of virtues an aristocrat would think well suited to a bourgeois.19 On eighteenth-century suppositions, the public virtues—that is, the political virtues—were to be exercised mainly by aristocrats. Of the seven principal virtues of classical and Christian theory, Adam Smith paid particular attention to three. His three books—two published and one intended—match the three. Prudence is the chief, if nothing like the only, virtue considered in The Wealth of Nations. Temperance is the chief, if again not the only, virtue considered in The Theory of Moral Sentiments. And justice was to be considered in a projected Treatise on Jurisprudence, the shape of which we can imagine from elaborate notes by Smith’s students in courses given from his chair of Moral Philosophy in 1762–1763 and 1766.


The Unknowers: How Strategic Ignorance Rules the World by Linsey McGoey

Alan Greenspan, An Inconvenient Truth, anti-globalists, antiwork, battle of ideas, behavioural economics, Big Tech, Black Lives Matter, Branko Milanovic, British Empire, Cambridge Analytica, carbon tax, Cass Sunstein, Clive Stafford Smith, conceptual framework, Corn Laws, corporate governance, corporate raider, Credit Default Swap, David Ricardo: comparative advantage, Donald Trump, drone strike, en.wikipedia.org, European colonialism, fake news, Frances Oldham Kelsey, hiring and firing, Howard Zinn, income inequality, it is difficult to get a man to understand something, when his salary depends on his not understanding it, joint-stock company, junk bonds, knowledge economy, market fundamentalism, mass incarceration, Michael Milken, minimum wage unemployment, Naomi Klein, new economy, Nick Leeson, p-value, Paul Samuelson, Peter Thiel, plutocrats, post-truth, public intellectual, race to the bottom, randomized controlled trial, rent-seeking, road to serfdom, Robert Mercer, Ronald Reagan, Scientific racism, selective serotonin reuptake inhibitor (SSRI), Social Justice Warrior, Steven Pinker, Suez crisis 1956, The Chicago School, The Wealth of Nations by Adam Smith, union organizing, Upton Sinclair, W. E. B. Du Bois, Washington Consensus, wealth creators

If you read on, beyond Books One to Three of the Wealth of Nations, into those parts almost never represented in modern selected editions, it becomes clear that Smith foresaw negative consequences to unfettered economic growth; that for Smith the moral economy still mattered. Female economists, of whom there have been a few over the intervening centuries, often seem to grasp that point, but it has been widely ignored in a predominantly male specialism.32 It is a very good point, but while gender plays some role, it can’t explain all. Writing in 1952, the British economist Lionel Robbins suggested that to call Adam Smith a laissez faire thinker ‘is a sure sign of ignorance or malice.’33 In other words, women have been at the forefront of a more accurate understanding of Smith’s writing.

, a wonderful and witty book which highlights important points about the way that contemporary economic theories tend to ignore the economic importance of domestic, unpaid labour, especially the labour of women.1 My focus is a little different. I agree that much academic theory ignores the role of unpaid labour in creating economic value. But there’s also another problem surrounding the treatment of Smith’s work today. His book, The Wealth of Nations, published in 1776, is widely viewed today as the most important modern economic text ever written. Smith is seen as the patron saint of the belief that economic self-interest will lead naturally to positive economic growth for all members of a community. Steven Pinker and others call this the ‘positive-sum’ or ‘shared prosperity’ thesis and they attribute it to Smith.

She notes that the editor of a 1970 Penguin version expects that his readers will agree ‘that the first two books contain the central part of Smith’s work as a theoretical economist, and the real basis of a profoundly influential school of thought.’ Another editor, of the Everyman version in 1991, suggests the first four books ‘contain the whole of what Smith had to say in carrying out his aim, “An inquiry into the Nature and Causes of the Wealth of Nations.”’31 Sutherland makes an important and neglected observation. To discount the centrality of Book 5 might seem like an arbitrary decision, but when multiple versions omit the same book, it amounts to a pattern of wilful omission. The deliberate cutting of sections where Smith writes at length about the necessity of government intervention is an example of what I mean by elite ignorance, because it proves that what people today don’t know about Smith isn’t simply accidental, but rather results from the biases of earlier scholars who are influential in shaping what future generations understand about the past.


The Darwin Economy: Liberty, Competition, and the Common Good by Robert H. Frank

Alan Greenspan, behavioural economics, carbon footprint, carbon tax, carried interest, Cass Sunstein, clean water, congestion charging, congestion pricing, corporate governance, deliberate practice, full employment, Garrett Hardin, Gary Kildall, high-speed rail, income inequality, independent contractor, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Paul Samuelson, plutocrats, positional goods, profit motive, Ralph Nader, rent control, Richard Thaler, Ronald Coase, Ronald Reagan, sealed-bid auction, smart grid, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thomas Malthus, Tragedy of the Commons, transaction costs, trickle-down economics, Tyler Cowen, ultimatum game, vertical integration, winner-take-all economy

Jacoby, “Probabilistic Forecast for 21st Century Climate Based on Uncertainties in Emissions (without Policy) and Climate Parameters,” MIT Joint Program on the Science and Policy of Global Change, Report 169, January 2009. 5. Jane Mayer, “Covert Operations: The Billionaire Brothers Who Are Waging a War against Obama,” New Yorker, August 30, 2010, pp. 44–55. 6. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, State College, PA: Penn State University, 2005, p. 364 (originally published in 1776). 7. Ibid., p. 111. 8. For a comprehensive account of how laissez-faire enthusiasts have often misrepresented Adam Smith’s positions, see Amartya Sen’s introduction to the 250thanniversary edition of Smith’s The Theory of Moral Sentiments, New York: Penguin, 2009. 9. Charles Darwin, The Origin of Species, 6th London Edition, The Literature Project, 2000–2010.

John Rawls, A Theory of Justice, Cambridge, MA: Belknap Press of Harvard University Press, 1971. 2. Harriet Rubin, “Ayn Rand’s Literature of Capitalism,” New York Times, September 15, 2007, http://www.nytimes.com/2007/09/15/business/15atlas.html. 3. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, State College, PA: Penn State University, 2005, book 1, chapter 1 (originally published in 1776), http://www.online-literature.com/adam_smith/wealth_nations/3/. 4. Ibid., book 1, chapter 3. 5. Robert Nozick, Anarchy, State, and Utopia, New York: Basic Books, 1974. 6. www.sirclisto.com/cavalier/spain.htm. INDEX absolute consumption, 24–25, 40 absolute income, 23, 44 ACAP.

One century hence, if a roster of professional economists is asked to identify the intellectual father of their discipline, a majority will name Charles Darwin. If the same question were posed today, of course, more than 99 percent of my colleagues would name Adam Smith. My views about Darwin’s significance reflect no shortage of admiration for Smith on my part. On the contrary, reading any random passage from the eighteenth-century Scottish moral philosopher’s masterwork, The Wealth of Nations, still causes me to marvel at the depth and breadth of his insights. Charles Darwin was himself no slouch, obviously, yet few people outside academic departments of biology and economics associate his name with ideas in economics.


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Hubris: Why Economists Failed to Predict the Crisis and How to Avoid the Next One by Meghnad Desai

3D printing, Alan Greenspan, bank run, banking crisis, Bear Stearns, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, BRICs, British Empire, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, correlation coefficient, correlation does not imply causation, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, demographic dividend, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, German hyperinflation, Glass-Steagall Act, Gunnar Myrdal, Home mortgage interest deduction, imperial preference, income inequality, inflation targeting, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, Long Term Capital Management, low interest rates, market bubble, market clearing, means of production, Meghnad Desai, Mexican peso crisis / tequila crisis, mortgage debt, Myron Scholes, negative equity, Northern Rock, oil shale / tar sands, oil shock, open economy, Paul Samuelson, Phillips curve, Post-Keynesian economics, price stability, purchasing power parity, pushing on a string, quantitative easing, reserve currency, rising living standards, risk/return, Robert Shiller, Robert Solow, Ronald Reagan, savings glut, secular stagnation, seigniorage, Silicon Valley, Simon Kuznets, subprime mortgage crisis, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, Tobin tax, too big to fail, women in the workforce

But eventually, if money kept flooding in from outside (as was the case with Spain in the previous two centuries), there would be limits to how far economic activity could expand in the short term, and this constraint would result in inflation. As to the question of what constituted wealth, the answer was to come from a fellow Scotsman and friend – Adam Smith. Determining the Wealth of Nations Adam Smith, a lifelong bachelor who lived with his mother and sister all his adult life, was a friend of David Hume. Smith was elected a Professor of Moral Philosophy at Glasgow, and later gave up the post to become a tutor to the Duke of Buccleuch, which allowed him to travel all over Europe meeting the famous philosophers of his day.

In the eighteenth century, kings still sought to increase their wealth through invasion and plunder – Britain was even then in the middle of its long century of war with France, which lasted, on and off, from 1695 to 1815. In his celebrated book An Inquiry into the Nature and Causes of the Wealth of Nations, published in 1776, Adam Smith pointed out that it was the productivity of its workers which was the key to the prosperity of a nation and not the treasures of gold and silver it had accumulated. The productivity of the workers could be enhanced with tools and machines. The capital – the money to buy the tools and machinery as well as to pay the wages – was accumulated out of the profits that the providers of capital made by employing the workers.

He was well aware of the role of benevolence and sympathy in social life, which he had discussed in The Theory of Moral Sentiments. There were restraints on the pursuit of self-interest by individuals in the laws of the land as well as social conventions. But the dynamic energy unleashed by millions of people pursuing self-interest was the key to the wealth of nations. Adam Smith was a Deist, that is, someone who did not believe in the Revelation or the Virgin Birth but was religious. The fashionable doctrine in those days was of God as a Clockmaker. God did not intervene in the mundane affairs of the people on earth. He set the universe in motion as if it were a highly sprung and delicate clock which then worked away on its own as the pendulum swung back and forth.


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The Evolution of Everything: How New Ideas Emerge by Matt Ridley

"World Economic Forum" Davos, adjacent possible, affirmative action, Affordable Care Act / Obamacare, Albert Einstein, Alfred Russel Wallace, AltaVista, altcoin, An Inconvenient Truth, anthropic principle, anti-communist, bank run, banking crisis, barriers to entry, bitcoin, blockchain, Boeing 747, Boris Johnson, British Empire, Broken windows theory, carbon tax, Columbian Exchange, computer age, Corn Laws, cosmological constant, cotton gin, creative destruction, Credit Default Swap, crony capitalism, crowdsourcing, cryptocurrency, David Ricardo: comparative advantage, demographic transition, Deng Xiaoping, discovery of DNA, Donald Davies, double helix, Downton Abbey, driverless car, Eben Moglen, Edward Glaeser, Edward Lorenz: Chaos theory, Edward Snowden, endogenous growth, epigenetics, Ethereum, ethereum blockchain, facts on the ground, fail fast, falling living standards, Ferguson, Missouri, financial deregulation, financial innovation, flying shuttle, Frederick Winslow Taylor, Geoffrey West, Santa Fe Institute, George Gilder, George Santayana, Glass-Steagall Act, Great Leap Forward, Greenspan put, Gregor Mendel, Gunnar Myrdal, Henri Poincaré, Higgs boson, hydraulic fracturing, imperial preference, income per capita, indoor plumbing, information security, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Jane Jacobs, Japanese asset price bubble, Jeff Bezos, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kevin Kelly, Khan Academy, knowledge economy, land reform, Lao Tzu, long peace, low interest rates, Lyft, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, means of production, meta-analysis, military-industrial complex, mobile money, Money creation, money: store of value / unit of account / medium of exchange, Mont Pelerin Society, moral hazard, Necker cube, obamacare, out of africa, packet switching, peer-to-peer, phenotype, Pierre-Simon Laplace, precautionary principle, price mechanism, profit motive, RAND corporation, random walk, Ray Kurzweil, rent-seeking, reserve currency, Richard Feynman, rising living standards, road to serfdom, Robert Solow, Ronald Coase, Ronald Reagan, Satoshi Nakamoto, scientific management, Second Machine Age, sharing economy, smart contracts, South Sea Bubble, Steve Jobs, Steven Pinker, Stuart Kauffman, tacit knowledge, TED Talk, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, twin studies, uber lyft, women in the workforce

Emergent ideas were all around him. He read his grandfather’s Lucretius-emulating poems. ‘My studies consist in Locke and Adam Smith,’ he wrote from Cambridge, citing two of the most bottom–up philosophers. Probably it was Smith’s The Moral Sentiments that he read, since it was more popular in universities than The Wealth of Nations. Indeed, one of the books that Darwin read in the autumn of 1838 after returning from the voyage of the Beagle and when about to crystallise the idea of natural selection was Dugald Stewart’s biography of Adam Smith, from which he got the idea of competition and emergent order. The same month he read, or reread, the political economist Robert Malthus’s essay on population, and was struck by the notion of a struggle for existence in which some thrived and others did not, an idea which helped trigger the insight of natural selection.

Human action, but not human design The great enrichment was an evolutionary phenomenon. Let’s return to the late eighteenth century, when Britain stands on the brink of this great enrichment, and revisit that great thinker about the general theory of evolution, Adam Smith. In 1776 Smith published his second book, The Wealth of Nations. In it he set out to champion a different evolutionary idea from that which he had set out in his Theory of Moral Sentiments. If God was not the cause of morality, was government the cause of prosperity? In Smith’s day, commerce was a tightly regulated business, with joint-stock companies chartered specifically and exclusively by the state to have monopolies, and mercantilist trade policies designed to promote certain kinds of foreign exports, not to mention professions strictly licensed by the government.

As so often, Smith got there first, saying in The Wealth of Nations: ‘The sovereign is completely discharged from a duty, in the attempting to perform which he must always be exposed to innumerable delusions, and for the proper performance of which no human wisdom or knowledge could ever be sufficient; the duty of superintending the industry of private people, and of directing it towards the employments most suitable to the interest of the society.’ Invisible hands This decentralised emergence of order and complexity is the essence of the evolutionary idea that Adam Smith crystallised in 1776. In his famous metaphor, Smith made the guiding hand invisible: each person ‘intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention’.


pages: 304 words: 80,965

What They Do With Your Money: How the Financial System Fails Us, and How to Fix It by Stephen Davis, Jon Lukomnik, David Pitt-Watson

activist fund / activist shareholder / activist investor, Admiral Zheng, banking crisis, Basel III, Bear Stearns, behavioural economics, Bernie Madoff, Black Swan, buy and hold, Carl Icahn, centralized clearinghouse, clean water, compensation consultant, computerized trading, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, crowdsourcing, David Brooks, Dissolution of the Soviet Union, diversification, diversified portfolio, en.wikipedia.org, financial engineering, financial innovation, financial intermediation, fixed income, Flash crash, Glass-Steagall Act, income inequality, index fund, information asymmetry, invisible hand, John Bogle, Kenneth Arrow, Kickstarter, light touch regulation, London Whale, Long Term Capital Management, moral hazard, Myron Scholes, Northern Rock, passive investing, Paul Volcker talking about ATMs, payment for order flow, performance metric, Ponzi scheme, post-work, principal–agent problem, rent-seeking, Ronald Coase, seminal paper, shareholder value, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical model, Steve Jobs, the market place, The Wealth of Nations by Adam Smith, transaction costs, Upton Sinclair, value at risk, WikiLeaks

Pitt speech on introducing his budget, February 17, 1792, quoted in John Kenneth Galbraith, A History of Economics (Hamish Hamilton, 1987), 61. 10. Adam Smith, The Wealth of Nations (Oxford University Press, 2008), bk 1, chap 2. 11. Smith claimed that 240 times the number of pins could be created in this way than by an artisan working alone. 12. See Adam Smith, The Wealth of Nations, bk. 1, chap. 7. 13. Other economists of the same era also sought to turn economics into a science like physics. Stanley Jevons, for example, is described as “wanting to make human behavior as predictable as gravity.” Eric Beinhocker, The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics (Random House, 2005), 34. 14.

7 In the Middle Ages, writings on economic matters could be found in manuals for confessors, who were concerned that prices charged by merchants were “just.” Adam Smith was a professor of moral philosophy who believed his most important book to be one entitled The Theory of Moral Sentiments.8 But he became most famous for a follow-up work in which he applied his mind to the world of commerce: The Wealth of Nations. Even in his own time, it was profoundly influential. Prime Minister William Pitt declared to the House of Commons in 1792 that Smith’s work would “furnish the best solution to every question connected to the history of commerce and with the system of political economy.”9 The Wealth of Nations contains two profoundly important observations, the first of which flew in the face of society’s preference for thinking about money in moral terms.

But scientists have certain statistical methods by which they can determine how accurate their measurements, and therefore their predictions, are likely to be. One of the key figures in developing those statistical methods was the mathematician who graced the ten-euro note: Carl Friedrich Gauss. Gauss, born the year after Adam Smith published The Wealth of Nations, is recognized as one of the world’s greatest mathematicians. His most direct contributions were in mathematics and physics; he did not turn his attention to economics, which at the time was not considered a mathematical science. As director of the astronomical observatory at Göttingen, Germany, however, he was interested in astronomical measurements and, in particular, the distribution of errors in measurement.17 Simply put, he wanted to know how wrong he could be, how often.


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How Markets Fail: The Logic of Economic Calamities by John Cassidy

Abraham Wald, Alan Greenspan, Albert Einstein, An Inconvenient Truth, Andrei Shleifer, anti-communist, AOL-Time Warner, asset allocation, asset-backed security, availability heuristic, bank run, banking crisis, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Black Monday: stock market crash in 1987, Black-Scholes formula, Blythe Masters, book value, Bretton Woods, British Empire, business cycle, capital asset pricing model, carbon tax, Carl Icahn, centralized clearinghouse, collateralized debt obligation, Columbine, conceptual framework, Corn Laws, corporate raider, correlation coefficient, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Daniel Kahneman / Amos Tversky, debt deflation, different worldview, diversification, Elliott wave, Eugene Fama: efficient market hypothesis, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, financial intermediation, full employment, Garrett Hardin, George Akerlof, Glass-Steagall Act, global supply chain, Gunnar Myrdal, Haight Ashbury, hiring and firing, Hyman Minsky, income per capita, incomplete markets, index fund, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Nash: game theory, John von Neumann, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kickstarter, laissez-faire capitalism, Landlord’s Game, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, Louis Bachelier, low interest rates, mandelbrot fractal, margin call, market bubble, market clearing, mental accounting, Mikhail Gorbachev, military-industrial complex, Minsky moment, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Myron Scholes, Naomi Klein, negative equity, Network effects, Nick Leeson, Nixon triggered the end of the Bretton Woods system, Northern Rock, paradox of thrift, Pareto efficiency, Paul Samuelson, Phillips curve, Ponzi scheme, precautionary principle, price discrimination, price stability, principal–agent problem, profit maximization, proprietary trading, quantitative trading / quantitative finance, race to the bottom, Ralph Nader, RAND corporation, random walk, Renaissance Technologies, rent control, Richard Thaler, risk tolerance, risk-adjusted returns, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, shareholder value, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical model, subprime mortgage crisis, tail risk, Tax Reform Act of 1986, technology bubble, The Chicago School, The Great Moderation, The Market for Lemons, The Wealth of Nations by Adam Smith, too big to fail, Tragedy of the Commons, transaction costs, Two Sigma, unorthodox policies, value at risk, Vanguard fund, Vilfredo Pareto, wealth creators, zero-sum game

remarks at the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, Wyoming, August 25–27, 2005, available at www.kc.frb.org/publicat/sympos/2005/PDF/GD5_2005.pdf. 23 “The conventional wisdom . . .”: John Kenneth Galbraith, The Affluent Society (Boston: Mariner Books, 1998), 9. 2. ADAM SMITH’S INVISIBLE HAND 27 “It is striking to me . . .”: Alan Greenspan, The Age of Turbulence (New York: Penguin Press, 2007), 260. 27 “One man draws out . . .”: Adam Smith, The Wealth of Nations, Books 1–3 (New York: Penguin Books, 1997), 109–10. 28 In China between 1981 . . . : Poverty Data: A Supplement to World Development Indicators 2008, World Bank, December 2008. 28 “The shepherd, the sorter . . .”: Smith, Wealth of Nations, Books 1–3, 116–17. 29 iPod’s manufacturing chain: See Greg Linden, Kenneth L.

Rubinfeld, of the University of California, Berkeley: General equilibrium theory, Pindyck and Rubinfeld write, “is the most direct way of illustrating the working of Adam Smith’s famous invisible hand, because it tells us that the economy will automatically allocate resources efficiently without the need for governmental regulatory control.” A defining feature of equilibrium theory, and the source of its appeal to many economists, is its mathematical elegance. For a hundred years or so, following the publication of The Wealth of Nations, economics remained an informal discipline: most of its major figures expressed their arguments in prose. As the nineteenth century progressed, this began to change.

Its main importance was that, starting out from a perfectly orthodox position—Romer did his Ph.D. at Chicago, where Robert Lucas was one of his teachers—it ended up undermining Adam Smith’s argument that unfettered competition is always the most effective vehicle for promoting economic growth. In an encouraging sign, at least some textbook writers have recognized this point. “That knowledge is both nonrivalrous and nonexcludable creates substantial problems for a market economy,” David Miles and Andrew Scott, the authors of Macroeconomics: Understanding the Wealth of Nations, note. “Because the output of R&D activity is both uncertain and, largely, nonexcludable, firms would prefer to let other firms discover successful new technologies and then copy them.


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Why We Work by Barry Schwartz

Atul Gawande, call centre, deskilling, do well by doing good, Frederick Winslow Taylor, fulfillment center, future of work, Higgs boson, if you build it, they will come, invisible hand, job satisfaction, meta-analysis, Paradox of Choice, scientific management, Silicon Valley, TED Talk, The Wealth of Nations by Adam Smith, Toyota Production System

You can see this view operating in the “carrot and stick” approach that has dominated efforts to solve the world’s recent financial crisis. To prevent a financial meltdown from happening again, people argued, we needed to replace the “dumb” incentives that led to it with “smarter” ones. We had to get incentives right. Nothing else really mattered. This idea animated the inventor of the free market, Adam Smith. In The Wealth of Nations, published in 1776, he wrote that: It is in the inherent interest of every man to live as much at his ease as he can; and if his emoluments are to be precisely the same whether he does or does not perform some very laborious duty, to perform it in as careless and slovenly a manner that authority will permit.

Empathy, and care and concern for the well-being of others, are routine parts of most people’s character. Yet they are in danger of being crowded out by exclusive concern for self-interest—a concern that is encouraged by the incentive-based structure of the workplace. Even Adam Smith understood that there was more to human nature than self-interest. The Wealth of Nations followed another book, The Theory of Moral Sentiments, in which he suggested that a certain natural sympathy for one’s fellow human beings provided needed restraints on what people would do if they were left free to “barter, truck, and exchange one thing for another.”

New York: Riverhead, 2010.* Sen, A. “Rational Fools.” Philosophy and Public Affairs, 6 (1976): 317–44. Skinner, B. F. (1953). Science and Human Behavior. New York: Macmillan.* Smith, A. The Theory of Moral Sentiments (Originally published in 1753). Oxford: Clarendon Press, 1976.* ——. The Wealth of Nations (Originally published in 1776). New York: Modern Library, 1937.* Snyder, M. and E. D. Tanke. (1977). “Social Perception and Interpersonal Behavior: On the Self-fulfilling Nature of Social Stereotypes.” Journal of Personality and Social Psychology, 35 (1977): 655–66. Sowell, T. A Conflict of Visions.


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The Logic of Life: The Rational Economics of an Irrational World by Tim Harford

activist fund / activist shareholder / activist investor, affirmative action, Albert Einstein, Andrei Shleifer, barriers to entry, behavioural economics, Berlin Wall, business cycle, colonial rule, company town, Daniel Kahneman / Amos Tversky, double entry bookkeeping, Dr. Strangelove, Edward Glaeser, en.wikipedia.org, endowment effect, European colonialism, experimental economics, experimental subject, George Akerlof, income per capita, invention of the telephone, Jane Jacobs, John von Neumann, Larry Ellison, law of one price, Martin Wolf, mutually assured destruction, New Economic Geography, new economy, Patri Friedman, plutocrats, Richard Florida, Richard Thaler, Ronald Reagan, Silicon Valley, spinning jenny, Steve Jobs, The Death and Life of Great American Cities, the market place, the strength of weak ties, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Tyler Cowen, women in the workforce, zero-sum game

Delaying motherhood means big income gains: Amalia Miller is the young economist behind this very clever research. Her working paper is available at www.virginia.edu/economics/miller.htm. (His employer was): Biographical details of Adam Smith are from James Buchan, Adam Smith and the Pursuit of Perfect Liberty (London: Profile, 2006). But despite his travels: See David Warsh’s superb Knowledge and the Wealth of Nations (New York: Norton, 2006), chapter 3. “could scarce, perhaps”: Adam Smith, The Wealth of Nations, book 1, chapter 1, paragraph 3. Versions are available online, for instance at www.econlib.org/library/Smith/smWN.html. His adoring wife: Stephanie Coontz, Marriage: A History (New York: Viking, 2005).

And they are perhaps delayed indefinitely: Betsey Stevenson and Justin Wolfers, “Marriage and Divorce: Changes and their Driving Forces,” NBER Working Paper 12944. Also Tyler Cowen, “Matrimony Has Its Benefits, and Divorce Has a Lot to Do with That,” The New York Times, April 19, 2007. “We know there exists something”: Interview with Justin Wolfers, June 2007. “The man whose whole life”: Adam Smith, The Wealth of Nations, book 5, chapter 1, par. 178, www.econlib.org/library/Smith/smWN.html. 4. WHY YOUR BOSS IS OVERPAID Dilbert: This Dilbert cartoon was reprinted in Edward Lazear, Personnel Economics for Managers (New York: Wiley, 1998). He reckoned that 30,000: Tim Harford, “Odd Numbers,” Financial Times, April 23, 2005.

Another good popular account is “Economics Focus: Winds of Change,” Economist, November 2, 2006. “Nobody ever saw a dog”: Smith, The Wealth of Nations, book 1, chapter 2. Computer-based simulations: See “Homo Economicus?” Economist, April 7, 2005, and Richard D. Horan, Erwin Bulte, and Jason F. Shogren, “How Trade Saved Humanity from Biological Exclusion: An Economic Theory of Neanderthal Extinction,” Journal of Economic Behavior & Organization 58, no. 1(September 2005): 1–29. Neanderthals, apparently, did not: “Mrs. Adam Smith,” Economist, December 9, 2006. Also Steven L. Kuhn and Mary C. Stiner, “What’s a Mother to Do? The Division of Labor Among Neanderthals and Modern Humans in Eurasia,” Current Anthropology 47, no. 6(December 2006): 953–80, www.journals.uchicago.edu/CA/journal/issues/v47n6/066001/066001.web.pdf.


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Basic Economics by Thomas Sowell

affirmative action, air freight, airline deregulation, Alan Greenspan, American Legislative Exchange Council, bank run, barriers to entry, big-box store, British Empire, business cycle, clean water, collective bargaining, colonial rule, corporate governance, correlation does not imply causation, cotton gin, cross-subsidies, David Brooks, David Ricardo: comparative advantage, declining real wages, Dissolution of the Soviet Union, diversified portfolio, European colonialism, fixed income, Ford Model T, Fractional reserve banking, full employment, global village, Gunnar Myrdal, Hernando de Soto, hiring and firing, housing crisis, income inequality, income per capita, index fund, informal economy, inventory management, invisible hand, John Maynard Keynes: technological unemployment, joint-stock company, junk bonds, Just-in-time delivery, Kenneth Arrow, knowledge economy, labor-force participation, land reform, late fees, low cost airline, low interest rates, low skilled workers, means of production, Mikhail Gorbachev, minimum wage unemployment, moral hazard, offshore financial centre, oil shale / tar sands, payday loans, Phillips curve, Post-Keynesian economics, price discrimination, price stability, profit motive, quantitative easing, Ralph Nader, rent control, rent stabilization, road to serfdom, Ronald Reagan, San Francisco homelessness, Silicon Valley, surplus humans, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, transcontinental railway, Tyler Cowen, Vanguard fund, War on Poverty, We are all Keynesians now

Cadell and W. Davies, Strand, 1805), Volume I, p. 337. {986} Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Modern Library, 1937), p. 79. {987} Ibid., p. 250. {988} Ibid., p. lvii. {989} Ibid., p. 325. {990} Ibid., p. 900. {991} Ibid., pp. 80–81, 365; Adam Smith, The Theory of Moral Sentiments (Indianapolis: Liberty Classics, 1976), p. 337. {992} Adam Smith, The Wealth of Nations, p. 423. {993} Sir James Steuart, The Works, Volume I, pp. 4, 15, 73, 88. {994} Adam Smith, The Wealth of Nations, p. 435. {995} David Ricardo, The Works and Correspondence of David Ricardo, Volume VII: Letters 1816–1818, edited by Piero Sraffa (New York: Cambridge University Press, 1952), p. 372

John Maynard Keynes{981} People have been talking about economic issues, and some writing about them, for thousands of years, so it is not possible to put a specific date on when the study of economics began as a separate field. Modern economics is often dated from 1776, when Adam Smith wrote his classic, The Wealth of Nations, but there were substantial books devoted to economics at least a century earlier, and there was a contemporary school of French economists called the Physiocrats, some of whose members Smith met while traveling in France, years before he wrote his own treatise on economics. What was different about The Wealth of Nations was that it became the foundation for a whole school of economists who continued and developed its ideas over the next two generations, including such leading figures as David Ricardo (1772–1823) and John Stuart Mill (1806–1873), and the influence of Adam Smith has to some extent persisted on to the present day.

Thus Sir James Steuart could write in 1767 of “a whole nation fed and provided for gratuitously” by means of slavery.{985} Although slaves were obviously part of the population, they were not considered to be part of the nation. CLASSICAL ECONOMICS Adam Smith Within a decade after Sir James Steuart’s multi-volume mercantilist treatise, Adam Smith’s The Wealth of Nations was published and dealt a historic blow against mercantilist theories and the whole mercantilist conception of the world. Smith conceived of the nation as all the people living in it. Thus you could not enrich a nation by keeping wages down in order to export.


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

banking crisis, basic income, Bertrand Russell: In Praise of Idleness, Bonfire of the Vanities, call centre, carbon credits, creative destruction, critique of consumerism, David Ricardo: comparative advantage, death of newspapers, Dr. Strangelove, financial innovation, Francis Fukuyama: the end of history, full employment, Great Leap Forward, guns versus butter model, happiness index / gross national happiness, Herbert Marcuse, income inequality, income per capita, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, market clearing, market fundamentalism, Meghnad Desai, Paul Samuelson, Philippa Foot, planned obsolescence, precautionary principle, profit motive, purchasing power parity, Ralph Waldo Emerson, retail therapy, Robert Solow, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tobin tax, union organizing, University of East Anglia, Veblen good, wage slave, wealth creators, World Values Survey, zero-sum game

“There are few ways in which a man can be more innocently employed than in getting money,” was how Dr. Johnson famously put it. His French contemporary Montesquieu talked of the douceur of commerce.14 Once money-making had been stripped of its ethical opprobrium, it became open to treatment in terms of cause and effect. Hume’s friend, the Scottish philosopher Adam Smith, took the lead. The Wealth of Nations, his masterpiece of 1776, presents humans as driven by a natural desire for self-improvement, which under conditions of free competition leads them “as if by an invisible hand” to promote the public well-being. Newton’s mechanical science of nature was thereby extended to economic relations, with self-interest in the role of gravity.

The role of the state in management, ownership, regulation, allocation, and distribution was drastically pared back. Governments gave up attempts to steer market forces to desirable social outcomes, limiting themselves to maintaining framework conditions for successful market performance. The wealth of nations would be made to grow faster by releasing acquisitiveness from its communal restraints, in a reprise of the arguments first advanced by Adam Smith and his followers. In this kind of world there is no reason why capitalism should ever end, provided everything goes according to plan. Keynes’s notion of satiety has no place: the progress of the system will create new wants and stimulate positional competition without limit.

John Maynard Keynes, The General Theory of Employment, Interest, and Money, The Collected Writings of John Maynard Keynes, vol. 7 (Cambridge: Cambridge University Press, 1973), p. 374. 7. IMSciences.net, accessed 09/09/11. 8. H. J. Johnson, “The Political Economy of Opulence,” Canadian Journal of Economics and Political Science, vol. 26, pt. 4 (1960), p. 554. 9. Adam Smith, The Wealth of Nations (Lawrence, Kan.: Digireads.com, 2009; first publ. 1759), p. 40; Alfred Marshall, Principles of Economics (London: Prometheus Books, 1920), p. 1; Lionel Robbins, An Essay on the Nature and Significance of Economic Science (London: Macmillan, 1932), p. 16. 10. Keynes, Essays in Persuasion, p. 332.


Capitalism, Alone: The Future of the System That Rules the World by Branko Milanovic

affirmative action, Asian financial crisis, assortative mating, barriers to entry, basic income, Berlin Wall, bilateral investment treaty, Black Swan, Branko Milanovic, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carried interest, colonial rule, corporate governance, creative destruction, crony capitalism, deindustrialization, dematerialisation, Deng Xiaoping, discovery of the americas, European colonialism, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, full employment, ghettoisation, gig economy, Gini coefficient, global supply chain, global value chain, Great Leap Forward, high net worth, household responsibility system, income inequality, income per capita, invention of the wheel, invisible hand, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, labor-force participation, laissez-faire capitalism, land reform, liberal capitalism, low skilled workers, Lyft, means of production, new economy, offshore financial centre, Paul Samuelson, plutocrats, post-materialism, purchasing power parity, remote working, rent-seeking, ride hailing / ride sharing, Robert Solow, Silicon Valley, single-payer health, special economic zone, Tax Reform Act of 1986, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, uber lyft, universal basic income, Vilfredo Pareto, Washington Consensus, women in the workforce, working-age population, Xiaogang Anhui farmers

That number is bound to rise with the increase in population, so the evolution of global inequality will increasingly depend on what is happening in Africa. 38. Adam Smith, The Wealth of Nations, book 4, chap. 7. Appendix A 1. “The colony of a civilised nation which takes possession either of a waste country, or of one so thinly inhabited that the natives easily give place to the new settlers, advances more rapidly to wealth and greatness than any other human society” (Adam Smith, The Wealth of Nations, book 4, chap. 7). 2. “The British Rule in India,” New York Tribune, June 25, 1853, in Marx (2007, 218–219). 3. “The Future Results of British Rule in India,” New York Tribune, August 8, 1853, in Marx (2007, 220). 4.

In order to answer that question and look at the prospects of political capitalism, it would be useful to consider an interesting approach suggested by Giovanni Arrighi in Adam Smith in Beijing: Lineages of the Twenty-First Century (2007). Smithian and Marxian capitalisms Arrighi starts from a dichotomy that I think he was the first to have defined, in a series of articles, between what he calls a Smithian “natural” path of development of capitalism and a Marxian “unnatural” path. Smith’s natural path, “the natural progress of opulence,” in the terminology of The Wealth of Nations, is that of a market economy of small producers that grows, through division of labor, from agriculture into manufacturing and only later goes into domestic trade and eventually long-distance foreign trade.

David Wootton writes: “The two works [The Theory of Moral Sentiments and The Wealth of Nations] do not fit quite so neatly together, for one is about how we ought to behave toward our family, friends, and neighbors (who evoke our benevolent feelings), and the other about how we should interact with strangers we meet in the marketplace (to whom we owe no particular duty of care—caveat emptor is an attitude we can legitimately adopt to strangers, but not to family, friends, and neighbors).… [There is] a tension between the amoral world of market forces, and the moral world of human interactions. The Wealth of Nations establishes the extent to which our choices are constrained by market forces, and these constraints limit our opportunities for admirable moral behavior” (Wootton 2018, 174–175; my emphasis). 5.


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The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor by William Easterly

air freight, Andrei Shleifer, battle of ideas, Bretton Woods, British Empire, business process, business process outsourcing, Carmen Reinhart, classic study, clean water, colonial rule, correlation does not imply causation, creative destruction, Daniel Kahneman / Amos Tversky, Deng Xiaoping, desegregation, discovery of the americas, Edward Glaeser, en.wikipedia.org, European colonialism, Ford Model T, Francisco Pizarro, fundamental attribution error, gentrification, germ theory of disease, greed is good, Gunnar Myrdal, income per capita, invisible hand, James Watt: steam engine, Jane Jacobs, John Snow's cholera map, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, low interest rates, M-Pesa, microcredit, Monroe Doctrine, oil shock, place-making, Ponzi scheme, public intellectual, risk/return, road to serfdom, Robert Solow, Silicon Valley, Steve Jobs, tacit knowledge, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, Thomas L Friedman, urban planning, urban renewal, Washington Consensus, WikiLeaks, World Values Survey, young professional

The son, also a Catholic, had unrealized pretensions of regaining his father’s throne as James III.) Smith’s leading success story was the American colonies (whose side he took in their dispute with the Crown just as the Wealth of Nations was published). Their secret was “plenty of good land, and liberty to manage their own affairs their own way.” The word liberty appears eighty-five times in the Wealth of Nations. As one biographer, Nicholas Phillipson, put it, Smith’s life’s work was “a call to his contemporaries to take moral, political and intellectual control of their lives.”44 In a remarkable and little-known paragraph criticizing Quesnay, Smith is starting to see that a free political system could also have an Invisible Hand: [Quesnay] seems not to have considered, that in the political body, the natural effort which every man is continually making to better his own condition, is a principle of preservation capable of preventing and correcting, in many respects, the bad effects of a political economy. . . .

Ian Simpson Ross, The Life of Adam Smith, second edition (Oxford: Oxford University Press, 2010), Kindle edition, locations 1231–39. 5. Ross, Life of Adam Smith, 6131–39. 6. Nicholas Phillipson, Adam Smith: An Enlightened Life (New Haven, CT: Yale University Press, 2010), Kindle edition, location 727. 7. Adam Smith, Wealth of Nations (Beijing, China: Dolphin Books, 2008), Kindle edition, locations 6696–98. There is something evocative and/or ironic about a Chinese company producing an electronic edition of Adam Smith sold on Amazon for $1.00. Emphasis added. 8. Ibid., 212–14. 9. Adam Smith, The Theory of Moral Sentiments (MacMay, 2008), Kindle edition, location 3585; http://www.amazon.com/dp/B001NPDN46/ref=rdr_kindle_ext_tmb. 10.

Actually, Smith held many negative views about both the rich and businessmen. In his first classic, The Theory of Moral Sentiments, published in 1759, Smith spoke of the rich as a “few lordly masters,” consumed by “vain and insatiable desires,” not to mention their “natural selfishness and rapacity.”9 As for businessmen, Smith in The Wealth of Nations spoke of “the mean rapacity, the monopolizing spirit, of merchants and manufacturers,” which sounds like something he had personally observed in Glasgow. His whole work he described as a “very violent attack” targeting “the wretched spirit of monopoly.” Another famous statement of Smith’s further develops this: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”10 Greedy merchants were, for Smith, far from concerned about promoting general well-being.


The Ages of Globalization by Jeffrey D. Sachs

Admiral Zheng, AlphaGo, Big Tech, biodiversity loss, British Empire, Cape to Cairo, circular economy, classic study, colonial rule, Columbian Exchange, Commentariolus, coronavirus, cotton gin, COVID-19, cuban missile crisis, decarbonisation, DeepMind, demographic transition, Deng Xiaoping, domestication of the camel, Donald Trump, en.wikipedia.org, endogenous growth, European colonialism, general purpose technology, global supply chain, Great Leap Forward, greed is good, income per capita, invention of agriculture, invention of gunpowder, invention of movable type, invention of the steam engine, invisible hand, Isaac Newton, James Watt: steam engine, job automation, John von Neumann, joint-stock company, lockdown, Louis Pasteur, low skilled workers, mass immigration, Nikolai Kondratiev, ocean acidification, out of africa, packet switching, Pax Mongolica, precision agriculture, profit maximization, profit motive, purchasing power parity, rewilding, South China Sea, spinning jenny, Suez canal 1869, systems thinking, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, Turing machine, Turing test, urban planning, warehouse robotics, Watson beat the top human players on Jeopardy!, wikimedia commons, zoonotic diseases

Spain and Portugal each held some Asian colonies as well, including the Philippines under Spain and eastern Timor under Portugal. 6.8 World Empires and Selected Nations, 1830 Much of the ensuing drama of nineteenth-century economic development would take place on the mainland of Europe, which pioneered the new age of industrial globalization. Adam Smith’s Summation of the Age of Global Empire Adam Smith, the great inventor of modern economic thought, living in Scotland in the eighteenth century, published his magnum opus, The Wealth of Nations, in 1776. As a great humanist, he observed the consequences of globalization with a globalist perspective rather than British partiality. (In his own work on moral sympathy, Smith spoke about the “impartial spectator” as the vantage point for moral reasoning.)

Private businesses, drunk with greed, hired private armies, enslaved millions, bribed their way to privileged political status at home and abroad, and generally acted with impunity. But even beyond the private greed, it was an age of conquest and unchecked competition among Europe’s powers. The world beyond the oceans was up for grabs, and little would hold back the rapaciousness that was unleashed as a result. Adam Smith’s masterwork, The Wealth of Nations, provided a template for riches: global trade as the spur for specialization and rising productivity. Smith’s recipe worked beyond his wildest imagination. As we shall see in the next phase of globalization, productivity began to rise rapidly and persistently as new inventions expanded the market and thereby the incentives for even more inventions.

The second is the social-democratic ethos, meaning an inclusive and participatory approach to political and economic life. The third is subsidiarity, meaning that we solve problems at the proper level of governance. The fourth is a reformed United Nations. The fifth is a world safe for diversity. Sustainable Development In The Wealth of Nations, Adam Smith largely defined the ethos of the Industrial Age: the quest for national wealth. Since the early nineteenth century, sovereign governments have competed for wealth and power through industrialization and technological advancement. A global-scale market economy emerged in which privately owned companies aggressively pursue profits on a global scale.


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Stealth of Nations by Robert Neuwirth

accounting loophole / creative accounting, big-box store, British Empire, call centre, collective bargaining, corporate governance, digital divide, full employment, Hernando de Soto, illegal immigration, income inequality, independent contractor, informal economy, invisible hand, Jane Jacobs, jitney, Johannes Kepler, joint-stock company, Joseph Schumpeter, megacity, microcredit, New Urbanism, off-the-grid, Pepto Bismol, pirate software, planned obsolescence, profit motive, Shenzhen special economic zone , Shenzhen was a fishing village, Simon Kuznets, special economic zone, The Wealth of Nations by Adam Smith, thinkpad, upwardly mobile, Vilfredo Pareto, yellow journalism

By 2020, the OECD projects, two-thirds of the workers of the world will be employed in System D. There’s no multinational, no Daddy Warbucks or Bill Gates, no government that can rival that level of job creation. Given its size, it makes no sense to talk of development, growth, sustainability, or globalization without reckoning with System D. Adam Smith understood this intuitively back in 1776, when he published The Wealth of Nations. As Smith wrote, “The whole consumption of the inferior ranks of people, or of those below the middling rank, it must be observed, is in every country much greater, not only in quantity, but in value, than that of the middling and of those above the middling rank.”

Even the simple rhymes of The Grumbling Hive show that Mandeville favored some government intervention in the market: “Vice is beneficial found / when it’s by justice lopp’d and bound.” Adam Smith, too, acknowledged that merchants could be expected to manipulate trade for their own gain. “The interest of the dealers, however, in any particular branch of trade or manufacture, is always in some respects different from, and even opposite to, that of the public,” he wrote in The Wealth of Nations, adding that “the proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the scrupulous, but with the most suspicious attention.

So, by this neat trick, Gesell proposed to encourage people to continually spend, and this stimulus in consumption of all sorts (two thumbs up from Bernard Mandeville!) would naturally force production to increase, thus creating jobs and sharing the wealth. Another thirty years on—a hundred and sixty years after Adam Smith published The Wealth of Nations—John Maynard Keynes offered a frank diagnosis of the problems of the free-market system in the last chapter of his 1936 book The General Theory of Employment, Interest and Money: “The outstanding faults of the economic society in which we live,” he wrote, “are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and income.”


pages: 403 words: 111,119

Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist by Kate Raworth

"Friedman doctrine" OR "shareholder theory", 3D printing, Alan Greenspan, Alvin Toffler, Anthropocene, Asian financial crisis, bank run, basic income, battle of ideas, behavioural economics, benefit corporation, Berlin Wall, biodiversity loss, bitcoin, blockchain, Branko Milanovic, Bretton Woods, Buckminster Fuller, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Cass Sunstein, choice architecture, circular economy, clean water, cognitive bias, collapse of Lehman Brothers, complexity theory, creative destruction, crowdsourcing, cryptocurrency, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, degrowth, dematerialisation, disruptive innovation, Douglas Engelbart, Douglas Engelbart, Easter island, en.wikipedia.org, energy transition, Erik Brynjolfsson, Ethereum, ethereum blockchain, Eugene Fama: efficient market hypothesis, experimental economics, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, Financial Instability Hypothesis, full employment, Future Shock, Garrett Hardin, Glass-Steagall Act, global supply chain, global village, Henri Poincaré, hiring and firing, Howard Zinn, Hyman Minsky, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of writing, invisible hand, Isaac Newton, it is difficult to get a man to understand something, when his salary depends on his not understanding it, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kickstarter, land reform, land value tax, Landlord’s Game, loss aversion, low interest rates, low skilled workers, M-Pesa, Mahatma Gandhi, market fundamentalism, Martin Wolf, means of production, megacity, Minsky moment, mobile money, Money creation, Mont Pelerin Society, Myron Scholes, neoliberal agenda, Network effects, Occupy movement, ocean acidification, off grid, offshore financial centre, oil shale / tar sands, out of africa, Paul Samuelson, peer-to-peer, planetary scale, price mechanism, quantitative easing, randomized controlled trial, retail therapy, Richard Thaler, Robert Solow, Ronald Reagan, Second Machine Age, secular stagnation, shareholder value, sharing economy, Silicon Valley, Simon Kuznets, smart cities, smart meter, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, statistical model, Steve Ballmer, systems thinking, TED Talk, The Chicago School, The Great Moderation, the map is not the territory, the market place, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, Torches of Freedom, Tragedy of the Commons, trickle-down economics, ultimatum game, universal basic income, Upton Sinclair, Vilfredo Pareto, wikimedia commons

Earth itself, however, is a closed system because almost no matter leaves or arrives on this planet: energy from the sun may flow through it, but materials can only cycle within it.22 Redrawing the economy as an open subsystem of the closed Earth system is the major conceptual shift introduced by ecological economists such as Herman Daly in the 1970s. And it’s a paradigm shift that has become increasingly important, given the economy’s ever-growing scale. When Adam Smith published The Wealth of Nations in 1776, there were fewer than one billion people alive and, in dollar terms, the size of the global economy was 300 times smaller than it is today. When Paul Samuelson published Economics in 1948 there were not yet three billion people on Earth and the global economy was still ten times smaller than it is today.

– fresh and ready for work each day at the office or factory door. So who cooked, cleaned up, and cleared away to make that possible? When Adam Smith, extolling the power of the market, noted that, ‘it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner’, he forgot to mention the benevolence of his mother, Margaret Douglas, who had raised her boy alone from birth. Smith never married so had no wife to rely upon (nor children of his own to raise). At the age of 43, as he began to write his opus, The Wealth of Nations, he moved back in with his cherished old mum, from whom he could expect his dinner every day.

If it were to be drawn, however, he would have to look something like this: standing alone, money in hand, calculator in head, and ego in heart. Rational Economic Man: the human character at the heart of mainstream economic theory. Where did this infamous character come from? His most intimate early portrait was created by Adam Smith in two major works, his 1759 Theory of Moral Sentiments and his 1776 book known as The Wealth of Nations. Today Smith is best remembered for having noted the human propensity to ‘truck, barter and exchange’ and the role of self-interest in making markets work.2 But although he believed self-interest was, ‘of all virtues that which is most helpful to the individual’, Smith also believed it was far from the most admirable of our traits, knocked off that top spot by our ‘humanity, justice, generosity and public spirit … the qualities most useful to others’.


pages: 290 words: 76,216

What's Wrong With Economics: A Primer for the Perplexed by Robert Skidelsky

additive manufacturing, agricultural Revolution, behavioural economics, Black Swan, Bretton Woods, business cycle, carbon tax, Cass Sunstein, central bank independence, cognitive bias, conceptual framework, Corn Laws, corporate social responsibility, correlation does not imply causation, creative destruction, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, degrowth, disruptive innovation, Donald Trump, Dr. Strangelove, full employment, George Akerlof, George Santayana, global supply chain, global village, Gunnar Myrdal, happiness index / gross national happiness, hindsight bias, Hyman Minsky, income inequality, index fund, inflation targeting, information asymmetry, Internet Archive, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, knowledge economy, labour market flexibility, loss aversion, Mahbub ul Haq, Mark Zuckerberg, market clearing, market friction, market fundamentalism, Martin Wolf, means of production, Modern Monetary Theory, moral hazard, paradox of thrift, Pareto efficiency, Paul Samuelson, Philip Mirowski, Phillips curve, precariat, price anchoring, principal–agent problem, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, shareholder value, Silicon Valley, Simon Kuznets, sunk-cost fallacy, survivorship bias, technoutopianism, The Chicago School, The Market for Lemons, The Nature of the Firm, the scientific method, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, Thorstein Veblen, Tragedy of the Commons, transaction costs, transfer pricing, Vilfredo Pareto, Washington Consensus, Wolfgang Streeck, zero-sum game

It also makes the problem of scarcity insoluble, as we shall see. Economics was not always as ethically colour-blind as it is now. Historically, there are two main definitions of the subject. The first makes it the study of wealth; the second the study of choice. The first dates from Adam Smith (1723–1790) who called his famous 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations. In discussing the nature of wealth, Smith set out to controvert the ‘erroneous opinion’ that wealth consists of money (gold and silver). Rather, he defined it as the ‘annual produce of the land and labour of society’.1 Wealth arises from the production and exchange of ‘useful’ things like provisions, houses, clothes, and furniture.

An Essay on the Nature and Significance of Economic Science, 2nd ed., London: Macmillan. Sahlins, Marshall (1972). Stone Age Economics, New York: de Gruyter. Sen, Amartya (1981). Poverty and Famines: An Essay on Entitlement and Deprivation, Oxford: Oxford University Press. Smith, Adam (1904 [1776]). An Inquiry into the Nature and Causes of the Wealth of Nations, London: Methuen. Veblen, Thorstein (1899). The Theory of the Leisure Class, New York: Macmillan. Chapter 3 Acemoglu, Daron, Johnson, Simon and Robinson, James (2001). ‘The Colonial Origins of Comparative Development: An Empirical Investigation’, American Economic Review, Vol. 91 (5): 1369–1401.

‘Keynes, Globalization and the Bretton Woods Institutions in the Light of Changing Ideas about Markets’, World Economics, Vol. 6 (1): 1–16. Skidelsky, Robert and Craig, Nan (eds.) (2016). Who Runs the Economy?: The Role of Power in Economics, London: Palgrave Macmillan. Smith, Adam (1904 [1776]). An Inquiry into the Nature and Causes of the Wealth of Nations, London: Methuen. Stiglitz, Joseph E. (1993). ‘Post Walrasian and Post Marxian Economics’, Journal of Economic Perspectives, Vol. 7 (1): 109–114. Streeck, Wolfgang (2016). How Will Capitalism End? Essays on a Failing System, London: Verso. Tugendhat, Christopher (1972). The Multinationals, New York: Random House.


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How Capitalism Saved America: The Untold History of Our Country, From the Pilgrims to the Present by Thomas J. Dilorenzo

air traffic controllers' union, Alan Greenspan, banking crisis, British Empire, business cycle, California energy crisis, collective bargaining, Cornelius Vanderbilt, corporate governance, corporate social responsibility, electricity market, financial deregulation, Fractional reserve banking, Hernando de Soto, Ida Tarbell, income inequality, invisible hand, Joseph Schumpeter, laissez-faire capitalism, McDonald's hot coffee lawsuit, means of production, medical malpractice, Menlo Park, minimum wage unemployment, Money creation, Norman Mailer, plutocrats, price stability, profit maximization, profit motive, Ralph Nader, rent control, rent-seeking, Robert Bork, rolling blackouts, Ronald Coase, Ronald Reagan, scientific management, Silicon Valley, statistical model, Tax Reform Act of 1986, The Wealth of Nations by Adam Smith, transcontinental railway, union organizing, Upton Sinclair, vertical integration, W. E. B. Du Bois, wealth creators, working poor, Works Progress Administration, zero-sum game

The more Americans come to understand the truth about capitalism, the more reason they will have to be optimistic for the future of their country. ———— NOTES INTRODUCTION: THE UNTOLD STORY 1. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Random House, 1937), 422. 2. Neela Banerjee and David Firestone, “New Kind of Electricity Market Strains Old Wires Beyond Limits,” New York Times, August 24, 2003, 1. CHAPTER ONE: WHAT IS CAPITALISM? 1. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Random House, 1937), 422. 2. Ludwig von Mises, Liberalism: In the Classical Tradition (San Francisco: Cobden Press, 1985), 32. 3.

Of course, nearly every one of Marx’s assumptions (government would wither away under communism, capitalism would make workers poorer, etc.) turned out to be wrong, including this one. Free-market capitalism, based on private property and peaceful exchange, is the source of civilization and human progress. Human beings have a natural propensity to “truck, barter, and exchange,” as Adam Smith said more than two centuries ago, and free-market capitalism is by far the best-known means by which this can be accomplished. In his famous treatise The Wealth of Nations, Smith neatly summed up the essence of how capitalism works: “Give me that which I want, and you shall have this which you want.”1 In other words, commerce is what economists call a “positive-sum game.” The act of buying and selling always benefits both buyer and seller; otherwise they wouldn’t trade with each other.

But such a claim unfairly lumps together those who succeeded on the strength of their own talents, intelligence, and innovations and those who did in fact gain an unfair advantage over competitors (and consumers). The true capitalists—in the railroad industry and other industries—were the so-called market entrepreneurs. In contrast, the real robber barons—the political entrepreneurs—were not capitalists but corporatists, or, to use a term that Adam Smith employed in The Wealth of Nations, mercantilists. These political entrepreneurs gained an unfair advantage through special privileges created by government intervention (direct subsidies, regulations that harmed their competitors, and much more). The critics are right to condemn these business/government partnerships, but they are wrong to label them as capitalism.


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The Fair Trade Scandal: Marketing Poverty to Benefit the Rich by Ndongo Sylla

"there is no alternative" (TINA), British Empire, carbon footprint, corporate social responsibility, David Ricardo: comparative advantage, deglobalization, degrowth, Doha Development Round, Food sovereignty, global value chain, illegal immigration, income inequality, income per capita, invisible hand, Joseph Schumpeter, labour mobility, land reform, market fundamentalism, mass immigration, means of production, Mont Pelerin Society, Naomi Klein, non-tariff barriers, offshore financial centre, open economy, Philip Mirowski, plutocrats, price mechanism, purchasing power parity, Ronald Reagan, Scientific racism, selection bias, structural adjustment programs, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, transatlantic slave trade, trickle-down economics, vertical integration, Washington Consensus, zero-sum game

Schumpeter (2006 [1954]: 179–80) wrote: But no matter what he actually learned or failed to learn from predecessors, the fact is that the Wealth of Nations does not contain a single analytic idea, principle, or method that was entirely new in 1776 […]. And it was Adam Smith’s good fortune that he was thoroughly in sympathy with the humors of his time. He advocated the things that were in the offing, and he made his analysis serve them. Needless to insist on what this meant both for performance and success: where would the Wealth of Nations be without free trade and laissez-faire? Also, the ‘unfeeling’or ‘slothful’ landlords who reap where they have not sown, the employers whose every meeting issues in conspiracy, the merchants who enjoy themselves and let their clerks and accountants do the work, and the poor laborers who support the rest of society in luxury – these are all important parts of the show.

On this point, the story begins with the tradition of free trade. Its influence has grown consistently since the Scottish economist and philosopher Adam Smith, considered as the founding father of modern economic science, published in 1776 his work entitled An Inquiry into the Nature and Causes of the Wealth of Nations. Just as the official history of capitalism conveys the false theory that free trade was the strategy followed in the past by countries that are rich today, the official history of political economy as written by the ‘victors’ also teaches us that Adam Smith is the founding father of the free trade tradition. Smith certainly set the standard of economic liberalism.

This approach was criticised by some authors due to its ‘neo-Smithian’ vision of the capitalist system (Fridell, 2007). In the language of authors in the Marxist lineage, this label symbolises the vision initially developed by Adam Smith, according to which capitalism would have ‘originated’ and been structured by a division of labour based on market exchange (Brenner, 1977). In the Wealth of Nations, Adam Smith demonstrates that the division of labour is a source of wealth creation – it increases labour productivity – and therefore of economic growth. He also underscores that the division of labour is limited by the size of the market.


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Wealth and Poverty: A New Edition for the Twenty-First Century by George Gilder

accelerated depreciation, affirmative action, Albert Einstein, Bear Stearns, Bernie Madoff, book value, British Empire, business cycle, capital controls, clean tech, cloud computing, collateralized debt obligation, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, deindustrialization, diversified portfolio, Donald Trump, equal pay for equal work, floating exchange rates, full employment, gentrification, George Gilder, Gunnar Myrdal, Home mortgage interest deduction, Howard Zinn, income inequality, independent contractor, inverted yield curve, invisible hand, Jane Jacobs, Jeff Bezos, job automation, job-hopping, Joseph Schumpeter, junk bonds, knowledge economy, labor-force participation, longitudinal study, low interest rates, margin call, Mark Zuckerberg, means of production, medical malpractice, Michael Milken, minimum wage unemployment, Money creation, money market fund, money: store of value / unit of account / medium of exchange, Mont Pelerin Society, moral hazard, mortgage debt, non-fiction novel, North Sea oil, paradox of thrift, Paul Samuelson, plutocrats, Ponzi scheme, post-industrial society, power law, price stability, Ralph Nader, rent control, Robert Gordon, Robert Solow, Ronald Reagan, San Francisco homelessness, scientific management, Silicon Valley, Simon Kuznets, Skinner box, skunkworks, Solyndra, Steve Jobs, The Wealth of Nations by Adam Smith, Thomas L Friedman, upwardly mobile, urban renewal, volatility arbitrage, War on Poverty, women in the workforce, working poor, working-age population, yield curve, zero-sum game

We should glorify—or at least advocate and defend—capitalism and capitalists for moral reasons, not just material ones. The abundances they create come about precisely because of capitalism’s moral foundations. This profound, basic understanding is what makes George Gilder’s Wealth & Poverty one of the great books of Western civilization, on par with Adam Smith’s The Wealth of Nations and the late Jude Wanniski’s The Way the World Works. The original edition was published in the early 1980s when, like today, people had profound doubts about capitalism. Gilder’s opening words were, “The most important event in the recent history of ideas is the demise of the socialist dream.”

It is, however, a golden rule of economics, a key to peace and prosperity, a source of the gifts of progress. It is the belief that finally confounded the predatory economics of mercantilism, in which nations used regulation and beggar-thy-neighbor trade campaigns to gather surpluses and bullion. It was this golden rule that inspired the first great book of economics, The Wealth of Nations, by Adam Smith. It was this belief that David Hume proclaimed in 1742, at the end of his essay “Of the Jealousy of Trade”: “I shall therefore venture to acknowledge, that, not only as a man, but as a British subject, I pray for the flourishing commerce of Germany, Spain, Italy, and even France itself.

The trend seems to have begun in politics. In fact, our current situation recalls the world in which economic science gained its first triumphs. This was the age of mercantilism, a time of similar hypertrophy of politics, when Adam Smith reproached the governments of Europe for believing that the power of demand, in the form of accumulated gold, constituted the source of wealth. In The Wealth of Nations Smith argued that real riches came from the power of production and supply, not bullion collected through a trade surplus. But during the two centuries since Smith won this initial victory for supply-side economics, the demand side has all too often triumphed.


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Owning the Earth: The Transforming History of Land Ownership by Andro Linklater

agricultural Revolution, Alan Greenspan, anti-communist, Anton Chekhov, Ayatollah Khomeini, Bear Stearns, Big bang: deregulation of the City of London, British Empire, business cycle, colonial rule, Corn Laws, Cornelius Vanderbilt, corporate governance, creative destruction, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, electricity market, facts on the ground, flying shuttle, Ford Model T, Francis Fukuyama: the end of history, full employment, Gini coefficient, Glass-Steagall Act, Google Earth, Great Leap Forward, income inequality, invisible hand, James Hargreaves, James Watt: steam engine, John Perry Barlow, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kibera, Kickstarter, land reform, land tenure, light touch regulation, market clearing, means of production, megacity, Mikhail Gorbachev, Mohammed Bouazizi, Monkeys Reject Unequal Pay, mortgage debt, Northern Rock, Peace of Westphalia, Pearl River Delta, plutocrats, Ponzi scheme, profit motive, quantitative easing, Ralph Waldo Emerson, refrigerator car, Right to Buy, road to serfdom, Robert Shiller, Ronald Reagan, spinning jenny, Suez canal 1869, The Chicago School, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, three-masted sailing ship, too big to fail, trade route, transatlantic slave trade, transcontinental railway, ultimatum game, wage slave, WikiLeaks, wikimedia commons, working poor

Hearing the young prince complain of the burden of responsibility he would carry as king, the doctor replied dismissively, “I do not see that it is so troublesome.” Irritated, the prince demanded, “Then what would you do if you were king?” Quesnay’s reply was the classic physiocrate description of government’s role: “Nothing.” Adam Smith owed the theory of laissez-faire economics to the physiocrates, and he owed some at least of his understanding about the behavior of money to Cantillon. But The Wealth of Nations was more than the sum of its parts. It extended the market-driven motivations of capitalist agriculture to industry and trade, and yoked them to the financial systems of mercantile capitalism. And it based its analysis of the wealth-producing capacity of free-market economics on the pragmatic reality that human nature is encouraged by the prospect of profit and discouraged by the experience of injustice.

In fact the 1873 recession proved to be of critical importance to those parts of the earth occupied by private property economies. By the time its effects had cleared away, it was apparent that the theory of free-enterprise capitalism described by Adam Smith had a flaw. Rural capitalism had offered Smith a model of a free enterprise system based on a myriad of small producers competing on price and delivery in a market where overproduction of one product brought a fall in price and profit, leading either to more efficient production or to a switch to a more profitable item. In The Wealth of Nations, he noted that it was fully working in England, reasonably developed in Scotland, evolving in France, and well-grounded in colonial America.

Allen, “The Price of Freehold Land and the Interest Rate in the Seventeenth and Eighteenth Centuries,” The Economic History Review, New Series, 41, no. 1 (Feb. 1988): 33–50; Robert C. Allen, “The High Wage Economy of Pre-Industrial Britain,” www.helsinki.fi/iehc2006/papers2/Allen77.pdf. “the natural fertility of the soil”: Adam Smith, An Enquiry into the Nature and Causes of the Wealth of Nations (New York: Random House, 1937), bk. 3, ch. IV, p. 133, http://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/index.htm. For the early development of mercantile capitalism, see Niall Ferguson, The Ascent of Money: A Financial History of the World (London and New York: Penguin, 2008).


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Work: A History of How We Spend Our Time by James Suzman

agricultural Revolution, AlphaGo, Anthropocene, basic income, biodiversity loss, carbon footprint, clean water, coronavirus, corporate social responsibility, cyber-physical system, David Graeber, death from overwork, deepfake, do-ocracy, double entry bookkeeping, double helix, fake news, financial deregulation, Ford Model T, founder crops, Frederick Winslow Taylor, gentrification, Great Leap Forward, interchangeable parts, invention of agriculture, invention of writing, invisible hand, Isaac Newton, James Watt: steam engine, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, karōshi / gwarosa / guolaosi, Kibera, Kickstarter, late capitalism, lateral thinking, market bubble, New Urbanism, Occupy movement, ocean acidification, Parkinson's law, Peter Singer: altruism, post-industrial society, post-work, public intellectual, Rubik’s Cube, Schrödinger's Cat, scientific management, sharing economy, social intelligence, spinning jenny, The Future of Employment, the scientific method, The Wealth of Nations by Adam Smith, theory of mind, trickle-down economics, universal basic income, upwardly mobile, urban planning, work culture , zoonotic diseases

It had a busy market and a thriving textile industry, and Smith spent his early life watching a near-ceaseless procession of three-masted merchantmen cutting across the black-green waters of the North Sea, coming to deposit cargoes of flax, wheat, continental beer and hemp at the harbour, before disembarking again with holds stuffed with coal and salt, or decks piled with bales of linen. An ageing Adam Smith returned to his childhood home, after several decades studying and teaching in Cambridge, Glasgow and Europe, to write his most celebrated work, An Inquiry into the Nature and Causes of the Wealth of Nations, which he published in 1776. Influenced by the ‘physiocrats’– a French intellectual movement that, among other things, lobbied for idle aristocrats to shoulder a greater proportion of the king’s extravagant tax demands, and who believed that neither governments nor nobles should meddle in the natural order of the markets – Smith was convinced that reason could reveal the fundamental laws of human economic behaviour in the same way that Isaac Newton had used reason to reveal some of the fundamental laws that governed the movement of celestial bodies.

The solution, Smith argued, lay in their agreeing on a ‘common instrument of commerce’ – what economic historians now often call ‘primitive currency’ – in the form of ‘one commodity or the other’, whether it be cattle, salt, nails, sugar or, as would ultimately become the case, gold, silver and coinage. For much of the nineteenth and early twentieth centuries, it was believed that Benjamin Franklin and Adam Smith had been friends, and that Franklin had offered Smith the benefit of his thoughts on an early draft of An Inquiry into the Nature and Causes of the Wealth of Nations. The appeal of this tale of Enlightenment collaboration stemmed principally from the fact that the publication of Wealth of Nations in 1776 not only coincided with the United States wresting its independence from the British Crown, but also because it could be read as a velvet-gloved critique of the tariffs, taxes and customs duties that inspired North American colonists to cast off the shackles of British imperial rule in the first place.

Ancient Greek philosophers, for instance, may have been contemptuous of hard manual labour but they still acknowledged its fundamental importance, even if they had slaves to do it for them. The same principle is also discussed in the writings of fourteenth-century scholars like Thomas Aquinas – who insisted that any commodity’s value should ‘increase in relation to the amount of labour which has been expended in the improvement’ of it. When Adam Smith returned to Kirkcaldy to write the Wealth of Nations, this idea still retained a kind of primal currency across Western Europe, where more than half of the population still made a living as small-scale farmers and so saw an obvious correspondence between how hard they worked and how well they ate. Smith was well aware that most people felt there was an organic link between labour and value.


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The Future of Capitalism: Facing the New Anxieties by Paul Collier

"Friedman doctrine" OR "shareholder theory", accounting loophole / creative accounting, Airbnb, An Inconvenient Truth, assortative mating, bank run, Bear Stearns, behavioural economics, Berlin Wall, Bernie Sanders, bitcoin, Bob Geldof, bonus culture, business cycle, call centre, central bank independence, centre right, commodity super cycle, computerized trading, corporate governance, creative destruction, cuban missile crisis, David Brooks, delayed gratification, deskilling, Donald Trump, eurozone crisis, fake news, financial deregulation, full employment, George Akerlof, Goldman Sachs: Vampire Squid, greed is good, income inequality, industrial cluster, information asymmetry, intangible asset, Jean Tirole, Jeremy Corbyn, job satisfaction, John Perry Barlow, Joseph Schumpeter, knowledge economy, late capitalism, loss aversion, Mark Zuckerberg, minimum wage unemployment, moral hazard, negative equity, New Urbanism, Northern Rock, offshore financial centre, out of africa, Peace of Westphalia, principal–agent problem, race to the bottom, rent control, rent-seeking, rising living standards, Robert Shiller, Robert Solow, Ronald Reagan, shareholder value, Silicon Valley, Silicon Valley ideology, sovereign wealth fund, The Wealth of Nations by Adam Smith, theory of mind, too big to fail, trade liberalization, urban planning, web of trust, zero-sum game

This chapter explores how our morals are linked to our emotions, how they evolve, and how things can go wrong.1 WANTS AND ‘OUGHTS’ The glib supporters of capitalism who argue that the end justifies the means invoke Adam Smith’s famous proposition in The Wealth of Nations that the pursuit of self-interest leads to the common good. ‘Greed is good’ became the intellectual underpinning for the zeal of the Reagan–Thatcher revolution. Smith’s proposition is a valuable corrective to the naïve notion that an action is good only if well-motivated. But modern economics, which The Wealth of Nations launched in 1776, is built on a character who is utterly despicable. Economic man is selfish, greedy and lazy. Such people do exist and you will meet some of them.

The Nobel Laureate Vernon Smith saw that The Wealth of Nations and The Theory of Moral Sentiments are built on a common idea: the mutual benefit from exchange. The arena for exchanging commodities is the market. The arena for exchanging obligations is the networked group, the subject of this chapter. For two centuries, economists thought that Adam Smith had written two incompatible books and ignored The Theory of Moral Sentiments. Only recently has he been properly understood: there are not two Smiths but one, and his neglected ideas are profoundly important.4 People are motivated partly by the ‘wants’ of The Wealth of Nations, and partly by the ‘oughts’ of The Theory of Moral Sentiments.

Yes, London has a lot of jobs, but they are lousy ones. Having set out what good non-cognitive training looks like, and the alternative track down which many young people are currently lured, we can finally turn to the psychology: what determines whether young people prefer this option? The crude psychology of The Wealth of Nations suggests that people only care about money. The more accurate psychology of The Theory of Moral Sentiments tells us that people also care about their position in society: they give and receive esteem. The evidence on regrets supports our intuition that esteem trumps money. But even on the criterion of money, many young people in America and Britain are being lured down cognitive culs-de-sac.


pages: 484 words: 136,735

Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis by Anatole Kaletsky

"World Economic Forum" Davos, Alan Greenspan, bank run, banking crisis, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Black Swan, bond market vigilante , bonus culture, Bretton Woods, BRICs, business cycle, buy and hold, Carmen Reinhart, classic study, cognitive dissonance, collapse of Lehman Brothers, Corn Laws, correlation does not imply causation, creative destruction, credit crunch, currency manipulation / currency intervention, currency risk, David Ricardo: comparative advantage, deglobalization, Deng Xiaoping, eat what you kill, Edward Glaeser, electricity market, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, F. W. de Klerk, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, foreign exchange controls, full employment, geopolitical risk, George Akerlof, global rebalancing, Goodhart's law, Great Leap Forward, Hyman Minsky, income inequality, information asymmetry, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kickstarter, laissez-faire capitalism, long and variable lags, Long Term Capital Management, low interest rates, mandelbrot fractal, market design, market fundamentalism, Martin Wolf, military-industrial complex, Minsky moment, Modern Monetary Theory, Money creation, money market fund, moral hazard, mortgage debt, Nelson Mandela, new economy, Nixon triggered the end of the Bretton Woods system, Northern Rock, offshore financial centre, oil shock, paradox of thrift, Pareto efficiency, Paul Samuelson, Paul Volcker talking about ATMs, peak oil, pets.com, Ponzi scheme, post-industrial society, price stability, profit maximization, profit motive, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, rising living standards, Robert Shiller, Robert Solow, Ronald Reagan, Savings and loan crisis, seminal paper, shareholder value, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, statistical model, systems thinking, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, Vilfredo Pareto, Washington Consensus, zero-sum game

Chapter Three 1 Robert Heilbroner, The Worldly Philosophers, Chapters 1-2. 2 Max Weber, The Protestant Ethic and the Spirit of Capitalism. 3 Adam Smith, The Wealth of Nations, Books 1-III, 119. 4 Seabright, The Company of Strangers, 14-15. 5 The first edition of Smith’s The Wealth of Nations was published on March 9, 1776 by W. Strahan and T. Cadell in London. Andrew Skinner notes the coincidence of its publication on the eve of the Declaration of Independence in his introduction to Smith’s work. Andrew Skinner, introduction to The Wealth of Nations, Books I-III, by Adam Smith, 6. 6 Keynes and others have traced the first recorded use of the phrase “laissezfaire”—which literally means “let do” or “let make”—to a speech by French minister Rene de Voyer, Marquis d’Argenson, in 1751 in which he declared, “Laissez faire, telle devrait être la devise de toute puissance publique, depuis que le monde est civilisé. ” (Let it be, such should be the motto of every public power, ever since the world is civilized.)

As expounded by Max Weber in his classic The Protestant Ethic and the Spirit of Capitalism, there are two additional requirements: acceptance of profit and capital accumulation as motives with genuine moral legitimacy, as opposed to deplorable, though ineradicable, human vices; and the recognition of voluntary exchange and cooperation, rather than heredity and coercion, as the main organizing principles of economic life.2 These concepts emerged from the Calvinist ideology of the late seventeenth century, according to the standard view of social history pioneered by Weber. But they were crystallized by Adam Smith in The Wealth of Nations, producing some astonishingly counterintuitive revelations. Smith observed that a market economy, although it involves millions of unconnected individuals who work at highly specialized and narrow tasks, is a naturally self-organizing mechanism provided a few simple rules of commerce and mutual trust are generally obeyed and enforced.

Most great economists—Smith, Ricardo, Mill, Keynes, Schumpeter, and Hayek—had an optimistic outlook about human creativity and the capacities of the market system. They were fundamentally optimistic for both practical and intellectual reasons. The main intellectual goal of economics set out by Adam Smith, and partly achieved by him in The Wealth of Nations, was to explain the miracle that led millions of unrelated individuals, all working freely in pursuit of their own desires and personal interests, to serve the needs of others and promote the prosperity of all. After Smith, other great economists enriched this understanding with unexpected and counterintuitive detail.


pages: 927 words: 216,549

Empire of Guns by Priya Satia

banking crisis, British Empire, business intelligence, Corn Laws, cotton gin, deindustrialization, delayed gratification, European colonialism, Fellow of the Royal Society, flying shuttle, hiring and firing, independent contractor, interchangeable parts, invisible hand, Isaac Newton, James Watt: steam engine, joint-stock company, Khyber Pass, Lewis Mumford, Menlo Park, military-industrial complex, Panopticon Jeremy Bentham, rent-seeking, Scramble for Africa, Silicon Valley, spinning jenny, technological determinism, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, transatlantic slave trade, zero-sum game

Its mercantilist mainstream saw commercial and colonial resources—metal, specie—as the liquidity needed to acquire a military arsenal and favored policies enabling Britain to acquire more resources than its rivals. Adam Smith’s complaints about the costs of war, about the “ruinous expedient” of perpetual funding and high public debt in peacetime, staked out a contrarian position; The Wealth of Nations (1776) was a work of persuasion. His and other voices in favor of pacific economic development grew louder from the margins. By denormalizing war, liberal political economy raised the stakes of the century’s long final wars from 1793 to 1815, which could be stomached only as an exceptional, apocalyptic stage on the way to permanent peace.

He struck a deal with Christopher Sholes, inventor of the modern keyboard, in 1868, producing the first Remington typewriter in 1874, a “discursive machine-gun” whose strikes and triggers echo the ammunitions transport in a revolver or machine gun. Electronic writing revolutionized communication; like the gun, it alters us fundamentally. 10 Opposition to the Gun Trade after 1815 Before he explained the wealth of nations, Adam Smith wrote about the moral sentiments necessary for judicious economic behavior, especially the capacity to survey one’s own sentiments “with the eyes of other people.” His Theory of Moral Sentiments appeared in 1759–61, when the doubling of identity was the norm—when exercising one’s conscience involved an almost literal division of the self into the judge and the self being judged.

Industrial organization was: The iron industry switched to coal-burning methods only late in the century, when wartime tariff policies suddenly rendered uncompetitive the foreign iron that had effectively been meeting rising demand. Evans et al., “Baltic Iron and the British Iron Industry,” 662. Adam Smith considered: A. Smith, The Wealth of Nations, 4–5. Handicraft and mechanized production: M. Berg, “Revisions and Revolutions.” Karl Marx knew: M. Berg, The Age of Manufactures, 194–98, 204, 255. short- or medium-term large rises: Hudson, The Industrial Revolution, 45. “semiskilled men with”: Collier, Arms and the Men, 29.


pages: 582 words: 160,693

The Sovereign Individual: How to Survive and Thrive During the Collapse of the Welfare State by James Dale Davidson, William Rees-Mogg

affirmative action, agricultural Revolution, Alan Greenspan, Alvin Toffler, bank run, barriers to entry, Berlin Wall, borderless world, British Empire, California gold rush, classic study, clean water, colonial rule, Columbine, compound rate of return, creative destruction, Danny Hillis, debt deflation, ending welfare as we know it, epigenetics, Fall of the Berlin Wall, falling living standards, feminist movement, financial independence, Francis Fukuyama: the end of history, full employment, George Gilder, Hernando de Soto, illegal immigration, income inequality, independent contractor, informal economy, information retrieval, Isaac Newton, John Perry Barlow, Kevin Kelly, market clearing, Martin Wolf, Menlo Park, money: store of value / unit of account / medium of exchange, new economy, New Urbanism, Norman Macrae, offshore financial centre, Parkinson's law, pattern recognition, phenotype, price mechanism, profit maximization, rent-seeking, reserve currency, road to serfdom, Ronald Coase, Sam Peltzman, school vouchers, seigniorage, Silicon Valley, spice trade, statistical model, telepresence, The Nature of the Firm, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, trade route, transaction costs, Turing machine, union organizing, very high income, Vilfredo Pareto

Conquest implies the destruction of the other party; commerce implies the satisfaction of the other party. As modern technology has 296 made conquest an extraordinarily dangerous policy, commerce has become the only rational approach to the problems of survival. This interdependence is strengthened by another central idea of Adam Smith~not new with him~which is the specialization of function. The Wealth of Nations starts with a celebrated passage in which Adam Smith observes that "the greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity and judgement with which it is any where directed, or applied, seem to have been the effects of the division of labour."

See Mancur Olson, "Diseconomies of Scale and Development," Cato Journal, vol.7, no.1 (Spring/Summer 1987). 11. Ibid. 12. Basil Davidson, The Black Mans' Burden: Africa and the Curse of the Nation State (New York: Times Books, 1992), p.290. 13. Olson, op. cit. 14. Adam Smith, The Wealth of Nations, p.724. This point was suggested by an argument by Edwin G. West in his Adam Smith and Modern Economics (Aldershot, England: Edward Elgar Publishing, 1990), pp.88-89. 15. Fritz Rorig, The Medieval Town (Berkeley: University of California Press, 1967), p.28. 16. Albert 0. Hirschman, Exit, Voice, and Loyalty (Cambridge: Harvard University Press, 1969), p.81. 17.

The First Industrial Technology Just as the cannon was opening new economic horizons, the printing press opened new intellectual horizons. It was the first machine of mass production, a signature technology that marked the onset of industrialism. In saying this, we share the view advanced by Adam Smith in The Wealth of Nations that the Industrial Revolution had already happened well before he wrote. It had not reached maturity, to be sure, but the principles of mass production and the factory system were well established. His famous example of the pin manufacturers makes this case. Smith explains how eighteen separate operations are employed to produce pins.


pages: 372 words: 94,153

More From Less: The Surprising Story of How We Learned to Prosper Using Fewer Resources – and What Happens Next by Andrew McAfee

back-to-the-land, Bartolomé de las Casas, Berlin Wall, bitcoin, Blitzscaling, Branko Milanovic, British Empire, Buckminster Fuller, call centre, carbon credits, carbon footprint, carbon tax, Charles Babbage, clean tech, clean water, cloud computing, congestion pricing, Corn Laws, creative destruction, crony capitalism, data science, David Ricardo: comparative advantage, decarbonisation, DeepMind, degrowth, dematerialisation, Demis Hassabis, Deng Xiaoping, do well by doing good, Donald Trump, Edward Glaeser, en.wikipedia.org, energy transition, Erik Brynjolfsson, failed state, fake news, Fall of the Berlin Wall, Garrett Hardin, Great Leap Forward, Haber-Bosch Process, Hans Rosling, humanitarian revolution, hydraulic fracturing, income inequality, indoor plumbing, intangible asset, James Watt: steam engine, Jeff Bezos, job automation, John Snow's cholera map, joint-stock company, Joseph Schumpeter, Khan Academy, Landlord’s Game, Louis Pasteur, Lyft, Marc Andreessen, Marc Benioff, market fundamentalism, means of production, Michael Shellenberger, Mikhail Gorbachev, ocean acidification, oil shale / tar sands, opioid epidemic / opioid crisis, Paul Samuelson, peak oil, precision agriculture, price elasticity of demand, profit maximization, profit motive, risk tolerance, road to serfdom, Ronald Coase, Ronald Reagan, Salesforce, Scramble for Africa, Second Machine Age, Silicon Valley, Steve Jobs, Steven Pinker, Stewart Brand, Ted Nordhaus, TED Talk, telepresence, The Wealth of Nations by Adam Smith, Thomas Davenport, Thomas Malthus, Thorstein Veblen, total factor productivity, Tragedy of the Commons, Uber and Lyft, uber lyft, Veblen good, War on Poverty, We are as Gods, Whole Earth Catalog, World Values Survey

This comparison illustrates a fundamental point: instead of being limited by the environment, we learned to shape it to our own ends during the Industrial Era. And did we do this wisely as well? In many ways and many places we did not. I. Also in 1776 the American Declaration of Independence was signed and the Scottish economist Adam Smith published his landmark The Wealth of Nations (a book we’ll come back to later). II. The battles over the Corn Laws led the politician James Wilson, who was in favor of free trade, to found The Economist. It’s still published today and is one of my favorite magazines (even though it calls itself a newspaper). III. It would have made sense for England to concentrate on manufacturing even if it were more productive than mainland Europe at both farming and manufacturing.

Keeping Smith’s insights in mind lets us see why this system for organizing economic activity works so well at delivering prosperity. It also lets us see where capitalism’s fault lines lie and helps us in evaluating arguments against it. So, with Adam Smith as a guide, let’s look at three valid critiques of capitalism, and three invalid ones. First, the valid criticisms: Capitalism is selfish. Yes, it absolutely is. But as Smith points out, this is a good thing. One of the most quoted passages from his 1776 masterpiece, The Wealth of Nations,I is “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”

As we’ll see later, progress in many important areas has sped up in recent decades as capitalism and tech progress have both spread around the world. Adam Smith realized that capitalism’s greatest virtue was that it improved the lives of not only the elite but also of people born into modest circumstances. He saw much more clearly than Marx or Malthus what the future held as long as capitalism was allowed to operate properly. And throughout his writing, he’s concerned with what we might today call social justice. Smith believed deeply that workers deserved a high and rising standard of living. As he wrote in The Wealth of Nations, “They who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed, and lodged.”


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The Price of Time: The Real Story of Interest by Edward Chancellor

"World Economic Forum" Davos, 3D printing, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, asset allocation, asset-backed security, assortative mating, autonomous vehicles, balance sheet recession, bank run, banking crisis, barriers to entry, Basel III, Bear Stearns, Ben Bernanke: helicopter money, Bernie Sanders, Big Tech, bitcoin, blockchain, bond market vigilante , bonus culture, book value, Bretton Woods, BRICs, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, cashless society, cloud computing, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, commodity super cycle, computer age, coronavirus, corporate governance, COVID-19, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cryptocurrency, currency peg, currency risk, David Graeber, debt deflation, deglobalization, delayed gratification, Deng Xiaoping, Detroit bankruptcy, distributed ledger, diversified portfolio, Dogecoin, Donald Trump, double entry bookkeeping, Elon Musk, equity risk premium, Ethereum, ethereum blockchain, eurozone crisis, everywhere but in the productivity statistics, Extinction Rebellion, fiat currency, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, Flash crash, forward guidance, full employment, gig economy, Gini coefficient, Glass-Steagall Act, global reserve currency, global supply chain, Goodhart's law, Great Leap Forward, green new deal, Greenspan put, high net worth, high-speed rail, housing crisis, Hyman Minsky, implied volatility, income inequality, income per capita, inflation targeting, initial coin offering, intangible asset, Internet of things, inventory management, invisible hand, Japanese asset price bubble, Jean Tirole, Jeff Bezos, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Rogoff, land bank, large denomination, Les Trente Glorieuses, liquidity trap, lockdown, Long Term Capital Management, low interest rates, Lyft, manufacturing employment, margin call, Mark Spitznagel, market bubble, market clearing, market fundamentalism, Martin Wolf, mega-rich, megaproject, meme stock, Michael Milken, Minsky moment, Modern Monetary Theory, Mohammed Bouazizi, Money creation, money market fund, moral hazard, mortgage debt, negative equity, new economy, Northern Rock, offshore financial centre, operational security, Panopticon Jeremy Bentham, Paul Samuelson, payday loans, peer-to-peer lending, pensions crisis, Peter Thiel, Philip Mirowski, plutocrats, Ponzi scheme, price mechanism, price stability, quantitative easing, railway mania, reality distortion field, regulatory arbitrage, rent-seeking, reserve currency, ride hailing / ride sharing, risk free rate, risk tolerance, risk/return, road to serfdom, Robert Gordon, Robinhood: mobile stock trading app, Satoshi Nakamoto, Satyajit Das, Savings and loan crisis, savings glut, Second Machine Age, secular stagnation, self-driving car, shareholder value, Silicon Valley, Silicon Valley startup, South Sea Bubble, Stanford marshmallow experiment, Steve Jobs, stock buybacks, subprime mortgage crisis, Suez canal 1869, tech billionaire, The Great Moderation, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tim Haywood, time value of money, too big to fail, total factor productivity, trickle-down economics, tulip mania, Tyler Cowen, Uber and Lyft, Uber for X, uber lyft, Walter Mischel, WeWork, When a measure becomes a target, yield curve

Part One (Of Historical Interest) sets the scene. We trace the origins of interest to the Ancient Near East (Chapter 1) and follow its story through the Middle Ages to the birth of capitalism in Europe (Chapter 2). We describe how interest and capitalism are inseparable. This principle may have been accepted by the date Adam Smith’s The Wealth of Nations was published in 1776, but there has always existed a ‘psychopathic’ fear of excessive interest rates. In seventeenth-century England, the most prominent exponent of lower rates was the wealthy City merchant Sir Josiah Child, who stood to benefit most from a reduction in the cost of borrowing.

This new concept of interest was ethically wide-ranging: it ‘came to cover virtually the entire range of human actions, from the narrowly self-centered to the sacrificially altruistic, and from the prudently calculated to the passionately compulsive’.49 The seventeenth-century English statesman and philosopher Lord Shaftesbury summed up the new thinking with his comment that ‘Interest governs the World.’50 In his Fable of the Bees (1714), Bernard Mandeville exposed the paradox at the heart of the modern world, namely that private vices brought public benefits. Adam Smith incorporated Mandeville’s wicked insights into his political economy. In The Wealth of Nations, Smith describes the individual as one who ‘By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.’51 A similar thought is expressed in another famous line, in which Smith writes that ‘It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.’

Rents in future years must be worth less than this year’s rent, Petty said, otherwise ‘an acre of land would be equal in value to a thousand acres of the same land; which is absurd, an infinity of units being equal to an infinity of thousands.’fn7 In the following century, Adam Smith described how the price of land depended on the market rate of interest. In The Wealth of Nations (published in 1776) Smith noted that land prices had risen in recent decades as interest rates declined. An act of investment – say the construction of a new manufacturing plant with factory buildings, machinery and all the necessary infrastructure – requires that investors forgo current consumption.


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The Myth of Capitalism: Monopolies and the Death of Competition by Jonathan Tepper

"Friedman doctrine" OR "shareholder theory", Affordable Care Act / Obamacare, air freight, Airbnb, airline deregulation, Alan Greenspan, bank run, barriers to entry, Berlin Wall, Bernie Sanders, Big Tech, big-box store, Bob Noyce, Boston Dynamics, business cycle, Capital in the Twenty-First Century by Thomas Piketty, citizen journalism, Clayton Christensen, collapse of Lehman Brothers, collective bargaining, compensation consultant, computer age, Cornelius Vanderbilt, corporate raider, creative destruction, Credit Default Swap, crony capitalism, diversification, don't be evil, Donald Trump, Double Irish / Dutch Sandwich, Dunbar number, Edward Snowden, Elon Musk, en.wikipedia.org, eurozone crisis, Fairchild Semiconductor, Fall of the Berlin Wall, family office, financial innovation, full employment, gentrification, German hyperinflation, gig economy, Gini coefficient, Goldman Sachs: Vampire Squid, Google bus, Google Chrome, Gordon Gekko, Herbert Marcuse, income inequality, independent contractor, index fund, Innovator's Dilemma, intangible asset, invisible hand, Jeff Bezos, Jeremy Corbyn, Jevons paradox, John Nash: game theory, John von Neumann, Joseph Schumpeter, junk bonds, Kenneth Rogoff, late capitalism, London Interbank Offered Rate, low skilled workers, Mark Zuckerberg, Martin Wolf, Maslow's hierarchy, means of production, merger arbitrage, Metcalfe's law, multi-sided market, mutually assured destruction, Nash equilibrium, Network effects, new economy, Northern Rock, offshore financial centre, opioid epidemic / opioid crisis, passive investing, patent troll, Peter Thiel, plutocrats, prediction markets, prisoner's dilemma, proprietary trading, race to the bottom, rent-seeking, road to serfdom, Robert Bork, Ronald Reagan, Sam Peltzman, secular stagnation, shareholder value, Sheryl Sandberg, Silicon Valley, Silicon Valley billionaire, Skype, Snapchat, Social Responsibility of Business Is to Increase Its Profits, SoftBank, Steve Jobs, stock buybacks, tech billionaire, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, undersea cable, Vanguard fund, vertical integration, very high income, wikimedia commons, William Shockley: the traitorous eight, you are the product, zero-sum game

In this book we'll present solutions. We end the book with thoughts on how to reform and fix the economy and political system. We do hope you're outraged after reading this book, but more important, we hope that you come away knowing that consumer and voter anger can be harnessed for good. In 1776 Adam Smith wrote The Wealth of Nations, and the Continental Congress declared independence from Britain. Smith complained bitterly about monopolies. He wrote of the East India Company: “… the monopoly which our manufacturers have obtained … has so much increased the number of some particular tribes of them, that, like an overgrown standing army, they have become formidable to the government, and upon many occasions intimidate the legislature.”

Few are complete monopolies, so when you read headlines about the monopoly problem in the United States, as Professor Tim Wu has noted, “the press is sounding the wrong alarm. We know how to fight monopolies, but regulators are confused when it comes to duopolies and oligopolies.”18 You won't find the words duopoly or oligopoly in Adam Smith's The Wealth of Nations or in any of the antitrust acts, such as the Sherman Act of 1890 or the Clayton Act of 1914. The word oligopoly was not even created until the 1930s by the Harvard economist Edward Chamberlin. The word oligopoly comes from Greek and means “few sellers.” It has the same origin as the word oligarchs.

Except in this case, there are no “made men” and only middle-aged white power brokers dividing the country. It doesn't matter where you look, competition looks fierce on paper but in reality it is often carefully orchestrated. There is nothing new under the sun. Even in the eighteenth century, Adam Smith wrote in The Wealth of Nations that “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” A little later John Stuart Mill echoed the sentiment, “Where competitors are so few, they always end by agreeing not to compete.”


pages: 576 words: 105,655

Austerity: The History of a Dangerous Idea by Mark Blyth

"there is no alternative" (TINA), accounting loophole / creative accounting, Alan Greenspan, balance sheet recession, bank run, banking crisis, Bear Stearns, Black Swan, book value, Bretton Woods, business cycle, buy and hold, capital controls, Carmen Reinhart, Celtic Tiger, central bank independence, centre right, collateralized debt obligation, correlation does not imply causation, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, debt deflation, deindustrialization, disintermediation, diversification, en.wikipedia.org, ending welfare as we know it, Eugene Fama: efficient market hypothesis, eurozone crisis, financial engineering, financial repression, fixed income, floating exchange rates, Fractional reserve banking, full employment, German hyperinflation, Gini coefficient, global reserve currency, Greenspan put, Growth in a Time of Debt, high-speed rail, Hyman Minsky, income inequality, information asymmetry, interest rate swap, invisible hand, Irish property bubble, Joseph Schumpeter, Kenneth Rogoff, liberal capitalism, liquidationism / Banker’s doctrine / the Treasury view, Long Term Capital Management, low interest rates, market bubble, market clearing, Martin Wolf, Minsky moment, money market fund, moral hazard, mortgage debt, mortgage tax deduction, Occupy movement, offshore financial centre, paradox of thrift, Philip Mirowski, Phillips curve, Post-Keynesian economics, price stability, quantitative easing, rent-seeking, reserve currency, road to serfdom, Robert Solow, savings glut, short selling, structural adjustment programs, tail risk, The Great Moderation, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, Tobin tax, too big to fail, Two Sigma, unorthodox policies, value at risk, Washington Consensus, zero-sum game

“Monthly Statement of the Public Debt of the United States: January 31, 2011,” United States Department of the Treasury, http://www.treasurydirect.gov/govt/reports/pd/mspd/2011/opds012011.pdf. 24. Adam Smith, Wealth of Nations (Buffalo, NY: Prometheus Books, 1991), 587. 25. See Murphy, “Genesis,” 155–179, for a good overview of Smith’s economics. 26. Albert Hirschman, The Passions and The Interests: Political Arguments for Capitalism before Its Triumph (Princeton, NJ: Princeton University Press, 1977). 27. Murphy, “Genesis.” Although some commentators see Smith as being critical of banks, there are other parts of the Wealth of Nations in which he is positively enthusiastic about them. 28. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Indianapolis, IN: Hackett, 1996), 64. 29.

The state was therefore something to be avoided, minimized, bypassed, curtailed, and above all, not trusted. The market, in contrast, emerged in liberal thought as the intellectual and institutional antidote to the confiscatory politics of the king.4 In such a world, if prices and merchants were set free, the wealth of nations (note, not “kingdoms”) would multiply. But from the start this liberal view of “the state versus the market” rested upon a misunderstanding: markets naturally appear when you remove the state from the equation. However, as Karl Polanyi noted at the end of World War II, there is nothing natural about markets.5 Turning people into wage laborers, securing the private ownership of land, even inventing capital and preserving its monetary form are all deeply political projects that involve courts, regulation, enforcement, bureaucracy, and all the rest.6 Indeed, gaining control of the state by the merchant class was a defining feature of early capitalism.7 With the partial exceptions of the United Kingdom and the United States (the former because it was first to make the transition to capitalism and the latter because it was geographically isolated), from Germany in the 1870s to China today, states make markets as much as markets determine the fate of states.8 Yet liberal economic thought remains largely oblivious to these facts.

The details of what Smith said about the economy are far less well known and quite surprising. Smith brought together much of the scattered work of early economists on the nature of money, economic growth, the role of capital and labor, and a host of other issues, and then had the good sense to put it in one accessible place: The Wealth of Nations.25 As Albert Hirschman observed, this book was no academic project. It was an argument for capitalism before its triumph, and a very successful argument, too.26 For our purposes here, we find in Smith a particular sensibility toward the state and its debt that brings us closer to the modern idea of austerity, but from a surprising angle: the importance of personal frugality and parsimony as the engine of capitalist growth.


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Capitalism: Money, Morals and Markets by John Plender

activist fund / activist shareholder / activist investor, Alan Greenspan, Andrei Shleifer, asset-backed security, bank run, Berlin Wall, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, Black Swan, bond market vigilante , bonus culture, Bretton Woods, business climate, business cycle, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collapse of Lehman Brothers, collective bargaining, computer age, Corn Laws, Cornelius Vanderbilt, corporate governance, creative destruction, 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 engineering, financial innovation, financial intermediation, Fractional reserve banking, full employment, Glass-Steagall Act, God and Mammon, Golden arches theory, Gordon Gekko, greed is good, Hyman Minsky, income inequality, industrial research laboratory, inflation targeting, information asymmetry, invention of the wheel, invisible hand, Isaac Newton, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, joint-stock company, Joseph Schumpeter, labour market flexibility, liberal capitalism, light touch regulation, London Interbank Offered Rate, London Whale, Long Term Capital Management, manufacturing employment, Mark Zuckerberg, market bubble, market fundamentalism, mass immigration, means of production, Menlo Park, money market fund, moral hazard, moveable type in China, Myron Scholes, Nick Leeson, Northern Rock, Occupy movement, offshore financial centre, paradox of thrift, Paul Samuelson, plutocrats, price stability, principal–agent problem, profit motive, proprietary trading, quantitative easing, railway mania, regulatory arbitrage, Richard Thaler, rising living standards, risk-adjusted returns, Robert Gordon, 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, Veblen good, We are the 99%, Wolfgang Streeck, zero-sum game

They then triumphantly rediscover the secret of prosperity: Thus Vice nurs’d Ingenuity, Which joined with Time and Industry, Had carry’d Life’s conveniencies, Its real Pleasures, Comforts, Ease, To such a Height, the very Poor Liv’d better than the Rich before. Adam Smith in Britain and Voltaire in France put the case for material values rather differently. For Voltaire, the great merit of commerce was that the pursuit of self-interest was less dangerous than the pursuit of other goals such as military expansion or religious salvation. He also believed that the self-interested pursuit of profit through commerce had a socialising influence, not least because it helped reduce religious differences. For his part, Adam Smith in The Wealth of Nations argued that consumption was socially benign and that the market economy was the best means for achieving what he called ‘universal opulence’.

To name just one example, Gordon Gekko’s ‘greed is good’ speech in the film Wall Street clearly descends in a direct line from the author of the fable. The Fable of the Bees was not universally admired by other Enlightenment thinkers. Adam Smith could not bring himself to accept the extremity of Mandeville’s paradox, in which vice was a necessary condition of prosperity. In his justly celebrated redefinition of the boundaries of the argument about business and morality, he emphasised self-interest rather than vice, with his statement in The Wealth of Nations that ‘it is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard for their own interest’. 10 In much the same vein, he added: ‘I have never known much good done by those who affected to trade for the public good.’11 Yet, as the author of The Theory of Moral Sentiments, he also emphasised the need for markets to operate within a moral context and believed that the act of engaging in market exchange entailed a discipline that encouraged good individual behaviour as well as the good of wider society.

Yet, as I will show, it is arguable that manufacturing employment ought to fall in a mature economy; and one of the safest predictions for the twenty-first century is that in the developed world it will continue to do so without causing a collapse in living standards. To make this case is admittedly quite a challenge, because the prejudice about the superiority of manufacturing over services has deep historical roots. Adam Smith, still hugely influential across the centuries, showed a bias in The Wealth of Nations against services, suggesting that while the labour of a manufacturer added value, the labour of a menial servant did not: There is one sort of labour which adds to the value of the subject upon which it is bestowed: there is another which has no such effect.


pages: 461 words: 128,421

The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street by Justin Fox

"Friedman doctrine" OR "shareholder theory", Abraham Wald, activist fund / activist shareholder / activist investor, Alan Greenspan, Albert Einstein, Andrei Shleifer, AOL-Time Warner, asset allocation, asset-backed security, bank run, beat the dealer, behavioural economics, Benoit Mandelbrot, Big Tech, Black Monday: stock market crash in 1987, Black-Scholes formula, book value, Bretton Woods, Brownian motion, business cycle, buy and hold, capital asset pricing model, card file, Carl Icahn, Cass Sunstein, collateralized debt obligation, compensation consultant, complexity theory, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, democratizing finance, Dennis Tito, discovery of the americas, diversification, diversified portfolio, Dr. Strangelove, Edward Glaeser, Edward Thorp, endowment effect, equity risk premium, Eugene Fama: efficient market hypothesis, experimental economics, financial innovation, Financial Instability Hypothesis, fixed income, floating exchange rates, George Akerlof, Glass-Steagall Act, Henri Poincaré, Hyman Minsky, implied volatility, impulse control, index arbitrage, index card, index fund, information asymmetry, invisible hand, Isaac Newton, John Bogle, John Meriwether, John Nash: game theory, John von Neumann, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Arrow, libertarian paternalism, linear programming, Long Term Capital Management, Louis Bachelier, low interest rates, mandelbrot fractal, market bubble, market design, Michael Milken, Myron Scholes, New Journalism, Nikolai Kondratiev, Paul Lévy, Paul Samuelson, pension reform, performance metric, Ponzi scheme, power law, prediction markets, proprietary trading, prudent man rule, pushing on a string, quantitative trading / quantitative finance, Ralph Nader, RAND corporation, random walk, Richard Thaler, risk/return, road to serfdom, Robert Bork, Robert Shiller, rolodex, Ronald Reagan, seminal paper, shareholder value, Sharpe ratio, short selling, side project, Silicon Valley, Skinner box, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, statistical model, stocks for the long run, tech worker, The Chicago School, The Myth of the Rational Market, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, Thorstein Veblen, Tobin tax, transaction costs, tulip mania, Two Sigma, Tyler Cowen, value at risk, Vanguard fund, Vilfredo Pareto, volatility smile, Yogi Berra

The South Sea Company collapsed in such a bubble of speculation in 1720 that the British parliament banned the creation of such entities—characterized by dispersed shareholders whose liability for the company’s debt was limited to the value of their shares. In 1776, Adam Smith argued that the “joint-stock company,” as the corporation was then known, had proved an unmitigated disaster. “The directors of such companies,…being the managers of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own,” he wrote in the Wealth of Nations. “Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company.”1 During the industrial revolution that began just after Smith’s death, it became apparent that his analysis was off.

Richard Hofstadter, Social Darwinism in American Thought, rev. ed. (Boston: Beacon Press, 1955), 51–53. 10. William Graham Sumner, What the Social Classes Owe to Each Other (Caldwell, Idaho: The Caxton Printers, 1989), 107. 11. Adam Smith, Wealth of Nations, book 4, chap. 2, par. 4, 2.9 (Indianapolis: Liberty Fund, 1981). It’s not clear Smith himself saw it that way, although many subsequent economists did. The actual quote from the Wealth of Nations is: As every individual…endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can.

Ross, and Mark Rubinstein, “Option Pricing: A Simplified Approach,” Journal of Financial Economics (Sept. 1979): 229–63. 25. Stephen A. Ross, “Options and Efficiency,” Quarterly Journal of Economics (Feb. 1976): 76. CHAPTER 9: MICHAEL JENSEN GETS CORPORATIONS TO OBEY THE MARKET 1. Adam Smith, The Wealth of Nations (Indianapolis: Liberty Fund, 1981), 741. 2. In the United States the first all-purpose general incorporation statute was Connecticut’s, enacted in 1837, although some states allowed easy incorporation of companies in particular industries before that. In the United Kingdom, Parliament allowed for general incorporation in 1844.


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The Locavore's Dilemma by Pierre Desrochers, Hiroko Shimizu

air freight, back-to-the-land, biodiversity loss, Biosphere 2, British Empire, Columbian Exchange, Community Supported Agriculture, creative destruction, edge city, Edward Glaeser, food desert, food miles, Food sovereignty, global supply chain, Great Leap Forward, Gregor Mendel, intermodal, invention of agriculture, inventory management, invisible hand, Jane Jacobs, land tenure, megacity, moral hazard, mortgage debt, oil shale / tar sands, oil shock, peak oil, planetary scale, precautionary principle, profit motive, refrigerator car, Steven Pinker, tacit knowledge, the market place, The Wealth of Nations by Adam Smith, Thomas Malthus, trade liberalization, Tragedy of the Commons, Tyler Cowen, Upton Sinclair, urban sprawl

Blackwell Publishing; Vaclav Smil. 2010. Prime Movers of Globalization. The History and Impact of Diesel Engines and Gas Turbines. MIT Press; and Robert P. Clark. 2000. Global Life Systems. Population, Food, and Disease in the Process of Globalization. Rowman & Littlefield Publishers, Inc. 5 Adam Smith. 1776. An Inquiry Into the Nature and Causes of the Wealth of Nations, Vol. 1, Book I, chapter II: Of the Principle which gives occasion to the Division of Labour. Available at http://www.econlib.org/library/Smith/smWN1.html#B.I, Ch.2, Of the Principle which gives Occasion to the Division of Labour. 6 Gisday Wa and Delgam Uukw. 1989 The Spirit in the Land.

“Come On Down to the Farmers Market (Bring Your Wallet and Your Food Orthodoxy), (September 17) http://www.consumerfreedom.com/news_detail.cfm/h/3992-come-on-down-to-the-farmers-market-bring-your-wallet-and-your-food-orthodoxy. 7 Alisa Smith and J.B. MacKinnon. 2005. “Living on the 100-mile Diet,” The Tyee (June 28) http://thetyee.ca/Life/2005/06/28/HundredMileDiet and Alisa Smith and J.B. MacKinnon. 2007.The 100-Mile Diet. A Year of Local Eating. Random House Canada. 8 Adam Smith. 1776. An Inquiry Into the Nature and Causes of the Wealth of Nations, Vol. 1, Book IV, chapter II: Of Restraints upon the Importation from Foreign Countries of Such Goods as Can Be Produced at Home http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=237&chapter=212328&layout=html&Itemid=27. 9 See, among others, Tom Philpott. 2011.

Bloomberg.com (November 24) http://www.bloomberg.com/news/2011-11-24/china-s-soybean-imports-in-2011-may-decline-shanghai-jc-says.html In 2010, the USA, Brazil, Argentina and China produced respectively 35, 27, 19 and 6% of the world’s total production (“World Statistics” at soy stats.com http://www.soystats.com/2011/Default-frames.htm ). 56 Quoted in Alan L. Olmstead and Paul W. Rhode. 2008. Creating Abundance. Biological Innovation and American Agricultural Development. Cambridge University Press, p. 381. 57 Adam Smith. 1776. An Inquiry Into the Nature and Causes of the Wealth of Nations, Vol. 1, Book I, chapter 8: On the Wages of Labour http://oll.libertyfund.org/?option=com_staticxt&staticfile=show. php%3Fti tle=220&chapter=217399 &layout=html&Itemid=27. Chapter 4 1 See, among others, Dennis E. Jelinski. 2005. “There is no Mother Nature—There is no Balance of Nature: Culture, Ecology and Conservation.”


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Who Needs the Fed?: What Taylor Swift, Uber, and Robots Tell Us About Money, Credit, and Why We Should Abolish America's Central Bank by John Tamny

Airbnb, Alan Greenspan, Apollo 13, bank run, Bear Stearns, Bernie Madoff, bitcoin, Bretton Woods, business logic, buy and hold, Carl Icahn, Carmen Reinhart, corporate raider, correlation does not imply causation, cotton gin, creative destruction, Credit Default Swap, crony capitalism, crowdsourcing, Donald Trump, Downton Abbey, Fairchild Semiconductor, fiat currency, financial innovation, Fractional reserve banking, full employment, George Gilder, Glass-Steagall Act, Home mortgage interest deduction, Jeff Bezos, job automation, Joseph Schumpeter, junk bonds, Kenneth Rogoff, Kickstarter, Larry Ellison, liquidity trap, low interest rates, Mark Zuckerberg, market bubble, Michael Milken, Money creation, money market fund, moral hazard, mortgage tax deduction, NetJets, offshore financial centre, oil shock, peak oil, Peter Thiel, Phillips curve, price stability, profit motive, quantitative easing, race to the bottom, Ronald Reagan, self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, Solyndra, Steve Jobs, The Wealth of Nations by Adam Smith, too big to fail, Travis Kalanick, Uber for X, War on Poverty, yield curve

Eventually, he plugged in what Harford described as a “toaster-shaped birthday cake,” and “two seconds later, the toaster was toast.” Thwaites concluded, “If you started absolutely from scratch, you could easily spend your life making a toaster.”1 Harford’s opening subject was, in many ways, a tribute to Adam Smith’s brilliant book The Wealth of Nations, and more modernly, to Leonard Read’s I, Pencil. In the former, Smith opens with an essential point: “The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgment with which it is any where directed, or applied, seem to have been the effects of the division of labour.”2 Smith goes on to describe something as basic as a pin factory.

That they’re not falling, but most often rising, is a market signal that fears of an environmental calamity related to oil consumption are vastly overdone. Instead, the nature of my argument about why the fracking boom has been anticredit is monetary. Specifically, it’s about the value of the dollar. For some simple background, we turn to Adam Smith, who made a critical observation in The Wealth of Nations: “The sole use of money is to circulate consumable goods.”7 There’s nothing abnormal or intimidating about Smith’s quote. As readers know by now, if money were actual wealth or itself a commodity, we’d all be rich. We could simply create lots of dollars. But money is not wealth.

It bought 1/266th of an ounce of gold when Bush was inaugurated in 2001, and by July 2008 it bought 1/940th of an ounce.12 In a sequel to the 1970s, Americans once again started speculating on housing. It offered better returns than the stock market, plus you can live in a house. The rush into housing was a hugely negative economic signal, much as it was in the 1970s. As Adam Smith wrote in The Wealth of Nations: Though a house . . . may yield a revenue to its proprietor, and thereby serve in the function of a capital to him, it cannot yield any to the public, nor serve in the function of a capital to it, and the revenue of the whole of the people can never be in the smallest degree increased by it.13 Housing was all the rage.


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The End of the Free Market: Who Wins the War Between States and Corporations? by Ian Bremmer

"World Economic Forum" Davos, affirmative action, Asian financial crisis, banking crisis, Berlin Wall, BRICs, British Empire, centre right, collective bargaining, corporate governance, creative destruction, credit crunch, Credit Default Swap, cuban missile crisis, Deng Xiaoping, diversified portfolio, Doha Development Round, Exxon Valdez, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, Glass-Steagall Act, global reserve currency, global supply chain, household responsibility system, invisible hand, joint-stock company, Joseph Schumpeter, Kickstarter, laissez-faire capitalism, low skilled workers, mass immigration, means of production, megacity, Mikhail Gorbachev, military-industrial complex, mutually assured destruction, Naomi Klein, Nelson Mandela, new economy, offshore financial centre, open economy, race to the bottom, reserve currency, risk tolerance, Savings and loan crisis, shareholder value, Shenzhen special economic zone , South Sea Bubble, sovereign wealth fund, special economic zone, spice trade, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, trade route, tulip mania, uranium enrichment, Washington Consensus, Yom Kippur War, zero-sum game

Drucker, “Trading Places,” National Interest, Spring 2005. 14 Antoine van Agtmael, The Emerging Markets Century: How a New Breed of World-Class Companies Is Overtaking the World (New York: Free Press, 2007). 15 From Bill Clinton’s 1996 State of the Union Address, http://clinton4.nara.gov/WH/New/other/sotu.html. 16 Forbes magazine’s Global 2000 list of companies for 2008. CHAPTER TWO : A Brief History of Capitalism 1 Adam Smith, The Wealth of Nations (1776; New York: Modern Library, 1994), book 4, ch. 2, pp. 484-85. 2 Adam Smith, The Theory of Moral Sentiments (1759; Cambridge, UK: Cambridge University Press, 2002), Introduction. 3 During the savings-and-loan crisis of the 1980s (and early 1990s) more than a thousand savings-and-loan associates failed at a cost of at least $125 billion to the U.S. federal government. 4 The South Sea Company, founded in 1711, enjoyed a monopoly over British trade with Spanish South America and the Pacific region.

Those who believe in pure or laissez-faire capitalism argue that while the buyers and sellers are buying and selling, the state should mind its own business. Beyond enforcing contracts and protecting property rights, governments enable capitalism by staying out of its way. Adam Smith, the oft-quoted father of modern capitalism, wrote in The Wealth of Nations (1776) of the unintended benefits that society derived from individual greed:By directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.1 Some students of Smith’s writings might qualify this point with a reference to his earlier work, The Theory of Moral Sentiments (1759), in which he argues thatthere are evidently some principles in [man’s] nature which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it.2 Advocates of pure capitalism insist that the “invisible hand” must be allowed to work its magic—and that any effort by government to guide its actions can only burden markets and distort their natural operation.

Yet all mixed capitalist systems share faith in the principle that only free markets can generate long-term prosperity and that government should never become the dominant player in an economy. State capitalism represents a direct challenge to that belief. Capitalism and Political Free Markets It’s not mere coincidence that Adam Smith published The Wealth of Nations in the same year that America’s founders signed their Declaration of Independence from Britain. The movement that eighteenth-century philosopher Immanuel Kant called the Enlightenment inspired all sorts of people to demand all sorts of freedoms—both economic and political—from priests, lords, and kings.


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

"there is no alternative" (TINA), Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, antiwork, AOL-Time Warner, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, Bear Stearns, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, Charles Babbage, collateralized debt obligation, colonial rule, Corn Laws, corporate governance, corporate raider, creative destruction, 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 engineering, financial innovation, flying shuttle, Ford Model T, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Akerlof, Gini coefficient, Glass-Steagall Act, global value chain, Goldman Sachs: Vampire Squid, Gordon Gekko, Great Leap Forward, greed is good, Gunnar Myrdal, Haber-Bosch Process, happiness index / gross national happiness, high net worth, income inequality, income per capita, information asymmetry, intangible asset, 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 bank, land reform, liberation theology, manufacturing employment, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, means of production, Mexican peso crisis / tequila crisis, Neal Stephenson, Nelson Mandela, Northern Rock, obamacare, offshore financial centre, oil shock, open borders, Pareto efficiency, Paul Samuelson, post-industrial society, precariat, principal–agent problem, profit maximization, profit motive, proprietary trading, purchasing power parity, quantitative easing, road to serfdom, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, scientific management, Scramble for Africa, search costs, 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 Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, transaction costs, transfer pricing, trickle-down economics, Vilfredo Pareto, Washington Consensus, working-age population, World Values Survey

But that little metal thing that most of you do not use – that is, unless you have long hair and like to keep it tidy or make your own clothes. The making of the pin is the subject of the very first chapter of what is commonly (albeit mistakenly)1 considered to be the first economics book, namely, An Inquiry into the Nature and Causes of the Wealth of Nations, by Adam Smith (1723–90). Smith starts his book by arguing that the ultimate source of increase in wealth lies in the increase in productivity through greater division of labour, which refers to the division of production processes into smaller, specialized parts. He argued that this increases productivity in three ways.

During this era, even many of those who worked for capitalists were not wage labourers. There were still slaves around. Like tractors or traction animals, slaves were means of production owned by capitalists, especially the plantation owners in the American South, the Caribbean, Brazil and elsewhere. It was two generations after the publication of The Wealth of Nations (henceforth TWON) that slavery was abolished in Britain (1833). It was nearly a century after TWON and after a bloody civil war that slavery was abolished in the US (1862). Brazil abolished it only in 1888. While a large proportion of people who worked for capitalists were not wage labourers, many wage labourers were people who wouldn’t be allowed to become wage labourers today.

In their attempts to make profits, producers strive to supply cheaper and better things, ultimately producing their products at the minimum possible costs, thus maximizing national output. This idea is known as the invisible hand and has become arguably the most influential metaphor in economics, although Smith himself used it only once in The Wealth of Nations (TWON) and did not accord it a prominent role in his theory.* Most Classical economists believed in the so-called Say’s Law, which states that supply creates its own demand. The reasoning was that every economic activity generates incomes (wages, profits, etc.) equivalent to the value of its output.


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GDP: A Brief but Affectionate History by Diane Coyle

Alan Greenspan, Asian financial crisis, Berlin Wall, big-box store, Bletchley Park, Bretton Woods, BRICs, business cycle, clean water, computer age, conceptual framework, crowdsourcing, Diane Coyle, double entry bookkeeping, driverless car, en.wikipedia.org, endogenous growth, Erik Brynjolfsson, Fall of the Berlin Wall, falling living standards, financial intermediation, global supply chain, happiness index / gross national happiness, hedonic treadmill, income inequality, income per capita, informal economy, Johannes Kepler, John von Neumann, Kevin Kelly, Les Trente Glorieuses, Long Term Capital Management, Mahbub ul Haq, mutually assured destruction, Nathan Meyer Rothschild: antibiotics, new economy, Occupy movement, Phillips curve, purchasing power parity, Robert Shiller, Robert Solow, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, The Wealth of Nations by Adam Smith, Thorstein Veblen, University of East Anglia, working-age population

Once again, financing warfare was the motivation. Then came a substantial intellectual innovation. In The Wealth of Nations (published 1776), Adam Smith introduced the distinction between “productive” and “unproductive” labor. An anonymous author had written in 1746, “What I mean by National Income is, all the whole body of our People get or receive from Land, Trade, Arts, Manufactures, Labour, or any other way whatsoever; and by Annual Expence I mean, the whole that they spend or consume.” Yet in Adam Smith’s definition thirty years later, the “whole body of our People” did not count. Only those involved in the making of physical commodities, agriculture and industry, would count toward national income.

Importantly, money spent on warfare or the interest on government debt was also being used unproductively. The nation’s wealth was its stock of physical assets less the national debt. National income was what derived from the national wealth. According to Benjamin Mitra-Kahn, “The Wealth of Nations introduced a new idea of the economy, and through the effort of Adam Smith’s students and admirers, it was adopted almost instantly.” In Smith’s own words: There is one sort of labour which adds to the value of the subject upon which it is bestowed: There is another which has no such effect. The former, as it produces a value, may be called productive; the latter, unproductive labour.

Frits Bos, “Uses of National Accounts: History, International Standardization and Applications in the Netherlands,” MPRA Paper no. 9387, 30 June 2008, http://mpra.ub.uni-muenchen.de/9387/. Accessed 1 August 2012. 2. Benjamin H. Mitra-Kahn, “Redefining the Economy: How the ‘Economy’ Was Invented, 1620” (Ph.D. dissertation, City University London, 2011), http://openaccess.city.ac.uk/1276/. Accessed 3 August 2012. 3. Adam Smith, The Wealth of Nations (first published 1776), book II, chap. 3. 4. Geoff Tily, “John Maynard Keynes and the Development of National Accounts in Britain, 1895–1941,” Review of Income and Wealth 55, no. 2 (2009): 331–359. 5. Angus Maddison, The World Economy: Historical Statistics (Paris: Organization for Economic Cooperation and Development, 2003), preface. 6.


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Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism by George A. Akerlof, Robert J. Shiller

affirmative action, Andrei Shleifer, asset-backed security, bank run, banking crisis, Bear Stearns, behavioural economics, business cycle, buy and hold, collateralized debt obligation, conceptual framework, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, Deng Xiaoping, Donald Trump, Edward Glaeser, en.wikipedia.org, experimental subject, financial innovation, full employment, Future Shock, George Akerlof, George Santayana, housing crisis, Hyman Minsky, income per capita, inflation targeting, invisible hand, Isaac Newton, Jane Jacobs, Jean Tirole, job satisfaction, Joseph Schumpeter, junk bonds, Long Term Capital Management, loss aversion, market bubble, market clearing, mental accounting, Michael Milken, Mikhail Gorbachev, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, Myron Scholes, new economy, New Urbanism, Paul Samuelson, Phillips curve, plutocrats, Post-Keynesian economics, price stability, profit maximization, public intellectual, purchasing power parity, random walk, Richard Thaler, Robert Shiller, Robert Solow, Ronald Reagan, Savings and loan crisis, seminal paper, South Sea Bubble, The Chicago School, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, W. E. B. Du Bois, We are all Keynesians now, working-age population, Y2K, Yom Kippur War

Estimates from the Brookings Institution say that preservation of Social Security at current levels would entail expenditure of about 2% of taxable earnings.16 We thought then, and we still think now, that Kerry’s mistake cost him the election. Saving and the Wealth of Nations We have been talking so far about personal decisions to save, why saving varies, and how important it is to people’s welfare in retirement. But there has long been another theme regarding savings. There are vast differences in the wealth of nations. In per capita terms there is more than a 200-fold difference between per capita income from the richest countries to the poorest. Indeed if we include Luxembourg and Burundi it is closer to a 1,000-fold difference.17 Income and wealth depend upon countries’ freedom to trade, the skills of their people, their geography, their current and past history of wars, their political and legal institutions.

Journal of Finance 52(1):33–55. Sims, Christopher A. 1972. “Money, Income and Causality.” American Economic Review 62:540–52. ———. 2001. “Pitfalls of a Minimax Approach to Model Uncertainty.” American Economic Review 91(2):51–54. Smith, Adam. 1776. An Inquiry into the Nature and Causes of the Wealth of Nations. London: Ward, Lock, Bowden & Co. Smith, Edgar Lawrence. 1925. Common Stocks as Long-Term Investments. New York: Macmillan. Solow, Robert. 1979. “Another Possible Source of Wage Rigidity.” Journal of Macroeconomics 1(1):79–82. Sorkin, Andrew Ross. 2008. “JP Morgan Pays $2 a Share for Bear Stearns.”

Applied Economics 35(3):337–42. Venti, Steven F., and David A. Wise. 2000. “Choice, Chance, and Wealth Dispersion at Retirement.” National Bureau of Economic Research Working Paper 7521, February. “Want Old Rate Restored.” 1894. Boston Daily, February 10, p. 10. Warsh, David. 2006. Knowledge and the Wealth of Nations: A Story of Economic Discovery. New York: W. W. Norton. Weinstein, Neil, and William M. Klein. 1996. “Unrealistic Optimism: Present and Future.” Journal of Social and Clinical Psychology 15:1–8. Welch, Jack, with John A. Byrne. 2001. Jack: Straight from the Gut. New York: Warner. Wentura, Dirk. 2005.


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The Trouble With Billionaires by Linda McQuaig

"World Economic Forum" Davos, battle of ideas, Bear Stearns, Bernie Madoff, Big bang: deregulation of the City of London, British Empire, Build a better mousetrap, carried interest, Charles Babbage, collateralized debt obligation, computer age, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, Douglas Engelbart, Douglas Engelbart, employer provided health coverage, financial deregulation, fixed income, full employment, Gary Kildall, George Akerlof, Gini coefficient, Glass-Steagall Act, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of the telephone, invention of the wheel, invisible hand, Isaac Newton, Jacquard loom, John Bogle, Joseph-Marie Jacquard, laissez-faire capitalism, land tenure, lateral thinking, low interest rates, Mark Zuckerberg, market bubble, Martin Wolf, mega-rich, minimum wage unemployment, Mont Pelerin Society, Naomi Klein, neoliberal agenda, Northern Rock, offshore financial centre, Paul Samuelson, plutocrats, Ponzi scheme, pre–internet, price mechanism, proprietary trading, purchasing power parity, RAND corporation, rent-seeking, rising living standards, road to serfdom, Robert Solow, Ronald Reagan, The Chicago School, The Spirit Level, The Wealth of Nations by Adam Smith, Tobin tax, too big to fail, trickle-down economics, Vanguard fund, very high income, wealth creators, women in the workforce

‘No fundamental disturbance of the whole system is involved,’ noted Simons in his classic ‌1938 text Personal Income Taxation.6 He elaborated on this theme later, in Economic Policy for a Free Society, emphasizing how progressive taxation achieves redistribution without impinging on freedom: ‘What is important for libertarians is that we preserve the basic processes of free exchange and that egalitarian measures be superimposed on those processes, effecting redistribution afterward and not in the immediate course ‌of production and commercial transactions.’7 It could be added here that taxation – and even heavy taxation of the rich – was supported by no less a conservative heavyweight than Adam Smith. This might come as a surprise since Smith’s legacy has been largely appropriated in recent years by neoliberals. While they’ve managed to tear snippets out of context to present his The Wealth of Nations as a manifesto for unbridled capitalism, in fact Smith was a philosopher who was wary of the social consequences of the emerging industrial capitalist system, and in particular the dangers of inequality. Throughout The Wealth of Nations, Smith consistently championed the rights of workers against the rights of merchants and industrialists.

In the United States, the slogan ‘no taxation without representation’ became the rallying cry of the Revolutionary War, reflecting the connection the colonial rebels made between taxation and democracy. Similarly, Adam Smith, the eighteenth-century Scottish philosopher and founder of the classical school of economics, rejected suggestions put forward by some in his day that taxes were ‘badges of slavery’. As he wrote in The Wealth of Nations: ‘Every tax…is to the person who pays it a badge, not of slavery, but of liberty. It denotes that he is subject to government, indeed, but that, as he has some property, he cannot himself be ‌the property of a master.’2 • • • Key to the development and promotion of today’s fierce anti-tax ideology was the emergence of a school of thought known as ‘public choice theory’.

Frankfurt, ‘Reflections on Bullshit’, Harper’s, February 1987. Frankfurt later developed his theory into a bestselling book, On Bullshit, published by Princeton University Press in 2005. 10 Revamping the Ovarian Lottery ‌1 Norbert Haring & Niall Douglas, Economists and the Powerful (London: Wimbledon Publishing Company, 2012), p. 1. ‌2 Adam Smith, The Wealth of Nations (London: Penguin Books, 1999), p. 857. ‌3 Hugh Stretton & Lionel Orchard, Public Goods, Public Enterprise, Public Choice: Theoretical Foundations of the Contemporary Attack on Government (New York: St. Martin’s Press, 1994), p. 20. ‌4 Karl Polanyi, The Great Transformation (Boston: Beacon Press, 1957), p. 163. ‌5 R.


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A Little History of Economics by Niall Kishtainy

Alvin Roth, behavioural economics, British Empire, Capital in the Twenty-First Century by Thomas Piketty, car-free, carbon tax, central bank independence, clean water, Corn Laws, Cornelius Vanderbilt, creative destruction, credit crunch, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, Dr. Strangelove, Eugene Fama: efficient market hypothesis, first-price auction, floating exchange rates, follow your passion, full employment, George Akerlof, Great Leap Forward, greed is good, Hyman Minsky, inflation targeting, invisible hand, John Nash: game theory, John von Neumann, Joseph Schumpeter, Kenneth Arrow, loss aversion, low interest rates, market clearing, market design, means of production, Minsky moment, moral hazard, Nash equilibrium, new economy, Occupy movement, Pareto efficiency, Paul Samuelson, Phillips curve, prisoner's dilemma, RAND corporation, rent-seeking, Richard Thaler, rising living standards, road to serfdom, Robert Shiller, Robert Solow, Ronald Reagan, sealed-bid auction, second-price auction, The Chicago School, The Great Moderation, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade route, Vickrey auction, Vilfredo Pareto, washing machines reduced drudgery, wealth creators, Winter of Discontent

Malthus panicked, and wrote to Ricardo to ask him to get rid of his share. Ricardo held his nerve, though, and held onto his own stake. When news came of the British victory, he became one of the wealthiest men in Britain overnight. Ricardo stumbled upon economics in a library where he discovered Adam Smith’s The Wealth of Nations. It turned out to be the most important book he ever read, and inspired him to apply his formidable mind to the analysis of the economy at a time when the new capitalists were competing for power with the old land-owning aristocrats. The question was how the country’s growing wealth was to be divided between the landowners, the capitalists and the mass of workers.

He’d moved away from the buzz of the cities where he’d made his name as a philosopher to write what would become arguably the most celebrated book in the history of economics. It led some to call him the father of modern economics. Fuelled by bracing walks and sleepless nights, the hefty book was published in 1776 and called The Wealth of Nations. In it Smith posed one of the fundamental questions of economics. Is self-interest compatible with a good society? To understand what this means, let’s compare the workings of society with those of a football team. A good football team needs good players, obviously. Good players do more than simply dribble and shoot well.

Smith had a vision of a new economy that was then being born, one based on the division of labour and self-interest. He has been acclaimed as a sage, often by those who believe that markets should rule above all else, that governments should do as little as possible and businesses do what they like. Two hundred years after The Wealth of Nations was published, American President Ronald Reagan championed these principles, taking Smith as his inspiration. Some of his White House officials even took to wearing ties with Smith’s portrait on them. But Smith might not have felt flattered by this. For one thing, he championed the role of markets as an attack on the mercantilist system which then ruled Europe with its many restrictions on buying and selling.


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Hive Mind: How Your Nation’s IQ Matters So Much More Than Your Own by Garett Jones

behavioural economics, centre right, classic study, clean water, corporate governance, David Ricardo: comparative advantage, en.wikipedia.org, experimental economics, Flynn Effect, Gordon Gekko, greed is good, hive mind, invisible hand, Kenneth Arrow, law of one price, meta-analysis, prediction markets, Robert Gordon, Ronald Coase, Saturday Night Live, social intelligence, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tyler Cowen, wikimedia commons, zero-sum game

It’s that the memory skills and other traits that higher-IQ individuals tend to have are useful in searching out win-win possibilities, so it would be a great surprise if that didn’t happen in the lab and out in the real world. And if a game of pure conflict turns even slightly into a game of mutual interest, Sobel and Crawford would predict that mutual interest will spur clearer communication. Adam Smith’s Pin Factory: A Team Effort If you’ve never read it before, right now is an excellent time to read the first chapter of Adam Smith’s second book, The Wealth of Nations, published in 1776. Just a few pages long, it discusses how pins are made—the small pushpins that have a flat head, not sewing needles or wooden clothespins. This chapter is where Smith lays out the power of the division of labor, showing that by dividing the job of making pins into about a half-dozen separate tasks—wire-cutting, point-sharpening, head-flattening, and so on—a small group of individuals could make a few pounds of pins each day.

If you have cooperative, patient, well-informed neighbors, that probably makes you a bit more cooperative, patient, and well-informed. Of course, test scores don’t explain everything about the wealth of nations: I’m only claiming that IQ-type scores explain about half of everything across countries—and much less within a country. If your next-door neighbor earns a lot more or less than you, it’s not mostly because of IQ. And across countries, differences in geography, culture, and the long reach of colonialism are surely shaping the wealth of nations. The hive mind is no single-cause theory of prosperity. It’s just a story that almost no one else is talking about. Chapter 1 JUST A TEST SCORE?

After all, rich countries and poor countries differ in countless ways, and average test scores are just one of the differences. I could just as easily have shown a graph that shows that rich countries have more cell phones per person, or that people in rich countries eat at restaurants more often or are more likely to have vacation homes. Does Figure I.1 really tell us anything about what drives the wealth of nations? One preliminary check is to see whether a nation’s average test scores still do a good job of predicting a nation’s level prosperity even when you know a lot of other things about the country: this approach is known as multiple regression. It amounts to asking, “Even if I already know that your country has a high savings rate, a lot of mineral wealth, or whatever, does knowing your nation’s average test scores still help me to predict how productive your country is?”


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

3D printing, active measures, additive manufacturing, Airbnb, autonomous vehicles, back-to-the-land, benefit corporation, big-box store, bike sharing, bioinformatics, bitcoin, business logic, business process, Chris Urmson, circular economy, clean tech, clean water, cloud computing, collaborative consumption, collaborative economy, commons-based peer production, Community Supported Agriculture, Computer Numeric Control, computer vision, crowdsourcing, demographic transition, distributed generation, DIY culture, driverless car, Eben Moglen, electricity market, en.wikipedia.org, Frederick Winslow Taylor, Free Software Foundation, Garrett Hardin, general purpose technology, global supply chain, global village, Hacker Conference 1984, Hacker Ethic, industrial robot, informal economy, information security, Intergovernmental Panel on Climate Change (IPCC), intermodal, Internet of things, invisible hand, Isaac Newton, James Watt: steam engine, job automation, John Elkington, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Julian Assange, Kickstarter, knowledge worker, longitudinal study, low interest rates, machine translation, Mahatma Gandhi, manufacturing employment, Mark Zuckerberg, market design, mass immigration, means of production, meta-analysis, Michael Milken, mirror neurons, natural language processing, new economy, New Urbanism, nuclear winter, Occupy movement, off grid, off-the-grid, oil shale / tar sands, pattern recognition, peer-to-peer, peer-to-peer lending, personalized medicine, phenotype, planetary scale, price discrimination, profit motive, QR code, RAND corporation, randomized controlled trial, Ray Kurzweil, rewilding, RFID, Richard Stallman, risk/return, Robert Solow, Rochdale Principles, Ronald Coase, scientific management, 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 Cathedral and the Bazaar, the long tail, 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, Tragedy of the Commons, transaction costs, urban planning, vertical integration, warehouse automation, Watson beat the top human players on Jeopardy!, web application, Whole Earth Catalog, Whole Earth Review, WikiLeaks, working poor, Yochai Benkler, zero-sum game, Zipcar

Epstein and Maarten Prak, Guilds, Innovation, and the European Economy, 1400–1800 (Cambridge: Cambridge University Press, 2008) 31. 23. Ibid., 44. Chapter 3 1. Yujiro Hayami and Yoshihisa Godo, Development Economics: From the Poverty to the Wealth of Nations (New York: Oxford University Press, 2005), 341. 2. Maurice Dobb, Studies in the Development of Capitalism (New York: International Publishers, 1947), 143. 3. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Edinburgh: Thomas Nelson, 1843), 20. 4. Ibid. 5. Ibid., 21. 6. Ibid., 22. 7. Carl Lira, “Biography of James Watt,” May 21, 2013, http://www.egr.msu.edu/~lira/supp/steam /wattbio.html (accessed January 7, 2014). 8.

Through most of history, markets were occasional meeting places where goods were exchanged. Today, virtually every aspect of our daily lives is connected in some way to commercial exchanges. The market defines us. But here lies the contradiction. Capitalism’s operating logic is designed to fail by succeeding. Let me explain. In his magnum opus, The Wealth of Nations, Adam Smith, the father of modern capitalism, posits that the market operates in much the same way as the laws governing gravity, as discovered by Isaac Newton. Just as in nature, where for every action there is an equal and opposite reaction, so too do supply and demand balance each other in the self-regulating marketplace.

Of course, my father could never have imagined in the early years that the millions of plastic bags he was selling would end up in landfills and pollute the environment. Nor could he have foreseen that the petrochemicals used to extrude the polyethylene would emit carbon dioxide and play a key role in altering the climate of the planet. Reflecting on my own father’s career, it is clear to me that the invisible hand that Adam Smith alluded to 237 years ago in The Wealth of Nations is really not all that invisible. It’s the entrepreneurial spirit that drove my dad and countless other entrepreneurs to innovate, reduce marginal costs, bring cheaper products and services to the market, and spur economic growth. That entrepreneurial spirit is now taking us to near zero marginal costs and into a new economic era of history where more goods and services will be nearly free and shared on a Collaborative Commons.


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Why We Can't Afford the Rich by Andrew Sayer

"World Economic Forum" Davos, accounting loophole / creative accounting, Alan Greenspan, Albert Einstein, Anthropocene, anti-globalists, asset-backed security, banking crisis, banks create money, basic income, biodiversity loss, bond market vigilante , Boris Johnson, Bretton Woods, British Empire, Bullingdon Club, business cycle, call centre, capital controls, carbon footprint, carbon tax, collective bargaining, corporate raider, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Graeber, David Ricardo: comparative advantage, debt deflation, decarbonisation, declining real wages, deglobalization, degrowth, deindustrialization, delayed gratification, demand response, don't be evil, Double Irish / Dutch Sandwich, en.wikipedia.org, Etonian, financial engineering, financial innovation, financial intermediation, Fractional reserve banking, full employment, G4S, Goldman Sachs: Vampire Squid, green new deal, high net worth, high-speed rail, income inequality, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, Isaac Newton, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", James Dyson, job automation, Julian Assange, junk bonds, Kickstarter, labour market flexibility, laissez-faire capitalism, land bank, land value tax, long term incentive plan, low skilled workers, Mark Zuckerberg, market fundamentalism, Martin Wolf, mass immigration, means of production, moral hazard, mortgage debt, negative equity, neoliberal agenda, new economy, New Urbanism, Northern Rock, Occupy movement, offshore financial centre, oil shale / tar sands, patent troll, payday loans, Philip Mirowski, plutocrats, popular capitalism, predatory finance, price stability, proprietary trading, pushing on a string, quantitative easing, race to the bottom, rent-seeking, retail therapy, Ronald Reagan, shareholder value, short selling, sovereign wealth fund, Steve Jobs, tacit knowledge, TED Talk, The Nature of the Firm, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transfer pricing, trickle-down economics, universal basic income, unpaid internship, upwardly mobile, Washington Consensus, wealth creators, WikiLeaks, Winter of Discontent, working poor, Yom Kippur War, zero-sum game

Anyway, don’t the differences in the quality of work that people do simply reflect differences in intelligence and effort? And doesn’t the division of labour make for economic efficiency, from which, supposedly, we all benefit? Let’s look at these objections. Isn’t the unequal division of labour a reflection of differences in ability and effort? In 1776, in The Wealth of Nations, Adam Smith famously analysed the benefits of division of labour through his example of the pin factory. Splitting the manufacture into 18 different operations, carried out repetitively and covered by about 10 workers, allowed them to produce over 48,000 pins per day, whereas if each worker had to do all 18 operations on each pin from start to finish before moving on to the next they would scarcely have produced 20 a day.

The proportion of part-timers in the workforce has also risen in the US in the last 40 years. 13 Tawney, R.H. (2004) [1920] The acquisitive society, Mineola, NY: Harcourt Brace and Howe. 14 Hudson, M. (2008) http://dandelionsalad.wordpress.com/2008/09/08/’modern-debt-peonage”-economic-democracy-is-turning-into-a-financial-oligarchy/. Chapter Four: For rent … for what? 15 Smith, A. (1976) [1776] The wealth of nations, ed. E. Cannan, Chicago, IL: University of Chicago Press, Bk I, ch V, p 56. 16 Paine, T. (1797) Agrarian justice, paragraph 11, http://geolib.pair.com/essays/paine.tom/agjst.html. 17 Churchill, W. (1909) The people’s rights, ch 4, http://www.wealthandwant.com/docs/Churchill_TPL.html. 18 Tawney, R.H. (2004) [1920] The acquisitive society, Mineola, NY: Harcourt Brace and Howe. 19 http://www.richest-people.co.uk/duke-of-westminster/. 20 Mill, J.S. (1965) Principles of political economy, in Collected Works, ed.

19 For a fuller discussion of these possibilities see Wright, E.O. (2000) Class counts, Cambridge: Cambridge University Press. 20 Orton, M and Rowlingson, K. (2007) Public attitudes to inequality, York: Joseph Rowntree Foundation; Horton, L. and Bamfield, T. (2009) Understanding attitudes to tackling economic inequality, York: Joseph Rowntree Foundation; Miller, D. (1999) Principles of social justice, Cambridge, MA: Harvard University Press. 21 See Robert Jackall’s wonderful study of corporate managers in the US in his 1988 book, Moral mazes, Oxford: Oxford University Press. 22 Gomberg, P. (2007) How to make opportunity equal, Oxford: Blackwell; Sayer, A. (2009) ‘The injustice of unequal work’, Soundings, 43, pp. 102–13. 23 Horton and Bamfield (2009). 24 Gomberg (2007). 25 Gomberg (2007). 26 Smith, A. (1976) [1776], The wealth of nations, ed. E. Cannan, Chicago, IL: University of Chicago Press, vol 2, bk V, ch i, pp 302–3. 27 Murphy, J.B. (1993) The moral economy of labor, New Haven, CT: Yale University Press. 28 Smith (1976) [1776], vol 1, bk I, ch ii, pp 19–20. 29 Feinstein, L. (2003) ‘Inequality in the early cognitive development of British children in the 1970 cohort’, Economica, 70, pp 73–97.


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Free to Choose: A Personal Statement by Milton Friedman, Rose D. Friedman

affirmative action, agricultural Revolution, air freight, back-to-the-land, bank run, banking crisis, business cycle, Corn Laws, foreign exchange controls, Fractional reserve banking, full employment, German hyperinflation, invisible hand, means of production, minimum wage unemployment, oil shale / tar sands, oil shock, price stability, Ralph Nader, RAND corporation, rent control, road to serfdom, Sam Peltzman, school vouchers, Simon Kuznets, The Wealth of Nations by Adam Smith, union organizing, Unsafe at Any Speed, Upton Sinclair, urban renewal, War on Poverty, working poor, Works Progress Administration

The story of the United States is the story of an economic miracle and a political miracle that was made possible by the translation into practice of two sets of ideas—both, by a curious coincidence, formulated in documents published in the same year, 1776. One set of ideas was embodied in The Wealth of Nations, the masterpiece that established the Scotsman Adam Smith as the father of modern economics. It analyzed the way in which a market system could combine the freedom of individuals to pursue their own objectives with the extensive cooperation and collaboration needed in the economic field to produce our food, our clothing, our housing. Adam Smith's key insight was that both parties to an exchange can benefit and that, so long as cooperation is strictly voluntary, no exchange will take place unless both parties do benefit.

We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chuses to depend chiefly upon the benevolence of his fellow citizens." —Adam Smith, The Wealth of Nations, vol. I, [>] We cannot indeed depend on benevolence for our dinner—but can we depend wholly on Adam Smith's invisible hand? A long line of economists, philosophers, reformers, and social critics have said no. Self-love will lead sellers to deceive their customers. They will take advantage of their customers' innocence and ignorance to overcharge them and pass off on them shoddy products.

The action shall name as defendant the Treasurer of the United States, who shall have authority over outlays by any unit or agency of the Government of the United States when required by a court order enforcing the provisions of this article. The order of the court shall not specify the particular outlays to be made or reduced. Changes in outlays necessary to comply with the order of the court shall be made no later than the end of the third full fiscal year following the court order. NOTES INTRODUCTION 1. Adam Smith, The Wealth of Nations (1776). (All page references are to the edition edited by Edwin Cannan, 5th ed. (London: Methuen & Co., Ltd., 1930). 2. On Liberty, People's ed. (London: Longmans, Green & Co., 1865), p. 6. 3. Wealth of Nations, vol. I, p. 325 (Book II, Chap. III). CHAPTER 1 1. See Hedrick Smith, The Russians (New York: Quadrangle Books/New York Times Book Co., 1976), and Robert G.


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For Profit: A History of Corporations by William Magnuson

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, Airbnb, bank run, banks create money, barriers to entry, Bear Stearns, Big Tech, Black Lives Matter, blockchain, Bonfire of the Vanities, bread and circuses, buy low sell high, carbon tax, carried interest, collective bargaining, Cornelius Vanderbilt, corporate raider, creative destruction, disinformation, Donald Trump, double entry bookkeeping, Exxon Valdez, fake news, financial engineering, financial innovation, Ford Model T, Ford paid five dollars a day, Frederick Winslow Taylor, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Ida Tarbell, Intergovernmental Panel on Climate Change (IPCC), invisible hand, joint-stock company, joint-stock limited liability company, junk bonds, Mark Zuckerberg, Menlo Park, Michael Milken, move fast and break things, Peter Thiel, power law, price discrimination, profit maximization, profit motive, race to the bottom, Ralph Waldo Emerson, randomized controlled trial, ride hailing / ride sharing, scientific management, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, slashdot, Snapchat, South Sea Bubble, spice trade, Steven Levy, The Wealth of Nations by Adam Smith, Thomas L Friedman, Tim Cook: Apple, too big to fail, trade route, transcontinental railway, union organizing, work culture , Y Combinator, Yom Kippur War, zero-sum game

One famous shareholder of the East India Company, Sir Josiah Child, was notorious for spreading false rumors that war had broken out in India, causing the company’s share price to drop. He would then proceed to buy up entire blocks of shares on the cheap. This kind of market manipulation wreaked havoc on stock markets and the pockets of unsophisticated investors for centuries. What should we make of the rise of this capitalist system? Adam Smith believed that it was all for the best. In The Wealth of Nations, Smith famously argued that an “invisible hand” oversaw the market. The invisible hand ensured that selfish individuals, looking out solely for themselves, ended up promoting the greater good of society as a whole. Precisely how the invisible hand did its work was unclear, but it generally involved some combination of supply and demand: by competing with one another in responding to the demands of consumers, corporations supplied the goods and services that society needed with high quality and at a reasonable price.

Corporations are public entities with a public purpose, given special rights and privileges precisely because governments believe they will contribute to the greatness of their nations. While they sometimes—perhaps even often—stray from this purpose, their original and abiding justification has always been their ability to promote the good of all. Adam Smith, the father of capitalism, understood this. In the seldom-read passage of The Wealth of Nations in which he articulated his vision of the invisible hand, he was careful to provide an important caveat about capitalism as a cure-all. The invisible hand is not infallible. “By directing [his] industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention,” Smith wrote.

“The monopoly of tea is, I dare say, but a small part of the plan they have formed to strip us of our property,” Dickinson concluded.36 The East India Company also attracted the attention of two philosophers developing new theories about nations and economies. Adam Smith, the father of modern capitalism, famously wrote in The Wealth of Nations that an “invisible hand” leads individuals pursuing their self-interest in a free market to simultaneously and unintentionally promote the interest of society more broadly. But in a somewhat less well known section of his treatise, Smith cast doubt on the ability of corporations to do the same.


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People, Power, and Profits: Progressive Capitalism for an Age of Discontent by Joseph E. Stiglitz

affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, AlphaGo, antiwork, barriers to entry, basic income, battle of ideas, behavioural economics, Berlin Wall, Bernie Madoff, Bernie Sanders, Big Tech, business cycle, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, carried interest, central bank independence, clean water, collective bargaining, company town, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, crony capitalism, DeepMind, deglobalization, deindustrialization, disinformation, disintermediation, diversified portfolio, Donald Trump, driverless car, Edward Snowden, Elon Musk, Erik Brynjolfsson, fake news, Fall of the Berlin Wall, financial deregulation, financial innovation, financial intermediation, Firefox, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, George Akerlof, gig economy, Glass-Steagall Act, global macro, global supply chain, greed is good, green new deal, income inequality, information asymmetry, invisible hand, Isaac Newton, Jean Tirole, Jeff Bezos, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John von Neumann, Joseph Schumpeter, labor-force participation, late fees, low interest rates, low skilled workers, Mark Zuckerberg, market fundamentalism, mass incarceration, meta-analysis, minimum wage unemployment, moral hazard, new economy, New Urbanism, obamacare, opioid epidemic / opioid crisis, patent troll, Paul Samuelson, pension reform, Peter Thiel, postindustrial economy, price discrimination, principal–agent problem, profit maximization, purchasing power parity, race to the bottom, Ralph Nader, rent-seeking, Richard Thaler, Robert Bork, Robert Gordon, Robert Mercer, Robert Shiller, Robert Solow, Ronald Reagan, Savings and loan crisis, search costs, secular stagnation, self-driving car, shareholder value, Shoshana Zuboff, Silicon Valley, Simon Kuznets, South China Sea, sovereign wealth fund, speech recognition, Steve Bannon, Steve Jobs, surveillance capitalism, TED Talk, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Rise and Fall of American Growth, the scientific method, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, trickle-down economics, two-sided market, universal basic income, Unsafe at Any Speed, Upton Sinclair, uranium enrichment, War on Poverty, working-age population, Yochai Benkler

Such an economy will shape us—make us more like the individuals and society to which we aspire. And in doing so, it will enable us to create a more humane economy, one capable of delivering for the vast majority of our citizens the “middle-class” life to which they aspire, but which has increasingly become out of reach. The Wealth of Nations Adam Smith’s famous book of 1776, The Wealth of Nations, is a good place to start for understanding how nations prosper. It is usually thought of as the beginning of modern economics. Smith rightly criticized mercantilism, the economic school of thought that dominated Europe during the Renaissance and the early industrial period.

Even to make money by taking advantage of weaknesses, such as gambling or alcohol, requires market power, because in our amoral society, there is an ample supply of those able and willing to do so, and in the absence of market power, profits even for nefarious activities would be driven down to zero. 10.While traditionally, corruption focuses on instances such as these, in fact there is widespread corruption in the private sector, as when an employee (even a CEO) takes advantage of his position to enrich himself, or when a company behaves dishonestly, to enrich itself at the expense of others. 11.Adam Smith, An Inquiry into the Causes of the Wealth of Nations, 1776. 12.Actually, the passage was in response not just to the potential for monopolization, but the pervasive presence of market power that had emerged at the end of the nineteenth century, including in oil, railroads, meatpacking, and tobacco. 13.There are, of course, fluctuations in the risk premium that the market requires, depending on judgment about risk in the economy. 14.For a close look at the corporate sector, see Simcha Barkai, “Declining Labor and Capital Shares” (working paper, 2017).

In short, our elites, in both parties, thought that focusing on GDP could be a substitute for focusing on people. In effect, they dissed large parts of the country. This disrespect was perhaps almost as painful as the economic tragedy that was befalling them. Alternative Theories to the Sources of the Wealth of Nations I’ve described the real source of the wealth of nations—resting on foundations of science and knowledge and the social institutions that we’ve created to help us not just live peacefully with each other but cooperate together for our common good. I’ve described too the threat to these foundations represented by Trump and his ilk.


The New Enclosure: The Appropriation of Public Land in Neoliberal Britain by Brett Christophers

Alan Greenspan, book value, Boris Johnson, Capital in the Twenty-First Century by Thomas Piketty, Corn Laws, credit crunch, cross-subsidies, Diane Coyle, estate planning, Garrett Hardin, gentrification, ghettoisation, Hernando de Soto, housing crisis, income inequality, invisible hand, Jeremy Corbyn, land bank, land reform, land tenure, land value tax, late capitalism, market clearing, Martin Wolf, New Journalism, New Urbanism, off grid, offshore financial centre, performance metric, Philip Mirowski, price mechanism, price stability, profit motive, radical decentralization, Right to Buy, Skype, sovereign wealth fund, special economic zone, the built environment, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tragedy of the Commons, Tyler Cowen, urban sprawl, wealth creators

But Our Belief in It Has Gone’, Guardian, 1 February 2017. 1 M. Rothbard, Economic Thought Before Adam Smith: An Austrian Perspective on the History of Economic Thought, Volume I (Aldershot: Edward Elgar, 1995), p. xii. 2 D. Reisman, ‘Adam Smith on Market and State’, Journal of Institutional and Theoretical Economics 154 (1998), pp. 357–83, at p. 374. 1 A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Edinburgh: Thomas Nelson/Peter Brown, 1831), p. 303. 2 Reisman, ‘Adam Smith on Market and State’, p. 375. 3 On infrastructure, see P. O’Neill, ‘The Financialisation of Infrastructure: The Role of Categorisation and Property Relations’, Cambridge Journal of Regions, Economy and Society 6 (2013), pp. 441–54. 1 See, for example, C.

But the land itself is not the only such asset. Also irreplaceable, and arguably more significant, is the particular capacity for public self-determination conferred by state ownership and control of the land – even if only ‘potentially’. Economic disorder There is a widely cited passage from Adam Smith’s The Wealth of Nations that reads as follows: As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce. The wood of the forest, the grass of the field, and all the natural fruits of the earth, which, when land was in common, cost the labourer only the trouble of gathering them, come, even to him, to have an additional price fixed upon them.

Letwin delivered a draft report in June 2018, just as this book was going to press. See O. Letwin, Independent Review of Build Out Rates: Draft Analysis. 3 Cited in R. Sylvester, A. Thomson, F. Elliott and T. Knowles, ‘Greedy House Developers Face Losing Right to Build’, The Times, 31 January 2018. 1 A. Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations (Edinburgh: Thomas Nelson/Peter Brown, 1831), p. 21. 2 For example, B. Christophers, ‘On Voodoo Economics: Theorising Relations of Property, Value and Contemporary Capitalism’, Transactions of the Institute of British Geographers 35 (2010), pp. 94–108. Note that ‘rentier capitalism’ does not necessarily signify the prominence of land rents; it denotes the significance of economic rent in general, where rent is understood as value captured by virtue of monopoly ownership of a scarce asset.


Undoing the Demos: Neoliberalism's Stealth Revolution by Wendy Brown

Affordable Care Act / Obamacare, bitcoin, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, corporate governance, credit crunch, crowdsourcing, David Brooks, Food sovereignty, haute couture, Herbert Marcuse, immigration reform, income inequality, invisible hand, labor-force participation, late capitalism, means of production, new economy, obamacare, occupational segregation, Philip Mirowski, public intellectual, Ronald Reagan, sexual politics, shareholder value, sharing economy, subprime mortgage crisis, TED Talk, The Chicago School, the long tail, the market place, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, trickle-down economics, Washington Consensus, Wolfgang Streeck, young professional, zero-sum game

., 2009), pp. 277–79; See also John Clarke, “Living With/in and Without Neo-Liberalism,” Focaal–European Journal of Anthropology 51 (2008), pp. 135–47; and Ronen Shamir, “The Age of Responsibilization: On Market-Embedded Morality,” Economy and Society 37.1 (2008), pp. 1–19. 240 notes 21. Adam Smith, The Wealth of Nations (Chicago: University of Chicago Press, 1976), p. 477 22. Thus the persistent effort to fathom why working and middle-class voters can often be mobilized “against their interests” operates within an anachronistic paradigm of liberalism; such voters are behaving like good neoliberal subjects.

., 1.9,15–18 39. Ibid., 1.9.14 notes 241 40. Laval, L’homme économique; Hirschman, The Passions and the Interests. 41. C. B. MacPherson, The Political Theory of Possessive Individualism: Hobbes to Locke (Oxford: Oxford University Press, 1962), p. 3. 42. Smith, The Wealth of Nations. 43. Marx, The German Ideology. 44. In chapter 2 of the Wealth of Nations, Smith writes: “whether this propensity [to truck and barter] be one of those original principles in human nature of which no further account can be given; or whether, as seems more probable, it be the necessary consequence of the faculties of reason and speech, it belongs not to our present subject to inquire.”

Hunger, thirst, the passion which unites the two sexes, and the dread of pain, prompt us to apply those means for their own sakes, and without any consideration of their tendency to those beneficent ends which the great Director of nature intended to produce by them.” Adam Smith, Theory of Moral Sentiments (Indianapolis: Liberty Classics, 1976), p. 378. Useful considerations of Smith’s account of human nature include Samuel Fleischacker, On Adam Smith’s Wealth of Nations: A Philosoph­ical Companion (Princeton: Princeton Univ. Press, 2004) and Manfred J. Holler, “Adam Smith’s Model of Man and Some of its Consequences,” Homo Oeconomicus 23.3 (2006), pp. 467–88. 242 notes 46. John Locke, Two Treatises of Government, in Political Writings, ed.


Who Rules the World? by Noam Chomsky

Able Archer 83, Alan Greenspan, Albert Einstein, anti-communist, Ayatollah Khomeini, Berlin Wall, Bretton Woods, British Empire, capital controls, classic study, corporate governance, corporate personhood, cuban missile crisis, deindustrialization, Donald Trump, Doomsday Clock, Edward Snowden, en.wikipedia.org, facts on the ground, failed state, Fall of the Berlin Wall, Garrett Hardin, high-speed rail, Howard Zinn, illegal immigration, Intergovernmental Panel on Climate Change (IPCC), invisible hand, liberation theology, Malacca Straits, Martin Wolf, Mikhail Gorbachev, Monroe Doctrine, Nelson Mandela, nuclear winter, Occupy movement, oil shale / tar sands, one-state solution, Plutonomy: Buying Luxury, Explaining Global Imbalances, precariat, public intellectual, Ralph Waldo Emerson, Robert Solow, Ronald Reagan, South China Sea, Stanislav Petrov, Strategic Defense Initiative, structural adjustment programs, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, trade route, Tragedy of the Commons, union organizing, uranium enrichment, wage slave, WikiLeaks, working-age population

It is small wonder that the “campaign of hatred” against the United States that concerned Eisenhower was based on the recognition that the United States supports dictators and blocks democracy and development, as do its allies. In Adam Smith’s defense, it should be added that he recognized what would happen if Britain followed the rules of sound economics, now called “neoliberalism.” He warned that if British manufacturers, merchants, and investors turned abroad, they might profit but England would suffer. But he felt that they would be guided by a home bias, so that as if by an “invisible hand” England would be spared the ravages of economic rationality. The passage is hard to miss. It is the one occurrence of the famous phrase “invisible hand” in The Wealth of Nations. The other leading founder of classical economics, David Ricardo, drew similar conclusions, hoping that what is called “home bias” would lead men of property to “be satisfied with the low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign nations”—feelings that, he added, “I should be sorry to see weakened.”16 Their predictions aside, the instincts of the classical economists were sound.

Randolph Bourne, “Twilight of Idols,” Seven Arts, October 1917, 688–702.   7. Michael Crozier, Samuel P. Huntington, and Joji Watanuke, The Crisis of Democracy: Report on the Governability of Democracies to the Trilateral Commission (New York: New York University Press, 1975), http://www.trilateral.org/download/doc/crisis_of_democracy.pdf.   8. Adam Smith, The Wealth of Nations (New York: Bantam Classics, 2003), 96.   9. Gordon S. Wood, The Creation of the American Republic, 1776–1787 (New York: W. W. Norton, 1969), 513–14. Lance Banning, in The Sacred Fire of Liberty: James Madison and the Founding of the Federal Republic (Ithaca: Cornell University Press, 1995), strongly affirms Madison’s dedication to popular rule but nevertheless concurs with Wood’s assessment of the Constitutional design (245). 10.

Fails to Explain Policies to Muslim World, Panel Says,” New York Times, 24 November 2004. 12. Afaf Lutfi Al-Sayyid Marsot, Egypt in the Reign of Muhammad Ali (Cambridge: Cambridge University Press, 1984). For more extensive discussion on post–World War II Egypt, see Noam Chomsky, World Orders Old and New (New York: Columbia University Press, 1994), chapter 2. 13. Adam Smith, The Wealth of Nations (New York: Bantam Classics, 2003), 309. 14. Noam Chomsky, Year 501: The Conquest Continues (Chicago: Haymarket Books, 2014), 150. 15. Chomsky, Hopes and Prospects, 80. 16. David Ricardo, The Works of David Ricardo: With a Notice of the Life and Writings of the Author by J. R.


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Extreme Money: Masters of the Universe and the Cult of Risk by Satyajit Das

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", "there is no alternative" (TINA), "World Economic Forum" Davos, affirmative action, Alan Greenspan, Albert Einstein, algorithmic trading, Andy Kessler, AOL-Time Warner, Asian financial crisis, asset allocation, asset-backed security, bank run, banking crisis, banks create money, Basel III, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Bonfire of the Vanities, bonus culture, book value, Bretton Woods, BRICs, British Empire, business cycle, buy the rumour, sell the news, capital asset pricing model, carbon credits, Carl Icahn, Carmen Reinhart, carried interest, Celtic Tiger, clean water, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate raider, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, Daniel Kahneman / Amos Tversky, deal flow, debt deflation, Deng Xiaoping, deskilling, discrete time, diversification, diversified portfolio, Doomsday Clock, Dr. Strangelove, Dutch auction, Edward Thorp, Emanuel Derman, en.wikipedia.org, Eugene Fama: efficient market hypothesis, eurozone crisis, Everybody Ought to Be Rich, Fall of the Berlin Wall, financial engineering, financial independence, financial innovation, financial thriller, fixed income, foreign exchange controls, full employment, Glass-Steagall Act, global reserve currency, Goldman Sachs: Vampire Squid, Goodhart's law, Gordon Gekko, greed is good, Greenspan put, happiness index / gross national happiness, haute cuisine, Herman Kahn, high net worth, Hyman Minsky, index fund, information asymmetry, interest rate swap, invention of the wheel, invisible hand, Isaac Newton, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", job automation, Johann Wolfgang von Goethe, John Bogle, John Meriwether, joint-stock company, Jones Act, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, laissez-faire capitalism, load shedding, locking in a profit, Long Term Capital Management, Louis Bachelier, low interest rates, margin call, market bubble, market fundamentalism, Market Wizards by Jack D. Schwager, Marshall McLuhan, Martin Wolf, mega-rich, merger arbitrage, Michael Milken, Mikhail Gorbachev, Milgram experiment, military-industrial complex, Minsky moment, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, mutually assured destruction, Myron Scholes, Naomi Klein, National Debt Clock, negative equity, NetJets, Network effects, new economy, Nick Leeson, Nixon shock, Northern Rock, nuclear winter, oil shock, Own Your Own Home, Paul Samuelson, pets.com, Philip Mirowski, Phillips curve, planned obsolescence, plutocrats, Ponzi scheme, price anchoring, price stability, profit maximization, proprietary trading, public intellectual, quantitative easing, quantitative trading / quantitative finance, Ralph Nader, RAND corporation, random walk, Ray Kurzweil, regulatory arbitrage, Reminiscences of a Stock Operator, rent control, rent-seeking, reserve currency, Richard Feynman, Richard Thaler, Right to Buy, risk free rate, risk-adjusted returns, risk/return, road to serfdom, Robert Shiller, Rod Stewart played at Stephen Schwarzman birthday party, rolodex, Ronald Reagan, Ronald Reagan: Tear down this wall, Satyajit Das, savings glut, shareholder value, Sharpe ratio, short selling, short squeeze, Silicon Valley, six sigma, Slavoj Žižek, South Sea Bubble, special economic zone, statistical model, Stephen Hawking, Steve Jobs, stock buybacks, survivorship bias, tail risk, Teledyne, The Chicago School, The Great Moderation, the market place, the medium is the message, The Myth of the Rational Market, The Nature of the Firm, the new new thing, The Predators' Ball, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, trickle-down economics, Turing test, two and twenty, Upton Sinclair, value at risk, Yogi Berra, zero-coupon bond, zero-sum game

O’Rourke described economics as “an entire scientific discipline of not knowing what you’re talking about.”2 Economics focuses on how production and financial systems work or should work. Macroeconomics focuses on growth, employment, production, inflation, and monetary and government budgetary (fiscal) policy. Microeconomics tries to analyze the behavior of firms or individuals, and how things like prices are determined and markets work. In his 1776 work The Wealth of Nations, Adam Smith argued for a self-regulating market system in which narrow self-interest could order economic activity: It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.3 Capitalism created wealth and progress, but at high social cost.

Alain de Botton (2002) The Art of Travel, Penguin Books, London: 40. 10. Ibid: 57. 11. Quoted in Andrew Ross Sorkin “A ‘bonfire’ returns as heartburn” (24 June 2008) New York Times. Chapter 1—Mirror of the Times 1. Michael Jackson “Money” from History—Past, Present And Future Book 1 (2009). 2. Adam Smith (1776) An Inquiry into the Nature and Causes of the Wealth of Nations: Book 1 Chapter 2 (http://geolib.com/smith.adam/won1-02.html). 3. Glyn Davies (2002) A History of Money: From Ancient Times to the Present Day, University of Wales Press, Cardiff: 13, 14. 4. Ibid: 18, 20. 5. Christian Oliver and Jan Cienski “North Korea offers ginseng to pay Czech debt” (10 August 2010) Financial Times. 6.

William Jennings Bryan, Speech concluding debate on the Chicago Platform (9 July 1896), Democratic National Convention, Chicago, Illinois (http://en.wikisource.org/wiki/Cross_of_Gold_Speech). 10. Wetherford, The History of Money: 175–7. 11. Quoted in Brook Larmer “The price of gold” (January 2009) National Geographic: 42. 12. Ian Fleming (2009) Goldfinger, Penguin Books, London: 73. 13. John Updike (1982) Rabbit is Rich, Penguin Books, London: 201. 14. Adam Smith (2007) The Wealth of Nations, Cosmino, New York: 241. 15. John Kenneth Galbraith (1975) Money: Whence It Came, Whence It Went, Houghton Mifflin, Boston: 45. 16. Dylan Grice “Popular delusions: a Minskian roadmap to the next gold mania” (18 November 2009), Société Générale Cross Asset Research. 17. Walsh, Keynes and the Market: 167. 18.


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Them And Us: Politics, Greed And Inequality - Why We Need A Fair Society by Will Hutton

Abraham Maslow, Alan Greenspan, Andrei Shleifer, asset-backed security, bank run, banking crisis, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Blythe Masters, Boris Johnson, bread and circuses, Bretton Woods, business cycle, capital controls, carbon footprint, Carmen Reinhart, Cass Sunstein, centre right, choice architecture, cloud computing, collective bargaining, conceptual framework, Corn Laws, Cornelius Vanderbilt, corporate governance, creative destruction, credit crunch, Credit Default Swap, debt deflation, decarbonisation, Deng Xiaoping, discovery of DNA, discovery of the americas, discrete time, disinformation, diversification, double helix, Edward Glaeser, financial deregulation, financial engineering, financial innovation, financial intermediation, first-past-the-post, floating exchange rates, Francis Fukuyama: the end of history, Frank Levy and Richard Murnane: The New Division of Labor, full employment, general purpose technology, George Akerlof, Gini coefficient, Glass-Steagall Act, global supply chain, Growth in a Time of Debt, Hyman Minsky, I think there is a world market for maybe five computers, income inequality, inflation targeting, interest rate swap, invisible hand, Isaac Newton, James Dyson, James Watt: steam engine, Japanese asset price bubble, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, knowledge worker, labour market flexibility, language acquisition, Large Hadron Collider, liberal capitalism, light touch regulation, Long Term Capital Management, long term incentive plan, Louis Pasteur, low cost airline, low interest rates, low-wage service sector, mandelbrot fractal, margin call, market fundamentalism, Martin Wolf, mass immigration, means of production, meritocracy, Mikhail Gorbachev, millennium bug, Money creation, money market fund, moral hazard, moral panic, mortgage debt, Myron Scholes, Neil Kinnock, new economy, Northern Rock, offshore financial centre, open economy, plutocrats, power law, price discrimination, private sector deleveraging, proprietary trading, purchasing power parity, quantitative easing, race to the bottom, railway mania, random walk, rent-seeking, reserve currency, Richard Thaler, Right to Buy, rising living standards, Robert Shiller, Ronald Reagan, Rory Sutherland, Satyajit Das, Savings and loan crisis, shareholder value, short selling, Silicon Valley, Skype, South Sea Bubble, Steve Jobs, systems thinking, tail risk, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, the scientific method, The Wealth of Nations by Adam Smith, three-masted sailing ship, too big to fail, unpaid internship, value at risk, Vilfredo Pareto, Washington Consensus, wealth creators, work culture , working poor, world market for maybe five computers, zero-sum game, éminence grise

_r=1. 4 This problem is even more pernicious in developing countries. See Raymond Fisman and Edward Miguel (2008) Economic Gangsters: Corruption, Violence and the Poverty of Nations, Princeton University Press. 5 Adam Smith (1776) An Enquiry into the Nature and Causes of the Wealth of Nations, Vol. I, pp. 363–4. 6 Generally, see Emma Rothschild (2001) Economic Sentiments: Adam Smith, Condorcet, and the Enlightenment, Harvard University Press. The spirit of rationalism underpinned early centralisation and the emergence of unified markets. See Stephan Epstein (2000) Freedom and Growth: The Rise of States and Markets in Europe, 1300–1750, Routledge. 7 J.

The acquirer must leave for his neighbour ‘as good and as large a possession (after the other had taken out his) as before it was appropriated’.11 A shipwrecked sailor, for example, cannot appropriate the only tools available because that would leave others at an unjustifiable disadvantage. Property ownership therefore had limits, but it was justified not as part of God’s dominion but because of the effort made to win it. We earn our rights – a view that has turned out to be durable. Adam Smith, the author of The Wealth of Nations, saw poor workers as victims of the disproportionate allocation of property, unacknowledged Atlases supporting a superstructure of ‘ease and plenty’ above them. Rather than pitiful creatures who deserved their fate, Smith’s humanity and Enlightenment recognition that human beings were of equal worth made him see virtue in the apparently virtueless poor.

He was wrong about derivatives alleviating risk, wrong that shareholders would ensure that banks pursued policies that did not destroy wealth, and wrong about the housing boom not being a bubble that would inevitably burst. But the pre-credit crunch, ‘socialist’ Brown was happy to go along with all this. Perhaps we should not be surprised. After all, Edinburgh University was Adam Smith’s alma mater, too, and both Brown and Smith were citizens of Kirkcaldy, and proud of the fact. Greenspan might stress The Wealth of Nations in his belief system; Brown might stress the humanism and commitment to fairness in Smith’s Theory of Moral Sentiments. But both worshipped at the same shrine.8 Brown was flattered that American conservatives thought so highly of the Scottish contribution to the European Enlightenment.


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Debt: The First 5,000 Years by David Graeber

Admiral Zheng, Alan Greenspan, anti-communist, back-to-the-land, banks create money, behavioural economics, bread and circuses, Bretton Woods, British Empire, carried interest, cashless society, central bank independence, classic study, colonial rule, commoditize, corporate governance, David Graeber, delayed gratification, dematerialisation, double entry bookkeeping, financial innovation, fixed income, full employment, George Gilder, informal economy, invention of writing, invisible hand, Isaac Newton, joint-stock company, means of production, microcredit, Money creation, money: store of value / unit of account / medium of exchange, moral hazard, oil shock, Panopticon Jeremy Bentham, Paul Samuelson, payday loans, place-making, Ponzi scheme, Post-Keynesian economics, price stability, profit motive, reserve currency, Right to Buy, Ronald Reagan, scientific management, seigniorage, sexual politics, short selling, Silicon Valley, South Sea Bubble, subprime mortgage crisis, Thales of Miletus, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, transatlantic slave trade, tulip mania, upwardly mobile, urban decay, working poor, zero-sum game

People continued keeping accounts in the old imperial currency, even if they were no longer using coins.28 Similarly, the Pukhtun men who like to swap bicycles for donkeys are hardly unfamiliar with the use of money. Money has existed in that part of the world for thousands of years. They just prefer direct exchange between equals—in this case, because they consider it more manly.29 The most remarkable thing is that even in Adam Smith’s examples of fish and nails and tobacco being used as money, the same sort of thing was happening. In the years following the appearance of The Wealth of Nations, scholars checked into most of those examples and discovered that in just about every case, the people involved were quite familiar with the use of money, and in fact, were using money—as a unit of account.30 Take the example of dried cod, supposedly used as money in Newfoundland.

In the Middle Ages, for instance, everyone continued to assess the value of tools and livestock in the old Roman currency, even if the coins themselves had ceased to circulate.6 It’s money that had made it possible for us to imagine ourselves in the way economists encourage us to do: as a collection of individuals and nations whose main business is swapping things. It’s also clear that the mere existence of money, in itself, is not enough to allow us see the world this way. If it were, the discipline of economics would have been created in ancient Sumer, or anyway, far earlier than 1776, when Adam Smith’s The Wealth of Nations appeared. The missing element is in fact exactly the thing Smith was attempting to downplay: the role of government policy. In England, in Smith’s day, it became possible to see the market, the world of butchers, ironmongers, and haberdashers, as its own entirely independent sphere of human activity because the British government was actively engaged in fostering it.

Cambridge: Cambridge University Press. Smith, Adam. 1761. Theory of moral sentiments. Cambridge: Cambridge University Press (2002 edition). _____. 1762. Lectures on Jurisprudence. Glasgow Edition of the Works and Correspondence of Adam Smith Vol. 5. Indianapolis: Liberty Fund (1982 edition). _____. 1776. An Inquiry into the nature and causes of the wealth of nations. Oxford: Clarendon Press (1976 edition). Smith, Edwin, and Andrew Murray Dale. 1968. The Ila Speaking Peoples Of Northern Rhodesia. Two Volumes. London: Kessinger. Smith, Timothy. 1983. “Wampum as Primitive Valuables.” Research in Economic Anthropology 5: 225-246.


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Capitalism 3.0: A Guide to Reclaiming the Commons by Peter Barnes

Albert Einstein, car-free, carbon tax, clean water, collective bargaining, corporate governance, corporate personhood, corporate raider, corporate social responsibility, cotton gin, dark matter, digital divide, diversified portfolio, do well by doing good, Easter island, en.wikipedia.org, Garrett Hardin, gentrification, hypertext link, Isaac Newton, James Watt: steam engine, jitney, junk bonds, Michael Milken, military-industrial complex, money market fund, new economy, patent troll, precautionary principle, profit maximization, Ronald Coase, telemarketer, The Wealth of Nations by Adam Smith, Tragedy of the Commons, transaction costs, War on Poverty, Yogi Berra

The Ascent of Corporations When I speak in this book of corporations, I’m speaking of a very special institution: the publicly traded stock corporation. This is an institution with a board of directors, a set of executive officers, and a fluctuating set of shareholders to whom the directors and officers are legally accountable. These corporations have an explicit mission: to maximize return to stock owners. When Adam Smith wrote The Wealth of Nations in 1776, there were barely a handful of corporations in Britain or America. The dominant business form was the partnership, in which small groups of people known to each other ran businesses they co-owned. In the public’s mind—as in Smith’s—the corporate form, in which managers sold stock to strangers, was inherently prone to fraud.

.”: Bob Dole’s statement on the spectrum giveaway can be found at www.anu.edu.au/mail-archives/link/link9601/0035.html. See also Ralph Kinney Bennett, “The Great Airwaves Giveaway,” Reader’s Digest, June 1996. 119 “If you steal $10 . . .”: Walter Hickel, Crisis in the Commons: The Alaska Solution (Oakland, Calif.: ICS Press, 2002), p. 217. 120 a handful of corporations: Adam Smith, The Wealth of Nations (London: Penguin Books, 1982 [originally published 1776]). 121 corporations were persons”: The Supreme Court decision that established corporate personhood was Santa Clara County v. Southern Pacific Railroad, 118 U.S. 394 (1886). 122 Fortune 500 sales: I computed the annual sales of Fortune 500 corporations from data available (for a fee) on Fortune magazine’s website.

.: South End Press, 2002. Shiva, Vandana. Earth Democracy: Justice, Sustainability, and Peace. Cambridge, Mass.: South End Press, 2005. Shulman, Seth. Owning the Future. Boston: Houghton Mifflin, 1999. Simms, Andrew. Ecological Debt: The Health of the Planet and the Wealth of Nations. London: Pluto Press, 2005. Smith, Adam. The Wealth of Nations. London: Penguin Books, 1982. (Originally published 1776) Smith, Adam. The Theory of Moral Sentiments. Amherst, N.Y.: Prometheus Books, 2000. (Originally published 1759) Steinberg, Theodore. Slide Mountain: The Folly of Owning Nature. Berkeley: University of California Press, 1995.


Year 501 by Noam Chomsky

air traffic controllers' union, anti-communist, Bartolomé de las Casas, Berlin Wall, Bolshevik threat, Bretton Woods, British Empire, business cycle, capital controls, Caribbean Basin Initiative, classic study, colonial rule, corporate governance, cuban missile crisis, declining real wages, Deng Xiaoping, deskilling, Dissolution of the Soviet Union, European colonialism, experimental subject, Fall of the Berlin Wall, Howard Zinn, invisible hand, land reform, land tenure, long peace, mass incarceration, means of production, Monroe Doctrine, Nixon triggered the end of the Bretton Woods system, non-tariff barriers, offshore financial centre, plutocrats, price stability, Ralph Nader, Ralph Waldo Emerson, RAND corporation, Robert Solow, Ronald Reagan, scientific management, Simon Kuznets, strikebreaker, structural adjustment programs, the scientific method, The Wealth of Nations by Adam Smith, trade liberalization, trickle-down economics, union organizing, War on Poverty, working poor

So it has always been.11 Stigler may well be right, however, that Smith “certainly convinced all subsequent economists.” If so, that is a comment on the dangers of illegitimate idealization that isolates some inquiry from factors that crucially affect its subject matter, a problem familiar in the sciences; in this case, separation of abstract inquiry into the wealth of nations from questions of power: Who decides, and for whom? We return to the point as Adam Smith himself understood it. The wealth of the colonies returned to Britain, creating huge fortunes. By 1700, the East India Company accounted for “above half the trade of the nation,” one contemporary critic commented. Through the following half-century, Keay writes, its shares became the “equivalent of a gilt-edged security, much sought after by trustees, charities and foreign investors.”

Their “conservative” counterparts are only more extreme in their adulation of the Wise Men who are the rightful rulers—in the service of the rich and powerful, a minor footnote regularly forgotten.18 The rabble must be instructed in the values of subordination and a narrow quest for personal gain within the parameters set by the institutions of the masters; meaningful democracy, with popular association and action, is a threat to be overcome. These too are persistent themes, that only take new forms. Adam Smith’s nuanced interpretation of state interference with international trade extended to the domestic scene as well. The praise in his opening remarks for “the division of labor” is well-known: it is the source of “the greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgment with which it is any where directed, or applied,” and the foundation of “the wealth of nations.” The great merit of free trade, he argued, is that it contributes to these tendencies.

The policies they contrived were reasonable enough in terms of narrow self-interest, however others may have been harmed, including the general population of England.17 Smith’s conclusion that “Under the present system of management, therefore, Great Britain derives nothing but loss from the dominion which she assumes over her colonies” is highly misleading. From the point of view of policy choices, Great Britain was not an entity. “The wealth of nations” is no concern of the “architects of policy,” who, as Smith insists, seek private gain. The fate of the common people is no more their concern than that of the “mere savages” who stand in the way. If an “invisible hand” sometimes provided others with benefits, that is merely incidental. The basic focus on “wealth of nations” and what “Great Britain derives” is faulty from the start, undermined by illegitimate idealization, though at least it is qualified and corrected in Smith’s fuller discussion.


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Losing Control: The Emerging Threats to Western Prosperity by Stephen D. King

"World Economic Forum" Davos, Admiral Zheng, Alan Greenspan, asset-backed security, barriers to entry, Berlin Wall, Bernie Madoff, Bretton Woods, BRICs, British Empire, business cycle, capital controls, Celtic Tiger, central bank independence, collateralized debt obligation, corporate governance, credit crunch, crony capitalism, currency manipulation / currency intervention, currency peg, David Ricardo: comparative advantage, demographic dividend, demographic transition, Deng Xiaoping, Diane Coyle, Fall of the Berlin Wall, financial deregulation, financial innovation, fixed income, foreign exchange controls, Francis Fukuyama: the end of history, full employment, G4S, George Akerlof, German hyperinflation, Gini coefficient, Great Leap Forward, guns versus butter model, hiring and firing, income inequality, income per capita, inflation targeting, invisible hand, Isaac Newton, junk bonds, knowledge economy, labour market flexibility, labour mobility, liberal capitalism, low interest rates, low skilled workers, market clearing, Martin Wolf, mass immigration, Meghnad Desai, Mexican peso crisis / tequila crisis, Naomi Klein, new economy, old age dependency ratio, Paul Samuelson, Ponzi scheme, price mechanism, price stability, purchasing power parity, rent-seeking, reserve currency, rising living standards, Ronald Reagan, Savings and loan crisis, savings glut, Silicon Valley, Simon Kuznets, sovereign wealth fund, spice trade, statistical model, technology bubble, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transaction costs, Washington Consensus, We are all Keynesians now, women in the workforce, working-age population, Y2K, Yom Kippur War

Market-led solutions are profoundly amoral and, thus, fail to address many of the key issues of political economy. Market forces may lead to more efficient outcomes, but efficiency says nothing about whether the rewards are fairly distributed. For markets to provide widespread benefits, property rights and the rule of law are most certainly required, but they may not be enough. As Adam Smith wrote in The Wealth of Nations, ‘Wherever there is great property, there is great inequality . . . the affluence of the rich excites the indignation of the poor, who are often driven by want, and prompted by envy, to invade his possessions . . . The acquisition of valuable and extensive property, therefore, necessarily requires the establishment of civil government.’

To put China’s gold medal haul into context, the Middle Kingdom managed to win only five gold medals in the Seoul Olympics in 1988. 7. For an informed discussion of the client state problem, see Tony Judt’s Post War: A History of Europe since 1945 (William Heinemann, London, 2005). 8. An Inquiry into the Nature and Causes of the Wealth of Nations, first published in 1776. As it turned out, this was a remarkably auspicious year for political and economic developments. 9. See, for example, ‘The market for lemons: quality uncertainty and the market mechanism’, the groundbreaking paper by George A. Akerlof, Quarterly Journal of Economics, 84.3 (1970), pp. 488–500. 10.

., Latin America’s Political Economy of the Possible: Beyond Good Revolutionaries and Free-Marketeers, MIT Press, Boston, 2007 Sen, A., Identity and Violence: The Illusion of Destiny, Allen Lane, London, 2006 Shiller, R., Irrational Exuberance, Princeton University Press, Princeton, 2000 Smith, A., The Wealth of Nations, Books I–III and Books IV–V, Penguin, London, 1999 ———, Theory of Moral Sentiments, Prometheus, London, 2000 Stevenson, D., 1914–1918: The History of the First World War, Allen Lane, London, 2004 Stiglitz, J., Globalisation and its Discontents, Penguin, London, 2003 Stock, J. and Watson, M., Has the Business Cycle Changed and Why?


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Payoff: The Hidden Logic That Shapes Our Motivations by Dan Ariely

Affordable Care Act / Obamacare, always be closing, behavioural economics, David Brooks, en.wikipedia.org, IKEA effect, knowledge economy, knowledge worker, science of happiness, Snapchat, TED Talk, The Wealth of Nations by Adam Smith

This view holds that the labor market is a place where individuals exchange work for wages (regardless of how meaningless the labor is) and that people typically don’t really care what happens to their work as long as they are fairly compensated for it. This view of labor as a work-wage exchange springs from Adam Smith’s 1776 magnum opus The Wealth of Nations, in which Smith described the benefits of breaking a large task into components, assigning one person to each specific task, and encouraging them to specialize in performing it. In his famous example of the pin factory, Smith argued that having one person make every part of a pin would result in low productivity.

CLICK HERE TO SIGN UP or visit us online to sign up at eBookNews.SimonandSchuster.com NOTES 1 As long as you don’t expect a simple answer to this question by the end of the book, we are going to be okay. 2 My father used to say that having very young kids at home is a sure way to get people to stay in the office longer. 3 Roy Baumeister, Kathleen Vohns, Jennifer Aaker, Emily Garbinsky, “Some Key Differences Between a Happy Life and a Meaningful Life,” Journal of Positive Psychology (2013). 4 Dan Ariely, Emir Kamenica, and Drazen Prelec, “Man’s Search for Meaning: The Case of Legos,” Journal of Economic Behavior & Organization (2008). 5 Amy Adkins, “Majority of U.S. Employees Not Engaged Despite Gains in 2014,” Gallup, January 28, 2015, http://www.gallup.com/poll/181289/majority-employees-not-engaged-despite-gains-2014.aspx. 6 Adam Smith, “An Inquiry into the Nature and Causes of the Wealth of Nations,” http://geolib.com/smith.adam/won1-01.html. 7 John Maynard Keynes, The General Theory of Employment, Interest and Money (1936). 8 Michelle Park, “A History of the Cake Mix, the Invention That Redefined ‘Baking,’ ” http://www.bonappetit.com/entertaining-style/pop-culture/article/cake-mix-history. 9 Mike Norton, Daniel Mochon, and Dan Ariely “The IKEA Effect: When Labor Leads to Love,” Journal of Consumer Psychology (2012).

In 1844, Marx wrote about what he called “the alienation of labor,” which described a situation in which someone works on a small sub-task, in a small part of a larger enterprise. Like the worker in Adam Smith’s pin factory, the laborer has no idea what his project is all about. He doesn’t understand how his work fits in with the enterprise as a whole. It is unclear to him who will use the product he makes, and he generally feels no connection to the organization, the project, the end user, or the outcome. It is clear that Adam Smith and Karl Marx had very different understandings of the nature of productivity. Smith assumed that management could change the structure of the workplace and achieve more efficiency without sacrificing human motivation.


pages: 357 words: 110,017

Money: The Unauthorized Biography by Felix Martin

Alan Greenspan, bank run, banking crisis, Basel III, Bear Stearns, Bernie Madoff, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business cycle, call centre, capital asset pricing model, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, creative destruction, credit crunch, David Graeber, en.wikipedia.org, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, fixed income, Fractional reserve banking, full employment, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Hyman Minsky, inflation targeting, invention of writing, invisible hand, Irish bank strikes, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kenneth Rogoff, land bank, Michael Milken, mobile money, moral hazard, mortgage debt, new economy, Northern Rock, Occupy movement, Paul Volcker talking about ATMs, plutocrats, private military company, proprietary trading, public intellectual, Republic of Letters, Richard Feynman, Robert Shiller, Savings and loan crisis, Scientific racism, scientific worldview, seigniorage, Silicon Valley, smart transportation, South Sea Bubble, supply-chain management, The Wealth of Nations by Adam Smith, too big to fail

The new world being forged by this corporate and financial revolution clamoured to be explained and justified—and Mandeville’s outrageous hypothesis appeared to do both at once. When it was taken up by one of the Enlightenment’s morning stars, the Scotsman Adam Smith, it became the basis of a fully fledged theory of monetary society that has survived to this day. In his Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith formulated the first systematic theory linking individual behaviour with the organisation of the economy, and presented the first cogent synthesis of earlier thinkers’ ideas of how the financial revolution had transformed traditional society.

A version of it can be found in Aristotle’s Politics, the earliest treatment of the subject in the entire Western canon.9 It is the theory developed by John Locke, the father of classical political Liberalism, in his Second Treatise of Government.10 To cap it all, it is the very theory—almost to the letter—advocated by none other than Adam Smith in his chapter “Of the Origin and Use of Money” in the foundation text of modern economics, An Inquiry into the Nature and Causes of the Wealth of Nations: But when the division of labour first began to take place, this power of exchanging must frequently have been very much clogged and embarrassed in its operations … The butcher has more meat in his shop than he himself can consume, and the brewer and the baker would each of them be willing to purchase a part of it.

., p. 74 (where it is accidentally attributed to Book XXII, 14). 6. Montesquieu, Esprit des lois, Book XXI, 20, quoted ibid., pp. 72–3. 7. Ibid. 8. James Carville, quoted in Wall Street Journal, 25 February 1993, p. A1. 9. It was published in England in 1767, nine years before Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations. 10. Steuart, 1966, Vol. 1, p. 278. Quoted in Hirschman, 1977, p. 85. 11. Boyer-Xambeu et al., 1994, p. 30. 12. The extent to which the development of finance in England lagged behind Continental Europe until the late seventeenth century is demonstrated by Thomas Mun’s treatment of standard Latin practices such as payments by transfer between bank accounts as unknown in England in his 1621 Discourse on Foreign Trade.


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Deaths of Despair and the Future of Capitalism by Anne Case, Angus Deaton

Affordable Care Act / Obamacare, basic income, Bertrand Russell: In Praise of Idleness, Boeing 737 MAX, business cycle, call centre, collapse of Lehman Brothers, collective bargaining, company town, Corn Laws, corporate governance, correlation coefficient, crack epidemic, creative destruction, crony capitalism, declining real wages, deindustrialization, demographic transition, Dissolution of the Soviet Union, Donald Trump, Downton Abbey, Edward Glaeser, Elon Musk, falling living standards, Fellow of the Royal Society, financial engineering, fulfillment center, germ theory of disease, income inequality, Jeff Bezos, Joseph Schumpeter, Ken Thompson, Kenneth Arrow, labor-force participation, Les Trente Glorieuses, low skilled workers, Martin Wolf, meritocracy, Mikhail Gorbachev, obamacare, opioid epidemic / opioid crisis, pensions crisis, pill mill, randomized controlled trial, refrigerator car, rent-seeking, risk tolerance, shareholder value, Silicon Valley, The Spirit Level, The Wealth of Nations by Adam Smith, Tim Cook: Apple, trade liberalization, Tyler Cowen, universal basic income, working-age population, zero-sum game

Those explanations are long standing. But there is another story that is more recent in origin: the decline in the power of workers relative to corporations, not only in workplaces and markets but also in Congress. It is to this that we now turn. 15 Firms, Consumers, and Workers IN A FAMOUS PASSAGE in The Wealth of Nations, Adam Smith writes that “people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”1 The use of market power to raise prices remains a concern today, as we have already seen in healthcare.

Emily Guendelsberger, 2019, On the clock: What low-wage work did to me and how it drives America insane, Little, Brown; James Bloodworth, 2018, Hired: Six months undercover in low-wage Britain, Atlantic Books. 16. Durkheim, Le suicide. 17. Dani Rodrik, 1997, Has globalization gone too far?, Institute for International Economics. 18. Sam Quinones, 2015, Dreamland: The true tale of America’s opiate epidemic, Bloomsbury. 19. Adam Smith, 1776, The wealth of nations, bk. 4. 20. Matthew Smith, Danny Yagan, Owen M. Zidar, and Eric Zwick, 2019, “Capitalists in the 21st century,” Quarterly Journal of Economics, 134(4), 1675–745. 21. Kenneth Scheve and David Stasavage, 2016, Taxing the rich: A history of fiscal fairness in the United States and Europe, Princeton University Press. 22.

Martin, Micah Hartman, Benjamin Washington, Aaron Catlin, and the National Health Expenditure Accounts Team, 2019, “National health care expenditure in 2017: Growth slows to post-Great Recession rates; share of GDP stabilizes,” Health Affairs, 38(1), 96–106, https://doi.org/10.1377/hlthaff.2018.05085. 2. Adam Smith, 1776, The wealth of nations, bk. 4. See our introduction. 3. Robert E. Hall and Charles I. Jones, 2007, “The value of life and the rise in health spending,” Quarterly Journal of Economics, 122(1), 39–72, https://doi.org/10.1162/qjec.122.1.39. 4. Kenneth J. Arrow, 1963, “Uncertainty and the welfare economics of medical care,” American Economic Review, 53(5), 941–73. 5.


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The Entrepreneurial State: Debunking Public vs. Private Sector Myths by Mariana Mazzucato

Apple II, banking crisis, barriers to entry, Bretton Woods, business cycle, California gold rush, call centre, carbon footprint, carbon tax, Carmen Reinhart, circular economy, clean tech, computer age, creative destruction, credit crunch, David Ricardo: comparative advantage, demand response, deskilling, dual-use technology, endogenous growth, energy security, energy transition, eurozone crisis, everywhere but in the productivity statistics, Fairchild Semiconductor, Financial Instability Hypothesis, full employment, G4S, general purpose technology, green transition, Growth in a Time of Debt, Hyman Minsky, incomplete markets, information retrieval, intangible asset, invisible hand, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, knowledge economy, knowledge worker, linear model of innovation, natural language processing, new economy, offshore financial centre, Philip Mirowski, popular electronics, Post-Keynesian economics, profit maximization, Ralph Nader, renewable energy credits, rent-seeking, ride hailing / ride sharing, risk tolerance, Robert Solow, shareholder value, Silicon Valley, Silicon Valley ideology, smart grid, Solyndra, Steve Jobs, Steve Wozniak, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Tony Fadell, too big to fail, total factor productivity, trickle-down economics, vertical integration, Washington Consensus, William Shockley: the traitorous eight

Carlota Perez Author of Technological Revolutions and Financial Capital: The Dynamics of Bubble and Golden Ages Technological University of Tallinn, Estonia; London School of Economics, University of Cambridge and University of Sussex, UK February 2013 INTRODUCTION DO SOMETHING DIFFERENT …our disability is discursive: we simply do not know how to talk about things anymore. Tony Judt (2010, 34) A Discursive Battle Never more than today is it necessary to question the role of the State in the economy – a burning issue since Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations (Smith, 1776). This is because in most parts of the world we are witnessing a massive withdrawal of the State, one that has been justified in terms of debt reduction and – perhaps more systematically – in terms of rendering the economy more ‘dynamic’, ‘competitive’ and ‘innovative’.

Equally important, the jobs created by a technology-driven supply chain are much higher paying – but, they must be sustained over entire technology life cycles. (2012, 31) Keynes focused on the need for the State to intervene in order to bring stability and prevent crises, certainly a pressing issue in today’s circumstances.3 But in order to understand the dynamics of such investments, it is fundamental to better understand different perspectives on the theory of economic growth first, and then to establish the role of technology and innovation in driving that economic growth. Technology and Growth While growth and the wealth of nations has been the lead concern of economists since Adam Smith, in the 1950s it was shown by Abramovitz (1956) and Solow (1956) that conventional measures of capital and labour inputs could not account for 90 per cent of economic growth in an advanced industrialized country such as the United States. It was assumed that the unexplained residual must reflect productivity growth, rather than the quantity of factors of production.

Soviet Union 37, 39; market failure theory applied to 61; as measure of innovation performance 34, 41; myth of business investment requirements 53–5; myth of innovation being about 44, 159–60; as not enough 142; of pharmaceutical companies 25–6, 188; R&D/GDP 52; SEMATECH funding 99; spending differences 42; of struggling OECD countries 41; technological change investments 59; in wind energy projects 144–5; worker tax credit 54 R&D/GDP 52 R&D Magazine 63 redistributional policies 31 Reenen, John van 46 Reinert, Erik 9n3, 38n5, 73 Reinhart, Carmen 17–18 renewable energy credits (RECs) 115n1 Renewable Portfolio Standards 114 ‘repatriation tax holiday’ 175 ‘representative’ agent 60 research 60, 78, 84, 136; see also science rewards, socialization of 156 risk 58–62, 70; see also socialization of risk risk landscape 22–3, 58, 194, 198 risk–reward nexus framework 186 risk–reward relationships: Apple and the US government 167–8; collective vs. private benefit 165–6, 196; corporate success resulting in regional economic misery 176–8; need for functional dynamic in 182–3, 197–8; overview 165–7; State recognition in 12 Robinson, Joan 34 Roche 82 Rock, Arthur 94 Rodrik, Dani 27, 28 Rogoff, Kenneth 17–18 Roland, Alex 98n7 Roosevelt, Franklin D. 6, 74 Royal Radar Establishment (RRE) 101 royalties 188–9 Ruegg, Rosalie 148 Ruttan, Vernon 62–3 Sanofi 69 Schmidt, Horace 92, 92–3; see also Apple Schumpeter, Joseph 10n4, 31, 35, 58 Schumpeterian innovation economics: creative destruction concept in 10, 10n4, 58, 165; extended protection in 189; influence of on BNDES 5; investment role in 31; macro models of 44; ‘systems of innovation’ view of 35–6; theory of 36n4 science 49, 51, 57, 59n1, 69; see also research Seagate 97 Segal, David 170 Semiconductor Manufacturing Technology (SEMATECH) consortium 99 Shapiro, Isaac 170–71, 171n2 share buybacks 25–7, 67, 171, 175 shareholder-value ideology 184, 186 Shiman, Philip 98n7 Shi Zhengrong 141, 152–4 Shockley, William 76 Silicon Valley 20, 63, 78, 95 Silver, Jonathan 129, 154 SIRI 103, 105–6, 109 SITRA, Finnish Innovation Fund 190 small and medium enterprises (SMEs) 10, 45–6, 45n6, 111n13 Small Business Administration (US) 94 small business associations 19 Small Business Innovation Development Act of 1982 79 Small Business Innovation Research (SBIR) (US) 20, 47, 79–81, 80, 188 Small Business Investment Company (SBIC) (US) 94 Smith, Adam 30; see also Adam Smith Institute; Inquiry into the Nature and Causes of the Wealth of Nations, An; ‘Invisible Hand’ socialization of risk and privatization of rewards: as cause of inequity and instability 185; direct or indirect returns of 187–91; framework for change of 185–7; income-contingent loans and equity 189–90; in the innovation economy 3; ‘innovation fund’ creation 189; IPR 189; mapping innovative labour into division of rewards 184–5; in pharmaceutical development 181; in public–private partnerships 27; skewed reality of risk and reward 181–5 social vs. private returns on investment 3–4 solar power: see wind and solar power Solow, Robert M. 33–4 Solyndra 129–32, 151, 154–5, 162; see also clean technology; ‘No More Solyndras Act’ Something Ventured, Something Gained (documentary) 78 Sony 108 Soppe, Birgit 146 South Korea 40, 61, 120–21 Soviet Union 37–9, 39, 76 Spain 120n4, 121, 121, 157 Spectrawatt 130n11, 162 spillovers 194 spinoff business model 76 SPINTRONICS 97, 97n5 Sputnik launch 76 Stanford Research Institute (SRI) 105–6; see also SIRI State: administrative role of 6, 12; attracting talent 12; capitalintensive investment by 27; ‘crowding in’ of 5–6, 8; ‘Developmental State’ 10, 37–8, 37–8n5, 40, 68; ‘directionality’ provided by 32n2; ‘dynamizing in’ 8; economic role of 1, 29; flexibility of 195–6; funding: see individual US agencies and departments; industrial directives of 21; as leading entrepreneurial force 193; market creation by 62, 167; organizational dynamics consideration 197; performance indicators lacking for 194; as private sector partner 5; response to criticism 19; responsibilities of 13; scope of endeavours of 18–19, 195; sectors funded by 63, 83, 196; targeted catch-up policies of 40; views of 9; see also ‘entrepreneurial’ State; ‘picking winners’ State development banks 2–3, 5, 122, 137–40, 189–91; see also Brazilian Development Bank (BNDES); China Development Bank (CDB); KfW (German Development Bank) stock market 49–50 Strategic Computing Initiative (SCI) 98–9 strategic management 197 Stumpe, Bent 101 Sullivan, Martin A. 174 SunPower 151 Suntech of China 152–5, 152n5 supply-side policies 83, 113–15, 159 sustainability 117, 119, 123, 195; see also green industrial revolution Swanson, Richard 151 Sweden 121 ‘systems of innovation’ approach: defined 36; foundation of 35–7; market failure approach vs. 9–10, 61–2; need for 22; regional 39; State role in 74; see also innovation; innovation ecosystems; Schumpeterian innovation economics ‘systems’ perspective 196 tariffs 108, 157, 157n6; see also feed-in tariffs Tassey, Gregory 32 tax avoidance: by Apple 11, 12, 171–5, 188; corporate 173–5, 187; ‘tax gap’ 187, 187n1 tax breaks 45–7 tax credits: energy 114, 138; impact of on R&D 28, 52–4; and R&D 111n13; and R&E 110; wind and solar power 126n8, 145, 149 tax cuts 10, 19, 23, 54, 69 taxes: antidumping tariffs 108; business as dependent on 69; ‘carbon tax’ 114; Citizens for Tax Justice 174n5; citizens unawareness of uses of 166; global avoidance schemes 174, 174n5; incentives to biotech firms 81; innovation systems not supported by 187–8; insensitivity of investment to 30n1; IRS 529 plans 111, 111n15; ‘patent box’ policy 51–2; policies impacting SMEs 45; policy 51; ‘repatriation tax holiday’ 175; State return from 165; US tax code 174; see also private vs. social returns; risk–reward nexus framework Taxol 188 Tea Party movement 17 technology: causing creative destruction 58; commissioning of advances in 54; core enabler technologies of Apple 95; dual-use 97; and growth 33–4; impact of regions on national performance 39; interagency collaborations in 74; origins of Apple products 109; revolutions 125, 126; SIRI 103, 105–6; State leadership of strategy for 40; unique situations in 59; see also computer field; wind and solar power technology commercialized: from capacitive sensing to click-wheels 99–101, 100n9, 103; cellular 102, 104, 109; from click-wheels to multi-touch screens 102–3; digital signal processing (DSP) 109; GPS 105; GPTs 62; LCD 107–8; lithium-ion battery 108; resistive touch-screens 101; silicon ICs impact on 98; thin-film transistors (TFTs) 107–8; ‘zero-emission’ electric vehicles 108 technology policy 75 Technology Reinvestment Program (TRP) 97 TFP of India vs. 46 TFTs (thin-film transistors) 107–8 Thomas, Patrick 148 ‘trade wars’ 122, 131, 157 ‘traitorous eight’, the 76 Tulum, Oner: on biopharmaceutical industry 67, 69, 82; NIH spending data compilation of 25, 69; on orphan drugs 81–2 United Kingdom (UK): approach to green initiatives 124–6; BBC 16; BERD (business expenditure on R&D) in 24; Big Society theme of 15–16; clean technology investment by 120; energy strategies of 116; government energy R&D spending 121, 121; green revolution in 120; Medical Research Council (MRC) 20, 67; outsourcing in 16; public R&D spending in 61; R&D/GDP 52; sector specialties of 42; SME government support 45; SME performance in 46 United States: Air Force 98, 104, 105; American Energy Innovation Council (AEIC) 26; Apple’s risk– reward relationship with 167–8; Army 107; competitiveness decline in 176; energy policy 158; energy strategies of 116, 137; funding and innovation in 52; funding sources for basic research R&D in 61; funding sources for R&D in 60, 60–61, 60n2; green revolution in 120; ‘hidden Developmental State’ in 38, 38n5; innovation threatened in 24; systems of innovation in 37; tax code 174; tax system 172; ‘trade wars’ of 122, 131, 157; types of venture capital successes in 49; undermining of innovation in 53; wind capacity of 143; see also taxes; specific agencies and departments of University of Southern California 77–8 UNIX 104 USSR: see Soviet Union US Windpower (later Kenetech) 147 Valentine, Don 94 Vallas, Steven P. 67–8 value: extraction 26, 42, 162; measures of 34 Venrock 94 Vensys Energiesysteme 149 venture capital: in Europe 53; Europe’s lag attributed to lack of 20; exit opportunities 48, 67, 81, 130, 138; failure of 107; government stimulation of 116; impatience of 129–32, 146n2; limited role of 131, 138; myth of as risk loving 47–50, 142, 161–2; and NASDAQ’s coevolution 50; presenting as lead risk taker 183; public vs. private 19, 47; short-termist approach of 108, 127; timing of investment by 23; Venrock 94; see also private sector venture capital sector investment: clean technology 161; green revolution 127–8, 128n9; in Solyndra 130; subsectors of within clean energy 128 venture capital stages of investment 47, 48; early stage and seed funding awards by 80; risk of loss in 48 Vestas: Denmark producing 143; DoE research influence on 148; early years of 147; patents purchased by 145; policy responses by 125, 137; rugged designs of 146 vision: Apple’s 93, 94, 99–100; ‘green’ 116, 120, 123; lack of 107; in nanotechnology 83–4; State’s 21–4, 58, 62–4 Warburg Pincus 50 Washington Consensus 40 Washington Post 57 Wayne, Ronald 89, 89n1; see also Apple welfare state institutions 31 Westerman, Wayne 102–3 Westinghouse 107 wind and solar power: clean technology in crisis 158–9; collective failure in 163; decline of US firms in 144, 144n1; grid parity in 141; networks of learning in 146n2; R&D myth in 159–60; small being beautiful myth in 160–61; solar bankruptcies 153–6; symbiotic innovation ecosystems in 162–3; venture capital myth in 161–2; from ‘Wind Rush’ to rise of China’s wind power sector 144–50; withdrawal of government support 149; see also specific corporations; clean technology wind and solar power markets: competition, innovation and market size 156–8; disrupting existing markets 161; global market for 143; growth opportunities in 156–7; growth powered by crisis 142–4; and manufacturing of 144, 146–7, 153 wind and solar power policies: California’s tax programme 147; fostering development 144–5; providing incentives 149–51; subsidies 148–9, 152; tax credits 145, 149 wind and solar power technology: aerodynamics of 148; computer use in 147–8; C-Si 129, 130n11, 151–2, 158; Denmark’s Gedser design 145; oil company role in 161n8; origins of solar technologies 150–53; remote power applications 150; research behind 148–9; see also clean technology wind energy R&D projects 144–6 Witty, Andrew 66–7 World Trade Organization (WTO) 40 World War II 74 Wozniak, Steve 89, 89n1, 94; see also Apple Wuxi-Guolian 152 Wuxi Suntech 153 Xerox 107 Xerox PARC 24 Zond Corporation 147–8 Table of Contents Halftitle Page Title Page Copyright Dedication Epigraph Contents List of Tables and Figures List of Acronyms Acknowledgements Foreword by Carlota Perez Introduction: Do Something Different A Discursive Battle Beyond Fixing Failures From ‘Crowding In’ to ‘Dynamizing In’ Images Matter Structure of the Book Chapter 1: From Crisis Ideology to the Division of Innovative Labour And in the Eurozone State Picking Winners vs.


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Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism by Ha-Joon Chang

"there is no alternative" (TINA), "World Economic Forum" Davos, affirmative action, Albert Einstein, Big bang: deregulation of the City of London, bilateral investment treaty, borderless world, Bretton Woods, British Empire, Brownian motion, business cycle, call centre, capital controls, central bank independence, colonial rule, Corn Laws, corporate governance, David Ricardo: comparative advantage, Deng Xiaoping, Doha Development Round, en.wikipedia.org, export processing zone, falling living standards, Fellow of the Royal Society, financial deregulation, financial engineering, fixed income, foreign exchange controls, Francis Fukuyama: the end of history, income inequality, income per capita, industrial robot, Isaac Newton, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, land reform, liberal world order, liberation theology, low skilled workers, market bubble, market fundamentalism, Martin Wolf, means of production, mega-rich, moral hazard, Nelson Mandela, offshore financial centre, oil shock, price stability, principal–agent problem, Ronald Reagan, South Sea Bubble, structural adjustment programs, The Wealth of Nations by Adam Smith, trade liberalization, transfer pricing, urban sprawl, World Values Survey

Thus they were compelled to leave the most profitable ‘high-tech’ industries in the hands of Britain – which ensured that Britain would enjoy the benefits of being on the cutting edge of world development.18 The double life of the British economy The world’s first famous free-market economist, Adam Smith, vehemently attacked what he called the ‘mercantile system’ whose chief architect was Walpole. Adam Smith’s masterpiece, The Wealth of Nations, was published in 1776, at the height of the British mercantile system. He argued that the restrictions on competition that the system was producing through protection, subsidies and granting of monopoly rights were bad for the British economy.* Adam Smith understood that Walpole’s policies were becoming obsolete. Without them, many British industries would have been wiped out before they had had the chance to catch up with their superior rivals abroad.

Pitt is cited as the Earl of Chatham, which he was at the time. 26 The full quotation is: ‘Were the Americans, either by combination or by any other sort of violence, to stop the importation of European manufactures, and, by thus giving a monopoly to such of their own countrymen as could manufacture the like goods, divert any considerable part of their capital into this employment, they would retard instead of accelerating the further increase in the value of their annual produce, and would obstruct instead of promoting the progress of their country towards real wealth and greatness.’ Adam Smith (1776), The Wealth of Nations, the 1937 Random House edition, pp. 347–8. Smith’s view was later echoed by the respected 19th-century French economist Jean-Baptise Say, who is reported to have said that, ‘like Poland’, the US should rely on agriculture and forget about manufacturing. Reported in List (1841), p. 99. 27 Hamilton divided these measures into eleven groups.

Therefore, adopting free trade was now increasingly in Britain’s interest. However, Smith was somewhat ahead of his time. Another generation would pass before his views became truly influential, and it was not until 84 years after The Wealth of Nations was published that Britain became a genuine free trading nation. By the end of the Napeolenic Wars in 1815, four decades after the publication of The Wealth of Nations, British manufacturers were firmly established as the most efficient in the world, except in a few limited areas where countries like Belgium and Switzerland possessed technological leads. British manufacturers correctly perceived that free trade was now in their interest and started campaigning for it (having said that, they naturally remained quite happy to restrict trade when it suited them, as the cotton manufacturers did when it came to the export of textile machinery that might help foreign competitors).


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Bad Samaritans: The Guilty Secrets of Rich Nations and the Threat to Global Prosperity by Ha-Joon Chang

"there is no alternative" (TINA), "World Economic Forum" Davos, affirmative action, Albert Einstein, banking crisis, Big bang: deregulation of the City of London, bilateral investment treaty, borderless world, Bretton Woods, British Empire, Brownian motion, business cycle, call centre, capital controls, central bank independence, colonial rule, Corn Laws, corporate governance, David Ricardo: comparative advantage, Deng Xiaoping, Doha Development Round, en.wikipedia.org, export processing zone, falling living standards, Fellow of the Royal Society, financial deregulation, financial engineering, fixed income, foreign exchange controls, Francis Fukuyama: the end of history, income inequality, income per capita, industrial robot, Isaac Newton, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, land reform, liberal world order, liberation theology, low skilled workers, market bubble, market fundamentalism, Martin Wolf, means of production, mega-rich, moral hazard, Nelson Mandela, offshore financial centre, oil shock, price stability, principal–agent problem, Ronald Reagan, South Sea Bubble, structural adjustment programs, The Wealth of Nations by Adam Smith, trade liberalization, transfer pricing, urban sprawl, World Values Survey

Thus they were compelled to leave the most profitable ‘high-tech’ industries in the hands of Britain – which ensured that Britain would enjoy the benefits of being on the cutting edge of world development.18 The double life of the British economy The world’s first famous free-market economist, Adam Smith, vehemently attacked what he called the ‘mercantile system’ whose chief architect was Walpole. Adam Smith’s masterpiece, The Wealth of Nations, was published in 1776, at the height of the British mercantile system. He argued that the restrictions on competition that the system was producing through protection, subsidies and granting of monopoly rights were bad for the British economy.iv Adam Smith understood that Walpole’s policies were becoming obsolete. Without them, many British industries would have been wiped out before they had had the chance to catch up with their superior rivals abroad.

Pitt is cited as the Earl of Chatham, which he was at the time. 26 The full quotation is: ‘Were the Americans, either by combination or by any other sort of violence, to stop the importation of European manufactures, and, by thus giving a monopoly to such of their own countrymen as could manufacture the like goods, divert any considerable part of their capital into this employment, they would retard instead of accelerating the further increase in the value of their annual produce, and would obstruct instead of promoting the progress of their country towards real wealth and greatness.’ Adam Smith (1776), The Wealth of Nations, the 1937 Random House edition, pp. 347–8. Smith’s view was later echoed by the respected 19th-century French economist Jean-Baptise Say, who is reported to have said that, ‘like Poland’, the US should rely on agriculture and forget about manufacturing. Reported in List (1841), p. 99. 27 Hamilton divided these measures into eleven groups.

Therefore, adopting free trade was now increasingly in Britain’s interest. However, Smith was somewhat ahead of his time. Another generation would pass before his views became truly influential, and it was not until 84 years after The Wealth of Nations was published that Britain became a genuine free trading nation. By the end of the Napeolenic Wars in 1815, four decades after the publication of The Wealth of Nations, British manufacturers were firmly established as the most efficient in the world, except in a few limited areas where countries like Belgium and Switzerland possessed technological leads. British manufacturers correctly perceived that free trade was now in their interest and started campaigning for it (having said that, they naturally remained quite happy to restrict trade when it suited them, as the cotton manufacturers did when it came to the export of textile machinery that might help foreign competitors).


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Luxury Fever: Why Money Fails to Satisfy in an Era of Excess by Robert H. Frank

Alan Greenspan, business cycle, clean water, company town, compensation consultant, Cornelius Vanderbilt, correlation coefficient, Daniel Kahneman / Amos Tversky, full employment, Garrett Hardin, germ theory of disease, global village, haute couture, hedonic treadmill, impulse control, income inequality, invisible hand, job satisfaction, Kenneth Arrow, lake wobegon effect, loss aversion, market clearing, McMansion, means of production, mega-rich, mortgage debt, New Urbanism, Pareto efficiency, Post-Keynesian economics, RAND corporation, rent control, Richard Thaler, rising living standards, Ronald Reagan, Silicon Valley, Tax Reform Act of 1986, telemarketer, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tragedy of the Commons, trickle-down economics, ultimatum game, winner-take-all economy, working poor

These people are willing to forgo many of life’s ordinary pleasures to acquire fine sculpture, and a law that prohibits them from doing so inflicts gratuitous injury. Another difficulty is that sumptuary laws were typically profoundly undemocratic, enacted to insulate those in positions of power and privilege from emulation by their social inferiors. It is this aspect of these laws that seems to have inspired Adam Smith’s contempt for them. Thus, as he put it in The Wealth of Nations, It is the highest impertinence of kings and ministers to pretend to watch over the economy of private people and to restrain their expense, either by sumptuary laws or by prohibiting the importation of foreign luxuries. They are themselves always and without exception, the greatest spendthrifts in the society.

For instance, if there were too many carriage makers and not enough automobile assembly workers, wage adjustments in these and other labor markets would quickly restore the proper balance—all without government bureaucrats ever having to lift a finger. Eighty-three years after publication of The Wealth of Nations, Charles Darwin launched a series of books that analyzed competition not among human traders but among animals in the wild. Darwin was much influenced by the British economist Thomas Malthus, an intellectual descendant of Smith’s. It is therefore no surprise that Darwin’s view of competition was in many ways similar to Smith’s.

Diener, E., and R. A. Emmons. “The Independence of Positive and Negative Affect,” Journal of Personality and Social Psychology 50, 1985: 1031-38. Diener, Ed. “A Value Based Index for Measuring National Quality of Life,” Social Indicators Research 36, 1995: 107-27. Diener, Ed, and Carol Diener. “The Wealth of Nations Revisited: Income and the Quality of Life,” Social Indicators Research 36, 1995: 275-86. Diener, Ed; Marissa Diener; and Carol Diener, “Factors Predicting the Subjective Well-Being of Nations,” Journal of Personality and Social Psychology 59, 1995: 851-64. Diener, Ed, and Eunkook Suh. “Measuring Quality of Life: Economic, Social, and Subjective Indicators,” Social Indicators Research, forthcoming.


The Age of Turbulence: Adventures in a New World (Hardback) - Common by Alan Greenspan

addicted to oil, air freight, airline deregulation, Alan Greenspan, Albert Einstein, asset-backed security, bank run, Berlin Wall, Black Monday: stock market crash in 1987, Bretton Woods, business cycle, business process, buy and hold, call centre, capital controls, carbon tax, central bank independence, collateralized debt obligation, collective bargaining, compensation consultant, conceptual framework, Corn Laws, corporate governance, corporate raider, correlation coefficient, cotton gin, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cuban missile crisis, currency peg, currency risk, Deng Xiaoping, Dissolution of the Soviet Union, Doha Development Round, double entry bookkeeping, equity premium, everywhere but in the productivity statistics, Fall of the Berlin Wall, fiat currency, financial innovation, financial intermediation, full employment, Gini coefficient, Glass-Steagall Act, Hernando de Soto, income inequality, income per capita, information security, invisible hand, Joseph Schumpeter, junk bonds, labor-force participation, laissez-faire capitalism, land reform, Long Term Capital Management, low interest rates, Mahatma Gandhi, manufacturing employment, market bubble, means of production, Mikhail Gorbachev, moral hazard, mortgage debt, Myron Scholes, Nelson Mandela, new economy, North Sea oil, oil shock, open economy, open immigration, Pearl River Delta, pets.com, Potemkin village, price mechanism, price stability, Productivity paradox, profit maximization, purchasing power parity, random walk, Reminiscences of a Stock Operator, reserve currency, Right to Buy, risk tolerance, Robert Solow, Ronald Reagan, Savings and loan crisis, shareholder value, short selling, Silicon Valley, special economic zone, stock buybacks, stocks for the long run, Suez crisis 1956, the payments system, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tipper Gore, too big to fail, total factor productivity, trade liberalization, trade route, transaction costs, transcontinental railway, urban renewal, We are all Keynesians now, working-age population, Y2K, zero-sum game

He never sought nor received the press that Fed governors get, but when the governors gave speeches, it was his forecast of the U.S. economy that Fed watchers were getting. We governors learned to see him as the indispensable, behind-the-scenes staffer.* Long before Adam Smith wrote his 1776 masterpiece, An Inquiry into the Nature and Causes of the Wealth of Nations, people were arguing over the shortest, straightest path to prosperity. Truly it is an argument without end. But even so, the data point to three important characteristics influencing global growth: (1) the extent of competition domestically, and, *David is so low-key that it wasn't until after we'd worked together closely for years that I learned t h a t his distant forebear, Richard Stockton, was a signer of t h e Declaration of Independence. 250 More ebooks visit: http://www.ccebook.cn ccebook-orginal english ebooks This file was collected by ccebook.cn form the internet, the author keeps the copyright.

These days, almost every professional field is constrained by some regulatory framework, so it's harder than it once was to isolate the reputation effect, but a sector in which one can is e-commerce. Alibris, for example, is a Web site that acts as a broker between sellers and buyers of used books. If you were eager to buy an early edition of Adam Smith's The Wealth of Nations, you might search on Alibris for the names of booksellers around the country who had copies for sale. Customers are given the opportunity to rate the reliability of booksellers from whom they've purchased at least one book, and those ratings no doubt play an important role in the decision as to which of several booksellers to use.

A U.S. economist looking for Smith's grave in an Edinburgh churchyard in 2000 reported having to clear away beer cans and debris to read the worn inscription on the stone: HERE ARE DEPOSITED THE REMAINS OF ADAM SMITH. A U T H O R OF THE THEORY OF M O R A L SENTIMENTS AND WEALTH OF NATIONS. Yet Scotland, too, has come around to according Smith the kind of honor he deserves. The way to the grave is now marked by a newly installed stone that quotes from The Wealth of Nations, and a college near Kirkcaldy has been renamed after Smith. A ten-foot-tall bronze statue of him is planned for Edinburgh's Royal Mile. Appropriately it is being paid for with 265 More ebooks visit: http://www.ccebook.cn ccebook-orginal english ebooks This file was collected by ccebook.cn form the internet, the author keeps the copyright.


pages: 524 words: 154,652

Blood in the Machine: The Origins of the Rebellion Against Big Tech by Brian Merchant

"World Economic Forum" Davos, Ada Lovelace, algorithmic management, Amazon Mechanical Turk, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, basic income, Bernie Sanders, Big Tech, big-box store, Black Lives Matter, Cambridge Analytica, Charles Babbage, ChatGPT, collective bargaining, colonial rule, commoditize, company town, computer age, computer vision, coronavirus, cotton gin, COVID-19, cryptocurrency, DALL-E, decarbonisation, deskilling, digital rights, Donald Trump, Edward Jenner, Elon Musk, Erik Brynjolfsson, factory automation, flying shuttle, Frederick Winslow Taylor, fulfillment center, full employment, future of work, George Floyd, gig economy, gigafactory, hiring and firing, hockey-stick growth, independent contractor, industrial robot, information asymmetry, Internet Archive, invisible hand, Isaac Newton, James Hargreaves, James Watt: steam engine, Jeff Bezos, Jessica Bruder, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Roose, Kickstarter, Lyft, Mark Zuckerberg, Marshall McLuhan, means of production, military-industrial complex, move fast and break things, Naomi Klein, New Journalism, On the Economy of Machinery and Manufactures, OpenAI, precariat, profit motive, ride hailing / ride sharing, Sam Bankman-Fried, scientific management, Second Machine Age, self-driving car, sharing economy, Silicon Valley, sovereign wealth fund, spinning jenny, Steve Jobs, Steve Wozniak, super pumped, TaskRabbit, tech billionaire, tech bro, tech worker, techlash, technological determinism, Ted Kaczynski, The Future of Employment, The Wealth of Nations by Adam Smith, Thomas Malthus, Travis Kalanick, Uber and Lyft, uber lyft, union organizing, universal basic income, W. E. B. Du Bois, warehouse automation, warehouse robotics, working poor, workplace surveillance

So was the factory, and the factory owner, as the chief engines of economic prosperity. “Adam Smith’s discussion in The Wealth of Nations united two key concepts: division of labor as a motor for generating prosperity, and market systems based on self-interest as a fuel for that motor,” the political scientist Mike Munger explained. Two of Smith’s earliest and most influential advocates were the British prime ministers guiding England’s post–Revolutionary War economic policy: the Earl of Shelburne and William Pitt the Younger. During a debate in the Commons on the fiscal health of the nation on February 17, 1792, Pitt offered a paean to Adam Smith: “The writings of an author of our own times… of a celebrated treatise on the Wealth of Nations… will, I believe, furnish the best solution to every question connected with the history of commerce, or with the systems of political economy.”

Why care too much about the way government institutions or old-line industries worked, when your purpose was to disrupt them in favor of something far better? Why care about history when you were building the future?” The entrepreneurs’ faith in “progress” was rooted in the trendy philosophy of the Scottish economist Adam Smith. “Laissez-faire,” the Luddite historian Brian Bailey wrote, had become “the political dogma of the English bourgeoisie. In fact, it represented freedom for the employers and intolerable repression of the workers.” Smith had published The Wealth of Nations in 1776, and while initial reaction was limited, it became influential in the following decades. The book, a synthesis of recent strands of economic thought, presented the doctrine of laissez-faire, or “let people do” (as they see fit), as a science.

During a debate in the Commons on the fiscal health of the nation on February 17, 1792, Pitt offered a paean to Adam Smith: “The writings of an author of our own times… of a celebrated treatise on the Wealth of Nations… will, I believe, furnish the best solution to every question connected with the history of commerce, or with the systems of political economy.” Those theories imbued Pitt’s “New Tories” with a sheen of modernity and lent an ideological fuel to the ascendent entrepreneurial class.1 Factory owners began invoking Adam Smith, and workers began despairing of him. (And newspaper columnists would continue to lambast Pitt, years after he was in office, for turning Smith’s ideas into public policy.) When Horsfall and Cartwright did complete their weekly journeys to the busy Huddersfield market, heads would turn as they made their transactions and moved more and more sums of money.


pages: 187 words: 58,839

Status Anxiety by Alain de Botton

hiring and firing, invention of the steam engine, invisible hand, means of production, meritocracy, plutocrats, Ralph Waldo Emerson, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen

In 1900, a giant Coca-Cola sign was erected on one side of Niagara Falls, while an advert for Mennen’s Toilet Powder was suspended over the gorge. 11. When defenders of modern societies have sought to make a case to sceptics, their task has not been difficult: they have had only to point to the enormous wealth that modern societies are able to generate for their members. In his Inquiry into the Nature and Causes of the Wealth of Nations (1776), Adam Smith sarcastically compared the awe-inspiring productivity of proto-industrial societies with the bare subsistence of primitive hunting-and-gathering ones. The latter were, by Smith’s account, steeped in terrible poverty. Harvests rarely yielded enough food, there were chronic shortages of basic necessities and, in times of serious crisis, children, the elderly and the poor were often left “to be devoured by wild beasts.”

A family bond, a friendship or a sexual attraction may at times render material incentives unnecessary, but only a reckless optimist would rely on emotional currencies for the regular fulfilment of his or her needs. Humans rarely smile without having some robust reason to do so. 3. Adam Smith, The Wealth of Nations (Edinburgh, 1776): “Man has almost constant occasion for the help of his brethren. [However], it is in vain for him to expect this from their benevolence only. He will be more likely to prevail if he can interest their self-love… . It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest.

In the ancient world, debate raged among philosophers about what was materially necessary for happiness and what unnecessary. Epicurus, for one, argued that simple food and shelter were all that was needed, and that an expensive house and lavish meals could be safely passed up by every rational, philosophically minded person. However, reviewing the argument many centuries later in The Wealth of Nations, Adam Smith wryly pointed out that in modern, materialistic societies, countless things that were no doubt unnecessary from the point of view of physical survival had nonetheless in practical terms come to be seen as “necessaries,” simply because no one could be thought respectable and so lead a psychologically comfortable life without owning them: “By necessaries I understand not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without.


pages: 790 words: 150,875

Civilization: The West and the Rest by Niall Ferguson

Admiral Zheng, agricultural Revolution, Albert Einstein, Andrei Shleifer, Atahualpa, Ayatollah Khomeini, Berlin Wall, BRICs, British Empire, business cycle, clean water, collective bargaining, colonial rule, conceptual framework, Copley Medal, corporate governance, creative destruction, credit crunch, David Ricardo: comparative advantage, Dean Kamen, delayed gratification, Deng Xiaoping, discovery of the americas, Dissolution of the Soviet Union, Easter island, European colonialism, Fall of the Berlin Wall, financial engineering, Francisco Pizarro, full employment, Great Leap Forward, Gregor Mendel, guns versus butter model, Hans Lippershey, haute couture, Hernando de Soto, income inequality, invention of movable type, invisible hand, Isaac Newton, James Hargreaves, James Watt: steam engine, John Harrison: Longitude, joint-stock company, Joseph Schumpeter, Kickstarter, Kitchen Debate, land reform, land tenure, liberal capitalism, Louis Pasteur, Mahatma Gandhi, market bubble, Martin Wolf, mass immigration, means of production, megacity, Mikhail Gorbachev, new economy, Pearl River Delta, Pierre-Simon Laplace, power law, probability theory / Blaise Pascal / Pierre de Fermat, profit maximization, purchasing power parity, quantitative easing, rent-seeking, reserve currency, retail therapy, road to serfdom, Ronald Reagan, savings glut, Scramble for Africa, Silicon Valley, South China Sea, sovereign wealth fund, special economic zone, spice trade, spinning jenny, Steve Jobs, Steven Pinker, subprime mortgage crisis, Suez canal 1869, Suez crisis 1956, The Great Moderation, the market place, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, Thorstein Veblen, total factor productivity, trade route, transaction costs, transatlantic slave trade, undersea cable, upwardly mobile, uranium enrichment, wage slave, Washington Consensus, women in the workforce, work culture , World Values Survey

In religion as in business, state monopolies are inefficient – even if in some cases the existence of a state religion increases religious participation (where there is a generous subsidy from government and minimal control of clerical appointments).43 More commonly, competition between sects in a free religious market encourages innovations designed to make the experience of worship and Church membership more fulfilling. It is this that has kept religion alive in America.44 (The insight is not entirely novel. Adam Smith made a similar argument in The Wealth of Nations, contrasting countries with established Churches with those allowing competition.)45 Yet there is something about today’s American Evangelicals that would have struck Weber, if not Smith, as suspect. For there is a sense in which many of the most successful sects today flourish precisely because they have developed a kind of consumer Christianity that verges on Wal-Mart worship.46 It is not only easy to drive to and entertaining to watch – not unlike a trip to the multiplex cinema, with soft drinks or Starbucks served on the premises.

‘The best instituted governments, like the best constituted animal bodies,’ wrote the British political philosopher Henry St John, Viscount Bolingbroke, in 1738, ‘carry in them the seeds of their destruction: and, though they grow and improve for a time, they will soon tend visibly to their dissolution. Every hour they live is an hour the less that they have to live.’3 In The Wealth of Nations Adam Smith conceived of economic growth – ‘opulence’ as he put it – ultimately giving way to the ‘stationary state’. Idealists and materialists agreed on this one thing. For Hegel and Marx alike, it was the dialectic that gave history its unmistakable beat. History was seasonal for Oswald Spengler, the German historian, who wrote in The Decline of the West (1918–22) that the nineteenth century had been ‘the winter of the West, the victory of materialism and scepticism, of socialism, parliamentarianism, and money’.

The Enlightenment was always most effective when it was being ironical – in Gibbon’s breathtaking chapter on early Christianity (volume I, chapter 15 of his Decline and Fall of the Roman Empire) or in Candide, Voltaire’s devastating mockery of Leibniz’s claim that ‘all is for the best in the best of all possible worlds’.* Yet perhaps the greatest achievement of the era was Smith’s analysis of the interlocking institutions of civil society (The Theory of Moral Sentiments) and the market economy (The Wealth of Nations). Significantly, by comparison with much else that was written in the period, both works were firmly rooted in observation of the Scottish bourgeois world Smith inhabited all his life. But where Smith’s ‘Invisible Hand’ of the market manifestly had to be embedded in a web of customary practice and mutual trust, the more radical Francophone philosophes sought to challenge not just established religious institutions but also established political institutions.


pages: 190 words: 53,409

Success and Luck: Good Fortune and the Myth of Meritocracy by Robert H. Frank

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Alan Greenspan, Amazon Mechanical Turk, American Society of Civil Engineers: Report Card, attribution theory, availability heuristic, behavioural economics, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, carried interest, Daniel Kahneman / Amos Tversky, David Brooks, deliberate practice, en.wikipedia.org, endowment effect, experimental subject, framing effect, full employment, Gary Kildall, high-speed rail, hindsight bias, If something cannot go on forever, it will stop - Herbert Stein's Law, income inequality, invisible hand, labor-force participation, lake wobegon effect, loss aversion, low interest rates, meritocracy, minimum wage unemployment, Network effects, Paradox of Choice, Paul Samuelson, Report Card for America’s Infrastructure, Richard Thaler, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Rory Sutherland, selection bias, side project, sovereign wealth fund, Steve Jobs, the long tail, The Wealth of Nations by Adam Smith, Tim Cook: Apple, ultimatum game, Vincenzo Peruggia: Mona Lisa, winner-take-all economy

Some critics complain, for example, that the explosive growth of CEO pay proves that executive labor markets are not really competitive—that CEOs appoint cronies to their boards who approve unjustifiably large pay packages. We’re also told that industrial behemoths conspire to drive out their rivals, thereby extorting higher prices from captive customers. To be sure, such abuses occur. But they’re no worse now than they’ve always been. As Adam Smith wrote in The Wealth of Nations, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”8 CEOs have always appointed people they know to their boards, so that’s not enough to explain recent trends.

The technological changes described by long-tail proponents enable you to make an informed judgment about the extent of my bias. You can review some of The Nepotist’s music videos here: http://thenepotist.com/videos/. 7. Xavier Gabaix and Augustin Landier, “Why Has CEO Pay Increased So Much?” Quarterly Journal of Economics 123.1 (2008): 49–100. 8. Adam Smith, The Wealth of Nations, book 1, chap. 10. 9. The Conference Board, “Departing CEO Age and Tenure,” June 13, 2014, https://www.conference-board.org/retrievefile.cfm?filename=TCB-CW-019.pdf&type=subsite. 10. Thomas Piketty, Capital in the Twenty-First Century, Cambridge, MA: Harvard University Press, 2013.

Harvey Hornstein, Cruelty and Kindness, Englewood Cliffs, NJ: Prentice Hall, 1976. 5. See Robert H. Frank, Passions within Reason: The Strategic Role of the Emotions, New York: W. W. Norton, 1988, chap. 4. 6. Robert H. Frank, Thomas Gilovich, and Dennis Regan, “The Evolution of One-Shot Cooperation,” Ethology and Sociobiology 14 (July 1993): 247–56. 7. Adam Smith, The Wealth of Nations, part 4, section 3, Library of Economics and Liberty, http://www.econlib.org/library/Smith/smWN.html. 8. Adam Satariano, Peter Burrows, and Brad Stone, “Scott Forstall, the Sorcerer’s Apprentice at Apple,” Bloomberg Business, October 12, 2011, http://www.bloomberg.com/bw/magazine/scott-forstall-the-sorcerers-apprentice-at-apple-10122011.html. 9.


When Free Markets Fail: Saving the Market When It Can't Save Itself (Wiley Corporate F&A) by Scott McCleskey

Alan Greenspan, Asian financial crisis, asset-backed security, bank run, barriers to entry, Bear Stearns, Bernie Madoff, break the buck, call centre, collateralized debt obligation, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, financial engineering, financial innovation, fixed income, Glass-Steagall Act, information asymmetry, invisible hand, Isaac Newton, iterative process, junk bonds, Long Term Capital Management, margin call, money market fund, moral hazard, mortgage debt, place-making, Ponzi scheme, prediction markets, proprietary trading, risk tolerance, Savings and loan crisis, shareholder value, statistical model, The Wealth of Nations by Adam Smith, time value of money, too big to fail, web of trust

The very thought of imposing mere transparency—to say nothing of actual restrictions— on this market was greeted ferociously not only from the industry but by other government agencies as well.1 The lineage of the notion that regulation reduces the freedom of the market can be traced back through the history of economic thought at least to the Scottish Enlightenment and the birth of modern capitalism, though the connection is actually a bit tenuous. IN THE BEGINNING, THERE WAS ADAM Capitalism existed long before Adam Smith, just as gravity existed long before Isaac Newton. There were even attempts to describe what we now regard as markets and market behavior before The Wealth of Nations was published in 1776. But The Wealth of Nations gave the world an aha! moment when it described, in a mere thousand pages or so, the way that markets worked at that time. And so, we rightly attribute the birth of the theory of free markets to Adam Smith and The Wealth of Nations. Don’t try to read the book, unless you enjoy spending five hours with Smith’s unhealthy fascination with how nails are made.

The bad news is that they overdid it and boiled it down to two words: invisible hand. For the ensuing 200-odd years, economic practitioners then reversed the process and expanded those two words into an economic dogma faithful to the original, they think. A lot of nuance was lost in the process. The Wealth of Nations was written at a time when government intervention in the markets didn’t mean pesky regulations here and paperwork there. This was the time of the British East India Company, an absolute governmentimposed monopoly with no legal competitors (unless you count the Dutch East India Company). Smith’s book was written as a repudiation of the prevailing mercantilist system, in which decisions were made by governments rather than by a dispassionate market.

Of course, there are bad regulations as well, such as the one that said you had to buy all your tea from the government monopoly. The point, however, is that regulations are not inherently antithetical to free markets, and that good ones are as necessary to the operation of markets in the real world as traffic signs are necessary to free travel. Smith’s arguments in The Wealth of Nations center on three issues, only one of which is really related directly to markets: the division of labor, the pursuit of self-interest, and free trade. The markets he discusses, it should be remembered, were not specifically capital markets and certainly not capital markets as we understand them today.


pages: 524 words: 155,947

More: The 10,000-Year Rise of the World Economy by Philip Coggan

accounting loophole / creative accounting, Ada Lovelace, agricultural Revolution, Airbnb, airline deregulation, Alan Greenspan, Andrei Shleifer, anti-communist, Apollo 11, assortative mating, autonomous vehicles, bank run, banking crisis, banks create money, basic income, Bear Stearns, Berlin Wall, Black Monday: stock market crash in 1987, Bletchley Park, Bob Noyce, Boeing 747, bond market vigilante , Branko Milanovic, Bretton Woods, Brexit referendum, British Empire, business cycle, call centre, capital controls, carbon footprint, carbon tax, Carl Icahn, Carmen Reinhart, Celtic Tiger, central bank independence, Charles Babbage, Charles Lindbergh, clean water, collective bargaining, Columbian Exchange, Columbine, Corn Laws, cotton gin, credit crunch, Credit Default Swap, crony capitalism, cross-border payments, currency peg, currency risk, debt deflation, DeepMind, Deng Xiaoping, discovery of the americas, Donald Trump, driverless car, Easter island, Erik Brynjolfsson, European colonialism, eurozone crisis, Fairchild Semiconductor, falling living standards, financial engineering, financial innovation, financial intermediation, floating exchange rates, flying shuttle, Ford Model T, Fractional reserve banking, Frederick Winslow Taylor, full employment, general purpose technology, germ theory of disease, German hyperinflation, gig economy, Gini coefficient, Glass-Steagall Act, global supply chain, global value chain, Gordon Gekko, Great Leap Forward, greed is good, Greenspan put, guns versus butter model, Haber-Bosch Process, Hans Rosling, Hernando de Soto, hydraulic fracturing, hydroponic farming, Ignaz Semmelweis: hand washing, income inequality, income per capita, independent contractor, indoor plumbing, industrial robot, inflation targeting, Isaac Newton, James Watt: steam engine, job automation, John Snow's cholera map, joint-stock company, joint-stock limited liability company, Jon Ronson, Kenneth Arrow, Kula ring, labour market flexibility, land reform, land tenure, Lao Tzu, large denomination, Les Trente Glorieuses, liquidity trap, Long Term Capital Management, Louis Blériot, low cost airline, low interest rates, low skilled workers, lump of labour, M-Pesa, Malcom McLean invented shipping containers, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Martin Wolf, McJob, means of production, Mikhail Gorbachev, mittelstand, Modern Monetary Theory, moral hazard, Murano, Venice glass, Myron Scholes, Nelson Mandela, Network effects, Northern Rock, oil shale / tar sands, oil shock, Paul Samuelson, Paul Volcker talking about ATMs, Phillips curve, popular capitalism, popular electronics, price stability, principal–agent problem, profit maximization, purchasing power parity, quantitative easing, railway mania, Ralph Nader, regulatory arbitrage, road to serfdom, Robert Gordon, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, savings glut, scientific management, Scramble for Africa, Second Machine Age, secular stagnation, Silicon Valley, Simon Kuznets, South China Sea, South Sea Bubble, special drawing rights, spice trade, spinning jenny, Steven Pinker, Suez canal 1869, TaskRabbit, techlash, Thales and the olive presses, Thales of Miletus, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, Tragedy of the Commons, transaction costs, transatlantic slave trade, transcontinental railway, Triangle Shirtwaist Factory, universal basic income, Unsafe at Any Speed, Upton Sinclair, V2 rocket, Veblen good, War on Poverty, Washington Consensus, Watson beat the top human players on Jeopardy!, women in the workforce, world market for maybe five computers, Yom Kippur War, you are the product, zero-sum game

The person who can best claim credit for founding the discipline is Adam Smith. His modern reputation is of a narrow believer in the free market, but that is a distortion of his views. In The Theory of Moral Sentiments, he writes: “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.” And in The Wealth of Nations, he wrote that “No society can surely be flourishing and happy of which the far greater part of its members are poor and miserable.” Adam Smith’s real target was the use of state policy to favour certain industries in the form of monopolies.

New gadgets such as the seed drill may have helped escape this Malthusian trap, as it became known, but just as important were new crops, and new systems of field rotation that boosted output. Specialisation – dividing work into tasks, with individual workers focusing on each one – is often the key to productivity improvement. It was one of the main insights of Adam Smith’s famous book The Wealth of Nations. And its advantages had been noticed in ancient times. In the Cyropaedia, written by Xenophon in around 370BCE, it was noted that in Persia “there are places even where one man earns a living just by mending shoes, another just by sewing the uppers together, while there is another who performs none of these operations but assembles the parts.

In the mid-18th century, around 70% of humans were still living in “agrarian empires” of one kind or another, whether in China, India, Japan, Russia, or under the Habsburg monarchy.1 The term “revolution” implies a sudden change but that is not what the numbers (such as we have) appear to suggest. British economic growth per capita did not rapidly accelerate in the years after 1760 and may even have slowed (the country had already made a significant switch from agriculture by this stage).2 Adam Smith, whose book The Wealth of Nations appeared in 1776, knew about the steam engine but did not seem to think it heralded a new era. Few steam engines were in use before 1800, as noted in the previous chapter. Nor was change confined to Britain. Other parts of Europe (and some parts of the US) were showing signs of industrialisation in the late 18th century, such as the setting up of textile factories, ironworks and the greater use of coal.


pages: 261 words: 74,471

Good Profit: How Creating Value for Others Built One of the World's Most Successful Companies by Charles de Ganahl Koch

Abraham Maslow, Albert Einstein, big-box store, book value, British Empire, business process, commoditize, creative destruction, disruptive innovation, do well by doing good, Garrett Hardin, global supply chain, hiring and firing, income per capita, Internet of things, invisible hand, Isaac Newton, Joseph Schumpeter, low interest rates, oil shale / tar sands, personalized medicine, principal–agent problem, proprietary trading, Ralph Waldo Emerson, risk tolerance, Salesforce, Solyndra, tacit knowledge, The Wealth of Nations by Adam Smith, Tragedy of the Commons, transaction costs, transfer pricing

Appendix B BUSINESSES KOCH HAS EXITED Activated carbon Air quality consulting Ammonia pipelines Animal feed Broadband trading Business aircraft Canadian pipelines Carbon dioxide Chromatography Coal mining Commercial lending Cooling towers Crude oil gathering Cryogenic systems Dredge manufacturing Drilling rigs European tissue Feedlots Fiberglass-reinforced products Financial instruments, various Gas liquids gathering Gas pipelines Gas processing Grain milling Grain trading Image transmission Meat processing Medical equipment Microelectronic chemicals Particle board Performance roads Pizza dough Platinum trading Polyester, commodity Propane retailing Service stations Slag cement Sulfur plant design Sulfuric acid Tankers Telecommunications Tennis court surfaces Trucking Venture capital Appendix C PRODUCTS KOCH TRADES Agriculture Cattle Cocoa Corn Cotton Hogs Soybeans Sugar Wheat Energy Electrical power Emission credits LNG Natural gas Fertilizer Anhydrous ammonia Enhanced efficiency products Phosphate Potash UAN Urea Financial Corporate bonds Equities Foreign exchange Interest rates Municipal bonds Real estate Forest Products Plywood Pulp and paper Recycled fiber Timber Wastepaper Woodchips Intermediate Feedstocks Ethanol Gas oil Naphtha Metals Aluminum Aluminum alloy Copper Gold Iron ore Lead Nickel Silver Steel Tin Zinc Minerals Cement Coal Exploration and production properties Petroleum coke Shipping Slag Sulfur Natural Gas Liquids Butane Ethane Natural gasoline Propane Oilfield Products Chemicals Guar Proppants Petrochemicals Benzene Cumene Ethylene Metaxylene Methanol Orthoxylene Paraxylene Propylene Pseudocumene Toluene Waste fiber and polymer Petroleum Condensate Crude oil Refined Products Diesel fuel Fuel oil Gasoline Jet fuel Resid Notes INTRODUCTION 1. F. A. Hayek, Law, Legislation and Liberty (Abingdon: Routledge, 1998), p. 136. 2. http://www.freetheworld.com​/2014/EFW2014-POST.pdf. 3. Adam Smith, The Theory of Moral Sentiments (1759), 1.1. 4. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 5th ed. (London: Methuen & Co., 1904), 4.2. Chapter 1: THE GLORIOUS FEELING OF ACCOMPLISHMENT 1. Letter from Fred Koch to his sons, January 22, 1936. 2. Letters from Charles de Ganahl to his son Carl, dated April 26, 1930, and published in The Life and Letters of Charles Francis de Ganahl (Richard R.

Rittman. 6. http://www.freetheworld.com​/2014/EFW2014-POST.pdf. 7. Based on data available through the year 2012. Authored by James Gwartney, Robert Lawson, and Joshua Hall and published by the Fraser Institute (www.freetheworld.com). 8. Thomas Hobbes, Leviathan (Boston: Adamant Media Corp., 2005), p. 84. 9. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Indianapolis: Liberty Fund Inc., 1981), vol. 1, 2.2. 10. Alexis de Tocqueville, Democracy in America (New York: Harper and Row Publishers, 1969), p. 526. 11. Richard Epstein, “The Limits of Liberty,” Reason, March 2004, vol. 35, no. 10, pp. 40–50. 12. Vernon Smith, “Constructionist and Ecological Rationality in Economics,” Nobel Prize Lecture, Stockholm, Sweden, December 8, 2002. 13.

Vernon Smith, “Constructionist and Ecological Rationality in Economics,” Nobel Prize Lecture, Stockholm, Sweden, December 8, 2002. 13. Franz Oppenheimer, The State (San Francisco: Fox and Wilkes, 1997), pp. 14–15. 14. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, p. 456. 15. F. A. Hayek, The Fatal Conceit (Chicago: University of Chicago Press, 1989), p. 77. 16. Thomas Sowell, Knowledge and Decisions (New York: Basic Books, 1980), p. 215. 17. Michael Polanyi, “The Republic of Science: Its Political and Economic Theory,” Minerva 1 (1962): 54–74. 18. Ludwig von Mises, Human Action (Chicago: Henry Regnery Co., 1963), p. 32. 19.


pages: 453 words: 111,010

Licence to be Bad by Jonathan Aldred

"Friedman doctrine" OR "shareholder theory", Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, availability heuristic, Ayatollah Khomeini, behavioural economics, Benoit Mandelbrot, Berlin Wall, Black Monday: stock market crash in 1987, Black Swan, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Cass Sunstein, Charles Babbage, clean water, cognitive dissonance, corporate governance, correlation does not imply causation, cuban missile crisis, Daniel Kahneman / Amos Tversky, Donald Trump, Douglas Engelbart, Douglas Engelbart, Dr. Strangelove, Edward Snowden, fake news, Fall of the Berlin Wall, falling living standards, feminist movement, framing effect, Frederick Winslow Taylor, From Mathematics to the Technologies of Life and Death, full employment, Gary Kildall, George Akerlof, glass ceiling, Glass-Steagall Act, Herman Kahn, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Jeff Bezos, John Nash: game theory, John von Neumann, Linda problem, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, meta-analysis, Mont Pelerin Society, mutually assured destruction, Myron Scholes, Nash equilibrium, Norbert Wiener, nudge unit, obamacare, offshore financial centre, Pareto efficiency, Paul Samuelson, plutocrats, positional goods, power law, precautionary principle, profit maximization, profit motive, race to the bottom, RAND corporation, rent-seeking, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, scientific management, Skinner box, Skype, Social Responsibility of Business Is to Increase Its Profits, spectrum auction, The Nature of the Firm, The Wealth of Nations by Adam Smith, Tragedy of the Commons, transaction costs, trickle-down economics, Vilfredo Pareto, wealth creators, zero-sum game

These economists and their supporters from outside economics (there are many) point to the founding father of economics, Adam Smith, who built his magnum opus The Wealth of Nations (1776) on the rock of humans as essentially selfish creatures. Modern economics has returned to this classical tradition, they conclude, after the aberration which began with Karl Marx and ended with the fall of the Berlin Wall, despite the best efforts of John Maynard Keynes to postpone the inevitable. Unfortunately, this version of history goes wrong from the beginning. Adam Smith’s ideas reflected the eighteenth-century intellectual society he lived in and don’t easily translate to our world.

We simply do not know.5 Keynes wrote these words in 1937, in response to criticisms of his General Theory, a book that represented unquestionably the biggest development in economics in the twentieth century – effectively inventing modern macroeconomics – and probably the most important contribution to economics since Adam Smith’s The Wealth of Nations over 150 years earlier. Keynes’s emphasis on the importance of economic and political uncertainty was, unsurprisingly, hugely influential. But not influential enough: the Keynesian view of uncertainty is not our contemporary orthodoxy. Instead the Second World War and its immediate aftermath nurtured a renewed optimism about a science of society.

.), The Growth of Service Industries (Cheltenham: Edward Elgar), 24. 20 Florio, M. (2006), The Great Divestiture (Cambridge: MIT Press). 21 Much of this section has been influenced by the superb analysis in Hay, C. (2007), Why We Hate Politics (Cambridge: Polity Press), chapters 3 and 5. 22 Lord Falconer, Secretary of State for Constitutional Affairs, quoted in Hay, 93. 5. FREE-RIDING, OR NOT DOING YOUR BIT 1 Quoted in Strain, C. (2016), The Long Sixties (New York: Wiley), 188. 2 Smith, A. (1776), The Wealth of Nations, book 1, chapter X, part II. 3 Weintraub, Stanley, ‘GBS and the Despots’, Times Literary Supplement, 22 August 2011. 4 For the development of economics, a crucial feature of the new understanding of ‘perfect competition’ was the assumption that the contribution of each producer to the market is effectively zero, not just negligible.


pages: 293 words: 91,412

World Economy Since the Wars: A Personal View by John Kenneth Galbraith

business cycle, central bank independence, classic study, flying shuttle, full employment, income inequality, James Hargreaves, James Watt: steam engine, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, low interest rates, means of production, planned obsolescence, price discrimination, price stability, road to serfdom, Ronald Reagan, spinning jenny, The Wealth of Nations by Adam Smith, Thorstein Veblen, union organizing, War on Poverty

Voltaire had observed that "It is only because the English have become merchants and traders that London has surpassed Paris in extent and in the number of its citizens; that the English can place 200 warships on the sea and subsidize allies."2 These views were finally crystallized by Adam Smith in the year of American independence. The Wealth of Nations, however, continued to be viewed with discontent and alarm by the men of the older wisdom. In the funeral elegy for Alexander Hamilton in 1804, James Kent complimented his deceased friend on having resisted the "fuzzy philosophy" of Smith. For another generation or more, or in all western countries, there would be solemn warnings that the notion of a liberal society was a reckless idea.

Enduring success was at odds with all history and could not be expected. This was the legacy of circumstances to ideas. As we shall see, it has enjoyed a remarkable vitality. II In the history of economic thought, Adam Smith (1723–1790), the first great figure in the central economic tradition,3 is counted a hopeful figure. In an important sense, he was. His vision was of an advancing national community, not a stagnant or declining one. His title, An Inquiry into the Nature and Causes of the Wealth of Nations, had an obvious overtone of opulence and well-being. He offered an all but certain formula for economic progress. This was the liberal economic society in which regulation was by competition and the market and not by the state, and in which each man, thrown on his own resources, labored effectively for the enrichment of the society.

They yield not to the attack of other ideas but, as I may note once more, to the massive onslaught of circumstance with which they cannot contend. 3. Economics and the Tradition of Despair ECONOMICS, not entirely by accident, became a subject of serious study at an important turning point in the history of western man. This was when the wealth of national communities began, for the first time, to show a steady and persistent improvement. This change, which in advanced countries like England and Holland came some time in the eighteenth century, must be counted one of the momentous events in the history of the world. "From the earliest times of which we have record—back, say, to two thousand years before Christ—down to the beginning of the eighteenth century, there was no very great change in the standard of living of the average man living in the civilized centers of the earth.


pages: 495 words: 138,188

The Great Transformation: The Political and Economic Origins of Our Time by Karl Polanyi

agricultural Revolution, Berlin Wall, borderless world, business cycle, central bank independence, Corn Laws, currency manipulation / currency intervention, David Ricardo: comparative advantage, Fall of the Berlin Wall, full employment, inflation targeting, joint-stock company, Kula ring, land reform, land tenure, liberal capitalism, manufacturing employment, new economy, Panopticon Jeremy Bentham, price mechanism, profit motive, Republic of Letters, road to serfdom, Ronald Reagan, scientific management, the market place, The Wealth of Nations by Adam Smith, trade liberalization, trade route, trickle-down economics, Washington Consensus, Wolfgang Streeck, working poor, Works Progress Administration

The habit of looking at the past ten thousand years as well as at the array of early societies as a mere prelude to the true history of our civilization which started approximately with the publication of the Wealth of Nations in 1776, is, to say the least, out of date. It is this episode which has come to a close in our days, and in trying to gauge the alternatives of the future, we should subdue our natural proneness to follow the proclivities of our fathers. But the same bias which made Adam Smith’s generation view primeval man as bent on barter and truck induced their successors to disavow all interest in early man, as he was now known not to have indulged in those laudable passions.

The former marked the close of an age which opened with the inventors of the state, Thomas More and Machiavelli, Luther and Calvin; the latter belonged to that nineteenth century in which Ricardo and Hegel discovered from opposite angles the existence of a society that was not subject to the laws of the state, but, on the contrary, subjected the state to its own laws. Adam Smith, it was true, treated material wealth as a separate field of study; to have done so with a great sense of realism made him the founder of a new science, economics. For all that, wealth was to him merely an aspect of the life of the community, to the purposes of which it remained subordinate; it was an appurtenance of the nations struggling for survival in history and could not be dissociated from them. In his view, one set of conditions which governed the wealth of nations derived from the improving, stationary, or declining state of the country as a whole; another set derived from the paramountcy of safety and security as well as the needs of the balance of power; still another was given by the policy of the government as it favored town or countryside, industry or agriculture; hence it was only within a given political framework that he deemed it possible to formulate the question of wealth, by which he for one meant the material welfare of “the great body of the people.”

The naturalistic element in the foundations of orthodox economics was the outcome of conditions primarily created by Speenhamland. It follows that neither Ricardo nor Malthus understood the working of the capitalist system. Not until a century after the publication of the Wealth of Nations was it clearly realized that under a market system the factors of production shared in the product, and as produce increased, their absolute share was bound to rise.* Although Adam Smith had followed Locke’s false start on the labor origins of value, his sense of realism saved him from being consistent. Hence he had confused views on the elements of price, while justly insisting that no society can flourish, the members of which, in their great majority, are poor and miserable.


Termites of the State: Why Complexity Leads to Inequality by Vito Tanzi

accounting loophole / creative accounting, Affordable Care Act / Obamacare, Alan Greenspan, Andrei Shleifer, Andrew Keen, Asian financial crisis, asset allocation, barriers to entry, basic income, behavioural economics, bitcoin, Black Swan, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Cass Sunstein, central bank independence, centre right, clean water, crony capitalism, David Graeber, David Ricardo: comparative advantage, deindustrialization, Donald Trump, Double Irish / Dutch Sandwich, experimental economics, financial engineering, financial repression, full employment, George Akerlof, Gini coefficient, Gunnar Myrdal, high net worth, hiring and firing, illegal immigration, income inequality, indoor plumbing, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jean Tirole, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labor-force participation, libertarian paternalism, Long Term Capital Management, low interest rates, market fundamentalism, means of production, military-industrial complex, moral hazard, Naomi Klein, New Urbanism, obamacare, offshore financial centre, open economy, Pareto efficiency, Paul Samuelson, Phillips curve, price stability, principal–agent problem, profit maximization, pushing on a string, quantitative easing, rent control, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Second Machine Age, secular stagnation, self-driving car, Silicon Valley, Simon Kuznets, synthetic biology, The Chicago School, The Great Moderation, The Market for Lemons, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, transfer pricing, Tyler Cowen: Great Stagnation, universal basic income, unorthodox policies, urban planning, very high income, Vilfredo Pareto, War on Poverty, Washington Consensus, women in the workforce

I shall continue to focus here on the activities of national governments. In addition to the essential, original, and most fundamental role of the state described earlier, namely the allocation of resources, a role that had been recognized and described by economists at least since the time when Adam Smith published The Wealth of Nations, two or, perhaps, more additional economic roles have been assigned to the state in the twentieth century by economists who write about market economies in democratic countries. These roles had not existed in the past, at least not in the modern versions. As already mentioned, these main new roles are: (a) the redistribution of income (and wealth) and (b) the stabilization of economic activity.

It would require that enterprises and also individuals pay attention to the social consequences of their economic actions, and not just to the impact on their (short run) profits or gains. Unfortunately, for a variety of reasons, some already mentioned by Adam Smith as far back as 1759 in The Theory of Moral Sentiments, and, especially, in 1776 in The Wealth of Nations, and some connected with recent economic and policy developments, this social consciousness is often absent or not evident in the actions of enterprises and individuals. Some recent literature has even argued that altruism may create problems and that greed may be a desirable trait in those who operate in the free market.

Skarbek, David, 2014, The Social Order of the Underworld: How Prison Gangs Govern the American Penal System (Oxford, UK and New York, NY: Oxford University Press). Skidelsky, Robert, 2000, John Maynard Keynes: Fighting for Britain, 1937–1946 (London: Macmillan). Slemrod, Joel and Jon Bakija, Taxing Ourselves: A Citizen’s Guide to the Debate over Taxes, Third Edition (Cambridge, MA and London, England: MIT Press). Smith, Adam, 1937, The Wealth of Nations (New York: The Modern Library). [1969] 1976. The Theory of Moral Sentiments (Indianapolis, IN: Liberty Classics). Smith, Vernon L., 2008, Rationality in Economics: Constructivist and Ecological Forms (Cambridge, UK and New York: Cambridge University Press). Solimano, Andres, 2016, Global Capitalism in Disarray: Inequality, Debt and Austerity (Oxford: Oxford University Press) Soll, Jacop, 2014, The Reckoning: Financial Accountability and the Making and Breaking of Nations (London: Allen Lane).


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A World of Three Zeros: The New Economics of Zero Poverty, Zero Unemployment, and Zero Carbon Emissions by Muhammad Yunus

"Friedman doctrine" OR "shareholder theory", active measures, Bernie Sanders, biodiversity loss, Capital in the Twenty-First Century by Thomas Piketty, clean water, conceptual framework, crony capitalism, data science, distributed generation, Donald Trump, financial engineering, financial independence, fixed income, full employment, high net worth, income inequality, Indoor air pollution, Internet of things, invisible hand, Jeff Bezos, job automation, Lean Startup, Marc Benioff, Mark Zuckerberg, megacity, microcredit, new economy, Occupy movement, profit maximization, Silicon Valley, the market place, The Wealth of Nations by Adam Smith, too big to fail, Tragedy of the Commons, unbanked and underbanked, underbanked, urban sprawl, young professional

Eventually, we’ll wonder why it took so long for the world to recognize the obvious demand for an economic system that is truly dedicated to meeting human needs. 11 REDESIGNING THE WORLD OF TOMORROW THE CONCEPTUAL FRAMEWORK OF CAPITALISM was originally laid out by the great Scottish economist and philosopher Adam Smith, primarily in his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations. This framework has been improved and elaborated throughout its long history, but the basic tenets have remained unchanged. Over time, many alternatives to capitalism have been offered and practiced. In the meantime, the world has changed enormously.

And to bolster it we also have a natural fellow-feeling, which Smith calls sympathy. Between them, these natural senses of conscience and sympathy ensure that human beings can and do live together in orderly and beneficial social organizations. Smith’s other great book, The Wealth of Nations, departed completely from his thesis on moral sentiments. His thesis in The Wealth of Nations is generally summarized as an argument that all will be well if people are allowed to follow “self-interest.” Whatever Smith had in mind in using the word self-interest, the world has interpreted it as equivalent to profit maximization. In effect, self-interest is viewed as the same as selfishness.

In effect, self-interest is viewed as the same as selfishness. As a result, the world beyond self has largely faded away from the business mind. In The Theory of Moral Sentiments, Smith elaborated on the great importance of justice and other moral virtues. But he never reconciled this with the concept of self-interest on which The Wealth of Nations is anchored. If he had used his two books to propose theoretical foundations for two different types of businesses, perhaps the world could have avoided the serious crisis we are facing today. The present structure of economic theory does not allow the selfless dimension of people to play out in a marketplace dedicated solely to self-interest-driven businesses.


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Seventeen Contradictions and the End of Capitalism by David Harvey

accounting loophole / creative accounting, Alvin Toffler, bitcoin, Branko Milanovic, Bretton Woods, BRICs, British Empire, business climate, California gold rush, call centre, central bank independence, Charles Babbage, classic study, clean water, cloud computing, collapse of Lehman Brothers, colonial rule, company town, cotton gin, creative destruction, Credit Default Swap, David Ricardo: comparative advantage, death from overwork, deindustrialization, demographic dividend, Deng Xiaoping, deskilling, drone strike, end world poverty, 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, gentrification, global reserve currency, Great Leap Forward, Guggenheim Bilbao, Gunnar Myrdal, Herbert Marcuse, 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, military-industrial complex, Money creation, Murray Bookchin, new economy, New Urbanism, Occupy movement, peak oil, phenotype, planned obsolescence, plutocrats, Ponzi scheme, quantitative easing, rent-seeking, reserve currency, road to serfdom, Robert Gordon, Ronald Reagan, Savings and loan crisis, scientific management, short selling, Silicon Valley, special economic zone, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, wages for housework, Wall-E, women in the workforce, working poor, working-age population

This amazingly influential story has held sway for more than two centuries, ever since Adam Smith articulated it so persuasively and brilliantly in The Wealth of Nations. It constitutes the founding myth of liberal economic theory. The liberal political economists mounted a crusade against state interventions in price-fixing markets and against monopoly power from the late eighteenth century onwards. Keynes did not depart too much from it. Even more surprisingly, it is accepted as gospel in Marx’s Capital, though in Marx’s case the reasoning runs that if Adam Smith’s utopian tale was correct, then things would not turn out to be for the benefit of all: the result would be to deepen the class divide of wealth and power and ensure that capital would become ever more crisis-prone as well as powerful.

While the narrow technical basis and associated skills of the individual tasks did not change that much, the organisation of production through cooperation and the division of labour brought these different tasks together to reap remarkable gains in efficiency and productivity. The costs of commodities in the marketplace fell rapidly to outcompete the traditional craft and artisanal forms of production. This was the division of labour that was not only extensively analysed but also lauded to the heavens by Adam Smith in The Wealth of Nations, published in 1776. In the celebrated case of the pin factory, Smith emphasised how the organised division of labour within the production process led to immense improvements in technical efficiency and labour productivity. By taking advantage of workers’ differing skills and talents, the overall increase in productivity and profitability within what Marx later called ‘the detail division of labour’ within the firm was assured.

283 Maddison, Angus 227 Maghreb 174 Malcolm X 291 Maldives 260 Malthus, Thomas 229–30, 232–3, 244, 246, 251 Manchester 149, 159 Manhattan Institute 143 Mansion House, London 201 manufacturing 104, 239 Mao Zedong 291 maquilas 129, 174 Marcuse, Herbert 204, 289 market cornering 53 market economy 198, 205, 276 marketisation 243 Marshall Plan 153 Martin, Randy 194 Marx, Karl 106, 118, 122, 142, 207, 211 and alienation 125, 126, 213 in the British Museum library 4 on capital 220 conception of wealth 214 on the credit system 239 and deskilling 119 on equal rights 64 and falling profits 107 and fetishism 4 on freedom 207, 208, 213 and greed 33 ‘industrial reserve army’ 79–80 and isolation of workers 125 labour theory of value 109 and monetary system reforms 36 monopoly power and competition 135 reality and appearance 4, 5 as a revolutionary humanist 221 and social reproduction 182 and socialist utopian literature 184 and technological innovation 103 and theorists of the political left 54 and the ‘totally developed individual’ 126–7 and world crises xiii; Capital 57, 79–80, 81, 82, 119, 129, 132, 269, 286, 291–2 The Economic and Philosophic Manuscripts of 1844 269, 286 Grundrisse 97, 212–13 Theories of Surplus Value 1 Marxism contradiction between productive forces and social relations 269 ‘death of Marxism’ xii; ecologically sensitive 263 and humanism 284, 286, 287 ‘profit squeeze’ theory of crisis formation 65 traditional Marxist conception of socialism/ communism 91 Marxists 65, 109 MasterCard Priceless 275 Mau Mau movement 291 Melbourne 141 merchants 67 and industrial capital 179 price-gouging customers 54 and producers 74–5 Mercosur 159 Mexican migrants 115, 175, 195–6 Mexico 123, 129, 174 Mexico City riots (1968) x microcredit 194, 198 microfinance 186, 194, 198, 211 Microsoft 131 Middle East 124, 230 Milanovic, Branko 170 military, the capacities and powers 4 dominance 110 and technology 93, 95 ‘military-industrial complex’ 157 mind-brain duality 70 mining 94, 113, 123, 148, 239, 257 MIT (Massachusetts Institute of Technology) 292 Mitchell, David: Cloud Atlas 264 Mitchell, Timothy 122 Modern Times (film) 103 Mondragon 180 monetarism xi monetary wealth and incomes, inequalities in (1920s) x 1071 monetisation 44, 55, 60, 61, 62, 115, 192–3, 198, 235, 243, 250, 253, 261, 262 money abandonment of metallic basis of global moneys 30, 37, 109 circulation of 15, 25, 30–31, 35 coinage 15, 27, 29, 30 commodification of 57 commodity moneys 27–31 creation of 30, 51, 173, 233, 238–9, 240 credit moneys 28, 30, 31, 152 cyber moneys 36, 109–10 electronic moneys 27, 29, 35, 36, 100 and exchange value 28, 35, 38 fiat 8, 27, 30, 40, 109, 233 gap between money and the value it represents 27 global monetary system 46–7 love of money as a possession 34 measures value 25, 28 a moneyless economy 36 oxidisation of 35 paper 15, 27, 29, 30, 31, 37, 40, 45 power of 25, 36, 59, 60, 62, 65–66, 131–6, 245, 266 quasi-money 35 relation between money and value 27, 35 represented as numbers 29–30 and social labour 25, 27, 31, 42, 55, 88, 243 and the state 45–6, 51, 173 storage of value 25, 26, 35 the US dollar 46–7 use value 28 money capital 28, 32, 59, 74, 142, 147, 158, 177, 178 money laundering 54, 109 ‘money of account’ 27–8, 30 monopolisation 53, 145 monopoly, monopolies 77 and competition 131–45, 218, 295 corporate 123 monetary system 45, 46, 48, 51 monopoly power 45, 46, 51, 93, 117, 120, 132, 133–4, 136, 137, 139, 141, 142–3 monopoly pricing 72, 132 natural 118, 132 of state over legitimate use of force and violence 42, 44, 45, 51, 88, 155, 173 see also prices, monopoly monopsony 131 Monsanto 123 Montreal Protocol 254, 259 ‘moral restraints’ 229, 233 mortgages 19, 21, 28, 32, 54, 67, 82, 239 multiculturalism 166 Mumbai 155, 159 Murdoch, Rupert xi Myrdal, Gunnar 150 N NAFTA 159 name branding 31, 139 nano-trading 243 Nation of Islam 291 national debt 45, 226, 227 National Health Service 115 National Labor Relations Board 120 National Security Administration 136 nationalisation 50 nationalism 7, 8, 44, 289 natural resources 58, 59, 123, 240, 241, 244, 246, 251 nature 56 alienation from 263 capital’s conception of 252 capital’s relation to 246–63 commodification of 59 domination of 247, 272 Heidegger on 59, 250 Polanyi on 58 power over 198 process-thing duality 73 and technology 92, 97, 99, 102 Nazis 151 neoclassical economists 109 neocolonialism 143, 201 neoliberal era 128 neoliberal ethic 277 neoliberalisation x, 48 neoliberalism xiii, 68, 72, 128, 134, 136, 176, 191, 234, 281 capitalism 266 consensus 23 counter-revolution 82, 129, 159, 165 political programme 199 politics 57 privatisation 235 remedies xi Nevada, housing in 77 ‘new economy’ (1990s) 144 New York City 141, 150 creativity 245 domestic labour in 196 income inequality 164 rental markets 22 social reproduction 195 Newton, Isaac 70 NGOs (non-governmental organisations) 189, 210, 284, 286, 287 Nike 31 Nkrumah, Kwame 291 ‘non-coincidence of interests’ 25 Nordic countries 165 North America deindustrialisation in 234 food grain exports 148 indigenous population and property rights 39 women in labour force 230 ‘not in my back yard’ politics 20 nuclear weapons 101 Nyere, Julius 291 O Obama, Barack 167 occupational safety and health 72 Occupy movement 280, 292 Ohlin Foundation 143 oil cartel 252 companies 77, 131 ‘Seven Sisters’ 131 embargo (1973) 124 ‘peak oil’ 251–2, 260 resources 123, 240, 257 oligarchy, oligarchs 34, 143, 165, 221, 223, 242, 245, 264, 286, 292 oligopoly 131, 136, 138 Olympic Games 237–8 oppositional movements 14, 162, 266–7 oppression 193, 266, 288, 297 Orwell, George 213 Nineteen Eighty-Four 202 overaccumulation 154 overheating 228 Owen, Robert 18, 184 Oxfam xi, 169–70 P Paine, Tom: Rights of Man 285 Paris 160 riots (1968) x patents 139, 245, 251 paternalism 165, 209 patriarchy 7 Paulson, Hank 47 pauperisation 104 Peabody, George 18 peasantry ix, 7, 107, 117, 174, 190, 193 revolts 202 pensions 134, 165, 230 rights 58, 67–8, 84, 134 people of colour: disposable populations 111 Pereire, Emile 239 pesticides 255, 258 pharmaceuticals 95, 121, 123, 136, 139 Philanthropic Colonialism 211 philanthropy 18, 128, 189, 190, 210–11, 245, 285 Philippines 115, 196 Picasso, Pablo 140–41, 187, 240 Pinochet, Augusto x Pittsburgh 150, 159, 258 planned obsolescence 74 plutocracy xi, xii, 91, 170, 173, 177, 180 Poland 152 Polanyi, Karl 56, 58, 60, 205–7, 210, 261 The Great Transformation 56–7 police 134 brutality 266 capacities and powers 43 powers xiii, 43, 52 repression 264, 280 surveillance and violence 264 violence 266, 280 police-state 203, 220 political economy xiv, 54, 58, 89, 97, 179–80, 182, 201, 206–9 liberal 204, 206, 209 political parties, incapable of mounting opposition to the power of capital xii political representation 183 pollutants 8, 246, 255 pollution 43, 57, 59, 60, 150, 250, 254, 255, 258 Pontecorvo, Gillo 288 Ponzi schemes 21, 53, 54, 243 population ageing 223, 230 disposable 108, 111, 231, 264 growth 107–8, 229, 230–31, 242, 246 Malthus’s principle 229–30 Portugal 161 post-structuralism xiii potlatch system 33 pounds sterling 46 poverty 229 anti-poverty organisations 286–7 and bourgeois reformism 167 and capital 176 chronic 286 eradication of 211 escape from 170 feminisation of 114 grants 107 and industrialisation 123 and population expansion 229 and unemployment 170, 176 US political movement denies assistance to the poor 292–3 and wealth 146, 168, 177, 218, 219, 243 world xi, 170 power accumulation of 33, 35 of capital xii, 36 class 55, 61, 88, 89, 97, 99, 110, 134, 135, 221, 279 computer 105 and currencies 46 economic 142, 143, 144 global 34, 170 the house as a sign of 15–16 of labour see under labour; of merchants 75 military 143 and money 25, 33, 36, 49, 59, 60, 62, 63, 65–6, 245, 266 monopoly see monopoly power; oligarchic 292 political 62, 143, 144, 162, 171, 219, 292 purchasing 105, 107 social 33, 35, 55, 62, 64, 294 state 42–5, 47–52, 72, 142, 155–9, 164, 209, 295 predation, predators 53, 54, 61, 67, 77, 84, 101, 109, 111, 133, 162, 198, 212, 254–5 price fixing 53, 118, 132 price gouging 132 Price, Richard 226, 227, 229 prices discount 133 equilibrium in 118 extortionate 84 food 244, 251 housing 21, 32, 77 land 77, 78, 150 low 132 market 31, 32 and marketplace anarchy 118 monopoly 31, 72, 139, 141 oil 251, 252 property 77, 78, 141, 150 supermarket 6 and value 31, 55–6 private equity firms 101, 162 private equity funds 22, 162 private property and the commons 41, 50, 57 and eradication of usufructuary rights 41 and individual appropriation 38 and monopoly power 134–5, 137 social bond between human rights and private property 39–40 and the state 47, 50, 58, 59, 146, 210 private property rights 38–42, 44, 58, 204, 252 and collective management 50 conferring the right to trade away that which is owned 39 decentralised 44 exclusionary permanent ownership rights 39 and externality effects 44 held in perpetuity 40 intellectual property rights 41 microenterprises endowed with 211 modification or abolition of the regime 14 and nature 250 over commodities and money 38 and state power 40–41, 42–3 underpinning home ownership 49 usufructuary rights 39 privatisation 23, 24, 48, 59, 60, 61, 84, 185, 235, 250, 253, 261, 262, 266 product lines 92, 107, 219, 236 production bourgeois 1 falling value of 107 immaterial 242 increase in volume and variety of 121 organised 2 and realisation 67, 79–85, 106, 107, 108, 173, 177, 179, 180, 221, 243 regional crises 151 workers’ dispossession of own means of 172 productivity 71, 91, 92, 93, 117, 118, 121, 125, 126, 132, 172, 173, 184, 185, 188, 220, 239 products, compared with commodities 25–6 profitability 92, 94, 98, 102, 103, 104, 106, 112, 116, 118, 125, 147, 184, 191–2, 240, 252, 253, 256, 257 profit(s) banking 54 as capital’s aim 92, 96, 232 and capital’s struggle against labour 64, 65 and competition 93 entrepreneurs 24, 104 falling 81, 107, 244 from commodity sales 71 and money capital 28 monopoly 93 rate of 79, 92 reinvestment in expansion 72 root of 63 spending of 15 and wage rates 172 proletarianisation 191 partial 175, 190, 191 ‘property bubble’ 21 property market boom (1920s) 239 growth of 50 property market crashes 1928 x, 21 1973 21 2008 21–2, 54, 241 property rights 39, 41, 93, 135 see also intellectual property rights; private property property values 78, 85, 234 ‘prosumers’ 237 Proudhon, Pierre-Joseph 183 Prozac 248 public goods 38 public utilities 23, 60, 118, 132 Q quantitative easing 30, 233 R R&D ix race 68, 116, 165, 166, 291 racial minorities 168 racialisation 7, 8, 62, 68 racism 8 Rand, Ayn 200 raw materials 16, 17, 148, 149, 154 Reagan, Ronald x, 72 Speech at Westminster 201 Reagan revolution 165–166 realisation, and production 67, 79–85, 106, 107, 108, 173, 177, 179, 180, 221, 243 reality contradiction between reality and appearance 4–6 social 27 Reclus, Elisée 140 regional development 151 regional volatility 154 Reich, Robert 123, 188 religion 7 religious affiliation 68 religious hatreds and discriminations 8 religious minorities 168 remittances 175 rent seeking 132–3, 142 rentiers 76, 77, 78, 89, 150, 179, 180, 241, 244, 251, 260, 261, 276 rents xii, 16–19, 22, 32, 54, 67, 77, 78, 84, 123, 179, 241 monopoly 93, 135, 141, 187, 251 repression 271, 280 autocratic 130 militarised 264 police-state 203 violent 269, 280, 297 wage 158, 274 Republican Party (US) 145, 280 Republicans (US) 167, 206 res nullius doctrine 40 research and development 94, 96, 187 ‘resource curse’ 123 resource scarcity 77 revolution, Fanon’s view of 288 revolutionary movements 202, 276 Ricardo, David 122, 244, 251 right, the ideological and political assault on the left xii; response to universal alienation 281 ‘rights of man’ 40, 59, 213 Rio de Janeiro 84 risk 17, 141, 162, 219, 240 robbery 53, 57, 60, 63, 72 robotisation 103, 119, 188, 295 Rodney, Walter 291 romantic movement 261 Roosevelt, Theodore 131, 135 Four Freedoms 201 Rousseau, Jean-Jacques 213, 214 Ruhr, Germany 150 rural landscapes 160–61 Russia 154 a BRIC country 170, 228 collapse of (1989) 165 financial crisis (1998) 154, 232 indebtedness 152 local famine 124 oligarchs take natural resource wealth 165 S ‘S’ curve 225, 230–31 Saint-Simon, Claude de Rouvroy, comte de 183 sales 28, 31, 187, 236 San Francisco 150 Santiago, Chile: street battles (2006–) 185 Sao Paulo, Brazil 129, 195 savings the house as a form of saving 19, 22, 58 loss of 20, 58 private 36 protecting the value of 20 Savings and Loan Crisis (USA from 1986) 18 savings accounts 5, 6 Scandinavia 18, 85, 165 scarcity 37, 77, 200, 208, 240, 246, 260, 273 Schumpeter, Joseph 98, 276 science, and technology 95 Seattle 196 Second Empire Paris 197 Second World War x, 161, 234 Securities and Exchange Commission 120, 195 security xiii, 16, 121, 122, 165, 205, 206 economic 36, 153 food 253, 294, 296 job 273 national 157 Sen, Amartya 208–11, 281 Development as Freedom 208–9 senior citizens 168 Seoul 84 serfdom 62, 209 sexual hatreds and discriminations 8 Shanghai 153, 160 share-cropping 62 Sheffield 148, 149, 159, 258 Shenzhen, China 77 Silicon Valley 16, 143, 144, 150 silver 27–31, 33, 37, 57, 233, 238 Simon, Julian 246 Singapore 48, 123, 150, 184, 187, 203 slavery 62, 202, 206, 209, 213, 268 slums ix, 16, 175 Smith, Adam 98, 125–6, 157, 185, 201, 204 ‘invisible hand’ 141–2 The Wealth of Nations 118, 132 Smith, Neil 248 social distinction 68, 166 social inequality 34, 110, 111, 130, 171, 177, 180, 220, 223, 266 social justice 200, 266, 268, 276 social labour 53, 73, 295 alienated 64, 66, 88 and common wealth 53 creation of use values through 36 expansion of total output 232 household and communal work 296 immateriality of 37, 233 and money 25, 27, 31, 42, 55, 88, 243 productivity 239 and profit 104 and value 26, 27, 29, 104, 106, 107, 109 weakening regulatory role of 109, 110 social media 99, 136, 236–7, 278–9 social movements 162–3 social reproduction 80, 127, 182–98, 218, 219, 220, 276 social security 36, 165 social services 68 social struggles 156, 159, 165, 168 social value 26, 27, 32, 33, 55, 172, 179, 241, 244, 268, 270 socialism 215 democratic xii; ‘gas and water’ 183 socialism/communism 91, 269 socialist revolution 67 socialist totalitarianism 205 society capitalist 15, 34, 81, 243, 259 civil 92, 122, 156, 185, 189, 252 civilised 161, 167 complex 26 demolition of 56 and freedom 205–6, 210, 212 hope for a better society 218 industrial 205 information 238 market 204 post-colonial 203 pre-capitalist 55 primitive 57 radical transformation of 290 status position in 186 theocratic 62 women in 113 work-based 273 world 204 soil erosion 257 South Africa 84–5, 152, 169 apartheid 169, 202, 203 South Asia labour 108 population growth 230 software programmers and developers 115, 116 South Korea 123, 148, 150, 153 South-East Asia 107–8 crisis (1997–8) 154, 232, 241 sovereign debt crises 37 Soviet Bloc, ex-, labour in 107 Soviet Union 196, 202 see also Russia Spain xi, 51, 161 housing market crash (2007–9) 82–3 spatio-temporal fixes 151–2, 153, 154, 162 spectacle 237–8, 242, 278 speculative bubbles and busts 178 stagnation xii, 136, 161–2, 169 Stalin, Joseph 70 standard of life 23, 175 starvation 56, 124, 246, 249, 260, 265 state, the aim of 156–7 brutality 266, 280 and capital accumulation 48 and civil society 156 curbing the powers of capital as private property 47 evolution of the capitalist state 42 and externality effects 44 guardian of private property and of individual rights 42 and home ownership 49–50 interstate system 156, 157 interventionism 193, 205 legitimate use of violence 42, 44, 45, 51, 88, 155, 173 loss of state sovereignty xii; and money 1, 45–6, 51, 173 ‘nightwatchman’ role 42, 50 powers of 42–5, 47–52, 57–8, 65, 72, 142, 155–9, 209, 295 and private property 47, 50, 58, 59, 146, 210 provision of collective and public goods 42–3 a security and surveillance state xiii; social democratic states 85 war aims 44 state benefits 165 state regulatory agencies 101 state-finance nexus 44–5, 46–7, 142–3, 156, 233 state-private property nexus 88–9 steam engine, invention of the 3 steel industry 120, 121, 148, 188 steel production 73–4 Stiglitz, Joseph 132–4 stock market crash (1929) x Stockholm, protests in (2013) 171, 243 strikes 65, 103, 124 sub-prime mortgage crisis 50 suburbanisation 253 supply and demand 31, 33, 56, 106 supply chain 124 supply-side remedies xi supply-side theories 82, 176 surplus value 28, 40, 63, 73, 79–83, 172, 239 surveillance xiii, 94, 121, 122, 201, 220, 264, 280, 292 Sweden 166, 167 protests in (2013) 129, 293 Sweezy, Paul 136 swindlers, swindling 45, 53, 57, 239 ‘symbolic analysts’ 188 Syntagma Square, Athens 266, 280 T Tahrir Square, Cairo 266 Taipei, Taiwan 153 Taiwan 123, 150, 153 Taksim Square, Istanbul 266, 280 Tanzania 291 tariffs 137 taxation 40, 43, 47, 67, 84, 93–4, 106, 133, 150, 155, 157, 167, 168, 172, 190 Taylor, Frederick 119, 126 Taylorism 103 Tea Party faction 205, 280, 281, 292 technological evolution 95–6, 97, 101–2, 109 technological imperatives 98–101 technological innovation 94–5 technology changes involving different branches of state apparatus 93–4 communicative technologies 278–9 and competition 92–3 constraints inhibiting deployment 101 culture of 227, 271 definition 92, 248 and devaluation of commodities 234 environmental 248 generic technologies 94 hardware 92, 101 humanising 271 information 100, 147, 158, 177 military 93, 95 monetary 109 and nature 92, 97, 99, 102 organisational forms 92, 99, 101 and productivity 71 relation to nature 92 research and development 94 and science 95 software 92, 99, 101 a specialist field of business 94 and unemployment 80, 103 work and labour control 102–11 telephone companies 54, 67, 84, 278 Tennessee 148 Teresa, Mother 284 Thatcher, Margaret (later Baroness) x, 72, 214, 259 Thatcherism 165 theft 53, 60, 61, 63 Thelluson, Peter 226, 227 think tanks 143 ‘Third Italy’ 143 Third World debt crisis 240 Toffler, Alvin 237 tolls 137 Tönnies, Ferdinand 122, 125 tourism ix, 16, 140, 141, 187, 236 medical 139 toxic waste disposal 249–50, 257 trade networks 24 trade unions xii, 116, 148, 168, 176, 184, 274, 280 trade wars 154 transportation 23, 99, 132, 147–8, 150, 296 Treasury Departments 46, 156 TRIPS agreement 242 tropical rainforest 253 ‘trust-busting’ 131 trusts 135 Turin, Italy 150 Turkey 107, 123, 174, 232, 280, 293 Tuscany, Italy 150 Tutu, Archbishop Desmond 284 Twitter 236 U unemployment 37, 104, 258, 273 benefits 176 deliberately created 65, 174 high xii, 10, 176 insurance 175 and labour reserves 175, 231 and labour-saving technologies 173 long-term 108, 129 permanent 111 echnologically induced 80, 103, 173, 274 uneven geographical developments 178, 296 advanced and underserved regional economies 149–50 and anti-capitalist movements 162 asset bubbles 243 and capital’s reinvention of itself 147, 161 macroeconomic processes of 159 masking the true nature of capital 159–60 and technological forms 219 volatility in 244 United Fruit 136 United Kingdom income inequality in 169; see also Britain United Nations (UN) 285 United States aim of Tea Party faction 280 banking 158 Bill of Rights 284 Britain lends to (nineteenth century) 153 capital in (1990s) 154 Constitution 284 consumption level 194 global reserve currency 45–6 growth 232 hostility towards state interventions 167 House of Representatives 206 human rights abuses 202 imperial power 46 indebtedness of students in 194 Indian reservations 249 interstate highway system 239 jobless recoveries after recession 172–3 liberty and freedom rhetoric 200–201, 202 Midwest ‘rust belt’ 151 military expenditures 46 property market crashes x, 21–2, 50, 54, 58, 82–3 racial issues 166 Savings and Loan Crisis (from 1986) 18 social mobility 196 social reproduction 196–7 solidly capitalist 166 steel industry 120 ‘symbolic analysts’ 188 ‘trust-busting’ 131 unemployment 108 wealth distribution 167 welfare system 176 universal suffrage 183 urbanisation 151, 189, 228, 232, 239, 247, 254, 255, 261 Ure, Andrew 119 US Congress 47 US dollar 15, 30, 45–6 US Executive Branch 47 US Federal Reserve xi, 6, 30, 37, 46, 47, 49, 132, 143, 233 monetary policy 170–71 US Housing Act (1949) 18 US Treasury 47, 142, 240 use values collectively managed pool of 36 commodification of 243 commodities 15, 26, 35 common wealth 53 creation through social labour 36 and entrepreneurs 23–4 and exchange values 15, 35, 42, 44, 50, 60, 65, 88 and housing 14–19, 21–2, 23, 67 and human labour 26 infinitely varied 15 of infrastructural provision 78 loss of 58 marketisation of 243 monetisation of 243 of money 28 privatised and commodified 23 provision of 111 and revolt of the mass of the people 60 social demand for 81 usufructuary rights 39, 41, 59 usury 49, 53, 186, 194 utopianism 18, 35, 42, 51, 66, 119, 132, 183, 184, 204, 206–10, 269, 281, 282 V value(s) commodity 24, 25 failure to produce 40 housing 19, 20, 22 net 19 production and realisation of 82 production of 239 property 21 relation between money and value 27, 35 savings 20 storing 25, 26, 35 see also asset values; exchange values; social value; use values value added 79, 83 Veblen, Thorstein: Theory of the Leisure Class 274 Venezuela 123, 201 Vietnam, labour in 108 Vietnam War 290 violence 53, 57, 72, 204–5, 286 against children 193 against social movements 266 against women 193 colonial 289–90, 291 and contemporary capitalism 8 culture of 271 of dispossession 58, 59 in a dystopian world 264 and humanism 286, 289, 291 of the liberation struggle 290 militarised 292 as the only option 290–91 political 280 in pursuit of liberty and freedom 201 racialised 291 state’s legitimate use of 42, 44, 45, 51, 88, 155, 173 of technology 271 and wage labour 207 virtual ecological transfer 256 Volcker, Paul 37 W wages 103 basic social wage 103 falling 80, 82 for housework 115, 192–3 low xii, 114, 116, 186, 188 lower bound to wage levels 175 non-payment of 72 and profits 172 reduction in 81, 103, 104, 135, 168, 172, 176, 178 rising 178 and unskilled labour 114 wage demands 150, 274 wage levels pushed up by labour 65 wage rates 103, 116, 172, 173 wage repression 158–9 weekly 71 see also income Wall Street criticised by a congressional committee 239–40 illegalities practised by 72, 77 and Lebed 195 new information-processing technologies 100 Wall Street Crash (1929) x, 47 Wall-E (film) 271 Walmart xii, 75, 84, 103, 131 war on terror 280 wars 8, 60, 229 currency 154 defined 44 monetisation of state war-making activities 44–5 privatisation of war making 235 resource 154, 260 and state aims 44 state financing of 32, 44, 48 and technology 93 trade 154 world 154 water privatisation 235 wave theory 70 wave-particle duality 70 wealth accumulation of 33, 34, 35, 157, 205 creation of 132–3, 142, 214 disparities of 164–81 distribution of 34, 167 extraction from non-productive activities 32 global 34 the house as a sign of 15–16 levelling up of per capita wealth 171 and poverty 146, 168, 177, 218, 219, 243 redistribution of 9, 234, 235 social 35, 53, 66, 157, 164, 210, 251, 265, 266, 268 taking it from others 132–3 see also common wealth weather futures 60 Weber, Max 122, 125 Weimar Republic 30 welfare state 165, 190, 191, 208 Wells Fargo 61 West Germany 153, 154, 161 Whitehead, Alfred North 97 Wilson, Woodrow 201 Wolf, Martin 304n2 Wollstonecraft, Mary: A Vindication of the Rights of Woman 285 women career versus family obligations 1–2 disposable populations 111 exploitation of 193 housework versus wage labour 114–15 oppression against 193 social struggle 168 trading of 62 violence against 193 in the workforce 108, 114, 115, 127, 174, 230 women’s rights 202, 218 workers’ rights 202 working classes and capital 80 consumer power 81 crushing organisation 81 education 183, 184 gentrified working-class neighbourhoods ix; housing 160 living conditions 292 wage repression and consumption 158–9 working hours 72, 104–5, 182, 272–5, 279 World Bank 16, 24, 100, 186, 245 World Trade Organization 138, 242 WPA programmes (1930s) 151 Wright, Frank Lloyd: Falling Water 16 Wriston, Walter 240 Y YouTube 236 Yugoslavia, former 174 Z Zola, Émile 7


pages: 807 words: 154,435

Radical Uncertainty: Decision-Making for an Unknowable Future by Mervyn King, John Kay

Airbus A320, Alan Greenspan, Albert Einstein, Albert Michelson, algorithmic trading, anti-fragile, Antoine Gombaud: Chevalier de Méré, Arthur Eddington, autonomous vehicles, availability heuristic, banking crisis, Barry Marshall: ulcers, battle of ideas, Bear Stearns, behavioural economics, Benoit Mandelbrot, bitcoin, Black Swan, Boeing 737 MAX, Bonfire of the Vanities, Brexit referendum, Brownian motion, business cycle, business process, capital asset pricing model, central bank independence, collapse of Lehman Brothers, correlation does not imply causation, credit crunch, cryptocurrency, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, DeepMind, demographic transition, discounted cash flows, disruptive innovation, diversification, diversified portfolio, Donald Trump, Dutch auction, easy for humans, difficult for computers, eat what you kill, Eddington experiment, Edmond Halley, Edward Lloyd's coffeehouse, Edward Thorp, Elon Musk, Ethereum, Eugene Fama: efficient market hypothesis, experimental economics, experimental subject, fear of failure, feminist movement, financial deregulation, George Akerlof, germ theory of disease, Goodhart's law, Hans Rosling, Helicobacter pylori, high-speed rail, Ignaz Semmelweis: hand washing, income per capita, incomplete markets, inflation targeting, information asymmetry, invention of the wheel, invisible hand, Jeff Bezos, Jim Simons, Johannes Kepler, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Snow's cholera map, John von Neumann, Kenneth Arrow, Kōnosuke Matsushita, Linda problem, Long Term Capital Management, loss aversion, Louis Pasteur, mandelbrot fractal, market bubble, market fundamentalism, military-industrial complex, Money creation, Moneyball by Michael Lewis explains big data, Monty Hall problem, Nash equilibrium, Nate Silver, new economy, Nick Leeson, Northern Rock, nudge theory, oil shock, PalmPilot, Paul Samuelson, peak oil, Peter Thiel, Philip Mirowski, Phillips curve, Pierre-Simon Laplace, popular electronics, power law, price mechanism, probability theory / Blaise Pascal / Pierre de Fermat, quantitative trading / quantitative finance, railway mania, RAND corporation, reality distortion field, rent-seeking, Richard Feynman, Richard Thaler, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Solow, Ronald Coase, sealed-bid auction, shareholder value, Silicon Valley, Simon Kuznets, Socratic dialogue, South Sea Bubble, spectrum auction, Steve Ballmer, Steve Jobs, Steve Wozniak, Suez crisis 1956, Tacoma Narrows Bridge, Thales and the olive presses, Thales of Miletus, The Chicago School, the map is not the territory, The Market for Lemons, The Nature of the Firm, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Bayes, Thomas Davenport, Thomas Malthus, Toyota Production System, transaction costs, ultimatum game, urban planning, value at risk, world market for maybe five computers, World Values Survey, Yom Kippur War, zero-sum game

From its very beginnings, useful economic theory has generally been of this kind. Adam Smith began The Wealth of Nations by illustrating the concept of the division of labour through a stylised description of a pin factory. There is no evidence that he was describing a real pin factory. In the early nineteenth century, David Ricardo proposed a model of international trade based on comparative advantage which continues to be among the central insights of economics. Two hundred and fifty years before Donald Trump’s presidency, Adam Smith had refuted the mercantilist view of foreign trade as a zero sum game in which one country gained at the expense of a weaker or foolish partner – trade could benefit both parties. 3 Ricardo developed Smith’s argument to show that a country that was more efficient than another country in producing everything could still benefit from trade with the less efficient country, and vice versa. 4 In the style of his times, he illustrated his thesis with a story based on a numerical example.

‘Eusociality’ describes behaviour in which animals practise a communal division of reproductive and nurturing labour, with multiple generations living together and working to rear the collective young. Eusociality leads to the division of labour, whose critical importance to economic development Adam Smith recognised in the very first pages of The Wealth of Nations . Eusocial species are highly productive, able to undertake complex tasks, and build elaborate artefacts. Eusociality has emerged down two distinct evolutionary pathways. Manifestations of eusociality are found among humans, and to a much smaller extent in some other mammals, and is the product of communication.

More than one-third of the economists either refused to answer the question regarding what is fair, or gave very complex, uncodable responses. It seems that the meaning of “fairness” in this context was somewhat alien for this group.’ 8 Reciprocity and exchange The evening led the authors to realise that anthropologists and economists are not really so far apart. Adam Smith began The Wealth of Nations with the observation that ‘the propensity to truck, barter and exchange is common to all men’. 9 The classic anthropological study of reciprocity in human relationships is Marcel Mauss’s 1925 essay The Gift . Mauss asked, ‘What power resides in the object that causes its recipient to pay it back?’


pages: 254 words: 72,929

The Age of the Infovore: Succeeding in the Information Economy by Tyler Cowen

Albert Einstein, Asperger Syndrome, autism spectrum disorder, behavioural economics, business cycle, Cass Sunstein, cognitive bias, David Brooks, en.wikipedia.org, endowment effect, Flynn Effect, folksonomy, framing effect, Google Earth, Gregor Mendel, impulse control, informal economy, Isaac Newton, loss aversion, Marshall McLuhan, Naomi Klein, neurotypical, new economy, Nicholas Carr, pattern recognition, phenotype, placebo effect, Richard Thaler, selection bias, Silicon Valley, social intelligence, the medium is the message, The Wealth of Nations by Adam Smith, theory of mind, Tyler Cowen

So you can think of this book as a rebellion against traditional economics or as a micro-foundation for a better economics or as neuroeconomics; alternatively, I view it as a return home to the original foundations of economics. It may come as a surprise that the origin of the study of economics was substantially psychology, perception, and mental ordering. As I’ve already discussed, Adam Smith, the father of modern economics, wrote not just The Wealth of Nations but also a book on human psychology, namely The Theory of Moral Sentiments. Smith’s life’s work was to mix economic reasoning with Stoic moral philosophy (Seneca, Epictetus, and Marcus Aurelius, plus their French Renaissance successor Montaigne) and applied psychology, most of which he generated from his own reasoning.

Marines, 107 value in culture, 9 and framing effects, 79–81, 84–85 and interiority, 63 of stories, 129, 146 Veley, Charles, 104–5 verbal communication, 20, 35 violence in art, 175 Virtual Human Interaction Lab, 86 Wal-Mart, 4, 59 war, 196–97 Warhol, Andy, 166, 191 Watson, John H. (fictional character), 155, 156, 157–59 “weak central coherence” of autistics, 20 “weak executive function” of autistics, 20 The Wealth of Nations (Smith), 124, 167, 215 web access to content, 47, 49–50, 62–63 and attention spans, 53–55 and autistics, 57, 132, 212, 213, 218 and cognitive performance, 52 currency of, 45–47 and education, 112, 113–14 groups and affiliations on, 87–89 and mental ordering, 4–9, 10–12, 13 and political connections, 87–88 popular websites, 46–47 rewiring effect of, 10 size of content, 48 See also specific sites such as Facebook Webern, Anton, 182 Wikipedia, 11, 47, 98–99 “Williams syndrome,” 179 Windows Live, 47 wine experiments, 79–80 Wittgenstein, Ludwig, 166 workplace, 69 written communication, 213.

Ostwald, Glenn Gould: The Ecstasy and Tragedy of Genius (New York: W. W. Norton and Co., 1997). On Adam Smith’s view of The Theory of Moral Sentiments, see Ian Simpson Ross, The Life of Adam Smith (Oxford: Clarendon Press, 1995), 177. For various pieces of biographical information on Smith, see adamsmithslostlegacy.com/2008/03/adam-smith-and-tourettes-syndrome.html. On Stewart, see William Robert Scott, Adam Smith as Student and Professor (New York: Augustus M. Kelley, 1965), 77. The John Rae quotation is from John Rae, Life of Adam Smith, chapter 17, online at www.econlib.org/library/YPDBooks/Rae/raeLS17.html#Chapter%2017.


Nuclear War and Environmental Catastrophe by Noam Chomsky, Laray Polk

Alan Greenspan, American Legislative Exchange Council, British Empire, cuban missile crisis, David Ricardo: comparative advantage, energy security, Higgs boson, Howard Zinn, interchangeable parts, invisible hand, Kwajalein Atoll, language acquisition, Malacca Straits, military-industrial complex, mutually assured destruction, Naomi Klein, nuclear ambiguity, Occupy movement, oil shale / tar sands, public intellectual, Ralph Nader, Ronald Reagan, South China Sea, The Wealth of Nations by Adam Smith, trade route, University of East Anglia, uranium enrichment, WikiLeaks

If we continue on the path of financialization of the economy and offshoring of production, there’s not going to be very much here for the working population. It’s kind of interesting if you look back at the classical economists, Adam Smith and David Ricardo. They were sort of aware of this—they didn’t put it in precisely these terms—but if you take a look at Adam Smith’s The Wealth of Nations, the famous phrase “invisible hand” appears once. It appears essentially in a critique of what’s going on right now. What he pretty much says is that, in England, if merchants and manufacturers preferred to import from abroad and sell abroad, they might make profit, but it would be bad for England.

This great mortality, however, will every where be found chiefly among the children of the common people, who cannot afford to tend them with the same care as those of better station.” Smith proposed better wages for workers, enabling families to better provide for their children, consequently providing a healthier, more productive workforce. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776; repr., London: Methuen, 1904), Library of Economics and Liberty (EconLib.org), s.v. “Adam Smith, Wealth of Nations,” s.v. “I.8 Of the Wages of Labour.” 7. Extraordinary Lives Laray Polk: In your office, among all the reference materials, you have a rather large black-and-white photograph of Bertrand Russell.

It’s rarely recognized that Magna Carta not only laid the basis for what became over centuries formal protection for civil and human rights, but also stressed the preservation of the commons from autocratic destruction and privatization—the Charter of the Forests, one of the two components of Magna Carta.101 In contrast, the US is a business-run society, to an extent beyond any other in the developed world. Enormous power lies in the hands of a highly class-conscious business elite, who, in Adam Smith’s words, are the “principal architects” of policy and make sure that their own interests are “most peculiarly attended to” no matter how “grievous” the effects on others, including the people of their own society and their colonies (Smith’s concern) and future generations (which must be our concern).


pages: 323 words: 90,868

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

3D printing, Airbnb, American energy revolution, assortative mating, autonomous vehicles, Bakken shale, barriers to entry, basic income, Bernie Sanders, Big Tech, BRICs, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, cloud computing, collective bargaining, computer age, creative destruction, currency risk, dark matter, David Ricardo: comparative advantage, deindustrialization, dematerialisation, Deng Xiaoping, deskilling, disruptive innovation, Dissolution of the Soviet Union, Donald Trump, Downton Abbey, driverless car, Edward Glaeser, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, falling living standards, financial engineering, 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, general purpose technology, gig economy, global supply chain, global value chain, heat death of the universe, hydraulic fracturing, income inequality, independent contractor, indoor plumbing, industrial robot, intangible asset, interchangeable parts, Internet of things, inventory management, invisible hand, James Watt: steam engine, Jeff Bezos, Jeremy Corbyn, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph-Marie Jacquard, knowledge economy, low interest rates, low skilled workers, lump of labour, Lyft, machine translation, manufacturing employment, Marc Andreessen, mass immigration, means of production, new economy, performance metric, pets.com, post-work, price mechanism, quantitative easing, Ray Kurzweil, rent-seeking, reshoring, rising living standards, Robert Gordon, Robert Solow, 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, tacit knowledge, TaskRabbit, tech billionaire, The Future of Employment, The Nature of the Firm, The Rise and Fall of American Growth, The Spirit Level, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, Uber and Lyft, Uber for X, uber lyft, very high income, warehouse robotics, working-age population

POLITICAL EFFECTS OF SCARCITY As the previous section ought to make clear, there is an inevitable political subtext, or even text, to discussions of the economic effects of labour scarcity. Battles over the gains from production are unavoidably political, as is the effort expended by owners of land and capital or by workers to secure the political rights that support scarcity.15 In The Wealth of Nations, Adam Smith mused: We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and every where in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate … We seldom, indeed, hear of this combination, because it is the usual, and one may say, the natural state of things which nobody ever hears of … Such combinations, however, are frequently resisted by a contrary defensive combination of the workmen; who sometimes too, without any provocation of this kind, combine of their own accord to raise the price of their labour … The masters upon these occasions are just as clamorous upon the other side, and never cease to call aloud for the assistance of the civil magistrate, and the rigorous execution of those laws which have been enacted with so much severity against the combinations of servants, labourers, and journeymen.16 If Smith took it for granted that power naturally rests with the master, that might be because he lived during an era of explosive population growth – of labour abundance – in which workers could exercise very little bargaining power within labour markets.

And the status quo, when it changes, will be pushed in the direction of increased social distance: the use of law and custom to try to push open gaps between societies where technology is closing them, sought because existing social structures are failing to transform new economic possibilities into broad-based income growth. THE WEALTH OF HUMANS In his Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith mused on the way in which market economies translate human impulses into social wealth: [M]an has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them.

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”?’


pages: 540 words: 168,921

The Relentless Revolution: A History of Capitalism by Joyce Appleby

1919 Motor Transport Corps convoy, agricultural Revolution, Alan Greenspan, An Inconvenient Truth, anti-communist, Asian financial crisis, asset-backed security, Bartolomé de las Casas, Bear Stearns, Bernie Madoff, Bretton Woods, BRICs, British Empire, call centre, Charles Lindbergh, classic study, collateralized debt obligation, collective bargaining, Columbian Exchange, commoditize, Cornelius Vanderbilt, corporate governance, cotton gin, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, deskilling, Doha Development Round, double entry bookkeeping, epigenetics, equal pay for equal work, European colonialism, facts on the ground, failed state, Firefox, fixed income, Ford Model T, Ford paid five dollars a day, Francisco Pizarro, Frederick Winslow Taylor, full employment, General Magic , Glass-Steagall Act, Gordon Gekko, Great Leap Forward, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Hernando de Soto, hiring and firing, Ida Tarbell, illegal immigration, informal economy, interchangeable parts, interest rate swap, invention of movable type, invention of the printing press, invention of the steam engine, invisible hand, Isaac Newton, James Hargreaves, James Watt: steam engine, Jeff Bezos, John Bogle, joint-stock company, Joseph Schumpeter, junk bonds, knowledge economy, land bank, land reform, Livingstone, I presume, Long Term Capital Management, low interest rates, Mahatma Gandhi, Martin Wolf, military-industrial complex, moral hazard, Nixon triggered the end of the Bretton Woods system, PalmPilot, Parag Khanna, pneumatic tube, Ponzi scheme, profit maximization, profit motive, race to the bottom, Ralph Nader, refrigerator car, Ronald Reagan, scientific management, Scramble for Africa, Silicon Valley, Silicon Valley startup, South China Sea, South Sea Bubble, special economic zone, spice trade, spinning jenny, strikebreaker, Suez canal 1869, the built environment, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thorstein Veblen, total factor productivity, trade route, transatlantic slave trade, transcontinental railway, two and twenty, union organizing, Unsafe at Any Speed, Upton Sinclair, urban renewal, vertical integration, War on Poverty, working poor, Works Progress Administration, Yogi Berra, Yom Kippur War

By the mid-eighteenth century Samuel Johnson could casually comment that “there are few ways in which a man can be more innocently employed than in getting money.”3 A decisive cultural shift had clicked into place. At the end of the eighteenth century, the intellectual effort to understand the phenomenon of capitalism found its Aristotle in Adam Smith, whose An Inquiry into the Nature and Causes of the Wealth of Nations appeared in 1776. Smith presented a brilliantly detailed explanation of the causes of the unparalleled wealth in Great Britain. (After the Scottish and English crowns were joined in 1706, England was called Great Britain or the United Kingdom.) Building on the new conception of human beings as responsibly pursuing their own interest, he advocated a system of “natural liberty” because he thought that the “invisible hand” of the market would function better if left free of most regulation.

The idea of men and women as consuming animals with boundless appetites capable of driving the economy to new levels of prosperity excited the imagination of dozens of writers, but they were entrepreneurs, not moralists. The proposition that the wealth of nations began with stimulating wants rather than with organizing production robbed intrusive social legislation of a supporting rationale. Once advocacy of freeing trade became attached to a new explanation of economic growth, the earlier commercial wisdom of carefully managing trade to ensure high prices came under challenge, a century before Adam Smith’s explanation of why freedom was better than control in matters economic. Popular responses to fashion revealed that some demand was elastic.

The British cut back on imports of linen from German and Holland and of wine from France. Port became the favorite drink because of the exceptionally good diplomatic relations between Britain and Portugal. Of course other countries retaliated with their own protective legislation. These were the policies that Adam Smith decried in the Wealth of Nations. Calculating the cost of maintaining British colonies, he argued that the country’s best trading partners were its closest neighbors. A lot of economic developments enhanced the possibility for an Industrial Revolution, though none of them can be seen as a cause per se. Conditions make things possible for causes to work, but they cannot cause anything.


pages: 444 words: 139,784

How to Read a Book by Mortimer J. Adler, Charles van Doren

Albert Einstein, George Santayana, Henri Poincaré, Honoré de Balzac, invention of the telescope, Isaac Newton, Johann Wolfgang von Goethe, Johannes Kepler, land tenure, On the Revolutions of the Heavenly Spheres, place-making, Ralph Waldo Emerson, The Wealth of Nations by Adam Smith

Only then would they have been ready to study the play carefully and closely because then they would have understood enough of it to learn more. The rule applies with equal force to expository works. Here, indeed, the best proof of the soundness of the rule—give a book a first superficial reading—is what happens when you do not follow it. Take a basic work in economics, for example, such as Adam Smith’s classic The Wealth of Nations. (We choose this book as an example because it is more than a textbook or a work for specialists in the field. It is a book for the general reader.) If you insist on understanding everything on every page before you go on to the next, you will not get very far. In your effort to master the fine points, you will miss the big points that Smith makes so clearly about the factors of wages, rents, profits, and interest that enter into the cost of things, the role of the market in determining prices, the evils of monopoly, the reasons for free trade.

You will not know the sense in which Euclid’s Elements of Geometry and William James’ Principles of Psychology are books of the same sort if you do not know that psychology and geometry are both sciences—and, incidentally, if you do not know that “elements” and “principles” mean much the same thing in these two titles (though not in general), nor will you further be able to distinguish them as different unless you know there are different kinds of science. Similarly, in the case of Aristotle’s Politics and Adam Smith’s The Wealth of Nations, you can tell how these books are alike and different only if you know what a practical problem is, and what different kinds of practical problems there are. Titles sometimes make the grouping of books easy. Anyone would know that Euclid’s Elements, Descartes’ Geometry, and Hilbert’s Foundations of Geometry are three mathematical books, more or less closely related in subject matter.

The unity of Aristotle’s Ethics can be stated thus: This is an inquiry into the nature of human happiness and an analysis of the conditions under which happiness may be gained or lost, with an indication of what men must do in their conduct and thinking in order to become happy or to avoid unhappiness, the principal emphasis being placed on the cultivation of the virtues, both moral and intellectual, although other goods are also recognized as necessary for happiness, such as wealth, health, friends, and a just society in which to live. Another practical book is Adam Smith’s The Wealth of Nations. Here the reader is aided by the author’s own statement of “the plan of the work” at the very beginning. But that takes several pages. The unity can be more briefly stated as follows: This is an inquiry into the source of national wealth in any economy that is built on a division of labor, considering the relation of the wages paid labor, the profits returned to capital, and the rent owed the landowner, as the prime factors in the price of commodities.


pages: 261 words: 86,905

How to Speak Money: What the Money People Say--And What It Really Means by John Lanchester

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, asset allocation, Basel III, behavioural economics, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, blood diamond, Bretton Woods, BRICs, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collective bargaining, commoditize, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Dava Sobel, David Graeber, disintermediation, double entry bookkeeping, en.wikipedia.org, estate planning, fear index, financial engineering, financial innovation, Flash crash, forward guidance, Garrett Hardin, Gini coefficient, Glass-Steagall Act, global reserve currency, high net worth, High speed trading, hindsight bias, hype cycle, income inequality, inflation targeting, interest rate swap, inverted yield curve, Isaac Newton, Jaron Lanier, John Perry Barlow, joint-stock company, joint-stock limited liability company, junk bonds, Kodak vs Instagram, Kondratiev cycle, Large Hadron Collider, liquidity trap, London Interbank Offered Rate, London Whale, loss aversion, low interest rates, margin call, McJob, means of production, microcredit, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, negative equity, neoliberal agenda, New Urbanism, Nick Leeson, Nikolai Kondratiev, Nixon shock, Nixon triggered the end of the Bretton Woods system, Northern Rock, offshore financial centre, oil shock, open economy, paradox of thrift, plutocrats, Ponzi scheme, precautionary principle, proprietary trading, purchasing power parity, pushing on a string, quantitative easing, random walk, rent-seeking, reserve currency, Richard Feynman, Right to Buy, road to serfdom, Ronald Reagan, Satoshi Nakamoto, security theater, shareholder value, Silicon Valley, six sigma, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, Steve Jobs, survivorship bias, The Chicago School, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tragedy of the Commons, trickle-down economics, two and twenty, Two Sigma, Tyler Cowen, Washington Consensus, wealth creators, working poor, yield curve

.† All those fundamental needs supplied, all those goods bought and sold, all those provisions transported at the expense of cash and effort and ingenuity, all those transactions made, and all of it constituting a mechanism that functions so effectively that the good citizens of Paris don’t even notice how dependent they are on it—and the whole mechanism created just by allowing people to trade freely with each other. Economists have a shorthand reference to this epiphanic insight into the power of markets: they call it “Who feeds Paris?” For most people with an interest in economics, there’s a revelatory moment resembling Bastiat’s. The bravura opening of Adam Smith’s The Wealth of Nations, the founding text of economics, has a description of a pin-making factory that is very like Bastiat’s moment of awakening in Paris. The eureka moment isn’t always to do with the power of markets, though that’s a pretty good starting point, since the balance of wants and needs manifested in a functioning market is an extraordinary thing: the contents of Aladdin’s cave, all on sale at an ordinary store near you, and brought there by nothing more than market forces.

The internet offers many superb resources on economics, as well as lively debates that respond to news and data in real time. There is no better place to begin than Twitter: I would start by following Tim Harford, Tyler Cowen, Aditya Chakrabortty, and Paul Kedrosky. Finally, I would urge anyone who’s interested in the subject but hasn’t read The Wealth of Nations to give Adam Smith’s masterwork a go. Smith was a great writer as well as a great thinker, and his book is still fresh and still readable, as well as being a serious candidate for the most influential work of the humanities ever written. Notes 1Grayson Perry and Brian Eno, “How the Internet Has Taught Us We Are All Perverts,” New Statesman, 7 November 2013. 2Daniel, quoted in Michael Lewis, The Big Short: Inside the Doomsday Machine (New York: Norton, 2010), p. 206. 3You can read the original Fortune article at www.awjones.com/images/Fortune_-_The_Jones_Nobody_Keeps_Up_With.pdf. 4See http://www.awjones.com/historyofthefirm.html. 5Frédéric Bastiat, Economic Sophisms, trans.

Smith, Adam (1723–1790) The founder of modern economics as a field of thought, and author of one of the most important books ever written, The Wealth of Nations (or to give it its full title, An Inquiry into the Nature and Causes of the Wealth of Nations). Everybody should read Smith, because he is such a good writer, still freshly readable to this day, and also because this fundamental text in economics is based on common sense; this in turn gives readers the permission to use their own common sense in thinking about economic questions. It’s also worth reading The Wealth of Nations to see that Smith is much less doctrinally simple-minded than some of the people who claim him for a narrow modern version of neoliberal capitalist economics.


Animal Spirits by Jackson Lears

1960s counterculture, Alan Greenspan, bank run, banking crisis, behavioural economics, business cycle, buy and hold, California gold rush, clockwork universe, conceptual framework, Cornelius Vanderbilt, creative destruction, cuban missile crisis, dark matter, Doomsday Clock, double entry bookkeeping, epigenetics, escalation ladder, feminist movement, financial innovation, Frederick Winslow Taylor, George Akerlof, George Santayana, heat death of the universe, Herbert Marcuse, Herman Kahn, Ida Tarbell, invisible hand, Isaac Newton, joint-stock company, Joseph Schumpeter, Lewis Mumford, lifelogging, market bubble, market fundamentalism, Mikhail Gorbachev, moral hazard, Norman Mailer, plutocrats, prosperity theology / prosperity gospel / gospel of success, Ralph Waldo Emerson, RAND corporation, Robert Shiller, Ronald Reagan, scientific management, Scientific racism, short selling, Shoshana Zuboff, Silicon Valley, source of truth, South Sea Bubble, Stanislav Petrov, Steven Pinker, Stewart Brand, Strategic Defense Initiative, surveillance capitalism, the market place, the scientific method, The Soul of a New Machine, The Wealth of Nations by Adam Smith, transcontinental railway, W. E. B. Du Bois, Whole Earth Catalog, zero-sum game

“falls short of that complete self-denial”: Smith, Theory, 277. “whatever other passions”: Hume, cited in Rasmussen, Infidel, 90–91. “we feel emotions”: Smith, cited in ibid., 92. “impertinent jealousy”: Adam Smith, The Wealth of Nations (2000), 646. “mean rapacity”: Ibid., 647. “interested sophistry”: Ibid. “Invention is kept alive”: Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Modern Library ed., 1994), 840. “By preferring the support”: Smith, Wealth of Nations, 593–94. “The rich … divide with the poor”: Smith, Theory, 164. “the uniform, constant, and uninterrupted effort”: Smith, Wealth of Nations, 373.

Though he celebrated the emerging nation of shopkeepers, Smith remained keenly aware of the emotional stress of commercial life, which he thought was exacerbated by the “impertinent jealousy,” “mean rapacity,” and “interested sophistry” of merchants. Discerning the degrading effects of the division of labor, Smith even questioned the conventional history of humanity as an ascent from barbarism to civilization. Intelligent barbarians, he observed in The Wealth of Nations, had to perform varied occupations. “Invention is kept alive, and the mind is not suffered to fall into that drowsy stupidity, which, in a civilized society, seems to benumb the understanding of all the inferior ranks of people,” Smith wrote. “The man whose whole life is spent performing a few simple operations, of which the effects too, are, perhaps, always the same, or very nearly the same, has no occasion to exert his understanding, or to exercise his invention in finding out expedients for removing difficulties which never occur … he becomes as stupid and ignorant as it is possible for a human creature to become.”

While Smith celebrated ambition, enterprise, spirit, and keenness rather than mere regularity in the performance of duty, he always elevated tranquility and contentment over vanity and striving; his Presbyterian temperament recoiled from anything that resembled the pursuit of fashion or social status. Though explicitly religious references faded from The Wealth of Nations, in Theory of Moral Sentiments Smith linked the cultivation of tranquility to our awareness of a higher law and our expectation of “a world to come.” Tranquility arose from obedience to God’s law, but obeying God’s law was not mere conformity to rule; the practice of decency to others had psychological as well as theological justifications.


Unfinished Empire: The Global Expansion of Britain by John Darwin

Alfred Russel Wallace, British Empire, classic study, colonial rule, Corn Laws, David Ricardo: comparative advantage, European colonialism, financial independence, friendly fire, full employment, imperial preference, Khartoum Gordon, Khyber Pass, Kowloon Walled City, land tenure, mass immigration, Nelson Mandela, open economy, plutocrats, principal–agent problem, quantitative easing, reserve currency, Right to Buy, Scientific racism, South China Sea, special economic zone, spice trade, Suez canal 1869, Suez crisis 1956, The Wealth of Nations by Adam Smith, too big to fail, trade route, transcontinental railway, union organizing

Most Australians, New Zealanders and English-speaking Canadians and South Africans took the same view. But the empire they imagined was an empire of partners and equals, not of dependents and subjects. For many Victorians, however, it was the third kind of empire that served Britain best and returned the largest moral dividend. Its outline was sketched in Adam Smith’s hymn to free trade, The Wealth of Nations (1776). In the ‘empire of free trade’ (not a term Smith used), rule was, or should be, redundant. Free commercial relations would allow the free passage of ideas. It was easy to think that complementary economies would become complementary cultures as well, and that the world’s richest, most complex and most diversified culture would export its institutions and values alongside its manufactures.

There was nothing new in the eagerness of the landed and commercial elite to make money quickly, nor in their willingness to try every possible method: the Elizabethan aristocracy had invested in piracy, colonization and exotic new trades, as well as mining and draining for land reclamation. But until the late eighteenth century, it was widely assumed that manufacture and farming in Britain should be protected against competition from abroad. In fact, it took more than seventy years before the programme spelt out in Adam Smith’s The Wealth of Nations (1776) was implemented in full with free trade in corn (1846) and the end of the Navigation Laws (in 1851). Long before that, manufacturers had been free to impose new conditions of work, while the state outlawed ‘combination’ (i.e. trade union organization) or cleared the way for the huge railway projects that, in London at least, removed thousands of people from the path of the line.

The effect on Europeans had been almost equally bad: their feelings were corrupted and coarsened by the violence and misery they inflicted.5 Indeed, trying to rule colonies that were geographically remote as well as ethnically different was politically risky and certain to fail. These views were influential among thinkers and writers in Britain, including Hume and Edward Gibbon, whose Decline and Fall of the Roman Empire (1776) had famously warned against the danger for an empire of reaching ‘immoderate size’. In The Wealth of Nations (1776), Adam Smith had looked forward to the time when those the Europeans had been able to oppress ‘with impunity’6 would restore the balance of power. Edmund Burke’s famous polemic against the corruption and cruelty of the British presence in India reflected the same disenchanted view of European behaviour overseas and its destructive effects on other cultures and peoples.


pages: 233 words: 71,775

The Joy of Tax by Richard Murphy

banking crisis, banks create money, carbon tax, carried interest, correlation does not imply causation, en.wikipedia.org, failed state, full employment, Gini coefficient, Global Witness, green new deal, high net worth, Jeremy Corbyn, land value tax, means of production, Modern Monetary Theory, Money creation, offshore financial centre, price elasticity of demand, quantitative easing, race to the bottom, savings glut, seigniorage, The Spirit Level, The Wealth of Nations by Adam Smith, transfer pricing

Even if ‘Liberté, Égalité, Fraternité’ was not, in fact, the cry of that revolution, in the Age of Enlightenment it was held self-evident that taxation not only had to reflect society, but had the capacity to change society. It may not have been coincidence that Adam Smith published his theory of taxation in his book The Wealth of Nations in 1776, the year the United States of America declared independence from Britain. Another paradigm in taxation had shifted. It was becoming clear that nation states were defined by their ability to tax and that the credibility of those states was, albeit rather hesitantly at first, being determined by their willingness to tax in accordance with the views of those who were governed.

I first created country-by-country reporting in 2003. 15 http://www.oecd-ilibrary.org/taxation/guidance-on-transfer-pricing-documentation-and-country-by-country-reporting_9789264219236-en 16 http://www.taxresearch.org.uk/Documents/CRDivCBCR2015.pdf 17 http://uncounted.org/2015/06/15/the-politics-of-country-by-country-reporting Chapter 6: The underpinnings of a good tax system 1 Adam Smith, The Wealth of Nations, 1776, Book V, Chapter II, Part II. Extract downloaded from http://www.bibliomania.com/2/1/65/112/frameset.html 4 December 2006 2 It should be noted that these four terms are also the titles of what are called the Quaker Testimonies. I am a Quaker, but as far as I know, also the only one to ever interpret them in the way I do here.

The fact that Walmsley also argues that people have not consented to tax by voting in elections might surprise many: this idea is very obviously untrue, but the argument is made time and again by those organizations. So, in 2014 Tim Worstall, an Adam Smith Institute fellow, stated that ‘democracy is not all it’s cracked up to be’2 whilst in 2012 Adam Smith Institute director Dr Eamonn Butler wrote about the ‘tyranny of the majority’3 – a term much favoured by these groups. What they mean by it is that the right that democracy on the basis of universal suffrage provides to a government to create progressive taxation is an assault by the majority on the rights of the wealthy minority.


pages: 436 words: 76

Culture and Prosperity: The Truth About Markets - Why Some Nations Are Rich but Most Remain Poor by John Kay

Alan Greenspan, Albert Einstein, Asian financial crisis, Barry Marshall: ulcers, behavioural economics, Berlin Wall, Big bang: deregulation of the City of London, Bletchley Park, business cycle, California gold rush, Charles Babbage, complexity theory, computer age, constrained optimization, corporate governance, corporate social responsibility, correlation does not imply causation, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, Donald Trump, double entry bookkeeping, double helix, Dr. Strangelove, Dutch auction, Edward Lloyd's coffeehouse, electricity market, equity premium, equity risk premium, Ernest Rutherford, European colonialism, experimental economics, Exxon Valdez, failed state, Fairchild Semiconductor, financial innovation, flying shuttle, Ford Model T, Francis Fukuyama: the end of history, George Akerlof, George Gilder, Goodhart's law, Great Leap Forward, greed is good, Gunnar Myrdal, haute couture, Helicobacter pylori, illegal immigration, income inequality, industrial cluster, information asymmetry, intangible asset, invention of the telephone, invention of the wheel, invisible hand, John Meriwether, John Nash: game theory, John von Neumann, junk bonds, Kenneth Arrow, Kevin Kelly, knowledge economy, Larry Ellison, light touch regulation, Long Term Capital Management, loss aversion, Mahatma Gandhi, market bubble, market clearing, market fundamentalism, means of production, Menlo Park, Michael Milken, Mikhail Gorbachev, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, Naomi Klein, Nash equilibrium, new economy, oil shale / tar sands, oil shock, Pareto efficiency, Paul Samuelson, pets.com, Phillips curve, popular electronics, price discrimination, price mechanism, prisoner's dilemma, profit maximization, proprietary trading, purchasing power parity, QWERTY keyboard, Ralph Nader, RAND corporation, random walk, rent-seeking, Right to Buy, risk tolerance, road to serfdom, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, second-price auction, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, Steve Jobs, Stuart Kauffman, telemarketer, The Chicago School, The Market for Lemons, The Nature of the Firm, the new new thing, The Predators' Ball, The Wealth of Nations by Adam Smith, Thorstein Veblen, total factor productivity, transaction costs, tulip mania, urban decay, Vilfredo Pareto, Washington Consensus, women in the workforce, work culture , yield curve, yield management

There was one important difference-a difference that itself provided part of the rationale for settlement. Europe increasingly suffered from too much population for its land; in America, the ratio of land to people was quite different. This had implications for the balance of economic and political power. Adam Smith, the revered founder of modern economics, published The Wealth of Nations in 1776, coincident with the American Revolution. "England," he observed, "is certainly, in the present times, a much richer country than any part of North America. The wages oflabor, however, are much higher in North America than in any part ofEngland." 10 Virginia was different.

In modern society, we make decisions and choices, and the economic system is the framework within which we make them. It contains rules for assignment, production, and exchange. In the late eighteenth and nineteenth centuries, economists established a durable method of analysis for understanding production for exchange. Adam Smith's principal work, The Wealth of Nations) described the division of labor. David Ricardo, who became a writer and member of the British Parliament after successful speculation in bonds, laid out the principle of comparative advantage fifty years later. The effectiveness of an economic system is determined by its efficiency in exploiting comparative advantage and the division oflabor.

The Sciences ofthe Artificial. Cambridge, Mass.: MIT Press. Singer, H. 1950. "The Distribution of Gains between Investing and Borrowing Countries." American Economic Review 40: 473-85. Smith, A. 1759. The Theory ofMoral Sentiments. Indianapolis: Liberty Press. 1976. ---. 1976. An Enquiry into the Nature and Causes of the Wealth of Nations. Ed. R. H. Campbell and A. S. Skinner. Oxford: Oxford University Press. Smith, B. D. 1995. The Emergence of Agriculture. New York and Oxford: Scientific American Library. Sokal, A. D., and J. Bricmont. 1998. Fashionable Nonsense: Postmodern Intellectuals) Abuse ofScience. New York: Picador.


Investment: A History by Norton Reamer, Jesse Downing

activist fund / activist shareholder / activist investor, Alan Greenspan, Albert Einstein, algorithmic trading, asset allocation, backtesting, banking crisis, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, book value, break the buck, Brownian motion, business cycle, buttonwood tree, buy and hold, California gold rush, capital asset pricing model, Carmen Reinhart, carried interest, colonial rule, Cornelius Vanderbilt, credit crunch, Credit Default Swap, Daniel Kahneman / Amos Tversky, debt deflation, discounted cash flows, diversified portfolio, dogs of the Dow, equity premium, estate planning, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, family office, Fellow of the Royal Society, financial innovation, fixed income, flying shuttle, Glass-Steagall Act, Gordon Gekko, Henri Poincaré, Henry Singleton, high net worth, impact investing, index fund, information asymmetry, interest rate swap, invention of the telegraph, James Hargreaves, James Watt: steam engine, John Bogle, joint-stock company, Kenneth Rogoff, labor-force participation, land tenure, London Interbank Offered Rate, Long Term Capital Management, loss aversion, Louis Bachelier, low interest rates, managed futures, margin call, means of production, Menlo Park, merger arbitrage, Michael Milken, money market fund, moral hazard, mortgage debt, Myron Scholes, negative equity, Network effects, new economy, Nick Leeson, Own Your Own Home, Paul Samuelson, pension reform, Performance of Mutual Funds in the Period, Ponzi scheme, Post-Keynesian economics, price mechanism, principal–agent problem, profit maximization, proprietary trading, quantitative easing, RAND corporation, random walk, Renaissance Technologies, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Sand Hill Road, Savings and loan crisis, seminal paper, Sharpe ratio, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, spinning jenny, statistical arbitrage, survivorship bias, tail risk, technology bubble, Teledyne, The Wealth of Nations by Adam Smith, time value of money, tontine, too big to fail, transaction costs, two and twenty, underbanked, Vanguard fund, working poor, yield curve

With fewer restrictions on interest rates, activities of financial intermediaries grew rapidly.87 However, the influence of the concept of usury was still strong and lasting. Though fewer and fewer people continued to support a total ban on interest rates, there remained long debates, often among economists and economic philosophers in the eighteenth century, about whether interest rates should be set by a free market or be regulated with caps. In The Wealth of Nations, Adam Smith supported a cap on interest rates at around 5 percent. Smith feared that higher rates of 8 to 10 percent would mean that most of the debt would be issued to what he called “prodigals and projectors” (speculators), as few others would be willing to take on debt at such a rate. He believed that without such a cap on interest rates, the prodigals and projectors would outbid more rational economic agents, and as a result defaults and resource misallocation would be pervasive.

In the end, of course, the fraudulent activities of Enron and Bernie Madoff are echoes of this forerunner some three centuries earlier. Adam Smith, the oft-cited “father of modern economics,” took an entirely adversarial view of the structure of the joint-stock companies The Democratization of Investment 69 and the notion of investment management more broadly. Of course, Smith was highly influenced by the South Sea Bubble collapse, and in The Wealth of Nations he wrote, “Negligence and profusion, must always prevail, more or less, in the management of the affairs of such a [joint-stock] company.”

“South Sea Bubble Short History,” Baker Library, Harvard Business School, accessed 2014, http://www.library.hbs.edu/hc/ssb/history .html; Joel Bakan, The Corporation: The Pathological Pursuit of Profit and Power (New York: Free Press, 2004), 6–8. 7. “South Sea Bubble Short History.” 8. Bakan, The Corporation, 6–7. 9. Colin Arthur Cooke, Corporation, Trust and Company: An Essay in Legal History (Cambridge, MA: Harvard University Press, 1951), 83. 10. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Modern Library, 1937), 334–335. 11. Peter N. Stearns, The Industrial Revolution in World History, 3rd ed. (Boulder, CO: Westview, 2007). 12. Ibid., 34–37. 2. The Democratization of Investment 345 13. Ibid., 17–26 and 79–83. 14. Meir Kohn, “Finance before the Industrial Revolution: An Introduction” (working paper 99-01, Department of Economics, Dartmouth College, Hanover, NH, February 1999), http://www.dartmouth.edu/~mkohn /Papers/99-01.pdf, 5–6. 15.


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Getting Better: Why Global Development Is Succeeding--And How We Can Improve the World Even More by Charles Kenny

agricultural Revolution, Berlin Wall, British Empire, Charles Lindbergh, clean water, demographic transition, double entry bookkeeping, Edward Jenner, experimental subject, Fall of the Berlin Wall, germ theory of disease, Golden arches theory, Great Leap Forward, Gunnar Myrdal, income inequality, income per capita, Indoor air pollution, inventory management, Kickstarter, Milgram experiment, off grid, open borders, public intellectual, purchasing power parity, randomized controlled trial, Robert Solow, seminal paper, structural adjustment programs, The Wealth of Nations by Adam Smith, total factor productivity, Toyota Production System, trade liberalization, transaction costs, Tyler Cowen, very high income, Washington Consensus, X Prize

INSTITUTIONS: STICKY TECHNOLOGIES We have seen that “technology” as defined by economists is a very broad concept, covering all sorts of innovation. It covers traditional or invented technologies—Watt’s steam train, Engelbart’s computer mouse—to be sure. But it also covers anything else that can raise the productivity of labor or capital. Think of Adam Smith’s pin factory, highlighted in the Wealth of Nations. The specialized machinery of the factory (technology “embodied” in physical capital) and the skills required to use it (human capital) were both vital, but what allowed for this specialization was the division of labor, according to Smith. “One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top.”

Chapter 6 further discusses the power of income as a measure and a tool in those terms. The great news for global development is that quality of life is (increasingly) cheap. SIX THE GREAT NEWS The Best Things in Life Are Cheap The idea that ever-growing wealth is central to the good life has long been controversial. In The Wealth of Nations, Adam Smith argued that escaping poverty only required that people are “tolerably well fed, clothed and lodged.” Because of the limited needs of mankind, he felt that the primary purpose of the pursuit of riches in wealthier countries is “regard to the sentiment of mankind . . . to be observed, to be attended to, to be taken notice of.”1 Smith was writing in the late eighteenth century, when GDP per capita in the United Kingdom was somewhere below $1,700.

“The Educational Impact of Rechov Sumsum/Shara’a Simsim.” International Journal of Behavioural Development 27, pp. 409–422. Collier, P. 2007. The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It. Oxford: Oxford University Press. Comin, D., W. Easterly, and E. Gong. 2006. “Was the Wealth of Nations Determined in 1000 BC?” NBER Working Paper 12657. Conley, D., G. McCord, and J. Sachs. 2007. “Africa’s Lagging Demographic Transition: Evidence from Exogenous Impacts of Malaria Ecology and Agricultural Technology.” NBER Working Paper 12892. Cooper, R. 2005. “A Half-Century of Development.”


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Trust: The Social Virtue and the Creation of Prosperity by Francis Fukuyama

Alvin Toffler, barriers to entry, Berlin Wall, blue-collar work, business climate, business cycle, capital controls, classic study, collective bargaining, corporate governance, corporate raider, creative destruction, deindustrialization, Deng Xiaoping, deskilling, double entry bookkeeping, equal pay for equal work, European colonialism, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Gilder, glass ceiling, Glass-Steagall Act, global village, Gunnar Myrdal, hiring and firing, industrial robot, Jane Jacobs, job satisfaction, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kanban, Kenneth Arrow, land reform, liberal capitalism, liberation theology, low skilled workers, manufacturing employment, mittelstand, price mechanism, profit maximization, RAND corporation, rent-seeking, Ronald Coase, scientific management, Silicon Valley, Steve Jobs, Steve Wozniak, The Death and Life of Great American Cities, The Nature of the Firm, the scientific method, The Wealth of Nations by Adam Smith, transaction costs, transfer pricing, traveling salesman, union organizing, vertical integration, W. E. B. Du Bois

Taylor, Bismarck: The Man and the Statesman (New York: Vintage Books, 1967), pp. 202-203. 17Braun (1990), p. 54. 18See Klaus Chmielewicz, “Codetermination,” in Handbook of German Business Management, Vol. 2 (199), pp. 412-438. 19Peter Schwerdtner, “Trade Unions in the German Economic and Social Order,” Zeitschrift für die gesamte Staatswissenschaft 135 (1979): 455-473. 20On this general point, see Allen in Lodge and Vogel, eds. (1987), pp. 79-80. 21James Fallows and others have made a great deal of the importance of Friedrich List, asserting that the latter’s National System of Political Economy has been a better guide to both German and Asian economic growth than Adam Smith’s Wealth of Nations. List, however, simply repeats many of the mercantilist dicta about the centrality of national power and the subordination of economic means to strategic ends that was the staple of mercantilists from earlier centuries like Colbert or Turgot. Adam Smith would have found nothing in List’s arguments that he would have considered a decisive critique; indeed, The Wealth of Nations was itself written as a critique of List’s mercantilist predecessors. Fallows, moreover, vastly overstates the importance of List to German economic thought and practice.

Two of the most prolific and renowned contemporary neoclassical economists, Gary Becker of the University of Chicago and James Buchanan of George Mason University (both of whom won Nobel Prizes for their work), have built careers extending economic methodology to what are usually regarded as noneconomic phenomena like politics, bureaucracy, racism, the family, and fertility.7 The political science departments of many major universities are now filled with followers of socalled rational choice theory, which attempts to explain politics using an essentially economic methodology.8 The problem with neoclassical economics is that it has forgotten certain key foundations on which classical economics was based. Adam Smith, the premier classical economist, believed that people are driven by a selfish desire to “better their condition,” but he would never have subscribed to the notion that economic activity could be reduced to rational utility maximization. Indeed, his other major work besides The Wealth of Nations was The Theory of Moral Sentiments, which portrays economic motivation as highly complex and embedded in broader social habits and mores. The very change in the name of the discipline from “political economy” to “economics” between the eighteenth and late nineteenth centuries reflects the narrowing of the model of human behavior at its core.

.: Inter-University Study of Human Resources, 1975); and Clark Kerr, The Future of Industrial Societies: Convergence or Diversity? (Cambridge: Cambridge University Press, 1983). 22Adam Smith’s description of the progressive division of labor in the pin factory into tasks of smaller and simpler scope at the beginning of The Wealth of Nations is actually the locus classicus for this line of criticism of modern industrial society. See An Enquiry in the Nature and Causes of the Wealth of Nations (Indianapolis: Liberty Classics, 1981), pp. 14-15. 23On the Judeo-Christian tradition, see the chapter by Jaroslav Pelikan in Jaroslav J. Pelikan et al, Comparative Work Ethics: Christian, Buddhist, Islamic (Washington, D.C: Library of Congress, 1985).


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The True and Only Heaven: Progress and Its Critics by Christopher Lasch

affirmative action, agricultural Revolution, Alvin Toffler, Ayatollah Khomeini, bank run, British Empire, Charles Lindbergh, collective bargaining, colonial exploitation, company town, complexity theory, delayed gratification, desegregation, disinformation, equal pay for equal work, Frederick Winslow Taylor, full employment, Future Shock, gentrification, George Santayana, ghettoisation, Gunnar Myrdal, Herbert Marcuse, informal economy, invisible hand, job satisfaction, Joseph Schumpeter, land reform, Lewis Mumford, liberal capitalism, liberation theology, mass immigration, means of production, military-industrial complex, Norman Mailer, Panopticon Jeremy Bentham, planned obsolescence, post-industrial society, Post-Keynesian economics, profit motive, Ralph Waldo Emerson, Ronald Reagan, Rosa Parks, school vouchers, scientific management, scientific worldview, sexual politics, the market place, the scientific method, The Wealth of Nations by Adam Smith, Thorstein Veblen, urban renewal, Vilfredo Pareto, wage slave, War on Poverty, work culture , young professional

Abundance annulled the first law of social life under scarcity, that individuals or nations prosper only at their neighbors' expense. "Ignorant nations," Bentham said, had "treated each other as rivals, who could only rise upon the ruins of one another." Fortunately the work of Adam Smith had now made it clear, according to Bentham, that "commerce is equally advantageous for all nations— each one profiting in a different manner, according to its natural means." The Wealth of Nations showed that "nations are associates and not rivals in the grand social enterprise." Smith's argument in favor of free trade offered a special application of the general principle, as Bentham put it, that "the interests of men coincide upon more points than they oppose each other."

A commercial society needed the "gentle virtue of humanity," to be sure; and "justice and humanity" rested, in turn, on a "sacred regard" for life and property, necessarily weakened by the "violence of faction" and the "hardships and hazards of war." Even so, Smith reserved his highest praise, not only in The Theory of Moral Sentiments but in The Wealth of Nations itself, for the soldier's life. He regretted that "the general security and happiness which prevail in ages of civility and politeness, afford little exercise to the contempt of danger, to patience in enduring labor, hunger, and pain." The division of labor made possible an unheard-of expansion of productivity, as he explained at length in The Wealth of Nations, but it also dulled the mind and sapped the martial spirit. His unsparing account of these effects drew on the republican identification of virtue with virility and resourcefulness.

The ancient world was fully acquainted with the achievements of reason; nor was the eighteenth-century world so besotted with those achievements that it overlooked reason's limits. As for the idea of historical stages, equally familiar to the ancients, it led to a theory of progress only when social theorists ceased to model those stages on the biological life cycle, in which growth and maturity led inevitably to senescence and death. Smith's work, especially The Wealth of Nations, implicitly repudiated this biological conception of history and the self-denying morality with which it had been associated. The stoic critique of appetite lost much of its force in the face of Smith's contention that insatiable appetites led not to corruption -54- and decay but to the indefinite expansion of the productive machinery necessary to satisfy them.


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Making It Happen: Fred Goodwin, RBS and the Men Who Blew Up the British Economy by Iain Martin

Alan Greenspan, asset-backed security, bank run, Basel III, Bear Stearns, beat the dealer, Big bang: deregulation of the City of London, Bletchley Park, call centre, central bank independence, computer age, corporate governance, corporate social responsibility, credit crunch, Credit Default Swap, deindustrialization, deskilling, Edward Thorp, Etonian, Eugene Fama: efficient market hypothesis, eurozone crisis, falling living standards, financial deregulation, financial engineering, financial innovation, G4S, Glass-Steagall Act, high net worth, interest rate swap, invisible hand, joint-stock company, Kickstarter, light touch regulation, London Whale, Long Term Capital Management, long term incentive plan, low interest rates, moral hazard, negative equity, Neil Kinnock, Nick Leeson, North Sea oil, Northern Rock, old-boy network, pets.com, proprietary trading, Red Clydeside, shareholder value, The Wealth of Nations by Adam Smith, too big to fail, upwardly mobile, value at risk, warehouse robotics

Upwards of 70 per cent of Scots were able to read and write by the mid-eighteenth century. At a time when England had only two such institutions, Oxford and Cambridge, Scotland had four ancient universities in the shape of St Andrews, Aberdeen, Edinburgh and Glasgow. From the latter intellectual hothouse came Adam Smith, the great classical liberal author of The Wealth of Nations (1776). Smith taught at Glasgow, gave popular public lectures in Edinburgh and became the father of modern economics. The ideas of philosophers including David Hume and Adam Ferguson, and scientists such as Joseph Black, helped shape our world. Even the modern insurance industry can be traced to Edinburgh and the establishment in the 1740s of the ‘Fund for a Provision for the Widows and Children of the Ministers of the Church of Scotland’, which created the model, with the use of actuarial tables, whereby a mutual insurance company could ensure that it had sufficient funds to insure against early death.8 It was in this innovative climate that the Royal Bank and the old Bank of Scotland pioneered what became modern British banking.

Established just three years previously, with the aristocracy of Ayrshire and surrounding counties heavily invested, the Ayr Bank had expanded too fast, made too many loans and became overextended. To fill the gap it started borrowing ever-larger amounts from elsewhere. Then came disaster, with the sudden collapse of the London-Scottish banking house of Neale, James, Fordyce and Downe, with which the Ayr Bank had done business.10 Adam Smith, writing in The Wealth of Nations, several years later, described the Ayr Bank’s reckless approach to running its affairs in the following terms: ‘The project of replenishing their coffers in this manner may be compared to that of a man who had a water-pond from which a stream was continually running out, but who proposed to keep it always full by employing a number of people to go continually with buckets to a well at some miles distance in order to bring water to replenish it.’

It also didn’t seem like a good way of getting a Labour government elected for the first time since 1979, given that it needed to win in the south and Midlands of England. Brown’s views started to evolve. Adam Smith, the eighteenth-century philosopher and father of modern economics, the inspiration for pro-market economists and free-market Thatcherites, was a fellow son of Kirkcaldy.3 There was a side to Smith that appealed to Brown all along. As well as teaching that markets were essential for economic efficiency, hadn’t Smith also appeared to argue in The Wealth of Nations that the rich should pay higher taxes to support the poor? As Brown’s views shifted away from old-style socialism there were areas he was determined to protect from markets; the National Health Service was the obvioius example.


The Economics Anti-Textbook: A Critical Thinker's Guide to Microeconomics by Rod Hill, Anthony Myatt

American ideology, Andrei Shleifer, Asian financial crisis, bank run, barriers to entry, behavioural economics, Bernie Madoff, biodiversity loss, business cycle, cognitive dissonance, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, different worldview, electricity market, endogenous growth, equal pay for equal work, Eugene Fama: efficient market hypothesis, experimental economics, failed state, financial innovation, full employment, gender pay gap, Gini coefficient, Glass-Steagall Act, Gunnar Myrdal, happiness index / gross national happiness, Home mortgage interest deduction, Howard Zinn, income inequality, indoor plumbing, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, liberal capitalism, low interest rates, low skilled workers, market bubble, market clearing, market fundamentalism, Martin Wolf, medical malpractice, military-industrial complex, minimum wage unemployment, moral hazard, Paradox of Choice, Pareto efficiency, Paul Samuelson, Peter Singer: altruism, positional goods, prediction markets, price discrimination, price elasticity of demand, principal–agent problem, profit maximization, profit motive, publication bias, purchasing power parity, race to the bottom, Ralph Nader, random walk, rent control, rent-seeking, Richard Thaler, Ronald Reagan, search costs, shareholder value, sugar pill, The Myth of the Rational Market, the payments system, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, ultimatum game, union organizing, working-age population, World Values Survey, Yogi Berra

So, competitive markets guarantee that the right quantities are produced and society’s net benefit is maximized. This is the technical argument for laissez-faire, the view that governments should leave the economy alone. But textbooks seek to persuade. So, most textbooks selectively paraphrase the argument developed by Adam Smith in The Wealth of Nations, published in 1776. In an analogy that has become iconic, Smith compares competitive market forces to an invisible hand that guides self-interest into socially useful activities. In a famous passage he says: ‘It is not through the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own interest.’

Such moral questions are ultimately resolved by political decisions. All economists can do is give advice on how to achieve society’s goals as efficiently as possible. The science of economics is value free. 14 2.1 The inherent tension with macroeconomics As we mentioned the first seminal book in economics, Adam Smith’s The Wealth of Nations, it behoves us to mention another, John Maynard Keynes’s The General Theory of Employment, Interest and Money. Published in 1936 during the Great Depression, it attempted to explain how unemployment could persist, and what ameliorating actions governments could take. In the process of ­doing this, Keynes became the founding father of macroeconomics.

Simon, H. (1991) ‘Organisations and markets’, Journal of Economic Perspectives, 5(2): 25–44. Singer, N. and D. Wilson (2009) ‘Medical editors push for ghostwriting crackdown’, New York Times, 17 September. Singer, P. and J. Mason (2006) The Ethics of What We Eat: Why our food choices matter, Emmaus, PA: Rodale. Smith, A. (1979 [1776]) The Nature and Causes of the Wealth of Nations, Indianapolis: Liberty Press. Solnick, S. J. and D. Hemenway (1998) ‘Is 287 Bibliography K. Rothschild (ed.), Power in Economics: Selected readings, London: Penguin, pp. 7–17. Ruffin, R. and P. Gregory (2001) Principles of Microeconomics, 7th edn, Toronto: Addison Wesley. Russell, T. and R.


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The Reckoning: Financial Accountability and the Rise and Fall of Nations by Jacob Soll

accounting loophole / creative accounting, bank run, Bear Stearns, Bonfire of the Vanities, British Empire, collapse of Lehman Brothers, computer age, corporate governance, creative destruction, Credit Default Swap, delayed gratification, demand response, discounted cash flows, double entry bookkeeping, financial independence, Frederick Winslow Taylor, Glass-Steagall Act, God and Mammon, High speed trading, Honoré de Balzac, inventory management, invisible hand, Isaac Newton, James Watt: steam engine, joint-stock company, Joseph Schumpeter, new economy, New Urbanism, Nick Leeson, Plato's cave, Ponzi scheme, Ralph Waldo Emerson, scientific management, Scientific racism, South Sea Bubble, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, trade route

He began putting surpluses of sometimes more than £1 million per annum into the sinking fund, which went to service the debt and lower the debt principal. This brought confidence to the markets and led to a general feeling that the debt was under control. By the time he left office in 1742, Walpole had lowered the debt by £13 million.27 In The Wealth of Nations (1776)—the defining work of morality and free-market economics—Adam Smith expressed doubt that a sinking fund was a solution to debt. Instead, he considered it a temptation to ignore debt and, indeed, to contract new debts. Smith was thinking of Walpole. Although Walpole was a man of finance who governed during the Enlightenment, he was a politician first, and as political pressure regarding the debt lightened, the sinking fund looked less and less like a debt-servicing instrument and more like a political slush fund.

Yamey, “Scientific Bookkeeping and the Rise of Capitalism,” Economic History Review 1, no. 2–3 (1949): 102; Lodewijk J. Wagenaar, “Les mécanismes de la prospérité,” in Amsterdam XVIIe siècle. Marchands et philosophes: les bénéfices de la tolerance, ed. Henri Méchoulan (Paris: Editions Autrement, 1993), 59–81; Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Amherst, NY: Prometheus Books, 1991), 4: chap. 3, part 1; Jan de Vries and Ad van der Woude, The First Modern Economy: Success, Failure, and Perseverance of the Dutch Economy, 1500–1815 (Cambridge: Cambridge University Press, 1997), 129–131. 7. Caspar Barlaeus, Marie de Medicis entrant dans l’Amsterdam; ou Histoire de la reception faicte à la Reyne Mère du Roy très-Chrestien, par les Bourgmaistres et Bourgeoisie de la Ville d’Amsterdam (Amsterdam: Jean & Corneille Blaeu, 1638), 57; Simon Schama, The Embarrassment of Riches: An Interpretation of Dutch Culture in the Golden Age, 2nd ed.

The Foundations of Modern Political Thought. 2 vols. Cambridge: Cambridge University Press, 1978. Smallwood, Stephanie E. Saltwater Slavery: A Middle Passage from Africa to American Diaspora. Cambridge, MA: Harvard University Press, 2008. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. Amherst, NY: Prometheus Books, 1991. Smith, Woodruff D. “The Function of Commercial Centers in the Modernization of European Capitalism: Amsterdam as an Information Exchange in the Seventeenth Century.” Journal of Economic History 44, no. 4 (1984): 985–1005. Smyth, Adam. Autobiography in Early Modern Britain.


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This Could Be Our Future: A Manifesto for a More Generous World by Yancey Strickler

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Abraham Maslow, accelerated depreciation, Adam Curtis, basic income, benefit corporation, Big Tech, big-box store, business logic, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, cognitive dissonance, corporate governance, Daniel Kahneman / Amos Tversky, data science, David Graeber, Donald Trump, Doomsday Clock, Dutch auction, effective altruism, Elon Musk, financial independence, gender pay gap, gentrification, global supply chain, Hacker News, housing crisis, Ignaz Semmelweis: hand washing, invention of the printing press, invisible hand, Jeff Bezos, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Nash: game theory, Joi Ito, Joseph Schumpeter, Kickstarter, Kōnosuke Matsushita, Larry Ellison, Louis Pasteur, Mark Zuckerberg, medical bankruptcy, Mr. Money Mustache, new economy, Oculus Rift, off grid, offshore financial centre, Parker Conrad, Ralph Nader, RAND corporation, Richard Thaler, Ronald Reagan, Rutger Bregman, self-driving car, shareholder value, Silicon Valley, Simon Kuznets, Snapchat, Social Responsibility of Business Is to Increase Its Profits, Solyndra, stem cell, Steve Jobs, stock buybacks, TechCrunch disrupt, TED Talk, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Travis Kalanick, Tyler Cowen, universal basic income, white flight, Zenefits

It’s like seeing the world through the eyes of a sociopathic oligarch. Everything has a price. A RATIONAL ORIGIN It all started innocently enough. In 1776, the Scottish economist and philosopher Adam Smith argued that society best functions when people are trusted to act according to their self-interest. “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest,” he famously wrote in The Wealth of Nations. You didn’t have to force or beg a butcher to be a butcher. Because this was what enabled people to survive and meet the needs of their family, it’s what they would do on their own.

Everything was connected but not everything worked the same way. Each part of the body had its own path to health. It wasn’t one treatment fits all. Now we know there are types and stages of cancer, good and bad cholesterols, good and bad fats, and more nuance every day. (Specificity is the same force that Adam Smith declares crucial to unlocking economic growth in The Wealth of Nations.) Because of the forces of technology, measurement, and specificity, our understanding of health became deeper. Medicine became real. We live longer and better lives as a result. The same thing can happen again. Financial maximization is to value what bloodletting was to medicine: the most advanced answer of its time, but not the final answer.

The idea that the rich would willfully share power was unthinkable. You had to petition the House of Lords to start a company. Children were expected to work long hours of hard labor. Then new ideas developed and spread for how the world could work. The French Revolution, the Declaration of Independence, Adam Smith, Karl Marx, the Beatles, hip-hop, and Star Trek: The Next Generation in the blink of an eye. It was a very different world and it wasn’t that long ago. Where should the 2050 generations lead us? I believe that expanding our definition of value is the goal to work toward. There is unlimited potential to increase the amount of fairness, mastery, purpose, community, knowledge, family, faith, tradition, and sustainability in our world if we accept a broader idea of value.


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Profiting Without Producing: How Finance Exploits Us All by Costas Lapavitsas

Alan Greenspan, Andrei Shleifer, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, borderless world, Branko Milanovic, Bretton Woods, business cycle, capital controls, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, computer age, conceptual framework, corporate governance, credit crunch, Credit Default Swap, David Graeber, David Ricardo: comparative advantage, disintermediation, diversified portfolio, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, false flag, financial deregulation, financial independence, financial innovation, financial intermediation, financial repression, Flash crash, full employment, general purpose technology, Glass-Steagall Act, global value chain, global village, High speed trading, Hyman Minsky, income inequality, inflation targeting, informal economy, information asymmetry, intangible asset, job satisfaction, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, liberal capitalism, London Interbank Offered Rate, low interest rates, low skilled workers, M-Pesa, market bubble, means of production, Minsky moment, Modern Monetary Theory, Money creation, money market fund, moral hazard, mortgage debt, Network effects, new economy, oil shock, open economy, pensions crisis, post-Fordism, Post-Keynesian economics, price stability, Productivity paradox, profit maximization, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, race to the bottom, regulatory arbitrage, reserve currency, Robert Shiller, Robert Solow, savings glut, Scramble for Africa, secular stagnation, shareholder value, Simon Kuznets, special drawing rights, Thales of Miletus, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, Tobin tax, too big to fail, total factor productivity, trade liberalization, transaction costs, union organizing, value at risk, Washington Consensus, zero-sum game

Marx offered a distinctive answer to this question, the significance of which can be fully appreciated only in the context of other monetary theories.15 It is notable, for instance, that classical political economy offers little guidance on this issue. Classical economists were certainly concerned with the peculiarity of money, but approached the issue instrumentally, so to speak. The standard view was put forth by Adam Smith in The Wealth of Nations while analysing ‘primitive’ exchange.16 In short, if money was absent, direct commodity exchange would prevail; however, direct exchange would be prone to constant breakdowns since the commodities held by traders would frequently be incompatible in terms of quantities, quality, time of exchange, and so on.

Advanced capitalism is indeed based on money that comprises promises to pay, but only a leap of logic would equate gold with a promise to pay – that is, with a debt.28 Fourth, and more generally, credit-based theories of money offer a slender foundation for explaining the collapse of financial relations and the corresponding rise of monetary relations that is characteristic of capitalist crises. It is instructive to note, incidentally, that some aspects of the chartalist view go back to classical political economy. Sir James Steuart proposed a well-developed version of abstract value measurement shortly before Adam Smith wrote The Wealth of Nations. In his Inquiry into the Principles of Political Economy, Steuart suggested that ‘money of account’ is an abstract numeraire that establishes ideal prices, which are then approximated in practice by ‘material money’.29 Marx, despite the high regard in which he held Steuart’s monetary analysis, rejected this view and offered fresh insight into money originating in commodity exchange.30 The gist of Marx’s objection to Steuart’s theory of the abstract numeraire was that it obfuscates the relationship between ideal prices (established abstractly by money on paper, or in the mind) and actual prices (established in practice by money through regular commodity exchanges).

Arthur, for whom Hegel-type dialectics entirely replace monetary theory and economics (‘Money and Exchange’, Capital and Class 30:3, 2006); for a telling response see Thomas Sekine, ‘Arthur on Money and Exchange’, Capital and Class 33:3, 2009. 15 Discussion in this section draws heavily on Costas Lapavitsas, Social Foundations of Markets, Money and Credit, London: Routledge, 2003, ch. 3. 16 Adam Smith, The Wealth of Nations, ed. Edwin Cannan E, London: Methuen, 1904, vol. 1, ch. 5. 17 This point is often missed by anthropologists, sociologists and other social scientists who discuss the origin of money and criticize ‘economic theory’ for relating money to direct exchange. Thus, David Graeber makes a typically withering attack on Smith for assuming a ‘primitive’ society and an imaginary state of barter out of which money presumably emerges (Debt: The First 5000 Years, New York: Melville House, 2011, ch. 2).


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

23andMe, 3D printing, Abraham Maslow, additive manufacturing, AI winter, Albert Einstein, Amazon Mechanical Turk, Amazon Robotics, 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, Blue Ocean Strategy, business process, business process outsourcing, Cass Sunstein, Checklist Manifesto, Clapham omnibus, Clayton Christensen, clean water, cloud computing, commoditize, computer age, Computer Numeric Control, computer vision, Computing Machinery and Intelligence, conceptual framework, corporate governance, creative destruction, crowdsourcing, Daniel Kahneman / Amos Tversky, data science, death of newspapers, disintermediation, Douglas Hofstadter, driverless car, en.wikipedia.org, Erik Brynjolfsson, Evgeny Morozov, Filter Bubble, full employment, future of work, Garrett Hardin, 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, Large Hadron Collider, lifelogging, lump of labour, machine translation, Marshall McLuhan, Metcalfe’s law, Narrative Science, natural language processing, Network effects, Nick Bostrom, optical character recognition, Paul Samuelson, personalized medicine, planned obsolescence, pre–internet, Ray Kurzweil, Richard Feynman, Second Machine Age, self-driving car, semantic web, Shoshana Zuboff, Skype, social web, speech recognition, spinning jenny, strong AI, supply-chain management, Susan Wojcicki, tacit knowledge, TED Talk, telepresence, The Future of Employment, the market place, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tragedy of the Commons, transaction costs, Turing test, Two Sigma, warehouse robotics, Watson beat the top human players on Jeopardy!, WikiLeaks, world market for maybe five computers, Yochai Benkler, young professional

Antonio Regalado, ‘What It Will Take for Computers to Be Conscious’, MIT Technology Review, 2 Oct. 2014 <http://www.technologyreview.com> (accessed 30 March 2015). 17 Jerome Groopman, How Doctors Think (2008), 17. 18 Simon Baron-Cohen, The Essential Difference: Male and Female Brains and the Truth About Autism (2004). 19 Joseph Weizenbaum, Computer Power and Human Reason: From Judgment to Calculation (1984). 20 The Panel on Fair Access to the Professions, Unleashing Aspiration: The Final Report of the Panel on Fair Access to the Professions (2009). <http://webarchive.nationalarchives.gov.uk/+/http:/www.cabinetoffice.gov.uk/media/227102/fair-access.pdf> (accessed 23 March 2015). 21 Adam Smith, An Inquiry into the Nature and Cause of the Wealth of Nations (1998). 22 Smith, The Wealth of Nations, 12–15. 23 Smith, The Wealth of Nations, 429. 24 Smith, The Wealth of Nations, 430. 25 ‘He is at home when he is not working and when he is working he is not at home’: ‘Economic and Philosophical Manuscripts’, in Karl Marx: Selected Writings, ed. Lawrence Simon (1994), 62. 26 Marx, ‘Economic and Philosophical Manuscripts’, passim. 27 Max Weber, The Protestant Ethic and the Spirit of Capitalism (2011), 99. 28 Isaac Asimov, Robot Visions (1990), 341. 29 ‘Le mieux est l’ennemi du bien’ (‘the best is the enemy of the good’), in Voltaire, ‘La Bégueule’ (1772) <http://fr.wikisource.org/wiki/La_Bégueule> (accessed 23 March 2015). 7 After the Professions When we started working on this book in 2010, our principal focus was on what the future might hold for the professions.

Langdon Winner, who writes: ‘the basic conceit is always the same: new technology will bring universal wealth, enhanced freedom, revitalized politics, satisfying community, and personal fulfillment.’ Langdon Winner, ‘Technology Today: Utopia or Dystopia?’, in Technology and the Rest of Culture, ed. Arien Mack (2001), 59. 16 See e.g. Adam Smith, An Inquiry into the Nature and the Causes of the Wealth of Nations (1998) and Karl Marx, Capital: Critique of Political Economy, vol. 1 (1992). 17 David Autor, ‘The “Task Approach” to Labor Markets: An Overview’, Institute for the Study of Labour Discussion Paper Series, No. 7178, Jan. 2013 <http://ftp.iza.org/dp7178.pdf> (accessed 25 March 2015). 18 Richard Susskind, Transforming the Law (2000), 47.

Workers in industrial Britain in the eighteenth and nineteenth centuries were systematically exploited and oppressed, and had little legal protection. To draw a direct comparison between their plight and the prospects for our professions would be to overstate the case. Yet we can still learn, albeit indirectly, from the insights of Smith and Marx. In 1776, Adam Smith published The Wealth of Nations.21 He was trying to understand what made some countries rich and others poor. His answer, in short, was that different countries had undergone different degrees of ‘division of labour’. This explained why some countries enjoyed a ‘universal opulence’ and others did not. The rationale underlying this division of labour was that by dividing up any given piece of work into its constituent tasks, and then reallocating particular tasks as specialties for specific people, productivity would be much greater than when one person is spread thinly across a range of tasks.


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Milton Friedman: A Biography by Lanny Ebenstein

Abraham Wald, affirmative action, Alan Greenspan, banking crisis, Berlin Wall, Bretton Woods, business cycle, classic study, Deng Xiaoping, Fall of the Berlin Wall, fiat currency, floating exchange rates, Francis Fukuyama: the end of history, full employment, Hernando de Soto, hiring and firing, inflation targeting, invisible hand, Joseph Schumpeter, Kenneth Arrow, Lao Tzu, liquidity trap, means of production, Modern Monetary Theory, Mont Pelerin Society, Myron Scholes, Pareto efficiency, Paul Samuelson, Phillips curve, Ponzi scheme, price stability, public intellectual, rent control, road to serfdom, Robert Bork, Robert Solow, Ronald Coase, Ronald Reagan, Sam Peltzman, school choice, school vouchers, secular stagnation, Simon Kuznets, stem cell, The Chicago School, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, Thorstein Veblen, zero-sum game

Their teacher had said that Friedman was an admirer of Adam Smith. Friedman wrote back that he was delighted to hear that you are studying his great book, The Wealth of Nations. It has much to tell us today. In many ways we have come full circle since that book was written. At the time Adam Smith wrote there were many government regulations and restrictions. His book was a blow for freedom. It succeeded. However, it took some seventy years before it did. Since then we have been drifting back, and today we again have a situation in which we have extensive controls and restrictions on human freedom. We need a new Adam Smith to strike a new blow for freedom.29 A great source of Friedman’s success is his sense of humor.

Friedman-Ebenstein correspondence (November 22, 2004). 42. Memoirs, 190. CHAPTER 20 1. Milton Friedman, Why Government Is the Problem (Stanford: Hoover Institution, 1993), 6. 2. Memoirs, 563. 3. Ibid., 471. 4. Ibid., 473. 5. John Stuart Mill, On Liberty (1859), Introduction. 6. FTC, xv. 7. Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations, vol. 1 (Indianapolis: Liberty Classics, 1976), 456, 426. 8. Memoirs, 480. 9. FTC, i. 10. Ibid. 11. Ibid. 12. Memoirs, 605. 13. Ibid., 503. 14. Ibid., 504. CHAPTER 21 1. Memoirs, 209–210. 2. Martin Anderson, Revolution (New York: Harcourt Brace Jovanovich, 1988), 164. 3.

After a lag, sometimes of decades, an intellectual tide “taken at its flood” will spread at first gradually, then more rapidly, to the public at large and through the public’s pressure on government will affect the course of economic, social, and political policy.10 The concept of lags runs through Friedman’s work. Milton and Rose think that the past two and a quarter centuries have been typified by three different intellectual tides in society and government: “The Rise of Laissez-Faire (the Adam Smith Tide),” “The Rise of the Welfare State (the Fabian Tide),” and “The Resurgence of Free Markets (the Hayek Tide).”11 They consider the Adam Smith tide, which advocates free trade and limited government, to have washed ashore in the realm of ideas from about 1776—with the publication of Smith’s Wealth of Nations and start of the American War of Independence—to 1883 and to have reached its primary public policy influence from about 1820 to 1900 in Britain and slightly later in the United States.


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The Greed Merchants: How the Investment Banks Exploited the System by Philip Augar

Alan Greenspan, Andy Kessler, AOL-Time Warner, barriers to entry, Bear Stearns, Berlin Wall, Big bang: deregulation of the City of London, Bonfire of the Vanities, business cycle, buttonwood tree, buy and hold, capital asset pricing model, Carl Icahn, commoditize, corporate governance, corporate raider, crony capitalism, cross-subsidies, deal flow, equity risk premium, financial deregulation, financial engineering, financial innovation, fixed income, Glass-Steagall Act, Gordon Gekko, high net worth, information retrieval, interest rate derivative, invisible hand, John Meriwether, junk bonds, Long Term Capital Management, low interest rates, Martin Wolf, Michael Milken, new economy, Nick Leeson, offshore financial centre, pensions crisis, proprietary trading, regulatory arbitrage, risk free rate, Sand Hill Road, shareholder value, short selling, Silicon Valley, South Sea Bubble, statistical model, systematic bias, Telecommunications Act of 1996, The Chicago School, The Predators' Ball, The Wealth of Nations by Adam Smith, transaction costs, tulip mania, value at risk, yield curve

Ibid. (20 August 2004). 52. Kay, John, Financial Times (16 June 2004). 53. Financial News (19 April 2004). 54. Pecora, Ferdinand, Wall Street Under Oath (Cresset Press, 1939), p. 119. Chapter 6 1. Smith, Adam, The Wealth of Nations (Modern Library edition, 2000), page 148; Smith, Roy, Adam Smith and the Origins of American Enterprise (Truman Tulley Books, 2002); Glahe, Fred (ed.), Adam Smith and the Wealth of Nations: Bicentennial Essays (University of Chicago Press, 1976). 2. Hintz, Brad, Large Investment Bank Margins and ROE Trends, Securities Industry Association Research Reports, vol. 3, no. 2 (March 2002), p. 10. 3.

The earnings of big technology companies would have been cut by a third if they had been forced to deduct options costs and S&P 500 company earnings would have been 5–6 per cent lower: research by CSFB and Citigroup Global Markets, Financial Times (22 June 2004). 11. The Economist (28 June 2003); Financial Times (17 January 2004). 12. Title of NBC programme, 1984. 13. Financial Times (11 October 2004). 14. Plender, John, op. cit., pp. 124–36. 15. Financial News (12 July 2004). 16. Author interview, 2003. 17. Smith, Adam, The Wealth of Nations (Modern Library edition, 2000), p. 485. 18. David Smith, Free Lunch (Profile Books, 2003), p. 49. 19. The Economist (16 November 2002). Chapter 11 1. Wall Street (American Entertainment/20th Century Fox, 1987). 2. Galbraith, J. K., The Great Crash 1929 (Penguin edition, 1992), p. 153. 3.

Enron is an extreme case, but its journey from being an energy supplier into an energy trader symbolizes the change in corporate values. It remains to be seen whether the markets culture can produce long term companies. Whatever Happened to the Invisible Hand? Adam Smith, the eighteenth-century father of modern economic theory, was not perturbed by the likelihood of collusion in free markets. He believed that the businessman is ‘led by an invisible hand to promote an end which was no part of his intention… By pursuing his own interest he frequently promotes that of society.’17 Adam Smith’s belief that conspiracy and contrivance would result in the public good is neatly summed up by another British economist called Smith, the journalist David Smith: ‘The point was that the market did not let them get away with it, or at least not for long.


Money and Government: The Past and Future of Economics by Robert Skidelsky

"Friedman doctrine" OR "shareholder theory", Alan Greenspan, anti-globalists, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, barriers to entry, Basel III, basic income, Bear Stearns, behavioural economics, Ben Bernanke: helicopter money, Big bang: deregulation of the City of London, book value, Bretton Woods, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, collective bargaining, constrained optimization, Corn Laws, correlation does not imply causation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Graeber, David Ricardo: comparative advantage, debt deflation, Deng Xiaoping, Donald Trump, Eugene Fama: efficient market hypothesis, eurozone crisis, fake news, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, forward guidance, Fractional reserve banking, full employment, Gini coefficient, Glass-Steagall Act, Goodhart's law, Growth in a Time of Debt, guns versus butter model, Hyman Minsky, income inequality, incomplete markets, inflation targeting, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Rogoff, Kondratiev cycle, labour market flexibility, labour mobility, land bank, law of one price, liberal capitalism, light touch regulation, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, long and variable lags, low interest rates, market clearing, market friction, Martin Wolf, means of production, Meghnad Desai, Mexican peso crisis / tequila crisis, mobile money, Modern Monetary Theory, Money creation, Mont Pelerin Society, moral hazard, mortgage debt, new economy, Nick Leeson, North Sea oil, Northern Rock, nudge theory, offshore financial centre, oil shock, open economy, paradox of thrift, Pareto efficiency, Paul Samuelson, Phillips curve, placebo effect, post-war consensus, price stability, profit maximization, proprietary trading, public intellectual, quantitative easing, random walk, regulatory arbitrage, rent-seeking, reserve currency, Richard Thaler, rising living standards, risk/return, road to serfdom, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, shareholder value, short selling, Simon Kuznets, structural adjustment programs, technological determinism, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, tontine, too big to fail, trade liberalization, value at risk, Washington Consensus, yield curve, zero-sum game

Sloman, P. (2015), The Liberal Party and the Economy, 1929–1964. Oxford: Oxford University Press. Smith, A. (1755), Adam Smith on the need for ‘peace, easy taxes, and a tolerable administration of justice’. Online Library of Liberty. Available at: http://oll.libertyfund.org/quote/436 [Accessed 25 August 2017]. 455 Bi bl io g r a p h y Smith, A. (1976 (1776)), The Glasgow Edition of the Works and Correspondences of Adam Smith (Vol. II) An Inquiry into the Nature and Causes of the Wealth of Nations (Vols. I & II). Oxford: Clarendon Press. Soros, G. (2009a), General theory of reflexivity. Financial Times, 26 October.

Smith ignored mercantilist concern with money and employment. 82 t h e or i e s of t h e f e r t i l e a n d b a r r e n s t a t e Money was simply a lubricant. The economists who followed Smith believed that in conditions of natural liberty all savings would be invested, resources fully used. Taxation does not appear in the index of The Wealth of Nations, but there is a large section on the national debt, the growth of which in the 1700s Smith regarded as the main impediment to increased prosperity. ‘Like an improvident spendthrift, whose pressing occasions will not allow him to wait for the regular payment of his revenue, the state is in the constant practice of borrowing of its own factors and agents, and paying interest for the use of its own money.’22 Issuing debt was a way of extracting money from the citizen by stealth.

Under Ricardian equivalence, consumers know this and respond to bond-financed government spending by reducing 398 No t e s 32 33 34 35 36 37 38 39 40 41 42 consumption, so that they can save for this higher tax future. It thus does not matter how the government funds spending; consumption (and investment) will fall either way. See Barro (1974). Ricardo (2005 (1817)), p. 248. But Smith is not entirely consistent: in the Wealth of Nations, he writes about the erection of banking companies in Scottish towns and villages, and holds ‘that the trade and industry of Scotland . . . have increased very considerably . . . and that banks have contributed a good deal to this increase, cannot be doubted’ (Smith (1976 (1776)), p. 297).


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The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention by William Rosen

Albert Einstein, All science is either physics or stamp collecting, barriers to entry, Charles Babbage, collective bargaining, computer age, Copley Medal, creative destruction, David Ricardo: comparative advantage, decarbonisation, delayed gratification, Fellow of the Royal Society, flying shuttle, Flynn Effect, fudge factor, full employment, Higgs boson, independent contractor, invisible hand, Isaac Newton, Islamic Golden Age, iterative process, James Hargreaves, James Watt: steam engine, John Harrison: Longitude, Joseph Schumpeter, Joseph-Marie Jacquard, knowledge economy, language acquisition, Lewis Mumford, moral hazard, Network effects, Panopticon Jeremy Bentham, Paul Samuelson, Peace of Westphalia, Peter Singer: altruism, QWERTY keyboard, Ralph Waldo Emerson, rent-seeking, Robert Solow, Ronald Coase, Simon Kuznets, spinning jenny, tacit knowledge, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, three-masted sailing ship, transaction costs, transcontinental railway, zero-sum game, éminence grise

Eighty years after Locke’s death, conservatives like Edmund Burke, and progressives like Jeremy Bentham and John Stuart Mill, were still uncomfortable with Locke’s idea of natural laws; Bentham called them “nonsense on stilts.”29 The final victory, however, was Locke’s; in 1776, Adam Smith was virtually channeling Locke’s Second Treatise, writing in The Wealth of Nations, “The property which every man has in his own labour, as it is the original foundation of all other property, so it is the most sacred and inviolable.” Smith’s French counterpart, Anne-Robert-Jacques Turgot, echoed him: “God … made the right of work30 the property of every individual in the world, and this property is the first, the most sacred, and the most imprescriptible of all kinds of property.”

February 17 saw the first volume of Edward Gibbon’s History of the Decline and Fall of the Roman Empire roll off the presses (“In the second century of the Christian Era, the empire of Rome comprehended the fairest part of the earth …”). And on March 9, a former University of Glasgow colleague of Joseph Black published An Inquiry into the Nature and Causes of the Wealth of Nations. Standing in London’s Science Museum, in front of Rocket and surrounded by models of Thomas Newcomen’s beam engine, Joseph Bramah’s challenge lock, and James Watt’s separate condenser, it takes very little imagination to see connections with iron foundries, coal mines, and even cotton fields. The road back to Adam Smith requires more thought, but is just as important, and as enlightening. Smith’s book, like Darwin’s Origin of Species, was revolutionary in its impact, immediately and permanently, though both are far more frequently cited than read.

., Technology in Western Civilization. 80 “a steam-loom weaver” Hills, Power from Steam, quoting Baines’s 1835 History of the Cotton Manufacture in Great Britain. 81 During the century and a half Clark, Farewell to Alms. CHAPTER ELEVEN: WEALTH OF NATIONS 1 nothing about the forging of iron David Warsh, Knowledge and the Wealth of Nations: A Story of Economic Discovery (New York: W. W. Norton, 2006). 2 David Ricardo predicted Clark, Farewell to Alms. 3 The second component, growth in capital Warsh, Knowledge and the Wealth of Nations. 4 Solow first assumed Ibid. 5 “the mass of persons with intermediate skills” Hobsbawm and Wrigley, Industry and Empire: from 1750 to the Present Day. 6 preindustrial Britain exhibited a fair bit F.


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Ethics in Investment Banking by John N. Reynolds, Edmund Newell

accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, banking crisis, Bear Stearns, collapse of Lehman Brothers, corporate governance, corporate social responsibility, credit crunch, Credit Default Swap, discounted cash flows, financial independence, Glass-Steagall Act, index fund, invisible hand, junk bonds, light touch regulation, margin call, Michael Milken, moral hazard, Nick Leeson, Northern Rock, proprietary trading, quantitative easing, shareholder value, short selling, South Sea Bubble, stem cell, the market place, The Wealth of Nations by Adam Smith, too big to fail, two and twenty, zero-sum game

New York Times, 20 November 2005 http://www.nytimes.com/2005/11/20/ business/yourmoney/20jail.html?pagewanted=all, accessed 8 March 2011. 8. Geraint Anderson http://www.moneyweb.com/mw/view/mw/en/page308878? oid=309416&sn=2009+Detail&pid=287226, accessed 8 March 2011. Chapter 2 1. 2. 3. 4. 5. Adam Smith (1776) The Wealth of Nations (London: W. Strahan and T. Cadell). Adam Smith (1759) The Theory of Moral Sentiments. http://www.sec.gov/news/press/2010/2010-59.htm, accessed 8 March 2011. Goldman Sachs (2011) Business Standards Report, section v, para A. http://online.wsj.com/article/SB122576100620095567.html, accessed 8 March 2011. 6.

Within other markets, it could be argued that minimum intervention and maximum openness is desirable to ensure the most efficient allocation of resources (as has been argued in relation to free trade). A market that operates in an inefficient or dysfunctional way, either because of the way it is structured or because of the negative influence by key players, is a concern. This was understood by no less a figure than Adam Smith, who is regarded by many as the founding father of free-market economics through his great work The Wealth of Nations.1 Smith makes clear, however, the dangers of potential market abuse as people pursue selfish ends. It is noteworthy, therefore, that Smith’s other great (and earlier) work, The Theory of Moral Sentiments,2 is about moral philosophy. Different markets raise different issues, including ethical ones.

Singer, P. (ed.) (1991) A Companion to Ethics (Oxford: Blackwell). Bibliography 169 Sinn, H.-W. (2010) Casino Capitalism: How the Financial Crisis Came about and What Needs to be Done Now (Oxford: Oxford University Press). Smith, A. (1759) The Theory of Moral Sentiments. Smith, A. (1776) The Wealth of Nations (London: W. Strahan and T. Cadell). Sorkin, A.R. (2009) Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System from Crisis – and Themselves (New York: Viking). Stackhouse, M.L. (2001) “Business, Economics and Christian Ethics”, in R. Gill (ed.)


The Corporation: The Pathological Pursuit of Profit and Power by Joel Bakan

"World Economic Forum" Davos, Alan Greenspan, benefit corporation, Berlin Wall, business logic, Cass Sunstein, corporate governance, corporate personhood, corporate social responsibility, creative destruction, electricity market, energy security, Exxon Valdez, Ford Model T, IBM and the Holocaust, joint-stock company, laissez-faire capitalism, market fundamentalism, Naomi Klein, new economy, precautionary principle, race to the bottom, Ralph Nader, Ronald Reagan, shareholder value, South Sea Bubble, The Wealth of Nations by Adam Smith, Triangle Shirtwaist Factory, urban sprawl

Unlike the prevailing partnership form, in which relatively small groups of men, bonded together by personal loyalties and mutual trust, pooled their resources to set up businesses they ran as well as owned, the corporation separated ownership from management- one group of people, directors and managers, ran the firm, while another group, shareholders, owned it. That unique design was believed by many to be a recipe for corruption and scandal. Adam Smith warned in The Wealth of Nations that because managers could not be trusted to steward "other people's money," "negligence and profusion" would inevitably result when businesses organized as corporations. Indeed, by the time he wrote those words in 1776, the corporation had been banned in England for more than fifty years.

Ford still stands for the legal principle that managers and directors have a legal duty to put shareholders' interests above all others and no legal authority to serve any other interests-what has come to be known as "the best interests of the corporation" principle. That principle provided a legal fix to a flaw in the corporate form that Page 37 NE CORPORATION 37 had famously worried Adam Smith 140 years before Dodge v. Ford was decided. Smith, in his 1776 classic, The Wealth of Nations, said he was troubled by the fact that corporations' owners, their shareholders , did not run their own businesses but delegated that task to professional managers. The latter could not be trusted to apply the same "anxious vigilance" to manage "other people's money" as they would their own, he wrote, and "negligence and profusion therefore must prevail, more or less, in the management of such a company."

Elite Deviance, 7th ed. Boston: Allyn & Bacon, 2001. Simpson, Sally S. Corporate Crime, Law, and Social Control. Cambridge, England: Cambridge University Press, 2002. Singer, P. W. Corporate Warriors: The Rise of the Privatized Military Industry. Ithaca, N.Y.: Cornell University Press, 2003. Smith, Adam. The Wealth of Nations. New York: Modern Library, 1994. Smith, D. Gordon. "The Shareholder Primacy Norm." The Journal of Corporation Law 23 (1998), 277. Smith, Toby M. The Myth of Green Marketing: Tending Our Goats at the Edge of Apocalypse. Toronto: University of Toronto Press, 1998. Smith, Thomas A. "The Efficient Norm for Corporate Law: A Neo-traditional Interpretation of Fiduciary Duty."


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Giving the Devil His Due: Reflections of a Scientific Humanist by Michael Shermer

Alfred Russel Wallace, anthropic principle, anti-communist, anti-fragile, barriers to entry, Berlin Wall, Black Lives Matter, Boycotts of Israel, Chelsea Manning, clean water, clockwork universe, cognitive dissonance, Colonization of Mars, Columbine, cosmological constant, cosmological principle, creative destruction, dark matter, deplatforming, Donald Trump, Edward Snowden, Elon Musk, fake news, Flynn Effect, germ theory of disease, Great Leap Forward, gun show loophole, Hans Rosling, heat death of the universe, hedonic treadmill, helicopter parent, Higgs boson, hindsight bias, illegal immigration, income inequality, intentional community, invisible hand, Johannes Kepler, Joseph Schumpeter, Kim Stanley Robinson, laissez-faire capitalism, Laplace demon, luminiferous ether, Mars Society, McMansion, means of production, mega-rich, Menlo Park, microaggression, military-industrial complex, moral hazard, moral panic, More Guns, Less Crime, Multics, Oklahoma City bombing, Peter Singer: altruism, phenotype, positional goods, power law, public intellectual, race to the bottom, Richard Feynman, Ronald Coase, Silicon Valley, Skype, social intelligence, Social Justice Warrior, stem cell, Stephen Hawking, Steve Jobs, Steven Pinker, Suez crisis 1956, TED Talk, the scientific method, The Wealth of Nations by Adam Smith, Timothy McVeigh, transaction costs, WikiLeaks, working poor, Yogi Berra

It was, in fact, the physiocrats who gave us the term laissez faire.27 The physiocrats asserted that people operating in a society were subject to knowable laws of both human and economic nature not unlike those discovered by Galileo and Newton, and this movement grew into the school of classical economics championed by David Hume, Adam Smith, and others that forms the basis of all economic science and policy today. Consider Smith’s monumental 1776 work. Most people think the title is The Wealth of Nations. Its full title is far more revealing as to its intent: An Inquiry into the Nature and Causes of the Wealth of Nations. Smith employed the terms “nature” and “causes” in the scientific sense of identifying and understanding the cause-and-effect relationships in the natural system of an economy, with the underlying premise that natural laws govern economies, that humans are rationally calculating economic actors whose behaviors can be understood, and that markets are self-regulated by an “invisible hand.”

A decade later, upon his return home from the five-year voyage around the world on HMS Beagle, Darwin revisited these works, reconsidering their implications in light of the new theory he was developing.10 Although Darwin does not reference Smith directly, Darwin scholars are largely in agreement that he modeled his theory of natural selection after Smith’s theory of the invisible hand.11 Compare, by example, these two descriptions from Smith and Darwin: Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Adam Smith, The Wealth of Nations, 1776 It may be said that natural selection is daily and hourly scrutinising, throughout the world, every variation, even the slightest; rejecting that which is bad, preserving and adding up all that is good; silently and insensibly working, whenever and wherever opportunity offers, at the improvement of each organic being in relation to its organic and inorganic conditions of life.

When Stein interviewed me and asked my opinion on the impact of Darwinism on culture, he seemed astonishingly ignorant of the many other ways that Darwinism has been used and abused by political and economic ideologues of all stripes. Because Stein is a well-known economic conservative (and because I had just finished writing my book The Mind of the Market, a chapter of which compares Adam Smith’s “invisible hand” with Charles Darwin’s “natural selection”), I pointed out how the captains of industry in the late nineteenth and early twentieth centuries justified their beliefs in laissez-faire capitalism through the social Darwinism of “survival of the fittest corporations.” And, more recently, I noted that Enron’s CEO, Jeffrey Skilling, said his favorite book in Harvard Business School was Richard Dawkins’ The Selfish Gene (first published in 1976), a form of Darwinism that Skilling badly misinterpreted (“read by title only” in Dawkins’ apt phrase to describe those who misread the book).


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The Great Convergence: Information Technology and the New Globalization by Richard Baldwin

"World Economic Forum" Davos, 3D printing, additive manufacturing, Admiral Zheng, agricultural Revolution, air freight, Amazon Mechanical Turk, Berlin Wall, bilateral investment treaty, Branko Milanovic, buy low sell high, call centre, Columbian Exchange, commoditize, commodity super cycle, David Ricardo: comparative advantage, deindustrialization, domestication of the camel, Edward Glaeser, endogenous growth, Erik Brynjolfsson, export processing zone, financial intermediation, George Gilder, global supply chain, global value chain, Henri Poincaré, imperial preference, industrial cluster, industrial robot, intangible asset, invention of agriculture, invention of the telegraph, investor state dispute settlement, Isaac Newton, Islamic Golden Age, James Dyson, Kickstarter, knowledge economy, knowledge worker, Lao Tzu, low skilled workers, market fragmentation, mass immigration, Metcalfe’s law, New Economic Geography, out of africa, paper trading, Paul Samuelson, Pax Mongolica, profit motive, rent-seeking, reshoring, Richard Florida, rising living standards, Robert Metcalfe, Robert Solow, Second Machine Age, Simon Kuznets, Skype, Snapchat, Stephen Hawking, tacit knowledge, telepresence, telerobotics, The Wealth of Nations by Adam Smith, trade liberalization, trade route, Washington Consensus

The Enlightenment (1600s and 1700s) furthered the rise of Europe by adding the thinking of Descartes, Locke, Voltaire, Hobbes, Hume, Kant, Newton, Smith, Rousseau, and others. Europe was also marked by keynote developments in banking, finance, and markets. The economic thought foundations were laid during this period for trade and what would later be called globalization. A key text was Adam Smith’s 1776 tome The Wealth of Nations, which built on thinking by French writers of the physiocratic school. European Age of Discovery: Putting the Global in Globalization The global economic and manufacturing center of gravity was still in Asia at the beginning of the 1400s. The demise of the Silk Road greatly raised the economic rewards in Europe to finding a way to the riches of the East around the Middle Eastern blockage.

It was a century-long sequence of incremental technical, organizational, social, and institutional changes that completely transformed the human condition. Economic historian Nick Crafts would argue that any precise year is misleading given its accretive nature, but 1776 provides as good a landmark as any, since this is when he finds a structural break in British industrial growth. Conveniently, it is also the publication date of Adam Smith’s The Wealth of Nations. The Industrial Revolution was directly linked with improved transportation. Inland water and road transportation networks densified in the last decades of the eighteenth century. Water transportation advanced with new types and layouts of sails, new shipbuilding techniques, and big advances in navigational technology.

The Specialization versus Coordination Tradeoff Deciding how to organize production is impossibly complex in the real world—that is, in the world of Mein Herr’s one-mile-to-the-mile-map world. The choices that real firms make fill days and years of middle-manager time, but allowing for all that detail would obscure the main tradeoffs. Abstraction is in order. Fortunately, Adam Smith laid out a useful approach to the matter. The key tradeoff is between specialization and coordination. In his 1776 book The Wealth of Nations, Smith discusses the gains from specialization in the context of an eighteenth-century pin factory. As Smith writes: “One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations; to put it on, is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the paper.”


pages: 356 words: 103,944

The Globalization Paradox: Democracy and the Future of the World Economy by Dani Rodrik

"World Economic Forum" Davos, affirmative action, Alan Greenspan, Asian financial crisis, bank run, banking crisis, Bear Stearns, bilateral investment treaty, borderless world, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, central bank independence, classic study, collective bargaining, colonial rule, Corn Laws, corporate governance, corporate social responsibility, credit crunch, Credit Default Swap, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, Doha Development Round, en.wikipedia.org, endogenous growth, eurozone crisis, export processing zone, financial deregulation, financial innovation, floating exchange rates, frictionless, frictionless market, full employment, George Akerlof, guest worker program, Hernando de Soto, immigration reform, income inequality, income per capita, industrial cluster, information asymmetry, joint-stock company, Kenneth Rogoff, land reform, liberal capitalism, light touch regulation, Long Term Capital Management, low interest rates, low skilled workers, margin call, market bubble, market fundamentalism, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, microcredit, Monroe Doctrine, moral hazard, Multi Fibre Arrangement, night-watchman state, non-tariff barriers, offshore financial centre, oil shock, open borders, open economy, Paul Samuelson, precautionary principle, price stability, profit maximization, race to the bottom, regulatory arbitrage, Savings and loan crisis, savings glut, Silicon Valley, special drawing rights, special economic zone, subprime mortgage crisis, The Wealth of Nations by Adam Smith, Thomas L Friedman, Tobin tax, too big to fail, trade liberalization, trade route, transaction costs, tulip mania, Washington Consensus, World Values Survey

., 1910), pp. 22–23. 12 Quoted in Newman, Empire of the Bay, p. 165. 13 The actual quote is: “This division of labour, from which so many advantages are derived, is not originally the effect of any human wisdom, which foresees and intends that general opulence to which it gives occasion. It is the necessary, though very slow and gradual consequence of a certain propensity in human nature which has in view no such extensive utility; the propensity to truck, barter, and exchange one thing for another”—Adam Smith, An Enquiry into the Nature and Causes of the Wealth of Nations (1776), Bk. I, chap. 2. 14 See David R. Cameron, “The Expansion of the Public Economy: A Comparative Analysis,” American Political Science Review, vol. 72, no. 4 (December 1978), pp. 1243–61. 15 Vito Tanzi and Ludger Schuknecht, Public Spending in the 20th Century: A Global Perspective (Cambridge: Cambridge University Press, 2000), chap. 1. 16 Dani Rodrik, “Why Do More Open Economies Have Bigger Governments?”

Taussig, “Abraham Lincoln on the Tariff: A Myth,” Quarterly Journal of Economics, vol. 28, no. 4 (August 1914), pp. 814–20. 6 World Values Survey online database (http://www.worldvaluessurvey.org/). 7 This can be seen in the cross-tabs that World Values Survey makes available online—ibid. 8 Anna Maria Mayda and Dani Rodrik, “Why Are Some Individuals (and Countries) More Protectionist Than Others?” European Economic Review, 49 (August 2005), pp. 1393–1430. 9 So Adam Smith was not correct when he famously wrote, in defense of free trade, that “What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom”—Smith, The Wealth of Nations, Bk. IV, chap. 2. 10 Regulatory decisions on new technologies can have large economic impacts on particular groups, just like trade policies. In October 2009, for example, when the Food and Drug Administration issued a negative judgment on a drug meant to treat osteoporosis in postmenopause women, the stock of the company that makes the drug fell by more than 2 percent.

Today, we are likely to take our cue more from Adam Smith, whose Wealth of Nations (published in 1776) was a frontal attack on mercantilist thought and practice. Economic liberals, with Smith as their founding father, have a different narrative. They believe that economies flourish when markets are left free of state control. Competition, rather than monopoly, maximizes economic advantage. Protective barriers on trade—import tariffs and prohibitions—reduce competition and thus are a way of shooting oneself in the foot. State-business collaboration is just another name for corruption. Adam Smith did not deny that there was a role for government, but his vision was of a state restricted to national defense, protection of property rights, and administration of justice.


How to Be a Liberal: The Story of Liberalism and the Fight for Its Life by Ian Dunt

4chan, Alan Greenspan, Alfred Russel Wallace, bank run, battle of ideas, Bear Stearns, Big bang: deregulation of the City of London, Boris Johnson, bounce rate, Brexit referendum, British Empire, Brixton riot, Cambridge Analytica, Carmen Reinhart, centre right, classic study, David Ricardo: comparative advantage, disinformation, Dominic Cummings, Donald Trump, eurozone crisis, experimental subject, fake news, feminist movement, Francis Fukuyama: the end of history, full employment, Glass-Steagall Act, Growth in a Time of Debt, illegal immigration, invisible hand, John Bercow, Kenneth Rogoff, liberal world order, low interest rates, Mark Zuckerberg, mass immigration, means of production, Mohammed Bouazizi, Northern Rock, old-boy network, Paul Samuelson, Peter Thiel, Phillips curve, price mechanism, profit motive, quantitative easing, recommendation engine, road to serfdom, Ronald Reagan, Saturday Night Live, Scientific racism, Silicon Valley, Silicon Valley billionaire, Steve Bannon, The Wealth of Nations by Adam Smith, too big to fail, upwardly mobile, Winter of Discontent, working poor, zero-sum game

Constant’s Principles of Politics Applicable to All Governments has been translated by Dennis O’Keeffe and reads very well on its own. It is also available online at the Online Library of Liberty, which you can access here: https://oll.libertyfund.org/titles/constant-principles-of-politics-applicable-to-all-governments Adam Smith’s The Wealth of Nations and The Theory of Moral Sentiments are worth reading on their own terms. Jerry Muller’s Adam Smith in His Time and Ours is a very good introduction to his life and work. It’s also well worth reading the sections on Smith in A History of Economic Thought: The LSE Lectures, by Lionel Robbins. Robbins was Hayek’s patron and ally at LSE, but then later moved towards Keynesianism.

He did so in a way that was vastly more sophisticated than previous thinkers, because he had access to significant improvements in the field of economics. The chief figure in that improvement was a Scotsman called Adam Smith. Using his contributions, Constant was able to develop new lines of argument for how freedom existed in the material world. Smith was born in Kirkcaldy in 1723. He lived a fairly uneventful life, teaching in universities in Edinburgh and Glasgow. But his contribution to intellectual thought would make him a pioneer in the history of ideas. His 1776 book, An Inquiry into the Nature and Causes of the Wealth of Nations, was the foundation of modern economics. It has since been misrepresented into a far cruder and more pessimistic assessment of the human personality than Smith himself intended.

‘What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom,’ Smith said. This notion took a firm hold on those who came after him. It became something close to a sacred economic commandment, to be followed at all times, by people across the political spectrum. The Wealth of Nations was an explanation and defence of capitalism – a system of production organised for profit. And it fitted liberalism like a glove. It seemed to tick all the boxes. It began with the individual. It based its function on the assumption that no-one had the right to tell the individual what to do – no king, no lord, no planning committee had the right to interfere.


pages: 237 words: 50,758

Obliquity: Why Our Goals Are Best Achieved Indirectly by John Kay

Andrew Wiles, Asian financial crisis, Bear Stearns, behavioural economics, Berlin Wall, Boeing 747, bonus culture, British Empire, business process, Cass Sunstein, computer age, corporate raider, credit crunch, Daniel Kahneman / Amos Tversky, discounted cash flows, discovery of penicillin, diversification, Donald Trump, Fall of the Berlin Wall, financial innovation, Goodhart's law, Gordon Gekko, greed is good, invention of the telephone, invisible hand, Jane Jacobs, junk bonds, lateral thinking, Long Term Capital Management, long term incentive plan, Louis Pasteur, market fundamentalism, Myron Scholes, Nash equilibrium, pattern recognition, Paul Samuelson, purchasing power parity, RAND corporation, regulatory arbitrage, shareholder value, Simon Singh, Steve Jobs, Suez canal 1869, tacit knowledge, Thales of Miletus, The Death and Life of Great American Cities, The Predators' Ball, The Wealth of Nations by Adam Smith, ultimatum game, urban planning, value at risk

Chapter 1: Obliquity—Why Our Objectives Are Often Best Pursued Indirectly 1 John Stuart Mill, Autobiography (1873; reprint, London: Penguin, 1989), p. 117. 2 Jim Collins and Jerry I. Porras, Built to Last: Successful Habits of Visionary Companies (London: Random House Business Books, 2000), p. 8. 3 Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776; abridged with commentary, Indianapolis and Cambridge: Hackett, 1993), p. 130. 4 Emily Dickinson, Emily Dickinson, ed. L. Dickey (New York: Dell, 1960), p. 107. 5 John Keats, “On First Looking into Chapman’s Homer,” in Poems by John Keats (London: Methuen, n.d.). 6 Richard Weston, Modernism (London: Phaidon Press, 1996). 7 Charles Jencks, The Language of Post-Modern Architecture (London, Academy Editions, 1984), p. 9. 8 Le Corbusier, Toward a New Architecture (London, Architectural Press, 1982), p. 10. 9 Marseille’s Unité d’Habitation, also known as La Cité Radieuse, was built in 1947–52 and combined Le Corbusier’s vision of communal living with the needs of postwar France for social housing. 10 Michael Hammer and James Champy, Reengineering the Corporation: A Manifesto for Business Revolution (London: Nicholas Brearley, 1995), p. 31. 11 Vladimir Ilyich Lenin, Essential Works of Lenin: “What Is to Be Done?”

London: Weidenfeld & Nicolson, 1970. Simon, H. A., and A. Newell. “Heuristic Problem Solving: The Next Advance in Operations Research.” Operations Research 6, no. 1 (Jan.–Feb. 1958). Singh, Simon. Fermat’s Last Theorem. London: Fourth Estate, 1997. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. 1776. Abridged, with commentary, Indianapolis and Cambridge: Hackett Publishing, 1993. Smith, Ed. What Sport Tells Us About Life. London: Penguin, 2008. Sobel, Robert. The Rise and Fall of the Conglomerate Kings. New York: Stein and Day, 1984. Solomon, Robert C. Ethics and Excellence. New York: Oxford University Press, 1994.

—Jim Collins and Jerry I. Porras, Built to Last2 He is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it. —Adam Smith, The Wealth of Nations3 Tell all the truth, but tell it slant. Success in circuit lies. —Emily Dickinson4 The American continent separates the Atlantic Ocean in the east from the Pacific in the west. The route of the Panama Canal follows the shortest crossing of America. When you arrive at Balboa port on the Pacific coast you are some thirty miles to the east of Colón, where you left the Atlantic.


pages: 371 words: 98,534

Red Flags: Why Xi's China Is in Jeopardy by George Magnus

"World Economic Forum" Davos, 3D printing, 9 dash line, Admiral Zheng, AlphaGo, Asian financial crisis, autonomous vehicles, balance sheet recession, banking crisis, Bear Stearns, Bretton Woods, Brexit referendum, BRICs, British Empire, business process, capital controls, carbon footprint, Carmen Reinhart, cloud computing, colonial exploitation, corporate governance, crony capitalism, currency manipulation / currency intervention, currency peg, demographic dividend, demographic transition, Deng Xiaoping, Doha Development Round, Donald Trump, financial deregulation, financial innovation, financial repression, fixed income, floating exchange rates, full employment, general purpose technology, Gini coefficient, global reserve currency, Great Leap Forward, high net worth, high-speed rail, hiring and firing, Hyman Minsky, income inequality, industrial robot, information security, Internet of things, invention of movable type, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, labour market flexibility, labour mobility, land reform, Malacca Straits, means of production, megacity, megaproject, middle-income trap, Minsky moment, money market fund, moral hazard, non-tariff barriers, Northern Rock, offshore financial centre, old age dependency ratio, open economy, peer-to-peer lending, pension reform, price mechanism, purchasing power parity, regulatory arbitrage, rent-seeking, reserve currency, rising living standards, risk tolerance, Shenzhen special economic zone , smart cities, South China Sea, sovereign wealth fund, special drawing rights, special economic zone, speech recognition, The Wealth of Nations by Adam Smith, total factor productivity, trade route, urban planning, vertical integration, Washington Consensus, women in the workforce, working-age population, zero-sum game

Tim Marshall, Prisoners of Geography: Ten Maps That Tell You Everything You Need to Know about Global Politics, Elliott & Thompson, 2015, pp. 35–6. 7. Angus Maddison, China’s Economic Performance in the Long Run, 2nd edition, OECD, 2007, p. 27. 8. Ryan Patrick Hanley, ‘The Wisdom of the State: Adam Smith on China and the Tartary’, American Political Science Review, vol. 108, no. 2, May 2014. 9. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, cited in Andre Gunder Frank, ReORIENT: Global Economy in the Asian Age, University of California Press, 1998, p. 279. 10. Eric Midthun Brooks, ‘The Enlightenment European Perception of China’, BA thesis, Haverford College, 2009, pp. 25–6, <https://scholarship.tricolib.brynmawr.edu/bitstream/handle/10066/3597/2009BrooksE.pdf?

The ‘century of humiliation’ In the late eighteenth century, the Scottish economist, philosopher and author Adam Smith, considered in the West at least as the founding father of economics, wrote prolifically about China. He deemed it to be ‘one of the most fertile, best cultivated, most industrious, and most populous countries in the world’, and noted that it was the only non-European modern society to have reached levels of civilisation and opulence that rivalled those of Europe.8 In his famous book An Inquiry into the Nature and Causes of the Wealth of Nations, published in 1776, he said that ‘Even those three countries, China, Egypt, and Indostan, the wealthiest, according to all accounts, that ever there were in the world, are chiefly renowned for their superiority in agriculture and manufactures . . .

–China Strategic and Economic Dialogue (i) Hua Guofeng (i) Huangpu district (Shanghai) (i) Huawei (i), (ii), (iii), (iv) hukou (i), (ii), (iii), (iv) Human Freedom Index (i) Human Resources and Social Security, Ministry of (i) Hunan (i) Hungary (i), (ii), (iii), (iv) ICORs (incremental capital-output ratios) (i), (ii), (iii) n4 IMF Article IV report (i) on broadening and deepening of financial system (i) China urged to devalue (i) China’s integration and (i) concern over smaller banks (i) concern over WMPs (i) credit gaps (i) credit intensity (i) GP research (i) ICOR (i) n4 laissez-faire ideas (i) pensions, healthcare and GDP research (i), (ii), (iii) Renminbi reserves (i) risky corporate loans (i) Special Drawing Rights (i), (ii), (iii), (iv), (v) WAPs (i) immigrants see migrants income inequality (i) India Adam Smith on (i) ASEAN (i) BRI misgivings (i) BRICS (i), (ii) comparative debt in (i) demographic dividend (i) economic freedom level (i) frictions with (i) Nobel Prize (i) pushing back against China (i) regional allies of (i) SCO member (i) Indian Ocean access to ports (i) African rail projects and (i) Chinese warships enter (i) rimland (i) shorelines (i) Indo-Pacific region (i), (ii) Indonesia Asian crisis (i) BRI investment (i) debt and GDP (i) GDP (i) rail transport projects (i) RCEP (i) retirement age (i) trade with China (i) Industrial and Commercial Bank of China (i), (ii) Industrial Revolution (i), (ii) industrialisation (i), (ii) Industry and Information Technology, Minister of (i) infrastructure (i), (ii), (iii), (iv) Initial Public Offerings (IPOs) (i) Inner Mongolia (i), (ii) innovation (i), (ii) Inquiry into the Nature and Causes of the Wealth of Nations (Adam Smith) (i) Institute for International Finance (i) institutions (i), (ii) insurance companies (i), (ii), (iii) intellectual property (i) interbank funding (i), (ii), (iii), (iv), (v) investment (i), (ii), (iii) Iran (i) Ireland (i), (ii), (iii) Iron Curtain (i) ‘iron rice bowl’ (i) Israel (i), (ii) Italy (i), (ii), (iii) Jakarta (i), (ii) Japan acts of aggression by (i) aftermath of war (i) ASEAN (i) between the wars (i) bond market (i) Boxer Rebellion and (i) Chiang Kai-shek fights (i) China and (i) China’s insecurity (i) credit gap comparison (i) dispute over Diaoyu islands (i), (ii) export-led growth (i), (ii) financial crisis (i) friction with (i) full-scale war with China (i), (ii) growth (i) high-speed rail (i) India and (i) Liaodong peninsula (i) Manchuria taken (i), (ii), (iii) Mao fights (i) middle- to high-income (i) migrants to (i) Okinawa (i) old-age dependency ratio (i) pensions, healthcare and GDP research (i) pushing back against China (i) RCEP (i) Renminbi block, attitude to (i) research and development (i) rimland (i) robots (i) seas and islands disputes (i) Shinzō Abe (i) TPP (i) trade and investment from (i) yen (i) Jardine Matheson Holdings (i) Jiang Zemin 1990s (i) Deng’s reforms amplified (i), (ii), (iii) influence and allies (i) Xiao Jianhua and (i) Johnson, Lyndon (i) Julius Caesar (i) Kamchatka (i) Kashgar (i) Kashmir (i) Kazakhstan (i), (ii) Ke Jie (i) Kenya (i) Keynes, John Maynard (i) Kharas, Homi (i) Kissinger, Henry (i), (ii), (iii), (iv) Korea (i), (ii), (iii) see also North Korea; South Korea Korean War (i), (ii) Kornai, János (i), (ii), (iii) n16 Kowloon (i), (ii) Krugman, Paul (i) Kunming (i) Kuomintang (KMT) (i), (ii) Kyrgyzstan (i) Kyushu (i) labour productivity (i) land reform (i) Laos (i), (ii), (iii) Latin America (i), (ii), (iii) Lattice Semiconductor Corporation (i) leadership (i) Leading Small Groups (LSGs) (i), (ii), (iii), (iv) Lee Kuan Yew (i) Lee Sodol (i) Legendary Entertainment (i) Lehman Brothers (i) lending (i) Leninism governance tending to (i) late 1940s (i) party purity (i) Xi’s crusade on (i), (ii) Lenovo (i), (ii) Lewis, Arthur (i) Lewis turning point (i) LGFVs (local government financing vehicles) (i) Li Keqiang (i), (ii) Liaodong peninsula (i), (ii) LinkedIn (i) Liu He (i), (ii), (iii) Liu Xiaobo (i) local government (i), (ii), (iii) London (i), (ii), (iii) Luttwak, Edward (i), (ii), (iii) Macartney, Lord George (i), (ii), (iii) Macau (i), (ii) Made in China 2025 (MIC25) ambitious plans (i) importance of (i) mercantilism (i) priority sectors (i) robotics (i) Maddison, Angus (i), (ii), (iii) n3 (C1) Maghreb (i) major banks see individual entries Malacca, Straits of (i) Malay peninsula (i) Malaysia ASEAN member (i) Asian crisis (i) high growth maintenance (i) Nine-Dash Line (i) rail projects (i), (ii) Renminbi reserves (i) TPP member (i) trade with (i) Maldives (i) Malthus, Thomas (i), (ii) Manchuria Communists retake (i) Japanese companies in (i) Japanese puppet state (i), (ii), (iii) key supplier (i) North China Plain and (i) Pacific coast access (i) Russian interests (i) targeted (i) Manhattan (i), (ii) see also New York Mao Zedong arts and sciences (i) China stands up under (i) China under (i) Communist Party’s grip on power (i) consumer sector under (i) Deng rehabilitated (i) Deng, Xi and (i) east wind and west wind (i) Great Leap Forward (i) industrial economy under (i) nature of China under (i) People’s Republic proclaimed (i) positives and negatives (i) property rights (i) women and the workforce (i) Xi and (i) Maoism (i) Mar-a-Lago (i) Mark Antony (i) Market Supervision Administration (i) Marshall Plan (i), (ii) Marxism (i), (ii), (iii), (iv) Mauritius (i) May Fourth Movement (i) McCulley, Paul (i) n18 Mediterranean (i) Menon, Shivshankar (i) mergers (i) MES (market economy status (ii)) Mexico completion of education rates (i) debt comparison (i) GDP comparison (i) NAFTA (i) pensions comparison (i) TPP member (i) US border (i) viagra policy (i) Middle East (i), (ii), (iii) middle-income trap (i), definition (i) evidence and argument for (i) governance (i) hostility to (i) hukou system (i) lack of social welfare for (i) low level of (i) migrant factory workers (i) patents and innovation significance (i) significance of technology tech strengths and weaknesses (i) total factor productivity focus (i) vested and conflicted interests (i) ultimate test (i) World Bank statistics (i) migrants (i), (ii), (iii), (iv), (v) Ming dynasty (i) Minsky, Hyman (i) mixed ownership (i), (ii) Modi, Narendra (i) Mombasa (i) monetary systems (i) Mongolia (i), (ii) Monogram (i) Moody’s (i) Morocco (i) mortality rates (i) see also population statistics mortgages (i) motor cars (i), (ii) Moutai (i) Mundell, Robert (i) Muslims (i) Mutual Fund Connect (i) Myanmar ASEAN (i) Chinese projects (i) disputes (i) low value manufacturing moves to (i) Qing Empire in (i) ‘string of pearls’ (i) ‘Myth of Asia’s Miracle, The’ (Paul Krugman) (i) NAFTA (North American Free Trade Agreement) (i) Nairobi (i) Namibia (i) Nanking (i) Treaty of (i), (ii) National Bureau of Statistics fertility rates (i) GDP figures (i) ICOR estimate (i), (ii), (iii) n4 SOE workers (i) National Cyberspace Work Conference (i) National Development and Reform Commission (i), (ii), (iii) National Financial Work Conferences (i) National Health and Family Planning Commission (i) National Medium and Long-Term Plan for the Development of Science and Technology (i) National Natural Science Foundation (i) National People’s Congress 2007 (i) 2016 (i) 2018 (i), (ii), (iii), (iv) National People’s Party of China (i) National Science Foundation (US) (i) National Security Commission (i) National Security Strategy (US) (i), (ii) National Supervision Commission (i), (ii), (iii), (iv) Needham, Joseph (i) Nepal (i), (ii) Netherlands (i) New Development Bank (i), (ii) New Eurasian Land Bridge (i) New Territories (i), (ii) New York (i) see also Manhattan New Zealand (i), (ii), (iii) Next Generation AI Development Plan (i) Nigeria (i) Nine-Dash Line (i) Ningpo (i) Nixon, Richard (i) Nobel Prizes (i), (ii) Nogales, Arizona (i) Nogales, Sonora (i) Nokia (i) non-communicable disease (i) non-performing loans (i), (ii), (iii), (iv), (v), (vi) North China Plain (i) North Korea (i) see also Korea Northern Rock (i) Norway (i) Nye, Joseph (i) Obama, Barack Hu Jintao and (i) Pacific shift recognised (i) Renminbi (i) US and China (i), (ii) OECD (Organisation for Economic Co-operation and Development) China’s ranking (i) GDP rates for pension and healthcare (i) GP doctors in (i) tertiary education rates (i) US trade deficit with China (i) Office of the US Trade Representative (i) Official Investment Assistance (Japan) (i) Okinawa (i) old-age dependency ratios (i), (ii), (iii) Olson, Mancur (i) Oman (i) one-child policy (i), (ii) Opium Wars financial cost of (i) First Opium War (i), (ii), (iii) Qing dynasty defeated (i) Oriental Pearl TV Tower, Shanghai (i) Pacific (i), (ii), (iii) Padma Bridge (i) Pakistan Economic Corridor (i) long-standing ally (i) Renminbi reserves (i) SCO member (i) ‘string of pearls’ (i) Paris (i) Party Congresses see numerical list at head of index patents (i) Peking (i), (ii), (iii) see also Beijing pensions (i) People’s Bank of China see also banks cuts interest rates again (i) floating exchange rates (i) lender of last resort (i), (ii) long term governor of (i) new rules issued (i) new State Council committee coordinates (i) places severe restrictions on banks (i) publishing Renminbi values (i) Renminbi/dollar rate altered (i) repo agreements (i) sells dollar assets (i) stepping in (i) Zhou Xiaochuan essay (i) People’s Daily front-page interview (i), (ii) on The Hague tribunal (i) riposte to Soros (i) stock market encouragement (i) People’s Liberation Army (i), (ii) Persia (i) Persian Gulf (i), (ii) Peru (i) Pettis, Michael (i) n12 Pew Research (i) Peyrefitte, Alain (i) Philippines (i), (ii), (iii), (iv) Piraeus (i) PISA (Programme for International Student Assessment) (i) Poland (i), (ii), (iii) ‘Polar Silk Road’ (i) Politburo (i), (ii), (iii), (iv) pollution (i) Polo, Marco (i) Pomeranz, Kenneth (i) population statistics (i) see also ageing trap; WAP (working-age population) consequences of ageing (i) demographic dividends (i), (ii) hukou system and other effects (i) low fertility (i), (ii), (iii) migrants (i), (ii) old-age dependency ratios (i), (ii), (iii) one-child policy (i), (ii) places with the most ageing populations (i) rural population (i) savings trends (i) technology and (i) under Mao (i) women (i) Port Arthur (i) Port City Colombo (i), (ii) Portugal (i), (ii), (iii), (iv) pricing (i), (ii) private ownership (i), (ii) productivity (i), (ii) Propaganda, Department of (i) property (i) property rights (i) Puerto Rico (i) Punta Gorda, Florida (i) Putin, Vladimir (i) Qianlong, Emperor (i) Qing dynasty (i), (ii), (iii) Qingdao (i) Qualcomm (i) Qualified Domestic Institutional Investors (i), (ii) Qualified Foreign Institutional Investors (i), (ii) Qiushi, magazine (i) rail network (i), (ii) RCEP (Regional Comprehensive Economic Partnership) (i), (ii), (iii) real estate (i), (ii) reform authoritative source warns of need for (i), (ii) different meaning from West (i) of economy via rebalancing (i), (ii) as embraced by Deng Xiaoping (i) fiscal, foreign trade and finance (i), (ii) Hukou (i) of ownership (i) state-owned enterprises (i) third plenum announcements (i) in Xi Jinping’s China (i) ‘Reform and Opening Up’ (Deng Xiaoping) (i), (ii), (iii) regulations and regulatory authorities (financial) (i), (ii) Reinhart, Carmen (i) Renminbi (i) 2015 mini-devaluation and capital outflows (i), (ii) appreciates (i) banking system’s assets in (i) bloc for (i) capital flight risk (i) devaluation (i), (ii), (iii), (iv) dim sum bonds (i) efforts to internationalise (i) end of peg (i) foreign investors and (i) fully convertible currency, a (i) growing importance of (i) IMF’s Special Drawing Rights (i) Qualified Institutional Investors (i) in relation to reserves (i) Renminbi trap (i), (ii), (iii), (iv) share of world reserves (i) significance of (i), (ii) Special Drawing Rights and (i), (ii) US dollar and (i), (ii), (iii), (iv), (v) repo markets (i), (ii) research and development (R&D) (i), (ii) Resources Department (i) retirement age (i) Rhodium Group (i) rimland (i) Robinson, James (i) robots (i) Rogoff, Kenneth (i) Roman Empire (i) Rotterdam (i) Rozelle, Scott (i) Rudd, Kevin (i) Rudong County (i) Rumsfeld, Donald (i) Rural Cooperative Medical Scheme (i) rural workers (i) Russia see also Soviet Union 19th century acquisitions (i), (ii) ageing population (i) BRI and (i) BRICS (i), (ii), (iii) C929s (i) China’s view of (i) early attempts at trade (i) fertility rates (i) Human Freedom Index (i) middle income trap and (i) Pacific sea ports (i) Polar Silk Road (i) Renminbi reserves (i) SCO member (i) Ryukyu Islands (i) Samsung (i) San Francisco (i) SASAC (i), (ii) Saudi Arabia (i) savings (i), (ii), (iii) Scarborough Shoal (i) Schmidt, Eric (i) Schumpeter, Joseph (i) SCIOs (i) Second Opium War (i) Second World War China and Japan (i), (ii) economic development since (i) Marshall Plan (i), (ii) US and Japan (i) Senkaku islands see Diaoyu islands separatism (i), (ii) Serbia (i) service sector (i), (ii) Seventh Fleet (US) (i) SEZs (special economic zones) (i), (ii), (iii), (iv) shadow banks (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix) n18 see also banks Shandong (i), (ii) Shanghai 1st Party Congress (i) arsenal (i) British influence in (i) central bank established (i) Deng’s Southern Tour (i) firms halt trading (i) income per head (i) interbank currency market (i) PISA scores (i) pollution (i) property price rises (i) stock market (i), (ii), (iii) Western skills used (i) Shanghai Composite Index (i), (ii) Shanghai Cooperation Organisation (SCO) (i), (ii), (iii) Shanghai Free Trade Zone (i), (ii), (iii) Shanghai–Hong Kong Bond Connect Scheme (i) Shanghai–Hong Kong Stock Connect Scheme (i), (ii) Shanghai World Financial Centre (i) Shenzhen first foreign company in (i) n3 (Intro.)


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The Glass Cage: Automation and Us by Nicholas Carr

Airbnb, Airbus A320, Andy Kessler, Atul Gawande, autonomous vehicles, Bernard Ziegler, business process, call centre, Captain Sullenberger Hudson, Charles Lindbergh, Checklist Manifesto, cloud computing, cognitive load, computerized trading, David Brooks, deep learning, deliberate practice, deskilling, digital map, Douglas Engelbart, driverless car, drone strike, Elon Musk, Erik Brynjolfsson, Evgeny Morozov, Flash crash, Frank Gehry, Frank Levy and Richard Murnane: The New Division of Labor, Frederick Winslow Taylor, future of work, gamification, global supply chain, Google Glasses, Google Hangouts, High speed trading, human-factors engineering, indoor plumbing, industrial robot, Internet of things, Ivan Sutherland, 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, low interest rates, Lyft, machine readable, Marc Andreessen, Mark Zuckerberg, means of production, natural language processing, new economy, Nicholas Carr, Norbert Wiener, Oculus Rift, pattern recognition, Peter Thiel, place-making, 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, scientific management, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley ideology, software is eating the world, Stephen Hawking, Steve Jobs, systems thinking, tacit knowledge, TaskRabbit, technological determinism, technological solutionism, technoutopianism, TED Talk, The Wealth of Nations by Adam Smith, turn-by-turn navigation, Tyler Cowen, US Airways Flight 1549, Watson beat the top human players on Jeopardy!, William Langewiesche

Thanks to the ingenuity of our inventors and entrepreneurs, hardly a decade has passed without the arrival of new, more elaborate, and more capable machinery. Yet our ambivalence toward these fabulous creations, creations of our own hands and minds, has remained a constant. It’s almost as if in looking at a machine we see, if only dimly, something about ourselves that we don’t quite trust. In his 1776 masterwork The Wealth of Nations, the foundational text of free enterprise, Adam Smith praised the great variety of “very pretty machines” that manufacturers were installing to “facilitate and abridge labour.” By enabling “one man to do the work of many,” he predicted, mechanization would provide a great boost to industrial productivity.7 Factory owners would earn more profits, which they would then invest in expanding their operations—building more plants, buying more machines, hiring more employees.

Inside the new factories, ever more efficient and capable machines were installed, boosting productivity but also narrowing the responsibility and autonomy of those who operated the equipment. Skilled craftwork became unskilled factory labor. Adam Smith had recognized how the specialization of factory jobs would lead to the deskilling of workers. “The man whose whole life is spent in performing a few simple operations, of which the effects too are, perhaps, always the same, or very nearly the same, has no occasion to exert his understanding, or to exercise his invention in finding out expedients for removing difficulties which never occur,” he wrote in The Wealth of Nations. “He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become.”27 Smith viewed the degradation of skills as an unfortunate but unavoidable by-product of efficient factory production.

., 91. 3.Ibid., 1–6. The emphasis is Macmillan’s. 4.Ibid., 92. 5.George B. Dyson, Darwin among the Machines: The Evolution of Global Intelligence (Reading, Mass.: Addison-Wesley, 1997), x. 6.Bertrand Russell, “Machines and the Emotions,” in Sceptical Essays (London: Routledge, 2004), 64. 7.Adam Smith, The Wealth of Nations (New York: Modern Library, 2000), 7–10. 8.Ibid., 408. 9.Malcolm I. Thomis, The Luddites: Machine-Breaking in Regency England (Newton Abbot, U.K.: David & Charles, 1970), 50. See also E. J. Hobsbawm, “The Machine Breakers,” Past and Present 1, no. 1 (1952): 57–70. 10.Karl Marx, Capital: A Critique of Political Economy, vol. 1 (Chicago: Charles H.


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Rage Inside the Machine: The Prejudice of Algorithms, and How to Stop the Internet Making Bigots of Us All by Robert Elliott Smith

"World Economic Forum" Davos, Ada Lovelace, adjacent possible, affirmative action, AI winter, Alfred Russel Wallace, algorithmic bias, algorithmic management, AlphaGo, Amazon Mechanical Turk, animal electricity, autonomous vehicles, behavioural economics, Black Swan, Brexit referendum, British Empire, Cambridge Analytica, cellular automata, Charles Babbage, citizen journalism, Claude Shannon: information theory, combinatorial explosion, Computing Machinery and Intelligence, corporate personhood, correlation coefficient, crowdsourcing, Daniel Kahneman / Amos Tversky, data science, deep learning, DeepMind, desegregation, discovery of DNA, disinformation, Douglas Hofstadter, Elon Musk, fake news, Fellow of the Royal Society, feminist movement, Filter Bubble, Flash crash, Geoffrey Hinton, Gerolamo Cardano, gig economy, Gödel, Escher, Bach, invention of the wheel, invisible hand, Jacquard loom, Jacques de Vaucanson, John Harrison: Longitude, John von Neumann, Kenneth Arrow, Linda problem, low skilled workers, Mark Zuckerberg, mass immigration, meta-analysis, mutually assured destruction, natural language processing, new economy, Northpointe / Correctional Offender Management Profiling for Alternative Sanctions, On the Economy of Machinery and Manufactures, p-value, pattern recognition, Paul Samuelson, performance metric, Pierre-Simon Laplace, post-truth, precariat, profit maximization, profit motive, Silicon Valley, social intelligence, statistical model, Stephen Hawking, stochastic process, Stuart Kauffman, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, The Future of Employment, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Bayes, Thomas Malthus, traveling salesman, Turing machine, Turing test, twin studies, Vilfredo Pareto, Von Neumann architecture, warehouse robotics, women in the workforce, Yochai Benkler

Democracy’s emphasis on individual rights fit neatly with the ‘priesthood of the individual’ doctrine at the core of Protestantism, the official religion of the country since the sixteenth century, and which by the eighteenth century was a distinguishing aspect of English thought, in contrast to more collectivist, Catholic Europe. This emphasis on individualism also found an echo in the emerging academic discipline of economics. In 1776, Adam Smith published An Inquiry into the Nature and Causes of the Wealth of Nations, in which he wrote: It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

On 2 March 1812, The Morning Chronicle published Byron’s ‘An Ode to the Framers Bill’: Men are more easily made than machinery Stockings fetch better prices than lives Gibbets on Sherwood will heighten the scenery, Showing how Commerce, how Liberty thrives Mechanization evolved to handle tasks outside of textiles, and spread quickly throughout industries and the world, nearly uniformly displacing jobs and degrading workers’ rights along the way. Three decades after Vaucanson’s marrying automata tech to industry, Adam Smith wrote The Wealth of Nations, the book which not only created the notion of the ‘invisible hand’, but foresaw the economic effects that mechanization would accelerate: specialization, and its inevitable consequence, the division of labour. Imagine the making of a fine, eighteenth-century leather purse. A single person, working alone to make such a purse would have to know how to raise grain, feed livestock, slaughter them, skin them, tan those skins, and make tools to sew and work the leather (not to mention the finishing work).

Despite the indisputable proof of women’s ability to contribute intellectually on a par with men, Edwards, Wollstonecraft, Lovelace and thousands of other outstanding female thinkers have struggled to shift the entrenched separate spheres social model over the centuries, even when a change was called for by prominent men. One such influential advocate was John Stuart Mill, who in 1848 (inspired partially by Babbage) published Principles of Political Economy, which replaced Adam Smith’s influential The Wealth of Nations to become the most important political economics text of the late nineteenth century and which was used in economics teaching well into the twentieth century. Mill was a philosophical titan and is considered one of the most influential thinkers in the history of liberalism. He contributed widely to social theory, political theory and economics, and was an accepted authority on social and individual rights.


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The Glass Half-Empty: Debunking the Myth of Progress in the Twenty-First Century by Rodrigo Aguilera

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Alan Greenspan, Anthropocene, availability heuristic, barriers to entry, basic income, benefit corporation, Berlin Wall, Bernie Madoff, Bernie Sanders, bitcoin, Boris Johnson, Branko Milanovic, Bretton Woods, Brexit referendum, Capital in the Twenty-First Century by Thomas Piketty, capitalist realism, carbon footprint, Carmen Reinhart, centre right, clean water, cognitive bias, collapse of Lehman Brothers, Colonization of Mars, computer age, Corn Laws, corporate governance, corporate raider, creative destruction, cryptocurrency, cuban missile crisis, David Graeber, David Ricardo: comparative advantage, death from overwork, decarbonisation, deindustrialization, Deng Xiaoping, Doha Development Round, don't be evil, Donald Trump, Doomsday Clock, Dunning–Kruger effect, Elon Musk, European colonialism, fake news, Fall of the Berlin Wall, first-past-the-post, Francis Fukuyama: the end of history, fundamental attribution error, gig economy, Gini coefficient, Glass-Steagall Act, Great Leap Forward, green new deal, Hans Rosling, housing crisis, income inequality, income per capita, index fund, intangible asset, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jean Tirole, Jeff Bezos, Jeremy Corbyn, Jevons paradox, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, karōshi / gwarosa / guolaosi, Kenneth Rogoff, Kickstarter, lake wobegon effect, land value tax, Landlord’s Game, late capitalism, liberal capitalism, long peace, loss aversion, low interest rates, Mark Zuckerberg, market fundamentalism, means of production, meta-analysis, military-industrial complex, Mont Pelerin Society, moral hazard, moral panic, neoliberal agenda, Network effects, North Sea oil, Northern Rock, offshore financial centre, opioid epidemic / opioid crisis, Overton Window, Pareto efficiency, passive investing, Peter Thiel, plutocrats, principal–agent problem, profit motive, public intellectual, purchasing power parity, race to the bottom, rent-seeking, risk tolerance, road to serfdom, Robert Shiller, Robert Solow, savings glut, Scientific racism, secular stagnation, Silicon Valley, Silicon Valley ideology, Slavoj Žižek, Social Justice Warrior, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, Stanislav Petrov, Steven Pinker, structural adjustment programs, surveillance capitalism, tail risk, tech bro, TED Talk, The Spirit Level, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transatlantic slave trade, trolley problem, unbiased observer, universal basic income, Vilfredo Pareto, Washington Consensus, Winter of Discontent, Y2K, young professional, zero-sum game

Finally, for those readers who still remain concerned about the potential disruption involved in moving towards an economy where employees rather than capitalists or the state control the means of production, it is worth recalling the extent to which many of the features that we now consider essential to a modern, capitalist economy were once heavily criticized. By capitalists. For example, Adam Smith was no fan of the joint-stock company, foreseeing the conflicts of interest between absentee ownership and management that would obsess a generation of business theorists two centuries after The Wealth of Nations was published. As with much of his work, statements like this have been conveniently forgotten by economic liberals, and especially libertarians, who would prefer to paint him as an absolutist defender of free markets and free enterprise.: The directors of such companies, however, being the managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own.

Having the wrong economic model to embrace it will be one of the biggest missed opportunities for progress and prosperity that we could conceive. Saving Democracy “Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all.” — Adam Smith, The Wealth of Nations Perhaps it is my bias as an economist speaking here, but it is my belief that solving many of the economic problems facing humanity would simultaneously help solve the political ones. Polities not captured by laissez-faire fundamentalism could offer their citizens true pluralistic options at the ballot box rather than recycling the same plutocrats from different parties.

., “What Billionaires Want: The Secret Influence of America’s 100 Richest”, Guardian, 30 Oct. 2018, https://www.theguardian.com/us-news/2018/oct/30/billionaire-stealth-politics-america-100-richest-what-they-want 23 Rawls, J., Justice as Fairness: A Restatement (Harvard University Press, 2001), pp. 137-8 24 Ibid., pg. 138 25 Ibid., pg. 139 26 Smith, A. An Inquiry into the Nature and Causes of the Wealth of Nations (1776), Book V, Ch. I, Part III 27 Quoted in Djellic, M-L., “When Limited Liability was (Still) an Issue: Mobilization and Politics of Signification in 19th-Century England”, Organizational Studies, 34(5-6), 2013, https://doi.org/10.1177%2F0170840613479223 28 “Conservative General Election Manifesto 1979”, Margaret Thatcher Foundation, https://www.margaretthatcher.org/document/110858 29 One study for the US is Muro, M., Maxim, R., and Whiton, J.


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Machinery of Freedom: A Guide to Radical Capitalism by David Friedman

Apollo 11, back-to-the-land, Fractional reserve banking, hiring and firing, jitney, laissez-faire capitalism, Machinery of Freedom by David Friedman, means of production, Money creation, radical decentralization, rent control, road to serfdom, Ronald Coase, Ronald Reagan, Stewart Brand, Tax Reform Act of 1986, The Wealth of Nations by Adam Smith, transaction costs, urban renewal, Vernor Vinge, Whole Earth Catalog

This is a classic example of the use of economics and statistics to measure the effect of government regulation. Peltz-man's conclusion was that the particular legislation he was looking at reduced the rate of introduction of new drugs by about half, while having no detectable effect on their average quality. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776; reprint ed., New York: Modern Library, 1937). Usually referred to simply as The Wealth of Nations, this is arguably the most influential libertarian book ever written. Law and Economics Gary S. Becker and George J. Stigler, 'Law Enforcement, Malfeasance, and Compensation of Enforcers', Journal of Legal Studies, 3 (January 1974), 1-18.

Force and restraint may, no doubt, be in some degree requisite in order to oblige children, or very young boys, to attend to those parts of education which it is thought necessary for them to acquire during that early period of life; but after twelve or thirteen years of age, provided the master does his duty, force or restraint can scarce ever be necessary to carry on any part of education. Excerpts from An Inquiry into the Nature and Causes of the Wealth of Nations, Book V, part 3, article 2. Written by Adam Smith and published in 1776. THE IMPOSSIBILITY OF A UNIVERSITY The modern corporate university, public or private, contains an implicit contradiction: it cannot take positions, but it must take positions. The second makes the demand for a 'responsible university' appealing, intellectually as well as emotionally.

Table of Contents THE MACHINERY OF FREEDOM PREFACE TO THE SECOND EDITION PREFACE TO THE FIRST EDITION ACKNOWLEDGEMENTS INTRODUCTION IN DEFENSE OF PROPERTY IN DEFENSE OF PROPERTY A NECESSARY DIGRESSION LOVE IS NOT ENOUGH INTERLUDE ROBIN HOOD SELLS OUT THE RICH GET RICHER AND THE POOR GET RICHER MONOPOLY I: HOW TO LOSE YOUR SHIRT MONOPOLY II: STATE MONOPOLY FOR FUN AND PROFIT EXPLOITATION AND INTEREST I DON'T NEED NOTHING LIBERTARIAN GRAB BAG OR HOW TO SELL THE STATE IN SMALL PIECES SELL THE SCHOOLS A RADICAL CRITIQUE OF AMERICAN UNIVERSITIES THE IMPOSSIBILITY OF A UNIVERSITY ADAM SMITH U. OPEN THE GATES SELL THE STREETS 99 AND 44/100THS PERCENT BUILT A FIRST STEP COUNTERATTACK MIGHT HAVE BEEN IS WILLIAM F. BUCKLEY A CONTAGIOUS DISEASE? IT'S MY LIFE THE RIGHTS OF YOUTH CREEPING CAPITALISM IF YOU WANT IT, BUY IT SCARCE MEANS FINITE POLLUTION BUCKSHOT FOR A SOCIALIST FRIEND ANARCHY IS NOT CHAOS WHAT IS ANARCHY?


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The Third Pillar: How Markets and the State Leave the Community Behind by Raghuram Rajan

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, air traffic controllers' union, airline deregulation, Albert Einstein, Andrei Shleifer, banking crisis, barriers to entry, basic income, battle of ideas, Bernie Sanders, blockchain, borderless world, Bretton Woods, British Empire, Build a better mousetrap, business cycle, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carl Icahn, central bank independence, computer vision, conceptual framework, corporate governance, corporate raider, corporate social responsibility, creative destruction, crony capitalism, crowdsourcing, cryptocurrency, currency manipulation / currency intervention, data acquisition, David Brooks, Deng Xiaoping, desegregation, deskilling, disinformation, disruptive innovation, Donald Trump, driverless car, Edward Glaeser, facts on the ground, financial innovation, financial repression, full employment, future of work, Glass-Steagall Act, global supply chain, Great Leap Forward, high net worth, household responsibility system, housing crisis, Ida Tarbell, illegal immigration, income inequality, industrial cluster, intangible asset, invention of the steam engine, invisible hand, Jaron Lanier, job automation, John Maynard Keynes: technological unemployment, joint-stock company, Joseph Schumpeter, labor-force participation, Les Trente Glorieuses, low interest rates, low skilled workers, manufacturing employment, market fundamentalism, Martin Wolf, means of production, Money creation, moral hazard, Network effects, new economy, Nicholas Carr, obamacare, opioid epidemic / opioid crisis, Productivity paradox, profit maximization, race to the bottom, Richard Thaler, Robert Bork, Robert Gordon, Ronald Reagan, Sam Peltzman, shareholder value, Silicon Valley, social distancing, Social Responsibility of Business Is to Increase Its Profits, SoftBank, South China Sea, South Sea Bubble, Stanford marshmallow experiment, Steve Jobs, superstar cities, The Future of Employment, The Wealth of Nations by Adam Smith, trade liberalization, trade route, transaction costs, transfer pricing, Travis Kalanick, Tyler Cowen, Tyler Cowen: Great Stagnation, universal basic income, Upton Sinclair, Walter Mischel, War on Poverty, women in the workforce, working-age population, World Values Survey, Yom Kippur War, zero-sum game

FREEING THE MARKETS In his book An Inquiry into the Nature and Causes of the Wealth of Nations, published in 1776, Adam Smith argued that by producing for the market and maximizing his own profits, the manufacturer maximized the size of the public pie, and thus the wealth of the nation. Smith thus made the case for allowing the invisible hand of the competitive market, working through self-interest, to drive economic prosperity. The real damage was not caused by avarice or even the self-indulgence of the rich, it emanated from restraints on competition and the resulting distorted prices and quantities. Seen in this light, Adam Smith was pro-market, not pro-business.

McGee, “The Economic Thought of David Hume,” Hume Studies 15, no. 1 (1989), 184–204. http://www.humesociety.org/hs/issues/v15n1/mcgee/mcgee-v15n1.pdf 23. The quotations are from Dietz, Economic History of England, 270. 24. This paragraph draws on E. L. Jones, The European Miracle, 3rd ed. (1981; repr., Cambridge, UK: Cambridge University Press, 2003), 98–102. 25. Jones, The European Miracle, 98. 26. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Chicago: University of Chicago Press, 1976). 27. Jones, European Miracle, 114; Eric Evans, The Forging of the Modern State: Early Industrial Britain 1783–1870 (London: Longman, 2001), 32, conjectures that even in the late eighteenth century when government was more capable than earlier, fully one-fifth of all imports were smuggled. 28.

Linklater, Owning the Earth, 117. 46. See Moore, Social Origins. CHAPTER 3: FREEING THE MARKET . . . THEN DEFENDING IT 1. Quoted in Edward Cheyney, An Introduction to the Industrial and Social History of England (New York: Macmillan, 1916), chapter 8. 2. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Chicago: University of Chicago Press, 1976), 90. Page numbers are from the Kindle edition of this text. 3. Smith, Wealth of Nations, 176. 4. See, for example, Smith, Wealth of Nations, 493. 5. Smith, Wealth of Nations, 314. 6. Smith, Wealth of Nations, 482. 7.


Work in the Future The Automation Revolution-Palgrave MacMillan (2019) by Robert Skidelsky Nan Craig

3D printing, Airbnb, algorithmic trading, AlphaGo, Alvin Toffler, Amazon Web Services, anti-work, antiwork, artificial general intelligence, asset light, autonomous vehicles, basic income, behavioural economics, business cycle, cloud computing, collective bargaining, Computing Machinery and Intelligence, correlation does not imply causation, creative destruction, data is the new oil, data science, David Graeber, David Ricardo: comparative advantage, deep learning, DeepMind, deindustrialization, Demis Hassabis, deskilling, disintermediation, do what you love, Donald Trump, driverless car, Erik Brynjolfsson, fake news, feminist movement, Ford Model T, Frederick Winslow Taylor, future of work, Future Shock, general purpose technology, gig economy, global supply chain, income inequality, independent contractor, informal economy, Internet of things, Jarndyce and Jarndyce, Jarndyce and Jarndyce, job automation, job polarisation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Joseph Schumpeter, knowledge economy, Loebner Prize, low skilled workers, Lyft, Mark Zuckerberg, means of production, moral panic, Network effects, new economy, Nick Bostrom, off grid, pattern recognition, post-work, Ronald Coase, scientific management, Second Machine Age, self-driving car, sharing economy, SoftBank, Steve Jobs, strong AI, tacit knowledge, technological determinism, technoutopianism, TED Talk, The Chicago School, The Future of Employment, the market place, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, Turing test, Uber for X, uber lyft, universal basic income, wealth creators, working poor

Sayers, S. (2005). Why Work? Marxism and Human Nature. Science and Society, 69(4), 606–616. Skidelsky, R., & Skidelsky, E. (2012). How Much is Enough? Money and the Good Life. London: Penguin. Smith, A. (1976). In R. H. Campbell & A. S. Skinner (Eds.), An Inquiry into the Nature and Causes of the Wealth of Nations. Oxford: Clarendon Press. Spencer, D. A. (2009). The Political Economy of Work. London: Routledge. Spencer, D. A. (2018). Fear and Hope in an Age of Mass Automation: Debating the Future of Work, New Technology. Work and Employment, 33(1), 1–12. Srnicek, N., & Williams, A. (2015). Inventing the Future.

Paris: OECD Publishing. Rosen, S. (1986). The Theory of Equalizing Differences. In O. Ashenfelter & R. Layard (Eds.), Handbook of Labor Economics. Amsterdam: North-Holland. Sennett, R. (2008). The Craftsman. New Haven, CT: Yale University Press. Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. London: Strahan. Supiot, A., et al. (2001). Beyond Employment. Changes in Work and the Future of Labour Law in Europe. Oxford: Oxford University Press. Taylor, C. (1989). The Sources of the Self. Cambridge, MA: Harvard University Press. Verdugo, G. (2014). The Great Compression of the French Wage Structure, 1969–2008.

The medieval economy comprised farms and ‘manufactories’ in small towns which were little larger than villages. The professions had their origin in the urban guilds of skilled workers. Yet everyone was skilled in the sense that 12 R. Skidelsky their work involved knowledge of all stages of production, not just tiny bits of it, as in Adam Smith’s pin factory. The nature of the work forced them to be ‘multi-tasked’. Associated with multi-tasking was multiple sources of income, with the ‘putting out’ system providing extra income for farmers in the fallow season. The social and political structure was hierarchical: everyone had their place and their just reward in the scheme of things.


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Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals by Tyler Cowen

agricultural Revolution, behavioural economics, Berlin Wall, Branko Milanovic, butterfly effect, conceptual framework, Daniel Kahneman / Amos Tversky, Fall of the Berlin Wall, framing effect, hedonic treadmill, impulse control, Peter Singer: altruism, rent-seeking, Robert Solow, social discount rate, Steven Pinker, The Wealth of Nations by Adam Smith, trade route, transaction costs, trickle-down economics, Tyler Cowen, Tyler Cowen: Great Stagnation, zero-sum game

First: The Principle of Growth: We should maximize the rate of sustainable economic growth, defined in terms of a concept such as Wealth Plus. The Principle of Growth would return economics to its roots in Adam Smith. Smith held a straightforward, common sense approach to political economy. He understood that the benefits of cumulative growth were significant, especially with the passage of time. It is no accident that his economics treatise was entitled An Inquiry Into the Nature and Causes of the Wealth of Nations. By the way, I see only one episode in human history in which the Principle of Growth was clearly and unambiguously applied, and that is in the East Asian economic miracles, which includes Japan, South Korea, Taiwan, Hong Kong, Singapore, and China (with a caveat for sustainability in the case of China).

Land Economics 73, no. 4 (November): 467–491. Chipman, John S., and James C. Moore. 1978. “The New Welfare Economics 1939–1974.” International Economic Review 19, no. 3 (October): 547–584. Clark, Kenneth. 1969. Civilization. New York: Harper & Row. Comin, Diego, William Easterly, and Erick Gong. 2010. “Was the Wealth of Nations Determined in 1000 B.C.?” American Economic Journal: Macroeconomics 2, no. 3: 65–97. Cowen, Tyler. 1992. “Consequentialism Implies a Zero Intergenerational Rate of Discount.” In Philosophy, Politics, and Society: Volume 6, Justice Between Age Groups and Generations, edited by Peter Laslett and James Fishkin, 162–168.

Since free lunches aren’t always easy to find, we should think about where free lunches might be hiding and why some of those free lunches might be less than evident. In particular, we might uncover hidden gains if we more closely consider the dimension of time. Maybe some of our choices release a steady stream of benefits, but we don’t see them as clearly as we ought to. As Adam Smith noted in the eighteenth century, we tend to visualize future events very poorly and with a deficit of proper imagination. In economics, there is at least one (hypothetical) example of a free lunch. Economist Frank Knight wrote of the Crusonia plant, a mythical, automatically growing crop which generates more output each period.


Falter: Has the Human Game Begun to Play Itself Out? by Bill McKibben

"Hurricane Katrina" Superdome, 23andMe, Affordable Care Act / Obamacare, Airbnb, Alan Greenspan, American Legislative Exchange Council, An Inconvenient Truth, Anne Wojcicki, Anthropocene, Apollo 11, artificial general intelligence, Bernie Sanders, Bill Joy: nanobots, biodiversity loss, Burning Man, call centre, Cambridge Analytica, carbon footprint, carbon tax, Charles Lindbergh, clean water, Colonization of Mars, computer vision, CRISPR, David Attenborough, deep learning, DeepMind, degrowth, disinformation, Donald Trump, double helix, driverless car, Easter island, Edward Snowden, Elon Musk, ending welfare as we know it, energy transition, Extinction Rebellion, Flynn Effect, gigafactory, Google Earth, Great Leap Forward, green new deal, Greta Thunberg, Hyperloop, impulse control, income inequality, Intergovernmental Panel on Climate Change (IPCC), James Bridle, Jane Jacobs, Jaron Lanier, Jeff Bezos, job automation, Kim Stanley Robinson, life extension, light touch regulation, Mark Zuckerberg, mass immigration, megacity, Menlo Park, moral hazard, Naomi Klein, Neil Armstrong, Nelson Mandela, Nick Bostrom, obamacare, ocean acidification, off grid, oil shale / tar sands, paperclip maximiser, Paris climate accords, pattern recognition, Peter Thiel, plutocrats, profit motive, Ralph Waldo Emerson, Ray Kurzweil, Robert Mercer, Ronald Reagan, Sam Altman, San Francisco homelessness, self-driving car, Silicon Valley, Silicon Valley startup, smart meter, Snapchat, stem cell, Stephen Hawking, Steve Jobs, Steve Wozniak, Steven Pinker, strong AI, supervolcano, tech baron, tech billionaire, technoutopianism, TED Talk, The Wealth of Nations by Adam Smith, traffic fines, Tragedy of the Commons, Travis Kalanick, Tyler Cowen, urban sprawl, Virgin Galactic, Watson beat the top human players on Jeopardy!, Y Combinator, Y2K, yield curve

These kids spend far less time hanging out with friends than any generation in history, and the data show they’re uniquely unhappy as a result.9 There’s actually a kind of natural balance between public and private that wise people have always recognized. Adam Smith can be said to have launched the movement that ended up with the Kochs: his landmark work, The Wealth of Nations, provided the first explanation of how pursuing one’s own interest could end up increasing the general prosperity. But that wasn’t Smith’s only book. In The Theory of Moral Sentiments, he points out that “how selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him.”

As the French journalist Hervé Kempf observed, growth “creates a surplus of apparent wealth that allows the system to be lubricated without modifying its structure.”13 But as this book has pointed out, that growth now comes with enormous levels of risk. Indeed, it risks ending the game of being human. Even with all that lubrication, the gears have begun to grind. And so, it makes sense to remember that those who helped define our current worldview have themselves imagined other possibilities. Adam Smith, who with The Wealth of Nations fired the gun that set off the race we’re still running, nonetheless predicted that the time would come when “a country which had acquired that full complement of riches which the nature of its soil and climate, and its situation with regard to other countries, allowed it to acquire; which could, therefore, advance no farther, and which was not going backward.”14 This stationary state was the inevitable destiny of societies, he believed, even if no one had gotten there yet.

George Monbiot, “Our Natural World Is Disappearing Before Our Eyes. We Have to Save It,” tppahanshilhorst.com, July 6, 2018. CHAPTER 5 1. Donald Worster, Shrinking the Earth: The Rise and Decline of Natural Abundance (New York: Oxford University Press, 2016), p. 15. 2. Ibid., p. 40. 3. Adam Smith, The Wealth of Nations, Book 4, Chapter 7, Part 3. (Indianapolis, 2009), p. 2. 4. Gayathri Vaidyanathan, “Killer Heat Grows Hotter around the World,” Scientific American, August 6, 2015. 5. Alan Blinder, “As the Northwest Boils, an Aversion to Air-Conditioners Wilts,” New York Times, August 3, 2017. 6.


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Capital Ideas: The Improbable Origins of Modern Wall Street by Peter L. Bernstein

Albert Einstein, asset allocation, backtesting, Benoit Mandelbrot, Black Monday: stock market crash in 1987, Black-Scholes formula, Bonfire of the Vanities, Brownian motion, business cycle, buy and hold, buy low sell high, capital asset pricing model, corporate raider, debt deflation, diversified portfolio, Eugene Fama: efficient market hypothesis, financial innovation, financial intermediation, fixed income, full employment, Glass-Steagall Act, Great Leap Forward, guns versus butter model, implied volatility, index arbitrage, index fund, interest rate swap, invisible hand, John von Neumann, Joseph Schumpeter, junk bonds, Kenneth Arrow, law of one price, linear programming, Louis Bachelier, mandelbrot fractal, martingale, means of production, Michael Milken, money market fund, Myron Scholes, new economy, New Journalism, Paul Samuelson, Performance of Mutual Funds in the Period, profit maximization, Ralph Nader, RAND corporation, random walk, Richard Thaler, risk free rate, risk/return, Robert Shiller, Robert Solow, Ronald Reagan, stochastic process, Thales and the olive presses, the market place, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, transfer pricing, zero-coupon bond, zero-sum game

The nonpredictability of future prices from past and present prices is the sign, not of failure of economic law, but the triumph of economic law after competition has done its best.”14 He recognized the jumble that stock prices presented as an unexplored variation on a theme that runs throughout economic-theory—the difference between price and value. From Adam Smith onward (not the fellow on TV who puts the name in quotation marks, but the eighteenth-century author of The Wealth of Nations), all the great economists have wrestled with this problem in one form or another; it plays a central role in Karl Marx’s model of capitalism. Economists agree that “value” refers to something that lies behind, or beneath, the prices observed in the marketplace; prices gyrate around “true value.”

Contents Acknowledgments Introduction: The Revolution in the Wealth of Nations Part I: Setting the Scene Chapter 1: Are Stock Prices Predictable? Part II: The Whole and the Parts Chapter 2: Fourteen Pages to Fame Chapter 3: The Interior Decorator Fallacy Chapter 4: The Most Important Single Influence Part III: The Demon of Chance Chapter 5: Illusions, Molecules, and Trends Chapter 6: Anticipating Prices Properly Chapter 7: The Search for High P.Q. Part IV: What Are Stocks Worth? Chapter 8: The Best at the Price Chapter 9: The Bombshell Assertions Chapter 10: Risky Business Chapter 11: The Universal Financial Device Part V: From Gown to Town Chapter 12: The Constellation Chapter 13: The Accountant for Risk Chapter 14: The Ultimate Invention Part VI: The Future Chapter 15: The View from the Top of the Tower Notes Bibliography and Other Sources Name Index Subject Index Copyright © 2005 by Peter 1.

She has been a close collaborator in every phase of the project, from the interviews to the planning and writing of each chapter. Every part of the book has been improved by her participation. Even with all this help and support, I am certain that flaws remain. They comprise the only part of the book that is my responsibility alone. Introduction: The Revolution in the Wealth of Nations . . . the machine-gun clatter of fingers on a keyboard. Americans have always welcomed change. Revolution is our birthright. We take it as a sign of our youth that we prefer the new to the old. We are fascinated by innovation and lionize the innovators. We are partial to tinkerers and make folk-heroes out of people like Thomas Edison, Henry Ford, and Benjamin Franklin.


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Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else by Chrystia Freeland

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Alan Greenspan, Albert Einstein, algorithmic trading, assortative mating, banking crisis, barriers to entry, Basel III, battle of ideas, Bear Stearns, behavioural economics, Bernie Madoff, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, Black Swan, Boris Johnson, Branko Milanovic, Bretton Woods, BRICs, Bullingdon Club, business climate, call centre, carried interest, Cass Sunstein, Clayton Christensen, collapse of Lehman Brothers, commoditize, conceptual framework, corporate governance, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Deng Xiaoping, disruptive innovation, don't be evil, double helix, energy security, estate planning, experimental subject, financial deregulation, financial engineering, financial innovation, Flash crash, Ford Model T, Frank Gehry, Gini coefficient, Glass-Steagall Act, global village, Goldman Sachs: Vampire Squid, Gordon Gekko, Guggenheim Bilbao, haute couture, high net worth, income inequality, invention of the steam engine, job automation, John Markoff, joint-stock company, Joseph Schumpeter, knowledge economy, knowledge worker, liberation theology, light touch regulation, linear programming, London Whale, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, Max Levchin, Mikhail Gorbachev, Moneyball by Michael Lewis explains big data, NetJets, new economy, Occupy movement, open economy, Peter Thiel, place-making, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, postindustrial economy, Potemkin village, profit motive, public intellectual, purchasing power parity, race to the bottom, rent-seeking, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, self-driving car, seminal paper, Sheryl Sandberg, short selling, Silicon Valley, Silicon Valley billionaire, Silicon Valley startup, Simon Kuznets, sovereign wealth fund, starchitect, stem cell, Steve Jobs, TED Talk, the long tail, the new new thing, The Spirit Level, The Wealth of Nations by Adam Smith, Tony Hsieh, too big to fail, trade route, trickle-down economics, Tyler Cowen: Great Stagnation, wage slave, Washington Consensus, winner-take-all economy, zero-sum game

New technologies have helped, too—instant and mobile communication makes it possible to live on the move and around the world. So have the political revolutions that have opened up so many of the world’s borders over the past twenty years. The most important shift, however, was the one foreseen by Adam Smith in The Wealth of Nations. Writing in 1776 at the very beginning of the industrial revolution, he predicted that as fortunes shifted from acres to shares they would become more mobile: “The proprietor of land is necessarily a citizen of the particular country in which his estate lies. The proprietor of stock is properly a citizen of the world, and is not necessarily attached to any particular country.”

Murphy, was in the vanguard of a small group of business school academics who had spent the previous decade trying to solve one of the big problems of twentieth-century market economies: How do you have capitalism without capitalists? Or, to put it another way, who manages the managers? This is not a new problem. In The Wealth of Nations, Adam Smith compared the executives of a joint-stock company to “the stewards of a rich man” and warned that “being the managers rather of other people’s money than their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own. . . .

“The largest metals group in the world is Indian” Stephen Jennings, “Opportunities of a Lifetime: Lessons for New Zealand from New, High-Growth Economics,” Sir Ronald Trotter Lecture, April 7, 2009. “They know how to provide mobile phones” Chrystia Freeland, “Globalization 2.0: Emerging-Market Cross-Pollination,” The Globe and Mail, October 1, 2010. “The proprietor of land is necessarily a citizen” Adam Smith, The Wealth of Nations, Book V, Chapter II, Section 91. “We don’t have castles and noble titles” Benjamin Wallace, “Those Fabulous Confabs,” New York, February 26, 2012. and where, in lieu of noble titles, an elaborate hierarchy of conference badges Nick Paumgarten, “Magic Mountain: What Happens at Davos?”


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A Splendid Exchange: How Trade Shaped the World by William J. Bernstein

Admiral Zheng, asset allocation, bank run, Benoit Mandelbrot, British Empire, call centre, clean water, Columbian Exchange, Corn Laws, cotton gin, David Ricardo: comparative advantage, death from overwork, deindustrialization, Doha Development Round, domestication of the camel, double entry bookkeeping, Easter island, Eratosthenes, financial innovation, flying shuttle, Gini coefficient, God and Mammon, high-speed rail, ice-free Arctic, imperial preference, income inequality, intermodal, James Hargreaves, John Harrison: Longitude, Khyber Pass, low skilled workers, non-tariff barriers, Paul Samuelson, placebo effect, Port of Oakland, refrigerator car, Silicon Valley, South China Sea, South Sea Bubble, spice trade, spinning jenny, Steven Pinker, Suez canal 1869, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, trade liberalization, trade route, transatlantic slave trade, transcontinental railway, two and twenty, upwardly mobile, working poor, zero-sum game

The dinar, like most of the standard gold coins of the premodern period, weighed about one-eighth of an ounce, worth about eighty dollars at current value. Thus, an annual income of one hundred dinars corresponds to about $8,000 per year in today's currency. 12. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Chicago: University of Chicago Press, 1976), I: 17. 13. Paul Mellars, "The Impossible Coincidence. A Single-Species Model for the Origins of Modem Human Behavior in Europe," Evolutionary Anthropology, 14:1 (February, 2005): 12-27. 14. Thomas L. Friedman, The World Is Flat (New York: Farrar, Straus and Giroux, 2005). 15.

Plassey was just one facet of the Seven Years' War, which yielded a particularly rich bounty for England: not only the Bengal, but also Canada and much of the Lesser Antilles. 8. Quoted in J. R. Ward, "The Industrial Revolution and British Imperialism, 1750-1850," Economic History Review 47, no. 1 (February 1994): 47. 9. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Chicago: University of Chicago Press, 1976), I: 82. 10. Ibid., II:33; Barber, 97. 11. Anthony Webster, "The Political Economy of Trade Liberalization: The East India Company Charter Act of 1813," The Economic History Review 43, no. 3 (August 1990): 404-419. 12.

Simmons, Colin, "'De-Industrialization,' Industrialization, and the Indian Economy, c. 1850-1947," Modern Asian Studies 19, no. 3 (April 1985): 593-622 Simpson, Donald, "The Treasure in the Vergulde Draek: A Sample of V. O. C. Bullion Exports in the 17th Century," The Great Circle 2, no. 1 (April 1980): 13-17. Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations (Chicago: University of Chicago Press, 1976). Srinivasan, T. N., "Developing Countries in the World Trading System: From GATT, 1947, to the Third Ministerial Meeting of WTO, 1999," World Economy 22, no. 8 (1999): 1047-1064. Stamper, Norm, "A Good Cop Wasted," excerpted in Seattle Weekly (June 1, 2005).


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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

Andrei Shleifer, asset-backed security, Bear Stearns, behavioural economics, Bernie Madoff, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Carl Icahn, collapse of Lehman Brothers, compensation consultant, corporate raider, Credit Default Swap, Daniel Kahneman / Amos Tversky, dark matter, David Brooks, desegregation, en.wikipedia.org, endowment effect, equity premium, financial intermediation, financial thriller, fixed income, full employment, George Akerlof, greed is good, income per capita, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, junk bonds, Kenneth Arrow, Kenneth Rogoff, late fees, loss aversion, market bubble, Menlo Park, mental accounting, Michael Milken, Milgram experiment, money market fund, moral hazard, new economy, Pareto efficiency, Paul Samuelson, payday loans, Ponzi scheme, profit motive, publication bias, Ralph Nader, randomized controlled trial, Richard Thaler, Robert Shiller, Robert Solow, Ronald Reagan, Savings and loan crisis, short selling, Silicon Valley, stock buybacks, the new new thing, The Predators' Ball, the scientific method, The Theory of the Leisure Class by Thorstein Veblen, 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, Vilfredo Pareto, wage slave

So, in the absence of some curbs on markets, we reach an economic equilibrium where the monkeys on the shoulder are substantially calling the shots. The Alleged Optimality of a Free-Market Equilibrium There is a perhaps surprising result that, indisputably, lies at the very heart of economics. Back in 1776, the father of the field, Adam Smith, in The Wealth of Nations, wrote that, with free markets, as if “by an invisible hand … [each person] pursuing his own interest” also promotes the general good.16 It took a bit more than a century for Smith’s statement to be precisely understood. According to the modern version, commonly taught even in introductory economics, a competitive free-market equilibrium is “Pareto optimal.”17 That means that once such an economy is in equilibrium, it is impossible to improve the economic welfare of everyone.

Levitt, “Keith Chen’s Monkey Research,” New York Times, June 5, 2005. 15. Venkat Lakshminarayanan, M. Keith Chen, and Laurie R. Santos, “Endowment Effect in Capuchin Monkeys,” Philosophical Transactions of the Royal Society B: Biological Sciences 363, no. 1511 (December 2008): 3837–44. 16. Adam Smith, The Wealth of Nations (New York: P. F. Collier, 1909; originally published 1776), p. 19. Emphasis added. 17. For a version of Pareto’s original writings, see Vilfredo Pareto, Manual of Political Economy: A Critical and Variorum Edition, ed. Aldo Montesano et al. (Oxford: Oxford University Press, 2014). This edition derives from Manuale di Economia, published in Italy in 1906, and also a later edition in French. 18.

Singh, Gurkirpal. “Recent Considerations in Nonsteroidal Anti-Inflammatory Drug Gastropathy.” American Journal of Medicine 105, no. 1, supp. 2 (July 27, 1998): 31S–38S. Skeel, David A., Jr. “Shaming in Corporate Law.” University of Pennsylvania Law Review 149, no. 6 (June 2001): 1811–68. Smith, Adam. The Wealth of Nations. New York: P. F. Collier, 1909. Originally published 1776. Smith, Gary. Standard Deviations: Flawed Assumptions, Tortured Data, and Other Ways to Lie with Statistics. New York: Duckworth Overlook, 2014. Snell, George D. “Clarence D. Little, 1888–1971: A Biographical Memoir by George D. Snell.”


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A Culture of Growth: The Origins of the Modern Economy by Joel Mokyr

Andrei Shleifer, barriers to entry, Berlin Wall, business cycle, classic study, clockwork universe, cognitive dissonance, Copley Medal, creative destruction, David Ricardo: comparative advantage, delayed gratification, deliberate practice, Deng Xiaoping, Edmond Halley, Edward Jenner, epigenetics, Fellow of the Royal Society, financial independence, flying shuttle, framing effect, germ theory of disease, Haber-Bosch Process, Herbert Marcuse, hindsight bias, income inequality, information asymmetry, invention of movable type, invention of the printing press, invisible hand, Isaac Newton, Jacquard loom, Jacques de Vaucanson, James Watt: steam engine, Johannes Kepler, John Harrison: Longitude, Joseph Schumpeter, knowledge economy, labor-force participation, land tenure, law of one price, Menlo Park, moveable type in China, new economy, phenotype, price stability, principal–agent problem, rent-seeking, Republic of Letters, Robert Solow, Ronald Reagan, seminal paper, South Sea Bubble, statistical model, survivorship bias, tacit knowledge, the market place, the strength of weak ties, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, transaction costs, ultimatum game, World Values Survey, Wunderkammern

The selection criteria for any kind of cultural belief are contingent, and it is easy to envisage a cultural environment in which the question “but is it true?” can be routinely answered satisfactorily by “sometimes,” or “maybe,” or “if God wills it.” 7 Schumpeter maintained, somewhat unfairly, that “the Wealth of Nations contained no really novel ideas and … cannot rank with Newton’s Principia and Darwin’s Origin as an intellectual achievement.” See Schumpeter, 1954 p. 185. 8 In 1492 the Abbott of Sponheim, Johannes Trithemius, wrote In Praise of Scribes in which he made a series of powerful arguments against the use of the printing press and favoring hand-copying.

By the eighteenth century, conservative writers such as the Jesuits associated Newtonian physics with various heretical philosophies such as deism, Spinozism, or Epicurean materialism (Shank, 2008, p. 381). 32 There is no documentary evidence for Laplace ever to have uttered those widely cited words, but Hahn (1986, p. 256) notes that the statement was a faithful reflection of his position. 33 This line comes right after the famous statement (not reproduced in the Wealth of Nations) that “little else is required to carry a nation to the highest state of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice” (Stewart [1793] 1829, p. 64). Dugald Stewart added that the sentences appear in a small 1755 manuscript by Smith that was in his possession, but not to be published. 34 The description of the one of the “fathers” of Salomon’s House, despite the definition of the end of their foundation as “the knowledge of causes and secret motions of things and the enlarging of the bounds of Human Empire to the effecting of all things possible” includes his entry in streets lined with people in which he “held up his bare hand as he went blessing the people in silence.”

The Republic of Letters: A Cultural History of the French Enlightenment. Ithaca, NY: Cornell University Press. Goody, Jack. 2009. Renaissances: The One or the Many? Cambridge: Cambridge University Press. ———. 2010. The Eurasian Miracle. Cambridge: Polity Press. Gorodnichenko, Yuriy and Gerard Roland. 2011. “Culture, Institutions, and the Wealth of Nations.” NBER Working Papers 16368, unpublished ms. Gough J. B. 2008. “Réaumur, René-Antoine Ferchault de.” In Charles C. Gillispie, ed., Complete Dictionary of Scientific Biography. Gale Virtual Reference Library. Detroit: Charles Scribner’s Sons. Vol. 11, pp. 327–35. Grafe, Regina. 2012. Distant Tyranny: Markets, Power, and Backwardness in Spain, 1650–1800.


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Misbehaving: The Making of Behavioral Economics by Richard H. Thaler

3Com Palm IPO, Alan Greenspan, Albert Einstein, Alvin Roth, Amazon Mechanical Turk, Andrei Shleifer, Apple's 1984 Super Bowl advert, Atul Gawande, behavioural economics, Berlin Wall, Bernie Madoff, Black-Scholes formula, book value, business cycle, capital asset pricing model, Cass Sunstein, Checklist Manifesto, choice architecture, clean water, cognitive dissonance, conceptual framework, constrained optimization, Daniel Kahneman / Amos Tversky, delayed gratification, diversification, diversified portfolio, Edward Glaeser, endowment effect, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, George Akerlof, hindsight bias, Home mortgage interest deduction, impulse control, index fund, information asymmetry, invisible hand, Jean Tirole, John Nash: game theory, John von Neumann, Kenneth Arrow, Kickstarter, late fees, law of one price, libertarian paternalism, Long Term Capital Management, loss aversion, low interest rates, market clearing, Mason jar, mental accounting, meta-analysis, money market fund, More Guns, Less Crime, mortgage debt, Myron Scholes, Nash equilibrium, Nate Silver, New Journalism, nudge unit, PalmPilot, Paul Samuelson, payday loans, Ponzi scheme, Post-Keynesian economics, presumed consent, pre–internet, principal–agent problem, prisoner's dilemma, profit maximization, random walk, randomized controlled trial, Richard Thaler, risk free rate, Robert Shiller, Robert Solow, Ronald Coase, Silicon Valley, South Sea Bubble, Stanford marshmallow experiment, statistical model, Steve Jobs, sunk-cost fallacy, Supply of New York City Cabdrivers, systematic bias, technology bubble, The Chicago School, The Myth of the Rational Market, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, transaction costs, ultimatum game, Vilfredo Pareto, Walter Mischel, zero-sum game

No Problem Economists have not always been so dense about self-control problems. For roughly two centuries, the economists who wrote on this topic knew their Humans. In fact, an early pioneer of what we would now call a behavioral treatment of self-control was none other than the high priest of free market economics: Adam Smith. When most people think about Adam Smith, they think of his most famous work, The Wealth of Nations. This remarkable book—the first edition was published in 1776—created the foundation for modern economic thinking. Oddly, the most well-known phrase in the book, the vaunted “invisible hand,” mentioned earlier, appears only once, treated with a mere flick by Smith.

Come to think of it, even if your spouse is an economist, this is probably not a great idea. You know, and I know, that we do not live in a world of Econs. We live in a world of Humans. And since most economists are also human, they also know that they do not live in a world of Econs. Adam Smith, the father of modern economic thinking, explicitly acknowledged this fact. Before writing his magnum opus, The Wealth of Nations, he wrote another book devoted to the topic of human “passions,” a word that does not appear in any economics textbook. Econs do not have passions; they are cold-blooded optimizers. Think of Mr. Spock in Star Trek. Nevertheless, this model of economic behavior based on a population consisting only of Econs has flourished, raising economics to that pinnacle of influence on which it now rests.

“Learning in High Stakes Ultimatum Games: An Experiment in the Slovak Republic.” Econometrica 66, no. 3: 569–96. Smith, Adam. (1759) 1981. The Theory of Moral Sentiments. Reprint edited by D. D. Raphael and A. L. Macfie. Indianapolis: LibertyClassics. ———. (1776) 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Reprint edited by R. H. Campbell and A. S. Skinner. Indianapolis: LibertyClassics. Smith, Vernon L. 1976. “Experimental Economics: Induced Value Theory.” American Economic Review 66, no. 2: 274–9. ———, Gerry L. Suchanek, and Arlington W. Williams. 1988. “Bubbles, Crashes, and Endogenous Expectations in Experimental Spot Asset Markets.”


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The Impulse Society: America in the Age of Instant Gratification by Paul Roberts

"Friedman doctrine" OR "shareholder theory", 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, Abraham Maslow, accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Alan Greenspan, American Society of Civil Engineers: Report Card, AOL-Time Warner, asset allocation, business cycle, business process, carbon tax, Carl Icahn, Cass Sunstein, centre right, choice architecture, classic study, collateralized debt obligation, collective bargaining, computerized trading, corporate governance, corporate raider, corporate social responsibility, creative destruction, crony capitalism, David Brooks, delayed gratification, disruptive innovation, double helix, Evgeny Morozov, factory automation, financial deregulation, financial engineering, financial innovation, fixed income, Ford Model T, full employment, game design, Glass-Steagall Act, greed is good, If something cannot go on forever, it will stop - Herbert Stein's Law, impulse control, income inequality, inflation targeting, insecure affluence, invisible hand, It's morning again in America, job automation, John Markoff, Joseph Schumpeter, junk bonds, knowledge worker, late fees, Long Term Capital Management, loss aversion, low interest rates, low skilled workers, mass immigration, Michael Shellenberger, new economy, Nicholas Carr, obamacare, Occupy movement, oil shale / tar sands, performance metric, postindustrial economy, profit maximization, Report Card for America’s Infrastructure, reshoring, Richard Thaler, rising living standards, Robert Shiller, Rodney Brooks, Ronald Reagan, shareholder value, Silicon Valley, speech recognition, Steve Jobs, stock buybacks, technological determinism, technological solutionism, technoutopianism, Ted Nordhaus, the built environment, the long tail, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, Tyler Cowen, Tyler Cowen: Great Stagnation, value engineering, Walter Mischel, winner-take-all economy

But the basic argument—that it is possible and thus necessary to take steps to produce more sustainable, equitable, humane economic outcomes—is neither flawed nor particularly “liberal.” From the very beginnings of the Industrial Revolution, it was understood that “commercial society,” as Adam Smith called capitalism, would need constant poking and prodding and nudging to ensure that its massive efficiencies benefited as wide a public as possible. As Smith wrote in The Wealth of Nations,1 “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.” Today, conservatives routinely invoke Smith and his invisible hand to argue for unfettered markets.

The Culture of the New Capitalism. New Haven, CT: Yale University Press, 2006. Shiller, Robert. Irrational Exuberance. Second Edition. Princeton, NJ: Princeton University Press, 2005. Slade, Giles. Made to Break: Technology and Obsolescence in America. Cambridge, MA: Harvard University Press, 2009. Smith, Adam. The Wealth of Nations. New York: Penguin Classics, 1982. Smith, Merrit Roe, and Leo Marx, eds. Does Technology Drive History? The Dilemma of Technological Determinism. Cambridge, MA: MIT Press, 1994. Sunstein, Cass R. Republic.com 2.0: Revenge of the Blogs. Princeton, NJ: Princeton University Press, 2007. ———.

In their capacity as buyers and consumers they are hard-hearted and callous, without consideration for other people.”22 Vendors who failed to accept these truths, and who continued to rely on social obligations and other nonmarket inefficiencies, were not only dooming themselves; they were also holding back the overall efficiency of the marketplace. As Adam Smith, patron saint of efficient markets, proposed two centuries earlier, the best outcome was achieved when individuals pursued self-interest. The shift from customer to consumer, conservative economists now argued, was merely a manifestation of Smith’s great insight. It might be devastating to older, inefficient vendors and a few small towns. But in the long term, it would bring the social benefits of a more efficient economy. Yet in viewing the social side of commerce through such a purely economic, Darwinian lens, we lose a lot of important detail. Adam Smith himself insisted that markets will not yield their famous optimality without a strong moral dimension: absent trust and empathy between buyer and seller, markets quickly lose their efficiencies and fail—as numerous scandals and scams and bubbles and busts have demonstrated.


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Socialism Sucks: Two Economists Drink Their Way Through the Unfree World by Robert Lawson, Benjamin Powell

Airbnb, anti-communist, Berlin Wall, Bernie Sanders, Black Lives Matter, business cycle, cognitive dissonance, crony capitalism, Deng Xiaoping, Donald Trump, en.wikipedia.org, equal pay for equal work, Fall of the Berlin Wall, Gini coefficient, Great Leap Forward, hiring and firing, illegal immigration, income inequality, indoor plumbing, invisible hand, Kickstarter, means of production, Mont Pelerin Society, profit motive, road to serfdom, Ronald Reagan, single-payer health, special economic zone, The Wealth of Nations by Adam Smith

Today, Venezuela ranks dead last in the economic freedom index, with a score of about 3.4 As economists, Bob and I know that economic freedom almost inevitably leads to good economic outcomes, because free people have both the incentive and the ability to improve their own lives, and, in the process, the lives of others. Adam Smith put it best in his book The Wealth of Nations when he wrote of an “invisible hand” that guided individual economic self-interest to a greater good. As Smith put it: “Every individual . . . neither intends to promote the public interest, nor knows how much he is promoting it . . . he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”5 This “invisible hand” requires two things: freedom and the rule of law.

David Sirota, “Hugo Chavez’s economic miracle,” Salon, March 6, 2013, http://www.salon.com/2013/03/06/hugo_chavezs_economic_miracle/. 4. North Korea and Cuba aren’t rated. The latest economic freedom ratings are available online here: https://www.fraserinstitute.org/economic-freedom. 5. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Modern Library, 1937 [1776]), 423. 6. Sabrina Martin, “Venezuelan Regime Threatens to Expropriate Bakeries, Jeopardizing Bread,” PanAm Post, March 13, 2017, https://panampost.com/sabrina-martin/2017/03/13/venezuela-regime-threatens-expropriate-bakeries-jeopardizing-bread/. 7.

Tons of books have been written on Marx, and we don’t want to bore you here by going through his entire life and work, but it’s worth at least briefly reviewing his ideas on value, alienation, and history, the three big pillars of Marxism. Even though we’re free-market economists, Marx’s labor theory of value doesn’t offend us. He was wrong, but it wasn’t until after Marx died that economists figured it out. Most economists, including the great classical liberal, Adam Smith, were mistaken in their labor, or cost-of-production, theory of value. It wasn’t until the so-called “Marginal Revolution” in the 1880s when three economists, working independently, all concluded that the value of a good is based on what people subjectively think a particular (or “marginal”) unit of that good is worth, which is exactly right.


pages: 264 words: 76,643

The Growth Delusion: Wealth, Poverty, and the Well-Being of Nations by David Pilling

Airbnb, Alan Greenspan, banking crisis, Bernie Sanders, Big bang: deregulation of the City of London, Branko Milanovic, call centre, carbon tax, centre right, clean tech, clean water, collapse of Lehman Brothers, collateralized debt obligation, commoditize, Credit Default Swap, credit default swaps / collateralized debt obligations, dark matter, Deng Xiaoping, Diane Coyle, Donald Trump, double entry bookkeeping, Easter island, Erik Brynjolfsson, falling living standards, financial deregulation, financial engineering, financial intermediation, financial repression, Gini coefficient, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Google Hangouts, Great Leap Forward, Hans Rosling, happiness index / gross national happiness, Higgs boson, high-speed rail, income inequality, income per capita, informal economy, invisible hand, Jeremy Corbyn, job satisfaction, Mahatma Gandhi, Mahbub ul Haq, market fundamentalism, Martin Wolf, means of production, military-industrial complex, Monkeys Reject Unequal Pay, mortgage debt, off grid, old-boy network, Panopticon Jeremy Bentham, peak oil, performance metric, pez dispenser, profit motive, purchasing power parity, race to the bottom, rent-seeking, Robert Gordon, Ronald Reagan, Rory Sutherland, science of happiness, shareholder value, sharing economy, Simon Kuznets, sovereign wealth fund, TED Talk, The Great Moderation, The Wealth of Nations by Adam Smith, Thomas Malthus, total factor productivity, Tragedy of the Commons, transaction costs, transfer pricing, trickle-down economics, urban sprawl, women in the workforce, World Values Survey

One author lists some of the activities that are not part of the economy as “giving birth to babies, raising children, cultivating a garden, cooking food for her siblings, milking the family cow, making clothes for her relatives or taking care of Adam Smith so he can write The Wealth of Nations.”13 Even the woman whose housework freed up time for the economist Adam Smith to write his most famous work contributed nothing to the economy, as we define it. Smith is known for his concept of the “invisible hand,” which describes the market forces and pricing signals that are supposed to make economies work smoothly without a central plan.

Subtly different from Petty, in the physiocrats’ interpretation the “productive class” consisted of mainly agricultural laborers, while the so-called sterile class included “artisans, professionals, merchants and, lo and behold, the King himself.”5 Viewed from this perspective, the invention of the economy—as something distinct from the monarch—was a profoundly democratic act. Adam Smith, in his An Inquiry into the Nature and Causes of the Wealth of Nations, first published in 1776, also divided labor into productive and unproductive categories. A man, he wrote, “grows rich by employing a multitude of manufacturers: He grows poor by maintaining a multitude of menial servants.” It wasn’t a very flattering view of the leisured classes.

What unites these early attempts to catalog national wealth is an effort to draw what economists today call the production boundary—between activities that should be counted and those that should not. In short, they were trying to answer a question that is still relevant today: precisely what is an economy? In the great economic ledger should the king appear on the plus side, the embodiment in flesh and blood of the national patrimony? Or, as the physiocrats and Adam Smith implied, should he be on the negative side of the ledger, an unproductive spender of the nation’s resources? The same question of what should be included and what should be excluded has rumbled on ever since. Should we include government spending? How about providers of services, whose contributions to society—healthy minds (psychoanalysts), humor (clowns), education (teachers)—may be harder to count than horseshoes or bushels of wheat?


pages: 209 words: 80,086

The Global Auction: The Broken Promises of Education, Jobs, and Incomes by Phillip Brown, Hugh Lauder, David Ashton

active measures, affirmative action, An Inconvenient Truth, barriers to entry, Branko Milanovic, BRICs, business process, business process outsourcing, call centre, classic study, collective bargaining, corporate governance, creative destruction, credit crunch, David Ricardo: comparative advantage, deindustrialization, deskilling, disruptive innovation, Dutch auction, Ford Model T, Frederick Winslow Taylor, full employment, future of work, glass ceiling, global supply chain, Great Leap Forward, immigration reform, income inequality, industrial cluster, industrial robot, intangible asset, job automation, Jon Ronson, Joseph Schumpeter, knowledge economy, knowledge worker, low skilled workers, manufacturing employment, market bubble, market design, meritocracy, neoliberal agenda, new economy, Paul Samuelson, pensions crisis, post-industrial society, profit maximization, purchasing power parity, QWERTY keyboard, race to the bottom, Richard Florida, Ronald Reagan, shared worldview, shareholder value, Silicon Valley, sovereign wealth fund, stem cell, tacit knowledge, tech worker, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, transaction costs, trickle-down economics, vertical integration, winner-take-all economy, working poor, zero-sum game

The hold of this faith over current thinking is difficult to exaggerate despite the fallout from the economic crisis.2 This book explains why it would be more fitting in a fairy tale than in an account of reality. But first we need to see how the neoliberal opportunity bargain of individual freedom and national prosperity was supposed to unfold. From Muscle Power to Brianpower In the eighteenth-century world of Adam Smith, the wealth of nations was based on trade and plunder rather than increasing productivity. The founder of modern economics recognized that wealth could be created by improving the efficiency of the workforce, even if the price was to condemn most workers to jobs that in Smith’s words made them “as stupid and ignorant as it is possible for a human creature to become.”

.), Education, Globalization and Social Change (Oxford: Oxford University Press, 2006). Chapter Two 1. Robert Reich, The Work of Nations (New York: Vintage, 1991), 247. 2. W. Norton Grubb and Marvin Lazerson, The Education Gospel: The Economic Power of Schooling (Cambridge, Mass.: Harvard University Press, 2004). 3. See Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations,Edwin Cannan (ed.) (Chicago: University of Chicago Press, 1976 [1776]), 8. By the dawn of the twentieth century, the fate of the workforce was looking more promising, at least according to another famous economist, Alfred Marshall. In a essay on “The Future of the Working-Classes” presented to the Reform Club in Cambridge, England, in 1873, he spoke of new technologies accelerating the demand for a skilled workforce ending the distinction between blue- and white-collar workers.

This was because the increase in productive capacity depended on subdividing the activities of workers, each performing the same repetitive task such as in the manufacture of pins where someone draws out the wire, another straightens it, another cuts it, and so on.3 The dangers involved in creating a workforce of human automatons were not lost on Smith. He believed that although this was a price worth paying to increase national wealth, state-funded education should be developed to compensate for the mind-numbing work that a detailed division of labor imposed on the workforce. Since Adam Smith, labor was treated as a homogeneous category. What counted was the number of workers or the size of the workforce, akin to the area of land for agricultural production or the number of machines in a factory. Well into the twentieth century, people were treated as expensive machines, and the personal costs of rising prosperity continued to be high.


pages: 192

Kicking Awaythe Ladder by Ha-Joon Chang

Asian financial crisis, business cycle, central bank independence, classic study, clean water, colonial rule, Corn Laws, corporate governance, creative destruction, David Ricardo: comparative advantage, fear of failure, income inequality, income per capita, joint-stock company, joint-stock limited liability company, land bank, land reform, liberal world order, moral hazard, open economy, purchasing power parity, rent-seeking, scientific management, short selling, Simon Kuznets, tacit knowledge, The Wealth of Nations by Adam Smith, trade liberalization, Washington Consensus

Once the most complex in Europe, the British tariff could now be printed "on half a page of Whitaker's Almanack" It is important to note here that Britain's technological lead that enabled this shift to a free trade regime had been achieved 'behind high and long-lasting tariff barriers'.47 It is also important to note that the overall liberalization of the British economy that occurred during the mid-nineteenth century, of which trade liberalization was just a part, was a highly controlled affair overseen by the state, and not achieved through a laissez-faire approach.48 It should also be pointed out that Britain 'adopted Free Trade painfully slowly: eighty-four years from The Wealth of Nations to Gladstone's 1860 budget; thirty-one from Waterloo to the ritual victory of 1846'.49 Moreover, the free-trade regime did not last long. By the 1880s, some hard-pressed British manufacturers were asking for protection. By the early twentieth century, reintroduction of protectionism was one of the hottest issues in British politics, as the country was rapidly losing its manufacturing advantage to the USA and Germany: testimony to this was the influence of the Tariff Reform League, formed in 1903 under the leadership of the charismatic politician Joseph Chamberlain.50 The era of free trade ended when Britain finally acknowledged that it had lost its manufacturing eminence and re-introduced tariffs on a large scale in 1932.51 2.2.2.

Singh, A, 1994, "Openness' and the 'Market-friendly' Approach to Development: Learning the Right Lessons from Development Experience', World Development, vol. 22, no. 12. 1997, 'Financial Liberalisation, the Stockmarket and Economic Development', Economic Journal, vol. 107, no. 442. Singh, A and Dhumale, R, 1999, 'Competition Policy, Development, and Developing Countries', T.R.A.D.E. Working Paper, no. 7, Geneva, South Centre. Smith, A, 1937 [1776], An Inquiry into the Nature and Causes of the Wealth of Nations, edited with an introduction, notes, marginal summary and an enlarged index by Edwin Cannan, with an introduction by Max Lerner, originally published in 1776, New York, Random House. Smith, T , 1955, Political Change and Industrial Development in Japan: Government Enterprise, 1868-1880, Stanford, Stanford University Press.

Any nation which by means of protective duties and restrictions on navigation has raised her manufacturing power and her navigation to such a degree of development that no other nation can sustain free competition with her, can do nothing wiser than to throw away these ladders of her greatness, to preach to other nations the benefits of free trade, and to declare in penitent tones that she has hitherto wandered in the paths of error, and has now for the first time succeeded in discovering the truth, [my italics] As for the USA, List points out that the country had previously been misjudged by the great economic theorists Adam Smith and Jean Baptiste Say as being 'like Poland', namely, destined to rely on agriculture.10 Indeed, Adam Smith in his Wealth of Nations sternly warned the Americans against any attempt at infant industry promotion: Were the Americans, either by combination or by any other sort of violence, to stop the importation of European manufactures, and, by thus giving a monopoly to such of their own countrymen as could manufacture the like goods, divert any considerable part of their capital into this employment, they would retard instead of accelerating the further increase in the value of their annual produce, and would obstruct instead of promoting the progress of their country towards real wealth and greatness.11 Two generations later, when List was writing his book, many Europeans still shared Smith's view.


pages: 276 words: 59,165

Impact: Reshaping Capitalism to Drive Real Change by Ronald Cohen

"World Economic Forum" Davos, asset allocation, benefit corporation, biodiversity loss, carbon footprint, carbon tax, circular economy, commoditize, corporate governance, corporate social responsibility, crowdsourcing, decarbonisation, diversification, driverless car, Elon Musk, family office, financial independence, financial innovation, full employment, high net worth, housing crisis, impact investing, income inequality, invisible hand, Kickstarter, lockdown, Mark Zuckerberg, microbiome, minimum viable product, moral hazard, performance metric, risk-adjusted returns, risk/return, Silicon Valley, sovereign wealth fund, Steve Ballmer, Steve Jobs, tech worker, TED Talk, The Wealth of Nations by Adam Smith, transaction costs, zero-sum game

As Rousseau was launching his political ideas on the world, Adam Smith introduced the theory of the ‘invisible hand of markets’ in The Wealth of Nations. In his view, ‘the invisible hand’– a metaphor for individuals acting in their own self-interest within a free market economy – created an equilibrium between the supply and demand for goods, which was in everyone’s best interest. His thinking has dominated the economic narrative ever since. In actual fact, Adam Smith was prouder of the ideas in The Theory of Moral Sentiments, published 17 years before The Wealth of Nations in 1759. In this earlier work, he sought to provide the moral and ethical foundation for human behavior, postulating that, ‘How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.’

And much is at stake – billions of people’s lives depend on the success of the Impact Revolution. There has never been a more tangible opportunity to make a transformative difference, and each of us has a significant role to play in making it happen. The economist Adam Smith famously introduced the ‘invisible hand of markets’ in The Wealth of Nations at the end of the eighteenth century, to describe how everyone’s striving for profit results in everyone’s best interests. His first book, The Theory of Moral Sentiments, was about the ability of humans to act out of empathy and altruism. Had he known that we would be measuring impact in the twenty-first century, he might well have combined his two books into one, and written about impact as the invisible heart of markets that guides their invisible hand.

It is this that constitutes the ‘invisible heart of markets’. As I wrote in this book’s introduction, had Smith thought that we could measure what we now call impact, he might have merged the two works and described a single economic system, in which the invisible heart of markets guides their invisible hand. The new ideas brought by The Wealth of Nations helped shift our economic system from mercantilism (which held that countries should use trade and the accumulation of gold to make themselves more powerful), to laissez-faire (the idea that state intervention in economic activity is ill-advised), which prevailed until the 1930s. After the Great Depression, this gave way to John Maynard Keynes’s new thinking about a ‘managed economy’, where the state assumes responsibility for altering public expenditure, interest rates and taxation to maintain full employment.


pages: 446 words: 578

The end of history and the last man by Francis Fukuyama

affirmative action, anti-communist, Ayatollah Khomeini, Berlin Wall, Bonfire of the Vanities, business cycle, centre right, classic study, cuban missile crisis, deindustrialization, Deng Xiaoping, Donald Trump, European colonialism, Exxon Valdez, F. W. de Klerk, Fall of the Berlin Wall, Francis Fukuyama: the end of history, full employment, Gini coefficient, Great Leap Forward, Gunnar Myrdal, Herbert Marcuse, Hernando de Soto, income inequality, Isaac Newton, Joan Didion, joint-stock company, Joseph Schumpeter, kremlinology, land reform, liberal world order, liberation theology, life extension, linear programming, long peace, means of production, Michael Milken, Mikhail Gorbachev, Nelson Mandela, New Journalism, nuclear winter, old-boy network, open economy, post-industrial society, RAND corporation, Ronald Reagan, Socratic dialogue, Strategic Defense Initiative, strikebreaker, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, zero-sum game

Marx’s vision of an industrial world where workers were mere appendages to their machines has not, by and large, been fulfilled. 15 The proliferation of new, increasingly specialized tasks in turn suggest new applications for technology in the production process. Adam Smith points out in the Wealth of Nations how concentration on a single, simple task frequently suggests new possibilities for machine production that would have escaped the attention of a craftsman dissipating his attention on a variety of tasks; hence the division of labor frequently leads to the creation of new technology, as well as the reverse. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, vol. 1 (Oxford: Oxford University Press, 1976), pp. 19-20. 16 Charles Lindblom points out how, as of the late 1970s, half of the American population worked in private-sector bureaucracies, while another thirteen million Americans worked for federal, state, or local government.

And yet, while the most successful modern economies may be capitalist, not all capitalist economies are successful—or, at any rate, as successful as others. Just as there are sharp distinctions between the ability of formally democratic countries to sustain democracy, so there are equally sharp differences between the ability of formally capitalist economies to grow. It was the view of Adam Smith that the chief source of the differences in the wealth of nations was the wisdom or foolishness of government policies, and that human economic behavior, once free from the constraints of bad policy, was more or less universal. Many of the differences in performance between capitalist economies can in fact be traced to differences in government policy.

Interest Groups in Soviet Politics. Princeton University Press, Princeton, NJ. Skocpol, Theda. 1977. “Wallerstein’s World Capitalist System: A Theoretical and Historical Critique.” American Journal of Sociology 82 (March): 1075-1090. Smith, Adam. 1976. An Inquiry into the Nature and Causes of the Wealth of Nations, 2 vols., Oxford University Press, Oxford. Smith, Adam. 1982. The Theory of Moral Sentiments. Liberty Classics, Indianapolis. Smith, Steven B. 1983. “Hegel’s Views on War, the State, and International Relations.” American Political Science Review 77, no. 3 (September): 624-632. Smith, Steven B. 1989a.


pages: 411 words: 80,925

What's Mine Is Yours: How Collaborative Consumption Is Changing the Way We Live by Rachel Botsman, Roo Rogers

"World Economic Forum" Davos, Abraham Maslow, Airbnb, Apollo 13, barriers to entry, behavioural economics, Bernie Madoff, bike sharing, Buckminster Fuller, business logic, buy and hold, carbon footprint, Cass Sunstein, collaborative consumption, collaborative economy, commoditize, Community Supported Agriculture, credit crunch, crowdsourcing, dematerialisation, disintermediation, en.wikipedia.org, experimental economics, Ford Model T, Garrett Hardin, George Akerlof, global village, hedonic treadmill, Hugh Fearnley-Whittingstall, information retrieval, intentional community, iterative process, Kevin Kelly, Kickstarter, late fees, Mark Zuckerberg, market design, Menlo Park, Network effects, new economy, new new economy, out of africa, Paradox of Choice, Parkinson's law, peer-to-peer, peer-to-peer lending, peer-to-peer rental, planned obsolescence, Ponzi scheme, pre–internet, public intellectual, recommendation engine, RFID, Richard Stallman, ride hailing / ride sharing, Robert Shiller, Ronald Coase, Search for Extraterrestrial Intelligence, SETI@home, Simon Kuznets, Skype, slashdot, smart grid, South of Market, San Francisco, Stewart Brand, systems thinking, TED Talk, the long tail, The Nature of the Firm, The Spirit Level, the strength of weak ties, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thorstein Veblen, Torches of Freedom, Tragedy of the Commons, transaction costs, traveling salesman, ultimatum game, Victor Gruen, web of trust, women in the workforce, work culture , Yochai Benkler, Zipcar

This lack of the most basic resources and the consequent poverty also confronted Adam Smith more than three hundred years ago. Smith, the great Scottish economist, sought a way out of the agrarian squalor of the eighteenth century. He believed a more productive society would lead to a wealthier society. In The Wealth of Nations, Smith argued that humans are motivated by self-interest and “self-love,” and that the exploitation of this trait leads to greater wealth for all and a more effective distribution of labor.1 Looking back, one can understand why Adam Smith wanted to figure how to get the economy to produce more.

Jonathan Haidt, The Happiness Hypothesis: Finding Modern Truth in Ancient Wisdom (Basic Books, 2006), 101. 46. Jon Mooallem, “The Self-Storage Self,” New York Times (September 2, 2009), http://www.nytimes.com/2009/09/06/magazine/06self-storage-t.html?pagewanted=1. 47. Lawson, All Consuming, 11. 1. Adam Smith, The Wealth of Nations (W. Strahan and T. Cadell, London, 1776). 2. “18th Century London—Its Daily Life and Hazards Canadian Content,” http://forums.canadiancontent.net/history/48176-18th-century-london-its-daily.html. 3. David Korten, When Corporations Rule the World (Berrett-Koehler Publishers, 1995), http://deoxy.org/korten_betrayal.htm. 4.

In When Corporations Rule the World, David C. Korten writes, “Smith did not advocate a market system based on unrestrained greed. He was talking about small farmers and artisans trying to get the best price for their products to provide for themselves and their families. That is self-interest—but it is not greed.”3 Adam Smith and later Milton Friedman both believed that an individual pursuing his own self-interest promotes the good of society as a whole. In Chapter Two, we saw how in just a few generations, this concept was transformed from a relatively healthy narrative of technological ingenuity to a frenetic quest for personal identity through brands, products, and services, before finally becoming an extreme system of insatiable consumerism.


pages: 801 words: 209,348

Americana: A 400-Year History of American Capitalism by Bhu Srinivasan

activist fund / activist shareholder / activist investor, American ideology, AOL-Time Warner, Apple II, Apple's 1984 Super Bowl advert, bank run, barriers to entry, Bear Stearns, Benchmark Capital, Berlin Wall, blue-collar work, Bob Noyce, Bonfire of the Vanities, British Empire, business cycle, buy and hold, California gold rush, Carl Icahn, Charles Lindbergh, collective bargaining, commoditize, Cornelius Vanderbilt, corporate raider, cotton gin, cuban missile crisis, Deng Xiaoping, diversification, diversified portfolio, Douglas Engelbart, Fairchild Semiconductor, financial innovation, fixed income, Ford Model T, Ford paid five dollars a day, global supply chain, Gordon Gekko, guns versus butter model, Haight Ashbury, hypertext link, Ida Tarbell, income inequality, information security, invisible hand, James Watt: steam engine, Jane Jacobs, Jeff Bezos, John Markoff, joint-stock company, joint-stock limited liability company, junk bonds, Kickstarter, laissez-faire capitalism, Louis Pasteur, Marc Andreessen, Menlo Park, Michael Milken, military-industrial complex, mortgage debt, mutually assured destruction, Norman Mailer, oil rush, peer-to-peer, pets.com, popular electronics, profit motive, punch-card reader, race to the bottom, refrigerator car, risk/return, Ronald Reagan, Sand Hill Road, self-driving car, shareholder value, side project, Silicon Valley, Silicon Valley startup, Steve Ballmer, Steve Jobs, Steve Wozniak, strikebreaker, Ted Nelson, The Death and Life of Great American Cities, the new new thing, The Predators' Ball, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, trade route, transcontinental railway, traveling salesman, Upton Sinclair, Vannevar Bush, Works Progress Administration, zero-sum game

• • • THE FATHER, WILL CARNEGIE, died soon after. He wouldn’t live long enough to see his son go beyond the telegraph office. But young Andrew Carnegie was in full possession of the entrepreneurial genius that had eluded Samuel Morse—he was exactly the type of “philosopher” vital to the wealth of nations of whom his fellow Scotsman, Adam Smith, had once written. Nine GOLD Their indictment was clear. “The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together,” wrote Marx and Engels in 1848.

Chapter 4: Cotton for the steam: James Watt, Specification of James Watt: Steam Engines (London: G. E. Eyre, 1855), 2–7. valued for millennia: Sven Beckert, Empire of Cotton: A Global History (New York: Alfred A. Knopf, 2014), 5. new ways replaced old: Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, vol. 1 (1776; repr., Indianapolis, IN: Liberty Fund, 1981), 18–20. home to South Carolina: “Notes of Catharine Greene,” quoted in Edward T. James et al., Notable American Women, 1607–1950: A Biographical Dictionary, vol. 3 (Boston: Harvard University Press, 1971), 85–86.

In 1982, when we had finally saved enough for a refrigerator, it was delivered by oxcart—an indignity that I felt even as a child, especially because I had waited and hoped for some time to see a delivery truck. But we didn’t need to endure this imbalance for long, this lack of purchasing power stemming from being on the wrong side of the wealth of nations. With the proper application of ambition, my mother could convert her education into a global currency, regardless of how illiquid it was in India. Ambition in this case meant the willingness to leave behind one’s homeland, culture, family, and large parts of self-identity. This has always been the immigrant’s price of admission.


Americana by Bhu Srinivasan

activist fund / activist shareholder / activist investor, American ideology, AOL-Time Warner, Apple II, Apple's 1984 Super Bowl advert, bank run, barriers to entry, Bear Stearns, Benchmark Capital, Berlin Wall, blue-collar work, Bob Noyce, Bonfire of the Vanities, British Empire, business cycle, buy and hold, California gold rush, Carl Icahn, Charles Lindbergh, collective bargaining, commoditize, Cornelius Vanderbilt, corporate raider, cotton gin, cuban missile crisis, Deng Xiaoping, diversification, diversified portfolio, Douglas Engelbart, Fairchild Semiconductor, financial innovation, fixed income, Ford Model T, Ford paid five dollars a day, global supply chain, Gordon Gekko, guns versus butter model, Haight Ashbury, hypertext link, Ida Tarbell, income inequality, information security, invisible hand, James Watt: steam engine, Jane Jacobs, Jeff Bezos, John Markoff, joint-stock company, joint-stock limited liability company, junk bonds, Kickstarter, laissez-faire capitalism, Louis Pasteur, Marc Andreessen, Menlo Park, Michael Milken, military-industrial complex, mortgage debt, mutually assured destruction, Norman Mailer, oil rush, peer-to-peer, pets.com, popular electronics, profit motive, punch-card reader, race to the bottom, refrigerator car, risk/return, Ronald Reagan, Sand Hill Road, self-driving car, shareholder value, side project, Silicon Valley, Silicon Valley startup, Steve Ballmer, Steve Jobs, Steve Wozniak, strikebreaker, Ted Nelson, The Death and Life of Great American Cities, the new new thing, The Predators' Ball, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, trade route, transcontinental railway, traveling salesman, Upton Sinclair, Vannevar Bush, Works Progress Administration, zero-sum game

• • • THE FATHER, WILL CARNEGIE, died soon after. He wouldn’t live long enough to see his son go beyond the telegraph office. But young Andrew Carnegie was in full possession of the entrepreneurial genius that had eluded Samuel Morse—he was exactly the type of “philosopher” vital to the wealth of nations of whom his fellow Scotsman, Adam Smith, had once written. Nine GOLD Their indictment was clear. “The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together,” wrote Marx and Engels in 1848.

Chapter 4: Cotton for the steam: James Watt, Specification of James Watt: Steam Engines (London: G. E. Eyre, 1855), 2–7. valued for millennia: Sven Beckert, Empire of Cotton: A Global History (New York: Alfred A. Knopf, 2014), 5. new ways replaced old: Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, vol. 1 (1776; repr., Indianapolis, IN: Liberty Fund, 1981), 18–20. home to South Carolina: “Notes of Catharine Greene,” quoted in Edward T. James et al., Notable American Women, 1607–1950: A Biographical Dictionary, vol. 3 (Boston: Harvard University Press, 1971), 85–86.

In 1982, when we had finally saved enough for a refrigerator, it was delivered by oxcart—an indignity that I felt even as a child, especially because I had waited and hoped for some time to see a delivery truck. But we didn’t need to endure this imbalance for long, this lack of purchasing power stemming from being on the wrong side of the wealth of nations. With the proper application of ambition, my mother could convert her education into a global currency, regardless of how illiquid it was in India. Ambition in this case meant the willingness to leave behind one’s homeland, culture, family, and large parts of self-identity. This has always been the immigrant’s price of admission.


Small Change: Why Business Won't Save the World by Michael Edwards

"Friedman doctrine" OR "shareholder theory", Bernie Madoff, clean water, corporate governance, corporate social responsibility, different worldview, high net worth, invisible hand, knowledge economy, Larry Ellison, light touch regulation, Mahatma Gandhi, Mark Shuttleworth, market bubble, microcredit, Nelson Mandela, New Journalism, One Laptop per Child (OLPC), Ponzi scheme, profit motive, public intellectual, Robert Shiller, shareholder value, Silicon Valley, Silicon Valley startup, Social Responsibility of Business Is to Increase Its Profits, subprime mortgage crisis, The Fortune at the Bottom of the Pyramid, The Spirit Level, The Wealth of Nations by Adam Smith, transaction costs

After all, markets were designed to facilitate the exchange of goods and services under a limited definition of efficiency that had little to do with moral or social goals. Yet the broader effects of capitalism have animated debates in all societies at least since Adam Smith, who was so agitated by this question that he wrote two different books in search of a single answer. One of them changed the world, and the other, sadly, has all but been forgotten. The Wealth of Nations describes how economic forces will produce the greatest common good under conditions of perfect liberty and competition, maximizing the efficient allocation of productive resources and bringing the economy into equilibrium — “the ideal balance between buyers and sellers, and firms and workers, such that rates of return to a resource in various uses will be equal.”1 The “invisible hand” makes only one 63 64 small change appearance in the 1,264 pages of my edition (it’s on page 572), perhaps because Smith didn’t believe that social welfare would be maximized through the uncoordinated (i.e., “invisible”) actions of self-interested individuals.

James, The Selfish Capitalist (London: Vermilion, 2007). 51. D. Callahan, “The Moral Market,” Democracy Journal (Summer 2009): 49–59. 52. R. Wilkinson and K. Pickett, The Spirit Level: Why More Equal Societies Almost Always Do Better (London: Allen Lane, 2009). chapter 4 1. From Alan Krueger’s introduction to the Bantam edition of The Wealth of Nations (New York, 2003). 2. ReasonOnline, “Rethinking the Social Responsibility of Business: A Reason Debate Featuring Milton Friedman, John Mackey and T. J. Rodgers,” http://www.reason.com/news/show/32239.html. 116 small change 3. J. Speth, The Bridge at the Edge of the World: Capitalism, the Environment, and Crossing from Crisis to Sustainability (New Haven: Yale University Press, 2008). 4.

Following our own self-interest to secure the basic necessities is only the first step toward the higher goal of achieving a virtuous life, attained by actualizing our capacity for what Smith called “benevolence.” Yet he was unable to integrate these two books into one coherent philosophy, sparking a conversation between efficiency and welfare that continues still today. Will philanthrocapitalism finally resolve Adam Smith’s dilemma? In conventional market thinking, “the social responsibility of business is to increase its profits,” as Milton Friedman famously declared almost forty years ago in the pages of the New York Times. That is because the invisible hand is supposed “to be beneficial for the people it orders,” maximizing social welfare as a by-product of self-interested but unconscious interactions, with some light regulation to ensure that business operates inside a framework of agreed-upon social rules.2 One of the virtues the high cost of mission drift 65 of markets is that, at least in theory, they can ensure that each resource is used where returns are highest and is combined with other resources in the most efficient way, even though producers and consumers do not coordinate their decisions.


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The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World by Jeremy Rifkin

3D printing, additive manufacturing, Albert Einstein, American ideology, An Inconvenient Truth, barriers to entry, behavioural economics, bike sharing, borderless world, carbon footprint, centre right, clean tech, collaborative consumption, collaborative economy, Community Supported Agriculture, corporate governance, decarbonisation, deep learning, distributed generation, electricity market, en.wikipedia.org, energy security, energy transition, Ford Model T, global supply chain, Great Leap Forward, high-speed rail, hydrogen economy, income inequality, industrial cluster, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, job automation, knowledge economy, manufacturing employment, marginal employment, Martin Wolf, Masdar, megacity, Mikhail Gorbachev, new economy, off grid, off-the-grid, oil shale / tar sands, oil shock, open borders, peak oil, Ponzi scheme, post-oil, purchasing power parity, Ray Kurzweil, rewilding, Robert Solow, Ronald Reagan, scientific management, scientific worldview, Silicon Valley, Simon Kuznets, Skype, smart grid, smart meter, Spread Networks laid a new fibre optics cable between New York and Chicago, supply-chain management, systems thinking, tech billionaire, the market place, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, transaction costs, trickle-down economics, urban planning, urban renewal, Yom Kippur War, Zipcar

Ray Canterbery notes that taking on the likes of Adam Smith becomes increasingly daunting because he rides on the coattails of the great Sir Isaac Newton. He writes, “From time to time, a cluster of economists consider conventional economics ripe for revolution, but any economic revolutionaries will have to go to the barricades against the genius of Isaac Newton as well as against Adam Smith and his long line of followers.”6 Now however, for the first time, the many cracks in the theoretical foundations of the discipline are threatening to tumble the edifice of classical economic theory. THE WEALTH OF NATIONS The fault line that runs through all of classical economic theory is the fundamental misunderstanding of the nature of wealth.

The trout, in turn, must consume 90,000 frogs, which must consume 27 million grasshoppers, which live off of 1,000 tons of grass.”10 Now, let’s look at the thermodynamic consequences of converting nature’s resources into food for human consumption in a complex, industrial civilization and what it portends for how we perceive the wealth of nations. Consider the energy that goes into a beefsteak: 1.It takes nine pounds of feed grain to make one pound of steak.11 This means that only 11 percent of the feed goes to produce the beef itself, with the rest either burned off as energy in the conversion process, used to maintain normal body functions, or extracted or absorbed into parts of the body that are not eaten—like hair or bones.

We might look back fifty years from now and say the same thing about the Third Industrial Revolution technologies and the new economic theory that is likely to accompany them. PART III THE COLLABORATIVE AGE CHAPTER SEVEN RETIRING ADAM SMITH The dawn of the market era and the onset of the First Industrial Revolution in the late eighteenth century brought with it a new academic field called economics. In their attempts to understand the new forces let loose by coal-powered steam technology and factory production, the founding fathers of the new discipline—Adam Smith, Jean-Baptiste Say, and the like—looked to the new field of physics for a set of guiding principles and metaphors to fashion their own theories of the workings of the marketplace.


Masters of Mankind by Noam Chomsky

affirmative action, Alan Greenspan, American Legislative Exchange Council, Berlin Wall, failed state, God and Mammon, high-speed rail, income inequality, Intergovernmental Panel on Climate Change (IPCC), land bank, land reform, Martin Wolf, means of production, military-industrial complex, Nelson Mandela, nuremberg principles, offshore financial centre, oil shale / tar sands, Paul Samuelson, plutocrats, profit maximization, Ralph Waldo Emerson, scientific management, Silicon Valley, the scientific method, The Wealth of Nations by Adam Smith, too big to fail, union organizing, urban renewal, War on Poverty, Washington Consensus, Westphalian system

Throughout the world, indigenous societies are struggling to protect what they sometimes call “the rights of nature,” while the civilized and sophisticated scoff at this silliness. All exactly the opposite of what rationality would predict—unless it is the skewed form of reason that passes through the distorting filter of RECD. * Inaugural Lecture delivered at University College Dublin Philosophy Society, April 2, 2013. Notes Epigraph 1. Adam Smith, The Wealth of Nations (Oxford: Clarendon Press, 1976), Book III, chapter 4, p. 418. Foreword by Marcus Raskin 1. Noam Chomsky, “The Responsibility of Intellectuals,” in The Essential Chomsky, ed. Anthony Arnove (New York: The New Press, 2008), p. 40. 2. Noam Chomsky, On Power and Ideology: The Managua Lectures (Boston: South End Press, 1987), p. 140.

All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind. As soon, therefore, as they could find a method of consuming the whole value of their rents themselves, they had no disposition to share them with any other persons.” —Adam Smith, The Wealth of Nations1 Foreword by Marcus Raskin Noam Chomsky’s political activities and his understanding of the nature of language capacity may be described metaphorically as an unbroken band labeled universality. But his universality is no mystification aimed at masking truths and marginalizing truthful inquiries, nor is it the belief that all of public life must be the same everywhere.

It does not matter whether these leaders are elected or appointed, or hold their office through blood or advantage of wealth or even as the result of some level of educational attainment useful to a ruling elite. He is aware that oligarchs do not rule as trustees for others, but for themselves. They have in mind the destruction of democracy if it ever proves to be more than a rhetorical fig leaf, when it means the redistribution of economic and political power along the ideological lines of Adam Smith and Tom Paine, or when it means the renunciation of imperialism. There is a direct line between the antidemocratic elites and the establishment of secret organizations such as the CIA, which know and do things that a democracy would not begin to understand or countenance—until the democracy is deadened through propaganda.


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Who's Your City?: How the Creative Economy Is Making Where to Live the Most Important Decision of Your Life by Richard Florida

Abraham Maslow, active measures, assortative mating, back-to-the-city movement, barriers to entry, big-box store, blue-collar work, borderless world, BRICs, business climate, Celebration, Florida, correlation coefficient, creative destruction, dark matter, David Brooks, David Ricardo: comparative advantage, deindustrialization, demographic transition, edge city, Edward Glaeser, epigenetics, extreme commuting, financial engineering, gentrification, Geoffrey West, Santa Fe Institute, happiness index / gross national happiness, high net worth, income inequality, industrial cluster, invention of the telegraph, Jane Jacobs, job satisfaction, Joseph Schumpeter, knowledge economy, knowledge worker, low skilled workers, megacity, new economy, New Urbanism, Peter Calthorpe, place-making, post-work, power law, Richard Florida, risk tolerance, Robert Gordon, Robert Shiller, Seaside, Florida, Silicon Valley, Silicon Valley startup, superstar cities, The Death and Life of Great American Cities, the strength of weak ties, The Wealth of Nations by Adam Smith, Thomas L Friedman, Tyler Cowen, urban planning, World Values Survey, young professional

The classical economists Adam Smith and David Ricardo both argued that nation-states are the geographic engines behind economic growth. As Ricardo famously theorized, discretely defined countries have incentive to specialize in different kinds of industries, which would allow them to gain and maintain “comparative advantage” over others.1 The first person to see this was the great urbanist Jane Jacobs, who is best known for her scathing critique of urban planning, The Death and Life of Great American Cities, and two other very important books, The Economy of Cities and Cities and the Wealth of Nations.2 In The Economy of Cities (1969) Jacobs refutes the long-standing theory that cities emerged only after agriculture had become sufficiently productive to create a surplus beyond what was needed to survive.

These organized geographic production systems and markets, where human beings and talents cluster, Lucas argues, offer social and economic advantages that other places simply can’t. Their benefits in terms of innovation and productivity far outweigh the higher costs of living and doing business there. Jane Said The study of economic growth is an arcane field that until recently has paid little attention to the importance of location. In 1776 Adam Smith published The Wealth of Nations, which argued that specialization, efficiency, and division of labor are the cornerstones of modern economic growth.2 Later, David Ricardo’s theory of comparative advantage argued that not just firms but countries gain advantage by specializing in certain kinds of economic activity.3 The far-seeing urbanist Jane Jacobs agrees that specialization has its uses, but she focuses on an even more fundamental source of economic growth—what she terms expansion.

For more on this methodology, see Florida, Gulden, and Mellander, “Rise of the Mega-region.” 8 “The Texas Triangle as Megalopolis,” Federal Reserve Bank of Dallas, Houston Branch, April 2004, www.dallasfed.org/research/houston/2004/hb0403.html. 9 On Montreal, see Kevin Stolarick and Richard Florida, “Creativity, Connections, and Innovation: A Study of Linkages in the Montréal Region,” Environment and Planning A, 38, 10, 2006, pp. 1799-1817. 10 Dominic Wilson and Roopa Purushothaman, “Dreaming with BRICs: The Path to 2050,” Global Economics Paper no. 99, Goldman Sachs, October 1, 2003. Chapter 4 1 Robert Lucas, “On the Mechanics of Economic Development,” Journal of Monetary Economics 22, 1988, pp. 3-42. 2 Adam Smith, The Wealth of Nations, Bantam, 2003 (1st ed., 1776). 3 David Ricardo, Principles of Political Economy and Taxation, Cosimo Classics, 2006 (1st ed., 1817). 4 Joseph Schumpeter, Theory of Economic Development, Harvard University Press, 1934 (1st ed., 1911); Schumpeter, Capitalism, Socialism, and Democracy, Harper, 1975 (1st ed., 1942).


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Fool Me Twice: Fighting the Assault on Science in America by Shawn Lawrence Otto

affirmative action, Albert Einstein, An Inconvenient Truth, anthropic principle, Apollo 11, Berlin Wall, biodiversity loss, Brownian motion, carbon footprint, carbon tax, Cepheid variable, clean water, Climategate, Climatic Research Unit, cognitive dissonance, Columbine, commoditize, cosmological constant, crowdsourcing, cuban missile crisis, Dean Kamen, desegregation, different worldview, disinformation, double helix, Dr. Strangelove, energy security, Exxon Valdez, fudge factor, Garrett Hardin, ghettoisation, global pandemic, Great Leap Forward, Gregor Mendel, Harlow Shapley and Heber Curtis, Harvard Computers: women astronomers, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Large Hadron Collider, Louis Pasteur, luminiferous ether, military-industrial complex, mutually assured destruction, Neil Armstrong, ocean acidification, Richard Feynman, Ronald Reagan, Saturday Night Live, shareholder value, sharing economy, smart grid, stem cell, synthetic biology, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Tragedy of the Commons, transaction costs, University of East Anglia, War on Poverty, white flight, Winter of Discontent, working poor, yellow journalism, zero-sum game

The dilemma suggests that politicians are paralyzed by a fundamental conflict between the environment and the economy that arises from the deeply held, mistaken belief that freedom and regulation are incompatible. Hardin’s paper was remarkable because it offered such a sound rebuttal to the ideas of the Scottish economist Adam Smith, whose collaborator and mentor was David Hume. In 1776 Smith argued in The Wealth of Nations that in a shared economy, an individual, who “intends only his own gain,” was in effect “led by an invisible hand” to promote the greater public interest, since willing buyers and willing sellers will always arrive at a natural price for things, and the highest value and efficiency will be obtained.

CHAPTER 11. FREEDOM AND THE COMMONS 1. US Department of Defense. Quadrennial Defense Review Report, February 2010. www.defense.gov/qdr/images/QDR_as_of_12Feb10_1000.pdf. 2. Smith, A. An Inquiry into the Nature and Causes of the Wealth of Nations. Ed. J. Manis. Electronic Classics Series. Hazleton, PA: Pennsylvania State University, n.d. www2.hn.psu.edu/faculty/jmanis/adam-smith/Wealth-Nations.pdf. 3. Hardin, G. The Tragedy of the Commons. Science 1968;162(3859):1243–1248. www.sciencemag.org/content/162/3859/1243.full. 4. Rand, A. The Virtue of Selfishness. New York: Signet, 1964. 5. Hume, D.

Conservation Group Petitions the United States Government to List the Polar Bear as a Threatened Species Under the Endangered Species Act. Center for Biological Diversity, February 16, 2005. www.biologicaldiversity.org/news/press_releases/polarbear2-16-05.html. [news release] Smith, A. An Inquiry into the Nature and Causes of the Wealth of Nations. Ed. J. Manis. Electronic Classics Series. Hazleton, PA: Pennsylvania State University, n.d. www2.hn.psu.edu/faculty/jmanis/adam-smith/Wealth-Nations.pdf. Smith, P., et al. Children Who Have Received No Vaccines: Who Are They and Where Do They Live? Pediatrics 2004;114(1):187–195. http://pediatrics.aappublications.org/cgi/content/full/114/1/187. Snow, C.


Profit Over People: Neoliberalism and Global Order by Noam Chomsky

Alan Greenspan, Bernie Sanders, Bretton Woods, classic study, declining real wages, deindustrialization, full employment, invisible hand, Jim Simons, joint-stock company, land reform, liberal capitalism, manufacturing employment, means of production, Monroe Doctrine, Nixon triggered the end of the Bretton Woods system, public intellectual, Ronald Reagan, strikebreaker, structural adjustment programs, Telecommunications Act of 1996, The Wealth of Nations by Adam Smith, Thomas Malthus, union organizing, Washington Consensus

Whether accurate or not, this description serves to remind us that the governing institutions are not independent agents but reflect the distribution of power in the larger society. That has been a truism at least since Adam Smith, who pointed out that the “principal architects” of policy in England were “merchants and manufacturers” who used state power to serve their own interests, however “grievous” the effect on others, including the people of England. Smith’s concern was “the wealth of nations,” but he understood that the “national interest” is largely a delusion: within the “nation” there are sharply conflicting interests, and to understand policy and its effects we have to ask where power lies and how it is exercised, what later came to be called class analysis.

My comments on the Madisonian roots of the prevailing concepts of democracy were unfair in an important respect. Like Adam Smith and other founders of classical liberalism, Madison was precapitalist, and anticapitalist in spirit. He expected that the rulers would be “enlightened Statesmen” and “benevolent philosophers,” “whose wisdom may best discern the true interests of their country.” They would “refine” and “enlarge” the “public views,” guarding the true interests of the country against the “mischiefs” of democratic majorities, but with enlightenment and benevolence. Madison soon learned differently, as the “opulent minority” proceeded to use their newfound power as much as Adam Smith had predicted a few years earlier.

The issues are of great human significance and not very well understood. To deal with them sensibly, we have to begin by separating doctrine from reality. We often discover a considerable gap. The term “neoliberalism” suggests a system of principles that is both new and based on classical liberal ideas: Adam Smith is revered as the patron saint. The doctrinal system is also known as the “Washington consensus,” which suggests something about global order. A closer look shows that the suggestion about global order is fairly accurate, but not the rest. The doctrines are not new, and the basic assumptions are far from those that have animated the liberal tradition since the Enlightenment.


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No Such Thing as a Free Gift: The Gates Foundation and the Price of Philanthropy by Linsey McGoey

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, agricultural Revolution, American Legislative Exchange Council, Bear Stearns, bitcoin, Bob Geldof, cashless society, clean water, cognitive dissonance, collapse of Lehman Brothers, colonial rule, corporate governance, corporate social responsibility, crony capitalism, effective altruism, Etonian, Evgeny Morozov, financial innovation, Food sovereignty, Ford paid five dollars a day, germ theory of disease, hiring and firing, Howard Zinn, Ida Tarbell, impact investing, income inequality, income per capita, invisible hand, Jane Jacobs, John Elkington, Joseph Schumpeter, Leo Hollis, liquidationism / Banker’s doctrine / the Treasury view, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, meta-analysis, Michael Milken, microcredit, Mitch Kapor, Mont Pelerin Society, Naomi Klein, Neil Armstrong, obamacare, Peter Singer: altruism, Peter Thiel, plutocrats, price mechanism, profit motive, public intellectual, Ralph Waldo Emerson, rent-seeking, road to serfdom, Ronald Reagan, school choice, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, Slavoj Žižek, Steve Jobs, strikebreaker, subprime mortgage crisis, tacit knowledge, technological solutionism, TED Talk, The Wealth of Nations by Adam Smith, Thorstein Veblen, trickle-down economics, urban planning, W. E. B. Du Bois, wealth creators

In fact, it’s a widely held belief, impressed on generations of scholars from at least the eighteenth century onwards, when a convenient reading of Adam Smith helped to propagate the idea that patents are fundamentally economic devices: an integral feature of laissez-faire economies. But patents are not market devices. They are the opposite. They are a government-sanctioned monopoly permitting exclusive sales of a product for a limited period of time, protected by courts of law. In The Wealth of Nations, Smith suggested that, in instances where individuals take huge financial risks to come up with a new invention, it was not unreasonable for a government to grant a ‘monopoly of the trade for a certain number of years’.

, Proceedings of the American Philosophical Society, vol. 149, no. 2 (2005), 126; see also Paul Schervish, ‘The Spiritual Horizons of Philanthropy: New Directions for Money and Motives,’ New Directions for Philanthropic Fundraising, vol. 29 (2000), 17–32. 26Edwards is one of the rare few who have pointed out the relevance of Smith to Bishop and Green’s notion. See Edwards, Small Change. 27Adam Smith, The Wealth of Nations, Books 1–3 (Harmondsworth: Penguin, 1982 [1776]), 292. 28Felix Salmon, ‘Philanthropy Can’t be Outsourced to the Profit Motive’, Reuters, 16 June 2011, at blogs.reuters.com. 29Slavoj Žižek, ‘The Liberal Communists of Porto Davos’, In These Times, 11 April 2006. 30Ray Madoff, ‘5 Myths About Payout Rules for Donor-Advised Funds,’ The Chronicle of Philanthropy, 13 January 2014. 31David Moore and Douglas Rutzen, ‘Legal Framework for Global Philanthropy: Barriers and Opportunities’, The International Journal of Not-for-Profit Law, vol. 13, no. 1–2 (2011), icnl.org. 32Emmanuel Saez, ‘Striking it Richer: The Evolution of Top Incomes in the United States’ (2012), at eml.berkeley.edu.

Criticizing the purported novelty of the notion of philanthrocapitalism, Salmon points out that the ‘realization that business has the capacity to create as well as destroy social value is known as “economics”, and goes back at least as far as Adam Smith. There’s nothing new about it, and nor is there anything new about economists using this insight to assuage the guilt of the rich’.28 The philosopher Slavoj Žižek has also noted the strange déjà vu that pervades the rhetoric of philanthrocapitalism enthusiasts, suggesting that their maxims are like a ‘postmodernized version of Adam Smith’s invisible hand: the market and social responsibility are not opposites, but can be reunited for mutual benefit … their goal is not to earn money, but to change the world (and as a by-product, make even more money)’.29 Both Salmon and Žižek make witty and persuasive points.


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Prosperity Without Growth: Foundations for the Economy of Tomorrow by Tim Jackson

"World Economic Forum" Davos, Alan Greenspan, bank run, banking crisis, banks create money, Basel III, basic income, biodiversity loss, bonus culture, Boris Johnson, business cycle, carbon footprint, Carmen Reinhart, Cass Sunstein, choice architecture, circular economy, collapse of Lehman Brothers, creative destruction, credit crunch, Credit Default Swap, critique of consumerism, David Graeber, decarbonisation, degrowth, dematerialisation, en.wikipedia.org, energy security, financial deregulation, Financial Instability Hypothesis, financial intermediation, full employment, Garrett Hardin, Glass-Steagall Act, green new deal, Growth in a Time of Debt, Hans Rosling, Hyman Minsky, impact investing, income inequality, income per capita, intentional community, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, laissez-faire capitalism, liberal capitalism, low interest rates, Mahatma Gandhi, mass immigration, means of production, meta-analysis, Money creation, moral hazard, mortgage debt, Murray Bookchin, Naomi Klein, negative emissions, new economy, ocean acidification, offshore financial centre, oil shale / tar sands, open economy, paradox of thrift, peak oil, peer-to-peer lending, Philip Mirowski, Post-Keynesian economics, profit motive, purchasing power parity, quantitative easing, retail therapy, Richard Thaler, road to serfdom, Robert Gordon, Robert Solow, Ronald Reagan, science of happiness, secular stagnation, short selling, Simon Kuznets, Skype, smart grid, sovereign wealth fund, Steve Jobs, TED Talk, The Chicago School, The Great Moderation, The Rise and Fall of American Growth, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, Tragedy of the Commons, universal basic income, Works Progress Administration, World Values Survey, zero-sum game

After all, the basic human metabolism doesn’t change so much across the species. Crucially, however, the material requirements associated with social and psychological capabilities can vary widely between different societies. Sen’s argument harks back to Adam Smith’s insight on the importance of shame in social life. ‘A linen shirt, for example, is, strictly speaking, not a necessary of life’, wrote Smith in The Wealth of Nations. ‘But in the present times, through the greater part of Europe, a creditable day labourer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty which, it is presumed, nobody can well fall into without extreme bad conduct.’10 Sen broadens this argument to a wider range of goods, and a deeper sense of flourishing.

It should not be railed against or reined in because it’s the source of our wealth and our wellbeing, argues the Fable of the Bees. The poem was particularly influential on the Scottish moral philosopher Adam Smith, the man widely regarded as the father of economics. ‘It is not from the benevolence of the butcher, the brewer and the baker that we expect our dinner, but from their regard to their own self-interest’, Smith famously wrote in An Inquiry into the Nature and Causes of the Wealth of Nations. Everyone is continually exerting himself in his own self-interest, said Smith. ‘It is his own advantage, indeed and not that of the society, which he has in view’, but ‘he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention’.31 The metaphor of the invisible hand turned out to be an extraordinarily powerful one and it has been central to modern economics.

The Happiness Hypothesis: Putting Ancient Wisdom and Philosophy to the Test of Modern Science. London: Arrow Books. Hall, Charles, Cutler Cleveland and Robert Kaufmann 1992. Energy and Resource Quality: The Ecology of the Economic Process. Niwot: University of Colorado Press. Hall, Charles and Kent Klitgaard 2012. Energy and the Wealth of Nations: Understanding the Biophysical Economy. New York and London: Springer. Hall, Peter and David Soskice 2001. Varieties of Capitalism: The Institutional Foundations of Competitive Advantage. Oxford: Oxford University Press. Hall, Robert and David Papell 2005. Macroeconomics: Economic Growth, Fluctuations and Policy.


The New Class War: Saving Democracy From the Metropolitan Elite by Michael Lind

"World Economic Forum" Davos, affirmative action, anti-communist, basic income, Bernie Sanders, Boris Johnson, Bretton Woods, Brexit referendum, business cycle, Cambridge Analytica, capital controls, Cass Sunstein, central bank independence, centre right, collective bargaining, commoditize, corporate governance, cotton gin, crony capitalism, deindustrialization, disinformation, Doha Development Round, Donald Trump, Edward Snowden, export processing zone, fake news, future of work, gentrification, global supply chain, guest worker program, Haight Ashbury, illegal immigration, immigration reform, independent contractor, invisible hand, Jeremy Corbyn, knowledge economy, Les Trente Glorieuses, liberal world order, low skilled workers, low-wage service sector, manufacturing employment, Mark Zuckerberg, mass immigration, means of production, Michael Milken, moral panic, Nate Silver, new economy, offshore financial centre, oil shock, open borders, plutocrats, Ponzi scheme, purchasing power parity, Ralph Nader, regulatory arbitrage, rent-seeking, Richard Florida, Ronald Reagan, scientific management, Silicon Valley, SoftBank, The Wealth of Nations by Adam Smith, Thorstein Veblen, Timothy McVeigh, trade liberalization, union organizing, universal basic income, upwardly mobile, WikiLeaks, Wolfgang Streeck, working poor

Nick Hopkins and Simon Bowers, “Apple Secretly Moved Parts of Empire to Jersey After Row Over Tax Affairs,” Guardian, November 6, 2017. 23. Adam Smith, An Inquiry into the Nature and Causes of the Wealth Of Nations, Book VI, Chapter II, “Of the Sources of the General or Public Revenue of the Society,” Part II, “Of Taxes,” Article II, “Taxes Upon Profit, or Upon the Revenue Arising from Stock,” Project Gutenberg ebook of An Inquiry into the Nature and Causes of the Wealth of Nations, ebook #3300, accessed October 3, 2019, https://www.gutenberg.org/files/3300/3300-h/3300-h.htm#chap11. 24. Smith, An Inquiry, Book I, Chapter IX, “On the Profits of Stock.” 25.

Exploiting the gap between the two nations’ tax laws, Apple Operations International has not filed an income tax return in either country, or any other country, for the past five years. From 2009 to 2012, it reported income totaling $30 billion.21 When Ireland changed its tax laws in 2015, Apple responded by secretly shifting some of its subsidiaries to another international tax haven, the Isle of Jersey.22 Adam Smith would not have been surprised. In The Wealth of Nations he wrote: “The proprietor of stock is properly a citizen of the world, and is not necessarily attached to any particular country. He would be apt to abandon the country in which he was exposed to a vexatious inquisition, in order to be assessed to a burdensome tax, and would remove his stock to some other country where he could carry on his business, or enjoy his fortune more at his ease.”23 Nor would Smith have been surprised by the centrality of labor arbitrage in the modern global economy: Our merchants and master manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad.

* * * — IN THE NINETEENTH and early twentieth centuries, five major schools of thought debated the future of industrial society: liberalism, producerism, socialism, corporatism, and pluralism. Economic liberalism has come in several varieties, including the eclectic and flexible “classical liberalism” of Adam Smith, David Ricardo, and J. S. Mill and a more rigidly antistatist ideology, associated with Friedrich Hayek and Ludwig von Mises and Milton Friedman and already called “neoliberalism” by the 1920s. In all its forms, economic liberalism identifies human freedom with commercial transactions in markets, with the state limited to the role of enforcing contracts and perhaps providing minimal social insurance safety nets.


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Economics Rules: The Rights and Wrongs of the Dismal Science by Dani Rodrik

airline deregulation, Alan Greenspan, Albert Einstein, bank run, barriers to entry, behavioural economics, Bretton Woods, business cycle, butterfly effect, capital controls, carbon tax, Carmen Reinhart, central bank independence, collective bargaining, congestion pricing, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, distributed generation, Donald Davies, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, Everything should be made as simple as possible, Fellow of the Royal Society, financial deregulation, financial innovation, floating exchange rates, fudge factor, full employment, George Akerlof, Gini coefficient, Growth in a Time of Debt, income inequality, inflation targeting, informal economy, information asymmetry, invisible hand, Jean Tirole, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, labor-force participation, liquidity trap, loss aversion, low skilled workers, market design, market fundamentalism, minimum wage unemployment, oil shock, open economy, Pareto efficiency, Paul Samuelson, price elasticity of demand, price stability, prisoner's dilemma, profit maximization, public intellectual, quantitative easing, randomized controlled trial, rent control, rent-seeking, Richard Thaler, risk/return, Robert Shiller, school vouchers, South Sea Bubble, spectrum auction, The Market for Lemons, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, trade liberalization, trade route, ultimatum game, University of East Anglia, unorthodox policies, Vilfredo Pareto, Washington Consensus, white flight

Jorge Luis Borges, “On Exactitude in Science,” in Collected Fictions, trans. Andrew Hurley (New York: Penguin, 1999). 23. Uskali Mäki, “Models and the Locus of Their Truth” Synthese 180 (2011): 47–63. CHAPTER 2: The Science of Economic Modeling 1. John Maynard Keynes, Essays in Persuasion (New York: W. W. Norton, 1963), 358–73. 2. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 5th ed. (1789; repr., London: Methuen, 1904), I.ii.2. 3. The pencil example was based on an essay by Leonard E. Read called “I, Pencil: My Family Tree as Told to Leonard E. Read” (Irvington-on-Hudson, NY: Foundation for Economic Education, 1958), http://www.econlib.org/library/Essays/rdPncl1.html. 4.

In his inimitable fashion, Roberto pushed me to think hard about the strengths and weaknesses of economics and to articulate what I found useful in the economic method. The discipline had become sterile and stale, Roberto argued, because economics had given up on grand social theorizing in the style of Adam Smith and Karl Marx. I pointed out, in turn, that the strength of economics lay precisely in small-scale theorizing, the kind of contextual thinking that clarifies cause and effect and sheds light—even if partial—on social reality. A modest science practiced with humility, I argued, is more likely to be useful than a search for universal theories about how capitalist systems function or what determines wealth and poverty around the world.

It is not at all evident, on its face, that millions of consumers, workers, firms, savers, investors, banks, and speculators, each of them pursuing strictly their own personal advantage, would collectively arrive at anything other than economic chaos. Yet the model says the outcome is actually efficient. The First Fundamental Theorem of Welfare Economics is colloquially known among economists as the Invisible Hand Theorem. It was Adam Smith, perhaps the father of economics, who first stated it in broad terms. Though he did not use the term “invisible hand” in quite this context, Smith argued that decentralized decision making by individual consumers and producers in a market would nonetheless provide collective benefit. “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner,” he famously wrote, “but from their regard to their own interest.”2 Smith’s point that price incentives turn markets into a stupendously effective coordination machine running on autopilot was brought home powerfully by Milton Friedman in his popular TV series Free to Choose in 1980, on the eve of a wave of market reforms under the Reagan and Thatcher governments.


Tyler Cowen - Stubborn Attachments A Vision for a Society of Free, Prosperous, and Responsible Individuals by Meg Patrick

agricultural Revolution, behavioural economics, Berlin Wall, conceptual framework, Fall of the Berlin Wall, framing effect, hedonic treadmill, impulse control, Peter Singer: altruism, rent-seeking, Robert Solow, social discount rate, The Wealth of Nations by Adam Smith, total factor productivity, trade route, transaction costs, trickle-down economics, Tyler Cowen, Tyler Cowen: Great Stagnation, zero-sum game

First: The Principle of Growth: “We should make political choices so as to maximize the rate of sustainable economic growth, as defined by Wealth Plus.” The Principle of Growth would return economics back to its roots in Adam Smith. Smith held a straightforward, common-sense approach to political economy. He understood that the benefits of cumulative growth were significant, especially with the passage of time. It is no surprise that his economics treatise was entitled An Inquiry into the Nature and Causes of the Wealth of Nations. 38 By the way, I see only one episode in human history where the Principle of Growth was clearly and unambiguously applied, and that is in the East Asian economic miracles, including Japan, South Korea, Taiwan, Hong Kong, Singapore, and China (with a caveat here for sustainability), across the appropriate periods of time in each case.

Land Economics, November 1997, 73, 4, 467-491. 115 Chipman, John S. and Moore, James C. 1978. “The New Welfare Economics 1939-1974.” International Economic Review, October, 19, 3, 547-584. Clark, Kenneth. 1969. Civilization. New York: Harper & Row. Comin, Diego, William Easterly, and Erick Gong, 2010. “Was the Wealth of Nations Determined in 1000 B.C.?”, American Economic Journal: Macroeconomics, 2, 3, 65-97. Cowen, Tyler. 1992. "Consequentialism Implies a Zero Intergenerational Rate of Discount," in Justice Across the Generations: Philosophy, Politics, and Society, sixth series, edited by Peter Laslett and James Fishkin, Yale University Press, 1992, 162-168.

Since free lunches aren’t always easy to find, we should think about where free lunches might be hiding or why some of those free lunches are less than evident. In particular we might uncover hidden gains if we more closely consider the dimension of time. Maybe some of our choices could release a steady gush of benefits, but we don’t always see those benefits as clearly as we ought to. As Adam Smith noted long ago in the eighteenth century, we visualize many future events very poorly and with a deficit of proper imagination. In economics, there is at least one (hypothetical) example of a free lunch over time. Economist Frank Knight wrote of the Crusonia plant, a mythical, automatically growing crop which creates more output each period.


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Other People's Money: Masters of the Universe or Servants of the People? by John Kay

Affordable Care Act / Obamacare, Alan Greenspan, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Monday: stock market crash in 1987, Black Swan, Bonfire of the Vanities, bonus culture, book value, Bretton Woods, buy and hold, call centre, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, cognitive dissonance, Cornelius Vanderbilt, corporate governance, Credit Default Swap, cross-subsidies, currency risk, dematerialisation, disinformation, disruptive innovation, diversification, diversified portfolio, Edward Lloyd's coffeehouse, Elon Musk, Eugene Fama: efficient market hypothesis, eurozone crisis, financial engineering, financial innovation, financial intermediation, financial thriller, fixed income, Flash crash, forward guidance, Fractional reserve banking, full employment, George Akerlof, German hyperinflation, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Greenspan put, Growth in a Time of Debt, Ida Tarbell, income inequality, index fund, inflation targeting, information asymmetry, intangible asset, interest rate derivative, interest rate swap, invention of the wheel, Irish property bubble, Isaac Newton, it is difficult to get a man to understand something, when his salary depends on his not understanding it, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Jim Simons, John Meriwether, junk bonds, light touch regulation, London Whale, Long Term Capital Management, loose coupling, low cost airline, M-Pesa, market design, Mary Meeker, megaproject, Michael Milken, millennium bug, mittelstand, Money creation, money market fund, moral hazard, mortgage debt, Myron Scholes, NetJets, new economy, Nick Leeson, Northern Rock, obamacare, Occupy movement, offshore financial centre, oil shock, passive investing, Paul Samuelson, Paul Volcker talking about ATMs, peer-to-peer lending, performance metric, Peter Thiel, Piper Alpha, Ponzi scheme, price mechanism, proprietary trading, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, railway mania, Ralph Waldo Emerson, random walk, reality distortion field, regulatory arbitrage, Renaissance Technologies, rent control, risk free rate, risk tolerance, road to serfdom, Robert Shiller, Ronald Reagan, Schrödinger's Cat, seminal paper, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, sovereign wealth fund, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, Steve Wozniak, The Great Moderation, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tobin tax, too big to fail, transaction costs, tulip mania, Upton Sinclair, Vanguard fund, vertical integration, Washington Consensus, We are the 99%, Yom Kippur War

eISBN 978 1 78283 154 9 The directors of such companies, however, being the managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own … Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company. Adam Smith, The Wealth of Nations, 1776 When I speak of high finance as a harmful factor in recent years, I am speaking about a minority which includes the type of individual who speculates with other people’s money – and you in Chicago know the kind I refer to. Franklin D. Roosevelt, US presidential campaign address, Chicago, 14 October 1936 Contents Prologue: The parable of the ox Introduction: Far too much of a good thing PART I: FINANCIALISATION 1 History The road to Pottersville The rise of the trader New markets, new businesses From crisis to crisis The robber barons We are the 1 per cent 2 Risk Cows, coffee and credit default swaps Chasing the dream Adverse selection and moral hazard 3 Intermediation The role of the middleman Liquidity Diversification Leverage 4 Profits Smarter people Competition The Edge Regulatory arbitrage I’ll be gone, you’ll be gone How profitable is the finance sector?

For all their superficial sophistication, the masters of the universe had no real understanding of what was going on before them. 4 Profits Smarter people Though the principles of the banking trade may appear somewhat abstruse, the practice is capable of being reduced to strict rules. To depart upon any occasion from these rules, in consequence of some flattering speculation of extraordinary gain, is almost always extremely dangerous, and frequently fatal to the banking company which attempts it. Adam Smith, The Wealth of Nations, 1776 The year is 1995, and I am sitting at a massive octagonal table on the top floor of the large modern building that dominates the town of Halifax, West Yorkshire. The location is the boardroom of the Halifax Building Society. The Halifax Building Society had travelled far in size, though not in distance.

., 2009, Hidden Champions of the 21st Century, London and New York, Springer Verlag. Sinclair, U., 1906, The Jungle, London, Werner Laurie. Sinclair, U., 1994, I, Candidate for Governor: And How I Got Licked, orig. pub. 1935, London, University of California Press. Smith, A., 1776, An Inquiry into the Nature and Causes of the Wealth of Nations, 5th edn, 1904, ed. Edwin Cannan, London, Methuen. Smith, G., 2012, ‘Why I Am Leaving Goldman Sachs’, The New York Times, 14 March. Soble, R.L., and Dallos, R.E., 1975, The Impossible Dream: The Equity Funding Story, the Fraud of the Century, New York, G.P. Putnam’s Sons. Sorkin, A.R., 2009, Too Big to Fail: Inside the Battle to Save Wall Street, London, Allen Lane.


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The Innovation Illusion: How So Little Is Created by So Many Working So Hard by Fredrik Erixon, Bjorn Weigel

Airbnb, Alan Greenspan, Albert Einstein, American ideology, asset allocation, autonomous vehicles, barriers to entry, Basel III, Bernie Madoff, bitcoin, Black Swan, blockchain, Blue Ocean Strategy, BRICs, Burning Man, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, classic study, Clayton Christensen, Colonization of Mars, commoditize, commodity super cycle, corporate governance, corporate social responsibility, creative destruction, crony capitalism, dark matter, David Graeber, David Ricardo: comparative advantage, discounted cash flows, distributed ledger, Donald Trump, Dr. Strangelove, driverless car, Elon Musk, Erik Brynjolfsson, Fairchild Semiconductor, fear of failure, financial engineering, first square of the chessboard / second half of the chessboard, Francis Fukuyama: the end of history, general purpose technology, George Gilder, global supply chain, global value chain, Google Glasses, Google X / Alphabet X, Gordon Gekko, Greenspan put, Herman Kahn, high net worth, hiring and firing, hockey-stick growth, Hyman Minsky, income inequality, income per capita, index fund, industrial robot, Internet of things, Jeff Bezos, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, Joseph Schumpeter, Just-in-time delivery, Kevin Kelly, knowledge economy, laissez-faire capitalism, low interest rates, Lyft, manufacturing employment, Mark Zuckerberg, market design, Martin Wolf, mass affluent, means of production, middle-income trap, Mont Pelerin Society, Network effects, new economy, offshore financial centre, pensions crisis, Peter Thiel, Potemkin village, precautionary principle, price mechanism, principal–agent problem, Productivity paradox, QWERTY keyboard, RAND corporation, Ray Kurzweil, rent-seeking, risk tolerance, risk/return, Robert Gordon, Robert Solow, Ronald Coase, Ronald Reagan, savings glut, Second Machine Age, secular stagnation, Silicon Valley, Silicon Valley startup, Skype, sovereign wealth fund, Steve Ballmer, Steve Jobs, Steve Wozniak, subprime mortgage crisis, technological determinism, technological singularity, TED Talk, telemarketer, The Chicago School, The Future of Employment, The Nature of the Firm, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, transaction costs, transportation-network company, tulip mania, Tyler Cowen, Tyler Cowen: Great Stagnation, uber lyft, University of East Anglia, unpaid internship, Vanguard fund, vertical integration, Yogi Berra

To think that companies should work for shareholders, he argued, “one must imagine that a man of vigorous, lusty and reassuringly heterosexual inclination eschews the lovely and available women by whom he is intimately surrounded in order to maximize the opportunities of other men whose existence he knows of only by hearsay.”39 Galbraith broadly got it right – even if he was ahead of his time, writing before others had coined the principal–agent theory. His flair for colorful expressions caught the imagination of people, but there were others before him who had touched upon the same type of conflict inside joint-stock companies. Adam Smith, for instance, tendered the same view in his classic tome The Wealth of Nations, where he made the point that, “being the managers rather of other people’s money than of their own, it cannot well be expected that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own.”40 The OECD has also offered pointed skepticism about what happens in firms with highly diffused and intermediated ownership.

30.Blundell-Wignall, Hu, and Yermo, “Sovereign Wealth and Pension Fund Issues,” 4. 31.NBIM, “The Fund’s Market Value,” 2015. 32.OECD, “Ageing and Employment Policies.” 33.Cournède, “The Political Economy of Delaying Fiscal Consolidation.” 34.Cournède, “The Political Economy of Delaying Fiscal Consolidation,” 10. 35.Magnus, The Age of Aging provides a thorough analysis of retirement savings and their relation to the broader economy. 36.United Nations, World Population Prospects: The 2012 Revision. 37.Cournède, “The Political Economy of Delaying Fiscal Consolidation.” 38.Iwamoto, “Abandoned Homes Haunt Japanese Neighbourhoods.” 39.Galbraith, The New Industrial State. 40.Smith, The Wealth of Nations. 41.Isaksson and Çelik. “Who Cares?” 42. 42.Goldstein, “The State of Engagement between US Corporations and Shareholders.” 43.Van der Elst, “Revisiting Shareholder Activism at AGMs”; Van der Elst and Aslan, “The Economic Consequences of Large Shareholder Activism.” 44.Berle and Means, The Modern Corporation and Private Property. 45.Drucker, The Unseen Revolution, 1. 46.Markowitz, “Portfolio Selection.” 47.Bhide, “The Hidden Costs of Stock Market Liquidity,” 31. 48.Pfleiderer, “Is Modern Portfolio Theory Dead?”

Sinn, Hans-Werner, “The Pathological Export Boom and the Bazaar Effect: How to Solve the German Puzzle.” World Economy, 29.9 (2006): 1157–75. Smith, Aaron, and Janna Anderson, “AI, Robotics, and the Future of Jobs.” Pew Research Center, Aug. 6, 2014. At http://www.pewinternet.org/2014/08/06/future-of-jobs/. Smith, Adam, The Theory of Moral Sentiments. Penguin, 2010. Smith, Adam, The Wealth of Nations, vol. 3. Prometheus Books, 1991. Smithers, Andrew, The Road to Recovery: How and Why Economic Policy Must Change. Wiley, 2013. Song, Jae, David J. Price, Faith Guvenen, Nicholas Bloom, and Till von Wachter, “Firming up Inequality.” NBER Working Paper No. 21199. National Bureau of Economic Research, May 2015.


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The Right to Earn a Living: Economic Freedom and the Law by Timothy Sandefur

"Friedman doctrine" OR "shareholder theory", Alan Greenspan, American ideology, barriers to entry, big-box store, Cass Sunstein, clean water, collective bargaining, corporate governance, corporate social responsibility, creative destruction, Edward Glaeser, housing crisis, independent contractor, joint-stock company, Joseph Schumpeter, minimum wage unemployment, positional goods, price stability, profit motive, race to the bottom, Ralph Nader, RAND corporation, rent control, Robert Bork, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, The Wealth of Nations by Adam Smith, trade route, transaction costs, Upton Sinclair, urban renewal, wealth creators

Allen,” Emory Law Journal 45 (1996): 1275–76. 4. Darcy v. Allen, 77 Eng. Rep. 1260 (1603). 5. The Case of the Tailors of Ipswich, 77 Eng. Rep. 1218 (K.B. 1615). 6. Ibid. at 1218. 7. Catherine Drinker Bowen, The Lion and the Throne: The Life of Edward Coke (Boston: Little, Brown, 1957), p. 304. 8. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Indianapolis: Liberty Classics, 1976), vol. 2, pp. 647–48. 9. See Barbara Malament, “The ‘Economic Liberalism’ of Sir Edward Coke,” in Law, Liberty, and Parliament: Selected Essays on the Writings of Sir Edward Coke, ed. Allen D. Boyer (Indianapolis: Liberty Fund, 2004), p. 186. 299 Notes for Pages 20–26 10.

The patrimony of the poor man lies in the strength and dexterity of his own hands; and to hinder him from employing this strength and dexterity in what manner he thinks proper, without injury to his neighbor, is a plain violation of this most sacred property. It is a manifest encroachment upon the just liberty both of the workman and of those who might be disposed to employ him. As it hinders the one from working at what he thinks proper, so it hinders the others from employing whom they think proper.’” (Quoting Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Indianapolis: Liberty Fund, 1976), vol. 1, p. 138). This is a moral, not an economic, argument. 3. Robert Green McCloskey, American Conservatism in the Age of Enterprise (New York: Harper & Row, 1964), p. 75. 4. Akhil Reed Amar, The Bill of Rights: Creation and Reconstruction (New Haven, CT: Yale University Press, 1998), pp. 148–49. 5.

West, Vindicating the Founders: Race, Sex, Class, and Justice in the Origins of America (Lanham, MD: Rowman & Littlefield, 1997), pp. 38–39. 34. Virginia Declaration of Rights (1776), para. 1 (emphasis added). 35. James Madison, Speech in the Virginia Constitutional Convention (1829), in Rakove, Madison: Writings, p. 824. 36. West, Vindicating the Founders, p. 39. 37. Smith, The Wealth of Nations, vol. 1, p. 138. 38. Ibid., vol. 2, p. 660. 39. Ibid., vol. 2, pp. 647–48 40. Ibid., vol. 2, p. 654. 41. Ibid., vol. 1, p. 140. 42. William Blackstone, Commentaries on the Laws of England (London: A. Strahan, 1809), vol. 1, p. 470. 300 Notes for Pages 26–31 43. Encyclopedia Britannica (Edinburgh: Bell & MacFarquar, 1771), vol. 2, p. 281.


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Capitalism Without Capital: The Rise of the Intangible Economy by Jonathan Haskel, Stian Westlake

23andMe, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, Albert Einstein, Alvin Toffler, Andrei Shleifer, bank run, banking crisis, Bernie Sanders, Big Tech, book value, Brexit referendum, business climate, business process, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, carbon credits, cloud computing, cognitive bias, computer age, congestion pricing, corporate governance, corporate raider, correlation does not imply causation, creative destruction, dark matter, Diane Coyle, Donald Trump, Douglas Engelbart, Douglas Engelbart, driverless car, Edward Glaeser, Elon Musk, endogenous growth, Erik Brynjolfsson, everywhere but in the productivity statistics, Fellow of the Royal Society, financial engineering, financial innovation, full employment, fundamental attribution error, future of work, gentrification, gigafactory, Gini coefficient, Hernando de Soto, hiring and firing, income inequality, index card, indoor plumbing, intangible asset, Internet of things, Jane Jacobs, Jaron Lanier, Jeremy Corbyn, job automation, Kanban, Kenneth Arrow, Kickstarter, knowledge economy, knowledge worker, laissez-faire capitalism, liquidity trap, low interest rates, low skilled workers, Marc Andreessen, Mother of all demos, Network effects, new economy, Ocado, open economy, patent troll, paypal mafia, Peter Thiel, pets.com, place-making, post-industrial society, private spaceflight, Productivity paradox, quantitative hedge fund, rent-seeking, revision control, Richard Florida, ride hailing / ride sharing, Robert Gordon, Robert Solow, Ronald Coase, Sand Hill Road, Second Machine Age, secular stagnation, self-driving car, shareholder value, sharing economy, Silicon Valley, six sigma, Skype, software patent, sovereign wealth fund, spinning jenny, Steve Jobs, sunk-cost fallacy, survivorship bias, tacit knowledge, tech billionaire, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Tim Cook: Apple, total factor productivity, TSMC, Tyler Cowen, Tyler Cowen: Great Stagnation, urban planning, Vanguard fund, walkable city, X Prize, zero-sum game

The story of how economists and statisticians came to measure intangible investment is a late episode in a much bigger story: the invention of GDP and systems of national accounts.1 This story is engagingly told in Diane Coyle’s GDP: A Brief but Affectionate History and Ehsan Masood’s The Great Invention: The Story of GDP. One of the biggest conceptual challenges involved in the creation of GDP was deciding what to count. This was an old problem. Adam Smith, in The Wealth of Nations, puzzled over whether England was producing more than it did at the fall of the Roman Empire. With no data to support this he simply asserted it was so, since there was more productive labor and less unproductive labor, the latter being occupations such as “servants . . . the sovereign . . . players, buffoons, musicians and opera-singers.”2 By the time of the Great Depression, when economists were being pressed into service to understand what was going wrong with the economy, this problem had become urgent.

All of these are examples of the synergies between intangibles—synergies that are often large in size and hard to predict.1 The Four S’s of Intangible Investment It should come as no surprise that things that one can’t touch, like ideas, commercial relationships, and know-how, are fundamentally different from physical things like machines and buildings. This fact has not been lost on economists. Over the last century researchers in different subfields of economics have looked into various unusual properties of intangible assets. David Warsh’s fascinating book Knowledge and the Wealth of Nations tells the story of how the economist Paul Romer developed an improved theory of economic growth that included knowledge, in particular R&D, rather than treating it as an unpredictable exogenous variable. The work of Romer, Chad Jones, Philippe Aghion, and other pioneers of endogenous growth theory, as it’s called, pointed out that knowledge is an unusual type of good because putting an idea into practice doesn’t use it up.

A more formal exploration of this relationship finds intangible investment negatively correlated with employment strictness and product market restrictions, controlling for other factors (Corrado et al. 2016). Chapter 3: How to Measure Intangible Investment 1. A very helpful guide to measuring investment and GDP, packed with data, is from Eurostat: http://ec.europa.eu/eurostat/statistics-explained/index.php/National_accounts_and_GDP. 2. Smith, The Wealth of Nations, book 2, chapter 3. 3. Hence, we have Alan Greenspan’s remarks in 2000 on the challenges faced by the US Bureau of Economic Analysis in defining and calculating GDP: “It’s become evident that there has been an increasing technological change within our system, which has muddied the distinction between what we call capital investment and current expense.


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Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace by Matthew C. Klein

Alan Greenspan, Albert Einstein, Asian financial crisis, asset allocation, asset-backed security, Berlin Wall, Bernie Sanders, Branko Milanovic, Bretton Woods, British Empire, business climate, business cycle, capital controls, centre right, collective bargaining, currency manipulation / currency intervention, currency peg, David Ricardo: comparative advantage, deglobalization, deindustrialization, Deng Xiaoping, Donald Trump, Double Irish / Dutch Sandwich, Fall of the Berlin Wall, falling living standards, financial innovation, financial repression, fixed income, full employment, George Akerlof, global supply chain, global value chain, Great Leap Forward, high-speed rail, illegal immigration, income inequality, intangible asset, invention of the telegraph, joint-stock company, land reform, Long Term Capital Management, low interest rates, Malcom McLean invented shipping containers, manufacturing employment, Martin Wolf, mass immigration, Mikhail Gorbachev, Money creation, money market fund, mortgage debt, New Urbanism, Nixon triggered the end of the Bretton Woods system, offshore financial centre, oil shock, open economy, paradox of thrift, passive income, reserve currency, rising living standards, Robert Shiller, Ronald Reagan, savings glut, Scramble for Africa, sovereign wealth fund, stock buybacks, subprime mortgage crisis, The Nature of the Firm, The Wealth of Nations by Adam Smith, Tim Cook: Apple, trade liberalization, Wolfgang Streeck

See also Thomas Hauner, Branko Milanovic, and Suresh Naidu, “Inequality, Foreign Investment, and Imperialism,” Stone Center Working Paper 2017, for a modern quantitative analysis of Hobson’s thesis. 8. Kenneth Austin, “Communist China’s Capitalism: The Highest Stage of Capitalist Imperialism,” World Economics, January–March 2011, 79–94. ONE From Adam Smith to Tim Cook 1. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 2 vols., ed. Edwin Cannan (London: Methuen, 1904), vol. 1, bk. 1, chap. 1, available at https://oll.libertyfund.org/. 2. R. H. Coase, “The Nature of the Firm,” Economica 4, no. 16 (November 1937): 386–405. 3. Smith, Wealth of Nations, vol. 1, bk. 4, chap. 2. 4.

Companies spread complex manufacturing supply chains across multiple countries to maximize efficiency and minimize taxes. Trade today looks nothing like it did before. Unfortunately, in spite of all these changes, the popular understanding of trade continues to be based on obsolete eighteenth-century models. Pins, Cloth, and Wine Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations opens with an account of a pin factory. Smith estimated that it took “eighteen distinct operations” to make a single pin. Just making the head required “two or three distinct operations.” One worker would be hard-pressed to make more than a few dozen pins in a day if he were forced to perform all the steps himself.

The only safety of nations lies in removing the unearned increments of income from the possessing classes, and adding them to the wage-income of the working classes or to the public income, in order that they may be spent in raising the standard of consumption. John A. Hobson, Imperialism: A Study (1902) Contents Acknowledgments Introduction ONE From Adam Smith to Tim Cook: The Transformation of Global Trade TWO The Growth of Global Finance THREE Saving, Investment, and Imbalances FOUR From Tiananmen to the Belt and Road: Understanding China’s Surplus FIVE The Fall of the Wall and the Schwarze Null: Understanding Germany’s Surplus SIX The American Exception: The Exorbitant Burden and the Persistent Deficit Conclusion.


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Team of Teams: New Rules of Engagement for a Complex World by General Stanley McChrystal, Tantum Collins, David Silverman, Chris Fussell

Airbus A320, Albert Einstein, Apollo 11, Atul Gawande, autonomous vehicles, bank run, barriers to entry, Black Swan, Boeing 747, butterfly effect, call centre, Captain Sullenberger Hudson, Chelsea Manning, clockwork universe, crew resource management, crowdsourcing, driverless car, Edward Snowden, Flash crash, Frederick Winslow Taylor, global supply chain, Henri Poincaré, high batting average, Ida Tarbell, information security, interchangeable parts, invisible hand, Isaac Newton, Jane Jacobs, job automation, job satisfaction, John Nash: game theory, knowledge economy, Mark Zuckerberg, Mohammed Bouazizi, Nate Silver, Neil Armstrong, Pierre-Simon Laplace, pneumatic tube, radical decentralization, RAND corporation, scientific management, self-driving car, Silicon Valley, Silicon Valley startup, Skype, Steve Jobs, supply-chain management, systems thinking, The Wealth of Nations by Adam Smith, urban sprawl, US Airways Flight 1549, vertical integration, WikiLeaks, zero-sum game

The habit of constraining information derives in part from modern security concerns, but also from the inured preference for clearly defined, mechanistic processes—whether factory floors or corporate org charts—in which people need to know only their own piece of the puzzle to do their job. One of the oldest and most famous examples of specialization—and the compartmentalized ignorance that such specialization encourages—can be found in Adam Smith’s 1776 description of a pin factory in his classic work, The Wealth of Nations: One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; . . . the important business of making a pin is, in this manner, divided into about eighteen distinct operations . . .

May, Senior Advisor), The 9/11 Commission Report, 271. “inordinate number of individuals” . . . 9/11 Commission Report, 272. did not read the memo . . . 9/11 Commission Report, 272. “were not put together” . . . 9/11 Commission Report, 277. CHAPTER 7: SEEING THE SYSTEM “One man draws out the wire” . . . Adam Smith, The Wealth of Nations, Books 1-3 (New York: Penguin, 1986), 109–10. “240,000 miles away” . . . “Address at Rice University on the Nation’s Space Effort,” John F. Kennedy Presidential Library & Museum, July 21, 2014, http://www.jfklibrary.org/Asset-Viewer/MkATdOcdU06X5uNHbmqm1Q.aspx. 600 million . . .

Management historian Alfred Chandler observed that the role of the merchant, which once embraced “exporter, wholesaler, importer, retailer, shipowner, banker and insurer,” split—like Adam Smith’s pin production—into multiple specialized businesses in the late 1800s. Years later, in what Chandler referred to as “the Managerial Revolution,” the specialized businesses were reunited when they merged into large, vertically integrated corporations with dozens of departments and hundreds of offices. Many functions were consolidated under centrally managed entities, instead of the sea of small actors responding independently to the forces of the market (Chandler dubbed this force “the visible hand” in contrast to Adam Smith’s description of market forces as “the invisible hand”).


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Cheap: The High Cost of Discount Culture by Ellen Ruppel Shell

accelerated depreciation, Alan Greenspan, barriers to entry, behavioural economics, Berlin Wall, big-box store, bread and circuses, business cycle, cognitive dissonance, computer age, cotton gin, creative destruction, Daniel Kahneman / Amos Tversky, delayed gratification, deskilling, Donald Trump, Edward Glaeser, fear of failure, Ford Model T, Ford paid five dollars a day, Frederick Winslow Taylor, George Akerlof, global supply chain, global village, Howard Zinn, income inequality, interchangeable parts, inventory management, invisible hand, James Watt: steam engine, Joseph Schumpeter, Just-in-time delivery, knowledge economy, Lewis Mumford, loss aversion, market design, means of production, mental accounting, Monkeys Reject Unequal Pay, Pearl River Delta, planned obsolescence, Ponzi scheme, price anchoring, price discrimination, race to the bottom, Richard Thaler, Ronald Reagan, Salesforce, scientific management, side project, Steve Jobs, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, traveling salesman, Triangle Shirtwaist Factory, ultimatum game, Victor Gruen, washing machines reduced drudgery, working poor, yield management, zero-sum game

.: Marshall Cavendish, 2004), 318. 214 “kind of environment that Sam Walton built this company for”: Stephanie Rosenbloom, “For Wal-Mart, a Christmas That Was Made to Order,” New York Times, November 5, 2008. 214 Dollar stores, too, were booming: Jason Asaeda, “Tough Times Favor Family Dollar Stores,” BusinessWeek, October 28, 2008. 215 for its 1.3 million employees: Kris Maher, “Wal-Mart Seeks New Flexibility in Worker Shifts,” Wall Street Journal, January 3, 2007. 215 entitled “Obama’s Biggest Challenge”: Bob Herbert, “Obama’s Biggest Challenge,” New York Times, January 9, 2009. 216 “whether carrots were grown without chemical fertilizers”: Andrew Martin, “Budgets Squeezed, Some Families Bypass Organics,” New York Times, November 1, 2008. 216 is trucked in from huge California farms: In Omnivore’s Dilemma, author Michael Pollan writes that Cascadian Farms founder Gene Kahn, now a vice president of General Mills, acknowledges his farm is essentially a “PR farm.” See Michael Pollan, The Omivore’s Dilemma: A Natural History of Four Meals (New York: Penguin, 2006), 145. 218 “need be employed in dissuading them from it”: Adam Smith, The Wealth of Nations, Books IV-V; Andrew S. Skinner, ed. (New York: Penguin Books, 1999), 32. 218 “tolerably well fed, clothed and lodged”: Adam Smith, The Wealth of Nations, Books I-III; Andrew S. Skinner, contributor, (New York: Penguin Books, 1970), 181. 220 B-grade versions of national brands: Charles Fishman offers a great example of this in The Wal-Mart Effect. In 2002, Wal-Mart sold an estimated $3 billion worth of its house brand “Faded Glory” jeans—more jeans than any other retailer.

Chief among these illusions was that we humans always act in our own best interest. This fantasy, although losing currency in recent years, had prevailed in one form or another in American political and economic thought for over a century. It was not always that way. Like psychology, economics was once a branch of “moral science,” concerned with the mind but also the heart. Adam Smith, the crusty Scottish philosopher generally credited as the founder of modern economics, began his Moral Sentiments: “How selfish soever man may be supposed, there are evidently some principles in his nature which interest him in the fortune of others and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it. . . .

CHAPTER TEN THE PERFECT PRICE The frugal man has the advantage over the man of pleasure in facilities for self-improvement, for doing his duty to his country, and for securing general happiness. | PLATO, SOCRATIC DISCOURSES If you hang around economists long enough, you hear a good deal about their intellectual heroes: John Stuart Mill, Adam Smith, John Maynard Keynes. Among the more controversial of these heroes is Joseph A. Schumpeter, the Harvard economist who in 1943 published the iconic Capitalism, Socialism, and Democracy. The seventh chapter of that work, entitled “The Process of Creative Destruction,” is for many academics a sacred text.


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

adjacent possible, Alfred Russel Wallace, banks create money, basic income, Buckminster Fuller, carbon tax, collective bargaining, computerized trading, creative destruction, David Ricardo: comparative advantage, declining real wages, deindustrialization, diversified portfolio, driverless car, en.wikipedia.org, Fractional reserve banking, full employment, Glass-Steagall Act, hydraulic fracturing, income inequality, It's morning again in America, Jaron Lanier, Jevons paradox, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, land reform, Mark Zuckerberg, Money creation, Network effects, oil shale / tar sands, Paul Samuelson, power law, profit maximization, quantitative easing, rent-seeking, Ronald Coase, Ronald Reagan, Silicon Valley, sovereign wealth fund, Stuart Kauffman, the map is not the territory, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, Upton Sinclair, Vilfredo Pareto, wealth creators, winner-take-all economy

Janet Lowe, Warren Buffett Speaks: Wit and Wisdom from the World’s Greatest Investor (New York: John Wiley & Sons, 1997), 164. 4. Herbert Simon, “Public Administration in Today’s World of Organizations and Markets,” public lecture (2000), http://research.mbs.ac.uk/hsi/Aboutus/HerbertSimonsLastPublicLecture.aspx. 5. Adam Smith, The Wealth of Nations, chapter 9, “Of the Rent of Land,” conclusion (London, 1776), 212, http://www2.hn.psu.edu/faculty/jmanis/adam-smith/wealth-nations.pdf. 6. See my reconsideration of Henry George’s Progress and Poverty in the New Republic, December 11, 1971, http://cooperativeindi-vidualism.org/barnes-peter_reconsideration-of-progress-and-poverty-by-henry-george-1971.html. 7.

In our larger society, similar warnings could be issued about the gaps between rich and poor and between humans and nature. These gaps must be not only minded but also narrowed. The persistent question is how to do this, and I contend that rent is a useful and indeed necessary tool. But before we get to that, we must first become familiar with rent. The term was first used by classical economists, including Adam Smith, to describe money paid to landowners. It was one of three income streams in the early years of capitalism, the others being wages paid to labor and interest paid to capital. In Smith’s view, landlords benefited from land’s unique ability to enrich its owners “independent of any plan or project of their own.”5 This ability arises from the fact that the supply of good land is limited, while the demand for it steadily rises.

. … To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can only serve to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens.”7 Figure 4.1: ADAM SMITH’S “ABSURD TAX” It’s important to recognize that the tax Smith spoke of isn’t the kind we pay to government; it’s the kind we pay, much less visibly, to businesses. That’s because prices in capitalism are driven by four factors: supply, demand, market power, and political power. The first two determine what might be called fair market value; the last two determine what is now called rent.


pages: 470 words: 130,269

The Marginal Revolutionaries: How Austrian Economists Fought the War of Ideas by Janek Wasserman

"World Economic Forum" Davos, Abraham Wald, Albert Einstein, American Legislative Exchange Council, anti-communist, battle of ideas, Berlin Wall, Bretton Woods, business cycle, collective bargaining, Corn Laws, correlation does not imply causation, creative destruction, David Ricardo: comparative advantage, different worldview, Donald Trump, experimental economics, Fall of the Berlin Wall, floating exchange rates, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, Gunnar Myrdal, housing crisis, Internet Archive, invisible hand, John von Neumann, Joseph Schumpeter, laissez-faire capitalism, liberal capitalism, low interest rates, market fundamentalism, mass immigration, means of production, Menlo Park, military-industrial complex, Mont Pelerin Society, New Journalism, New Urbanism, old-boy network, Paul Samuelson, Philip Mirowski, price mechanism, price stability, public intellectual, RAND corporation, random walk, rent control, road to serfdom, Robert Bork, rolodex, Ronald Coase, Ronald Reagan, Silicon Valley, Simon Kuznets, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, trade liberalization, union organizing, urban planning, Vilfredo Pareto, Washington Consensus, zero-sum game, éminence grise

This definition placed Menger within the new trends in economic thought that stressed utility and the satisfaction of the subjective needs of individual actors.16 Menger then limned the production process, starting from consumption goods and running back to the raw materials that constitute those items. For Menger, long, capitalist production processes were a thing of beauty, since they increased the number of goods and the overall prosperity of human civilization. Like Adam Smith before him, who started The Wealth of Nations with a meditation on the division of labor and its role in the prosperity of nations, Menger also marveled over production, though from the vantage of individual producers and their subjective choices. His subjectivist interpretation therefore set apart Principles from classical economic theory.

Cambridge, MA: Harvard University Press, 2018. ———. “Neoliberalism’s Populist Bastards.” Public Seminar, February 15, 2018. http://www.publicseminar.org/2018/02/neoliberalisms-populist-bastards/. ———. “The Road to the Alt Right.” Working paper, German Studies Association, 2017. Smith, Adam. The Wealth of Nations. Edited by Edwin Canaan. 5th ed. London: Methuen, 1904. Smithies, Arthur. “Professor Hayek on the Pure Theory of Capital.” AER 31, no. 4 (1942): 767–79. Somary, Felix. The Raven of Zurich: The Memoirs of Felix Somary. New York: St. Martin’s, 1986. Sombart, Werner. Der moderne Kapitalismus.

Understanding these interactions may permit us to change our world for the better. 1 THE PREHISTORY AND EARLY YEARS OF THE AUSTRIAN SCHOOL In the orthodox telling of the Austrian School story, in the beginning was Carl Menger: “In 1871 Carl Menger founded the Austrian School in Vienna with his pathbreaking Principles of Economics.”1 His Principles offered a significant reformulation of core economic concepts like value, price, and production, contributing to an incipient transformation in economics called the marginal revolution. Alongside French, English, and American scholars, the Viennese thinker overturned a century of received wisdom from “classical” political economists such as Adam Smith and David Ricardo. In Vienna, Menger spawned a movement with his words. Historians of economic thought have noted, however, that an Austrian School of economics did not spring fully formed from Menger’s mind or from the pages of Principles. In fact, Principles was poorly distributed, found a limited readership, received middling reviews, and played a minor role in the vibrant economic discussions of the 1870s.


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Imperial Ambitions: Conversations on the Post-9/11 World by Noam Chomsky, David Barsamian

British Empire, collective bargaining, cuban missile crisis, declining real wages, failed state, feminist movement, Howard Zinn, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Joseph Schumpeter, launch on warning, liberation theology, Monroe Doctrine, Nelson Mandela, offshore financial centre, public intellectual, Ronald Reagan, The Wealth of Nations by Adam Smith, Thomas L Friedman, Upton Sinclair, uranium enrichment, Westphalian system

Social Security was created in response to pressure from popular, organized social movements—the labor movement and others—that were based on the idea of solidarity and mutual aid. If you go back to Adam Smith, whom we’re supposed to revere but not read, he assumed that sympathy was the core human value, and society should therefore be constructed so that this natural human dedication to sympathy and mutual support will be satisfied. In fact, his main argument for markets was that they would, under conditions of perfect liberty, lead to perfect equality. In fact, Smith’s famous phrase “the invisible hand,” which everyone totally misuses, appears only once in The Wealth of Nations, in the context of an argument against what we now call neoliberalism.5 He says that if English manufacturers and investors imported from abroad and invested overseas, rather than here, it would be harmful to England.

INTELLECTUAL SELF-DEFENSE 1. BBC World News, 3 December 2004. 2. Thomas E. Ricks, Washington Post, 9 May 2004. 3. PIPA/Knowledge Networks Poll, Press Release, 3 December 2003; and additional PIPA polls. 4. Edmund L. Andrews, New York Times, 3 December 2004. 5. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776) (University of Chicago Press, 1996), book 4, chap. 2. 6. David Ricardo, The Principles of Political Economy and Taxation (Dover, 2004), pp. 83–84. 7. Lord Hutton, “Report of the Inquiry into the Circumstances Surrounding the Death of Dr. David Kelly C.M.G.,” 28 January 2004. 8.

In fact, Smith’s famous phrase “the invisible hand,” which everyone totally misuses, appears only once in The Wealth of Nations, in the context of an argument against what we now call neoliberalism.5 He says that if English manufacturers and investors imported from abroad and invested overseas, rather than here, it would be harmful to England. In other words, if they followed what are now called the principles of Adam Smith, it would be harmful to England. He said, however, there was no reason to worry about that because “upon equal or nearly equal profits, every wholesale merchant naturally prefers the home-trade to the foreign trade of consumption.” That is, British capitalists will individually prefer to use domestically produced goods and to invest at home. So, therefore, as if “led by an invisible hand to promote an end which was no part of his intention,” the threat of what’s now called neoliberalism will be avoided.


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Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity by Daron Acemoglu, Simon Johnson

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 4chan, agricultural Revolution, AI winter, Airbnb, airline deregulation, algorithmic bias, algorithmic management, Alignment Problem, AlphaGo, An Inconvenient Truth, artificial general intelligence, augmented reality, basic income, Bellingcat, Bernie Sanders, Big Tech, Bletchley Park, blue-collar work, British Empire, carbon footprint, carbon tax, carried interest, centre right, Charles Babbage, ChatGPT, Clayton Christensen, clean water, cloud computing, collapse of Lehman Brothers, collective bargaining, computer age, Computer Lib, Computing Machinery and Intelligence, conceptual framework, contact tracing, Corn Laws, Cornelius Vanderbilt, coronavirus, corporate social responsibility, correlation does not imply causation, cotton gin, COVID-19, creative destruction, declining real wages, deep learning, DeepMind, deindustrialization, Demis Hassabis, Deng Xiaoping, deskilling, discovery of the americas, disinformation, Donald Trump, Douglas Engelbart, Douglas Engelbart, Edward Snowden, Elon Musk, en.wikipedia.org, energy transition, Erik Brynjolfsson, European colonialism, everywhere but in the productivity statistics, factory automation, facts on the ground, fake news, Filter Bubble, financial innovation, Ford Model T, Ford paid five dollars a day, fulfillment center, full employment, future of work, gender pay gap, general purpose technology, Geoffrey Hinton, global supply chain, Gordon Gekko, GPT-3, Grace Hopper, Hacker Ethic, Ida Tarbell, illegal immigration, income inequality, indoor plumbing, industrial robot, interchangeable parts, invisible hand, Isaac Newton, Jacques de Vaucanson, James Watt: steam engine, Jaron Lanier, Jeff Bezos, job automation, Johannes Kepler, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph-Marie Jacquard, Kenneth Arrow, Kevin Roose, Kickstarter, knowledge economy, labor-force participation, land reform, land tenure, Les Trente Glorieuses, low skilled workers, low-wage service sector, M-Pesa, manufacturing employment, Marc Andreessen, Mark Zuckerberg, megacity, mobile money, Mother of all demos, move fast and break things, natural language processing, Neolithic agricultural revolution, Norbert Wiener, NSO Group, offshore financial centre, OpenAI, PageRank, Panopticon Jeremy Bentham, paperclip maximiser, pattern recognition, Paul Graham, Peter Thiel, Productivity paradox, profit maximization, profit motive, QAnon, Ralph Nader, Ray Kurzweil, recommendation engine, ride hailing / ride sharing, Robert Bork, Robert Gordon, Robert Solow, robotic process automation, Ronald Reagan, scientific management, Second Machine Age, self-driving car, seminal paper, shareholder value, Sheryl Sandberg, Shoshana Zuboff, Silicon Valley, social intelligence, Social Responsibility of Business Is to Increase Its Profits, social web, South Sea Bubble, speech recognition, spice trade, statistical model, stem cell, Steve Jobs, Steve Wozniak, strikebreaker, subscription business, Suez canal 1869, Suez crisis 1956, supply-chain management, surveillance capitalism, tacit knowledge, tech billionaire, technoutopianism, Ted Nelson, TED Talk, The Future of Employment, The Rise and Fall of American Growth, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, theory of mind, Thomas Malthus, too big to fail, total factor productivity, trade route, transatlantic slave trade, trickle-down economics, Turing machine, Turing test, Twitter Arab Spring, Two Sigma, Tyler Cowen, Tyler Cowen: Great Stagnation, union organizing, universal basic income, Unsafe at Any Speed, Upton Sinclair, upwardly mobile, W. E. B. Du Bois, War on Poverty, WikiLeaks, wikimedia commons, working poor, working-age population

Weavers typically did not work on Mondays, and sometimes even Tuesdays, and when necessary made it up by working Friday and Saturday nights. Most workers did not need to keep careful track of time or did not even have access to clocks. Factory work changed all that. The modern imagery of early factories owes much to Adam Smith’s vivid description of a pin factory in his classic book, The Wealth of Nations. Smith emphasized how the division of labor in factories improved efficiency by allowing each worker to focus on a very specific task in the process of pin making. But early factory organization had as much to do with worker discipline as the division of labor for technical efficiency.

If the market process was already incentivizing businesses to offer safe and high-quality products, additional regulations would only divert effort and reduce profitability, forcing businesses to increase prices or reduce labor demand. These ideas about the idealized market process have been part of economic theory ever since Adam Smith’s The Wealth of Nations introduced the notion of the invisible hand—a metaphor for the notion that the market provides good outcomes for everyone, if there is enough competition. There has always been debate on this point, with the other side taken by people like John Maynard Keynes, who points out that markets do not function in an idealized way.

Things are even worse when these corporations can block entry by new competitors or when they are able to acquire competing businesses, as the robber barons of late nineteenth-century America understood all too well. Adam Smith, the original proponent of the market-mechanism magic, was damning in his account of how even small groups of businessmen getting together could damage the common good. In a famous passage in The Wealth of Nations, he wrote, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”


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An Empire of Wealth: Rise of American Economy Power 1607-2000 by John Steele Gordon

accounting loophole / creative accounting, Alan Greenspan, bank run, banking crisis, Bretton Woods, British Empire, business cycle, buttonwood tree, California gold rush, Charles Babbage, clean water, collective bargaining, Corn Laws, Cornelius Vanderbilt, corporate governance, cotton gin, cuban missile crisis, disintermediation, double entry bookkeeping, failed state, Fairchild Semiconductor, financial independence, flying shuttle, Ford Model T, Frederick Winslow Taylor, full employment, Glass-Steagall Act, global village, Ida Tarbell, imperial preference, industrial research laboratory, informal economy, interchangeable parts, invisible hand, Isaac Newton, it's over 9,000, Jacquard loom, James Hargreaves, James Watt: steam engine, joint-stock company, joint-stock limited liability company, junk bonds, lone genius, Louis Pasteur, low interest rates, margin call, Marshall McLuhan, means of production, megaproject, Menlo Park, Mikhail Gorbachev, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, new economy, New Urbanism, postindustrial economy, price mechanism, Ralph Waldo Emerson, RAND corporation, rent control, rent-seeking, reserve currency, rolodex, Ronald Reagan, Savings and loan crisis, spinning jenny, Suez canal 1869, The Wealth of Nations by Adam Smith, three-masted sailing ship, trade route, transaction costs, transcontinental railway, undersea cable, vertical integration, Yom Kippur War

Sir Dudley North (1641–91), for instance, demonstrated that the idea that one nation could grow rich only at the expense of another was a fallacy and that the more trade, both exports and imports, the better. Adam Smith would draw heavily on North and others in writing The Wealth of Nations. But mercantilism coincided with powerful economic self-interests among merchants and manufacturers who wanted protection from foreign competition, and it held intellectual sway until Adam Smith blew it away with one of the most powerfully argued and influential books in Western history. In 1651 England began passing a series of Navigation Acts to regulate the trade of its American colonies.

And yet the Constitution endures, and the country continues to flourish under it. By no means the least of the lucky breaks that the United States has had in its history was the time at which it came into existence and established its fundamental laws. In one of history’s great coincidences, Adam Smith published The Wealth of Nations in 1776. It destroyed the intellectual underpinnings of the mercantilism on which the economic policies of Western nations had been based for two hundred years. It showed in example after example, each more powerfully argued than the next, that unfettered trade, both within and without the country, and a government that did not take sides as individuals competed in the marketplace resulted in greater prosperity for all and thus greater power for the country as a whole.

A protective tariff always has a surface plausibility that makes it attractive to politicians: a protective tariff saves jobs and protects profits in the short term, which is what always most concerns politicians—who are usually up for reelection in the near future. Even Alexander Hamilton recommended one in his “Report on Manufactures.” But the arguments against it, laid out at length in The Wealth of Nations, are economically persuasive. Most important, a tariff is not paid by foreign producers; it is paid by domestic consumers, to whom the cost is passed along. And consumers not only pay higher prices for foreign goods, they also pay higher prices for domestic goods as well, for local producers will invariably take advantage of any opportunity to raise their own prices.


pages: 632 words: 159,454

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

accounting loophole / creative accounting, Alan Greenspan, anti-communist, Asian financial crisis, asset-backed security, Atahualpa, balance sheet recession, bank run, banking crisis, Bear Stearns, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business cycle, 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 engineering, financial innovation, fixed income, floating exchange rates, foreign exchange controls, Francisco Pizarro, full employment, German hyperinflation, Glass-Steagall Act, guns versus butter model, hiring and firing, income inequality, invisible hand, Isaac Newton, it's over 9,000, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Rogoff, labour market flexibility, land bank, liberal capitalism, low interest rates, market bubble, money: store of value / unit of account / medium of exchange, moral hazard, new economy, Nixon triggered the end of the Bretton Woods system, oil shock, plutocrats, Ponzi scheme, price mechanism, quantitative easing, rolodex, Ronald Reagan, South Sea Bubble, subprime mortgage crisis, Suez canal 1869, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the market place, The Wealth of Nations by Adam Smith, too big to fail, War on Poverty, Yom Kippur War

Bodin was in no doubt that the Spanish were to blame for this increase in prices, since when ‘the Spaniard made himself lord of the New World, axes and knives were sold there for more than pearls and precious stones’. As a consequence, ‘everything is more expensive in Spain and Italy than in France, and more so in Spain than in Italy’.44 Bodin’s insight into the monetary significance of the Spanish discovery of the New World was shared by other great economists. In Book I of The Wealth of Nations, Adam Smith asserted that the ‘discovery of the mines of America diminished the value of gold and silver in Europe’. Smith made the further point that, after the discovery of Potosí, ‘the silver mines of Europe were, the greater part of them, abandoned’, since the value of silver ‘was so much reduced that their produce [of the European silver mines] could no longer pay the expence of working them . . . with a profit’.

Fitzgerald, Money Growth and Inflation: How Long is the Long-Run?, 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.

Skidelsky, Robert, John Maynard Keynes: Hopes Betrayed, 1883–1920, London, 1983. Slivinski, Stephen, Buck Wild: How Republicans Broke the Bank and Became the Party of Big Government, Nashville, 2006. Sloan, Alfred, My Life with General Motors, London, 1986 (1st edn 1963). Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations, London, 2007 (1st edn 1776). Smith, Vera C., The Rationale of Central Banking, London, 1936. Sobel, Robert, The Last Bull Market: Wall Street in the 1960s, New York, 1980. Sobel, Robert, The Worldly Economists, New York, 1980. Sorkin, Andrew Ross, Too Big to Fail: Inside the Battle to Save Wall Street, London, 2009.


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

Affordable Care Act / Obamacare, Alan Greenspan, British Empire, business cycle, Carmen Reinhart, classic study, credit crunch, Daniel Kahneman / Amos Tversky, debt deflation, deindustrialization, Etonian, eurozone crisis, falling living standards, full employment, Gini coefficient, Greenspan put, growth hacking, hedonic treadmill, hiring and firing, income inequality, interest rate swap, invisible hand, It's morning again in America, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Rogoff, labour market flexibility, low interest rates, low skilled workers, MITM: man-in-the-middle, mortgage debt, new economy, Northern Rock, obamacare, oil shock, plutocrats, price stability, quantitative easing, Right to Buy, 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

Examining the ‘plague’ of poverty in America, Heritage Foundation, Washington, DC, 2007, at: www.heritage.org/research/reports/2007/08/how-poor-are-americas-poor-examining-the-plague-of-poverty-in-america 5. Maud Pember-Reeves, Round About a Pound a Week, C. Bell and Son, London, 1914, at: http://archive.org/stream/roundaboutpoundw­00reevrich#page/12/mode/2up 6. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Electronic Classics Series Publications, Hazleton, PA, 2005 [1776], at: www2.hn.psu.edu/faculty/jmanis/adam-smith/wealth-nations.pdf 7. See, for example, Amartya Sen, Inequality Reexamined, Oxford University Press, Oxford, 1995. 8. The connection between, for example, low social class and cardiovascular disease is now familiar.

The dividing line between essential and non-essential expenditure is, however, not as sharp as the likes of the Heritage Foundation would have us believe. For an explanation of why, we turn not to Keynes or Marx, but to an authority whose name is often claimed by the free-market Right: Adam Smith, writing in The Wealth of Nations. By necessaries I understand, not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without. A linen shirt, for example, is, strictly speaking, not a necessary of life.

‘Deleveraging and growth: Japan's long and winding road’, lecture at the London School of Economics, 10 January 2012, available at: www.lse.ac.uk/asiaResearchCentre/_files/Shi­rakawaLectureTranscript.pdf Skidelsky, Robert. John Maynard Keynes, vol. 2: The Economist as Savior, 1920–37, Penguin Viking, New York, 1995. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations, Electronic Classics Series Publications, Hazleton, PA, 2005 [1776], available at: www2.hn.psu.edu/faculty/jmanis/adam-smith/wealth-nations.pdf Smith, Jean Edward. FDR, Random House paperback edition, New York, 2008 [2007]. Steinbeck, John. The Grapes of Wrath, Pan Books, London, 1975 [1939]. Stiglitz, Joseph. The Price of Inequality, Penguin/Allen Lane, London, 2012.


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An Edible History of Humanity by Tom Standage

agricultural Revolution, amateurs talk tactics, professionals talk logistics, Bartolomé de las Casas, British Empire, carbon footprint, Columbian Exchange, Corn Laws, cotton gin, demographic transition, Deng Xiaoping, Eratosthenes, financial innovation, food miles, Great Leap Forward, Haber-Bosch Process, invisible hand, James Watt: steam engine, Kickstarter, Louis Pasteur, Mikhail Gorbachev, special economic zone, spice trade, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transatlantic slave trade, women in the workforce

Taking a long-term historical perspective also provides a new way to illuminate modern debates about food, such as the controversy surrounding genetically modified organisms, the relationship between food and poverty, the rise of the “local” food movement, the use of crops to make biofuels, the effectiveness of food as a means of mobilizing political support for various causes, and the best way to reduce the environmental impact of modern agriculture. In his book The Wealth of Nations, first published in 1776, Adam Smith famously likened the unseen influence of market forces, acting on participants who are all looking out for their own best interests, to an invisible hand. Food’s influence on history can similarly be likened to an invisible fork that has, at several crucial points in history, prodded humanity and altered its destiny, even though people were generally unaware of its influence at the time.

One factor that counted in the potato’s favor was the high status of white bread, made from wheat, compared with brown bread, made from rye, oats, and barley. English workers who had become wealthy enough to switch from brown to white bread during the eighteenth century were very reluctant to switch back again. When times were hard, they would sooner eat potatoes. In his book The Wealth of Nations, published in 1776, the Scottish philosopher and economist Adam Smith observed that “the food produced by a field of potatoes is not inferior in quantity to that produced by a field of rice, and much superior to what is produced by a field of wheat.” Even allowing for the fact that potatoes contained a large amount of water, he noted, “an acre of potatoes will still produce six thousand weight of solid nourishment, three times the quantity produced by the acre of wheat.”

Enriching the Earth: Fritz Haber, Carl Bosch, and the Transformation of World Food Production. Cambridge, Massachusetts: MIT Press, 2004. ———. “Nitrogen and Food Production: Proteins for Human Diets.” Ambio 31, no. 2 (March 2002): 126–31. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. Hartford: Oliver D. Cooke, 1804. Spaull, C. “The Hekanakhte Papers and Other Early Middle Kingdom Documents, by T. G. H. James.” (Review) Journal of Egyptian Archaeology 49 (1963): 184–86. Steinberg, Theodore. “An Ecological Perspective on the Origins of Industrialization.” Environmental Review 10, no. 4 (Winter 1986): 261–76.


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Economists and the Powerful by Norbert Haring, Norbert H. Ring, Niall Douglas

accounting loophole / creative accounting, Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, asset allocation, bank run, barriers to entry, Basel III, Bear Stearns, Bernie Madoff, book value, British Empire, buy and hold, central bank independence, collective bargaining, commodity trading advisor, compensation consultant, corporate governance, creative destruction, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, diversified portfolio, financial deregulation, George Akerlof, illegal immigration, income inequality, inflation targeting, information asymmetry, Jean Tirole, job satisfaction, Joseph Schumpeter, Kenneth Arrow, knowledge worker, land bank, law of one price, light touch regulation, Long Term Capital Management, low interest rates, low skilled workers, mandatory minimum, market bubble, market clearing, market fundamentalism, means of production, military-industrial complex, minimum wage unemployment, Money creation, moral hazard, new economy, obamacare, old-boy network, open economy, Pareto efficiency, Paul Samuelson, pension reform, Ponzi scheme, price stability, principal–agent problem, profit maximization, purchasing power parity, Renaissance Technologies, Robert Solow, rolodex, Savings and loan crisis, Sergey Aleynikov, shareholder value, short selling, Steve Jobs, The Chicago School, the payments system, The Wealth of Nations by Adam Smith, too big to fail, Tragedy of the Commons, transaction costs, ultimatum game, union organizing, Vilfredo Pareto, working-age population, World Values Survey

Ricardo would later use this treaty as his famous example to illustrate the mutual benefits of comparative advantage (Ricardo 1817); however Portugal to this day still lives with an unusually global-trade-dependant economy as a legacy of that treaty (Almodovar and Cardoso 1998). The birth of marginalism While the classical economists touted the virtues of free international trade and took issues of power out of international economics, they still left some room to discuss power in the national context, notably on the labor market. When Adam Smith wrote his famous Inquiry into the Wealth of Nations in 1776, large parts of the British population hardly had enough income to feed their children adequately and provide decent housing. For Smith, it was clear that wages were determined by the relative bargaining powers of industrialists and workers: What are the common wages of labour, depends everywhere upon the contract usually made between those two parties… The workmen desire to get as much, the masters to give as little as possible… It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms.

“Soros Fund Fined $2.2 Million by Hungarian Regulator.” Bloomberg, March 27. Smeeding, Timothy M. 2005. “Public Policy, Economic Inequality, and Poverty: The United States in Comparative Perspective.” Social Science Quarterly 86: 955–83. Smith, Adam. 1776/2007. An Inquiry into the Nature and Causes of the Wealth of Nations. Ed. Sálvio M. Soares. MetaLibri, 2007, v.1.0p. http://metalibri.wikidot.com/ title:an-inquiry-into-the-nature-and-causes-of-the-wealth-of (accessed March 28, 2012). Sonik, Sara and David Hemenway. 1998. “Is More Always Better? A Survey on Positional Concerns.” Journal of Economic Behavior and Organization 37: 373–83.

He who pays the piper calls the tune The Member of Parliament, who supports every proposal for strengthening this monopoly, is sure to acquire not only the reputation of understanding trade, but great popularity and 42 ECONOMISTS AND THE POWERFUL influence with an order of men, whose numbers and wealth render them of great importance. —Adam Smith, 1784 What Adam Smith said in the above quote from the second edition of his Wealth of Nations regarding parliamentarians and their incentives to please powerful economic interests holds true for economists as well, and still does to this day. The modern mainstream conception of economics is attractive to all those who do well under the status quo and who would do even better with less grassroots and collective action.


Rethinking Islamism: The Ideology of the New Terror by Meghnad Desai

Ayatollah Khomeini, battle of ideas, Berlin Wall, Dr. Strangelove, full employment, global village, illegal immigration, income per capita, invisible hand, liberal capitalism, liberation theology, Mahatma Gandhi, Martin Wolf, means of production, Meghnad Desai, Nelson Mandela, oil shock, purchasing power parity, Ronald Reagan, structural adjustment programs, The Wealth of Nations by Adam Smith, Timothy McVeigh, Yom Kippur War

.฀ The฀best฀system฀of฀governance฀was฀one฀which฀gave฀protection฀to฀ property฀in฀a฀rule-based฀framework฀and฀allowed฀maximum฀freedom฀ to฀people฀to฀pursue฀their฀self-interest.฀Adam฀Smith฀called฀this฀the฀ system฀of฀natural฀liberty,฀and฀argued฀that฀it฀was฀the฀best฀principle฀ and฀that฀all฀nations฀should฀seek฀to฀establish฀it. Smith฀ was฀ a฀ philosopher฀ rather฀ than฀ an฀ ideologue,฀ but฀ even฀ without฀ his฀ preaching฀ he฀ had฀ enormous฀ influence฀ soon฀ after฀ the฀ publication฀of฀his฀An฀Inquiry฀into฀the฀Nature฀and฀Causes฀of฀the฀Wealth฀ of฀ Nations.฀His฀doctrine฀of฀natural฀liberty฀(often฀wrongly฀labelled฀ laissez-faire)฀is฀programmatic฀only฀in฀recommending฀the฀removal฀of฀ obstacles฀to฀free฀commerce.

.฀ They฀ seek฀ a฀ total฀ explanation฀ of฀ the฀ world’s฀ past,฀   ฀  present฀and฀future,฀but฀one฀based฀in฀history,฀political฀economy฀and฀ sociology.฀Two฀centuries฀later,฀Karl฀Popper,฀a฀leading฀philosopher฀ of฀the฀twentieth฀century,฀was฀to฀castigate฀such฀totalising฀explanation฀as฀historicism.฀ Adam฀Smith฀was฀impressed฀by฀Newton’s฀success฀in฀explaining฀ the฀workings฀of฀the฀universe฀from฀a฀small฀number฀of฀first฀principles฀ –฀ gravity฀ for฀ one.฀ He฀ attempted฀ a฀ theory฀ of฀ history฀ based฀ on฀ a฀ notion฀of฀stages฀of฀development฀–฀a฀sequence฀of฀modes฀of฀subsistence.฀ The฀ stages฀ began฀ with฀ hunting฀ and฀ gathering,฀ followed฀ by฀ pastoralism,฀ agriculture฀ and฀ then฀ finally฀ commerce.฀ A฀ central฀ principle฀ was฀ that฀ people฀ had฀ a฀ propensity฀ to฀ ‘truck฀ and฀ barter’,฀ and฀as฀they฀pursued฀their฀own฀interests฀social฀changes฀came฀about฀ through฀ the฀ autonomous฀ action฀ of฀ myriad฀ individuals.฀ Laws฀ of฀ property฀evolved฀over฀time,฀and฀systems฀of฀governance฀emerged.฀ The฀best฀system฀of฀governance฀was฀one฀which฀gave฀protection฀to฀ property฀in฀a฀rule-based฀framework฀and฀allowed฀maximum฀freedom฀ to฀people฀to฀pursue฀their฀self-interest.

.฀ The฀ ideas฀ in฀ the฀ abandoned฀ manuscript฀ surfaced฀ in฀ various฀ abridged฀forms,฀most฀famously฀in฀the฀Preface฀to฀A฀Contribution฀to฀ the฀ Critique฀ of฀ Political฀ Economy,฀ which฀ Marx฀ wrote฀ in฀ .฀ The฀ Preface฀contains฀a฀terse฀summary฀of฀the฀materialist฀theory฀of฀history,฀the฀foundation฀upon฀which฀Marx’s฀theory฀of฀the฀dynamics฀of฀ history฀was฀built.฀It฀offers฀a฀theory฀of฀the฀stages฀of฀history฀similar฀ to฀but฀more฀complex฀than฀the฀one฀Adam฀Smith฀had฀proposed.฀But฀ ฀ ฀  by฀the฀time฀the฀Preface฀was฀published฀in฀,฀Marx฀had฀already฀ become฀better฀known.฀This฀was฀because฀of฀another฀much฀shorter฀ book฀–฀indeed฀a฀pamphlet฀–฀that฀he฀and฀Engels฀had฀written.฀It฀was฀ not฀just฀a฀theory฀of฀history;฀it฀made฀history. Marx฀and฀Engels฀followed฀up฀their฀abandoned฀tome฀on฀ideology฀ by฀ publishing฀ a฀ short฀ sharp฀ essay฀ for฀ the฀ Communist฀ League฀ in฀ ฀ –฀ The฀ Communist฀ Manifesto.฀ It฀ was฀ this฀ more฀ than฀ any฀ other฀ work฀ of฀ theirs฀ that฀ launched฀ Communism฀ as฀ an฀ ideology.฀ They฀ gave฀Communism฀a฀shape฀and฀a฀theory.


To the Ends of the Earth: Scotland's Global Diaspora, 1750-2010 by T M Devine

agricultural Revolution, British Empire, classic study, deindustrialization, deskilling, full employment, ghettoisation, Great Leap Forward, housing crisis, invention of the telegraph, invisible hand, it's over 9,000, joint-stock company, Khartoum Gordon, land tenure, Lewis Mumford, manufacturing employment, mass immigration, new economy, New Urbanism, oil shale / tar sands, railway mania, Red Clydeside, rising living standards, Robert Gordon, Scramble for Africa, Suez canal 1869, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transatlantic slave trade, transcontinental railway, women in the workforce

Scottish educators and ministers were commonplace throughout, and in particular at some of the great institutions of higher learning in America – the College of New Jersey (later Princeton), William and Mary and the College of Philadelphia (later the University of Pennsylvania).81 Thus it was that Scottish civil institutions began to make a deep mark on the expansion of empire only a few generations after the union with England. 2 Did Slavery Help to Make Scotland Great? In his magnum opus, The Wealth of Nations, Adam Smith famously declared that: ‘Under the present system of management, therefore, Great Britain derives nothing but loss from the dominion which she assumes over her colonies.’ Yet, even Smith’s authority could not lay to rest the question of whether empire in the later eighteenth century was a drain on the metropolis or a priceless resource of great material advantage to the mother country as it moved towards economic transformation.

Karras, Sojourners in the Sun: Scottish Migrants in Jamaica and the Chesapeake 1740–1800 (Ithaca, N. Y., 1992), pp. 43–5; Hamilton, Scotland, the Caribbean and the Atlantic World, pp. 23–4. 29. National Archives, Customs 14 and 17/12. Copies in National Archives of Scotland (NAS), RH 2/4/22 and 40 30. Adam Smith, The Wealth of Nations (1776; London, 1937), p. 366. 31. J. R. Ward, ‘The British West Indies in the Age of Abolition’, in Marshall, ed., Oxford History, p. 427. 32. Ibid. 33. Quoted in R. B. Sheridan, ‘The Formation of Caribbean Plantation Society, 1689–1748’, in Marshall, ed., Oxford History, p. 402. 34.

., Love and Liberty (Edinburgh, 1997). Slaven, A., The Development of the West of Scotland 1750–1960 (London, 1975). Slaven, Anthony and Sydney Checkland, eds., Dictionary of Scottish Business Biography 1860–1960, Vol. 2 (Aberdeen, 1990). Smith, Adam, The Theory of Moral Sentiments (1759; London, 1804 edn). Smith, Adam, The Wealth of Nations (1776; London, 1937 edn). Smith, Bill, Robert Fleming 1845–1933 (Haddington, 2000). Smout, T. C., ‘Tours in the Scottish Highlands from the eighteenth to the twentieth centuries’, Northern Scotland, 5 (1983). Smout, T. C., A Century of the Scottish People, 1830–1950 (London, 1986). Smout, T.


pages: 346 words: 90,371

Rethinking the Economics of Land and Housing by Josh Ryan-Collins, Toby Lloyd, Laurie Macfarlane

agricultural Revolution, asset-backed security, balance sheet recession, bank run, banking crisis, barriers to entry, basic income, book value, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, Corn Laws, correlation does not imply causation, creative destruction, credit crunch, debt deflation, deindustrialization, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, foreign exchange controls, full employment, garden city movement, George Akerlof, ghettoisation, Gini coefficient, Hernando de Soto, housing crisis, Hyman Minsky, income inequality, information asymmetry, knowledge worker, labour market flexibility, labour mobility, land bank, land reform, land tenure, land value tax, Landlord’s Game, low interest rates, low skilled workers, market bubble, market clearing, Martin Wolf, means of production, Minsky moment, Money creation, money market fund, mortgage debt, negative equity, Network effects, new economy, New Urbanism, Northern Rock, offshore financial centre, Pareto efficiency, place-making, Post-Keynesian economics, price stability, profit maximization, quantitative easing, rent control, rent-seeking, Richard Florida, Right to Buy, rising living standards, risk tolerance, Robert Solow, Second Machine Age, secular stagnation, shareholder value, subprime mortgage crisis, the built environment, The Great Moderation, The Market for Lemons, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, universal basic income, urban planning, urban sprawl, working poor, working-age population

This rent will change over time as land is developed around any particular plot, out of the control of any individual landlord. But equally, economic rent is not related to the investment the landowner has put into the land. In other words, rent is determined by collective rather than individual investment and activity. As Adam Smith noted in The Wealth of Nations (1776, p. 162): The rent of land, therefore, considered as the price paid for the use of the land, is naturally a monopoly price. It is not at all proportioned to what the landlord may have laid out upon the improvement of the land, or to what he can afford to take; but to what the farmer can afford to give.

London: Centre for Global Studies. Slack, Enid, and Richard M. Bird. 2014. ‘The Political Economy of Property Tax Reform’. OECD Working Papers on Fiscal Federalism no. 18, 9 April. Sloman, J., and A. Wride. 2009. Economics. 7th ed. Harlow: Prentice Hall. Smith, Adam. 1776. An Inquiry into the Nature and Causes of the Wealth of Nations. W. Strahan and T. Cadell. Snowdon, Christopher. 2010. The Spirit Level Delusion: Fact-Checking the Left’s New Theory of Everything. Ripon: Little Dice. Solow, Robert M. 1956. ‘A Contribution to the Theory of Economic Growth’. The Quarterly Journal of Economics 70 (1): 65–94. Stephens, Mark. 1993.

Since in most advanced economies all land is owned, it is not clear the Lockean justification for private property in land still has legitimacy. The classical political economists that followed Locke and fellow Enlightenment thinkers rejected the ‘natural law’ argument (we discuss this more in Chapter 3). Adam Smith, usually recognised as the founder of liberal economic thought and free markets, accepted the concept of natural rights but limited them to the notions of ‘liberty and life’. In contrast, he held property to be an acquired right that was dependent on the state and its form (West, 2003, pp. 20–42).


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Inequality and the 1% by Danny Dorling

Affordable Care Act / Obamacare, banking crisis, battle of ideas, Bear Stearns, Bernie Madoff, Big bang: deregulation of the City of London, Boris Johnson, Branko Milanovic, buy and hold, call centre, Capital in the Twenty-First Century by Thomas Piketty, centre right, collective bargaining, conceptual framework, corporate governance, credit crunch, David Attenborough, David Graeber, delayed gratification, Dominic Cummings, double helix, Downton Abbey, en.wikipedia.org, Etonian, family office, financial deregulation, full employment, gentrification, Gini coefficient, high net worth, housing crisis, income inequality, land value tax, Leo Hollis, Londongrad, longitudinal study, low skilled workers, lump of labour, mega-rich, Monkeys Reject Unequal Pay, Mont Pelerin Society, mortgage debt, negative equity, Neil Kinnock, Occupy movement, offshore financial centre, plutocrats, precariat, quantitative easing, race to the bottom, Robert Shiller, Russell Brand, TaskRabbit, TED Talk, The Spirit Level, The Wealth of Nations by Adam Smith, trickle-down economics, unpaid internship, very high income, We are the 99%, wealth creators, working poor

When they came into the world, and for the first six or eight years of their existence, they were perhaps, very much alike. Adam Smith, The Wealth of Nations (1776)48 Despite the greed of those at the top of the heap, many still find fault first with the unfortunates struggling at the bottom. Young people who cannot find employment typically appear among these innocent targets. Foremost among those casting aspersions on the young is David Cameron. The Conservative prime minister said in 2013: ‘Today it is still possible to leave school, sign on, find a flat, start claiming housing benefit and opt for a life on benefits.’49 In fact, people almost never opt for poverty. As Adam Smith noted more than two centuries ago, although some may be more prone to selfish habit we are all very much alike at the start – it is the circumstances we find ourselves in that turn us into bullies, or the bullied.

Dixon, ‘Judges Lose Their Sky TV at Taxpayer Funded Lodgings’, Telegraph, 14 October 2013. 47. A. Foster, ‘Jeremy Paxman Takes 20 Per Cent Pay Cut to Stay at Newsnight – But Still Gets £3M over Four Years’, Evening Standard, 8 February 2011. 48. A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Book I, Chapter II: ‘Of the Principle which Gives Occasion to the Division of Labour’, Section 1.2.4 (London: Methuen, 5th edn, 1904 [1776]), at econlib.org. 49. BBC, ‘David Cameron Suggests Cutting Benefits for Under-25s’, BBC News, 2 October 2013, at bbc.co.uk. 50. C. Hope, ‘Exclusive: Cabinet Is Worth £70 Million’, Telegraph, 27 May 2012. 51.

Elbaek and N. Lawson, ‘The Bridge: How the Politics of the Future Will Link the Vertical to the Horizontal’, London, Compass, at compassonline.org.uk. 48. H. Dalton, ‘The Measurement of the Inequality of Incomes’, Economics Journal 30: 119 (September 1920), at jstor.org. 49. World Bank, ‘Where is the Wealth of Nations? Measuring Capital for the 21st Century’, Washington, DC, World Bank, 2006, at web.worldbank.org. 50. J. B. Stewart, ‘Calculated Deal in a Rate-Rigging Inquiry’, New York Times, 13 July 2012. 51. E. Logutenkova, ‘UBS, Barclays Dodge $4.3 Billion EU Fines for Rate Rigging’, Bloomberg News, 4 December 2013, at bloomberg.com. 52.


pages: 650 words: 203,191

After Tamerlane: The Global History of Empire Since 1405 by John Darwin

agricultural Revolution, Atahualpa, Berlin Wall, Bretton Woods, British Empire, Cape to Cairo, classic study, colonial rule, Columbian Exchange, cuban missile crisis, deglobalization, deindustrialization, European colonialism, failed state, Francisco Pizarro, Great Leap Forward, invisible hand, Isaac Newton, joint-stock company, Khartoum Gordon, laissez-faire capitalism, land reform, Mahatma Gandhi, Malacca Straits, military-industrial complex, mutually assured destruction, new economy, New Urbanism, oil shock, open economy, price mechanism, reserve currency, Ronald Reagan, Scramble for Africa, South China Sea, South Sea Bubble, spice trade, Suez canal 1869, Suez crisis 1956, The Wealth of Nations by Adam Smith, trade route, transaction costs, transatlantic slave trade

The fourth assumption concerns our understanding of empire. Empire is often seen as the original sin of European peoples, who corrupted an innocent world. Of course its real origins are much older, and lie in a process almost universal in human societies. It was a human characteristic, remarked Adam Smith in The Wealth of Nations (1776), to want to ‘truck, barter and exchange’.23 Smith was thinking of material goods: it was the habit of exchange that allowed the division of labour, the real foundation of economic life. But he might well have extended his philosophical insight to the parallel world of information and ideas.

High costs of production and the loss of export markets, as trade rivals raised tariffs, damaged manufacturing and drove capital towards public lending at home and abroad – a strategy shipwrecked by the political and diplomatic crises at the end of the century. Altogether the Dutch experiment in pre-industrial modernity was aborted by three forces endemic in early modern Europe: the ‘mercantilist’ tendency towards closed markets and commercial autarky – the trade-suppressing policies castigated by Adam Smith in The Wealth of Nations – the high costs of pre-industrial manufacturing, coupled with the environmental limits on agricultural growth; and the drastic consequences of intra-European conflict for the fiscal systems of European states. Dutch experience suggested that the limits of preindustrial modernity would soon be felt for Britain and France also, and that it would require a technological, political and geostrategic revolution before the European style of economy could successfully colonize the rest of Eurasia – and the world. 4 The Eurasian Revolution 4.

The most prosperous regions could be seen in France, mainland Britain, the Low Countries, the Rhineland, northern Italy and parts of Catalonia, and among the commercial towns of southern and eastern Germany and the Austrian Empire. These were the places where an advanced commercial economy of the kind that Adam Smith described in The Wealth of Nations had taken firm root. Economic growth was driven by increased specialization and the division of labour, allowing productivity to rise and the market to grow in a virtuous circle. Incremental improvements in manufacturing technique and the use of the land pushed in the same direction.


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The Enlightened Capitalists by James O'Toole

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Abraham Maslow, activist fund / activist shareholder / activist investor, anti-communist, Ayatollah Khomeini, benefit corporation, Bernie Madoff, Bletchley Park, book value, British Empire, business cycle, business logic, business process, California gold rush, carbon footprint, City Beautiful movement, collective bargaining, company town, compensation consultant, Cornelius Vanderbilt, corporate governance, corporate social responsibility, Credit Default Swap, crowdsourcing, cryptocurrency, desegregation, do well by doing good, Donald Trump, double entry bookkeeping, end world poverty, equal pay for equal work, Frederick Winslow Taylor, full employment, garden city movement, germ theory of disease, glass ceiling, God and Mammon, greed is good, high-speed rail, hiring and firing, income inequality, indoor plumbing, inventory management, invisible hand, James Hargreaves, job satisfaction, joint-stock company, Kickstarter, knowledge worker, Lao Tzu, Larry Ellison, longitudinal study, Louis Pasteur, Lyft, Marc Benioff, means of production, Menlo Park, North Sea oil, passive investing, Ponzi scheme, profit maximization, profit motive, Ralph Waldo Emerson, rolodex, Ronald Reagan, Salesforce, scientific management, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, Socratic dialogue, sovereign wealth fund, spinning jenny, Steve Jobs, Steve Wozniak, stock buybacks, stocks for the long run, stocks for the long term, The Fortune at the Bottom of the Pyramid, The Wealth of Nations by Adam Smith, Tim Cook: Apple, traveling salesman, Uber and Lyft, uber lyft, union organizing, Vanguard fund, white flight, women in the workforce, young professional

That caveat registered, the protagonists of most stories about great business leaders have been self-interested individuals whose metrics of success were profits and wealth creation. Moreover, the goal of profit has long been accepted by most citizens in capitalist societies as both appropriate and sufficient. The Realists’ Case Against Business Enlightenment IN 1776 ADAM SMITH laid the foundation for the case against business idealism in The Wealth of Nations: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their self-interest.”17 Baldly stated, Smith thus reminds us that the motivation bakers have in baking bread is making money, not feeding us.

Owen was born in Wales in 1771, the sixth of seven children in a lower-middle-class family that, unusually for the era, had the wherewithal to send Robert and his siblings to the village school. Owen’s first four years of childhood were passed at home with his loving family (at roughly the time Adam Smith was furiously penning The Wealth of Nations in Edinburgh). Beginning at age five, Owen attended the school taught by a certain Mr. Thickness, whose improbable Dickensian name was an accurate description of his mental capabilities. Despite schoolmaster Thickness’s shortcomings, Owen proved himself to be something of a prodigy, learning to read, write, and do arithmetic sums by the time he was seven.

., to Get Out of Standard Oil,” New York World, May 22, 1905. 10.Vincent Curcio, Henry Ford (New York: Oxford University Press, 2013), 114. 11.Curcio, 168–69. 12.David Nasaw, Andrew Carnegie (New York: Penguin, 2006). 13.Nasaw, 167. 14.Nasaw, 358. 15.Nasaw, 647. 16.Nasaw, 750. 17.Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London: W. Strahan and T. Cadell, 1776), 1:17. 18.Stanley Fish, “Are the Studios in the Morality Business?” Los Angeles Times, February 28, 2016. 19.Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962). 20.Smith, Wealth of Nations, 4:35. 21.Quoted in Businessweek, February 26, 2001, 101. 22.Edward E.


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Dirty Secrets How Tax Havens Destroy the Economy by Richard Murphy

"Friedman doctrine" OR "shareholder theory", banking crisis, barriers to entry, Bernie Sanders, centre right, corporate governance, Donald Trump, Double Irish / Dutch Sandwich, en.wikipedia.org, Glass-Steagall Act, Global Witness, high net worth, income inequality, intangible asset, Leo Hollis, light touch regulation, moral hazard, Occupy movement, offshore financial centre, race to the bottom, Social Responsibility of Business Is to Increase Its Profits, Suez canal 1869, Suez crisis 1956, The Wealth of Nations by Adam Smith, transfer pricing, Washington Consensus

Murphy, ‘Country-by-Country Reporting: Accounting for Globalisation Locally’, Tax Justice Network, 2012, pdf at taxresearch.org.uk. 30.This is an OECD estimate. See OECD, ‘About BEPS and the Inclusive Framework’, at oecd.org. 2The Problems of Secrecy 1.Federal Trade Commission, ‘Guide to Antitrust Laws’, at ftc.gov. 2.A. Smith, An Enquiry into the Nature and Causes of the Wealth Of Nations, pdf at ibiblio.org, p. 574. 3.G. Zucman, The Hidden Wealth of Nations: The Scourge of Tax Havens (Chicago: University of Chicago Press, 2015). 4.Philip Booth, ‘Oxfam’s 355 Economists Are Completely Wrong: Tax Havens Do Serve a Useful Purpose’, City AM, 10 May 2016. 5.Dan Mitchell, ‘Debating Tax Havens’, International Liberty, 13 July 2013, at danieljmitchell.wordpress.com. 6.M.

This is especially true in the current era: when the owners of most limited companies provide them with very little capital, which is the only sum that protects creditors from a potential insolvency, it is only the availability of data on who owns and really manages a company and the publication of its accounts that can offer any protection from abuse to creditors and stakeholders such as employees, customers, tax authorities and society at large. I am not alone in taking this view. Adam Smith was massively concerned about the abuse of limited liability: The directors of such companies, however, being the managers rather of other people’s money than of their own, it cannot well be expected that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own.

Its ability to permit the accumulation of private capital from a variety of sources proved to be a catalyst in the evolution of society, its economies, and the release of human potential for the common good. But he was also right that all this was accompanied by risks that still remain today. In fact, the secrecy that so many tax havens provide on the ownership, identity of management, and trading of companies delivers the precise scenario in which Adam Smith’s worst fears about the abuses that limited liability could give rise to might be realised. Only transparency and accountability can counterbalance these risks and ensure that limited-liability companies can operate without significant cost to society. The Cost of Tax Havens What are these costs?


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Postcapitalism: A Guide to Our Future by Paul Mason

air traffic controllers' union, Alan Greenspan, Alfred Russel Wallace, bank run, banking crisis, banks create money, Basel III, basic income, Bernie Madoff, Bill Gates: Altair 8800, bitcoin, Bletchley Park, Branko Milanovic, Bretton Woods, BRICs, British Empire, business cycle, business process, butterfly effect, call centre, capital controls, carbon tax, Cesare Marchetti: Marchetti’s constant, Claude Shannon: information theory, collaborative economy, collective bargaining, commons-based peer production, Corn Laws, corporate social responsibility, creative destruction, credit crunch, currency manipulation / currency intervention, currency peg, David Graeber, deglobalization, deindustrialization, deskilling, discovery of the americas, disinformation, Downton Abbey, drone strike, en.wikipedia.org, energy security, eurozone crisis, factory automation, false flag, financial engineering, financial repression, Firefox, Fractional reserve banking, Frederick Winslow Taylor, fulfillment center, full employment, future of work, game design, Glass-Steagall Act, green new deal, guns versus butter model, Herbert Marcuse, income inequality, inflation targeting, informal economy, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Internet of things, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Perry Barlow, Joseph Schumpeter, Kenneth Arrow, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, late capitalism, low interest rates, low skilled workers, market clearing, means of production, Metcalfe's law, microservices, middle-income trap, Money creation, money: store of value / unit of account / medium of exchange, mortgage debt, Network effects, new economy, Nixon triggered the end of the Bretton Woods system, Norbert Wiener, Occupy movement, oil shale / tar sands, oil shock, Paul Samuelson, payday loans, Pearl River Delta, post-industrial society, power law, precariat, precautionary principle, price mechanism, profit motive, quantitative easing, race to the bottom, RAND corporation, rent-seeking, reserve currency, RFID, Richard Stallman, Robert Gordon, Robert Metcalfe, scientific management, secular stagnation, sharing economy, Stewart Brand, structural adjustment programs, supply-chain management, technological determinism, The Future of Employment, the scientific method, The Wealth of Nations by Adam Smith, Transnistria, Twitter Arab Spring, union organizing, universal basic income, urban decay, urban planning, vertical integration, Vilfredo Pareto, wages for housework, WikiLeaks, women in the workforce, Yochai Benkler

WORK IS THE SOURCE OF VALUE Amid the empty shops in the run-down high street of Kirkcaldy, Scotland, there is a branch of Gregg’s. Gregg’s sells high-fat food at low prices and is one of the few places busy at lunchtime. A glance at Scotland’s poverty map gives the context: the town is dotted with areas of extreme deprivation and ill health.1 On the wall outside Gregg’s is a plaque marking the house where Adam Smith wrote The Wealth of Nations. Nobody takes much notice. But this is where, in 1776, the economic principles of capitalism were first laid out. I’m not sure Smith would like the look of his home town today, blighted by de-industrialization, low pay and chronic sickness. But he would have understood the cause. The source of all wealth, said Smith, is work.

If you witness workers sweating thirteen hours a day in a machine workshop, as Smith did, you will understand that it is the workers, not the machines, that produce the added value.3 Standard textbooks will tell you Smith thought the labour-theory was valid only for primitive societies, and that when it came to capitalism, ‘value’ was the combined product of wages, capital and land. This is incorrect.4 Smith’s labour theory of value was inconsistent, but on a detailed reading of The Wealth of Nations the argument is clear: labour is the source of value but the market can only reflect this roughly, through what Smith calls ‘higgling and bargaining’. So the law operates beneath the surface in a full capitalist economy. Profits and rents are deductions from the value produced by labour.5 David Ricardo, the most influential economist of the early nineteenth century, created a more developed model.

Romer, ‘Endogenous Technological Change’, Journal of Political Economy, vol. 98, no. 5, pt 2 (1990), pp. S71–S102 12. Ibid. p. S72 13. Ibid., pp. S71–S102 14. http://www.billboard.com/biz/articles/news/digital-and-mobile/1567869/business-matters-average-itunes-account-generates-just 15. D. Warsh, Knowledge and the Wealth of Nations: A Story of Economic Discovery (New York, 2007) 16. http://en.wikipedia.org/wiki/Apple_A7#cite_note-AnandTech-iPhone5s-A7-2 17. http://commons.wikimedia.org/wiki/File:Bill_Gates_Letter_to_Hobbyists.jpg 18. R. Stallman, The GNU Manifesto, March 1985, http://www.gnu.org/gnu/manifesto.html 19. http://gs.statcounter.com 20. http://www.businessinsider.com/android-market-share-2012-11 21.


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Six Degrees: The Science of a Connected Age by Duncan J. Watts

AOL-Time Warner, Berlin Wall, Bretton Woods, business process, corporate governance, Drosophila, Erdős number, experimental subject, fixed income, Frank Gehry, Geoffrey West, Santa Fe Institute, independent contractor, industrial cluster, invisible hand, it's over 9,000, Long Term Capital Management, market bubble, Milgram experiment, MITM: man-in-the-middle, Murray Gell-Mann, Network effects, new economy, Norbert Wiener, PalmPilot, Paul Erdős, peer-to-peer, power law, public intellectual, rolodex, Ronald Coase, Savings and loan crisis, scientific worldview, Silicon Valley, social contagion, social distancing, Stuart Kauffman, supply-chain management, The Nature of the Firm, the strength of weak ties, The Wealth of Nations by Adam Smith, Toyota Production System, Tragedy of the Commons, transaction costs, transcontinental railway, vertical integration, Vilfredo Pareto, Y2K

How is it, in other words, that the performance of firms—meaning their ability to allocate resources, innovate, adapt, and solve problems, both routine and radical—is related to their organizational architecture? MARKETS AND HIERARCHIES INDUSTRIAL ORGANIZATION IS ACTUALLY QUITE AN OLD SUBJECT, growing out of the economic and social upheaval of the Industrial Revolution. Indeed, it is the topic of industrial organization on which Adam Smith opens his monumental treatise, The Wealth of Nations. In particular, Smith discusses the division of labor, the principle that he originally inferred from his observations of workers in manufacturing plants, who consistently performed better when their collective task was broken down into specialized subtasks. The example he uses to illustrate the principle is, of all things, the production of pins.

Some other recent treatises on the same subject are Kindleberger, C. P. Manias, Panics, and Crashes: A History of Financial Crises, 4th ed. (Wiley, New York, 2000). Shiller, R. J. Irrational Exuberance (Princeton University Press, Princeton, NJ, 2000). Fear, Greed, and Rationality Adam Smith’s discussion of rationally optimizing agents, including his reference to the invisible hand, is in Smith, A. The Wealth of Nations, Vol. 1, Book 4 (University of Chicago Press, Chicago, 1976), chapter 2, p. 477. The paradox of the efficient market hypothesis is described in Chancellor, E. Devil Take the Hindmost: A History of Financial Speculation (Farrar, Straus and Giroux, New York, 1999).

Schools, governments, and professional armies can’t exist, nor can manufacturing, construction, transportation, or service industries. But as central as the division of labor was to Smith’s view of industrial organization, he never actually specified the mechanism by which the specialized subtasks should be aggregated into a complex whole. In The Wealth of Nations, Smith skirts the issue, claiming only that the extent to which specialization is possible depends on the “extent of the market.” By this statement he meant that the larger the pool of potential consumers, the more resources a firm can afford to invest in building production facilities, designing and creating specialized machinery, and employing workers, thereby benefiting from economies of scale.


pages: 453 words: 122,586

Samuelson Friedman: The Battle Over the Free Market by Nicholas Wapshott

2021 United States Capitol attack, Alan Greenspan, bank run, basic income, battle of ideas, Bear Stearns, Berlin Wall, Bretton Woods, business cycle, California gold rush, collective bargaining, coronavirus, corporate governance, COVID-19, creative destruction, David Ricardo: comparative advantage, Donald Trump, double helix, en.wikipedia.org, fiat currency, financial engineering, fixed income, floating exchange rates, full employment, God and Mammon, greed is good, Gunnar Myrdal, income inequality, indoor plumbing, invisible hand, John von Neumann, Joseph Schumpeter, Kenneth Arrow, laissez-faire capitalism, light touch regulation, liquidity trap, lockdown, low interest rates, Machinery of Freedom by David Friedman, market bubble, market clearing, mass immigration, military-industrial complex, Money creation, money market fund, Mont Pelerin Society, moral hazard, new economy, Nixon shock, Nixon triggered the end of the Bretton Woods system, paradox of thrift, Paul Samuelson, Philip Mirowski, Phillips curve, price mechanism, price stability, public intellectual, pushing on a string, quantitative easing, rent control, road to serfdom, Robert Bork, Robert Solow, Ronald Coase, Ronald Reagan, school vouchers, seminal paper, Simon Kuznets, social distancing, Tax Reform Act of 1986, The Chicago School, The Great Moderation, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, too big to fail, trickle-down economics, universal basic income, upwardly mobile, urban renewal, War on Poverty, We are all Keynesians now, Works Progress Administration, zero-sum game

And the consumer who is king is the electorate.”80 Samuelson believed that at the core of the argument between him and Friedman were competing views of the role the individual should play in society. Friedman contended that, just as Adam Smith81 had suggested in The Wealth of Nations, self-interest was the constant factor that ensured that society worked well for the maximum number. “As Adam Smith wrote over 200 years ago,” Friedman wrote, “in the economic market, people who intend to serve only their own private interests are led by an invisible hand to serve public interests where there was no part of their intention to promote.”82 But for Samuelson, Smith was a creature of his place and age—eighteenth-century Scotland during the Enlightenment.

Somebody else made that happen.” 76.Samuelson, Economics from the Heart, August 13, 1973, p. 34. 77.Samuelson, The Samuelson Sampler, September 1968, p. 7. 78.Robert Strange McNamara (June 9, 1916–July 6, 2009), former president of Ford Motor Company who became U.S. secretary of defense during the Vietnam War. President of the World Bank 1968–1981. 79.Samuelson, Economics from the Heart, July 23, 1979, p. 71. 80.Samuelson, The Samuelson Sampler, September 1968, p. 7. 81.Adam Smith (June 16, 1723–July 17, 1790), Scottish economist, philosopher, and author whose An Inquiry into the Nature and Causes of the Wealth of Nations (1776) is considered the first economics text. 82.Friedman’s television series Free to Choose, 1980. https://thedailyhatch.org/2013/08/26/milton-friedmans-free-to-choose-how-to-stay-free-transcript-and-video-60-minutes/. 83.Samuelson, “Modern Economic Realities and Individualism,” in Innocence and Power: Individualism in Twentieth-Century America, ed.

I think I am a different Keynesian than I was ten years ago.”64 But when asked to rank Keynes as an economist, Samuelson did not blink. “I still think he was the greatest economist of the twentieth century and one of the three greatest of all time.”65 Asked to name numbers two and three, he replied, “Adam Smith and Leon Walras.”66 It was perhaps the sublime confidence in his own intellect that allowed Samuelson to change his mind as often as he liked, an admirable trait that separated him from those, like Friedman and Hayek, who, having decided a line to pursue, kept digging down. Samuelson once wrote to Friedman, “Now I must eat my words.


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God Is Back: How the Global Revival of Faith Is Changing the World by John Micklethwait, Adrian Wooldridge

affirmative action, anti-communist, Ayatollah Khomeini, barriers to entry, battle of ideas, Bonfire of the Vanities, Boris Johnson, correlation does not imply causation, credit crunch, David Brooks, Dr. Strangelove, Francis Fukuyama: the end of history, full employment, ghettoisation, global supply chain, God and Mammon, Great Leap Forward, hiring and firing, industrial cluster, intangible asset, invisible hand, Iridium satellite, Jane Jacobs, joint-stock company, knowledge economy, liberation theology, low skilled workers, mass immigration, McMansion, megacity, Mikhail Gorbachev, Nelson Mandela, new economy, oil shock, Peace of Westphalia, public intellectual, Robert Bork, rolodex, Ronald Reagan, Scientific racism, Silicon Valley, stem cell, supply-chain management, The Wealth of Nations by Adam Smith, Thomas Malthus, upwardly mobile, W. E. B. Du Bois, Washington Consensus

The biggest problem for the prophets of secularization is that the surge of religion is being driven by the same two things that have driven the success of market capitalism: competition and choice. THE GOSPEL OF PLURALISM To understand the competitive mechanism behind religion’s revival, you need to consult only two sacred texts. The first is The Wealth of Nations, in which Adam Smith argues that the free market works with God as well as Mammon. Nonestablished clergy, who rely on the collection plate, show greater “zeal” in proselytizing “the inferior ranks of people” than established clerical salarymen, who are more interested in sucking up to their patrons.

The decision to get government out of the religion business did as much as almost anything else to establish America’s role as the most religious country in the advanced world. Why is disestablishment a recipe for religious vigor? As we have already pointed out, Adam Smith gave the best answer to this question more than two centuries ago in The Wealth of Nations: a free market in religion forces clergymen to compete for market share. But English fiction is also an acerbic commentary on the way that an established clergy can sometimes behave: think of the obsequious Reverend Mr. Collins pursuing his patron Lady Catherine de Bourgh in Pride and Prejudice or the infighting over livings in Trollope.

This spirit of competition also helps to explain some of Islam’s success. That may sound odd. Saudi Arabia enforces religious orthodoxy with police and prisons, punishing apostasy with death. In many Islamic countries mosques get a degree of financial help and direction from the state that would have scandalized Adam Smith. Islam is not as evangelical as Christianity. Its followers are less intent on spreading the good news than on stiffening the resolve of traditional Muslims. Yet there is more competition within Islam than at first appears. Like Pentecostalism, Islam is a religion without much hierarchy: most mosques claim to be following the teachings of one preacher or another, but their real authority comes from the Koran.


pages: 515 words: 132,295

Makers and Takers: The Rise of Finance and the Fall of American Business by Rana Foroohar

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, additive manufacturing, Airbnb, Alan Greenspan, algorithmic trading, Alvin Roth, Asian financial crisis, asset allocation, bank run, Basel III, Bear Stearns, behavioural economics, Big Tech, bonus culture, Bretton Woods, British Empire, business cycle, buy and hold, call centre, Capital in the Twenty-First Century by Thomas Piketty, Carl Icahn, Carmen Reinhart, carried interest, centralized clearinghouse, clean water, collateralized debt obligation, commoditize, computerized trading, corporate governance, corporate raider, corporate social responsibility, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, crowdsourcing, data science, David Graeber, deskilling, Detroit bankruptcy, diversification, Double Irish / Dutch Sandwich, electricity market, Emanuel Derman, Eugene Fama: efficient market hypothesis, financial deregulation, financial engineering, financial intermediation, Ford Model T, Frederick Winslow Taylor, George Akerlof, gig economy, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Greenspan put, guns versus butter model, High speed trading, Home mortgage interest deduction, housing crisis, Howard Rheingold, Hyman Minsky, income inequality, index fund, information asymmetry, interest rate derivative, interest rate swap, Internet of things, invisible hand, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", John Bogle, John Markoff, joint-stock company, joint-stock limited liability company, Kenneth Rogoff, Kickstarter, knowledge economy, labor-force participation, London Whale, Long Term Capital Management, low interest rates, manufacturing employment, market design, Martin Wolf, money market fund, moral hazard, mortgage debt, mortgage tax deduction, new economy, non-tariff barriers, offshore financial centre, oil shock, passive investing, Paul Samuelson, pensions crisis, Ponzi scheme, principal–agent problem, proprietary trading, quantitative easing, quantitative trading / quantitative finance, race to the bottom, Ralph Nader, Rana Plaza, RAND corporation, random walk, rent control, Robert Shiller, Ronald Reagan, Satyajit Das, Savings and loan crisis, scientific management, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, Snapchat, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, Steve Jobs, stock buybacks, subprime mortgage crisis, technology bubble, TED Talk, The Chicago School, the new new thing, The Spirit Level, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Tobin tax, too big to fail, Tragedy of the Commons, trickle-down economics, Tyler Cowen: Great Stagnation, Vanguard fund, vertical integration, zero-sum game

As the crisis of 2008 and its continuing aftermath have surely shown, we are at the end of what financialization can do for growth. We need a new model, one that enriches the many rather than the few, in a more sustainable way. We need markets that are structured fairly, with the kind of equal access that Adam Smith described in The Wealth of Nations. We need a political economy that isn’t captured by moneyed interests. And we need a financial sector that understands that it should be a helpmeet to business, not an end in and of itself. Even if we don’t understand the particulars of Wall Street, we all know on some gut level that the current system isn’t working.

Dunstan Prial, “Fund Managers Pressured to Be ‘Better Corporate Citizens,’ ” Associated Press, March 9, 2000; Willard T. Carleton, James M. Nelson, and Michael Weisbach, “The Influence of Institutions on Corporate Governance Through Private Negotiations: Evidence from TIAA-CREF,” Journal of Finance 53, no. 4 (1998): 1335–62. 52. Adam Smith, An Inquiry into the Nature and Causes of The Wealth of Nations, vol. 2, edited by Edwin Cannan (London: Methuen & Co., 1904), 159. CHAPTER 9: THE ARTFUL DODGERS 1. Vanessa Houlder and Vicent Boland, “Corporate Tax: The $240bn Black Hole,” Financial Times, November 25, 2015. 2. Carla Mozée, “What an AstraZeneca Deal Could Do for Pfizer’s ‘War Chest,’ Taxes,” MarketWatch, April 28, 2014. 3.

Still, this was a sensitive topic—since asset managers are hired to manage the retirement money of the very firms whose corporate governance they might be trying to direct—and Bogle’s suggestion got a rather mixed reaction. “I remember one of the guys from some big firm said, ‘We all know what you’re trying to do, Jack. Why don’t you just leave it to the markets? Leave it to Adam Smith’s Invisible Hand!’ And I said, ‘Don’t you realize that we are Adam Smith’s Invisible Hand?’ ”48 It’s a profound statement. Finance is in control, yes. But that means that it has the potential to be a force for economic and social good, rather than exploitation. Yet in this case, harnessing that force would require that the asset management industry turn its back on a business model that has been yielding unbelievably easy money for decades.


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The End of Growth: Adapting to Our New Economic Reality by Richard Heinberg

3D printing, agricultural Revolution, Alan Greenspan, Anthropocene, Apollo 11, back-to-the-land, banking crisis, banks create money, Bear Stearns, biodiversity loss, Bretton Woods, business cycle, carbon footprint, Carmen Reinhart, clean water, cloud computing, collateralized debt obligation, computerized trading, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, David Graeber, David Ricardo: comparative advantage, degrowth, dematerialisation, demographic dividend, Deng Xiaoping, Elliott wave, en.wikipedia.org, energy transition, falling living standards, financial deregulation, financial innovation, Fractional reserve banking, full employment, Gini coefficient, Glass-Steagall Act, global village, green transition, happiness index / gross national happiness, I think there is a world market for maybe five computers, income inequality, intentional community, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Jevons paradox, Kenneth Rogoff, late fees, liberal capitalism, low interest rates, mega-rich, military-industrial complex, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, naked short selling, Naomi Klein, Negawatt, new economy, Nixon shock, offshore financial centre, oil shale / tar sands, oil shock, peak oil, Ponzi scheme, price stability, private military company, quantitative easing, reserve currency, ride hailing / ride sharing, rolling blackouts, Ronald Reagan, short selling, special drawing rights, systems thinking, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, trade liberalization, tulip mania, WikiLeaks, working poor, world market for maybe five computers, zero-sum game

Richard Heinberg, The Party’s Over (Gabriola Island BC: New Society Publishers, 2003), pp. 14–33; William Catton, Overshoot: The Ecological Basis of Revolutionary Change (University of Illinois, 1980). 47. For an unrealistically optimistic view of what division of labor has achieved, see John Kay, “Why You Can Have an Economy of People Who Don’t Sweat,” Financial Times, Oct. 20, 2010. 48. Adam Smith, The Wealth of Nations (New York: Oxford University Press, World’s Classics Edition, 2008). 49. Economists frame the advantages of increased trade in terms of a concept called “comparative advantage.” Technically, comparative advantage means that each country will specialize in what it is good at, even if another country does everything better, and the result is that all countries benefit from trade.

Each person, therefore, making a tenth part of forty-eight thousand pins, might be considered as making four thousand eight hundred pins in a day. But if they had all wrought separately and independently, and without any of them having been educated to this peculiar business, they certainly could not each of them have made twenty, perhaps not one pin in a day....48 Later in The Wealth of Nations, Smith criticizes the division of labor, saying it leads to a “mental mutilation” in workers as they become ignorant and insular — so it’s hard to know whether he thought the trend toward specialization was good or just inevitable. It’s important to note, however, that it was under way before the fossil fuel revolution, and was already contributing to economic growth.

While the first economists were ancient Greek and Indian philosophers, among them Aristotle (382– 322 bce) — who discussed the “art” of wealth acquisition and questioned whether property should best be owned privately or by government acting on behalf of the people — little of real substance was added to the discussion during the next two thousand years. It’s in the 18th century that economic thinking really gets going. “Classical” economic philosophers such as Adam Smith (1723–1790), Thomas Robert Malthus (1766–1834), and David Ricardo (1772–1823) introduced basic concepts such as supply and demand, division of labor, and the balance of international trade. As happens in so many disciplines, early practitioners were presented with plenty of uncharted territory and proceeded to formulate general maps of their subject that future experts would labor to refine in ever more trivial ways.


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The Technology Trap: Capital, Labor, and Power in the Age of Automation by Carl Benedikt Frey

3D printing, AlphaGo, Alvin Toffler, autonomous vehicles, basic income, Bernie Sanders, Branko Milanovic, British Empire, business cycle, business process, call centre, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, Charles Babbage, Clayton Christensen, collective bargaining, computer age, computer vision, Corn Laws, Cornelius Vanderbilt, creative destruction, data science, David Graeber, David Ricardo: comparative advantage, deep learning, DeepMind, deindustrialization, demographic transition, desegregation, deskilling, Donald Trump, driverless car, easy for humans, difficult for computers, Edward Glaeser, Elon Musk, Erik Brynjolfsson, everywhere but in the productivity statistics, factory automation, Fairchild Semiconductor, falling living standards, first square of the chessboard / second half of the chessboard, Ford Model T, Ford paid five dollars a day, Frank Levy and Richard Murnane: The New Division of Labor, full employment, future of work, game design, general purpose technology, Gini coefficient, Great Leap Forward, Hans Moravec, high-speed rail, Hyperloop, income inequality, income per capita, independent contractor, industrial cluster, industrial robot, intangible asset, interchangeable parts, Internet of things, invention of agriculture, invention of movable type, invention of the steam engine, invention of the wheel, Isaac Newton, James Hargreaves, James Watt: steam engine, Jeremy Corbyn, job automation, job satisfaction, job-hopping, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kickstarter, Kiva Systems, knowledge economy, knowledge worker, labor-force participation, labour mobility, Lewis Mumford, Loebner Prize, low skilled workers, machine translation, Malcom McLean invented shipping containers, manufacturing employment, mass immigration, means of production, Menlo Park, minimum wage unemployment, natural language processing, new economy, New Urbanism, Nick Bostrom, Norbert Wiener, nowcasting, oil shock, On the Economy of Machinery and Manufactures, OpenAI, opioid epidemic / opioid crisis, Pareto efficiency, pattern recognition, pink-collar, Productivity paradox, profit maximization, Renaissance Technologies, rent-seeking, rising living standards, Robert Gordon, Robert Solow, robot derives from the Czech word robota Czech, meaning slave, safety bicycle, Second Machine Age, secular stagnation, self-driving car, seminal paper, Silicon Valley, Simon Kuznets, social intelligence, sparse data, speech recognition, spinning jenny, Stephen Hawking, tacit knowledge, The Future of Employment, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Malthus, total factor productivity, trade route, Triangle Shirtwaist Factory, Turing test, union organizing, universal basic income, warehouse automation, washing machines reduced drudgery, wealth creators, women in the workforce, working poor, zero-sum game

Computer-controlled machines have eliminated precisely the jobs created for a host of machine operators during the Second Industrial Revolution. The workers that were once pulled into decent-paying jobs in mass-production industries are now being pushed out. What Computers Do In the Wealth of Nations, Adam Smith observed the division of labor in Britain’s pin factories. By dividing activities into narrow tasks, he found that the first factories were able to increase efficiency enormously. While his observation concerned the division of labor between human workers, the age of automation came with a new division of labor: tasks can now be divided between humans and computers.

On cotton yarn manufacturing, see R. C. Allen, 2009a, The British Industrial Revolution in Global Perspective (Cambridge: Cambridge University Press), chapter 8, Kindle. 8. Mantoux, 1961, The Industrial Revolution in the Eighteenth Century, 234. 9. It was in the same year that Adam Smith published The Wealth of Nations that the industrial undertakings that would eventually make Britain a truly wealthy nation took off. 10. Quoted in Mantoux, 1961, The Industrial Revolution in the Eighteenth Century, 213. 11. Ibid., 14. 12. On the labor savings of Arkwright’s inventions, see Allen, 2009a, The British Industrial Revolution, chapter 8. 13.

Based on data from the 1086 Domesday Book and the numbers published by Gregory King in 1688, Graeme Snooks has estimated that the British economy grew at an annual rate of 0.29 percent in per capita terms (1994, “New Perspectives on the Industrial Revolution,” in Was the Industrial Revolution Necessary?, ed. G. D. Snooks [London: Routledge], 1–26). 35. D. Defoe, [1724] 1971, A Tour through the Whole Island of Great Britain (London: Penguin), 432. 36. A. Smith, [1776] 1976, An Inquiry into the Nature and Causes of the Wealth of Nations (Chicago: University of Chicago Press), 365–66. 37. As noted above, a larger share of this wealth was appropriated by a fraction of the population. But although everyone didn’t gain equally from growth, most workers lived well above subsistence levels. Based on King’s 1688 social table of Britain, Allen estimates that the poorest group—consisting of cottagers, paupers, and vagrants—earned just about enough to buy a bare-bones subsistence basket.


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Capitalism in America: A History by Adrian Wooldridge, Alan Greenspan

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Affordable Care Act / Obamacare, agricultural Revolution, air freight, Airbnb, airline deregulation, Alan Greenspan, American Society of Civil Engineers: Report Card, Asian financial crisis, bank run, barriers to entry, Bear Stearns, Berlin Wall, Blitzscaling, Bonfire of the Vanities, book value, Bretton Woods, British Empire, business climate, business cycle, business process, California gold rush, Charles Lindbergh, cloud computing, collateralized debt obligation, collective bargaining, Corn Laws, Cornelius Vanderbilt, corporate governance, corporate raider, cotton gin, creative destruction, credit crunch, debt deflation, Deng Xiaoping, disruptive innovation, Donald Trump, driverless car, edge city, Elon Musk, equal pay for equal work, Everybody Ought to Be Rich, Fairchild Semiconductor, Fall of the Berlin Wall, fiat currency, financial deregulation, financial engineering, financial innovation, fixed income, Ford Model T, full employment, general purpose technology, George Gilder, germ theory of disease, Glass-Steagall Act, global supply chain, Great Leap Forward, guns versus butter model, hiring and firing, Ida Tarbell, income per capita, indoor plumbing, informal economy, interchangeable parts, invention of the telegraph, invention of the telephone, Isaac Newton, Jeff Bezos, jimmy wales, John Maynard Keynes: technological unemployment, Joseph Schumpeter, junk bonds, Kenneth Rogoff, Kitchen Debate, knowledge economy, knowledge worker, labor-force participation, land bank, Lewis Mumford, Louis Pasteur, low interest rates, low skilled workers, manufacturing employment, market bubble, Mason jar, mass immigration, McDonald's hot coffee lawsuit, means of production, Menlo Park, Mexican peso crisis / tequila crisis, Michael Milken, military-industrial complex, minimum wage unemployment, mortgage debt, Myron Scholes, Network effects, new economy, New Urbanism, Northern Rock, oil rush, oil shale / tar sands, oil shock, Peter Thiel, Phillips curve, plutocrats, pneumatic tube, popular capitalism, post-industrial society, postindustrial economy, price stability, Productivity paradox, public intellectual, purchasing power parity, Ralph Nader, Ralph Waldo Emerson, RAND corporation, refrigerator car, reserve currency, rising living standards, road to serfdom, Robert Gordon, Robert Solow, Ronald Reagan, Sand Hill Road, savings glut, scientific management, secular stagnation, Silicon Valley, Silicon Valley startup, Simon Kuznets, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, stem cell, Steve Jobs, Steve Wozniak, strikebreaker, supply-chain management, The Great Moderation, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, total factor productivity, trade route, transcontinental railway, tulip mania, Tyler Cowen, Tyler Cowen: Great Stagnation, union organizing, Unsafe at Any Speed, Upton Sinclair, urban sprawl, Vannevar Bush, vertical integration, War on Poverty, washing machines reduced drudgery, Washington Consensus, white flight, wikimedia commons, William Shockley: the traitorous eight, women in the workforce, Works Progress Administration, Yom Kippur War, young professional

The United States was born in the age of the Enlightenment, when old verities were being rethought and established institutions remodeled. The country’s bloody struggle for independence (1775–83) began a year before the publication of the greatest work of free-market economics ever written, Adam Smith’s The Wealth of Nations (1776). For most of recorded history, people had acquiesced in, and in some ways embraced, a society that was static and predictable. From the birth of Jesus to about 1820, economic growth amounted to no more than 0.11 percent a year or 11 percent a century, according to Angus Maddison.2 A young fifteenth-century vassal could look forward to tilling the same plot of his landlord’s soil until disease, famine, natural disaster, or violence dispatched him.

Moving things upstream, against the current, particularly a mighty current like the Mississippi’s, was often impossible. Americans were also fortunate in having the great Atlantic Ocean to provide them with both a ready supply of fish and a thoroughfare to the European continent. The New England fishing industry was so successful that no less a figure than Adam Smith described it in The Wealth of Nations as “one of the most important, perhaps, in the world.”10 Communities sustained themselves on lobster, oysters, herring, sturgeon, haddock, crabs, and scrod; indeed, the codfish was to Massachusetts what tobacco was to Virginia. The “cradle of American liberty,” Faneuil Hall, was the gift of Peter Faneuil, a Boston merchant who had made a fortune selling New England codfish around the world.

The codes even decreed whether customers could choose their own chicken from a coop or butcher shop or whether they had to be allotted it randomly. The result was to entrench the power of established companies: insiders flourished thanks to guaranteed markets at elevated prices, part of which funded high wage rates, but outsiders could not prosper however hard they worked or cleverly they innovated. In The Wealth of Nations, Adam Smith had warned that “people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” The major tire makers (Goodyear, Goodrich, and Firestone) got together and wrote the NRA tire code.


pages: 363 words: 107,817

Modernising Money: Why Our Monetary System Is Broken and How It Can Be Fixed by Andrew Jackson (economist), Ben Dyson (economist)

Alan Greenspan, bank run, banking crisis, banks create money, Basel III, Bretton Woods, business cycle, call centre, capital controls, cashless society, central bank independence, credit crunch, David Graeber, debt deflation, double entry bookkeeping, eurozone crisis, financial exclusion, financial innovation, Financial Instability Hypothesis, financial intermediation, floating exchange rates, Fractional reserve banking, full employment, Greenspan put, Hyman Minsky, inflation targeting, informal economy, information asymmetry, intangible asset, land bank, land reform, London Interbank Offered Rate, low interest rates, market bubble, market clearing, Martin Wolf, means of production, Money creation, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, negative equity, Northern Rock, Post-Keynesian economics, price stability, profit motive, quantitative easing, Real Time Gross Settlement, regulatory arbitrage, risk-adjusted returns, Savings and loan crisis, seigniorage, shareholder value, short selling, South Sea Bubble, technological determinism, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, unorthodox policies

We then discuss the development of banking in the United Kingdom and its evolution up to the present day. 1.1 The origins of money A textbook history The standard theory of the origins of money, commonly found in economics textbooks, was perhaps first put forward by Aristotle (in “Politics”) and restated by Adam Smith in his book “The Wealth of Nations” (1776). According to Smith’s story, money emerged naturally with the division of labour, as individuals found themselves without many of the necessities they required but at the same time an excess of their own produce. Without a means of exchange individuals had to resort to barter in order to trade, which was problematic as both sides of the deal had to have something the other person wanted (the “double coincidence of wants”).

“As a consequence, as the bank raises the rate of interest, there is an adverse selection effect; the mix of loan applicants changes adversely, so much so that the expected return from those receiving loans may actually decrease as the interest rate charged increased.” The problem of adverse selection has long been known – Adam Smith noted in the Wealth of Nations that when interest rates are high the only people wishing to borrow would be “prodigals and projectors”: “Sober people, who will give for the use of money no more than a part of what they are likely to make by the use of it, would not venture into the competition. A great part of the capital of the country would thus be kept out of the hands which were most likely to make a profitable and advantageous use of it, and thrown into those which were most likely to waste and destroy it.

(Lester, 1938, cited in Zarlenga, 2002) In conclusion, historians agree that Pennsylvania’s system of issuing currency was ‘to the manifest benefit of the province’ (Ferguson, 1953). Indeed, Ferguson notes that “Pennsylvania’s currency was esteemed by all classes and regarded as having contributed to the growth and prosperity of the colony” (p. 159), and that “Favourable testimony can be found in nearly all commentators, modern or contemporary”. (p. 163) Adam Smith, writing in the Wealth of Nations, commented that the success of the system was dependent on three circumstances: “First, upon the demand for some other instrument of commerce, besides gold and silver money, or upon the demand for such a quantity of consumable stock as could not be had without sending abroad the greater part of their gold and silver money, in order to purchase it; secondly, upon the good credit of the government which made use of this expedient; and, thirdly, upon the moderation with which it was used, the whole value of the paper bills of credit never exceeding that of the gold and silver money which would have been necessary for carrying on their circulation, had there been no paper bills of credit.”


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The New Economics: A Bigger Picture by David Boyle, Andrew Simms

Abraham Maslow, Alan Greenspan, Alvin Toffler, Apollo 11, Asian financial crisis, back-to-the-land, banking crisis, behavioural economics, Bernie Madoff, Big bang: deregulation of the City of London, Bonfire of the Vanities, Bretton Woods, capital controls, carbon footprint, carbon tax, clean water, collateralized debt obligation, colonial rule, Community Supported Agriculture, congestion charging, corporate raider, corporate social responsibility, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Crossrail, delayed gratification, deskilling, digital divide, en.wikipedia.org, energy transition, financial deregulation, financial exclusion, financial innovation, full employment, garden city movement, Glass-Steagall Act, green new deal, happiness index / gross national happiness, if you build it, they will come, income inequality, informal economy, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, John Elkington, junk bonds, Kickstarter, land bank, land reform, light touch regulation, loss aversion, mega-rich, microcredit, Mikhail Gorbachev, Money creation, mortgage debt, neoliberal agenda, new economy, North Sea oil, Northern Rock, offshore financial centre, oil shock, peak oil, pension time bomb, pensions crisis, profit motive, purchasing power parity, quantitative easing, Ronald Reagan, seigniorage, Simon Kuznets, sovereign wealth fund, special drawing rights, systems thinking, the long tail, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, trickle-down economics, Vilfredo Pareto, Washington Consensus, wealth creators, working-age population

Earl (1997) ‘Neighbourhoods and violent crime’, Science, 15 August. 23 Edgar Cahn (2000) No More Throwaway People: The Co-production Imperative, Essential Books, Washington DC. The phrase ‘core economy’ was originated by Neva Goodwin in Neva Goodwin, Julie Nelson, Frank Ackerman and Thomas Weisskopf (2003) Microeconomics in Context, Houghton Mifflin, New York. 24 Adam Smith (1976) An Inquiry into the Nature and Causes of the Wealth of Nations. Ed. R. H. Campbell and A. S. Skinner. 2 vols, Glasgow Edition of the Works and Correspondence of Adam Smith 2. Oxford University Press, Oxford. 25 New York Times (1921) 4 December. 7 Resources: Why are Cuban Mechanics the Best in the World? Every Cuban is a mechanic. Cuban proverb, quoted in the film Yank Tanks Money is round and it rolls away.

63 9 Tax Justice Network (2005) The Price of Offshore, London. 10 Edgar Cahn (2000) No More Throwaway People: The Co-production Imperative, Essential Books, Washington DC. 11 Robert Skidelsky (1992) John Maynard Keynes Vol 2: The Economist as Saviour, Picador, London. 12 David Boyle (2003) Beyond Yes and No: A Multi-currency Alternative to EMU, New Economics Foundation, London. 13 James Robertson (2002) ‘The euro will prompt further monetary reform’, European Business Review, Vol 14, No 1. 14 Jane Jacobs (1986) Cities and the Wealth of Nations, Random House, New York. 15 Bernard Lietaer (2000) The Future of Money, Random Century, London. 16 Richard Douthwaite (1999) The Ecology of Money, Schumacher Briefings Number 4, Green Books, Totnes. 17 Tom Greco (1985) New Money for Healthy Communities, Greco, Tucson. 18 See, for example, David Boyle (ed) (2002) The Money Changers: Currency Reform from Aristotle to e-cash, Earthscan, London. 19 New York Times (1921) 4 December. 20 Stamp Out Poverty (2005) Submission to the Intergovernmental Working Group, London. 21 Joseph Stiglitz (2002) Globalisation and its Discontents, Norton, New York. 5 Markets: Why has London Traffic Always Travelled at 12mph?

Other books to read David Boyle (1999) Funny Money, HarperCollins, London David Boyle, Sherry Clark and Sarah Burns (2006) Hidden Work, Joseph Rowntree Foundation, London Colin Hines (2000) Localization: A Global Manifesto, Earthscan, London Alison Ravetz (2008) ‘Is the government trying to abolish illness?’, New Statesman, 5 May James Robertson and Joseph Huber (2000) Creating New Money, New Economics Foundation, London Shann Turnbull (1975) New Money Sources and Profit Motives for Democratising the Wealth of Nations, Company Directors Association, Sydney Notes 1 2 3 4 5 6 7 8 9 Tim Jackson, Nic Marks, Jon Ralls and S. Strymne (1997) An Index of Sustainable Economic Welfare for the UK 1950–1996, Centre for Environmental Strategy, University of Surrey, Guildford. Robert Lacey and Dabby Danziger (1999) The Year 1000: What Life was Like at the Turn of the Last Millennium, Little, Brown, London.


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The Seventh Sense: Power, Fortune, and Survival in the Age of Networks by Joshua Cooper Ramo

air gap, Airbnb, Alan Greenspan, Albert Einstein, algorithmic trading, barriers to entry, Berlin Wall, bitcoin, Bletchley Park, British Empire, cloud computing, Computing Machinery and Intelligence, crowdsourcing, Danny Hillis, data science, deep learning, defense in depth, Deng Xiaoping, drone strike, Edward Snowden, Fairchild Semiconductor, Fall of the Berlin Wall, financial engineering, Firefox, Google Chrome, growth hacking, Herman Kahn, income inequality, information security, Isaac Newton, Jeff Bezos, job automation, Joi Ito, Laura Poitras, machine translation, market bubble, Menlo Park, Metcalfe’s law, Mitch Kapor, Morris worm, natural language processing, Neal Stephenson, Network effects, Nick Bostrom, Norbert Wiener, Oculus Rift, off-the-grid, packet switching, paperclip maximiser, Paul Graham, power law, price stability, quantitative easing, RAND corporation, reality distortion field, Recombinant DNA, recommendation engine, Republic of Letters, Richard Feynman, road to serfdom, Robert Metcalfe, Sand Hill Road, secular stagnation, self-driving car, Silicon Valley, Skype, Snapchat, Snow Crash, social web, sovereign wealth fund, Steve Jobs, Steve Wozniak, Stewart Brand, Stuxnet, superintelligent machines, systems thinking, technological singularity, The Coming Technological Singularity, The Wealth of Nations by Adam Smith, too big to fail, Vernor Vinge, zero day

Releasing power into the busy arms of businessmen, politicians, scientists, and artists meant that ideas, politics, and innovations competed. They got better. They evolved. And the sum of all these interacting pieces produced sustained economic growth for the first time in history. In a “commercial society,” Adam Smith explained in The Wealth of Nations, “every man thus lives by exchanging, or becomes in some measure a merchant.” Smith didn’t mean that everyone was really a merchant; rather, in a world of markets, each of us—our labor, our ideas, our capital—is a commodity. We are liberated, but only to compete. For votes, for jobs, for resources.

Nisbet, Cambridge Texts in the History of Political Thought (Cambridge: Cambridge University Press, 1991), 54. “Human knowledge”: Francis Bacon, The New Organon, ed. Lisa Jardine and Michael Silverthorne, Cambridge Texts in the History of Philosophy (Cambridge: Cambridge University Press, 2000), 33. In a “commercial society”: Adam Smith, The Wealth of Nations, ed. Kathryn Sutherland, Oxford World’s Classics (Oxford: Oxford University Press, 2008), 31. “the scaffolds humans erect”: Douglass C. North, Understanding the Process of Economic Change (Princeton, NJ: Princeton University Press, 2010), 48. Museums… Scientific congresses: Joel Mokyr, “The Intellectual Origins of Modern Economic Growth,” Journal of Economic History 65, no. 2 (June 2005): 290.

Unlike traditional conflicts: Derek Gregory, “The Everywhere War,” The Geographical Journal 177, no. 3 (September 2011): 238–50. He labeled it: Donald G. Janelle, “Spatial Reorganization: A Model and Concept,” Annals of the Association of American Geographers 59, no. 2 (1969): 348–64. Adam Smith’s famous remark: Adam Smith, The Theory of Moral Sentiments, ed. Knud Haakonssen (Cambridge: Cambridge University Press, 2002), 198. “Time is a ride”: Stewart Brand, The Clock of the Long Now, 67. The German philosopher: Monika Codourey, “Mobile Identities and the Socio-Spatial Relations of Air Travel,” Surveillance & Society 5, no. 2 (2008): 188–202.


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Start It Up: Why Running Your Own Business Is Easier Than You Think by Luke Johnson

Albert Einstein, barriers to entry, Bear Stearns, Bernie Madoff, business cycle, collapse of Lehman Brothers, compensation consultant, Cornelius Vanderbilt, corporate governance, corporate social responsibility, creative destruction, credit crunch, false flag, financial engineering, Ford Model T, Grace Hopper, happiness index / gross national happiness, high net worth, James Dyson, Jarndyce and Jarndyce, Jarndyce and Jarndyce, Kickstarter, mass immigration, mittelstand, Network effects, North Sea oil, Northern Rock, patent troll, plutocrats, Ponzi scheme, profit motive, Ralph Waldo Emerson, Silicon Valley, software patent, stealth mode startup, Steve Jobs, Steve Wozniak, The Wealth of Nations by Adam Smith, traveling salesman, tulip mania, Vilfredo Pareto, wealth creators

The delights of the portfolio career I once attended a dinner party where the host went round the table one by one, describing what each of us did for a living. It was a sobering moment. Here were our lives, summed up in a few words. Is this really how we will be remembered? Is this all we have done? Ever since Adam Smith published The Wealth of Nations in 1776, modern societies have focused on the division of labour. It is one of the platforms on which industrial capitalism is constructed. We have become ever more specialist in our work – no one wants to be known as a jack of all trades, master of none. Today it is all niches.

It should be non-profit and unfussy, with an emphasis on the partners interacting to their mutual advantage, and perhaps an ancillary role of charitable giving. Ideally it covers all sectors and ages, with veterans giving tips to up-and-comers. There should be start-ups, family firms and established companies. Building a business is never easy, and the best support always comes from those who have been there before. Just beware Adam Smith’s famous dictum: ‘People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.’ These days that’s a criminal offence. Cliques and clubs – the ties that bind It seems every profession has a small circle of characters that basically command things.

After all, in mature economies most markets are dominated by a handful of operators – if you assemble the owners, founders and heads of those companies, it would often be fewer than twenty people. There is mutual respect and occasional cooperation between these bosses – but is there plotting against the consumer? Adam Smith thought so, but I disagree. It’s more likely that the members of such groups spend their time conspiring against each other. At the sharp end, business leaders compete ferociously for power, fame, money, market share, staff, property and awards. And, as Smith said, once more: ‘Rivalship and emulation render excellency and frequently occasion the very greatest exertions.’


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Liberalism at Large: The World According to the Economist by Alex Zevin

"there is no alternative" (TINA), activist fund / activist shareholder / activist investor, affirmative action, Alan Greenspan, anti-communist, Asian financial crisis, bank run, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business climate, business cycle, capital controls, carbon tax, centre right, Chelsea Manning, collective bargaining, Columbine, Corn Laws, corporate governance, corporate social responsibility, creative destruction, credit crunch, David Ricardo: comparative advantage, debt deflation, desegregation, disinformation, disruptive innovation, do well by doing good, Donald Trump, driverless car, Edward Snowden, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, Francis Fukuyama: the end of history, full employment, Gini coefficient, Glass-Steagall Act, global supply chain, guns versus butter model, hiring and firing, imperial preference, income inequality, interest rate derivative, invisible hand, It's morning again in America, Jeremy Corbyn, John von Neumann, Joseph Schumpeter, Julian Assange, junk bonds, Khartoum Gordon, land reform, liberal capitalism, liberal world order, light touch regulation, Long Term Capital Management, low interest rates, market bubble, Martin Wolf, means of production, Michael Milken, Mikhail Gorbachev, Monroe Doctrine, Mont Pelerin Society, moral hazard, Naomi Klein, new economy, New Journalism, Nixon triggered the end of the Bretton Woods system, no-fly zone, Norman Macrae, Northern Rock, Occupy movement, Philip Mirowski, plutocrats, post-war consensus, price stability, quantitative easing, race to the bottom, railway mania, rent control, rent-seeking, road to serfdom, Ronald Reagan, Rosa Parks, Seymour Hersh, Snapchat, Socratic dialogue, Steve Bannon, subprime mortgage crisis, Suez canal 1869, Suez crisis 1956, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, trade liberalization, trade route, unbanked and underbanked, underbanked, unorthodox policies, upwardly mobile, War on Poverty, WikiLeaks, Winter of Discontent, Yom Kippur War, young professional

., Université de Genève 1959), pp. 25–26, 62–64, 91–93; David Todd, L’identité Économique de la France: Libre-Échange et Protectionnisme, 1814–1851, Paris 2008, pp. 331–51, 416. 31.Smith invoked the term in The Wealth of Nations in 1776 to describe certain professions, or generous wages; he also referred to a ‘liberal plan of equality, liberty and justice’, that is, ‘allowing every man to pursue his own interest in his own way’, and also, in a digression on the Corn Laws, to a ‘liberal system’, by which he meant ‘freedom of the corn trade’. Adam Smith, The Wealth of Nations, ed. Edwin Cannan, New York 2003, pp. 509, 681–82. 32.José Luis Abellán, Historia Crítica del Pensamiento Español, Madrid 1984, Vol IV, pp. 58, 78–82; Jörn Leonhard, ‘From European Liberalism to the Language of Liberalisms: The Semantics of Liberalism in European Comparison’, in Redescriptions, 2004, pp. 17–31; Leonhard, Liberalismus, pp. 329–32, 347, 410–12, 416, 494. 33.In a letter from 1831, Mill opposed the ‘speculative Toryism’ of Wordsworth, Southey or Coleridge, ‘a reverence for government in the abstract … duly sensible that it is good for man to be ruled; to submit his body and mind to the guidance of a higher intelligence and virtue’, to lower case liberalism, ‘which is for making every man his own guide and sovereign master, and letting him think for himself and do exactly as he judges best for himself, giving other men leave to persuade him if they can by evidence, but forbidding him to give way to authority; and still less allowing them to constrain him more than the existence & tolerable security of every man’s person and property renders indispensably necessary’: Mill to John Sterling, 20 October 1831, in Collected Works, ed.

But that they were anything other than absolutely true and ultimately humane was out of the question. Political economy was a science and so certain was the newspaper that its laws had been discovered, and by whom, that it argued repeatedly for changing its very name. The application of the adjective political to the science of ‘The Wealth of Nations’ is of French origin; and never was an epithet more misapplied; for the distinguishing feature of Smith’s science is the proof it continually supplies that all policy – unless laissez-faire, or standing idle and religiously refraining from interfering, can be called a policy – is erroneous, injurious to the production of wealth, and repudiated by the science.

If a principle be true there can be no exception to its application, and least of all can it be abandoned or neglected in an extreme case.’75 The paper was aware that Adam Smith had sanctioned public works in like situations. But it doubted if he would still approve, and defended him from a hostile pamphlet, The True Cure for Ireland, which called it ‘perfect folly to be dancing a Will-o’-the-wisp dance, after the abstract principles of political economy, as laid down by Adam Smith, for it ought to be remembered he wrote for a country advanced in social position and high civilization.’ On the contrary, retorted the Economist, ‘Smith wrote for all time, and of all time’.76 Wilson not only ensured that his paper constantly firmed up civil servants and politicians over Ireland: he soon enlisted them to craft the Economist itself.


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The Great Surge: The Ascent of the Developing World by Steven Radelet

Admiral Zheng, agricultural Revolution, Asian financial crisis, bank run, Berlin Wall, biodiversity loss, Boeing 747, Branko Milanovic, business climate, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, clean water, colonial rule, creative destruction, demographic dividend, Deng Xiaoping, Dissolution of the Soviet Union, Doha Development Round, Erik Brynjolfsson, European colonialism, export processing zone, F. W. de Klerk, failed state, Francis Fukuyama: the end of history, Gini coefficient, global pandemic, global supply chain, Great Leap Forward, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), invention of the steam engine, James Watt: steam engine, John Snow's cholera map, Joseph Schumpeter, Kenneth Arrow, land reform, low interest rates, low skilled workers, M-Pesa, megacity, middle-income trap, Mikhail Gorbachev, Nelson Mandela, off grid, oil shock, out of africa, purchasing power parity, race to the bottom, randomized controlled trial, Robert Gordon, Robert Solow, Second Machine Age, secular stagnation, Shenzhen special economic zone , Sheryl Sandberg, Simon Kuznets, South China Sea, special economic zone, standardized shipping container, Steven Pinker, The Wealth of Nations by Adam Smith, Thomas Malthus, three-masted sailing ship, trade route, women in the workforce, working poor

Most of today’s global trade occurs through sea-based shipping, as it has for several hundred years. Cities and countries with greater access to the sea have lower shipping costs, so businesses and individuals are much better positioned to take advantage of all of the opportunities afforded by trade, including access to new technologies. Adam Smith recognized the importance of global access through sea-based trade in The Wealth of Nations: As by means of water-carriage a more extensive market is opened to every sort of industry than what land-carriage alone can afford it, so it is upon the sea-coast, and along the banks of navigable rivers, that industry of every kind naturally begins to sub-divide and improve itself, and it is frequently not till a long time after that those improvements extend themselves to the inland part of the country.9 True to Smith’s insights, as development spread from Europe over the last two centuries, coastal cities—or cities with direct access to the sea through rivers—became the major centers of commercial activity around the world: London, Rotterdam, New York, Los Angeles, New Orleans, Tokyo, Seoul, Sydney, Shanghai, Istanbul, Rio de Janeiro, Buenos Aires, and many others.

George Ayittey, Africa Betrayed (New York: St. Martin’s Press, 1993); Acemoglu and Robinson, Why Nations Fail. 6. Francis Fukuyama, The End of History and the Last Man (New York: Free Press, 1992), p. xiii. SEVEN: HELLO GLOBALIZATION, WELCOME NEW TECHNOLOGIES 1. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London: W. Strahan and T. Cadell, 1776), chap. 7. 2. Frank Viviano, “China’s Great Armada,” National Geographic, July 2005, p. 37. 3. Ibid., p. 52. 4. The figures are drawn from the World Bank’s World Development Indicators, and are the sum in each year of the number of patent applications for residents and nonresidents. 5.

Masters (Washington, DC: International Bank for Reconstruction and Development/World Bank, 2009). 7. Samuel Huntington, The Third Wave: Democratization in the Late Twentieth Century (Norman: University of Oklahoma Press, 1991), p. 258. 8. Ethan Kapstein and Nathan Converse, The Fate of Young Democracies (Cambridge: Cambridge University Press, 2008), p. xv. 9. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London: W. Strahan and T. Cadell, 1776), bk. 1, chap. 3, and bk. 3, chap. 4. NINE: FOREIGN AID: BLESSING OR CURSE? 1. Richard Carter and Kamini N. Mendis, “Evolutionary and Historical Aspects of the Burden of Malaria,” Clinical Microbiology Reviews 15, no. 4 (October 2002): 564–94, table 3. 2.


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10% Less Democracy: Why You Should Trust Elites a Little More and the Masses a Little Less by Garett Jones

Andrei Shleifer, Asian financial crisis, Brexit referendum, business cycle, central bank independence, clean water, corporate governance, correlation does not imply causation, creative destruction, Edward Glaeser, fake news, financial independence, game design, German hyperinflation, hive mind, invisible hand, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Jean Tirole, Kenneth Rogoff, low interest rates, Mark Zuckerberg, mass incarceration, military-industrial complex, minimum wage unemployment, Mohammed Bouazizi, Neil Armstrong, open economy, Pareto efficiency, Paul Samuelson, price stability, rent control, Robert Solow, The Wealth of Nations by Adam Smith, trade liberalization, Tyler Cowen

You want a lot of members who are better than you: • Fellow gym members who can inspire you • Fellow classmates who are smarter than you and can therefore teach you new things • Fellow heads of government in the Council of Europe who are more market oriented than you When our peers shape us, it’s smart to search out peers who are better than us. And in the EU, there aren’t that many nations that can serve as models to the United Kingdom. Great Britain, after all, largely invented the concept of market-oriented liberalism, building on the insights of Adam Smith’s late eighteenth-century work, The Wealth of Nations, and turning market-oriented liberalism into a practical policy that reached its peak in the late nineteenth century under the political leadership of Prime Minister William Gladstone. And while the United Kingdom has ebbed and flowed in its support for economic liberalism in the twentieth and twenty-first centuries, it still is far more market oriented than most other EU members.

Through the process, I learned about the workings of the human brain, the value of intelligence tests, the merits and joys of listening to psychologists. 10% Less Democracy has nothing to do with any of that, at least not directly. But one relevant lesson I did learn from that experience was that voter skill matters for the wealth of nations—that the clichés are true and that informed voters are an extremely important ingredient in the recipe for good government. Indeed, informed voters are so important that many thinkers—including economist Dambisa Moyo of Barclays and other corporate boards and philosopher Jason Brennan of Georgetown—have been searching for ways to give the most-informed voters greater weight in modern democracies.

Denmark, 169–70, 175; economic growth in, 170; Economist’s Democracy Index score for, 171; electoral terms in, 175; Feedback Unit, 173; Government Parliamentary Committees, 173; income per person in, 169, 170; independent central bank in, 175; independent judiciary in, 175; Institute of Policy Studies, 173; Lee Kuan Yew, 172–73, 175; libel suits in, 170; life expectancy, 169, 170; middle class in, 173, 175; monetary policy, 175; People’s Action Party (PAP), 170, 174, 175; Singapore Zoo, 174; vs. United States, 171 Smith, Adam: on economic freedom, 73; The Wealth of Nations, 157 social media, 2, 13, 132, 141, 144–47, 170, 179 Socrates, 181, 182 Solow, Robert: on inflation and unemployment, 43 South Korea, 22 sovereign debt. See government debt/sovereign debt Spain: central bank in, 46; EU membership, 158; inflation in, 46; relations with EU, 155 Standard & Poor’s, 121 statistics: multivariate regression, 12 Stella, Andrea: on independent central banks and inflation, 58–59 Stockemer, Daniel, 107 Summers, Larry: on control of central banks, 42–43; on economic independence of central banks, 45–46, 50; on income growth and central bank independence, 48, 49; on inflation and central bank independence, 45–47; influence of, 49–50; on political independence of central banks, 45–46, 47; on unemployment and central bank independence, 48 sweet spots, 19–20, 21–22 Switzerland: independent central bank in, 45–46; inflation in, 45–46 Tabarrok, Alex: on elected judges and voters, 66–68 Tobin, James: on inflation and unemployment, 43 Taiwan, 22 Tammany Hall, 105, 137–38, 141, 143 tariffs, 32, 100, 105 Tawadros, George: on inflation and central banks, 47–48 taxation: Blinder on, 61, 92–94, 143; and democracy, 62; of imports, 32, 100, 105; and inflation, 23; of interest earnings, 23; tax rates, 19–20, 117, 118, 133 term lengths of politicians: increases in, 11, 22, 37–40; short terms and short-term thinking, 31–35.


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The New Division of Labor: How Computers Are Creating the Next Job Market by Frank Levy, Richard J. Murnane

Atul Gawande, business cycle, call centre, computer age, Computer Numeric Control, correlation does not imply causation, David Ricardo: comparative advantage, deskilling, digital divide, Frank Levy and Richard Murnane: The New Division of Labor, Gunnar Myrdal, hypertext link, index card, information asymmetry, job automation, knowledge economy, knowledge worker, low skilled workers, low-wage service sector, PalmPilot, pattern recognition, profit motive, Robert Shiller, Ronald Reagan, Salesforce, speech recognition, tacit knowledge, talking drums, telemarketer, The Wealth of Nations by Adam Smith, working poor

The narrow job definitions provided workers no opportunity to learn how their task related to those of their co-workers. The importance of organizational design for stimulating or repressing the development of expertise is not a new idea. We remember Adam Smith for explaining how the division of labor—dividing work into narrow tasks—increases short-run efficiency. In his 1776 treatise, The Wealth of Nations, Smith also made clear how that same structure stifles learning. The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur.

By keeping the four questions in front of us, we will be better able to appreciate the challenge we face as we work to progress as a nation. This page intentionally left blank NOTES CHAPTER 1. New Divisions of Labor 1. Quoted from http://www.pa.msu.edu/people/mulhall/mist/Triple.html. 2. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Modern Library, 1994; orig. 1776). Smith used the term to describe the increased efficiency that came when a particular job—making a straight pin, in his example—was divided into a series of narrow tasks—making the heads of pins, making the stems, sharpening the points—with each task assigned to a specialized worker. 3.

Like many computer scientists of that time, the committee expected computers would soon replicate all the modes by which humans process information. The expectation was only partly fulfilled, and so the committee’s warning was only partly right. Computers have not created mass unemployment, but they have created a major upheaval in the nature of human work. More than two centuries ago, Adam Smith used the words “division of labor” to describe an earlier upheaval—the way in which the first factory systems had reorganized work and dramatically boosted productivity.2 In today’s economy, Smith’s words have taken on new meanings. There is a new division of labor between people and computers. And there is a growing division within human labor itself—a divide between those who can and those who cannot do valued work in an economy filled with computers.


pages: 208 words: 57,602

Futureproof: 9 Rules for Humans in the Age of Automation by Kevin Roose

"World Economic Forum" Davos, adjacent possible, Airbnb, Albert Einstein, algorithmic bias, algorithmic management, Alvin Toffler, Amazon Web Services, Atul Gawande, augmented reality, automated trading system, basic income, Bayesian statistics, Big Tech, big-box store, Black Lives Matter, business process, call centre, choice architecture, coronavirus, COVID-19, data science, deep learning, deepfake, DeepMind, disinformation, Elon Musk, Erik Brynjolfsson, factory automation, fake news, fault tolerance, Frederick Winslow Taylor, Freestyle chess, future of work, Future Shock, Geoffrey Hinton, George Floyd, gig economy, Google Hangouts, GPT-3, hiring and firing, hustle culture, hype cycle, income inequality, industrial robot, Jeff Bezos, job automation, John Markoff, Kevin Roose, knowledge worker, Kodak vs Instagram, labor-force participation, lockdown, Lyft, mandatory minimum, Marc Andreessen, Mark Zuckerberg, meta-analysis, Narrative Science, new economy, Norbert Wiener, Northpointe / Correctional Offender Management Profiling for Alternative Sanctions, off-the-grid, OpenAI, pattern recognition, planetary scale, plutocrats, Productivity paradox, QAnon, recommendation engine, remote working, risk tolerance, robotic process automation, scientific management, Second Machine Age, self-driving car, Shoshana Zuboff, Silicon Valley, Silicon Valley startup, social distancing, Steve Jobs, Stuart Kauffman, surveillance capitalism, tech worker, The Future of Employment, The Wealth of Nations by Adam Smith, TikTok, Travis Kalanick, Uber and Lyft, uber lyft, universal basic income, warehouse robotics, Watson beat the top human players on Jeopardy!, work culture

Uber drivers lost out on millions of dollars Arik Jenkins, “Why Uber Doesn’t Want a Built-In Tipping Option,” Fortune, April 18, 2017. the technology critic Tim Wu calls Tim Wu, “The Tyranny of Convenience,” New York Times, February 16, 2018. Rule 3 Demote Your Devices Adam Smith warned Adam Smith, The Wealth of Nations (1776). The psychologist Sherry Turkle Sherry Turkle, Reclaiming Conversation: The Power of Talk in a Digital Age (New York: Penguin, 2015). One such study, conducted at the University of British Columbia Ryan J. Dwyer, Kostadin Kushlev, and Elizabeth W. Dunn, “Smartphone Use Undermines Enjoyment of Face-to-Face Social Interactions,” Journal of Experimental Social Psychology (September 2018).

These AIs represent the kind of futuristic superintelligence we saw in sci-fi movies as kids, and they stare out at us from our screens every day—observing us, adapting to our preferences, figuring out what sequence of stimuli will get us to watch one more video, share one most post, click on one more ad. Humans have worried about the degrading psychological effects of machines for centuries. (Adam Smith warned in The Wealth of Nations that automated factory equipment was making us “as stupid and ignorant as it is possible for a human creature to become.”) And in recent years, sounding the alarm about the negative consequences of smartphone use has become a thriving cottage industry. We now have “screen detox” resorts for adults, screen-time consultants for kids, and “digital sabbath” groups that encourage members to unplug completely for one day a week.


pages: 243 words: 66,908

Thinking in Systems: A Primer by Meadows. Donella, Diana Wright

affirmative action, agricultural Revolution, Albert Einstein, Buckminster Fuller, business cycle, clean water, Dissolution of the Soviet Union, game design, Garrett Hardin, Gunnar Myrdal, illegal immigration, invisible hand, Just-in-time delivery, Kickstarter, Lewis Mumford, means of production, Mikhail Gorbachev, Nelson Mandela, peak oil, race to the bottom, Ralph Waldo Emerson, Ronald Reagan, Stanford prison experiment, systems thinking, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, Tragedy of the Commons, Whole Earth Review

Forrester, Urban Dynamics (Cambridge, MA: The MIT Press, 1969), 117. 7. Václav Havel, from a speech to the Institute of France, quoted in the International Herald Tribune, November 13, 1992, p. 7. 8. Dennis L. Meadows, Dynamics of Commodity Production Cycles, (Cambridge MA: Wright-Allen Press, Inc., 1970). 9. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Edwin Cannan, ed., (Chicago: University of Chicago Press, 1976), 477-8. 10. Herman Daly, ed., Toward a Steady-State Economy (San Francisco: W. H. Freeman and Co., 1973), 17; Herbert Simon, “Theories of Bounded Rationality,” in R. Radner and C. B. McGuire, eds., Decision and Organization (Amsterdam: North-Holland Pub.

By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it. —Adam Smith,9 18th century political economist It would be so nice if the “invisible hand” of the market really did lead individuals to make decisions that add up to the good of the whole. Then not only would material selfishness be a social virtue, but mathematical of the economy would be much easier to make. There would be no need to think about the good of other people or about the operations of complex feedback systems. No wonder Adam Smith’s model has had such strong appeal for two hundred years! Unfortunately, the world presents us with multiple examples of people acting rationally in their short-term best interests and producing aggregate results that no one likes.

Which is to say, we don’t even make decisions that optimize our own individual good, much less the good of the system as a whole. When the theory of bounded rationality challenged two hundred years of economics based on the teachings of political economist Adam Smith, you can imagine the controversy that resulted—one that is far from over. Economic theory as derived from Adam Smith assumes first that homo economicus acts with perfect optimality on complete information, and second that when many of the species homo economicus do that, their actions add up to the best possible outcome for everybody. Neither of these assumptions stands up long against the evidence.


pages: 325 words: 99,983

Globish: How the English Language Became the World's Language by Robert McCrum

Alistair Cooke, anti-communist, AOL-Time Warner, Berlin Wall, Bletchley Park, British Empire, call centre, Charles Lindbergh, classic study, colonial rule, credit crunch, cuban missile crisis, Deng Xiaoping, Etonian, export processing zone, failed state, Fall of the Berlin Wall, Ford Model T, Francis Fukuyama: the end of history, invention of movable type, invention of writing, invisible hand, Isaac Newton, jimmy wales, knowledge economy, Livingstone, I presume, Martin Wolf, Naomi Klein, Norman Mailer, Parag Khanna, Ralph Waldo Emerson, Republic of Letters, Ronald Reagan, sceptred isle, Scramble for Africa, Silicon Valley, Steven Pinker, the new new thing, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade route, transatlantic slave trade, transcontinental railway, upwardly mobile

Eventually, there was revulsion at heaven’s bounty and the governor-general, Warren Hastings, was impeached on charges of misgovernment and corruption. Meanwhile, the American Revolution had relocated the English-speaking world’s centre of gravity. Britain, having lost one empire in the West, found a second one in the East. With remarkable foresight, the Scots economist Adam Smith identified this process as early as 1776 in The Wealth of Nations. There were, wrote Smith, two milestones on Britain’s road to global empire: the settlement of North America and the opening of trade routes to India and the East: The discovery of America, and that of a passage to the East Indies by the Cape of Good Hope, are the two greatest and most important events recorded in the history of mankind.

It was this idea that generations of independent-minded Scots and Englishmen would take to the four corners of the world. In this way, the world’s English became the vessel for a progressive culture and political economy. William Pitt the younger, the prime minister during the last years of the century, used to quote from Adam Smith in his Commons speeches (while privately admitting that The Wealth of Nations was beyond him), popularising Smith’s ideas and placing them at the heart of his government’s foreign policy. Yet again, it was war with France that shaped the final decades of Britain’s century-long struggle for global dominance. At first, the French Revolution renewed ancestral Gallic ambitions and, in opposition, stimulated a bruising nationalist temper in Britain.

Schoenbaum, Shakespeare Lives (Oxford, 1993), pp. 104-10. 165 ‘Let me search for the clue’: David McCullough, John Adams (New York, 2001), pp. 48-9. 166 ‘There is nothing preserved of this great genius: ibid., p. 359. 166 Abraham Lincoln used to derive special pleasure from reading Shakespeare: Doris Kearns Goodwin, Team of Rivals (London, 2009), p. 546. 166 The discovery of America: Adam Smith, The Wealth of Nations (1776). 167 The surge in Britain’s fortunes was palpable: Piers Brendon, The Decline and Fall of the British Empire, 1781-1997 (London, 2007), p. 28. 168 Closer to home, in Egypt: Maya Jasonoff, Edge of Empire: Conquest and Collecting in the East, 1750-1850 (London 2005), p. 243. 168 ‘oak planted in a flower pot’: Brendon, Decline and Fall, p. 28. 169 The British media was playing its part too: Tombs and Tombs, That Sweet Enemy, pp. 188-9. 169 ‘The greatest revolution’: quoted ibid., p. 189. 170 So the French Revolution was denied: this account of the duke of Dorset’s abortive game relies on ‘Carry on Cricket: The Duke of Dorset’s 1789 Tour’, History Today, 39 (August 1989).


Free Money for All: A Basic Income Guarantee Solution for the Twenty-First Century by Mark Walker

3D printing, 8-hour work day, additive manufacturing, Affordable Care Act / Obamacare, basic income, Baxter: Rethink Robotics, behavioural economics, Capital in the Twenty-First Century by Thomas Piketty, commoditize, confounding variable, driverless car, financial independence, full employment, guns versus butter model, happiness index / gross national happiness, industrial robot, intangible asset, invisible hand, Jeff Bezos, job automation, job satisfaction, John Markoff, Kevin Kelly, laissez-faire capitalism, late capitalism, longitudinal study, market clearing, means of production, military-industrial complex, new economy, obamacare, off grid, off-the-grid, plutocrats, precariat, printed gun, profit motive, Ray Kurzweil, rent control, RFID, Rodney Brooks, Rosa Parks, science of happiness, Silicon Valley, surplus humans, The Future of Employment, the market place, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, universal basic income, warehouse robotics, working poor

Nozick, Anarchy, State and Utopia (New York: Basic Books, 1974). 3. I borrow the camping analogy from Gerald Cohen (Cohen, Why Not Socialism? (Princeton, NJ: Princeton University Press, 2009)). 4. Karl Marx and Friedrich Engels, The Communist Manifesto (Peking: Foreign Language Press, 1975). 222 NOTES 5. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (A. and C. Black, 1863). 6. Ibid. 7. Anne Robert Jacques Turgot and Peter Diderik Groenewegen, The Economics of ARJ Turgot (The Hague, Netherlands: Martinus Nijhoff, 1977). 8. Nozick also stipulates that legitimate justice in transfer must be free of fraud and deception. 9.

Rebecca Weber, “The Travel Agent Is Dying, but It’s Not yet Dead—CNN.com,” CNN, accessed May 18, 2015, http://www. cnn.com/2013/10/03/travel/travel-agent-survival/index.html. 22. Björn Nykvist and M\a ans Nilsson, “Rapidly Falling Costs of Battery Packs for Electric Vehicles,” Nature Climate Change, 2015, http://www.nature.com/nclimate/journal/vaop/ncurrent/full/ nclimate2564.html. 23. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (A. and C. Black, 1863). 24. There are about 7 acres of land per person in the United States, so there is more than enough land for everyone. 25. K. Eric Drexler, Nanosystems: Molecular Machinery, Manufacturing, and Computation (New York: John Wiley, 1992). 26. Ray Kurzweil, The Singularity Is Near (New York: Penguin Books, 2005). 27.

How to Simplify the Tax Code and Provide Every American With a Basic Income Guarantee. USBIG Discussion Paper, 2006. http://usbig.net/papers/144-Sheahen-RefundableTaxCredit.pdf. REFERENCES 243 Sheahen, Allan. Basic Income Guarantee: Your Right to Economic Security. New York: Palgrave Macmillan, 2012. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations . Edinburgh, Scottland: A. and C. Black, 1863. Smith, Eric Alden, Monique Borgerhoff Mulder, Samuel Bowles, Michael Gurven, Tom Hertz, and Mary K. Shenk. “Production Systems, Inheritance, and Inequality in Premodern Societies.” Current Anthropology 51, 1 (2010): 85–94. Sofge, Erik. “3 New Farm Bots Programmed to Pick, Plant and Drive.”


pages: 334 words: 82,041

How Did We Get Into This Mess?: Politics, Equality, Nature by George Monbiot

Affordable Care Act / Obamacare, Alfred Russel Wallace, Anthropocene, bank run, bilateral investment treaty, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, Corn Laws, creative destruction, credit crunch, David Attenborough, dematerialisation, demographic transition, drone strike, en.wikipedia.org, first-past-the-post, full employment, Gini coefficient, hedonic treadmill, income inequality, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, invisible hand, land bank, land reform, land value tax, Leo Hollis, market fundamentalism, meta-analysis, Mont Pelerin Society, moral panic, Naomi Klein, Northern Rock, obamacare, oil shale / tar sands, old-boy network, peak oil, place-making, planned obsolescence, plutocrats, profit motive, rent-seeking, rewilding, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, urban sprawl, We are all Keynesians now, wealth creators, World Values Survey

A Telling Silence 1‘Liberal Democrat Manifesto 2010’, politicsresources.net. 2David Teather, 22 June 2010, ‘Capital Gains Tax Rises to 28% for Higher Earners’, theguardian.com. 3House of Commons, 8 January 2013, Welfare Benefits Up-Rating Bill, Hansard, publications.parliament.uk. 4HM Revenues and Customs, 14 April 2013, Rates and Allowances: Corporation Tax, gov.uk; Dan Milmo, 5 December 2012, ‘Corporation Rate Cut to Nearly Half of US Level as Osborne Ignores Tax Row’, theguardian.com. 5Ibid. 6Gordon Brown, 1 November 1999, Speech to the CBI Conference. 7Tony Dolphin, 10 June 2010, Financial Sector Taxes, Institute for Public Policy Research, ippr.org. 8Greg Philo, 15 August 2010, ‘Deficit Crisis: Let’s Really Be in It Together’, theguardian.com. 9Chris Spillane and Neil Callanan, 28 October 2012, ‘Sultan’s Tax Discount on London House Shows Law Favours Rich’, independent.co.uk. 10Ibid. 11Hélène Mulholland, 7 October 2012, ‘David Cameron Rules out Mansion Tax and Plans Further Welfare Cuts’, theguardian.com. 12Speech delivered by Winston Churchill in King’s Theater, Edinburgh, on 17 July 1909, see Current Affairs, ‘Winston Churchill Said It All Better Than We Can’, landvaluetax.org. 13‘Ground-rents are a still more proper subject of taxation than the rent of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground’, from Adam Smith, 1776, An Inquiry into the Nature and Causes of the Wealth of Nations, Book V, Chapter 2. 14Winston Churchill, as above. 15Land Value Taxation Campaign, ‘Land Rent for Public Revenue’, landvaluetax.org. 16David Cameron, 6 March 2011, ‘Speech to Conservative Spring Conference | Cardiff’, newstatesman.com. 51. The Values of Everything 1Tom Crompton, September 2010, ‘Common Cause: The Case for Working with Our Cultural Values’, WWF, Oxfam, Friends of the Earth, CPRE, Climate Outreach Information Network, wwf.org.uk. 2J.

Every Saturday, in a wine bar called the Cork and Bottle, Margaret Thatcher’s researchers and leader writers and columnists from The Times and Telegraph met staff from the Adam Smith Institute and the Institute of Economic Affairs. Over lunch, they ‘planned strategy for the week ahead’.8 These meetings would ‘co-ordinate our activities to make us more effective collectively’. The journalists would then turn the institute’s proposals into leader columns while the researchers buttonholed shadow ministers. Soon, Pirie says, the Daily Mail began running a supportive article on the leader page every time the Adam Smith Institute published something.9 The paper’s editor, David English, oversaw these articles himself, and helped the institute to refine its arguments.10 As Pirie’s history progresses, all references to funding cease.

As the corporate lobbyist Jeff Judson enthuses, they are ‘virtually immune to retribution … the identity of donors to think tanks is protected from involuntary disclosure’.3 A consultant who worked for the billionaire Koch brothers claims that they see the funding of think tanks ‘as a way to get things done without getting dirty themselves’.4 This much I knew, but over the past few days I’ve learnt a lot more. In Think Tank: The Story of the Adam Smith Institute, the institute’s founder, Madsen Pirie, provides an unintentional but invaluable guide to how power in this country really works.5 Soon after it was founded in 1977, the institute approached ‘all the top companies’. About twenty of them responded by sending cheques.6 Its most enthusiastic supporter was the coup-plotter Sir James Goldsmith, one of the most unscrupulous asset strippers of that time.


pages: 339 words: 109,331

The Clash of the Cultures by John C. Bogle

Alan Greenspan, asset allocation, buy and hold, collateralized debt obligation, commoditize, compensation consultant, corporate governance, corporate social responsibility, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, diversified portfolio, estate planning, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, financial intermediation, fixed income, Flash crash, Glass-Steagall Act, Hyman Minsky, income inequality, index fund, interest rate swap, invention of the wheel, John Bogle, junk bonds, low interest rates, market bubble, market clearing, military-industrial complex, money market fund, mortgage debt, new economy, Occupy movement, passive investing, Paul Samuelson, Paul Volcker talking about ATMs, Ponzi scheme, post-work, principal–agent problem, profit motive, proprietary trading, prudent man rule, random walk, rent-seeking, risk tolerance, risk-adjusted returns, Robert Shiller, seminal paper, shareholder value, short selling, South Sea Bubble, statistical arbitrage, stock buybacks, survivorship bias, The Wealth of Nations by Adam Smith, transaction costs, two and twenty, Vanguard fund, William of Occam, zero-sum game

To protect against such conflicts of interest, English common law had developed, centuries earlier, the concept of fiduciary duty—the duty of the agents entrusted with the care of the property of others to protect the interests of their principals, the owners of these assets. But while this concept may seem simple and obvious, its actual implementation was too often honored more in the breach than in the observance. Indeed, in 1776, Adam Smith eloquently described—in his The Wealth of Nations—the challenges that existed even in that far simpler era: . . . the managers of other people’s money (rarely) watch over it with the same anxious vigilance with which . . . they watch over their own. . . . Like the stewards of a rich man, they very easily give themselves a dispensation.

See also Index funds assets exchange traded funds versus future of growth in number of as portfolio core profile of trading volumes “Trafficking” in management contracts Transactions: cost of taxes on Trends Turner, Adair Turner, Lynn Turnover: actively managed equity funds exchange traded funds index funds mutual funds Stewardship Quotient and stock market Twardowski, Jan M. 12b-1 fees Value, corporate Vanguard: Admiral shares balanced index fund bond funds, defined-maturity cash flow emerging markets stock fund exchange traded funds “Extended Market” portfolio growth and value index funds history index fund family milestones international funds LifeStrategy Portfolios proxy votes REIT index fund small capitalization stock fund Stewardship Quotient structure and strategy tax-managed index funds Vanguard 500 Index Fund Vanguard Institutional Index Fund Vanguard PRIMECAP Fund Vanguard Total Bond Market Index Fund Vanguard Total Stock Market Index funds Vanguard U.S. Growth Fund Vanguard Wellington Fund. See Wellington Fund Vanguard Windsor Fund Volatility Volcker Rule “Wall Street Casino, The” (Bogle) Wall Street Journal, The Wealth of Nations, The (Smith) Wellington Fund: about advisory fees Annual Report (1967) Annual Report (1978) Annual Report (2000) Annual Report (2010) assets under management Beta dividend income projections dividend policy dividends equity ratio expenses Fall (1967–1978) founding income strategy, implications of investment committee lessons from memo on restructuring memo on speculation naming of other balanced funds versus other pioneer funds compared to performance portfolio approach to higher income Renaissance (1978-2012) restructuring memo returns Rise (1929-1966) shareholder objectives survey speculation memo Wellington Management Company.

I wince when the Federal Reserve states its intention to raise asset prices—including “higher stock prices”—apparently irrespective of the level of underlying intrinsic stock values. Substantive limits on short selling are another nonstarter for me. The overriding principle should be: Let the markets clear, at whatever prices that willing and informed buyers agree to pay to willing and informed (but often better-informed) sellers. Individual investors need to wake up. Adam Smith–like, they need to look after their own best interests. Of course, that would mean that individual investors must demand much better, clearer, and more pointed disclosures. We need a campaign to educate investors about the hard realities of investing. Investors need to understand not only the magic of compounding long-term returns, but the tyranny of compounding costs; costs that ultimately overwhelm that magic.


pages: 350 words: 103,988

Reinventing the Bazaar: A Natural History of Markets by John McMillan

accounting loophole / creative accounting, Albert Einstein, Alvin Roth, Andrei Shleifer, Anton Chekhov, Asian financial crisis, classic study, congestion charging, corporate governance, corporate raider, crony capitalism, Dava Sobel, decentralized internet, Deng Xiaoping, Dutch auction, electricity market, experimental economics, experimental subject, fear of failure, first-price auction, frictionless, frictionless market, George Akerlof, George Gilder, global village, Great Leap Forward, Hacker News, Hernando de Soto, I think there is a world market for maybe five computers, income inequality, income per capita, independent contractor, informal economy, information asymmetry, invisible hand, Isaac Newton, job-hopping, John Harrison: Longitude, John Perry Barlow, John von Neumann, Kenneth Arrow, land reform, lone genius, manufacturing employment, market clearing, market design, market friction, market microstructure, means of production, Network effects, new economy, offshore financial centre, ought to be enough for anybody, pez dispenser, pre–internet, price mechanism, profit maximization, profit motive, proxy bid, purchasing power parity, Robert Solow, Ronald Coase, Ronald Reagan, sealed-bid auction, search costs, second-price auction, Silicon Valley, spectrum auction, Stewart Brand, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, War on Poverty, world market for maybe five computers, Xiaogang Anhui farmers, yield management

Journal of Economic Perspectives 5, 25–44. Skidelsky, Robert. 1996. The Road from Serfdom, London, Penguin. Slemrod, Joel, ed. 2000. Does Atlas Shrug? The Economic Consequences of Taxing the Rich. Cambridge, Harvard University Press. Smith, Adam. 1976. An Inquiry into the Nature and Causes of the Wealth of Nations. Chicago, University of Chicago Press. First published in 1776. Smith, Eugene. 1975. Minamata, New York, Holt, Rinehart, Winston. Smith, Vernon L. 1982. “Microeconomic Systems as an Experimental Science.” American Economic Review 72, 923–955. Sobel, Dava. 1996. Longitude. New York, Penguin.

Certain respected merchants, called “queen mothers,” play the part of judges, arbitrating when disputes arise. Gains from trade are generated. The vendors make others—as well as themselves—better off by making food available to the urban poor, and by providing income to farmers with which to buy necessities like clothing. Thus they exemplify Adam Smith’s analysis of the merchant: “By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it.” The Makola marketplace has continued to operate despite periodic, sometimes violent attempts by the Ghanaian government to shut it down. These attempts reached a height of brutality in 1979 after the military government accused marketplace traders of violating its price controls.

Deaths from influenza and pneumonia have been greatly reduced, as have deaths from heart disease, strokes, and ulcers. Millions live longer, more productively, and more comfortably. Market incentives are what prompted the invention of these miracle drugs. Were it not for the profit motive, many of them would not exist. Adam Smith said self-interest can lead to beneficent outcomes: there is no more striking instance of this than the aggressive pursuit of profit giving rise to life-preserving medicines. No economic system that has ever been implemented, other than the market, has succeeded in consistently spawning major pharmaceutical innovations.


pages: 142 words: 45,733

Utopia or Bust: A Guide to the Present Crisis by Benjamin Kunkel

Alan Greenspan, Anthropocene, anti-communist, Bear Stearns, Bretton Woods, business cycle, capital controls, Carmen Reinhart, creative destruction, David Graeber, declining real wages, full employment, Hyman Minsky, income inequality, late capitalism, Lewis Mumford, liberal capitalism, liquidity trap, means of production, money: store of value / unit of account / medium of exchange, mortgage debt, Occupy movement, peak oil, price stability, profit motive, public intellectual, savings glut, Slavoj Žižek, The Wealth of Nations by Adam Smith, transatlantic slave trade, vertical integration, War on Poverty, We are the 99%, women in the workforce, Works Progress Administration, zero-sum game

Coinage did not become widespread until several thousand years later. Graeber insists on the historical priority of debt to exchange in order to dispel the anthropological premise of modern economics: “the myth of barter.” Adam Smith supposed, as primers on economics complacently repeat, that economic life emerged from a propensity of the species to truck and barter. The Wealth of Nations imagines “a tribe of hunters or shepherds” among whom producers of arrowheads, tanned hides, or “little huts or moveable houses” simply swap one thing directly for another. Eventually, however, economies become too complex to function like this, and so they introduce some universal commodity—salt, cowries, or one or another precious metal—by means of which all other commodities can be exchanged.

But among Americans, wage growth had ceased and household incomes could no longer be supplemented by the mass entry of women into the workforce, something already accomplished. The issuance and securitization of debt alone could substitute for present income. In the end, so much fictitious capital could not be redeemed. Whatever the destination of future Chinese savings gluts, they are unlikely to sponsor American consumption in the same way. In his final book, Adam Smith in Beijing (2007), the late Giovanni Arrighi expanded on Harvey’s concepts of the spatial fix and the switching crisis to survey half a millennium of capitalist development and to peer into a new, perhaps Chinese century. In Arrighi’s scheme of capitalist history, there have been four “systemic cycles of accumulation,” each lasting roughly a century and each organized on a larger scale than the one before, with a new polity at the center: a Genoese-Iberian cycle; a Dutch cycle; a British cycle; and an American one.

If the loaning of money at interest, stigmatized as usury during the Middle Ages, has seemed a more tolerable practice during much of the history of capitalism, its acceptance has been purchased through growth: increased income for rentiers didn’t necessarily imply a corresponding decrease for everyone else, only a share in the common expansion. The more nearly property relations approach a zero-sum game, the less we will be able to distinguish between what Adam Smith called productive and consumptive loans, the former contributing to the borrower’s prosperity and the latter merely draining it. Positive real interest rates per se will come to seem consumptive or parasitic, a straightforward transfer of wealth from debtor to creditor. It’s not inconceivable that financial rents could grow even as the economy stalls, with the subjects of capitalism submitting to an age of declining standards of living, as occurred in much of Europe during the eighteenth century.


pages: 219 words: 61,720

American Made: Why Making Things Will Return Us to Greatness by Dan Dimicco

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Affordable Care Act / Obamacare, Alan Greenspan, American energy revolution, American Society of Civil Engineers: Report Card, Apollo 11, Bakken shale, barriers to entry, Bernie Madoff, California high-speed rail, carbon credits, carbon footprint, carbon tax, clean water, congestion pricing, crony capitalism, currency manipulation / currency intervention, David Ricardo: comparative advantage, decarbonisation, digital divide, driverless car, fear of failure, full employment, Google Glasses, high-speed rail, hydraulic fracturing, invisible hand, job automation, knowledge economy, laissez-faire capitalism, Loma Prieta earthquake, low earth orbit, manufacturing employment, Neil Armstrong, oil shale / tar sands, Ponzi scheme, profit motive, Report Card for America’s Infrastructure, rolling blackouts, Ronald Reagan, Savings and loan crisis, Silicon Valley, smart grid, smart meter, sovereign wealth fund, The Wealth of Nations by Adam Smith, too big to fail, uranium enrichment, Washington Consensus, Works Progress Administration

Cline, “Renminbi Undervaluation, China’s Surplus, and the US Trade Deficit,” Peterson Institute, http://www.piie.com/publications/pb/pb10-20.pdf; Robert E. Scott, “The China Toll,” Economic Policy Institute, August 23, 2012, http://www.epi.org/publication/bp345-china-growing-trade-deficit-cost/. No discussion of free trade is complete without a mention of Scottish moral philosopher Adam Smith, whose free-trade theories—laid out in his most famous book, The Wealth of Nations—came about in reaction to British mercantilism. “If a foreign country can supply us with a commodity cheaper than we ourselves can make it,” Smith wrote, “better buy it from them with some part of the produce of our own industry, employed in a way in which we have some advantage.”8 When you read Smith, remember that Great Britain could only afford to embrace free trade after centuries of building up its economy under the mercantilist system.

Bureau of Economic Analysis, “Value Added by Industry as a Percentage of Gross Domestic Product,” November 13, 2012, http://www.bea.gov/industry/gdpbyind_data.htm. 7. Robert E. Scott, “Trading Away the Manufacturing Advantage,” Economic Policy Institute, September 30, 2013, http://www.epi.org/publication/trading-manufacturing-advantage-china-trade/. 8. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 1776. 9. “Certain Oil Country Tubular Goods from China Injure U.S. Industry, Says USITC,” USITC, December 30, 2009, http://usitc.gov/press_room/news_release/2009/er1230gg1.htm. Chapter 6 1. President Barack Obama, Weekly Address, August 1, 2009, http://www.whitehouse.gov/the-press-office/weekly-address-president-obama-says-gdp-numbers-show-recovery-act-working-long-term. 2.

When we think of mercantilism, we usually think of England and Spain in the sixteenth or seventeenth centuries, trying to amass as much gold and silver as they could get their hands on. A mercantilist trading policy is one in which a government protects and heavily subsidizes key industries, exporting as much as possible and importing as little as possible. The great Scottish philosopher and economist Adam Smith said the remedy to mercantilism was laissez-faire capitalism. The “invisible hand” of capitalism has always struggled with the heavy hand of government meddling. The U.S. trade deficit, which had fallen 60 percent during Reagan’s second term and into the elder Bush’s presidency, began to expand again in the early 1990s.7 The move toward free trade (which we’ll discuss at greater length in chapter 5) left U.S. industries vulnerable once again to predatory foreign trade practices.


pages: 199 words: 61,648

Having and Being Had by Eula Biss

Capital in the Twenty-First Century by Thomas Piketty, David Graeber, Donald Trump, Garrett Hardin, glass ceiling, Haight Ashbury, index fund, invisible hand, Jeff Bezos, Joan Didion, job satisfaction, Landlord’s Game, means of production, moral hazard, new economy, Norman Mailer, Occupy movement, precariat, Robert Shiller, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tragedy of the Commons, trickle-down economics, Upton Sinclair, wage slave, wages for housework

He means consumption, which was once the name for a wasting disease, and is now the word anthropologists use for almost everything we do outside of work—eating, shopping, reading, listening to music. Consume, he notes, is from the Latin consumere, meaning “to seize or take over completely.” A person might consume food or be consumed by rage. In its earliest usage, consumption always implied destruction. Consumption was the opposite of production in Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations. He made this inquiry in 1776, when work was being relocated into factories and lives were newly divided between home and work. We still use the math of that time to subtract what is consumed at home from what is produced at work. In that crude equation, only work that earns money is productive.

The Mushroom at the End of the World: On the Possibility of Life in Capitalist Ruins, Anna Lowenhaupt Tsing. Princeton University Press, 2017. The Precariat: The New Dangerous Class, Guy Standing. Bloomsbury Academic, 2011. WATER An Inquiry into the Nature and Causes of the Wealth of Nations, volume 1, Adam Smith. Liberty Fund, 2009. First Published 1776. ART The Coronation of the Emperor Napoleon I and the Crowning of the Empress Joséphine in Notre-Dame Cathedral on December 2, 1804, Jacques-Louis David. 1807. “Apeshit,” music video directed by Ricky Saiz. Parkwood, Roc Nation, 2018.

The spray was like little stones on my face as I swam toward the waterfall, and I could feel the incredible power of it, the energy churning under the surface. This village has a museum called Musée de l’Eau, the Museum of Water, but I don’t go in. I already feel like I’m in a museum of water. “Nothing is more useful than water,” Adam Smith wrote in 1776, “but it will purchase scarce any thing; scarce any thing can be had in exchange for it.” Diamonds are useless, he added, but they can be exchanged for many things. He didn’t foresee a time when wars would be fought over water as often as diamonds, but he could already see that the things that meet our most urgent needs are often worthless.


pages: 304 words: 82,395

Big Data: A Revolution That Will Transform How We Live, Work, and Think by Viktor Mayer-Schonberger, Kenneth Cukier

23andMe, Affordable Care Act / Obamacare, airport security, Apollo 11, barriers to entry, Berlin Wall, big data - Walmart - Pop Tarts, Black Swan, book scanning, book value, business intelligence, business process, call centre, cloud computing, computer age, correlation does not imply causation, dark matter, data science, double entry bookkeeping, Eratosthenes, Erik Brynjolfsson, game design, hype cycle, IBM and the Holocaust, index card, informal economy, intangible asset, Internet of things, invention of the printing press, Jeff Bezos, Joi Ito, lifelogging, Louis Pasteur, machine readable, machine translation, Marc Benioff, Mark Zuckerberg, Max Levchin, Menlo Park, Moneyball by Michael Lewis explains big data, Nate Silver, natural language processing, Netflix Prize, Network effects, obamacare, optical character recognition, PageRank, paypal mafia, performance metric, Peter Thiel, Plato's cave, post-materialism, random walk, recommendation engine, Salesforce, self-driving car, sentiment analysis, Silicon Valley, Silicon Valley startup, smart grid, smart meter, social graph, sparse data, speech recognition, Steve Jobs, Steven Levy, systematic bias, the scientific method, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, Thomas Davenport, Turing test, vertical integration, Watson beat the top human players on Jeopardy!

His technical description of reCaptchas is at Luis von Ahn et al., “reCAPTCHA: Human-Based Character Recognition via Web Security Measures,” Science 321 (September 12, 2008), pp. 1465–68 (http://www.sciencemag.org/content/321/5895/1465.abstract). [>] Smith’s pin factory—Adam Smith, The Wealth of Nations (reprint, Bantam Classics, 2003), book I, chapter one. (A free electronic version is at http://www2.hn.psu.edu/faculty/jmanis/adam-smith/Wealth-Nations.pdf). [>] Storage—Viktor Mayer-Schönberger, Delete: The Virtue of Forgetting in the Digital Age (Princeton University Press, 2011), p. 63. [>] On electrical cars’ power usage—IBM, “IBM, Honda, and PG&E Enable Smarter Charging for Electric Vehicles,” press release, April 12, 2012 (http://www-03.ibm.com/press/us/en/pressrelease/37398.wss).

The Signal and the Noise: Why So Many Predictions Fail—But Some Don’t. Penguin, 2012. Singel, Ryan. “Netflix Spilled Your Brokeback Mountain Secret, Lawsuit Claims.” Wired, December 17, 2009 (http://www.wired.com/threatlevel/2009/12/netflix-privacy-lawsuit/). Smith, Adam. The Wealth of Nations (1776). Reprinted Bantam Classics, 2003. A free electronic version is available (http://www2.hn.psu.edu/faculty/jmanis/adam-smith/Wealth-Nations.pdf). Solove, Daniel J. The Digital Person: Technology and Privacy in the Information Age. NYU Press, 2004. Surowiecki, James. “A Billion Prices Now.” New Yorker, May 30, 2011 (http://www.newyorker.com/talk/financial/2011/05/30/110530ta_talk_surowiecki).

Or think of billions of old search queries, or the price of nearly every seat on every commercial airline flight in the United States going back years. Until recently there were no easy ways to collect, store, and analyze such data, which severely limited the opportunities to extract its potential value. In Adam Smith’s celebrated example of the pin maker, with which he discussed the division of labor in the eighteenth century, it would have required observers watching all the workers not just for one particular study, but at all times everyday, taking detailed measurements, and counting the output on thick paper with feathery quill pens.


pages: 337 words: 103,273

The Great Disruption: Why the Climate Crisis Will Bring on the End of Shopping and the Birth of a New World by Paul Gilding

"World Economic Forum" Davos, airport security, Alan Greenspan, Albert Einstein, biodiversity loss, Bob Geldof, BRICs, carbon credits, carbon footprint, carbon tax, clean tech, clean water, Climategate, commoditize, corporate social responsibility, creative destruction, data science, decarbonisation, energy security, Exxon Valdez, failed state, fear of failure, geopolitical risk, income inequality, Intergovernmental Panel on Climate Change (IPCC), John Elkington, Joseph Schumpeter, market fundamentalism, mass immigration, Medieval Warm Period, Naomi Klein, negative emissions, Nelson Mandela, new economy, nuclear winter, Ocado, ocean acidification, oil shock, peak oil, Ponzi scheme, precautionary principle, purchasing power parity, retail therapy, Ronald Reagan, shareholder value, systems thinking, The Spirit Level, The Wealth of Nations by Adam Smith, union organizing, University of East Anglia, warehouse automation

There would be as much scope as ever for all kinds of mental culture, and moral and social progress; as much room for improving the Art of Living and much more likelihood of its being improved, when minds cease to be engrossed by the art of getting on. Scarcely necessary indeed. We can go still further back, virtually to the beginning of economics as a field of study, to Adam Smith, whose famous 1776 book, An Inquiry into the Nature and Causes of the Wealth of Nations, was described as “the effective birth of economics as a separate discipline.” Adam Smith assumed and indeed forecast the end of economic growth and the transition to a stable-state economy, for various reasons—including what he saw as the obvious limits of natural resources. Smith reasoned that all economies would eventually reach a “stationary state” when they had “acquired that full complement of riches which the nature of its soil and climate, and its situation with respect to other societies allowed it to acquire; which could, therefore advance not further and which was not going backwards.”1 So over two hundred years ago, the founder of modern liberal economies recognized what we have since forgotten—that any economy remains constrained by its “soil and climate” or its natural resource base.

A Steady-State Economy, commissioned by the Sustainable Development Commission, April 24, 2008, http://www.sd-commission.org.uk/publications.php?id=775. 2. Ibid. 3. Representative Barber Conable is credited as the source of this quote. 4. See http://www.climatespectator.com.au/commentary/sizing-low-carbon-economy. CHAPTER 15: THE HAPPINESS ECONOMY 1. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 5th ed., edited by Edwin Cannan (London: Methuen & Co., Ltd., 1904). 2. Centre for the Advancement of Steady State Economics, http://steadystate.org. 3. See http://www.happyplanetindex.org. 4. Paper by Professor Clive Hamilton and Professor Tim Kasser, presented at Oxford University conference 2009, 4 degrees and beyond, http://www.clivehamilton.net.au/cms/media/documents/articles/oxford_four_degrees_paper _final.pdf.

This starts to slow the economy without increasing unemployment as a result. It also generates a cultural understanding and live examples of people living happily in new ways—less work, less debt, less stuff, more fun, more community, and more security. What the work of all these pioneers, from Adam Smith to Herman Daly, and the work of groups like Center for the Advancement of the Steady State Economy (CASSE)2 and NEF tell us is clear. The task before us, while not simple, is also far from impossible. Given such change is the only option we have before us, short of allowing society to collapse, this is a welcome relief!


pages: 196 words: 57,974

Company: A Short History of a Revolutionary Idea by John Micklethwait, Adrian Wooldridge

affirmative action, AOL-Time Warner, barriers to entry, Bear Stearns, Bonfire of the Vanities, book value, borderless world, business process, Carl Icahn, Charles Lindbergh, classic study, company town, Corn Laws, Cornelius Vanderbilt, corporate governance, corporate raider, corporate social responsibility, creative destruction, credit crunch, crony capitalism, double entry bookkeeping, Etonian, Fairchild Semiconductor, financial engineering, Great Leap Forward, hiring and firing, Ida Tarbell, industrial cluster, invisible hand, James Watt: steam engine, John Perry Barlow, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, junk bonds, knowledge economy, knowledge worker, laissez-faire capitalism, manufacturing employment, market bubble, Michael Milken, military-industrial complex, mittelstand, new economy, North Sea oil, pneumatic tube, race to the bottom, railway mania, Ronald Coase, scientific management, Silicon Valley, six sigma, South Sea Bubble, Steve Jobs, Steve Wozniak, strikebreaker, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, Triangle Shirtwaist Factory, tulip mania, wage slave, William Shockley: the traitorous eight

Both quoted in Anthony Sampson, Company Man: The Rise and Fall of Corporate Life (New York: Times Business, 1995), 17. 27. Quoted in Lawrence James, Raj: The Making and Unmaking of British India (London: Abacus, 1998), 49. 28. Beatty, Colossus, 18. 29. Stephen Innes, “From Corporation to Commonwealth,” in ibid., 18. 30. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, vol. 2 (New York: Oxford University Press, 1976), 733. He details the shortcomings of chartered companies on pp. 733–58. 31. K. N. Chaudhuri, The Trading World of Asia and the English East India Company (Cambridge: Cambridge University Press, 1978), 454. 32. Ann Carlos and Stephen Nicholas, “Giants of an Earlier Capitalism: The Chartered Trading Companies as Modern Multinationals,” Business History Review 62 (Autumn 1988): 398–419. 33.

The Victorians also gave us many of the most profound arguments that swirl around companies. Nowadays it is assumed that the causes of capitalism and companies are inseparable. Yet many of the earliest critics of the joint-stock company and the “subsidy” of limited liability were economic liberals, taking their cue from Adam Smith, who had derided them as antiquated and inefficient. One noted Victorian thinker, A. V. Dicey, fretted that the company would become the harbinger of a new age of collectivism: “one trade after another” would pass from the “management of private persons into the hands of corporate bodies created by the state.”3 (Karl Marx gave a grudging welcome to companies for much the same reason.)

In 1619, the Virginia Company effectively introduced representative democracy into the colonies, authorizing a General Assembly in which members elected the company’s officers.28 John Winthrop (1588–1649) took Massachusetts down the same road in 1630 when the General Court of the Massachusetts Company transformed itself into a commonwealth, redefining “freemen” from stockholders in a commercial venture to citizens of a state.29 Roughly put, the General Courts evolved into increasingly rebellious state legislatures. Economic liberals produced a different array of charges. Adam Smith (1723–1790), who was obsessed with the East India Company’s abuses in Bengal, had two basic complaints. First, he disliked the fact that chartered companies possessed monopolies (albeit ones that were being diluted, even as he scribbled away, by both licensed and clandestine competition). For him, the chartered companies were “either burdensome or useless” and they “either mismanaged or confined” trade.30 Second, he thought that joint-stock companies were inherently less efficient than sole traders.


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Progress: Ten Reasons to Look Forward to the Future by Johan Norberg

agricultural Revolution, anti-communist, availability heuristic, Bartolomé de las Casas, Berlin Wall, bread and circuses, British Empire, business climate, carbon tax, classic study, clean water, continuation of politics by other means, Daniel Kahneman / Amos Tversky, demographic transition, desegregation, Donald Trump, Edward Jenner, Flynn Effect, germ theory of disease, Gini coefficient, Great Leap Forward, Gunnar Myrdal, Haber-Bosch Process, Hans Island, Hans Rosling, Ignaz Semmelweis: hand washing, income inequality, income per capita, indoor plumbing, Isaac Newton, Jane Jacobs, John Snow's cholera map, Kibera, Louis Pasteur, Mahatma Gandhi, meta-analysis, Mikhail Gorbachev, more computing power than Apollo, moveable type in China, Naomi Klein, Nelson Mandela, open economy, place-making, Rosa Parks, sexual politics, special economic zone, Steven Pinker, telerobotics, The Wealth of Nations by Adam Smith, transatlantic slave trade, very high income, working poor, Xiaogang Anhui farmers, zero-sum game

New York: Random House, 1969, p. 121. 2 Braudel 2002, p. 283. 3 Maddison 2003, p. 262. 4 Francois Bourguignon and Christian Morrisson, ‘Inequality among world citizens: 1820–1992’, American Economic Review, 92, 4 (2002), 727–44; World Bank, PovcalNet, http://iresearch.worldbank.org/PovcalNet; Marcio Cruz, James Foster, Bryce Quillin and Philip Schellekens, ‘Ending extreme poverty and sharing prosperity: progress and policies’, Policy Research Note no. 3, October 2015. 5 Martin Ravallion, ‘Poverty in the rich world when it was not nearly so rich’ (2014), blog post, Center for Global Development, Washington DC, http://www.cgdev.org/blog/poverty-rich-world-when-it-was-not-nearly-so-rich (accessed on 12 April 2016). 6 Fogel 2004, p. 41. 7 Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations, Glasgow Edition of the Works and Correspondence of Adam Smith. Indianapolis: Liberty Fund, 1981, bk. 1, ch. 8. 8 Peter Lindert and Jeffrey Williamson, ‘English workers’ living standards during the Industrial Revolution: a new look’, in Joel Mokyr (ed.), The Economics of the Industrial Revolution.

It was considered the only way to incentivize people to work hard, and it was thought that only low wages could reduce the cost of production so that a country could remain competitive. If the poor got a raise, they would leave the job and end up in the alehouse, according to many thinkers of the time. The Scottish economist Adam Smith, the arch-enemy of the Mercantilists, thought that this was wrong, arguing that higher wages could in fact make people work more and that ‘no society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.’7 The ideas of Smith and other Enlightenment thinkers developed a growing respect for the hard-working poor.

Like the Leveller Richard Rumbold, Enlightenment thinkers most often believed in the equality of rights, and rejected the notion that the greater part of humanity was born with saddles on their backs and bridles in their mouths, with some few booted and spurred to drive them. The classical liberals of the Scottish Enlightenment, Francis Hutcheson and Adam Smith, condemned slavery early on, and in 1772 the Chief Justice of England declared slavery illegal. Any slave brought into the country would be set free the moment they set foot in England or Scotland. In Parliament, William Wilberforce fought against the British slave trade and for complete abolition for almost half a century.


pages: 823 words: 220,581

Debunking Economics - Revised, Expanded and Integrated Edition: The Naked Emperor Dethroned? by Steve Keen

accounting loophole / creative accounting, Alan Greenspan, banking crisis, banks create money, barriers to entry, behavioural economics, Benoit Mandelbrot, Big bang: deregulation of the City of London, Black Swan, Bonfire of the Vanities, book value, business cycle, butterfly effect, capital asset pricing model, cellular automata, central bank independence, citizen journalism, clockwork universe, collective bargaining, complexity theory, correlation coefficient, creative destruction, credit crunch, David Ricardo: comparative advantage, debt deflation, diversification, double entry bookkeeping, en.wikipedia.org, equity risk premium, Eugene Fama: efficient market hypothesis, experimental subject, Financial Instability Hypothesis, fixed income, Fractional reserve banking, full employment, Glass-Steagall Act, Greenspan put, Henri Poincaré, housing crisis, Hyman Minsky, income inequality, information asymmetry, invisible hand, iterative process, John von Neumann, Kickstarter, laissez-faire capitalism, liquidity trap, Long Term Capital Management, low interest rates, mandelbrot fractal, margin call, market bubble, market clearing, market microstructure, means of production, minimum wage unemployment, Money creation, money market fund, open economy, Pareto efficiency, Paul Samuelson, Phillips curve, place-making, Ponzi scheme, Post-Keynesian economics, power law, profit maximization, quantitative easing, RAND corporation, random walk, risk free rate, risk tolerance, risk/return, Robert Shiller, Robert Solow, Ronald Coase, Savings and loan crisis, Schrödinger's Cat, scientific mainstream, seigniorage, six sigma, South Sea Bubble, stochastic process, The Great Moderation, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, total factor productivity, tulip mania, wage slave, zero-sum game

(Quesnay, cited in Meek 1972) Since land determined the value of commodities, and the price paid for something was normally equivalent to its value, the ratio between the prices of two commodities should be equivalent to the ratios of the land needed to produce them. Smith (and Ricardo) The physiocratic answer to the source of value reflected the school’s origins in overwhelmingly rural France. Adam Smith, a son of Scotland and neighbor to the ‘nation of shopkeepers,’ was strongly influenced by the physiocrats. But in The Wealth of Nations (which was published in the year in which the first steam engine was installed) Smith argued that labor was the source of value. In Smith’s words: ‘The annual labor of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes, and which consist always either in the immediate produce of that labor, or in what is purchased with that produce from other nations’ (Smith 1838 [1776]).

Silvestre, J. (1993) ‘The market-power foundations of macroeconomic policy,’ Journal of Economic Literature, 31(1): 105–41. Simon, H. A. (1996) The Sciences of the Artificial, Cambridge, MA: MIT Press. Sippel, R. (1997) ‘An experiment on the pure theory of consumer’s behaviour,’ Economic Journal, 107(444): 1431–44. Smith, A. (1838 [1776]) An Inquiry into the Nature and Causes of the Wealth of Nations, Edinburgh: Adam and Charles Black. Solow, R. M. (1956) ‘A contribution to the theory of economic growth,’ Quarterly Journal of Economics, 70(1): 65–94. Solow, R. M. (2001) ‘From neoclassical growth theory to new classical macroeconomics,’ in J. H. Drèze (ed.), Advances in Macroeconomic Theory, New York: Palgrave.

Sciabarra, Chris scientific realism second-order linear differential equations self-employment self-interest self-organization of systems Shadowstats.com Shaikh, Anwar, ‘Neo-Ricardian economics’ Sharpe, W. F. Shedlock, Mish Shiller, Robert shocks, exogenous short run short-term funding, dependence on Simulink system dynamics program Sippel, Reinhard size, importance of Smith, Adam; The Wealth of Nations Smith, Edgar, Common Stocks as Long Term Investment Smith, Yves social conflict, not taken into account social security social welfare; maximization of social well-being socialism; perceived inevitability of; scientific socialist economies, shortages in society, as sum of individuals soft budget constraint Solow, Robert Sonnenschein, H.


pages: 282 words: 80,907

Who Gets What — and Why: The New Economics of Matchmaking and Market Design by Alvin E. Roth

Affordable Care Act / Obamacare, Airbnb, algorithmic trading, barriers to entry, behavioural economics, Berlin Wall, bitcoin, Build a better mousetrap, centralized clearinghouse, Chuck Templeton: OpenTable:, commoditize, computer age, computerized markets, crowdsourcing, deferred acceptance, desegregation, Dutch auction, experimental economics, first-price auction, Flash crash, High speed trading, income inequality, Internet of things, invention of agriculture, invisible hand, Jean Tirole, law of one price, Lyft, market clearing, market design, medical residency, obamacare, PalmPilot, proxy bid, road to serfdom, school choice, sealed-bid auction, second-price auction, second-price sealed-bid, Silicon Valley, spectrum auction, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, The Wealth of Nations by Adam Smith, two-sided market, uber lyft, undersea cable

Many doctors, hospitals, foundations, and patients argue that the law should be changed to allow living kidneys to be bought, so that the supply of kidneys can keep up with the demand. Economists have long been accustomed to the fact that cash payments can fill such gaps by providing incentives to increase supply. Adam Smith, in his book An Inquiry into the Nature and Causes of the Wealth of Nations (1776), famously observed, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” Economists mostly think that allowing some incentives, monetary or otherwise, to be offered for giving someone a kidney could increase the supply of kidneys.

. [>] allow living kidneys: See, for example, the passionate advocacy of Sally Satel, herself a kidney transplant recipient and a doctor, and the author of When Altruism Isn’t Enough: The Case for Compensating Kidney Donors (Washington, DC: AEI Press, 2008), or the argument presented to economists by the late Nobel laureate Gary Becker and his coauthor Julio Elías in “Introducing Incentives in the Market for Live and Cadaveric Organ Donations,” Journal of Economic Perspectives 21, no. 3 (Summer 2007): 3–24, http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.21.3.3. [>] “It is not”: Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Oxford: Oxford University Press, 2008), bk. 1, chap. 2, para. 2. [>] opposition to legalizing kidney sales: One of the most outspoken opponents of legalizing kidney sales is one of the heroes of kidney exchange, Frank Delmonico. He has been active in formulating the Declaration of Istanbul and is executive director of its custodian group, whose mission is “to promote, implement and uphold the Declaration of Istanbul so as to combat organ trafficking, transplant tourism and transplant commercialism and to encourage adoption of effective and ethical transplantation practices around the world.”

See also markets and marketplaces FreeMarkets, 121–22 futures markets, 16–17, 82–89 Gale, David, 141–43, 158 game theory, 10–11 thought experiments in, 32–33 on trading cycles, 32–41 gaming the system, 10–11 banning markets and, 213–14 in Boston school choice, 126–30 in early transactions, 57–80 in New York City school system, 109–10, 153–55 in the Oklahoma Land Rush, 58–60 gastroenterology fellowships, 75–78 Google, 190–91 Android, 21–22 Great Recession (2008), 66 Green, Jerry, 3–4, 8 Green, Pamela, 3–4 Greiner, Ben, 118 gun ownership, 198 Hamlet (Shakespeare), 200 Hayek, Friedrich, 226–27 health care reimbursement, 206–7, 223–24 for kidney transplants, 51, 206–7, 208–10 health codes, 220–21 Hendren, Hardy, 138, 141 Hil, Garet, 45–46, 49 Hopwood, Shon, 97, 239 horsemeat, 195–97 Hoxby, Caroline, 126 human dignity, 207 IBM, 19 identity theft, 116 immune systems, 133–34 indentured servitude, 199–200 India, 201–2 industry standards, 22 information early transactions and missing, 60 importance of sharing all, 153–61 privacy and, 119–22 on qualifications and interest (See signals and signaling) reliable, 118–19 safety of sharing in Boston Public Schools, 122–28 in clearinghouses, 112 for kidney exchanges, 34, 36, 37, 47–49 market efficiency and, 119–21 for medical residencies, 137–43, 150–51 in New York City school system, 109–10, 112, 153–61 speed of, cotton market and, 89–90 in-kind exchanges, 202–5 Inquiry into the Nature and Causes of the Wealth of Nations, An (Smith), 206–7 insider trading, 48, 85 Institute for Innovation in Public School Choice, 165 interest charges, 200–201, 202, 205 Internet marketplaces, 7, 20–26 Airbnb, 99–103 congestion in, 99–106 dating sites, 72, 169, 175–77 eBay, 104–5, 116–21 payment systems in, 23–26 privacy and, 119–22 real estate, 224–25 reputation in, 115–16, 117–19 safety of, 105 signaling in, 169 targeted ads in, 189–92 thickness of, 105 trust in, 105 Uber, 103–4 Internet of Things, 101 iPhone, 21–22, 24 Iran, Islamic Republic of, 205–6 Iron Law of Marriage, 145 Islam, 200, 201, 205 iStopOver, 102 Japan college applications in, 171 exploding job offers in, 98–99 Jevons, William Stanley, 32 job markets.


pages: 604 words: 161,455

The Moral Animal: Evolutionary Psychology and Everyday Life by Robert Wright

agricultural Revolution, Andrei Shleifer, Apollo 13, Asian financial crisis, British Empire, centre right, cognitive dissonance, cotton gin, double entry bookkeeping, double helix, Easter island, fault tolerance, Francis Fukuyama: the end of history, Garrett Hardin, George Gilder, global village, Great Leap Forward, invention of gunpowder, invention of movable type, invention of the telegraph, invention of writing, invisible hand, John Nash: game theory, John von Neumann, Marshall McLuhan, Multics, Norbert Wiener, planetary scale, planned obsolescence, pre–internet, profit motive, Ralph Waldo Emerson, random walk, Richard Thaler, rising living standards, Robert Solow, Silicon Valley, social intelligence, social web, Steven Pinker, talking drums, technological determinism, the medium is the message, The Wealth of Nations by Adam Smith, trade route, Tragedy of the Commons, your tax dollars at work, zero-sum game

What did the Northwest Coast Indians have that the Shoshone didn’t have? What was the key to prehistoric economic development? WORKING OVERTIME Maybe we should direct these questions to a noted authority on economic development (and on non-zero-sumness, though he long predates such terminology): Adam Smith. Two factors, Smith noted in The Wealth of Nations, are especially conducive to the growing division of labor that characterizes economic advance. One is cheap transportation. Spending your afternoon making yarn for a Chilkat robe makes sense only if the finished product can be transported at a cost acceptable to its buyer.

University of Chicago Press. Shelton, Jo-Ann, ed. (1988) As the Romans Did. Oxford University Press. Singer, Charles, et al., eds. (1954–56) A History of Technology, 2vols. Oxford University Press. Singer, Peter (1981) The Expanding Circle: Ethics and Socibiology. Farrar, Straus and Giroux. Smith, Adam (1937) The Wealth of Nations. Random House Modern Library. (Originally published, 1776.) Smith, Bruce D. (1995) The Emergence of Agriculture. Scientific American Library. Smith, Merritt Roe, and Leo Marx, eds. (1994) Does Technology Drive History? MIT Press. Smith, Michael E. (1997) “Life in the Provinces of the Aztec Empire.”

So, all along, the difference between native Americans of Amazonia and of the Northwest Coast hadn’t been their work ethic. The difference had been that the Amazonians weren’t getting paid to work overtime. Neither were the Shoshone. The arid Great Basin was even less conducive to thick population than were South American jungles. ADAM SMITH AMENDED Maybe we should amend Adam Smith’s trademark metaphor of the invisible hand. Smith’s point, of course, was that a bunch of far-flung people pursuing individual gain can, without really trying, collectively orchestrate a large-scale social process. The ingredients of a beautiful robe just seem to magically congregate, assemble themselves, and then find a buyer, as if guided from above.


pages: 476 words: 125,219

Digital Disconnect: How Capitalism Is Turning the Internet Against Democracy by Robert W. McChesney

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, access to a mobile phone, Alan Greenspan, Albert Einstein, American Legislative Exchange Council, American Society of Civil Engineers: Report Card, AOL-Time Warner, Automated Insights, barriers to entry, Berlin Wall, Big Tech, business cycle, Cass Sunstein, citizen journalism, classic study, cloud computing, collaborative consumption, collective bargaining, company town, creative destruction, crony capitalism, David Brooks, death of newspapers, declining real wages, digital capitalism, digital divide, disinformation, Double Irish / Dutch Sandwich, Dr. Strangelove, Erik Brynjolfsson, Evgeny Morozov, failed state, fake news, Filter Bubble, fulfillment center, full employment, future of journalism, George Gilder, Gini coefficient, Google Earth, income inequality, informal economy, intangible asset, invention of agriculture, invisible hand, Jaron Lanier, Jeff Bezos, jimmy wales, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Perry Barlow, Joseph Schumpeter, Julian Assange, Kickstarter, Mark Zuckerberg, Marshall McLuhan, means of production, Metcalfe’s law, military-industrial complex, mutually assured destruction, national security letter, Nelson Mandela, Network effects, new economy, New Journalism, Nicholas Carr, Occupy movement, ocean acidification, offshore financial centre, patent troll, Peter Thiel, plutocrats, post scarcity, Post-Keynesian economics, power law, price mechanism, profit maximization, profit motive, public intellectual, QWERTY keyboard, Ralph Nader, Richard Stallman, road to serfdom, Robert Metcalfe, Saturday Night Live, sentiment analysis, Silicon Valley, Silicon Valley billionaire, single-payer health, Skype, spectrum auction, Steve Jobs, Steve Wozniak, Steven Levy, Steven Pinker, Stewart Brand, technological determinism, Telecommunications Act of 1996, the long tail, the medium is the message, The Spirit Level, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transfer pricing, Upton Sinclair, WikiLeaks, winner-take-all economy, yellow journalism, Yochai Benkler

James Maitland, the eighth Earl of Lauderdale (1759–1839), was the author of An Inquiry into the Nature and Origin of Public Wealth and into the Means and Causes of Its Increase (1804). Lauderdale argued that there is an inverse correlation between public and private wealth, such that an increase in the latter diminishes the former.3 Scarcity is necessary for something to have value in exchange and to augment private riches. “Scarcity,” as Adam Smith said in The Wealth of Nations, “is degraded by abundance,” and is a requirement for capitalist markets.4 But this is not the case for public wealth, which encompasses all value in use and thus includes not only what is scarce but also what is abundant. This paradox led Lauderdale to argue that increases in the scarcity of necessary and normally abundant elements of life like air, water, and food would, if exchange values were attached to them, enhance individual private riches and indeed the riches of the country conceived of as “the sum-total of individual riches”—but only at the expense of the common wealth.

An excellent discussion of this is in Wu, Master Switch, ch. 17. 137. Jaron Lanier, You Are Not a Gadget: A Manifesto (New York: Knopf, 2010), 87. 138. Steven Levy, “How the Propeller Heads Stole the Electronic Future,” New York Times Magazine, Sept. 24, 1995, 58. 139. Lanier, You Are Not a Gadget, 87. 140. Adam Smith, The Wealth of Nations (1776; New York: Modern Library, 1937), 173. 141. This episode is chronicled in John Motavalli, Bamboozled at the Revolution: How Big Media Lost Billions in the Battle for the Internet (New York: Viking, 2002). See also Rich Media, Poor Democracy, chap. 3. 142. One striking development is that media conglomerates are moving into education as a potential “cash cow” for textbooks and, especially, digital material.

New York Times, July 14, 2012. 2. This point was developed brilliantly in Robert Heilbroner, The Nature and Logic of Capitalism (New York: W.W. Norton, 1985). 3. This section draws on John Bellamy Foster, Brett Clark, and Richard York, The Ecological Rift (New York: Monthly Review Press, 2010), 53–72. 4. Adam Smith, The Wealth of Nations (1776; New York: Modern Library, 1937), 173. 5. The findings come from a 2012 survey commissioned by Good Technology and conducted by OnePoll in May 2012. “Good Technology Survey Reveals Americans Are Working More, But on Their Own Schedule,” July 2, 2012, good.com/news/press-releases/current-press-releases/161009045.html.


pages: 239 words: 64,987

Cod: A Biography of the Fish That Changed the World by Mark Kurlansky

British Empire, European colonialism, The Wealth of Nations by Adam Smith

Theirs was a cult of the individual, with commerce becoming almost the New England religion. Even the fishermen were independent entrepreneurs, working not on salary but, as they still do in most of the world, for a share of the catch. Adam Smith, the eighteenth-century economist, singled out the New England fishery for praise in his seminal work on capitalism, The Wealth of Nations. To Smith, the fishery was an exciting example of how an economy could flourish if individuals were given an unrestricted commercial environment. The British Crown had never intended to grant such freedom, and now it had a colony that no longer needed it—a dangerous precedent in the midst of the empire.

New York: Oxford University Press, 1978. Nugent, Maria. Lady Nugent’s Journal: Jamaica One Hundred and Thirty Years Ago. Edited by Frank Cundall. London: West India Committee, 1934. Perley, Sidney. The History of Salem Massachusetts. Salem: published by the author, 1924. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. Edited by Edwin Cannon. New York: Modern Library, 1937. First published in 1776. Thoreau, Henry David. Cape Cod. New York: Penguin, 1987. First published in 1865. FISH AND FISHERIES Binkley, Marian. Voices from Off Shore: Narratives of Risk and Danger in the Nova Scotian Deep-Sea Fishery.

New England produced too much cod for the British market. It could not all be sold in Britain, and the British merchant fleet did not have the capacity to reexport that much cod. In spite of the Trade and Navigation Acts, the British had to allow the New Englanders to trade it. Freed from restraint, as Adam Smith pointed out, the trade grew. By 1700, the British West Indies could not absorb all of New England’s cod. Nor could it fully supply New England’s rum industry, which was a byproduct of the cod trade. Typical of the difference between New England and Newfoundland, Newfoundland imported Jamaican rum for local bottling, and still does, whereas New England imported molasses and built its own rum industry to sell in foreign markets.


pages: 561 words: 157,589

WTF?: What's the Future and Why It's Up to Us by Tim O'Reilly

"Friedman doctrine" OR "shareholder theory", 4chan, Affordable Care Act / Obamacare, Airbnb, AlphaGo, Alvin Roth, Amazon Mechanical Turk, Amazon Robotics, Amazon Web Services, AOL-Time Warner, artificial general intelligence, augmented reality, autonomous vehicles, barriers to entry, basic income, behavioural economics, benefit corporation, Bernie Madoff, Bernie Sanders, Bill Joy: nanobots, bitcoin, Blitzscaling, blockchain, book value, Bretton Woods, Brewster Kahle, British Empire, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, Captain Sullenberger Hudson, carbon tax, Carl Icahn, Chuck Templeton: OpenTable:, Clayton Christensen, clean water, cloud computing, cognitive dissonance, collateralized debt obligation, commoditize, computer vision, congestion pricing, corporate governance, corporate raider, creative destruction, CRISPR, crowdsourcing, Danny Hillis, data acquisition, data science, deep learning, DeepMind, Demis Hassabis, Dennis Ritchie, deskilling, DevOps, Didi Chuxing, digital capitalism, disinformation, do well by doing good, Donald Davies, Donald Trump, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, fake news, Filter Bubble, Firefox, Flash crash, Free Software Foundation, fulfillment center, full employment, future of work, George Akerlof, gig economy, glass ceiling, Glass-Steagall Act, Goodhart's law, Google Glasses, Gordon Gekko, gravity well, greed is good, Greyball, Guido van Rossum, High speed trading, hiring and firing, Home mortgage interest deduction, Hyperloop, income inequality, independent contractor, index fund, informal economy, information asymmetry, Internet Archive, Internet of things, invention of movable type, invisible hand, iterative process, Jaron Lanier, Jeff Bezos, jitney, job automation, job satisfaction, John Bogle, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John Zimmer (Lyft cofounder), Kaizen: continuous improvement, Ken Thompson, Kevin Kelly, Khan Academy, Kickstarter, Kim Stanley Robinson, knowledge worker, Kodak vs Instagram, Lao Tzu, Larry Ellison, Larry Wall, Lean Startup, Leonard Kleinrock, Lyft, machine readable, machine translation, Marc Andreessen, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, McMansion, microbiome, microservices, minimum viable product, mortgage tax deduction, move fast and break things, Network effects, new economy, Nicholas Carr, Nick Bostrom, obamacare, Oculus Rift, OpenAI, OSI model, Overton Window, packet switching, PageRank, pattern recognition, Paul Buchheit, peer-to-peer, peer-to-peer model, Ponzi scheme, post-truth, race to the bottom, Ralph Nader, randomized controlled trial, RFC: Request For Comment, Richard Feynman, Richard Stallman, ride hailing / ride sharing, Robert Gordon, Robert Metcalfe, Ronald Coase, Rutger Bregman, Salesforce, Sam Altman, school choice, Second Machine Age, secular stagnation, self-driving car, SETI@home, shareholder value, Silicon Valley, Silicon Valley startup, skunkworks, Skype, smart contracts, Snapchat, Social Responsibility of Business Is to Increase Its Profits, social web, software as a service, software patent, spectrum auction, speech recognition, Stephen Hawking, Steve Ballmer, Steve Jobs, Steven Levy, Stewart Brand, stock buybacks, strong AI, synthetic biology, TaskRabbit, telepresence, the built environment, the Cathedral and the Bazaar, The future is already here, The Future of Employment, the map is not the territory, The Nature of the Firm, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Davenport, Tony Fadell, Tragedy of the Commons, transaction costs, transcontinental railway, transportation-network company, Travis Kalanick, trickle-down economics, two-pizza team, Uber and Lyft, Uber for X, uber lyft, ubercab, universal basic income, US Airways Flight 1549, VA Linux, warehouse automation, warehouse robotics, Watson beat the top human players on Jeopardy!, We are the 99%, web application, Whole Earth Catalog, winner-take-all economy, women in the workforce, Y Combinator, yellow journalism, zero-sum game, Zipcar

If the population or resources are small, the country must reach outside its borders for both, but in many cases, this local population is sufficient to bootstrap a robust marketplace, with plenty of consumers and plenty of providers of goods and services. But there’s an important lesson from the wealth of nations: If the population doesn’t have enough money to buy goods and services on offer either from its own sellers or from those trading from other countries, the country remains poor. The marketplace is out of balance. This is the situation in much of the world economy today, where growth is slow, because wealth has become concentrated in too few hands and there aren’t enough buyers for all the goods and services that might otherwise be on offer.

During earlier research on economic differences between the twenty regional governments of Italy, Putnam had noticed that there was a close correlation between civic engagement and prosperity. “These communities did not become civic simply because they were rich. The historical record strongly suggests precisely the opposite: They have become rich because they were civic.” Social capital is as important as financial capital in the wealth of nations. Mark Zuckerberg came to much the same conclusion. “There has been a striking decline in the important social infrastructure of local communities over the past few decades,” he noted. “The decline raises deeper questions alongside surveys showing large percentages of our population lack a sense of hope for the future.

Yet today, I am seeing progress toward many of my youthful dreams. And that brings me back to AI. AI is not some kind of radical discontinuity. AI is not the machine from the future that is hostile to human values and will put us all out of work. AI is the next step in the spread and usefulness of knowledge, which is the true source of the wealth of nations. We should not fear it. We should put it to work, intentionally and thoughtfully, in ways that create more value for society than they disrupt. It is already being used to enhance, not replace, human intelligence. “We’ve already seen chess evolve to a new kind of game where young champions like Magnus Carlsen have adopted styles of play that take advantage of AI chess engines,” notes Bryan Johnson.


pages: 1,213 words: 376,284

Empire of Things: How We Became a World of Consumers, From the Fifteenth Century to the Twenty-First by Frank Trentmann

Abraham Maslow, Airbnb, Alan Greenspan, Anton Chekhov, Ayatollah Khomeini, behavioural economics, Berlin Wall, Big bang: deregulation of the City of London, bread and circuses, British Empire, Capital in the Twenty-First Century by Thomas Piketty, car-free, carbon footprint, Cass Sunstein, choice architecture, classic study, clean water, collaborative consumption, collective bargaining, colonial exploitation, colonial rule, Community Supported Agriculture, company town, critique of consumerism, cross-subsidies, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, deindustrialization, dematerialisation, Deng Xiaoping, deskilling, equity premium, Fall of the Berlin Wall, Fellow of the Royal Society, financial exclusion, fixed income, food miles, Ford Model T, full employment, gentrification, germ theory of disease, global village, Great Leap Forward, haute cuisine, Herbert Marcuse, high net worth, income inequality, index card, informal economy, Intergovernmental Panel on Climate Change (IPCC), Internet of things, it's over 9,000, James Watt: steam engine, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kitchen Debate, knowledge economy, labour mobility, Les Trente Glorieuses, libertarian paternalism, Livingstone, I presume, longitudinal study, mass immigration, McMansion, mega-rich, Michael Shellenberger, moral panic, mortgage debt, Murano, Venice glass, Naomi Klein, New Urbanism, Paradox of Choice, Pier Paolo Pasolini, planned obsolescence, pneumatic tube, post-industrial society, Post-Keynesian economics, post-materialism, postnationalism / post nation state, profit motive, prosperity theology / prosperity gospel / gospel of success, public intellectual, purchasing power parity, Ralph Nader, rent control, retail therapy, Richard Thaler, Right to Buy, Ronald Reagan, school vouchers, scientific management, Scientific racism, Scramble for Africa, seminal paper, sharing economy, Silicon Valley, Skype, stakhanovite, Ted Nordhaus, the built environment, the market place, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, Thorstein Veblen, trade liberalization, trade route, transatlantic slave trade, union organizing, upwardly mobile, urban planning, urban sprawl, Washington Consensus, women in the workforce, working poor, young professional, zero-sum game

From the late seventeenth century, economic commentators began to argue that the purchase of goods and services not only satisfied individual wants but, in the process, enriched a nation by enlarging the market for producers and investors. Personal vanities, like a snuffbox or extravagant clothes, could yield public benefits, at least in material terms. Such linkages unsettled earlier moral certainties. A major milestone was Adam Smith’s The Wealth of Nations in 1776, in which he argued that ‘consumption is the sole end and purpose of all production.’5 Notwithstanding this dictum, Smith and his immediate successors were some way from making consumption the centre of economics, let alone from imagining that there could be sustained growth.

It was ‘the highest impertinence and presumption’, Smith concluded, for ‘kings and ministers to pretend to watch over the economy of private people, and to restrain their expense, either by sumptuary laws, or by prohibiting the importation of foreign luxuries. They are themselves always, and without any exception, the greatest spendthrifts in the society.’68 In the Wealth of Nations (1776), Adam Smith looked back on the decline of feudalism and rise of commerce in Europe. It was the great barons’ appetite for diamond buckles and ‘trinkets and baubles’ that made them gradually barter away their authority, he argued. They literally consumed their power. To fund their growing appetite for goods they first reduced the number of their retainers.

Or, as one advocate of consumer protection put it, ‘maybe we can start realizing a “good” in between “God” and “goods”,’ similar to the Middle Path of Buddha or Aristotle’s golden mean.97 Sometimes, nationalist history is bent to fit that purpose. Gandhi has been reincarnated by government agencies as the friend of the consumer who had the prophetic wisdom to recognize ‘the customer’ as the ‘most important visitor on our premises’, the ‘purpose’ of our work and the element on whom everything depends.98 Adam Smith had said something like that in the Wealth of Nations. Whether Gandhi would have liked to appear as an Indian mouthpiece of Smith is doubtful. As early as 1915, passengers irritated with transport services set up an association to voice their complaints. Half a century later, a more general Consumer Guidance Society of India was founded.


pages: 717 words: 196,908

The Idea of Decline in Western History by Arthur Herman

agricultural Revolution, Albert Einstein, Alvin Toffler, anti-communist, bread and circuses, British Empire, David Attenborough, Dr. Strangelove, European colonialism, Future Shock, George Santayana, ghettoisation, Great Leap Forward, Gregor Mendel, Herbert Marcuse, hiring and firing, Joan Didion, laissez-faire capitalism, late capitalism, lateral thinking, Lewis Mumford, liberal capitalism, mass immigration, means of production, Menlo Park, military-industrial complex, Murray Bookchin, Nelson Mandela, Norman Mailer, nuclear winter, plutocrats, post scarcity, profit motive, road to serfdom, Robert Bork, Scientific racism, Scramble for Africa, Suez canal 1869, The Bell Curve by Richard Herrnstein and Charles Murray, the scientific method, The Wealth of Nations by Adam Smith, transcontinental railway, upwardly mobile, W. E. B. Du Bois

It unites them, by one of the strongest of all ties, the desire of supplying their mutual wants.”21 It became a commonplace to say, as we do today, that a market economy depends on people pursuing their own self-interest. But self-interest to a student of civil society such as Adam Smith did not mean avarice or greed. Those were the typical antisocial attitudes of a more primitive state of economy and society, in which the fear of material scarcity is genuine and real. Instead, self-interest in a civilized or “polite” society involves the rational desire to provide goods and services at a profit to an equally self-interested consumer. For the eighteenth century, commerce not only produced the “wealth of nations,” it was also the primary mechanism of achieving human progress and turning men from beasts into civilized beings.

“The experience of four thousand years should enlarge our hopes and diminish our apprehensions,” Gibbon wrote. “No people, unless the face of nature is changed, will relapse into their original barbarism.”30 * See Chapter 5. * It is worth remembering that Adam Smith had no illusions about what the triumph of the commercial spirit and the division of labor’s emphasis on specialization might mean for those who were part of it. “Another bad effect of commerce,” he wrote in The Wealth of Nations, “is that the minds of men are contracted, and rendered incapable of elevation. Education is despised, or at least neglected, and heroic spirit is almost utterly extinguished. To remedy these defects,” Smith concluded, “would be an object worthy of serious attention

A half century later, the natural law philosopher Francis Hutcheson argued that human society grew out of man’s innate sociability or desire to be with others—the “natural bonds of beneficence and humanity in all.” Hutcheson served as mentor to a generation of Enlightenment thinkers, including David Hume and Adam Smith. Although these men would become more skeptical about humanity’s prospects than their great teacher, the so-called Scottish school did remain true to Hutcheson’s basic supposition. A single, universal set of natural bonds underpins all human communities throughout history, and these develop in increasing complexity—from family, tribe, and clan to community and empire—according to the same regular pattern.


pages: 365 words: 88,125

23 Things They Don't Tell You About Capitalism by Ha-Joon Chang

accelerated depreciation, affirmative action, Alan Greenspan, AOL-Time Warner, Asian financial crisis, bank run, banking crisis, basic income, Berlin Wall, Bernie Madoff, borderless world, business logic, Carmen Reinhart, central bank independence, collateralized debt obligation, colonial rule, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, deskilling, digital divide, ending welfare as we know it, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, full employment, German hyperinflation, Gini coefficient, Glass-Steagall Act, hiring and firing, Hyman Minsky, income inequality, income per capita, invisible hand, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labour market flexibility, light touch regulation, Long Term Capital Management, low skilled workers, manufacturing employment, market fundamentalism, means of production, Mexican peso crisis / tequila crisis, microcredit, Myron Scholes, North Sea oil, offshore financial centre, old-boy network, post-industrial society, price stability, profit maximization, profit motive, purchasing power parity, rent control, Robert Solow, shareholder value, short selling, Skype, structural adjustment programs, the market place, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, Toyota Production System, trade liberalization, trickle-down economics, women in the workforce, working poor, zero-sum game

Notes THING 1 1 On how tariff (hampering free trade in goods) was another important issue in the making of the American Civil War, see my earlier book Kicking Away the Ladder – Development Strategy in Historical Perspective (Anthem Press, London, 2002), pp. 24–8 and references thereof. THING 2 1 A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Clarendon Press, Oxford, 1976), p. 741. 2 N. Rosenberg and L. Birdzell, How the West Grew Rich (IB Tauris & Co., London, 1986), p. 200. 3 A. Glyn, Capitalism Unleashed – Finance, Globalisation, and Welfare (Oxford University Press, Oxford, 2004), p. 7, fig. 1.3. 4 J. G. Palma, ‘The revenge of the market on the rentiers – Why neo-liberal reports on the end of history turned out to be premature’, Cambridge Journal of Economics, 2009, vol. 33, no. 4, p. 851, fig. 12. 5 See W.

Mind the gap All my criticisms so far about the overdevelopment of the financial sector in the last two or three decades are not to say that all finance is a bad thing. Had we listened to Adam Smith, who opposed limited liability companies (see Thing 2) or Thomas Jefferson, who considered banking to be ‘more dangerous than standing armies’, our economies would still be made up of the ‘Satanic mills’ of the Victorian age, if not necessarily Adam Smith’s pin factories. However, the fact that financial development has been crucial in developing capitalism does not mean that all forms of financial development are good.

It was believed that those who were managing a limited liability company without owning it 100 per cent would take excessive risks, because part of the money they were risking was not their own. At the same time, the non-managing investors in a limited liability company would also become less vigilant in monitoring the managers, as their risks were capped (at their respective investments). Adam Smith, the father of economics and the patron saint of free-market capitalism, opposed limited liability on these grounds. He famously said that the ‘directors of [joint stock] companies … being the managers rather of other people’s money than of their own, it cannot well be expected that they would watch over it with the same anxious vigilance with which the partners in a private copartnery [i.e., partnership, which demands unlimited liability] frequently watch over their own’.1 Therefore, countries typically granted limited liability only to exceptionally large and risky ventures that were deemed to be of national interest, such as the Dutch East India Company set up in 1602 (and its arch-rival, the British East India Company) and the notorious South Sea Company of Britain, the speculative bubble surrounding which in 1721 gave limited liability companies a bad name for generations.


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Free Market Missionaries: The Corporate Manipulation of Community Values by Sharon Beder

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Alan Greenspan, anti-communist, battle of ideas, business climate, Cornelius Vanderbilt, corporate governance, electricity market, en.wikipedia.org, full employment, Herbert Marcuse, Ida Tarbell, income inequality, invisible hand, junk bonds, liquidationism / Banker’s doctrine / the Treasury view, minimum wage unemployment, Mont Pelerin Society, new economy, old-boy network, popular capitalism, Powell Memorandum, price mechanism, profit motive, Ralph Nader, rent control, risk/return, road to serfdom, Ronald Reagan, school vouchers, shareholder value, spread of share-ownership, structural adjustment programs, The Chicago School, the market place, The Wealth of Nations by Adam Smith, Thomas L Friedman, Torches of Freedom, trade liberalization, traveling salesman, trickle-down economics, two and twenty, Upton Sinclair, Washington Consensus, wealth creators, young professional

Witnesses to the hearings told the parliamentary committee that share plans were ‘a means of aligning the interests of business and employees so as to achieve better business results’; a way of rewarding employees for their efforts in a ‘tax-effective’ manner; a method of encouraging savings and ‘a means of “democratising” capital: that is, spreading capital ownership and access to capital more widely within the community’.47 Nelson argued that ‘employee share plans bind people more closely to the activities of their fellow citizens who work within a particular organization’ and ‘create a more inclusive workplace’.48 Shann Turbull, a founding member of the Australian Employee Ownership Association, and author of Democratising the Wealth of Nations, argued that corporations misused employee share ownership schemes as a way of legitimizing excessive payments to top executives by offering shares to all employees: ‘I am suggesting that we want to see beyond that to get not just a mandate within a corporation, but a mandate within the whole voting constituency of Australia, so that all people have an inclusive vested interest in property ownership.’49 The Business Council of Australia (BCA) also support employee share ownership plans because they give large numbers of people a financial stake in the company they work for and therefore an incentive to contribute to its success: ‘Shared ownership can create an environment of common goals and shared interest between employees and management.’50 Eighty per cent of its members listed on the stock exchange had such plans.

Desai, ‘Second-Hand Dealers in Ideas’, p31; James, ‘The Idea Brokers’, p497; Thatcher quoted in Cockett, Thinking the Unthinkable, p173. Quoted in Yergin and Stanislaw, The Commanding Heights. Dexter Whitfield, Making It Public: Evidence and Action against Privatisation, London, Pluto Press, 1983, p47; Adam Smith Institute, ‘The Adam Smith Institute’, Adam Smith Institute, www.adamsmith.org.uk/ accessed 7 May 2001. Ashford, ‘Politically Impossible?’, p24; Whitfield, Making It Public, p46. Robin Oakley, ‘Privatized Policy-Making for the Tory Right’, The Times, 17 February 1989; Alan Rusbridger, ‘A Thought for Tomorrow’, The Guardian, 22 December 1987.

.,” or So They Said’, George Mason University, Fairfax, VA, http://mason.gmu.edu/~ayarrow/economic%20journalismform.PDF accessed 2 January 250 FREE MARKET MISSIONARIES Yergin, D. and Stanislaw, J. (1998) The Commanding Heights: The Battle between Government and the Marketplace That Is Remaking the World, Simon & Schuster, New York Index 3M 209, 210, 222 Abbott Laboratories 69 Academy of Enterprise 214 Access Economics 138 ACIL Economics/ACIL Tasman 138 Adam Smith Club 128 Adam Smith Institute 113 Adler, Rodney 135 The Advertiser 129 advertising 1970s campaigns 63–75 free enterprise advertising 15, 16, 20, 22, 23, 26, 29–42 post-war campaigns 32–39 pre-war criticism 29 role 30–32 share ownership campaigns 195, 196 techniques 16, 67 use of polling 32 wartime 30 Advertising Council (US) 26, 30, 32–35, 39, 46, 64, 65–69, 74–75 Advertising Federation of America 49 AFL 33–34 AIG 210 Aims for Freedom and Enterprise (AIMS) 79, 87 Aims of Industry 113 Alcoa 37–38, 50, 132 Allen Consulting 138 Allende, Salvador 97, 145 see also Chile Alliance for Worker Retirement Security 172 Allied Chemical 69 American Bankers Association 53 American Bar Association 63 American Chamber of Commerce in Australia 84, 211 American Council on Education 47 American Cyanamid 51, 69 American Economic Association 219 American Economic Foundation (AEF) 47, 54 American Enterprise Association 48 American Enterprise Forum 71 American Enterprise Institute (AEI) 54, 117, 119, 121, 131, 135, 136 American Express 119, 212, 215 American Federation of Advertising 30 American Heritage Foundation 26 American Iron and Steel Institute 26, 53 American Legion 49 American Management Association 55 American Medical Asociation 49 American Petroleum Institute 26, 50, 53, 119 American Shareholders Association 174, 183 American Tobacco 3, 4 American Vocational Association 47 American way of life 15, 16, 21, 33, 57 Americans for the Competitive Enterprise System 54 AMP Insurance 134 Arthur Andersen 133 Assembly of Australian Business Organisations (AABO) 83 Association of British Chambers of Commerce 81, 113 Association of National Advertisers 32 Association of Private Enterprise Education (APEE) 221–222 Atlas Economic Research Foundation 114–115 AT&T 15, 31, 102, 193, 209, 222 AusIndustry 213 Australia children’s enterprise education 209, 210, 211, 212–213 civil service 89, 130, 131, 135, 138, 158–160, 163 consultants, management 138, 158 economic advisers 155–165 economic education 81–89, 224 economic literacy 218 employee share ownership 180–181 key civil servants 159–162 key people and connections 137 market liberalization 152, 155–163, 164–165 National Priorities Project 132 New Right 130–131, 159, 160 privatizations 132, 138, 196 privatizations of pensions 183–184 Senior Executive Service 158–159 share ownership 174, 201–202 social justice 165, 192 think tanks 84, 127–138 Treasury 156–157, 161 see also Stone, John 252 FREE MARKET MISSIONARIES universities 89, 159 Washington consensus 149, 154 Workers’ Party 127–128 Australian Bankers Association 84 Australian Business Week 212–213 Australian Chamber of Commerce 64, 81–83, 86 Australian Chamber of Manufacturers 83, 134 Australian Coal Association 133 Australian Employers’ Federation 132 see also Hay, Andrew Australian Farmers’ Federation 83 Australian Federation of Commercial Broadcasters 88 Australian Free Enterprise Association 85 Australian Gas Light Company 180 Australian Industries Development Association 84 Australian Institute of Public Policy (AIPP) 135 Australian Labor Party (ALP) 84, 85, 134, 152, 156–158, 175 Australian Lecture Foundation 129 Australian Mining Industry Council 83, 84, 129, 132, 133 Australian National University 155, 160 Australian Public Service Association 138 Australian Share Ownershp Association 180 Australian Small Business Association 132 Australian Stock Exchange 130 Australian Wool Growers and Graziers’ Council 83 Balderstone, James 134 Balladur, Edouard 197 Bank of America 215 Baroody, William Jr 117 Barratt, Paul 162 Barton, Bruce 15, 30 Baumol, William 102, 103 Baxter, Ken 160, 162 Bennet, William 171 Bergen Chamber Economic Education Foundation 72 Bergen County Chamber of Commerce 72 Bernays, Edward 1, 3–4 Best Buy 210 Boeing 212 Booker T.


Hopes and Prospects by Noam Chomsky

air traffic controllers' union, Alan Greenspan, Albert Einstein, banking crisis, Bear Stearns, Berlin Wall, Bretton Woods, British Empire, capital controls, colonial rule, corporate personhood, Credit Default Swap, cuban missile crisis, David Ricardo: comparative advantage, deskilling, en.wikipedia.org, energy security, failed state, Fall of the Berlin Wall, financial deregulation, Firefox, Glass-Steagall Act, high-speed rail, Howard Zinn, Hyman Minsky, invisible hand, liberation theology, market fundamentalism, Martin Wolf, Mikhail Gorbachev, Monroe Doctrine, moral hazard, Nelson Mandela, new economy, nuremberg principles, one-state solution, open borders, Plutonomy: Buying Luxury, Explaining Global Imbalances, public intellectual, Ralph Waldo Emerson, RAND corporation, Robert Solow, Ronald Reagan, Savings and loan crisis, Seymour Hersh, structural adjustment programs, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, trade liberalization, uranium enrichment, Washington Consensus

For insightful accounts of the roots of the crisis, see Dean Baker, Plunder and Blunder (Sausalito, CA: PoliPoint Press, 2009); John Bellamy Foster and Fred Magdoff, The Great Financial Crisis (New York: Monthly Review Press, 2009). Three: Democracy and Development: Their Enemies, Their Hopes 1. Solow, “Interview,” Challenge, January–February 2000. Bairoch, Economics and World History (Chicago: University of Chicago Press, 1993). Chang, Kicking Away the Ladder. See also Shahid Alam, Poverty from the Wealth of Nations (New York: St. Martin’s Press, 2000). An enduring classic is Frederick Clairmonte, Economic Liberalism and Underdevelopment (New York: Asia Publishing House, 1960). 2. The Jacksonian Democrats sought to do just that, to great economic and geopolitical advantage, specifically with cotton.

As we know, the voyages of Columbus opened the way to the European conquest of the Western hemisphere, with hideous consequences for the indigenous population, and soon for Africans brought here in one of the vilest episodes of history. Vasco da Gama soon opened the way to bring to Africa and Asia the “the savage injustice of the Europeans,” to borrow Adam Smith’s rueful phrase, referring primarily to Britain’s terrible crimes in India, plain enough even in his day. Also in 1492, Christian conquerors extended their barbaric sway over the most advanced and tolerant civilization in Europe, Moorish Spain, forcing Jews to flee or convert to the civilization of the Inquisition and initiating the vast ethnic cleansing of the Muslim population (“Moors”), while also destroying much of the rich record of classical learning that they had preserved and developed—rather like the Mongol invasion of Iraq two centuries earlier, or the even worse destruction of the treasures of civilization in the course of the U.S.

Clive was amazed at what he found. He described the great textile center of Dacca, now the capital of Bangladesh, as “extensive, populous and as rich as the city of London.” After a century of British rule its population had fallen from 150,000 to 30,000, and it was reverting to jungle and malaria. Adam Smith wrote that hundreds of thousands die in Bengal every year as a result of British regulations that even forced farmers to “plough up rich fields of rice or other grain for plantations of poppies” for opium production, turning “dearth into a famine.” In the words of the rulers themselves, “The misery hardly finds a place in the history of commerce.


pages: 457 words: 128,838

The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order by Paul Vigna, Michael J. Casey

Airbnb, Alan Greenspan, altcoin, Apple Newton, bank run, banking crisis, bitcoin, Bitcoin Ponzi scheme, blockchain, Bretton Woods, buy and hold, California gold rush, capital controls, carbon footprint, clean water, Cody Wilson, collaborative economy, collapse of Lehman Brothers, Columbine, Credit Default Swap, cross-border payments, cryptocurrency, David Graeber, decentralized internet, disinformation, disintermediation, Dogecoin, driverless car, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, fiat currency, financial engineering, financial innovation, Firefox, Flash crash, Ford Model T, Fractional reserve banking, Glass-Steagall Act, hacker house, Hacker News, Hernando de Soto, high net worth, informal economy, intangible asset, Internet of things, inventory management, Joi Ito, Julian Assange, Kickstarter, Kuwabatake Sanjuro: assassination market, litecoin, Long Term Capital Management, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, McMansion, means of production, Menlo Park, mobile money, Money creation, money: store of value / unit of account / medium of exchange, Nelson Mandela, Network effects, new economy, new new economy, Nixon shock, Nixon triggered the end of the Bretton Woods system, off-the-grid, offshore financial centre, payday loans, Pearl River Delta, peer-to-peer, peer-to-peer lending, pets.com, Ponzi scheme, prediction markets, price stability, printed gun, profit motive, QR code, RAND corporation, regulatory arbitrage, rent-seeking, reserve currency, Robert Shiller, Ross Ulbricht, Satoshi Nakamoto, seigniorage, shareholder value, sharing economy, short selling, Silicon Valley, Silicon Valley startup, Skype, smart contracts, special drawing rights, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, supply-chain management, Ted Nelson, The Great Moderation, the market place, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, Turing complete, Tyler Cowen, Tyler Cowen: Great Stagnation, Uber and Lyft, uber lyft, underbanked, Vitalik Buterin, WikiLeaks, Y Combinator, Y2K, zero-sum game, Zimmermann PGP

On that basis, the metallism crowd views the beginnings of money through the eyes of Aristotle, who wrote, “When the inhabitants of one country became more dependent on those of another and they imported what they needed, and exported what they had too much of, money necessarily came into use.” This view, that once trade became so complex that barter would no longer cut it, was resurrected two millennia later by Adam Smith in The Wealth of Nations. Smith described the New World communities of Peru and elsewhere as burdened by barter until the genius of European coinage was introduced. Smith’s view was critical to the conventional wisdom that we’ve sequenced from barter to money to debt. He argued that as human beings divided labor according to their talents, they produced surplus goods to trade but were trapped by the failure to meet what economists call a “coincidence of wants.”

This “metallism” viewpoint: Distinctions between metallism and chartalism informed by Stephanie Bell, “The Hierarchy of Money” (Jerome Levy Economics Institute of Bard College, April 1998). Aristotle, who wrote, “When the inhabitants”: B. J. Gordon, “Aristotle, Schumpeter, and the Metallist Tradition,” Quarterly Journal of Economics 75 (4) (1961): 608–14. Adam Smith in The Wealth of Nations: Martin, Money, 8–10. The anthropologist David Graeber hypothesizes: David Graeber, “On the Invention of Money—Notes on Sex, Adventure, Monomaniacal Sociopathy and the True Function of Economics,” http://www.nakedcapitalism.com/2011/09/david-graeber-on-the-invention-of-money-%E2%80%93-notes-on-sex-adventure-monomaniacal-sociopathy-and-the-true-function-of-economics.html.

Casey, “BitBeat: For Bitcoin Miners, a Hot Problem This Summer,” Wall Street Journal, MoneyBeat blog, April 29, 2014, http://blogs.wsj.com/moneybeat/2014/04/29/bitbeat-for-bitcoin-miners-a-hot-problem-this-summer/. Adam Smith opined on a similar matter in the eighteenth century: Paul Krugman, “Adam Smith Hates Bitcoin,” New York Times, Conscience of a Liberal blog, April 12, 2013, http://krugman.blogs.nytimes.com/2013/04/12/adam-smith-hates-bitcoin/. One such vulnerability was thrust: Account of the hardfork in the blockchain comes from a thread on the #bitcoin-dev list at the Bitcoin Forum, March 11, 2013, http://bitcoinstats.com/irc/bitcoin-dev/logs/2013/03/11.


pages: 511 words: 132,682

Competition Overdose: How Free Market Mythology Transformed Us From Citizen Kings to Market Servants by Maurice E. Stucke, Ariel Ezrachi

"Friedman doctrine" OR "shareholder theory", affirmative action, Airbnb, Alan Greenspan, Albert Einstein, Andrei Shleifer, behavioural economics, Bernie Sanders, Boeing 737 MAX, Cambridge Analytica, Cass Sunstein, choice architecture, cloud computing, commoditize, corporate governance, Corrections Corporation of America, Credit Default Swap, crony capitalism, delayed gratification, disinformation, Donald Trump, en.wikipedia.org, fake news, Garrett Hardin, George Akerlof, gig economy, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Google Chrome, greed is good, hedonic treadmill, incognito mode, income inequality, income per capita, independent contractor, information asymmetry, invisible hand, job satisfaction, labor-force participation, late fees, loss aversion, low skilled workers, Lyft, mandatory minimum, Mark Zuckerberg, market fundamentalism, mass incarceration, Menlo Park, meta-analysis, Milgram experiment, military-industrial complex, mortgage debt, Network effects, out of africa, Paradox of Choice, payday loans, Ponzi scheme, precariat, price anchoring, price discrimination, profit maximization, profit motive, race to the bottom, Richard Thaler, ride hailing / ride sharing, Robert Bork, Robert Shiller, Ronald Reagan, search costs, shareholder value, Sheryl Sandberg, Shoshana Zuboff, Silicon Valley, Snapchat, Social Responsibility of Business Is to Increase Its Profits, Stanford prison experiment, Stephen Hawking, sunk-cost fallacy, surveillance capitalism, techlash, The Chicago School, The Market for Lemons, The Myth of the Rational Market, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Davenport, Thorstein Veblen, Tim Cook: Apple, too big to fail, Tragedy of the Commons, transaction costs, Uber and Lyft, uber lyft, ultimatum game, Vanguard fund, vertical integration, winner-take-all economy, Yochai Benkler

The Chicago School justification for this is that if we are motivated by greed, we’ll compete hard to steal business from our rivals to make even more money, and the end result will be that society as a whole will be wealthier, healthier, and perhaps happier. Under this concept of competition, greed and selfishness are repackaged as virtues. As Easterbrook opined in another decision, which affirmed a lower court ruling: Greed is the foundation of much economic activity, and Adam Smith told us [in The Wealth of Nations] that each person’s pursuit of his own interests drives the economic system to produce more and better goods and services for all. “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”26 In conclusion, Easterbrook agreed that the judge in the lower court had “properly declined to allow the jury to convert moral and ethical claims into legal duties.”

For Smith, benevolence, which causes individuals to act, at times, out of goodness, even when they derive nothing financially from it, was not simply one of mankind’s “splendid virtues,” but an expression of basic “principles in his nature.”33 And fairness and altruism weren’t just qualities without any practical value, but virtues that “played an essential role in market interactions, allowing trust, repeated transactions and material gains to occur.”34 Fairness he viewed as the “main pillar that upholds the whole edifice. If it is removed, the great, the immense fabric of human society . . . must in a moment crumble to atoms.”35 These sentiments are as much a part of classical economic theory as those expressed in The Wealth of Nations. Thus, Smith has become the patron saint of a new wave of economists—known as the behavioral economists—like recent Nobel Prize laureates Daniel Kahneman and Richard Thaler. Looking at the empirical evidence, they conclude that most people are not as purely “self-interested” as the Chicago School’s theorists suppose.

Should we accept the possibility of competition being bad at times? And, if so, how would we recognize when that is the case? Let’s start with the famous Scottish economist Adam Smith, known as the patron saint of competition, and the hockey player Craig MacTavish. Part I When Is Competition Toxic? Chapter 1 First Overdose The Race to the Bottom Two centuries after his death, the Scottish economist Adam Smith might still be the most powerful man in the world. Although he only used the term a few times in his writing, Smith’s “invisible hand” became one of social science’s most well-known metaphors, and the foundational principle of a lot of complex economic systems.


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The Age of Surveillance Capitalism by Shoshana Zuboff

"World Economic Forum" Davos, algorithmic bias, Amazon Web Services, Andrew Keen, augmented reality, autonomous vehicles, barriers to entry, Bartolomé de las Casas, behavioural economics, Berlin Wall, Big Tech, bitcoin, blockchain, blue-collar work, book scanning, Broken windows theory, California gold rush, call centre, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, choice architecture, citizen journalism, Citizen Lab, classic study, cloud computing, collective bargaining, Computer Numeric Control, computer vision, connected car, context collapse, corporate governance, corporate personhood, creative destruction, cryptocurrency, data science, deep learning, digital capitalism, disinformation, dogs of the Dow, don't be evil, Donald Trump, Dr. Strangelove, driverless car, Easter island, Edward Snowden, en.wikipedia.org, Erik Brynjolfsson, Evgeny Morozov, facts on the ground, fake news, Ford Model T, Ford paid five dollars a day, future of work, game design, gamification, Google Earth, Google Glasses, Google X / Alphabet X, Herman Kahn, hive mind, Ian Bogost, impulse control, income inequality, information security, Internet of things, invention of the printing press, invisible hand, Jean Tirole, job automation, Johann Wolfgang von Goethe, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, Kevin Roose, knowledge economy, Lewis Mumford, linked data, longitudinal study, low skilled workers, Mark Zuckerberg, market bubble, means of production, multi-sided market, Naomi Klein, natural language processing, Network effects, new economy, Occupy movement, off grid, off-the-grid, PageRank, Panopticon Jeremy Bentham, pattern recognition, Paul Buchheit, performance metric, Philip Mirowski, precision agriculture, price mechanism, profit maximization, profit motive, public intellectual, recommendation engine, refrigerator car, RFID, Richard Thaler, ride hailing / ride sharing, Robert Bork, Robert Mercer, Salesforce, Second Machine Age, self-driving car, sentiment analysis, shareholder value, Sheryl Sandberg, Shoshana Zuboff, Sidewalk Labs, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, slashdot, smart cities, Snapchat, social contagion, social distancing, social graph, social web, software as a service, speech recognition, statistical model, Steve Bannon, Steve Jobs, Steven Levy, structural adjustment programs, surveillance capitalism, technological determinism, TED Talk, The Future of Employment, The Wealth of Nations by Adam Smith, Tim Cook: Apple, two-sided market, union organizing, vertical integration, Watson beat the top human players on Jeopardy!, winner-take-all economy, Wolfgang Streeck, work culture , Yochai Benkler, you are the product

Until the last few moments of the human story, life was necessarily local, and the “whole” was necessarily invisible to the “part.” Adam Smith’s famous metaphor of the “invisible hand” drew on these enduring realities of human life. Each individual, Smith reasoned, employs his capital locally in pursuit of immediate comforts and necessities. Each one attends to “his own security… his own gain… led by an invisible hand to promote an end which was no part of his intention.” That end is the efficient employ of capital in the broader market: the wealth of nations. The individual actions that produce efficient markets add up to a staggeringly complex pattern, a mystery that no one person or entity could hope to know or understand, let alone to direct: “The statesman, who should attempt to direct private people in what manner they ought to employ their capitals, would… assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever.…”1 The neoliberal economist Friedrich Hayek, whose work we discussed briefly in Chapter 2 as the foundation for the market-privileging economic policies of the past half century, drew the most basic tenets of his arguments from Smith’s assumptions about the whole and the part.

Read this book to understand the inner workings of today’s digital capitalism, its threats to twenty-first-century society, and the reforms we must make for a better tomorrow.” —Frank Pasquale, University of Maryland Carey School of Law “I will make a guarantee: Assuming we survive to tell the tale, The Age of Surveillance Capitalism has a high probability of joining the likes of Adam Smith’s The Wealth of Nations and Max Weber’s Economy and Society as defining social-economics texts of modern times. It is not a ‘quick read’; it is to be savored and re-read and discussed with colleagues and friends. No zippy one-liners from me, except to almost literally beg you to read/ingest this book.” —Tom Peters, coauthor of In Search of Excellence “The Age of Surveillance Capitalism is brilliant and essential.

Neil McKendrick, “The Consumer Revolution of Eighteenth-Century England,” in Birth of a Consumer Society: The Commercialization of Eighteenth-Century England, ed. John Brewer and J. H. Plumb (Bloomington: Indiana University Press, 1982), 11. 4. Nathaniel Forster, An Enquiry into the Causes of the Present High Price of Provisions (London: J. Fletcher, 1767), 41. 5. Adam Smith, The Wealth of Nations, ed. Edwin Cannan (New York: Modern Library, 1994). 6. Lee Rainie and Janna Anderson, “The Future of Privacy: Above-and-Beyond Responses: Part 1,” Pew Research Center: Internet, Science & Tech, December 18, 2014, http://www.pewinternet.org/2014/12/18/above-and-beyond-responses-part-1-2/. 7.


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Age of Anger: A History of the Present by Pankaj Mishra

anti-communist, Asian financial crisis, Ayatollah Khomeini, Berlin Wall, Boeing 747, Brexit referendum, British Empire, classic study, colonial rule, continuation of politics by other means, creative destruction, Donald Trump, Edward Snowden, Evgeny Morozov, Fall of the Berlin Wall, Fellow of the Royal Society, Francis Fukuyama: the end of history, George Santayana, global village, Great Leap Forward, Gunnar Myrdal, informal economy, invisible hand, liberal capitalism, Mahatma Gandhi, Marshall McLuhan, Martin Wolf, mass immigration, Nelson Mandela, Oklahoma City bombing, Peter Thiel, Philip Mirowski, planetary scale, plutocrats, power law, precariat, public intellectual, Republic of Letters, Scientific racism, Silicon Valley, Silicon Valley billionaire, smart cities, Snapchat, stem cell, technological solutionism, the scientific method, The Wealth of Nations by Adam Smith, Timothy McVeigh, trade route, traveling salesman, urban planning, Vilfredo Pareto, wage slave, women in the workforce, zero-sum game

Montaigne, for instance, had been under the impression that in a trade one man can only benefit at the expense of another. In the eighteenth century, however, moneymaking through trade and commerce began to appear more desirable than the old kind of wealth. Montesquieu was already writing approvingly in The Spirit of the Laws (1748), two decades before the Wealth of Nations (1776), that politicians ‘speak to us only of manufactures, commerce, finance, wealth, and even luxury’. Rousseau echoed him complainingly in Discourse on the Arts and Sciences (1750) when he wrote that ‘ancient politicians spoke incessantly about morals and virtue, ours speak only of business and money’.

Over the last two decades, elites in even many formerly socialist countries came to uphold an ideal of cosmopolitan liberalism: the universal commercial society of self-interested rational individuals that was originally advocated in the eighteenth century by such Enlightenment thinkers as Montesquieu, Adam Smith, Voltaire and Kant. Indeed, we live today in a vast, homogeneous world market, in which human beings are programmed to maximize their self-interest and aspire to the same things, regardless of their difference of cultural background and individual temperament. The world seems more literate, interconnected and prosperous than at any other time in history.

Beginning in the 1990s, a democratic revolution of aspiration – of the kind Tocqueville witnessed with many forebodings in early nineteenth-century America – swept across the world, sparking longings for wealth, status and power, in addition to ordinary desires for stability and contentment, in the most unpromising circumstances. Egalitarian ambition broke free of old social hierarchies, caste in India as well as class in Britain. The culture of individualism went universal, in ways barely anticipated by Tocqueville, or Adam Smith, who first theorized about a ‘commercial society’ of self-seeking individuals. The emphasis on individual rights has heightened awareness of social discrimination and gender inequality; in many countries today, there is a remarkably greater acceptance of different sexual orientations. The larger political implications of this revolutionary individualism, however, are much more ambiguous.


The Toaster Project: Or a Heroic Attempt to Build a Simple Electric Appliance From Scratch by Thomas Thwaites

Anthropocene, carbon footprint, global supply chain, invisible hand, lateral thinking, supply-chain management, The Wealth of Nations by Adam Smith

I suppose Professor Cilliers not having to spend much time toasting his bread in the morning is one small contributing factor to the reason why he has time to become an expert in bubbles, and in studying bubbles he makes mining copper more efficient, which in turn makes toasters cheaper, which means more people can devote less time to making their toast and more time to other activities, like going to art school and doing ridiculous things like taking nine months to make a single toaster from scratch. So this is what Adam Smith was going on about in his Inquiry into the Nature and Causes of the Wealth of Nations (1776), when he wrote: In the first fire-engines, a boy was constantly employed to open and shut alternately the communication between the boiler and the cylinder, according as the piston either ascended or descended. One of those boys, who loved to play with his companions, observed that, by tying a string from the handle of the valve which opened this communication to another part of the machine, the valve would open and shut without his assistance, and leave him at liberty to divert himself with his playfellows.

I even have one of his iPhones, which at the moment I quite like (though strangely it does make me feel like a bit of an idiot when everyone else in the room has one too—like going to a party and everyone’s wearing the same “fashionable” top—but that’s the point of fashion right?). However, before we get too chummy with Adam Smith and his invisible hand, it seems that the need to buy more stuff to stimulate our economy, and the need to consume less to save our environment, are on a collision course. So while the £1187.54 price of my toaster doesn’t really include all that it cost to make it, £3.94 isn’t really what the Argos Value version cost either.


pages: 446 words: 109,157

The Constitution of Knowledge: A Defense of Truth by Jonathan Rauch

2021 United States Capitol attack, 4chan, active measures, affirmative action, Albert Einstein, Ayatollah Khomeini, Black Lives Matter, centre right, classic study, Climategate, company town, coronavirus, COVID-19, critical race theory, deplatforming, disinformation, disintermediation, Donald Trump, experimental subject, facts on the ground, fake news, Filter Bubble, framing effect, hive mind, illegal immigration, information asymmetry, invention of movable type, Isaac Newton, jimmy wales, Jon Ronson, Louis Pasteur, market bubble, meta-analysis, microaggression, mirror neurons, Peace of Westphalia, peer-to-peer, post-truth, profit motive, QAnon, race to the bottom, RAND corporation, Russian election interference, social software, Steve Bannon, Steven Pinker, technoutopianism, TED Talk, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Tragedy of the Commons, yellow journalism, Yochai Benkler, zero-sum game

But the founders were not just blundering along; they self-consciously sought to create an alternative to the failed regimes of the past. The greatest of them—especially John Locke, Adam Smith, and James Madison, the big three of modern liberalism—were men of genius, whose acuity and sophistication remain astonishing even today. The economic system has no formal constitution. It does have something like a founding document, in the form of Smith’s The Wealth of Nations, plus Smith’s equally important and closely connected, though until recently neglected, treatise on moral development and social behavior, his Theory of Moral Sentiments.

., 226 Silverglate, Harvey, 243–44 Simmons, Ruth, 208–09 Simpson, Thomas, 237 Singal, Jesse, 212, 218 skepticism, 57–58 Skripa, Sergei, 165 slavery, 81, 253–54 Sloman, Steven: The Knowledge Illusion (with Fernbach), 34, 72 smearing. See canceling and cancel culture; trolls and trolling Smith, Adam: on cooperation and empathy, 46–47; Madison and, 83, 85; Theory of Moral Sentiments, 46; The Wealth of Nations, 46 Smit, Lamar, 182 snowflakes, 246–51 Soave, Robby, 10, 205 Sobieraj, Sarah: The Outrage Industry (with Berry), 127, 129 socialization, 48 social justice, 44, 235, 240, 247, 254, 260 social media. See digital media; specific platforms social networks: biases in, 73–75; globalization and, 68–70; knowledge in, 60–61, 65, 67, 70–73; public goods of, 75–78; reality in, 86–87; scientific development in, 62–68, 70–73.

It required the work of thousands of practitioners. Although they held no constitutional convention, they did establish the Constitution of Knowledge’s conventions. In the late 1700s, a Scottish natural philosopher named James Hutton published what he called a new theory of the earth. By no coincidence, he was a contemporary of Adam Smith and David Hume and a product of the same Scottish Enlightenment milieu. The debate he had entered was full of conjectures about how and when the world had come into being, most of which relied one way or another on stories in the Bible. One prominent theory claimed the earth was formed 6,000 years ago, devoid of all topography, with man as its occupant.


pages: 171 words: 53,428

On Anarchism by Noam Chomsky

anti-communist, crowdsourcing, feminist movement, land reform, means of production, Occupy movement, post-industrial society, profit motive, The Wealth of Nations by Adam Smith

In fact, there are no two points of view more antithetical than classical liberalism and capitalism—and that’s why when the University of Chicago publishes a bicentennial edition of Smith, they have to distort the text (which they did): because as a true classical liberal, Smith was strongly opposed to all of the idiocy they now spout in his name. So if you read George Stigler’s introduction to the bicentennial edition of The Wealth of Nations—it’s a big scholarly edition, University of Chicago Press, so it’s kind of interesting to look at—it is diametrically opposed to Smith’s text on point after point. Smith is famous for what he wrote about division of labor: he’s supposed to have thought that division of labor was a great thing.

And that’s one of the main purposes of socialism, I think: to reach a point where people have the opportunity to decide freely for themselves what their needs are, and not just have the “choices” forced on them by some arbitrary system of power. [ . . . ] ADAM SMITH: REAL AND FAKE MAN: You said that classical liberalism was “anticapitalist.” What did you mean by that? Well, the underlying, fundamental principles of Adam Smith and other classical liberals were that people should be free: they shouldn’t be under the control of authoritarian institutions, they shouldn’t be subjected to things like division of labor, which destroys them. So look at Smith: why was he in favor of markets?

Well, the underlying, fundamental principles of Adam Smith and other classical liberals were that people should be free: they shouldn’t be under the control of authoritarian institutions, they shouldn’t be subjected to things like division of labor, which destroys them. So look at Smith: why was he in favor of markets? He gave kind of a complicated argument for them, but at the core of it was the idea that if you had perfect liberty, markets would lead to perfect equality—that’s why Adam Smith was in favor of markets. Adam Smith was in favor of markets because he thought that people ought to be completely equal—completely equal—and that was because, as a classical liberal, he believed that people’s fundamental character involves notions like sympathy, and solidarity, the right to control their own work, and so on and so forth: all the exact opposite of capitalism.


pages: 401 words: 93,256

Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business, and Life by Rory Sutherland

"World Economic Forum" Davos, 3D printing, Alfred Russel Wallace, barriers to entry, basic income, behavioural economics, Black Swan, Brexit referendum, butterfly effect, California gold rush, call centre, Captain Sullenberger Hudson, Cass Sunstein, cognitive dissonance, confounding variable, Daniel Kahneman / Amos Tversky, Dava Sobel, delayed gratification, Donald Trump, double helix, Downton Abbey, driverless car, Easter island, Edward Jenner, Elon Musk, Firefox, Ford Model T, General Magic , George Akerlof, gig economy, Google Chrome, Google X / Alphabet X, Grace Hopper, Hyperloop, Ignaz Semmelweis: hand washing, IKEA effect, information asymmetry, it is difficult to get a man to understand something, when his salary depends on his not understanding it, James Dyson, John Harrison: Longitude, loss aversion, low cost airline, Mason jar, Murray Gell-Mann, nudge theory, Peter Thiel, placebo effect, race to the bottom, Richard Feynman, Richard Thaler, Rory Sutherland, shareholder value, Silicon Valley, social intelligence, Steve Jobs, supply-chain management, systems thinking, TED Talk, the map is not the territory, The Market for Lemons, The Wealth of Nations by Adam Smith, ultimatum game, universal basic income, Upton Sinclair, US Airways Flight 1549, Veblen good, work culture

It’s a different kind of thing, which I call ‘non-sense’. Behavioural economics is an odd term. As Warren Buffett’s business partner Charlie Munger once said, ‘If economics isn’t behavioural, I don’t know what the hell is.’ It’s true: in a more sensible world, economics would be a subdiscipline of psychology.* Adam Smith was as much a behavioural economist as an economist – The Wealth of Nations (1776) doesn’t contain a single equation. But, strange though it may seem, the study of economics has long been detached from how people behave in the real world, preferring to concern itself with a parallel universe in which people behave as economists think they should.

*In understanding the folly of seeking universal laws for human behaviour, I have been greatly enlightened by the anthropologist Oliver Scott Curry and the recent book Skin in the Game by Nassim Nicholas Taleb. The attempt by philosophers to impose context-free moral obligations on people seems to fall foul of our evolved nature. *One of the brothers Geoff and Vince Graham. *Before The Wealth of Nations, Smith wrote a book called The Theory of Moral Sentiments (1759). Commonly described as a work of moral philosophy, it is also a fabulous primer on behavioural science and consumer psychology. See Chapter 3.10. *And it’s usually a he, isn’t it? *Why do you think Management Consultancies are so successful?

The problem here is that real life is not a conventional science – the tools which work so well when designing a Boeing 787, say, will not work so well when designing a customer experience or a tax programme. People are not nearly as pliable or predictable as carbon fibre or metal alloys, and we should not pretend that they are. Adam Smith, the father of economics, identified this problem in the late eighteenth century,* but it is a lesson which many economists have been ignoring ever since. If you want to look like a scientist, it pays to cultivate an air of certainty, but the problem with attachment to certainty is that it causes people completely to misrepresent the nature of the problem being examined, as if it were a simple physics problem rather than a psychological one.


pages: 324 words: 90,253

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

Alan Greenspan, Albert Einstein, Apollo 11, Asian financial crisis, asset-backed security, banking crisis, Basel III, Bear Stearns, Berlin Wall, Bernie Madoff, bond market vigilante , British Empire, business cycle, 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, currency risk, debt deflation, Deng Xiaoping, Diane Coyle, endowment effect, eurozone crisis, Fall of the Berlin Wall, financial innovation, financial repression, fixed income, floating exchange rates, Ford Model T, full employment, George Akerlof, German hyperinflation, Glass-Steagall Act, Hyman Minsky, income inequality, income per capita, inflation targeting, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, junk bonds, Kickstarter, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, London Interbank Offered Rate, loss aversion, low interest rates, market clearing, mass immigration, Minsky moment, moral hazard, mortgage debt, Neil Armstrong, new economy, New Urbanism, Nick Leeson, Northern Rock, Occupy movement, oil shale / tar sands, oil shock, old age dependency ratio, price mechanism, price stability, quantitative easing, railway mania, rent-seeking, reserve currency, rising living standards, risk free rate, Savings and loan crisis, seminal paper, 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

The Love of Money, and the Case for the Good Life (Allen Lane, London, 2012). 2. T. Malthus, An Essay on the Principle of Population, ed. G. Gilbert (Oxford University Press, Oxford, 1993). 3. The Economics of Climate Change: The Stern Review (Cambridge University Press, Cambridge, 2006). 4. A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Book 1, ch. 8: ‘Of the Wages of Labour’. 5. D. Kahneman, J. L. Knetsch and R. H. Thaler, ‘Experimental Tests of the Endowment Effect and the Coase Theorem’, Journal of Political Economy, 98.6 (1990). 6. Source: Maddison; all data can be found at the historical statistics section at http://www.ggdc.net/maddison/oriindex.htm. 7.

‘Sober Set with Quaker Roots’, Times Higher Education, 3 May 2002 Schama, S. Citizens: A Chronicle of the French Revolution, Knopf, New York, 1989 Skidelsky, R. and Skidelsky, E. How Much Is Enough? The Love of Money, and the Case for the Good Life, Allen Lane, London, 2012 Smith, A. An Inquiry in the Nature and Causes of the Wealth of Nations, Penguin, London, 1999 Snyder, T. (ed.). ‘120 Years of American Education: A Statistical Portrait’, US Department of Education, Office of Educational Research and Improvement, Washington, DC, Jan. 1993 Stern, N. The Economics of Climate Change: The Stern Review. Cambridge University Press, Cambridge, 2006 Stevenson B. and Wolfers, J.

Argentina may have lost its way during the twentieth century but the increase in living standards elsewhere owed a great deal to continuous invention and innovation. Argentina simply failed to harness what was rapidly becoming available elsewhere. Yet while the denial of productivity gains may be the most readily identified Malthusian failing, there is another major problem with Malthusian views, admirably identified by Adam Smith long before Malthus put pen (or quill) to paper. We need economic growth because, without it, society is in danger of fragmenting: It is in the progressive state, while the society is advancing to the further acquisition, rather than when it has acquired its full complement of riches, that the condition of the labouring poor, of the great body of the people, seems to be the happiest and the most comfortable.


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Green Tyranny: Exposing the Totalitarian Roots of the Climate Industrial Complex by Rupert Darwall

1960s counterculture, active measures, Affordable Care Act / Obamacare, Albert Einstein, Bakken shale, Berlin Wall, Bernie Sanders, California energy crisis, carbon credits, carbon footprint, centre right, clean tech, collapse of Lehman Brothers, creative destruction, decarbonisation, deindustrialization, dematerialisation, disinformation, Donald Trump, electricity market, Elon Musk, energy security, energy transition, facts on the ground, Fall of the Berlin Wall, Garrett Hardin, gigafactory, Gunnar Myrdal, Herbert Marcuse, hydraulic fracturing, Intergovernmental Panel on Climate Change (IPCC), invisible hand, it's over 9,000, James Watt: steam engine, John Elkington, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, liberal capitalism, market design, means of production, megaproject, Mikhail Gorbachev, mittelstand, Murray Bookchin, Neil Armstrong, nuclear winter, obamacare, oil shale / tar sands, Paris climate accords, Peace of Westphalia, peak oil, plutocrats, postindustrial economy, precautionary principle, pre–internet, recommendation engine, renewable energy transition, rent-seeking, road to serfdom, rolling blackouts, Ronald Reagan, shareholder value, Silicon Valley, Silicon Valley billionaire, Solyndra, Strategic Defense Initiative, subprime mortgage crisis, tech baron, tech billionaire, The Wealth of Nations by Adam Smith, Tragedy of the Commons, women in the workforce, young professional

In 2000, the eponym of the first law and cofounder of Intel, Gordon Moore, and his wife set up the Palo Alto–based Moore Foundation with five billion dollars and later would spend one million dollars on the anti–Prop. 23 campaign.4 Climate change is ethics for the wealthy: It legitimizes great accumulations of wealth. Pledging to combat it immunizes climate-friendly corporate leaders and billionaires from being targeted as members of the top one-tenth of the top one percent. This signifies a profound shift in the nature and morality of capitalism. In the famous passage on the invisible hand in The Wealth of Nations, Adam Smith wrote of individuals who, intending their own gain, promote an end that was no part of their intention. “By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it.”5 Less well known are the two sentences that immediately follow: I have never known much good done by those who affected to trade for the public good.

Capitalism’s Fort Sumter 1Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Chicago, 1976), p. 363. 2Mark Mills interview with author, June 27, 2015. 3Mark Mills, “Will the Paris Climate Summit Lead to More Money for Scientists or Solyndras?” Forbes.com, December 2, 2015, http://www.forbes.com/sites/markpmills/2015/12/02/progress-in-paris-at-the-cop21-more-money-for-scientists-or-corporatists/print/ (accessed January 15, 2016). 4Steven Malanga, “The Green behind California’s Greens,” City Journal, Spring 2015. 5Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Chicago, 1976), p. 477. 6Ibid., p. 478. 7Joel Kotkin, “Are We Heading for an Economic Civil War?”

In 1968, Hardin gave a lecture to the American Association for the Advancement of Science that became one of ecology’s canonical texts (Science lists over 26,000 citations). “The Tragedy of the Commons” takes a (hypothetical) example of open pasture leading to overgrazing. On the basis of this, Hardin asserted that freedom in a commons brings ruin to all. Adam Smith’s invisible hand had to be replaced by government coercion. It was theorizing without facts. As the Nobel economist Elinor Ostrom wrote in a 1999 critique, such a prescription was not supported by extensive research. In fact, there is a wide diversity of institutional arrangements for coping with common-pool resources—when they had not been prevented by central authorities.42 Population control was at the core of Hardin’s concerns: “Freedom to breed will bring ruin to us all.”43 In an earlier biology textbook, Hardin had asked students to confront the benefits of eugenics in reducing the “supply of mutant types at equilibrium.”44 Should society resort to eugenics?


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The Establishment: And How They Get Away With It by Owen Jones

anti-communist, Asian financial crisis, autism spectrum disorder, bank run, battle of ideas, Big bang: deregulation of the City of London, bonus culture, Boris Johnson, Bretton Woods, British Empire, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, centre right, citizen journalism, collapse of Lehman Brothers, collective bargaining, disinformation, don't be evil, Edward Snowden, Etonian, eurozone crisis, falling living standards, Francis Fukuyama: the end of history, full employment, G4S, glass ceiling, hiring and firing, housing crisis, inflation targeting, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, James Dyson, Jon Ronson, laissez-faire capitalism, land bank, light touch regulation, low interest rates, market fundamentalism, mass immigration, Monroe Doctrine, Mont Pelerin Society, moral hazard, Neil Kinnock, night-watchman state, Nixon triggered the end of the Bretton Woods system, Northern Rock, Occupy movement, offshore financial centre, old-boy network, open borders, Overton Window, plutocrats, popular capitalism, post-war consensus, profit motive, quantitative easing, race to the bottom, rent control, road to serfdom, Ronald Reagan, shareholder value, short selling, sovereign wealth fund, stakhanovite, statistical model, subprime mortgage crisis, Suez crisis 1956, The Wealth of Nations by Adam Smith, transfer pricing, Tyler Cowen, union organizing, unpaid internship, Washington Consensus, We are all Keynesians now, wealth creators, Winter of Discontent

When Pirie was in the United States in 1976, celebrations marking the 200th anniversary of the Declaration of Independence were in full swing. For the followers of free-market economics, it was also two centuries since another landmark date: the publication of Scottish thinker Adam Smith’s The Wealth of Nations, which set out for the first time some of the ideology that underpinned capitalism. With a colleague, Eamonn Butler, Pirie decided to found a new think tank – and so the Adam Smith Institute was born, in 1977 and in London. Pirie was determined to bury the post-war Establishment, but he did not anticipate how much he and his fellow travellers would be pushing at an open door.

On its foundation in 1977, Pirie’s Adam Smith Institute began a relentless campaign of agitation. Its members petitioned politicians in their parliamentary offices, over lunches and at conferences. They wrote articles in key newspapers, with the hope of bringing their ideas to the attention of those in power, and established close relationships with influential journalists. ‘John O’Sullivan, writing for the Telegraph first, and then The Times, could usually contrive some reference to our latest publication or induce one of his colleagues to cover it’, as the official history of the Adam Smith Institute puts it.12 The Adam Smith Institute was transforming journalists into its very own outriders, disseminating their work to a mass audience.

‘John O’Sullivan, writing for the Telegraph first, and then The Times, could usually contrive some reference to our latest publication or induce one of his colleagues to cover it’, as the official history of the Adam Smith Institute puts it.12 The Adam Smith Institute was transforming journalists into its very own outriders, disseminating their work to a mass audience. Feature articles based on their research were published in newspapers like the Daily Mail. The Institute was nothing if not ambitious. ‘Our aim was almost to try and build another consensus – or not quite a consensus, but to create the impression that a tide was surging in that direction,’ says Pirie. Soon it became a coordinated offensive. The Adam Smith Institute joined with the IEA, CPS and other free-market organizations to found the St James Society, named after the St James’ Court hotel in Westminster where they first convened.


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The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era by Gary Gerstle

2021 United States Capitol attack, A Declaration of the Independence of Cyberspace, affirmative action, Affordable Care Act / Obamacare, air traffic controllers' union, Airbnb, Alan Greenspan, Alvin Toffler, anti-communist, AOL-Time Warner, Bear Stearns, behavioural economics, Bernie Sanders, Big Tech, Black Lives Matter, blue-collar work, borderless world, Boris Johnson, Brexit referendum, British Empire, Broken windows theory, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, collective bargaining, Cornelius Vanderbilt, coronavirus, COVID-19, creative destruction, crony capitalism, cuban missile crisis, David Brooks, David Graeber, death from overwork, defund the police, deindustrialization, democratizing finance, Deng Xiaoping, desegregation, Dissolution of the Soviet Union, Donald Trump, Electric Kool-Aid Acid Test, European colonialism, Ferguson, Missouri, financial deregulation, financial engineering, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, future of work, Future Shock, George Floyd, George Gilder, gig economy, Glass-Steagall Act, global supply chain, green new deal, Greenspan put, guns versus butter model, Haight Ashbury, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Ida Tarbell, immigration reform, informal economy, invention of the printing press, invisible hand, It's morning again in America, Jeff Bezos, John Perry Barlow, Kevin Kelly, Kitchen Debate, low interest rates, Lyft, manufacturing employment, market fundamentalism, Martin Wolf, mass incarceration, Menlo Park, microaggression, Mikhail Gorbachev, military-industrial complex, millennium bug, Modern Monetary Theory, money market fund, Mont Pelerin Society, mortgage debt, mutually assured destruction, Naomi Klein, neoliberal agenda, new economy, New Journalism, Northern Rock, obamacare, Occupy movement, oil shock, open borders, Peter Thiel, Philip Mirowski, Powell Memorandum, precariat, price stability, public intellectual, Ralph Nader, Robert Bork, Ronald Reagan, scientific management, Seymour Hersh, sharing economy, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, social distancing, Steve Bannon, Steve Jobs, Stewart Brand, Strategic Defense Initiative, super pumped, technoutopianism, Telecommunications Act of 1996, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, Uber and Lyft, uber lyft, union organizing, urban decay, urban renewal, War on Poverty, Washington Consensus, We are all Keynesians now, We are the 99%, white flight, Whole Earth Catalog, WikiLeaks, women in the workforce, Works Progress Administration, Y2K, Yom Kippur War

., Re-Imagining Democracy in the Age of Revolutions: America, France, Britain, and Ireland (New York: Oxford University Press, 2013); Eric Hobsbawm, The Age of Revolution: Europe, 1789–1848 (New York: New American Library, 1962). 7.Gary Gerstle, Liberty and Coercion: The Paradox of American Government from the Founding to the Present (Princeton, NJ: Princeton University Press, 2015), chapter 1. 8.Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, ed. Edwin Cannan (1776; reprint, New York: Modern Library, 1965), 13 and passim; Gerstle, Liberty and Coercion, chapter 1. The emancipatory character of liberal thought, in its eighteenth-century guise, is often underestimated. See Istvan Hont and Michael Ignatieff, “Needs and Justice in the Wealth of Nations: An Introductory Essay,” in Istvan Hont and Michael Ignatieff, eds., Wealth and Virtue: The Shaping of Political Economy in the Scottish Enlightenment (New York: Cambridge University Press, 1983), 1–44; Gerstle, “The Protean Character of American Liberalism.” 9.Helena Rosenblatt, The Lost History of Liberalism: From Ancient Rome to the Twenty-First Century (Princeton, NJ: Princeton University Press, 2018); the following four books by David Brion Davis: The Problem of Slavery in Western Culture (Ithaca, NY: Cornell University Press, 1966); The Problem of Slavery in the Age of Revolution, 1770-1823 (Ithaca, NY: Cornell University Press, 1975); The Problem of Slavery in the Age of Emancipation (New York: Knopf, 2014); and Inhuman Bondage: The Rise and Fall of Slavery in the New World (New York: Oxford University Press, 2006); Thomas L.

This emphasis on human freedom and its protection was foundational to classical liberalism—and to the American republic.7 The Bill of Rights spoke to the political dimension of classical liberalism. An economic dimension of liberalism drew on the thought of Adam Smith, the Scottish political economist and philosopher who had published his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in the same year that the Americans had declared their independence from Britain. In Wealth of Nations, Smith stressed the imperative of creating an economy in which people would be free to pursue their economic interests and advantage.

Efficiency would spring from such specialization, increasing the quantity of production while decreasing the price of each manufactured unit, thus enhancing opportunities for market exchange. This specialization and differentiation of labor would also occur on a macro level between sectors of the economy and between nations, increasing domestic and international trade, all accruing to the “wealth of nations.” The proponents of this dimension of liberalism, what they celebrated as market freedom, argued that it would trigger extraordinary economic growth. Economic liberalism also carried within it an emancipatory current, since creating a world of free exchange required liberating national economies from the state controls that monarchs and mercantilists had everywhere imposed and that Smith despised.


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A Small Farm Future: Making the Case for a Society Built Around Local Economies, Self-Provisioning, Agricultural Diversity and a Shared Earth by Chris Smaje

agricultural Revolution, Airbnb, Alfred Russel Wallace, back-to-the-land, barriers to entry, biodiversity loss, Black Lives Matter, Boris Johnson, carbon footprint, circular economy, clean water, climate change refugee, collaborative consumption, Corn Laws, COVID-19, David Ricardo: comparative advantage, decarbonisation, degrowth, deindustrialization, dematerialisation, demographic transition, Deng Xiaoping, Donald Trump, energy transition, European colonialism, Extinction Rebellion, failed state, fake news, financial deregulation, financial independence, Food sovereignty, Ford Model T, future of work, Gail Bradbrook, garden city movement, Garrett Hardin, gentrification, global pandemic, Great Leap Forward, green new deal, Hans Rosling, hive mind, intentional community, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jevons paradox, land reform, mass immigration, megacity, middle-income trap, Murray Bookchin, Naomi Klein, Peace of Westphalia, peak oil, post-industrial society, precariat, profit maximization, profit motive, rent-seeking, rewilding, Rutger Bregman, Silicon Valley, Silicon Valley billionaire, Steven Pinker, Stewart Brand, Ted Nordhaus, the scientific method, The Wealth of Nations by Adam Smith, Tragedy of the Commons, transaction costs, vertical integration, Washington Consensus, Wolfgang Streeck, zero-sum game

Sometimes household farmers make the same judgement, especially when the wider economy forces their hand, although this is often a strategy to retain the farm for long-term security, not abandon it. Still, small-scale farmers do try to retain autonomy by preserving the zero-price household economy as best they can. Such efforts are likely to spread and deepen in the future as a response to interlocking global crises. Pioneer economist Adam Smith famously wrote in The Wealth of Nations (1776): ‘It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard for their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.’31 This isn’t how people behave in societies where capital hasn’t fully penetrated, however.

This nearly brings me to the end of my story, an alternative narrative to that which Adam Smith presented, but geared to the small farm future that’s upon us by exploring the dynamics of status and autonomy. If it seems no more than an over-complicated way of saying that in the future we’ll have to consume less, I apologise. However, I’ve tried to show that reduced consumption might not be a simple matter of necessity, but a complex matter of cultural fulfilment. Therefore, the idea of a lower-energy and lower-consumption future might be more than just a futile environmentalist exhortation destined to crash into the real-world rocks of Adam Smith’s ‘propensity in human nature to truck, barter and exchange’.

This lesson is written into our concept of utopia – an improved or perfected society of ideal well-being, which we correctly view as an impossibility (a ‘no-place’ in its Greek etymology). And yet we’ve come to think that the pursuit of private, individual self-interest creates ever-compounding public benefit through mystical concepts like Adam Smith’s invisible hand of the market.149 In service of such concepts we restrict the ability of our political communities to limit private accumulation through markets, instead combusting ever more fossil fuels that imperil the ability of Earth to sustain its current complement of life in order to produce mass consumer goods and possibilities for endless travel that we think will improve our happiness.


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Eat People: And Other Unapologetic Rules for Game-Changing Entrepreneurs by Andy Kessler

23andMe, Abraham Maslow, Alan Greenspan, Andy Kessler, bank run, barriers to entry, Bear Stearns, behavioural economics, Berlin Wall, Bob Noyce, bread and circuses, British Empire, business cycle, business process, California gold rush, carbon credits, carbon footprint, Cass Sunstein, cloud computing, collateralized debt obligation, collective bargaining, commoditize, computer age, Cornelius Vanderbilt, creative destruction, disintermediation, Douglas Engelbart, Dutch auction, Eugene Fama: efficient market hypothesis, fiat currency, Firefox, Fractional reserve banking, George Gilder, Gordon Gekko, greed is good, income inequality, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, Joseph Schumpeter, junk bonds, Kickstarter, knowledge economy, knowledge worker, Larry Ellison, libertarian paternalism, low skilled workers, Mark Zuckerberg, McMansion, Michael Milken, Money creation, Netflix Prize, packet switching, personalized medicine, pets.com, prediction markets, pre–internet, profit motive, race to the bottom, Richard Thaler, risk tolerance, risk-adjusted returns, Silicon Valley, six sigma, Skype, social graph, Steve Jobs, The Wealth of Nations by Adam Smith, transcontinental railway, transfer pricing, vertical integration, wealth creators, Yogi Berra

Now I’m not suggesting we actually eat anyone, as in the 1973 Charlton Heston sci-fi cult classic, Soylent Green, about overpopulation in the year 2022 (“Soylent Green is people!”). But we do need to get rid of worthless jobs. On the surface, I know that this might sound contrary to the old “help your fellow man” mantra, but really, truly, the road to wealth passes through the graveyard of today’s jobs. Adam Smith figured this out a long time ago. In The Wealth of Nations, he wrote that “all useful machines and instruments of trade” were designed to “facilitate and abridge labour.” Reduce. Condense. Curtail. Swim with the fishes. But which ones? The English classification system was quite simple: Tinker, Tailor, Soldier, Sailor Rich Man, Poor Man, Beggar Man, Thief And then Americans added: Doctor, Lawyer, Indian Chief.

RULE #5 Wealth Comes from Productivity; Everything Else Is Gravy IN THE FIRST PART OF 2010, IN AN OP-ED FOR THE WALL STREET Journal, I wrote, “It’s been ten long years since the economy has created real wealth, as opposed to easy-credit-induced real estate or paper wealth.” I got tons of responses, but one e-mail stuck out, from a guy named James: Do you have any suggestions on reading or other background on the concept of what “real wealth” is? I’m not sure Adam Smith addressed it, and I don’t think my business school (Chicago) did either. Now James may have been pulling my chain, subtly telling me I had no idea what I was talking about and that Adam Smith and the Chicago Booth School are the sources of all things economic. Or maybe he was pushing me to explain. So here it goes: Saul Alinsky had his Rules for gaining power. And with power come wealth, or at least the power to redistribute wealth.

Even the people who ultimately trade for actual fish see an increase in their living standards because they don’t have to sit around all day fishing; they can spend more time designing bear traps or other newfangled innovations. All productivity, all the time. I don’t want to do a whole economics lesson of the butcher and baker and candlestick maker and the lovely benefits of free trade. Go read Adam Smith or something. I just want to remind you (and myself) that it’s all about productivity. According to the Economic Policy Institute, “Labor productivity is a measure of the amount of goods and services that the average worker produces in an hour of work. The level of productivity is the single most important determinant of a country’s standard of living, with faster productivity growth leading to an increasingly better standard of living.”


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Karl Marx: Greatness and Illusion by Gareth Stedman Jones

anti-communist, battle of ideas, Berlin Wall, British Empire, Charles Babbage, classic study, colonial rule, Corn Laws, deindustrialization, Fall of the Berlin Wall, feminist movement, fixed income, invention of the sewing machine, joint-stock company, land reform, land tenure, means of production, New Journalism, New Urbanism, night-watchman state, On the Economy of Machinery and Manufactures, The Wealth of Nations by Adam Smith, trade liberalization, unemployed young men, wage slave

Its determinateness of form is completely extinguished.’20 This meant that capital was ‘this unity of production and valorisation not immediately, but only as a process tied to certain conditions’.21 3. THE ORIGINS OF A SOCIAL FORM Why and how did this social form come into being? At the beginning of The Wealth of Nations, Adam Smith stated that the division of labour was ‘the necessary, though very slow and gradual, consequence of a certain propensity in human nature … the propensity to truck, barter, and exchange one thing for another’.22 Similar assumptions were made in manuals of popular political economy, which Karl attacked at the beginning of his introduction to the Grundrisse.

Andrew Ure, The Philosophy of Manufactures: or, An Exposition of the Scientific, Moral and Commercial Economy of the Factory System of Great Britain, London, Charles Knight, 1835; Charles Babbage, On the Economy of Machinery and Manufactures, London, Charles Knight, 1832. 17. Marx, Economic Manuscripts of 1857–58, p. 131. 18. Ibid., p. 133. 19. Ibid., p. 134 (capitals in original text). 20. Ibid., vol. 28, p. 230. 21. Ibid., p. 334. 22. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, ed. Edwin Cannan, Chicago, University of Chicago Press, 1976 [1776], book 1, ch. 11, p. 17. 23. Marx, ‘Introduction’ to Economic Manuscripts of 1857–58, pp. 17–18. 24. Ibid., p. 18. 25. Ibid. 26. Marx, Economic Manuscripts of 1857–58, pp. 413, 420. 27. Ibid., pp. 409–10. 28.

Juni 1849, oder der letzte Sieg der Bourgeoisie in Frankreich, Hamburg, Joffman und Campe, 1850 Sismondi, J.-C.-L. Simonde de, Nouveaux principes d’économie politique, ou, De la richesse dans ses rapports avec la population, 2 vols., Paris, Chez Delaunay, 1819 Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations, ed. Edwin Cannan, Chicago, University of Chicago Press, 1976 [1776] Stein, Lorenz von, Der Socialismus und Communismus des heutigen Frankreichs: ein Beitrag zur Zeitgeschichte, 2nd edn, Leipzig, Otto Wigand, 1848 Stekloff, G. M., History of the First International, London, M. Lawrence, 1928 Stern, Daniel, Histoire de la Révolution de 1848, Paris, André Balland, 1985 [1850–52] Stirner, Max, The Ego and Its Own, ed.


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Inside the Robot Kingdom: Japan, Mechatronics and the Coming Robotopia by Frederik L. Schodt

carbon-based life, computer age, Computer Numeric Control, computer vision, deindustrialization, Deng Xiaoping, deskilling, factory automation, game design, guest worker program, industrial robot, Jacques de Vaucanson, Norbert Wiener, post-industrial society, robot derives from the Czech word robota Czech, meaning slave, Ronald Reagan, Silicon Valley, telepresence, The Wealth of Nations by Adam Smith, V2 rocket, warehouse automation, Whole Earth Review, women in the workforce

For the moment at least, the voices of opposition to robots in Japan have been drowned— drowned in the avalanche of wealth and materialism that the robots helped create. Robots and the Wealth of Nations * * * In manufactures the same number of hands, assisted with the best machinery, will work up a much greater quantity of goods than with more imperfect instruments of trade. ADAM SMITH, THE WEALTH OF NATIONS, 1776 * * * In 1985 the report of the United States President's Commission on Industrial Competitiveness, headed by John Young of Hewlett-Packard, noted that Japanese productivity growth has been five times greater than our own.

Tsusansho ga chosa e" [Parent Firms Using High Interest Rates, Warned Against Bullying Subcontractors. MITI to Conduct Survey], Nikkan kogyo shinbun, 31 May 1986, p. 1 Sidebar "Hasegawa's New Laws of Robotics." From Hasegawa, Robotto to shakai, p. 145. Chapter 9: Robots and the Wealth of Nations Epigraph from Adam Smith, The Wealth of Nations: Books I-III (Harmondsworth, England: Penguin Classics, 1986), p. 383. Global Competition: The New Reality, 1985, p. 11. In a 1982 poll, 75.9 percent of 521 firms in Aichi Prefecture introduced robots to reduce labor; 68.9 percent reported success. Eiji Ogawa, "Robottoka to sangyo kozo" [Robotization and the Structure of Industry], Journal of the Robotics Society of Japan, vol. 3, no. 1 (February 1985), p. 35; Engelberger's opening speech at the RIA Joseph F.

PART TWO Before Industrial Robots: A State of Mind 3 The First Japanese Robot 4 Robots of the Imagination 5 The Toy Robot Kingdom PART THREE After Industrial Robots: Building the Kingdom 6 Japan Manufactures the Industrial Robot 7 An Empire of Yellow Robots 8 The Man—Machine Interface 9 Robots and the Wealth of Nations PART FOUR Beyond Industrial Robots 10 Religion and Robots 11 Six Legs, Four Legs, Two Legs, or None? Color Photo Section Notes Bibliography Index Credits About The Author On the New Digital Edition of Inside the Robot Kingdom I began doing research for Inside the Robot Kingdom in the mid-1980s.


Manias, Panics and Crashes: A History of Financial Crises, Sixth Edition by Kindleberger, Charles P., Robert Z., Aliber

active measures, Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, Boeing 747, Bonfire of the Vanities, break the buck, Bretton Woods, British Empire, business cycle, buy and hold, Carmen Reinhart, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, Corn Laws, corporate governance, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cross-border payments, currency peg, currency risk, death of newspapers, debt deflation, Deng Xiaoping, disintermediation, diversification, diversified portfolio, edge city, financial deregulation, financial innovation, Financial Instability Hypothesis, financial repression, fixed income, floating exchange rates, George Akerlof, German hyperinflation, Glass-Steagall Act, Herman Kahn, Honoré de Balzac, Hyman Minsky, index fund, inflation targeting, information asymmetry, invisible hand, Isaac Newton, Japanese asset price bubble, joint-stock company, junk bonds, large denomination, law of one price, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, low interest rates, margin call, market bubble, Mary Meeker, Michael Milken, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, new economy, Nick Leeson, Northern Rock, offshore financial centre, Ponzi scheme, price stability, railway mania, Richard Thaler, riskless arbitrage, Robert Shiller, short selling, Silicon Valley, South Sea Bubble, special drawing rights, Suez canal 1869, telemarketer, The Chicago School, the market place, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, very high income, Washington Consensus, Y2K, Yogi Berra, Yom Kippur War

Kelley, 1967), p. 96. 6. Walter Bagehot, Lombard Street: a Description of the Money Market (1873; reprint edn, London: John Murray, 1917), p. 18. 7. Sir John Clapham, The Bank of England: a History (Cambridge: Cambridge University Press, 1945), vol. 2, p. 326. 8. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776; reprint edn, New York: Modern Library, 1937), pp. 703–4. 9. Alfred Marshall, Money, Credit and Commerce (1923; reprint edn, New York: Augustus M. Kelley, 1965), p. 305. 10. More and more economic theorists are moving away from unswerving reliance on the assumption that market participants are uniformly intelligent, informed, and independent in thought, introducing such concepts as asymmetric information (different knowledge available to different participants), cognitive dissonance (unconscious suppression of information that fails to fit a priori views), herd behavior, procrastination that results in failure to act in timely fashion, and so on.

Hawtrey, The Art of Central Banking (London: Longmans, Green, 1932), pp. 128–9. 28. See Herman E. Krooss, ed., Documentary History of Banking and Currency in the United States (New York: Chelsea House, 1969), vol. 1, p. 31. 29. Viner, Studies in International Trade, pp. 245ff., esp. pp. 249–50. 30. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776; reprint edn, New York: Modern Library, 1937), pp. 293–7. 31. R.G. Hawtrey, Currency and Credit, 3rd edn (New York: Longmans, Green 1930), p. 224. 32. Arthur D. Gayer, W.W. Rostow, and Anna Jacobson Schwartz, The Growth and Fluctuation of the British Economy, 1790–1850 (Oxford: Oxford University Press, Clarendon Press, 1953), vol. 1, p. 105. 33.

Manias, Panics and Crashes Examine the record of history, recollect what has happened within the circle of your own experience, consider with attention what has been the conduct of almost all the great unfortunate, either in private or public life, whom you may have either read of, or heard of, or remember; and you will find that the misfortunes of by far the greater part of them have arisen from their not knowing when they were well, when it was proper for them to sit still and be contented. – Adam Smith The Theory of Moral Sentiments Much has been written about panics and manias, much more than with the most outstretched intellect we are able to follow or conceive; but one thing is certain, that at particular times a great deal of stupid people have a great deal of stupid money. ... At intervals, from causes which are not to the present purpose, the money of these people – the blind capital, as we call it, of the country – is particularly large and craving; it seeks for someone to devour it, and there is a ‘plethora’; it finds someone, and there is ‘speculation’; it is devoured, and there is ‘panic


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When More Is Not Better: Overcoming America's Obsession With Economic Efficiency by Roger L. Martin

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, autism spectrum disorder, banking crisis, Black Monday: stock market crash in 1987, butterfly effect, call centre, cloud computing, complexity theory, coronavirus, COVID-19, David Ricardo: comparative advantage, do what you love, Edward Lorenz: Chaos theory, financial engineering, Frederick Winslow Taylor, Glass-Steagall Act, High speed trading, income inequality, industrial cluster, inflation targeting, Internet of things, invisible hand, Lean Startup, low interest rates, Lyft, Mark Zuckerberg, means of production, Network effects, new economy, obamacare, open economy, Phillips curve, Pluto: dwarf planet, power law, Renaissance Technologies, Richard Florida, Ronald Reagan, scientific management, shareholder value, Silicon Valley, Snapchat, Spread Networks laid a new fibre optics cable between New York and Chicago, Tax Reform Act of 1986, The future is already here, the map is not the territory, The Wealth of Nations by Adam Smith, Tobin tax, Toyota Production System, transaction costs, trickle-down economics, two-sided market, uber lyft, very high income, Vilfredo Pareto, zero-sum game

Based on that core principle, American economists, policy makers, and business managers have consistently optimized measures that encourage ever greater efficiency. They have been encouraged in this endeavor—and, more generally, in their beliefs—by the contributions of a handful of influential thinkers. Adam Smith It is an interesting and important historical coincidence that Adam Smith’s The Wealth of Nations was published in 1776, the same year that America declared its independence from Britain. In it, Smith provides two important underpinnings for a model of efficiency. First is the “invisible hand” of an unfettered market of buyers and sellers that produces, without explicit organization, a price that generates efficient use of resources to provide the optimal quantity of goods.

Smith’s work was well known to the Founding Fathers, including Thomas Jefferson, Alexander Hamilton, and James Madison, who led the formulation of the US constitution and developed the basic principles of US economic policy in the quarter century following the Declaration of Independence. A full 28 percent of American libraries from 1777 to 1790 held The Wealth of Nations.18 Hamilton made specific reference to the benefits of the division of labor in his 1791 Report on the Subject of Manufactures, lauding the “greater skill and dexterity naturally resulting from a constant and undivided application to a single object” and arguing that it “has the effect of augmenting the productive powers of labor, and with them, the total mass of the produce or revenue of a country.”19 Both Smith’s invisible hand and division of labor were embraced as the economic policy of the US was formulated in this seminal period.

For most of the past seven decades or so, we have been busily signing one free-trade agreement after another because the zero-tariff level that they (in their ultimate manifestation) provide is equated with the efficiency of our economy. Proxies and Their Lineage It is both important and only fair to note that, in the main, the fathers of the efficiency-oriented intellectual traditions would almost certainly not have taken their ideas as far as we have seen them taken. Adam Smith did not argue that labor divided more ways is always better. David Ricardo did not insist that more free trade agreements are always better. And most certainly W. Edwards Deming did not argue for the utter elimination of slack—in fact, he argued for the importance of maintaining an optimal level of slack.


pages: 374 words: 111,284

The AI Economy: Work, Wealth and Welfare in the Robot Age by Roger Bootle

"World Economic Forum" Davos, 3D printing, agricultural Revolution, AI winter, Albert Einstein, AlphaGo, Alvin Toffler, anti-work, antiwork, autonomous vehicles, basic income, Ben Bernanke: helicopter money, Bernie Sanders, Bletchley Park, blockchain, call centre, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, Carl Icahn, Chris Urmson, computer age, Computing Machinery and Intelligence, conceptual framework, corporate governance, correlation does not imply causation, creative destruction, David Ricardo: comparative advantage, deep learning, DeepMind, deindustrialization, Demis Hassabis, deskilling, Dr. Strangelove, driverless car, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, facts on the ground, fake news, financial intermediation, full employment, future of work, Future Shock, general purpose technology, Great Leap Forward, Hans Moravec, income inequality, income per capita, industrial robot, Internet of things, invention of the wheel, Isaac Newton, James Watt: steam engine, Jeff Bezos, Jeremy Corbyn, job automation, job satisfaction, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Joseph Schumpeter, Kevin Kelly, license plate recognition, low interest rates, machine translation, Marc Andreessen, Mark Zuckerberg, market bubble, mega-rich, natural language processing, Network effects, new economy, Nicholas Carr, Ocado, Paul Samuelson, Peter Thiel, Phillips curve, positional goods, quantitative easing, RAND corporation, Ray Kurzweil, Richard Florida, ride hailing / ride sharing, rising living standards, road to serfdom, Robert Gordon, Robert Shiller, Robert Solow, Rutger Bregman, Second Machine Age, secular stagnation, self-driving car, seminal paper, Silicon Valley, Silicon Valley billionaire, Simon Kuznets, Skype, social intelligence, spinning jenny, Stanislav Petrov, Stephen Hawking, Steven Pinker, synthetic biology, technological singularity, The Future of Employment, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, universal basic income, US Airways Flight 1549, Vernor Vinge, warehouse automation, warehouse robotics, Watson beat the top human players on Jeopardy!, We wanted flying cars, instead we got 140 characters, wealth creators, winner-take-all economy, world market for maybe five computers, Y2K, Yogi Berra

Different periods experience a different balance of these various factors. The Industrial Revolution saw a combination of all of them. And the benefits were interactive as the expansion of markets made possible by increased trade enabled the exploitation of economies of scale in production – just as Adam Smith argued would happen in The Wealth of Nations, published in 1776. Economic development continued throughout the nineteenth century and into the twentieth. But twentieth-century economic performance did not at first show the full benefits because other factors intervened. The first half of the century was scarred by two world wars that destroyed capital on a massive scale and diverted resources into war production.

He says: “Consider the lilies of the field, how they grow: they neither toil nor spin.”3 Many of the negative attitudes toward work that persist today can be traced back, if not to the Garden of Eden, then at least to the Industrial Revolution. This sucked people into factories, changing the character of work. The division of labor championed by Adam Smith may have been more efficient than one person working at several different tasks, but it also had its downsides, and he acknowledged as much. In The Wealth of Nations, published in 1776, he wrote: “The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding.”4 Marx took this point further.

London: Institute of Economic Affairs. Shadbolt, N., and Hampson, R. (2018) The Digital Ape, London: Scribe. Shanahan, M. (2015) The Technological Singularity, Cambridge: The MIT Press. Simon, H. (1965) The Shape of Automation for Men and Management, New York: Harper. Smith, A. (1776) The Wealth of Nations, London: William Strahan. Stiglitz, J. E. (1969) New Theoretical Perspectives on the Distribution of Income and Wealth among Individuals, London: The Econometric Society. Susskind, R. and Susskind, D. (2017) The Future of the Professions: How Technology Will Transform the Work of Human Experts, Oxford: Oxford University Press.


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Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries by Safi Bahcall

accounting loophole / creative accounting, Alan Greenspan, Albert Einstein, AOL-Time Warner, Apollo 11, Apollo 13, Apple II, Apple's 1984 Super Bowl advert, Astronomia nova, behavioural economics, Boeing 747, British Empire, Cass Sunstein, Charles Lindbergh, Clayton Christensen, cognitive bias, creative destruction, disruptive innovation, diversified portfolio, double helix, Douglas Engelbart, Douglas Engelbart, Dunbar number, Edmond Halley, Gary Taubes, Higgs boson, hypertext link, industrial research laboratory, invisible hand, Isaac Newton, Ivan Sutherland, Johannes Kepler, Jony Ive, knowledge economy, lone genius, Louis Pasteur, Mark Zuckerberg, Menlo Park, Mother of all demos, Murray Gell-Mann, PageRank, Peter Thiel, Philip Mirowski, Pierre-Simon Laplace, power law, prediction markets, pre–internet, Ralph Waldo Emerson, RAND corporation, random walk, reality distortion field, Richard Feynman, Richard Thaler, Sheryl Sandberg, side project, Silicon Valley, six sigma, stem cell, Steve Jobs, Steve Wozniak, synthetic biology, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tim Cook: Apple, tulip mania, Wall-E, wikimedia commons, yield management

Rae, John. Life of Adam Smith. Macmillan, 1895. Romilly, Sir Samuel. “Letter LXXI, To Madam G—,” Aug. 20, 1790, in Memoirs of the Life of Sir Samuel Romilly, edited by His Sons, Vol. I (1840), 404. Ross, Ian S. The Life of Adam Smith. Oxford, 2010. Rothschild, Emma. Economic Sentiments. Harvard, 2001. Schofield, Robert E. “An Evolutionary Taxonomy of Eighteenth-Century Newtonianisms.” Stu. Eighteenth-Cent. Cult. 7 (1978): 175. Scott, Andrew C., et al. Fire on Earth: An Introduction. Wiley, 2014. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. Glasgow Ed., Vol. 2.

., et al. “Forest Fires: An Example of Self-Organized Critical Behavior.” Science 281 (1998): 1840. Mandelbrot, Benoit B., and Richard L. Hudson. The (Mis)Behavior of Markets. Basic Books, 2004. McLean, Iain. Adam Smith: Radical and Egalitarian. Edinburgh, 2006. Mirowski, Philip. More Heat Than Light. Cambridge, 1989. Montes, Leonidas. “Newtonianism and Adam Smith.” In The Oxford Handbook of Adam Smith, edited by C. Berry et al., 36. Oxford, 2013. Nagel, Kai, et al. “Still Flowing: Approaches to Traffic Flow and Traffic Jam Modeling.” Op. Res. 51 (2003): 681. Newman, M. E. J. Networks: An Introduction.

The scholar, relieved, joined his friends for supper. At half past nine, he rose to return to bed, announcing, “I love your company, gentlemen, but I believe I must leave you to go to another world.” Six days later he died. Adam Smith, who knew how to make an exit, has grown into a misty icon, a hero to libertarians and free-marketeers who like their economics neat, hold the morals. (The real Adam Smith argued for restraints on markets and prized his work on ethics more than his work on economics.) The manuscript Smith asked his friends to spare had nothing to do with either ethics or economics. It was his History of Astronomy, written shortly after he finished graduate school.


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The Aristocracy of Talent: How Meritocracy Made the Modern World by Adrian Wooldridge

"World Economic Forum" Davos, Ada Lovelace, affirmative action, Alan Greenspan, Albert Einstein, assortative mating, barriers to entry, Bernie Sanders, Black Lives Matter, Bletchley Park, borderless world, Boris Johnson, Brexit referendum, business intelligence, central bank independence, circulation of elites, Clayton Christensen, cognitive bias, Corn Laws, coronavirus, corporate governance, correlation coefficient, COVID-19, creative destruction, critical race theory, David Brooks, Dominic Cummings, Donald Trump, Double Irish / Dutch Sandwich, Etonian, European colonialism, fake news, feminist movement, George Floyd, George Gilder, Gini coefficient, glass ceiling, helicopter parent, Home mortgage interest deduction, income inequality, intangible asset, invention of gunpowder, invention of the printing press, Isaac Newton, Jeff Bezos, Jeremy Corbyn, Jim Simons, joint-stock company, Joseph Schumpeter, knowledge economy, knowledge worker, land tenure, London Interbank Offered Rate, Long Term Capital Management, Louis Pasteur, Mahatma Gandhi, Mark Zuckerberg, means of production, meritocracy, meta-analysis, microaggression, mortgage tax deduction, Myron Scholes, offshore financial centre, opioid epidemic / opioid crisis, Panopticon Jeremy Bentham, Peter Thiel, plutocrats, post-industrial society, post-oil, pre–internet, public intellectual, publish or perish, Ralph Waldo Emerson, RAND corporation, rent-seeking, Richard Florida, Ronald Reagan, scientific management, sexual politics, shareholder value, Sheryl Sandberg, Silicon Valley, spinning jenny, Steve Bannon, Steven Pinker, supply-chain management, surveillance capitalism, tech bro, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, Thorstein Veblen, three-martini lunch, Tim Cook: Apple, transfer pricing, Tyler Cowen, unit 8200, upwardly mobile, Vilfredo Pareto, W. E. B. Du Bois, wealth creators, women in the workforce

Louis XIV promoted low-born favourites such as Sébastien de Vauban, the great engineer, and Jean Racine, the great dramatist.18 A Scottish laird, John Stuart, took a shine to a cobbler’s son, James Mill, and provided him with an education in exchange for tutoring his daughter (Mill honoured him by naming his eldest son after him). Adam Smith had the leisure to write The Wealth of Nations because the Duke of Buccleuch spotted his genius. Patrons often felt an obligation to recommend competent clients – a complete duffer might prove embarrassing. Equally, clients often felt an obligation to bring credit to their sponsors. ‘The Crown and the Executive found in this system guarantees of fidelity and good conduct,’ Winston Churchill wrote in his life of Marlborough, ‘and no one troubled himself about the obstacles placed in the path of unpropertied ability.’19 Samuel Pepys, who owed his career to the patronage of his first cousin once removed, Lord Montagu, is a good example of the working of the patronage system at its best.

Still, it was not enough to delegitimize the old establishment. You also needed to devise a way of identifying men of merit who could take their place. Leading critics of the old regime advanced general arguments in favour of examinations without getting down to the details. Adam Smith suggested vaguely in The Wealth of Nations that every man ‘undergo an examination or probation in them before he can obtain the freedom in any corporation to be allowed to set up any trade’.14 Jeremy Bentham was equally vague in his (wonderfully titled) Official Aptitude Maximized; Expense Minimized (1830). The breakthrough was made by Cambridge University, which led the way in introducing written examinations to replace the older tradition of oral examinations, and in linking examination results to substantial rewards in the form of prizes and college fellowships.

Allen, The Institutional Revolution: Measurement and the Economic Emergence of the Modern World (Chicago and London, University of Chicago Press, 2012), p. 44 13 Jonathan Rose, The Intellectual Life of the British Working Classes (London, Yale University Press, 2001), pp. 16, 117 14 Adam Smith, The Wealth of Nations, 2 Vols. (first pub. 1776), Vol. 1 p. 270 15 Michael Sadler, Essays on Examinations (London, Macmillan, 1936) p. 53 16 Joseph F. Kett, Merit: The History of a Founding Ideal from the American Revolution to the Twenty-First Century (Ithaca, NY, Cornell University Press, 2013), pp. 84–5.


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The Empathic Civilization: The Race to Global Consciousness in a World in Crisis by Jeremy Rifkin

Abraham Maslow, agricultural Revolution, Albert Einstein, animal electricity, back-to-the-land, British Empire, carbon footprint, classic study, collaborative economy, death of newspapers, delayed gratification, distributed generation, emotional labour, en.wikipedia.org, energy security, feminist movement, Ford Model T, global village, Great Leap Forward, hedonic treadmill, hydrogen economy, illegal immigration, income inequality, income per capita, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), Internet Archive, invention of movable type, invention of the steam engine, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, Lewis Mumford, Mahatma Gandhi, Marshall McLuhan, means of production, megacity, meta-analysis, Milgram experiment, mirror neurons, Nelson Mandela, new economy, New Urbanism, Norbert Wiener, off grid, off-the-grid, out of africa, Peace of Westphalia, peak oil, peer-to-peer, planetary scale, Recombinant DNA, scientific management, scientific worldview, Simon Kuznets, Skype, smart grid, smart meter, social intelligence, supply-chain management, surplus humans, systems thinking, the medium is the message, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Tragedy of the Commons, transaction costs, upwardly mobile, uranium enrichment, working poor, World Values Survey

Their success in mitigating future abuses and criminal behavior, while mixed, is nonetheless encouraging and suggests a broadening of the vision of criminal justice and the role of law in addressing wrongdoing in society. Even economics, the dismal science, has undergone a partial makeover. For two centuries Adam Smith’s observation that nature inclines each individual to pursue his or her own individual self- interest in the marketplace seemed the undisputable last word on the nature of human nature. In his Inquiry into the Nature and Causes of the Wealth of Nations (1776), Smith contended that[e]very individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of society, which he has in view.

“Reinhold Niebuhr’s The Self and the Dramas of History: A Criticism,” Pastoral Psychology 9, 1958. pp. 15-17. 14 Gay, Peter. The Enlightenment: The Science of Freedom. New York: W. W. Norton, 1996. p. 150. 15 Wilson, Edward O. Biophilia. Cambridge, MA: Harvard University Press, 1984. 16 Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. Edwin Cannan, ed. London: Methuen & Co., 1961. Vol. 1. p. 475. 17 Harlow, Harry F. “The Nature of Love.” American Psychologist. Vol. 13. No. 12. 1958. p. 676. 18 Ibid. p. 677. 19 Canetti, Elias. Crowds and Power. Carol Stewart, trans. London: Gollancz, 1962. p. 448. 20 Gimbutas, Marija.

New York: Avon Books, 1990. ———. A Darwinian Left: Politics, Evolution and Cooperation. New Haven, CT: Yale University Press, 1999. Skolimowski, Henryk. The Participatory Mind: A New Theory of Knowledge and of the Universe. London: Penguin, 1994. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. Ed. Edwin Cannan, London: Methuen, 1961. Sober, Elliott, and David S. Wilson. Unto Others: The Evolution and Psychology of Unselfi sh Behavior. Cambridge, MA: Harvard University Press, 1998. Soddy, Frederick. Matter and Energy. New York: Holt, 1912. Sperber, Jonathan. The European Revolutions, 1848-1851. 2nd ed.


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Willful: How We Choose What We Do by Richard Robb

activist fund / activist shareholder / activist investor, Alvin Roth, Asian financial crisis, asset-backed security, Bear Stearns, behavioural economics, Bernie Madoff, Brexit referendum, capital asset pricing model, cognitive bias, collapse of Lehman Brothers, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, delayed gratification, diversification, diversified portfolio, effective altruism, endowment effect, Eratosthenes, experimental subject, family office, George Akerlof, index fund, information asymmetry, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, lake wobegon effect, loss aversion, market bubble, market clearing, money market fund, Paradox of Choice, Pareto efficiency, Paul Samuelson, Peter Singer: altruism, Philippa Foot, principal–agent problem, profit maximization, profit motive, Richard Thaler, search costs, Silicon Valley, sovereign wealth fund, survivorship bias, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, transaction costs, trolley problem, ultimatum game

New Internationalist, April 5, 1997. https://newint.org/features/1997/04/05/peter-singer-drowning-child-new-internationalist (accessed February 2, 2019). Skidelsky, Robert. John Maynard Keynes: The Economist as Saviour, 1920–1937. London: Macmillan, 1992. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. Chicago: University of Chicago Press, 1976. ———. The Theory of Moral Sentiments. London: A. Millar, 1759. Sturges, Preston. The Palm Beach Story. Motion picture. Paramount Pictures, 1942. Taylor, Michael. Rationality and the Ideology of Disconnection. Cambridge, UK: Cambridge University Press, 2006.

For-itself investing has always been and will always be in short supply because of the anxiety it entails—people can only bear so much, and institutions are not built for it. When we confront a one-time event without the guidance of familiar rules, we’re on our own. This indeterminacy and freedom and the ensuing sense of isolation and responsibility can give rise to dread. Adam Smith expressed it perfectly when he suggested that “anxious vigilance” was the defining quality of a good manager, who must often operate under novel and uncertain conditions, doing that which can’t be transcribed into rules and delegated.3 Anyone who spots an opportunity to buy or sell because prices have drifted from their fundamental value places herself in opposition to the prevailing canon.

I didn’t panic or despair when losing or become exuberant and rash when winning. Together, these factors allowed me to take for-itself action. Lots of people probably shared the intuition that soybean prices were unsustainably low, but I was in a position to act. Although these trades were accompanied by Adam Smith’s “anxious vigilance” to some degree, it took a bet on a wind farm to bring home the full (and sometimes grueling) implications of a for-itself leap under novel and uncertain conditions. Thanet Offshore Wind: A Big Leap There is a sentiment among traders that it’s a bad omen to win on your first trade.


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Wealth and Poverty of Nations by David S. Landes

Admiral Zheng, affirmative action, agricultural Revolution, Atahualpa, Ayatollah Khomeini, Bartolomé de las Casas, book value, British Empire, business cycle, Cape to Cairo, classic study, clean water, colonial rule, Columbian Exchange, computer age, David Ricardo: comparative advantage, deindustrialization, deskilling, European colonialism, Fellow of the Royal Society, financial intermediation, Francisco Pizarro, germ theory of disease, glass ceiling, high-speed rail, illegal immigration, income inequality, Index librorum prohibitorum, interchangeable parts, invention of agriculture, invention of movable type, invisible hand, Isaac Newton, it's over 9,000, James Watt: steam engine, John Harrison: Longitude, joint-stock company, Just-in-time delivery, Kenneth Arrow, land tenure, lateral thinking, Lewis Mumford, mass immigration, Mexican peso crisis / tequila crisis, MITM: man-in-the-middle, Monroe Doctrine, Murano, Venice glass, new economy, New Urbanism, North Sea oil, out of africa, passive investing, Paul Erdős, Paul Samuelson, Philip Mirowski, rent-seeking, Right to Buy, Robert Solow, Savings and loan crisis, Scramble for Africa, Simon Kuznets, South China Sea, spice trade, spinning jenny, Suez canal 1869, The Wealth of Nations by Adam Smith, trade route, transaction costs, transatlantic slave trade, Vilfredo Pareto, zero-sum game

Late in our century, the balance has begun to shift toward Asia, where countries such as J a p a n have grown at a s t o u n d i n g rates. W h y have these d o m ­ inant nations been blessed, and why are s o m a n y others still mired in poverty? T h e answer lies in this important a n d timely book, where D a v i d S . Landes, taking his cue from A d a m Smith's The Wealth of Nations, tells the long, fascinat­ ing story o f wealth and power throughout the world: the creation o f wealth, the paths o f winners a n d losers, the rise a n d fall o f nations. H e studies history as a process, attempting to understand how the world's cul­ tures lead t o — o r r e t a r d — e c o n o m i c a n d military suc­ cess a n d material achievement.

The Hungry Planet: The Modern World at the Edge of Famine. 2 d rev. e d . , N e w Y o r k : M a c m i l l a n . 574 BIBLIOGRAPHY Boskin, Michael J . , and Lawrence J . L a u . 1 9 9 2 . "Capital, Technology, and Economic G r o w t h , " in R o s e n b e r g , L a n d a u , a n d M o w e r y , e d s . , Technology and the Wealth of Nations, p p . 1 7 - 5 5 . B o t t i n e a u , Y v e s . 1 9 7 7 . Le Portugal et sa vocation maritime: Histoire et civilisation d'une nation. P a r i s : B o c c a r d . B o u c h e r , P h i l i p P. 1 9 9 2 Cannibal Encounters: Europeans and Island Caribs, 1492-1763. Baltimore: J o h n s H o p k i n s Univ.

B l o o m i n g t o n : I n d i a n a U n i versity P r e s s . L a n d a u , R a l p h , a n d N a t h a n R o s e n b e r g . 1 9 9 2 . "Successful C o m m e r c i a l i z a t i o n in t h e C h e m i c a l P r o c e s s I n d u s t r i e s , " in R o s e n b e r g , L a n d a u , a n d M o w e r y , e d s . , Technology and the Wealth of Nations, p p . 7 3 - 1 1 9 . L a n d a u , R a l p h , T i m o t h y T a y l o r , a n d G a v i n W r i g h t , e d s . 1 9 9 6 . The Mosaic of Economic Growth. S t a n f o r d : S t a n f o r d U n i v . P r e s s . Landes, David S. 1 9 5 2 . "Bankers a n d Pashas: International Finance in E g y p t in the 1 8 6 0 ' s , " in M i l l e r , e d . , Men in Business, p p . 2 3 - 7 0 . . 1 9 5 6 .


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The Origins of Political Order: From Prehuman Times to the French Revolution by Francis Fukuyama

Admiral Zheng, agricultural Revolution, Andrei Shleifer, Asian financial crisis, Ayatollah Khomeini, barriers to entry, Berlin Wall, blood diamond, California gold rush, cognitive dissonance, colonial rule, conceptual framework, correlation does not imply causation, currency manipulation / currency intervention, Day of the Dead, demographic transition, Deng Xiaoping, double entry bookkeeping, endogenous growth, equal pay for equal work, European colonialism, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, Francisco Pizarro, Garrett Hardin, Hernando de Soto, hiring and firing, invention of agriculture, invention of the printing press, John Perry Barlow, Khyber Pass, land reform, land tenure, means of production, offshore financial centre, out of africa, Peace of Westphalia, principal–agent problem, RAND corporation, rent-seeking, Right to Buy, Scramble for Africa, selective serotonin reuptake inhibitor (SSRI), spice trade, Stephen Hawking, Steven Pinker, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, trade route, Tragedy of the Commons, transaction costs, Washington Consensus, zero-sum game

Marx’s influence has been such that many generations of students have continued to see the “rise of the bourgeoisie” as something that simply happens as a concomitant of economic modernization, without the need for further explanation, and to see that class’s political power as flowing from its economic power.16 Writing almost seventy-five years before Marx, Adam Smith in The Wealth of Nations provided a more nuanced and ultimately convincing account of the provenance of the bourgeoisie, one that sees politics as cause as much as consequence of its rise. At the beginning of book three of the first volume, Smith notes that there should be a natural progression in what he calls “opulence,” or economic growth, starting with improved agricultural productivity, leading to greater internal trade between countryside and town, and only in the end to increased international trade.

Thus, while having a coherent state and reasonably good governance is a condition for growth, it is not clear that democracy plays the same positive role. Between economic growth and social development, or the development of civil society A lot of classic social theory links the emergence of modern civil society to economic development.28 Adam Smith in The Wealth of Nations noted that the growth of markets was related to the division of labor in society: as markets expand and firms take advantage of economies of scale, social specialization increases and new social groups (for example, the industrial working class) emerge. The fluidity and open access demanded by modern market economies undermine many traditional forms of social authority and force their replacement with more flexible, voluntary forms of association.

An oppressed class under the sway of the feudal nobility, an armed and self-governing association in the mediaeval commune; here independent urban republic (as in Italy and Germany), there taxable ‘third estate’ of the monarchy (as in France), afterwards, in the period of manufacture proper, serving either the semi-feudal or the absolute monarchy as a counterpoise against the nobility, and, in fact, corner-stone of the great monarchies in general, the bourgeoisie has at last, since the establishment of Modern Industry and of the world-market, conquered for itself, in the modern representative State, exclusive political sway. The executive of the modern State is but a committee for managing the common affairs of the whole bourgeoisie.” Political power is thus for him the consequence and not the cause of this class’s economic power. 17 Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Indianapolis: Liberty Classics, 1981), book III, chap. 1. 18 Ibid., part III, chap. 2. 19 Ibid., part III, chap. 3. 20 Ibid., part III, chap. 5. 21 Ertman, Birth of the Leviathan, pp. 176–77. 22 Aylmer, Rebellion or Revolution?, pp. 5–6. 23 Joel Hurstfield, Freedom, Corruption and Government in Elizabethan England (Cambridge, MA: Harvard University Press, 1973), pp. 137–62. 24 Ertman, Birth of the Leviathan, p. 184. 25 As in all wars, the back-and-forth fortunes of the two sides was subject to considerable contingency, based on individual acts of heroism, misjudgment, cowardice, or incompetence.


pages: 492 words: 118,882

The Blockchain Alternative: Rethinking Macroeconomic Policy and Economic Theory by Kariappa Bheemaiah

"World Economic Forum" Davos, accounting loophole / creative accounting, Ada Lovelace, Adam Curtis, Airbnb, Alan Greenspan, algorithmic trading, asset allocation, autonomous vehicles, balance sheet recession, bank run, banks create money, Basel III, basic income, behavioural economics, Ben Bernanke: helicopter money, bitcoin, Bletchley Park, blockchain, Bretton Woods, Brexit referendum, business cycle, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, cashless society, cellular automata, central bank independence, Charles Babbage, Claude Shannon: information theory, cloud computing, cognitive dissonance, collateralized debt obligation, commoditize, complexity theory, constrained optimization, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, crowdsourcing, cryptocurrency, data science, David Graeber, deep learning, deskilling, Diane Coyle, discrete time, disruptive innovation, distributed ledger, diversification, double entry bookkeeping, Ethereum, ethereum blockchain, fiat currency, financial engineering, financial innovation, financial intermediation, Flash crash, floating exchange rates, Fractional reserve banking, full employment, George Akerlof, Glass-Steagall Act, Higgs boson, illegal immigration, income inequality, income per capita, inflation targeting, information asymmetry, interest rate derivative, inventory management, invisible hand, John Maynard Keynes: technological unemployment, John von Neumann, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, knowledge economy, large denomination, Large Hadron Collider, Lewis Mumford, liquidity trap, London Whale, low interest rates, low skilled workers, M-Pesa, machine readable, Marc Andreessen, market bubble, market fundamentalism, Mexican peso crisis / tequila crisis, Michael Milken, MITM: man-in-the-middle, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, natural language processing, Network effects, new economy, Nikolai Kondratiev, offshore financial centre, packet switching, Pareto efficiency, pattern recognition, peer-to-peer lending, Ponzi scheme, power law, precariat, pre–internet, price mechanism, price stability, private sector deleveraging, profit maximization, QR code, quantitative easing, quantitative trading / quantitative finance, Ray Kurzweil, Real Time Gross Settlement, rent control, rent-seeking, robo advisor, Satoshi Nakamoto, Satyajit Das, Savings and loan crisis, savings glut, seigniorage, seminal paper, Silicon Valley, Skype, smart contracts, software as a service, software is eating the world, speech recognition, statistical model, Stephen Hawking, Stuart Kauffman, supply-chain management, technology bubble, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Nature of the Firm, the payments system, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, trade liberalization, transaction costs, Turing machine, Turing test, universal basic income, Vitalik Buterin, Von Neumann architecture, Washington Consensus

As digitization leads to massive increases in efficiency and network effects, markets are getting more Schumpeterian in the sense that those market players who are capable of digitizing business models are capable of overtaking existing incumbents and gaining larger portions of market share. In The Wealth of Nations, Adam Smith famously said that the division of labor is limited by the extent of the market. Thus, as digitization overcomes the physical barriers to access markets, we notice that it is creating room for specializations that address granular subdivisions in existing and niche markets. Moreover, as the barriers of technical know-how and location get porous, the impact on strategy has been the obsession on customer focus.

The logarithmic curve seen in Figure 4-3 is representative of this fact Figure 4-3.Moore’s Law: Over 199 Years And Going Strong Image Source: BCA Research Special Report, ‘Human Intelligence and Economic Growth - From 50,000 B.C. to the Singularity’ (2013). As the graph shows, these exponential curves are relatively recent in the history of economics. When Adam Smith published the ‘Wealth of Nations’, in 1776, the subject of economics represented linear scales. Technology evolved at a much slower pace (refer to Figure 4-1) and this made the social science of economics develop models that were well suited to linear technological growth curves and our linear way of predictive thinking.

As agents adapt and inform themselves via feedback, they begin to form alliances based on internal constraints and preferences and subsequently establish themselves into autonomous organizational structures that do not need central co-ordination. Dissecting the emergence of this organizational process is akin to witnessing the physical embodiment of Adam Smith’s invisible hand. Path Dependence In a word, path dependence can be summarized as history. Path dependence is the dependence of economic outcomes on the path of previous outcomes, rather than based on current conditions. For example, the statement “we saved and invested last year and therefore we have assets today” might be more fashionably expressed as, “the capital stock is path dependent”’ (Margolis and Liebowitz, 1998).


pages: 469 words: 146,487

Empire: How Britain Made the Modern World by Niall Ferguson

British Empire, Cape to Cairo, colonial rule, Corn Laws, death from overwork, European colonialism, imperial preference, income per capita, information security, John Harrison: Longitude, joint-stock company, Khartoum Gordon, Khyber Pass, land reform, land tenure, liberal capitalism, Livingstone, I presume, low interest rates, Mahatma Gandhi, mass immigration, military-industrial complex, night-watchman state, Panopticon Jeremy Bentham, profit motive, Scramble for Africa, spice trade, Suez canal 1869, Suez crisis 1956, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the new new thing, The Wealth of Nations by Adam Smith, Thomas Malthus, three-masted sailing ship, trade route, transatlantic slave trade, undersea cable, union organizing, zero-sum game

The money taxpayers would have saved as a result of this could have been spent on electricity, cars and consumer durables, thus encouraging industrial modernization at home. Nearly a century ago, the likes of J. A. Hobson and Leonard Hobhouse were arguing along very similar lines; they in turn were in some measure the heirs of Richard Cobden and John Bright in the 1840s and 1850s. In The Wealth of Nations (1776), Adam Smith had expressed his doubts about the wisdom of ‘raising up a nation of customers who should be obliged to buy from the shops of our different producers, all the goods with which these could supply them’. But it was Cobden who had originally insisted that the expansion of British trade should go hand in hand with a foreign policy of complete non-intervention.

As revenue imploded and costs exploded, the company had to rely on bond sales and short-term borrowing to remain afloat. Finally, the directors were forced not only to reduce the annual dividend but to turn to the government for assistance – to the disgust of the free market economist, Adam Smith. As Smith noted contemptuously in The Wealth of Nations (1776): Their debts, instead of being reduced, were augmented by an arrear to the treasury … of … four hundred thousand pounds, by another to the custom-house for duties unpaid, by a large debt to the bank for money borrowed, and by a fourth for bills drawn upon them from India, and wantonly accepted, to the amount of upwards of twelve hundred thousand pounds.

In the former category belong both the nationalists and the Marxists, from the Mughal historian Gholam Hossein Khan, author of the Seir Mutaqherin (1789) to the Palestinian academic Edward Said, author of Orientalism (1978), by way of Lenin and a thousand others in between. In the latter camp belong the liberals, from Adam Smith onwards, who have maintained for almost as many years that the British Empire was, even from Britain’s point of view, ‘a waste of money’. The central nationalist/Marxist assumption is, of course, that imperialism was economically exploitative; every facet of colonial rule, including even the apparently sincere efforts of Europeans to study and understand indigenous cultures, was at root designed to maximize the ‘surplus value’ that could be extracted from the subject peoples.


Rockonomics: A Backstage Tour of What the Music Industry Can Teach Us About Economics and Life by Alan B. Krueger

"Friedman doctrine" OR "shareholder theory", accounting loophole / creative accounting, Affordable Care Act / Obamacare, Airbnb, Alan Greenspan, autonomous vehicles, bank run, behavioural economics, Berlin Wall, bitcoin, Bob Geldof, butterfly effect, buy and hold, congestion pricing, creative destruction, crowdsourcing, digital rights, disintermediation, diversified portfolio, Donald Trump, endogenous growth, Gary Kildall, George Akerlof, gig economy, income inequality, independent contractor, index fund, invisible hand, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kickstarter, Larry Ellison, Live Aid, Mark Zuckerberg, Moneyball by Michael Lewis explains big data, moral hazard, Multics, Network effects, obamacare, offshore financial centre, opioid epidemic / opioid crisis, Paul Samuelson, personalized medicine, power law, pre–internet, price discrimination, profit maximization, random walk, recommendation engine, rent-seeking, Richard Thaler, ride hailing / ride sharing, Saturday Night Live, Skype, Steve Jobs, the long tail, The Wealth of Nations by Adam Smith, TikTok, too big to fail, transaction costs, traumatic brain injury, Tyler Cowen, ultimatum game, winner-take-all economy, women in the workforce, Y Combinator, zero-sum game

These data come from author’s calculations of data on CEO compensation of publicly traded companies, athletes, and musician earnings. See “Equilar | New York Times 200 Highest-Paid CEOs,” Equilar, May 25, 2018; “The World’s Highest-Paid Athletes,” Forbes, June 13, 2018; and Ed Christman, “Billboard’s 2018 Money Makers: 50 Highest-Paid Musicians,” Billboard, Jul. 20, 2018. 24. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London: W. Strahan and T. Cadell, 1776). 25. Grateful Dead, “Playing in the Band,” Ace, Warner Bros., 1972. 26. Frank Sinatra, Sinatra at the Sands, Reprise Records, 1966. 27. Author’s calculations using data from Billboard Top 100 Songs. 28.

Paul Resnikoff, “Two-Thirds of All Music Sold Comes from Just 4 Companies,” Digital Music News, Aug. 3, 2016. 33. “Tech Firms Shell Out to Hire and Hoard Talent,” The Economist, Nov. 5, 2016. 34. “Knorr, Wabtec Settle with U.S. over Agreements to Not Poach Workers,” Reuters, Apr. 3, 2018. 35. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London: W. Strahan and T. Cadell, 1776). 36. Federal Trade Commission, “Antitrust Guidance for Human Resource Professionals,” Department of Justice, Antitrust Division, Oct. 2016. 37. David Clark, “Antitrust Action Against No-Poaching Agreements: Obama Policy to Be Continued by the Trump Administration,” National Law Review, Jan. 26, 2018.

But if possible, I advise students, they should find a field that they enjoy and that others find less enjoyable, because that limits the supply of people going into their field, thereby increasing pay for those who do go into it. Music falls squarely in the first of these categories. I used to think that musicians entered the field because of overconfidence, with oversized expectations that they will attain fame and fortune despite the long odds. After all, Adam Smith, the eighteenth-century founder of economics, long ago argued that “the contempt of risk, and the presumptuous hope of success, are in no period of life more active than at the age at which young people choose their professions.”24 But even presumptuous young musicians seem to me to be under little illusion that they will achieve fame and fortune.


Globalists: The End of Empire and the Birth of Neoliberalism by Quinn Slobodian

"World Economic Forum" Davos, Alan Greenspan, Asian financial crisis, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, business cycle, capital controls, central bank independence, classic study, collective bargaining, David Ricardo: comparative advantage, Deng Xiaoping, desegregation, Dissolution of the Soviet Union, Doha Development Round, eurozone crisis, Fall of the Berlin Wall, floating exchange rates, full employment, Garrett Hardin, Greenspan put, Gunnar Myrdal, Hernando de Soto, invisible hand, liberal capitalism, liberal world order, Mahbub ul Haq, market fundamentalism, Martin Wolf, Mercator projection, Mont Pelerin Society, Norbert Wiener, offshore financial centre, oil shock, open economy, pattern recognition, Paul Samuelson, Pearl River Delta, Philip Mirowski, power law, price mechanism, public intellectual, quantitative easing, random walk, rent control, rent-seeking, road to serfdom, Ronald Reagan, special economic zone, statistical model, Suez crisis 1956, systems thinking, tacit knowledge, The Chicago School, the market place, The Wealth of Nations by Adam Smith, theory of mind, Thomas L Friedman, trade liberalization, urban renewal, Washington Consensus, Wolfgang Streeck, zero-sum game

For pioneering studies of this perspective, see Stephen Gill, “Economic Globalization and the Internationalization of Authority: Limits and Contradictions,” Geoforum 23, no. 2 (1992): 269–283; Gill, “New Constitutionalism, Demo­cratisation and Global Po­liti­cal Economy,” Pacifica Review: Peace, Security and Global Change 10, no. 1 (1998): 23–38. For other key studies, see Sarah Babb, ­Behind the Development Banks: Washington Politics, World Poverty, and the Wealth of Nations NOTES TO PAGES 4–6 21. 22. 23. 24. 25. 26. 27. 293 (Chicago: University of Chicago Press, 2009); Nitsan Chorev, “The Institutional Proj­ect of Neo-­Liberal Globalism: The Case of the WTO,” Theory and Society 34, no. 3 (2005): 317–355; A. Claire Cutler, Private Power and Global Authority: Transnational Merchant Law in the Global Po­liti­cal Economy (New York: Cambridge University Press, 2003); John Gray, False Dawn: The Delusions of Global Capitalism (New York: New Press, 1998); David J.

Wassily Leontief, “For a National Economic Planning Board,” New York Times, March 14, 1974. 23. Wassily Leontief, The ­Future of the World Economy (New York: United Nations, 1976). 24. Tinbergen et al., Reshaping the International Order. 25. See Sarah Babb, ­Behind the Development Banks: Washington Politics, World Poverty, and the Wealth of Nations (Chicago: University of Chicago Press, 2009). 26. Hank Overbeek and Kees van der Pijl, “Restructuring Capital and Restructuring Hegemony: Neo-­Liberalism and the Unmaking of the Post-­war Order,” in Overbeek, Restructuring hegemony, 19. See also Bair, “Taking Aim,” 360–361; Martijn Konings, “Governing the System: Risk, Finance, and Neoliberal Reason,” Eu­ro­ pean Journal of International Relations 22, no. 2 (2016): 268–288; Greta R.

After protests shut down its 1999 meeting, it pivoted to emphasize the h ­ uman side of globalization. Even though the policies described as neoliberal had long been criticized, the IMF report was still significant for recognizing the label “neoliberalism.” The term appeared poised for the mainstream, appearing in the Financial Times, the Guardian, and other newspapers.11 Also in 2016, the Adam Smith Institute, founded in 1977 and a source of guidance for Margaret Thatcher, “came out as neoliberals,” in their words, shedding their former moniker, “libertarian.”12 “Globalist in outlook” was one of the princi­ples they claimed for themselves. In 2017 the director of the Walter Eucken Institute in Germany publicly defended the honor of what he called “classic neoliberalism” and its call for “a strong state standing above the interests of lobbies.”13 It seemed that for both critics and proponents “the movement that dared not speak its own name” could now be named.14 This was a clarifying development.


pages: 463 words: 105,197

Radical Markets: Uprooting Capitalism and Democracy for a Just Society by Eric Posner, E. Weyl

3D printing, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, anti-communist, augmented reality, basic income, Berlin Wall, Bernie Sanders, Big Tech, Branko Milanovic, business process, buy and hold, carbon footprint, Cass Sunstein, Clayton Christensen, cloud computing, collective bargaining, commoditize, congestion pricing, Corn Laws, corporate governance, crowdsourcing, cryptocurrency, data science, deep learning, DeepMind, Donald Trump, Elon Musk, endowment effect, Erik Brynjolfsson, Ethereum, feminist movement, financial deregulation, Francis Fukuyama: the end of history, full employment, gamification, Garrett Hardin, George Akerlof, global macro, global supply chain, guest worker program, hydraulic fracturing, Hyperloop, illegal immigration, immigration reform, income inequality, income per capita, index fund, informal economy, information asymmetry, invisible hand, Jane Jacobs, Jaron Lanier, Jean Tirole, Jeremy Corbyn, Joseph Schumpeter, Kenneth Arrow, labor-force participation, laissez-faire capitalism, Landlord’s Game, liberal capitalism, low skilled workers, Lyft, market bubble, market design, market friction, market fundamentalism, mass immigration, negative equity, Network effects, obamacare, offshore financial centre, open borders, Pareto efficiency, passive investing, patent troll, Paul Samuelson, performance metric, plutocrats, pre–internet, radical decentralization, random walk, randomized controlled trial, Ray Kurzweil, recommendation engine, rent-seeking, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robert Shiller, Ronald Coase, Rory Sutherland, search costs, Second Machine Age, second-price auction, self-driving car, shareholder value, sharing economy, Silicon Valley, Skype, special economic zone, spectrum auction, speech recognition, statistical model, stem cell, telepresence, Thales and the olive presses, Thales of Miletus, The Death and Life of Great American Cities, The Future of Employment, The Market for Lemons, The Nature of the Firm, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, Tragedy of the Commons, transaction costs, trickle-down economics, Tyler Cowen, Uber and Lyft, uber lyft, universal basic income, urban planning, Vanguard fund, vertical integration, women in the workforce, Zipcar

For example, in a poll conducted by PRRI and The Atlantic after the election, two-thirds of Trump voters described his election as “the last chance to stop American decline,” https://www.prri.org/research/prri-atlantic-poll-post-election-white-working-class/, and a poll by Lord Ashcroft found that by 16 percentage points, those favoring Brexit believed life was worse in Britain than it was 30 years ago, while those favoring “Remain” had the opposite view by 46 percentage points, http://lordashcroftpolls.com/2016/06/how-the-united-kingdom-voted-and-why/. 21. Arlie Hochshild, Strangers in Their Own Land: Anger and Mourning on the American Right (New Press, 2016). 22. Adam Smith, The Wealth of Nations, Part I, 56 (Collier, 1902). 23. The distinction we are drawing is famously associated with the 1893 work of the great sociologist Émile Durkheim, The Division of Labour in Society (Simon & Schuster, 1997). 24. See Michael J. Sandel, What Money Can’t Buy: The Moral Limits of Markets (Farrar, Straus and Giroux, 2012); Samuel Bowles, The Moral Economy: Why Good Incentives Are No Substitute for Good Citizens (Yale University Press, 2016) for a contemporary defense of moral economies. 25.

With an improved public life, crime would be reduced, street life would be restored, and the retreat into private communities would cease. Far from the usual image of markets substituting for and undermining the public sphere, Radical Markets would bolster trust in public life. Chapter 2 explains how an auction could organize politics. Radical Heroes Our argument draws on an intellectual tradition that goes back to Adam Smith. Smith is frequently invoked by conservative thinkers these days, including Market Fundamentalists. But Smith was a radical—in the two ways highlighted by our epigraph. First, he dug deeply into the roots of economic organization and proposed theories that remain influential today. Second, he attacked the prevailing ideas and institutions of his day and presented a series of daring propositions and reforms.

Even the best-run governments of the most advanced countries rally around the mainstream technocratic approach of the past despite its many failures. In searching for a way out of this impasse, we have thus found ourselves rereading the works of the founding fathers of modern social organization: a group of self-styled “political economists” and “Philosophical Radicals” of the late eighteenth and nineteenth centuries, including Adam Smith, the Marquis de Condorcet, Jeremy Bentham, John Stuart Mill, Henry George, Léon Walras, and Beatrice Webb. Although these thinkers—whose ideas we will explore in later chapters—lived in a world different from ours, they faced some similar challenges. The economic and political system they had inherited from the eighteenth century could not keep up with changes in technology, demographics, the globalization of the time, and the larger cultural environment.


pages: 239 words: 69,496

The Wisdom of Finance: Discovering Humanity in the World of Risk and Return by Mihir Desai

activist fund / activist shareholder / activist investor, Albert Einstein, Andrei Shleifer, AOL-Time Warner, assortative mating, Benoit Mandelbrot, book value, Brownian motion, capital asset pricing model, Carl Icahn, carried interest, Charles Lindbergh, collective bargaining, corporate governance, corporate raider, discounted cash flows, diversified portfolio, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, follow your passion, George Akerlof, Gordon Gekko, greed is good, housing crisis, income inequality, information asymmetry, Isaac Newton, Jony Ive, Kenneth Rogoff, longitudinal study, Louis Bachelier, low interest rates, Monty Hall problem, moral hazard, Myron Scholes, new economy, out of africa, Paul Samuelson, Pierre-Simon Laplace, principal–agent problem, Ralph Waldo Emerson, random walk, risk/return, Robert Shiller, Ronald Coase, short squeeze, Silicon Valley, Steve Jobs, Thales and the olive presses, Thales of Miletus, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, Tim Cook: Apple, tontine, transaction costs, vertical integration, zero-sum game

The simple maxim that “the greatest happiness of the greatest number is the foundation of morals and legislation,” a phrase Bentham attributed to Joseph Priestley, was remarkably radical for its time and still serves as the foundation of much economic and philosophical analysis. Bentham was also the first great defender of the use of credit and the idea of leverage. In his showdown with Adam Smith on lending, they take quite uncharacteristic positions. The typically eloquent exponent of markets (Smith) advocates for limits on markets, while the radical reformer (Bentham) embraces the unfettered market for debt. In The Wealth of Nations, Smith had argued that interest rates on loans should be capped at 5 percent. His logic manifested the deep historical bias against borrowers. Smith ventured that if interest rates were allowed to be higher, only “prodigals and projectors” would take the loans, and people with reasonable projects wouldn’t take loans.

Details of the actual meeting are at “Jeremy Bentham Makes Surprise Visit to UCL Council.” UCL. July 10, 2013. https://www.ucl.ac.uk/silva/news/news-articles/0713/10072013-Jeremy-Bentham-UCL-Council-visit. The discussion of the feud draws on Smith, Adam. The Wealth of Nations. New York: Bantam Classics, 2003. Bentham, Jeremy. Defence of Usury. London: Routledge/Thoemmes, 1992; and Hollander, Samuel. “Jeremy Bentham and Adam Smith on the Usury Laws: A ‘Smithian’ Reply to Bentham and a New Problem.” European Journal of the History of Economic Thought 6, no. 4 (1999): 523–51. The discussion of the role of debt in The Merchant of Venice draws on Shakespeare, William.

Triumphs of Experience: The Men of the Harvard Grant Study. Cambridge, MA: Belknap Press of Harvard University Press, 2012; and Jefferson, Thomas. Thomas Jefferson to José Corrêa da Serra. December 27, 1814. Monticello, Charlottesville, Virginia. http://founders.archives.gov/documents/Jefferson/03-08-02-0143. “prodigals and projectors”: Smith, The Wealth of Nations, book II, chapter 4. “there are, in this case”: Bentham, Defence of Usury, 174. “it is the highest impertinence”: ibid., 157. “stamp of indiscriminate”: ibid., 135. “He lends out”: Shakespeare, The Merchant of Venice, act I, scene 3. “infinite obligation that”: Auden, “A Merchant in Venice,” 147.


Exploring Everyday Things with R and Ruby by Sau Sheong Chang

Alfred Russel Wallace, bioinformatics, business process, butterfly effect, cloud computing, Craig Reynolds: boids flock, data science, Debian, duck typing, Edward Lorenz: Chaos theory, Gini coefficient, income inequality, invisible hand, p-value, price stability, Ruby on Rails, Skype, statistical model, stem cell, Stephen Hawking, text mining, The Wealth of Nations by Adam Smith, We are the 99%, web application, wikimedia commons

How do the fashion boutiques know which clothes to stock and how much to sell them for? How does Darty (a French electronics chain) know which are the best mobile phones to sell? These questions are answered succinctly by 18th-century Scottish economist and social philosopher Adam Smith. His book An Inquiry into the Nature and Causes of the Wealth of Nations (excerpted here) is considered the first modern work of economics, while he himself is often regarded as the father of economics: It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own interest.

: (question mark, colon), in Ruby ternary conditional expression, if and unless > (right angle bracket), The R Console, Variables and Functions -> assignment operator, R, Variables and Functions > R console prompt, The R Console ' ' (single quotes), enclosing Ruby strings, Strings [ ] (square brackets), Vectors, Matrices, Data frames accessing subset of R data frame, Data frames enclosing R matrix indexes, Matrices enclosing R vector indexes, Vectors [[ ]] (square brackets, double), enclosing single R vector index, Vectors A aes() function, R, Aesthetics An Inquiry into the Nature and Causes of the Wealth of Nations (University of Chicago Press), The Invisible Hand apply() function, R, Interpreting the Data Armchair Economist (Free Press), How to Be an Armchair Economist array() function, R, Arrays arrays, R, Arrays–Arrays arrays, Ruby, Arrays and hashes–Arrays and hashes, Arrays and hashes artificial society, Money (see Utopia example) as.Date() function, R, Number of Messages by Day of the Month ascultation, Auscultation assignment operators, R, Variables and Functions at sign, double (@@), preceding Ruby class variables, Class methods and variables attr keyword, Ruby, Classes and objects Audacity audio editor, Homemade Digital Stethoscope average, Interpreting the Data (see mean() function, R) Axtell, Robert (researcher), It’s a Good Life Growing Artificial Societies: Social Science from the Bottom Up (Brookings Institution Press/MIT Press), It’s a Good Life B backticks (` `), enclosing R operators as functions, Variables and Functions bar charts, Plotting charts, Interpreting the Data–Interpreting the Data, The Second Simulation–The Second Simulation, The Third Simulation–The Third Simulation, The Final Simulation–The Final Simulation barplot() function, R, Plotting charts batch mode, R, Sourcing Files and the Command Line Bioconductor repository, Packages birds flocking, Schooling Fish and Flocking Birds (see flocking example) bmp() function, R, Basic Graphs Boids algorithm, Schooling Fish and Flocking Birds–The Origin of Boids Box, George Edward Pelham (statistician), regarding usefulness of models, The Simple Scenario break keyword, R, Conditionals and Loops brew command, Installing Ruby using your platform’s package management tool butterfly effect, The Changes C c() function, R, Vectors CALO Project, The Emailing Habits of Enron Executives camera, pulse oximeter using, Homemade Pulse Oximeter case expression, Ruby, case expression chaos theory, The Changes charts, Charting–Adjustments, Plotting charts, Statistical transformation, Geometric object, Interpreting the Data–Interpreting the Data, Interpreting the Data–Interpreting the Data, Interpreting the Data–Interpreting the Data, The Second Simulation, The Second Simulation–The Second Simulation, The Third Simulation–The Third Simulation, The Third Simulation–The Third Simulation, The Final Simulation–The Final Simulation, The Final Simulation–The Final Simulation, Analyzing the Simulation–Analyzing the Simulation, Analyzing the Second Simulation–Analyzing the Second Simulation, Number of Messages by Day of the Month–Number of Messages by Hour of the Day, Generating the Heart Sounds Waveform–Generating the Heart Sounds Waveform, Generating the Heartbeat Waveform and Calculating the Heart Rate–Generating the Heartbeat Waveform and Calculating the Heart Rate, Money–Money, Money–Money, Implementation bar charts, Plotting charts, Interpreting the Data–Interpreting the Data, The Second Simulation–The Second Simulation, The Third Simulation–The Third Simulation, The Final Simulation–The Final Simulation histograms, Statistical transformation, Geometric object, Money–Money line charts, Interpreting the Data–Interpreting the Data, Analyzing the Simulation–Analyzing the Simulation, Analyzing the Second Simulation–Analyzing the Second Simulation Lorenz curves, Money–Money scatterplots, Interpreting the Data–Interpreting the Data, The Second Simulation, The Third Simulation–The Third Simulation, The Final Simulation–The Final Simulation, Number of Messages by Day of the Month–Number of Messages by Hour of the Day, Implementation waveforms, Generating the Heart Sounds Waveform–Generating the Heart Sounds Waveform, Generating the Heartbeat Waveform and Calculating the Heart Rate–Generating the Heartbeat Waveform and Calculating the Heart Rate class methods, Ruby, Class methods and variables class variables, Ruby, Class methods and variables–Class methods and variables classes, R, Programming R classes, Ruby, Classes and objects–Classes and objects code examples, Using Code Examples (see example applications) colon (:), Symbols, Vectors creating R vectors, Vectors preceding Ruby symbols, Symbols comma-separated value (CSV) files, Importing data from text files (see CSV files) Comprehensive R Archive Network (CRAN), Packages conditionals, R, Conditionals and Loops conditionals, Ruby, Conditionals and loops–case expression contact information for this book, How to Contact Us conventions used in this book, Conventions Used in This Book cor() function, R, The R Console Core library, Ruby, Requiring External Libraries corpus, Text Mining correlation, R, The R Console CRAN (Comprehensive R Archive Network), Packages CSV (comma-separated value) files, Importing data from text files, The First Simulation–The First Simulation, The First Simulation, Interpreting the Data, The Simulation, Extracting Data from Sound–Extracting Data from Sound, Extracting Data from Video extracting video data to, Extracting Data from Video extracting WAV data to, Extracting Data from Sound–Extracting Data from Sound reading data from, Interpreting the Data writing data to, The First Simulation–The First Simulation, The Simulation csv library, Ruby, The First Simulation, The Simulation, Grab and Parse curl utility, Ruby Version Manager (RVM) D data, Data, Data, Everywhere–Data, Data, Everywhere, Bringing the World to Us, Importing Data–Importing data from a database, Importing data from text files, The First Simulation–The First Simulation, Interpreting the Data, How to Be an Armchair Economist, The Simulation, Grab and Parse–Grab and Parse, The Emailing Habits of Enron Executives–The Emailing Habits of Enron Executives, Homemade Digital Stethoscope–Extracting Data from Sound, Extracting Data from Sound–Extracting Data from Sound, Homemade Pulse Oximeter–Extracting Data from Video, Extracting Data from Video analyzing, Data, Data, Everywhere–Data, Data, Everywhere, Bringing the World to Us, How to Be an Armchair Economist charts for, How to Be an Armchair Economist (see charts) obstacles to, Data, Data, Everywhere–Data, Data, Everywhere simulations for, Bringing the World to Us (see simulations) audio, from stethoscope, Homemade Digital Stethoscope–Extracting Data from Sound CSV files for, Importing data from text files, The First Simulation–The First Simulation, Interpreting the Data, The Simulation, Extracting Data from Sound–Extracting Data from Sound, Extracting Data from Video from Enron, The Emailing Habits of Enron Executives–The Emailing Habits of Enron Executives from Gmail, Grab and Parse–Grab and Parse importing, R, Importing Data–Importing data from a database video, from pulse oximeter, Homemade Pulse Oximeter–Extracting Data from Video data frames, R, Data frames–Data frames data mining, The Idea data.frame() function, R, Data frames database, importing data from, Importing data from a database–Importing data from a database dbConnect() function, R, Importing data from a database dbGet() function, R, Importing data from a database DBI packages, R, Importing data from a database–Importing data from a database Debian system, installing Ruby on, Installing Ruby using your platform’s package management tool def keyword, Ruby, Classes and objects dimnames() function, R, Matrices distribution, normal, Money dollar sign ($), preceding R list item names, Lists doodling example, Shoes doodler–Shoes doodler double quotes (" "), enclosing Ruby strings, Strings duck typing, Ruby, Code like a duck–Code like a duck dynamic typing, Ruby, Code like a duck–Code like a duck E economics example, A Simple Market Economy–A Simple Market Economy, The Producer–The Producer, The Consumer–The Consumer, Some Convenience Methods–Some Convenience Methods, The Simulation–The Simulation, Analyzing the Simulation–Analyzing the Simulation, The Producer–The Producer, The Consumer–The Consumer, Market–Market, The Simulation–The Simulation, Analyzing the Second Simulation–Analyzing the Second Simulation, Price Controls–Price Controls charts for, Analyzing the Simulation–Analyzing the Simulation, Analyzing the Second Simulation–Analyzing the Second Simulation Consumer class for, The Consumer–The Consumer, The Consumer–The Consumer Market class for, Some Convenience Methods–Some Convenience Methods, Market–Market modeling, A Simple Market Economy–A Simple Market Economy price controls analysis, Price Controls–Price Controls Producer class for, The Producer–The Producer, The Producer–The Producer simulations for, The Simulation–The Simulation, The Simulation–The Simulation email example, Grab and Parse–Grab and Parse, The Emailing Habits of Enron Executives–The Emailing Habits of Enron Executives, Number of Messages by Day of the Month–Number of Messages by Day of the Month, Number of Messages by Day of the Month–Number of Messages by Hour of the Day, MailMiner–MailMiner, Number of Messages by Day of Week–Number of Messages by Hour of the Day, Interactions–Comparative Interactions, Text Mining–Text Mining charts for, Number of Messages by Day of the Month–Number of Messages by Hour of the Day content of messages, analyzing, Text Mining–Text Mining data for, Grab and Parse–Grab and Parse Enron data for, The Emailing Habits of Enron Executives–The Emailing Habits of Enron Executives interactions in email, analyzing, Interactions–Comparative Interactions number of messages, analyzing, Number of Messages by Day of the Month–Number of Messages by Day of the Month, Number of Messages by Day of Week–Number of Messages by Hour of the Day R package for, creating, MailMiner–MailMiner emergent behavior, The Origin of Boids (see also flocking example) Enron Corporation scandal, The Emailing Habits of Enron Executives Epstein, Joshua (researcher), It’s a Good Life Growing Artificial Societies: Social Science from the Bottom Up (Brookings Institution Press/MIT Press), It’s a Good Life equal sign (=), assignment operator, R, Variables and Functions Euclidean distance, Roids evolution, Evolution example applications, Using Code Examples, Shoes stopwatch–Shoes stopwatch, Shoes doodler–Shoes doodler, The R Console–Sourcing Files and the Command Line, Data frames–Introducing ggplot2, qplot–qplot, Statistical transformation–Geometric object, Adjustments–Adjustments, Offices and Restrooms, A Simple Market Economy, Grab and Parse, My Beating Heart, Schooling Fish and Flocking Birds, Money artificial utopian society, Money (see Utopia example) birds flocking, Schooling Fish and Flocking Birds (see flocking example) doodling, Shoes doodler–Shoes doodler economics, A Simple Market Economy (see economics example) email, Grab and Parse (see email example) fuel economy, qplot–qplot, Adjustments–Adjustments heartbeat, My Beating Heart (see heartbeat example) height and weight, The R Console–Sourcing Files and the Command Line league table, Data frames–Introducing ggplot2 movie database, Statistical transformation–Geometric object permission to use, Using Code Examples restrooms, Offices and Restrooms (see restrooms example) stopwatch, Shoes stopwatch–Shoes stopwatch expressions, R, Programming R external libraries, Ruby, Requiring External Libraries–Requiring External Libraries F factor() function, R, Factors, Text Mining factors, R, Factors–Factors FFmpeg library, Extracting Data from Video, Extracting Data from Video field of vision (FOV), Roids fish, schools of, Schooling Fish and Flocking Birds (see flocking example) flocking example, Schooling Fish and Flocking Birds–The Origin of Boids, The Origin of Boids, Simulation–Simulation, Roids–Roids, The Boid Flocking Rules–Putting in Obstacles, The Boid Flocking Rules–The Boid Flocking Rules, A Variation on the Rules–A Variation on the Rules, Going Round and Round–Going Round and Round, Putting in Obstacles–Putting in Obstacles Boids algorithm for, Schooling Fish and Flocking Birds–The Origin of Boids centering path for, Going Round and Round–Going Round and Round obstacles in path for, Putting in Obstacles–Putting in Obstacles research regarding, A Variation on the Rules–A Variation on the Rules Roid class for, Roids–Roids rules for, The Origin of Boids, The Boid Flocking Rules–The Boid Flocking Rules simulations for, Simulation–Simulation, The Boid Flocking Rules–Putting in Obstacles flows, Shoes, Shoes stopwatch fonts used in this book, Conventions Used in This Book–Conventions Used in This Book for loop, R, Conditionals and Loops format() function, R, Number of Messages by Day of the Month FOV (field of vision), Roids fuel economy example, qplot–qplot, Adjustments–Adjustments function class, R, Programming R functions, R, Variables and Functions–Variables and Functions G GAM (generalized addictive model), The Changes gem command, Ruby, Requiring External Libraries .gem file extension, Requiring External Libraries generalized addictive model (GAM), The Changes Gentleman, Robert (creator of R), Introducing R geom_bar() function, R, Interpreting the Data, The Second Simulation, The Final Simulation geom_histogram() function, R, Geometric object geom_line() function, R, Analyzing the Simulation geom_point() function, R, Plot, Interpreting the Data, Generating the Heart Sounds Waveform geom_smooth() function, R, Interpreting the Data ggplot() function, R, Plot ggplot2 package, R, Introducing ggplot2–Adjustments Gini coefficient, Money Git utility, Ruby Version Manager (RVM) Gmail, retrieving message data from, Grab and Parse–Grab and Parse graphics device, opening, Basic Graphs graphics package, R, Basic Graphs graphs, Charting (see charts) Growing Artificial Societies: Social Science from the Bottom Up (Brookings Institution Press/MIT Press), It’s a Good Life H hash mark, curly brackets (#{ }), enclosing Ruby string escape sequences, Strings hashes, Ruby, Arrays and hashes–Arrays and hashes heart, diagram of, Generating the Heart Sounds Waveform heartbeat example, My Beating Heart, My Beating Heart, My Beating Heart, Homemade Digital Stethoscope, Homemade Digital Stethoscope, Homemade Digital Stethoscope–Extracting Data from Sound, Generating the Heart Sounds Waveform–Generating the Heart Sounds Waveform, Generating the Heart Sounds Waveform, Finding the Heart Rate–Finding the Heart Rate, Homemade Pulse Oximeter–Homemade Pulse Oximeter, Homemade Pulse Oximeter–Extracting Data from Video, Generating the Heartbeat Waveform and Calculating the Heart Rate–Generating the Heartbeat Waveform and Calculating the Heart Rate, Generating the Heartbeat Waveform and Calculating the Heart Rate–Generating the Heartbeat Waveform and Calculating the Heart Rate charts for, Generating the Heart Sounds Waveform–Generating the Heart Sounds Waveform, Generating the Heartbeat Waveform and Calculating the Heart Rate–Generating the Heartbeat Waveform and Calculating the Heart Rate data for, Homemade Digital Stethoscope–Extracting Data from Sound, Homemade Pulse Oximeter–Extracting Data from Video audio from stethoscope, Homemade Digital Stethoscope–Extracting Data from Sound video from pulse oximeter, Homemade Pulse Oximeter–Extracting Data from Video heart rate, My Beating Heart, Finding the Heart Rate–Finding the Heart Rate, Generating the Heartbeat Waveform and Calculating the Heart Rate–Generating the Heartbeat Waveform and Calculating the Heart Rate finding from video file, Generating the Heartbeat Waveform and Calculating the Heart Rate–Generating the Heartbeat Waveform and Calculating the Heart Rate finding from WAV file, Finding the Heart Rate–Finding the Heart Rate health parameters for, My Beating Heart heart sounds, My Beating Heart, My Beating Heart, Homemade Digital Stethoscope, Generating the Heart Sounds Waveform health parameters for, My Beating Heart recording, Homemade Digital Stethoscope types of, My Beating Heart, Generating the Heart Sounds Waveform homemade pulse oximeter for, Homemade Pulse Oximeter–Homemade Pulse Oximeter homemade stethoscope for, Homemade Digital Stethoscope height and weight example, The R Console–Sourcing Files and the Command Line here-documents, Ruby, Strings hex editor, Extracting Data from Sound histograms, Statistical transformation, Geometric object, Money–Money Homebrew tool, Installing Ruby using your platform’s package management tool hyphen (-), Variables and Functions, Variables and Functions -> assignment operator, R, Variables and Functions <- assignment operator, R, Variables and Functions I icons used in this book, Conventions Used in This Book if expression, R, Conditionals and Loops if expression, Ruby, if and unless–if and unless Ihaka, Ross (creator of R), Introducing R ImageMagick library, Extracting Data from Video IMAP (Internet Message Access Protocol), Grab and Parse importing data, R, Importing Data–Importing data from a database inheritance, Ruby, Inheritance–Inheritance initialize method, Ruby, Classes and objects inner product, Roids–Roids installation, Installing Ruby–Installing Ruby using your platform’s package management tool, Installing Shoes–Installing Shoes, Introducing R, Installing packages–Installing packages R, Introducing R R packages, Installing packages–Installing packages Ruby, Installing Ruby–Installing Ruby using your platform’s package management tool Shoes, Installing Shoes–Installing Shoes Internet Message Access Protocol (IMAP), Grab and Parse Internet Message Format, The Emailing Habits of Enron Executives invisible hand metaphor, The Invisible Hand irb application, Running Ruby–Running Ruby J jittering, Adjustments jpeg() function, R, Basic Graphs L Landsburg, Stephen E.

:), in Ruby ternary conditional expression, if and unless R R Development Core Team, Introducing R R language, Packing Your Bags, Introducing R–Introducing R, Introducing R, Introducing R, Using R–Using R, The R Console–The R Console, The R Console, The R Console, Sourcing Files and the Command Line–Sourcing Files and the Command Line, Sourcing Files and the Command Line, Packages–Using packages, Programming R, Variables and Functions, Variables and Functions–Variables and Functions, Variables and Functions–Variables and Functions, Conditionals and Loops, Conditionals and Loops–Conditionals and Loops, Vectors–Vectors, Lists–Lists, Matrices–Matrices, Arrays–Arrays, Factors–Factors, Data frames–Data frames, Importing Data–Importing data from a database, Charting–Adjustments, Basic Graphs, MailMiner–MailMiner arrays, Arrays–Arrays assignment operators, Variables and Functions batch mode, Sourcing Files and the Command Line charting, Charting–Adjustments conditionals, Conditionals and Loops console for, The R Console–The R Console data frames, Data frames–Data frames expressions, Programming R factors, Factors–Factors functions, Variables and Functions–Variables and Functions importing data, Importing Data–Importing data from a database installing, Introducing R lists, Lists–Lists loops, Conditionals and Loops–Conditionals and Loops matrices, Matrices–Matrices output formats, Basic Graphs packages for, Packages–Using packages packages for, creating, MailMiner–MailMiner running, Using R–Using R running code from a file, Sourcing Files and the Command Line–Sourcing Files and the Command Line statistical functions, The R Console variables, Variables and Functions–Variables and Functions vectors, The R Console, Vectors–Vectors version of, Introducing R R-Forge repository, Packages .rb file extension, Running Ruby rbind() function, R, Data frames read() function, R, Importing data from text files read.table() function, R, Interpreting the Data, Number of Messages by Day of the Month repeat loop, R, Conditionals and Loops require statement, Ruby, Requiring External Libraries restrooms example, Offices and Restrooms–The Final Simulation, Offices and Restrooms, The Simple Scenario–The Simple Scenario, The Simple Scenario–The First Simulation, Representing Restrooms and Such, Representing Restrooms and Such, Representing Restrooms and Such, Interpreting the Data–Interpreting the Data, Interpreting the Data–Interpreting the Data, The Second Simulation–The Final Simulation, The Second Simulation, The Second Simulation–The Second Simulation, The Third Simulation–The Third Simulation, The Final Simulation–The Final Simulation charts for, Interpreting the Data–Interpreting the Data, The Second Simulation, The Second Simulation–The Second Simulation, The Third Simulation–The Third Simulation, The Final Simulation–The Final Simulation data results, interpreting, Interpreting the Data–Interpreting the Data Facility class for, Representing Restrooms and Such HSE (Health and Safety Executive) data regarding, Offices and Restrooms modeling, The Simple Scenario–The Simple Scenario Person class for, Representing Restrooms and Such Restroom class for, Representing Restrooms and Such simulations for, The Simple Scenario–The First Simulation, The Second Simulation–The Final Simulation return keyword, R, Variables and Functions return keyword, Ruby, Methods Reynolds, Craig (creator of Boids algorithm), Schooling Fish and Flocking Birds RIFF format, Extracting Data from Sound right angle bracket (>), The R Console, Variables and Functions -> assignment operator, R, Variables and Functions > R console prompt, The R Console RMagick library, Extracting Data from Video, Extracting Data from Video Ruby language, Packing Your Bags, Ruby–Why Ruby, Why Ruby, Installing Ruby–Installing Ruby using your platform’s package management tool, Installing Ruby from source, Running Ruby–Running Ruby, Running Ruby, Running Ruby, Requiring External Libraries–Requiring External Libraries, Strings–Strings, Strings, Arrays and hashes–Arrays and hashes, Arrays and hashes–Arrays and hashes, Arrays and hashes, Symbols, Conditionals and loops–case expression, Loops, Classes and objects–Classes and objects, Classes and objects–Classes and objects, Methods, Class methods and variables, Class methods and variables–Class methods and variables, Inheritance–Inheritance, Inheritance–Inheritance, Inheritance, Inheritance, Code like a duck–Code like a duck, Code like a duck–Code like a duck, Shoes–Shoes doodler, Roids arrays, Arrays and hashes–Arrays and hashes, Arrays and hashes class methods, Class methods and variables class variables, Class methods and variables–Class methods and variables classes, Classes and objects–Classes and objects compiling from source code, Installing Ruby from source conditionals, Conditionals and loops–case expression duck typing, Code like a duck–Code like a duck dynamic typing, Code like a duck–Code like a duck external libraries for, Requiring External Libraries–Requiring External Libraries hashes, Arrays and hashes–Arrays and hashes here-documents, Strings inheritance, Inheritance–Inheritance installing, Installing Ruby–Installing Ruby using your platform’s package management tool interactive tool for, Running Ruby interpreter for, Running Ruby loops, Loops methods, Methods mixin mechanism, Inheritance modules, Inheritance objects, Classes and objects–Classes and objects open classes, Roids running, Running Ruby–Running Ruby Shoes toolkit for, Shoes–Shoes doodler strings, Strings–Strings subclassing, Inheritance–Inheritance symbols, Symbols website for, Why Ruby Ruby Version Manager (RVM), Ruby Version Manager (RVM) RubyGems package manager, Requiring External Libraries RubyInstaller, RubyInstaller RVideo library, Extracting Data from Video RVM (Ruby Version Manager), Ruby Version Manager (RVM) S saccadic masking, Data, Data, Everywhere sample frame, Extracting Data from Sound sample points, Extracting Data from Sound sapply() function, R, Variables and Functions scale_shape_manual() function, Interpreting the Data scale_x_continuous() function, Interpreting the Data scale_y_continuous() function, Interpreting the Data scatterplot, R, The R Console, Sourcing Files and the Command Line scatterplots, Interpreting the Data–Interpreting the Data, The Second Simulation, The Third Simulation–The Third Simulation, The Final Simulation–The Final Simulation, Number of Messages by Day of the Month–Number of Messages by Hour of the Day, Implementation schools of fish, Schooling Fish and Flocking Birds (see flocking example) sd() function, R, The R Console self keyword, Ruby, Class methods and variables seq() function, R, Vectors Shapiro-Wilk test, Money Shoes toolkit, Shoes–Shoes doodler, A Rainbow of Shoes, Installing Shoes–Installing Shoes, Programming Shoes–Shoes doodler, Shoes stopwatch, Shoes stopwatch, Shoes stopwatch, Simulation–Simulation, Roids–Roids flows, Shoes stopwatch installing, Installing Shoes–Installing Shoes programming in, Programming Shoes–Shoes doodler slots, Shoes stopwatch stacks, Shoes stopwatch versions (colors) of, A Rainbow of Shoes simulations, Bringing the World to Us, The Simple Scenario–The First Simulation, The Simple Scenario–The First Simulation, The Second Simulation–The Final Simulation, The Simulation–The Simulation, The Simulation–The Simulation, Simulation–Simulation, The Boid Flocking Rules–Putting in Obstacles economics example, The Simulation–The Simulation, The Simulation–The Simulation flocking example, Simulation–Simulation, The Boid Flocking Rules–Putting in Obstacles Monte Carlo method, The Simple Scenario–The First Simulation restrooms example, The Simple Scenario–The First Simulation, The Second Simulation–The Final Simulation single quotes (' '), enclosing Ruby strings, Strings slots, Shoes, Shoes stopwatch Smith, Adam (author), The Invisible Hand An Inquiry into the Nature and Causes of the Wealth of Nations (University of Chicago Press), The Invisible Hand source() function, R, Sourcing Files and the Command Line square brackets ([ ]), Vectors, Matrices, Data frames accessing subset of R data frame, Data frames enclosing R matrix indexes, Matrices enclosing R vector indexes, Vectors square brackets, double ([[ ]]), enclosing single R vector index, Vectors stacks, Shoes, Shoes stopwatch standard deviation, R, The R Console Standard library, Ruby, Requiring External Libraries Starlings in Flight (STARFLAG) project, A Variation on the Rules statistical functions, R, The R Console, Packages, Interpreting the Data–Interpreting the Data stats package, R, Packages stat_bin() function, R, Statistical transformation, Statistical transformation stethoscope, homemade, Homemade Digital Stethoscope stopwatch example, Shoes stopwatch–Shoes stopwatch String class, Extracting Data from Sound strings, Ruby, Strings–Strings subclassing, Ruby, Inheritance–Inheritance sudo command, Installing Ruby using your platform’s package management tool symbols, Ruby, Symbols T table() function, R, Interpreting the Data, Number of Messages by Day of the Month term-document matrix, Text Mining ternary conditional expression, Ruby, if and unless text document, Text Mining text files, Importing data from text files, Importing data from text files, The Emailing Habits of Enron Executives (see also CSV files) email message data in, The Emailing Habits of Enron Executives importing data from, R, Importing data from text files text mining, Text Mining–Text Mining The Grammar of Graphics (Springer), Introducing ggplot2 tm library, Text Mining U Ubuntu system, installing Ruby on, Installing Ruby using your platform’s package management tool UI toolkits, Shoes toolkit, Shoes–Shoes doodler unless expression, Ruby, if and unless unpack method, String class, Extracting Data from Sound until loop, Ruby, Loops Utopia example, It’s a Good Life, It’s a Good Life, Money–Money, Money–Money, Money–Money, Sex–The Changes, Birth and Death, The Changes–The Changes, Evolution–Implementation, Implementation, Implementation charts for, Money–Money, Implementation data, analyzing, Money–Money, The Changes–The Changes, Implementation evolution added to simulation, Evolution–Implementation flocking roids, as basis for simulation, It’s a Good Life food added to simulation, Money–Money mortality added to simulation, Birth and Death procreation added to simulation, Sex–The Changes research regarding, It’s a Good Life V variables, R, Variables and Functions–Variables and Functions Vector class, Ruby, Roids vectors, R, The R Console, Vectors–Vectors video file, extracting data from, Extracting Data from Video–Extracting Data from Video W WAV files, Homemade Digital Stethoscope, Extracting Data from Sound–Extracting Data from Sound, Extracting Data from Sound extracting to CSV file, Extracting Data from Sound–Extracting Data from Sound format of, Extracting Data from Sound recording audio to, Homemade Digital Stethoscope waveforms, Generating the Heart Sounds Waveform–Generating the Heart Sounds Waveform, Generating the Heartbeat Waveform and Calculating the Heart Rate–Generating the Heartbeat Waveform and Calculating the Heart Rate webcam, pulse oximeter using, Homemade Pulse Oximeter website resources, How to Contact Us, Why Ruby, Installing Ruby from source, Ruby Version Manager (RVM), RubyInstaller, Introducing R, Packages, The Emailing Habits of Enron Executives, The Emailing Habits of Enron Executives Enron email data, The Emailing Habits of Enron Executives for this book, How to Contact Us Internet Message Format, The Emailing Habits of Enron Executives R language, Introducing R R packages, Packages Ruby language, Why Ruby Ruby source code, Installing Ruby from source RubyInstaller, RubyInstaller RVM (Ruby Version Manager), Ruby Version Manager (RVM) weight example, The R Console (see height and weight example) while loop, R, Conditionals and Loops while loop, Ruby, Loops Wickham, Hadley (creator of ggplot2 package), Introducing ggplot2 Wilkinson, Leland (author), Introducing ggplot2 The Grammar of Graphics (Springer), Introducing ggplot2 win.metafile() function, R, Basic Graphs Windows, RubyInstaller, Installing Shoes, Using R, Basic Graphs installing Ruby on, RubyInstaller installing Shoes on, Installing Shoes opening graphics device, Basic Graphs R user interface for, Using R windows() function, R, Basic Graphs with() function, R, Data frames, Importing data from a database write() method, Ruby, The Simulation X X11() function, R, Basic Graphs About the Author Sau Sheong Chang has been in software development, mostly web applications and recently cloud- and data-related systems, for almost 17 years and is still a keen and enthusiastic programmer.


pages: 97 words: 31,550

Money: Vintage Minis by Yuval Noah Harari

23andMe, agricultural Revolution, algorithmic trading, AlphaGo, Anne Wojcicki, autonomous vehicles, British Empire, call centre, credit crunch, DeepMind, European colonialism, Flash crash, Ford Model T, greed is good, job automation, joint-stock company, joint-stock limited liability company, lifelogging, low interest rates, Nick Bostrom, pattern recognition, peak-end rule, Ponzi scheme, self-driving car, Suez canal 1869, telemarketer, The future is already here, The Future of Employment, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, Watson beat the top human players on Jeopardy!, zero-sum game

Today, there is so much credit in the world that governments, business corporations and private individuals easily obtain large, long-term and low-interest loans that far exceed current income. The belief in the growing global pie eventually turned revolutionary. In 1776 the Scottish economist Adam Smith published The Wealth of Nations, probably the most important economics manifesto of all time. In the eighth chapter of its first volume, Smith made the following novel argument: when a landlord, a weaver or a shoemaker has greater profits than he needs to maintain his own family, he uses the surplus to employ more assistants, in order to further increase his profits.

That was the lesson taught by the Mississippi Bubble of 1719, and anyone who forgot it was reminded by the US housing bubble of 2007, and the ensuing credit crunch and recession. The Capitalist Hell THERE IS AN even more fundamental reason why it’s dangerous to give markets a completely free rein. Adam Smith taught that the shoemaker would use his surplus to employ more assistants. This implies that egoistic greed is beneficial for all, since profits are utilised to expand production and hire more employees. Yet what happens if the greedy shoemaker increases his profits by paying employees less and increasing their work hours?


pages: 614 words: 174,226

The Economists' Hour: How the False Prophets of Free Markets Fractured Our Society by Binyamin Appelbaum

90 percent rule, airline deregulation, Alan Greenspan, Alvin Roth, Andrei Shleifer, anti-communist, battle of ideas, Benoit Mandelbrot, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, Celtic Tiger, central bank independence, clean water, collective bargaining, Corn Laws, correlation does not imply causation, Credit Default Swap, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, desegregation, Diane Coyle, Donald Trump, Dr. Strangelove, ending welfare as we know it, financial deregulation, financial engineering, financial innovation, fixed income, flag carrier, floating exchange rates, full employment, George Akerlof, George Gilder, Gini coefficient, greed is good, Greenspan put, Growth in a Time of Debt, Ida Tarbell, income inequality, income per capita, index fund, inflation targeting, invisible hand, Isaac Newton, It's morning again in America, Jean Tirole, John Markoff, Kenneth Arrow, Kenneth Rogoff, land reform, Les Trente Glorieuses, long and variable lags, Long Term Capital Management, low cost airline, low interest rates, manufacturing employment, means of production, Menlo Park, minimum wage unemployment, Mohammed Bouazizi, money market fund, Mont Pelerin Society, Network effects, new economy, Nixon triggered the end of the Bretton Woods system, oil shock, Paul Samuelson, Philip Mirowski, Phillips curve, plutocrats, precautionary principle, price stability, profit motive, public intellectual, Ralph Nader, RAND corporation, rent control, rent-seeking, Richard Thaler, road to serfdom, Robert Bork, Robert Gordon, Robert Solow, Ronald Coase, Ronald Reagan, Sam Peltzman, Savings and loan crisis, Silicon Valley, Simon Kuznets, starchitect, Steve Bannon, Steve Jobs, supply-chain management, The Chicago School, The Great Moderation, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, transaction costs, trickle-down economics, ultimatum game, Unsafe at Any Speed, urban renewal, War on Poverty, Washington Consensus, We are all Keynesians now

The English economist William Petty, whom Karl Marx called the “founder of political economy,” made himself useful, first to the Commonwealth and then to King Charles II, by taking the measure of private wealth to inform and justify the state’s growing reliance on taxation.20 Partisans began to rely on the language of economics to muster public support for their views, and to shift government policy. The first great work of economics, published in 1776, was called The Wealth of Nations because Adam Smith had a recipe for increasing that wealth: free markets and free trade. A few decades later, in 1817, the economist David Ricardo sharpened the point, arguing that nations could prosper by abandoning production of some goods and focusing on areas of “comparative advantage.” The other stuff could then be imported.

Mostly it is ignored.”32 Stigler said people made imperfect decisions because information had a price, just like anything else. People were unlikely to invest the necessary time and energy to thoroughly research the cost of toothpaste. One implication, Stigler argued in a 1964 paper, was that the government should worry less about corporate concentration. The paper was a direct rebuttal of a sacred text, Adam Smith’s The Wealth of Nations, in which Smith famously observed, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” By the 1960s, this observation had been formalized by academics who shared the prevailing distrust of markets, and adopted as policy by the federal government, which assumed that the odds of collusion increased as competition declined.

“From the business standpoint, they are patent factories: They manufacture the raw material of monopoly.”44 In a 1954 book, Fair Competition, he defended the idea that the government should protect small business at the expense of consumers. “One cannot simply equate the ‘public interest’ in a democracy with the ‘consumer interest,’ ” he wrote. Adam Smith had famously asserted that consumption was the purpose of production. Kahn rejoined that this was “not true, even though Adam Smith said it.” People, he wrote, also had interests as producers and as “citizens of an urbanized civilization.”45 It was not good for a factory town to lose its factories. Kahn’s most important book, The Economics of Regulation (1970), was a sweeping critique of the practice of regulation — and a defense of the value of effective regulation.


pages: 497 words: 150,205

European Spring: Why Our Economies and Politics Are in a Mess - and How to Put Them Right by Philippe Legrain

3D printing, Airbnb, Alan Greenspan, Asian financial crisis, bank run, banking crisis, barriers to entry, Basel III, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, book value, Boris Johnson, Bretton Woods, BRICs, British Empire, business cycle, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Carmen Reinhart, Celtic Tiger, central bank independence, centre right, clean tech, collaborative consumption, collapse of Lehman Brothers, collective bargaining, corporate governance, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Crossrail, currency manipulation / currency intervention, currency peg, debt deflation, Diane Coyle, disruptive innovation, Downton Abbey, Edward Glaeser, Elon Musk, en.wikipedia.org, energy transition, eurozone crisis, fear of failure, financial deregulation, financial engineering, first-past-the-post, Ford Model T, forward guidance, full employment, Gini coefficient, global supply chain, Great Leap Forward, Growth in a Time of Debt, high-speed rail, hiring and firing, hydraulic fracturing, Hyman Minsky, Hyperloop, immigration reform, income inequality, interest rate derivative, Intergovernmental Panel on Climate Change (IPCC), Irish property bubble, James Dyson, Jane Jacobs, job satisfaction, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, labour market flexibility, labour mobility, land bank, liquidity trap, low interest rates, margin call, Martin Wolf, mittelstand, moral hazard, mortgage debt, mortgage tax deduction, North Sea oil, Northern Rock, offshore financial centre, oil shale / tar sands, oil shock, open economy, peer-to-peer rental, price stability, private sector deleveraging, pushing on a string, quantitative easing, Richard Florida, rising living standards, risk-adjusted returns, Robert Gordon, savings glut, school vouchers, self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, Skype, smart grid, smart meter, software patent, sovereign wealth fund, Steve Jobs, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, Tyler Cowen, Tyler Cowen: Great Stagnation, working-age population, Zipcar

While many excellent economists have shed light on a wide variety of subjects, we still have only a sketchy grasp of how economies work – and what passes for economic “science” is often bunk. Fortunately, technological progress doesn’t depend on our economic understanding of why it occurs – although it can be stunted by bad policies. Political economy – as it was then called – emerged in the eighteenth century, when the Scottish philosopher Adam Smith pursued “an inquiry into the nature and causes of the wealth of nations”.538 His key insight – that competition between selfish profit-seeking producers tends to advance the common good – is profound and often true.539 At the time, political economy was descriptive, analytical and firmly anchored in a political and social context.

This wouldn’t reduce the supply of land, which is fixed and immovable: Mayfair can’t be spirited away to a tax haven. Nor would it push up rents, which depend on what tenants are prepared to pay rather than landlords’ expenses.725 Thus, unlike most taxes, it wouldn’t crimp economic activity, as Adam Smith explained in The Wealth of Nations. On the contrary, a land tax would encourage development. Since it would be payable irrespective of how land is used, it would stimulate the regeneration of derelict and unused sites. Infrastructure investment that raises surrounding land values, such as new Tube (metro) lines or a high-speed rail network, would pay for itself and thus escape short-sighted budget cuts.

In the UK it was $24,119. www.gapminder.org 530 GDP per person in Estonia was $7,734 in 1994 and $18,858 in 2012 in 2005 dollars adjusted for differences in purchasing power. www.gapminder.org 531 GDP per person in Estonia was $6,976 in 1994 and $11,058 in 2012 in 2005 dollars adjusted for differences in purchasing power. www.gapminder.org 532 GDP per person in Ireland was $38,856 in 2005 dollars adjusted for differences in purchasing power in 2012, up from $18,869 in 1994. www.gapminder.org 533 GDP per person in Spain was $26,458 in 2005 dollars adjusted for differences in purchasing power in 2012, up from $18,783 in 1994. www.gapminder.org 534 GDP per person in Britain was $31,295 in 2005 dollars adjusted for differences in purchasing power in 2012, up from $24,119 in 1994. www.gapminder.org 535 Kaja Bonesmo Fredriksen, “Income Inequality in the European Union”, OECD Economics Department Working Papers, No. 952, 2012. http://dx.doi.org/10.1787/5k9bdt47q5zt-en 536 Personal calculations from Eurostat, median equivalised net income, at purchasing power standard. Code: ilc_di03 537 Personal calculations from Eurostat, income of first decile, top cut-off point, at purchasing power standard Code: ilc_di01 538 Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 1776 539 In The Theory of Moral Sentiments (1759), Smith also argued that people had regard for others: “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.


What Kind of Creatures Are We? (Columbia Themes in Philosophy) by Noam Chomsky

Affordable Care Act / Obamacare, Albert Einstein, Arthur Eddington, Brownian motion, classic study, conceptual framework, en.wikipedia.org, failed state, Great Leap Forward, Henri Poincaré, Isaac Newton, Jacques de Vaucanson, language acquisition, liberation theology, mass incarceration, means of production, phenotype, Ronald Reagan, The Wealth of Nations by Adam Smith, theory of mind, Turing test, wage slave

., with introduction, James McGilvray (Cambridge: Cambridge University Press, 2009); and Javier Virués Ortega, “Juan Huarte de San Juan in Cartesian and Modern Psycholinguistics: An Encounter with Noam Chomsky,” Psicothema 17, no. 3 (2005): 436–40, http://www.psicothema.com/pdf/3125.pdf. 3. WHAT IS THE COMMON GOOD? 1. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, ed. Edwin Cannan (1776; Chicago: University of Chicago Press, 1976), book 5, chap. 1, part 3, art. 2 (ii, 302–3). 2. Adam Smith, The Theory of Moral Sentiments (1759; New York: Penguin, 2009); “vile maxim”: Smith, Wealth of Nations, book 3, chap. 4 (i, 437). 3. Rudolf Rocker, Anarcho-Syndicalism: Theory and Practice (London: Secker and Warburg, 1938). 4.

The words are quoted from Wilhelm von Humboldt, one of the founders of classical liberalism among many other accomplishments. It follows that institutions that constrain such human development are illegitimate, unless they can somehow justify themselves. Humboldt was expressing views that were familiar during the Enlightenment. Another illustration is Adam Smith’s sharp critique of division of labor, and particularly his reasons.1 In his words, “The understandings of the greater part of men are necessarily formed by their ordinary employments,” and that being so, the man whose life is spent in performing a few simple operations, of which the effects too are, perhaps, always the same, or very nearly the same, has no occasion to exert his understanding… and generally becomes as stupid and ignorant as it is possible for a human creature to be….


pages: 7,371 words: 186,208

The Long Twentieth Century: Money, Power, and the Origins of Our Times by Giovanni Arrighi

anti-communist, Asian financial crisis, barriers to entry, Bretton Woods, British Empire, business climate, business logic, business process, classic study, colonial rule, commoditize, Corn Laws, creative destruction, cuban missile crisis, David Ricardo: comparative advantage, declining real wages, deindustrialization, double entry bookkeeping, European colonialism, Fairchild Semiconductor, financial independence, financial intermediation, floating exchange rates, gentrification, Glass-Steagall Act, Great Leap Forward, income inequality, informal economy, invisible hand, joint-stock company, Joseph Schumpeter, Kōnosuke Matsushita, late capitalism, London Interbank Offered Rate, means of production, Meghnad Desai, military-industrial complex, Money creation, money: store of value / unit of account / medium of exchange, new economy, offshore financial centre, oil shock, Peace of Westphalia, post-Fordism, profit maximization, Project for a New American Century, RAND corporation, reserve currency, scientific management, spice trade, Strategic Defense Initiative, Suez canal 1869, the market place, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, trade route, transaction costs, transatlantic slave trade, transcontinental railway, upwardly mobile, vertical integration, Yom Kippur War

This extraordinary capacity was a manifestation of hegemony — that is, of the capacity to claim with credibility that the expansion of UK power served not just UK national interest but a “universal” interest as well. Central to this hegemonic claim was a distinction between the power of rulers and the “wealth of nations” subtly drawn in the liberal ideology propagated by the British intelligentsia. In this ideology, the expansion of the power of British rulers relative to other rulers was presented as the motor force of a general expansion of the wealth of nations. Free trade might undermine the sovereignty of rulers, but it would at the same time expand the wealth of their subjects, or at least of their propertied subjects. The appeal and credibility of this claim were based on systemic circumstances created by the revolutionary upheavals of 1776-1848.

(Marx 1959: 754-5) Marx’s focus on the domestic aspects of capital accumulation prevented him from appreciating the continuing significance of national debts in a system of states in constant competion with one another for assistance from capitalists for their power pursuits. For Marx, the alienation of the assets and future revenues of states was simply an aspect of “primitive accumulation” — Adam Smith’s “previous accumulation,” “an accumulation not the result of the capitalist mode of production, but its starting point” (Marx 1959: 713). Nevertheless, Marx did acknowledge the continuing significance of national debts, not as the expression of interstate competition, but as means of an “invisible” inter-capitalist cooperation, which “started” capital accumulation over and over again across the space—time of the capitalist world-economy from its inception through his own day: With the national debt arose an international credit system, which often conceals one of the sources of primitive accumulation in this or that people.

Or, to rephrase it, do the structures of US capitalism constitute the ultimate limit of the six centuries-long process through which capitalist power has attained its present, seemingly allencompassing scale and scope? In seeking plausible answers to these questions, the complementary insights of Weber and Marx concerning the role of high finance in the modern era must be supplemented by Adam Smith’s insights concerning the process of world market formation. Like Marx after him, Smith saw in the European “discoveries” of America and of a passage to the East Indies via the Cape of Good Hope a decisive turning point in world history. He 20 THE LONG TWENTIETH CENTURY was none the less far less sanguine than Marx about the ultimate benefits of these events for humanity: Their consequences have already been great; but, in the short period of between two and three centuries which has elapsed since these discoveries were made, it is impossible that the whole extent of their consequences can have been seen.


Falling Behind: Explaining the Development Gap Between Latin America and the United States by Francis Fukuyama

Andrei Shleifer, Atahualpa, barriers to entry, Berlin Wall, British Empire, business climate, Cass Sunstein, central bank independence, collective bargaining, colonial rule, conceptual framework, creative destruction, crony capitalism, European colonialism, Fall of the Berlin Wall, first-past-the-post, Francis Fukuyama: the end of history, Francisco Pizarro, Hernando de Soto, income inequality, income per capita, land reform, land tenure, Monroe Doctrine, moral hazard, New Urbanism, oil shock, open economy, public intellectual, purchasing power parity, rent-seeking, Ronald Reagan, The Wealth of Nations by Adam Smith, total factor productivity, trade liberalization, transaction costs, upwardly mobile, Washington Consensus, zero-sum game

In a land where a free government Why Institutions Matter 231 was not favored by tradition and whose people “bereft of public spirit” survived in a state of distrust, the best thing was to cut one’s losses and not apply direct taxes (moreover, according to Alberdi, the experience of direct taxes during the Rosas dictatorship had been disastrous).22 Hamilton’s and Alberdi’s recommendations contained some maxims well known to that class of legislators since Adam Smith, in 1776, had stipulated in The Wealth of Nations four principles common to all taxes generally. First, citizens should pay in proportion to their incomes; second, the tax that each individual is obligated to pay should be “certain, and not arbitrary”; third, every tax ought to be “levied at the time, or in the manner, in which it is most likely to be convenient for the contributor to pay it”; and, fourth, the administration for collecting taxes should not be excessive nor facilitate evasion.23 In sum, equality, certainty, ease of payment, and restraint in what could be called the economy of tax collection were for Adam Smith the four cardinal points of sound fiscal policy.

Juan Bautista Alberdi, Sistema económico y rentístico de la Confederación Argentina según su Constitución de 1853 (Buenos Aires: La Cultura Argentina, 1921 [1855]), p. 20. Ibid., p. 178. Ibid., p. 199. Ibid., p. 198. Ibid., p. 195. Institutional Factors in Latin America’s Development 22. Ibid., p. 193. 23. Adam Smith, The Wealth of Nations, vol. 2, edited by Edwin Cannan ( New York: Putnam’s, 1904), book 5, chapter 2, part 2, pp. 310–311. 24. Ibid., p. 312. 25. Ibid., citing Henry Home, Lord Kames, Sketches of the History of Man, vol. 1 (1774), p. 474. 26. Immanuel Kant, The Metaphysical Elements of Justice (1965), pp. 92–93, cited in Stephen Holmes, Passions and Constraint: On the Theory of Liberal Democracy (Chicago: University of Chicago Press, 1995), pp. 249–250. 27.

First, citizens should pay in proportion to their incomes; second, the tax that each individual is obligated to pay should be “certain, and not arbitrary”; third, every tax ought to be “levied at the time, or in the manner, in which it is most likely to be convenient for the contributor to pay it”; and, fourth, the administration for collecting taxes should not be excessive nor facilitate evasion.23 In sum, equality, certainty, ease of payment, and restraint in what could be called the economy of tax collection were for Adam Smith the four cardinal points of sound fiscal policy. Note that they point to both the objective dimension (the legislature establishes them) and the subjective dimension (the citizen abides by them), and they do not discriminate as to the differing qualities attributed to direct or indirect taxes. Clearly, what concerned Adam Smith were the principles of justice contained in the laws and their consequences: “[t]he law, contrary to all the ordinary principles of justice, first creates the temptation, and then punishes those who yield to it; and it commonly enhances the punishment too in proportion to the very circumstance which ought certainly to alleviate it, the temptation to commit the crime.”24 One should underscore that this vindication of justice is mainly tied to the principle of fiscal proportionality.


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Humankind: A Hopeful History by Rutger Bregman

"Hurricane Katrina" Superdome, Airbnb, Anton Chekhov, basic income, behavioural economics, Berlin Wall, bitcoin, Bletchley Park, Broken windows theory, call centre, data science, David Graeber, domesticated silver fox, Donald Trump, Easter island, experimental subject, fake news, Fall of the Berlin Wall, Frederick Winslow Taylor, Garrett Hardin, Hans Rosling, invention of writing, invisible hand, knowledge economy, late fees, Mahatma Gandhi, mass incarceration, meta-analysis, Milgram experiment, mirror neurons, Nelson Mandela, New Journalism, nocebo, placebo effect, Rutger Bregman, scientific management, sharing economy, Shoshana Zuboff, Silicon Valley, social intelligence, Stanford prison experiment, Stephen Fry, Stephen Hawking, Steve Jobs, Steven Pinker, surveillance capitalism, TED Talk, The Spirit Level, The Wealth of Nations by Adam Smith, Tragedy of the Commons, transatlantic slave trade, tulip mania, universal basic income, W. E. B. Du Bois, World Values Survey

Many scholars have thus come to regard the extermination of six million Jews as not only the height of brutality, but of modernity.9 The Enlightenment’s contradictions stand out when we examine its portrayal of human nature. On the face of it, philosophers like David Hume and Adam Smith took a cynical view. Modern capitalism, democracy and the rule of law are all founded on the principle that people are selfish. But if you actually read their books you come to realise that Enlightenment authors were not diehard cynics at all. Seventeen years before publishing The Wealth of Nations (destined to become the capitalist bible), Adam Smith wrote a volume titled The Theory of Moral Sentiments. In it, we find passages like this one: How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.

If there was one sin that Enlightenment thinkers espoused, it was greed, which they trumpeted under the motto ‘private vices, public benefits’.3 This stood for the ingenious notion that behaviour which was antisocial at the individual level could have payoffs for wider society. Enlightenment economist Adam Smith set out this idea in his classic The Wealth of Nations (1776), which was the first book to defend the principles of the free market. In it, he famously wrote: ‘It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity, but to their self-love, and never talk to them of our own necessities, but of their advantages.’

A Short History of Drugs and War (Oxford, 2016). 45Lee, Up Close and Personal, p. 27. 46Snipers much more often belong to the 1 to 2 per cent of soldiers who are psychopaths and have no natural aversion to killing. See Susan Neiman, Moral Clarity. A Guide for Grown-Up Idealists (Princeton, 2008), p. 372. 47Dave Grossman, ‘Hope on the Battlefield’, in Dacher Keltner, Jason Marsh and Jeremy Adam Smith (eds), The Compassionate Instinct. The Science of Human Goodness (New York, 2010), p. 41. 48Grossman, On Killing, p. 178. 49Many soldiers who fought in the First and Second World Wars were also traumatised; however, Vietnam was comparatively much more traumatic. Of course, other factors were also to blame (such as the chilly reception Vietnam vets received on their return), but all the evidence suggests that the biggest was how the soldiers were conditioned to kill.


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Tenants: The People on the Frontline of Britain's Housing Emergency by Vicky Spratt

Airbnb, Albert Einstein, basic income, Big bang: deregulation of the City of London, Black Lives Matter, Boris Johnson, British Empire, Buy land – they’re not making it any more, call centre, Capital in the Twenty-First Century by Thomas Piketty, centre right, clean water, coronavirus, COVID-19, credit crunch, cryptocurrency, edge city, en.wikipedia.org, full employment, garden city movement, gender pay gap, gentrification, gig economy, global pandemic, housing crisis, Housing First, illegal immigration, income inequality, Induced demand, Jane Jacobs, Jeremy Corbyn, land bank, land reform, land value tax, lockdown, longitudinal study, low interest rates, mass immigration, mega-rich, meta-analysis, negative equity, Overton Window, Own Your Own Home, plutocrats, quantitative easing, rent control, Right to Buy, Rishi Sunak, Rutger Bregman, side hustle, social distancing, stop buying avocado toast, the built environment, The Death and Life of Great American Cities, The Spirit Level, The Wealth of Nations by Adam Smith, trickle-down economics, universal basic income, urban planning, urban renewal, working-age population, young professional, zero-sum game

Drawing attention to the precarity of the status quo when it comes to housing is contentious; whether they are hedge fund investors, cryptocurrency speculators or landlords, those who speculate to make something out of nothing the world over don’t like to be challenged on the mechanisms which facilitate it. ‘As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed,’ the economist Adam Smith wrote in 1776 in his book The Wealth of Nations, ‘and demand a rent even for its natural produce.’ However, it is important to get something straight: the problem with the private rented sector is not that it is entirely a scam in which landlords are de facto screwing over tenants (although, as this book will expose in later chapters, there are rogue landlords who do exactly this).

Available at www.ethnicity-facts-figures.service.gov.uk/housing/owning-and-renting/renting-from-a-private-landlord/latest The number of families who became homeless: Shelter, ‘Over half of homeless families in England are in work, shock new figures show’, 23 July 2018, england.shelter.org.uk/media/press_release/over_half_of_homeless_families_in_england_are_in_work,_shock_new_figures_show most of which are privately owned: Vicky Spratt, ‘Welcome to Eros House, where desperate families are forced to live in “inhumane” flats that cost up to £380 per week’, i Paper, 14 December 2018, inews.co.uk/opinion/the-mould-is-in-my-childs-bed-the-families-temporarily-housed-in-dilapidated-former-office-block-are-still-there-one-year-later-235452 a 430 per cent increase: ‘LGA – 430% increase in B&B spend for people who are homeless reveals urgency for more social housing’, Local Government Association, 3 July 2021, www.local.gov.uk/about/news/lga-430-increase-bb-spend-people-who-are-homeless-reveals-urgency-more-social-housing the right to adequate housing: The Right to Adequate Housing: Fact Sheet No. 21/Rev.1, UN-Habitat (2014), www.ohchr.org/documents/publications/fs21_rev_1_housing_en.pdf One third of all households in poverty: Alison Wallace, David Rhodes and Firona Roth, ‘Home owners and poverty’, Joseph Rowntree Foundation, 15 February 2018, www.jrf.org.uk/report/home-owners-and-poverty ‘and demand a rent even for its natural produce.’: Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776), Book 1, Chapter 6. Available online at geolib.com/smith.adam/won1-06.html the unconditional and unqualified ownership of property: Jean-Jacques Rousseau, The Social Contract (1762; London: Penguin, 2004). 1,187,641 households: ‘Shelter: 1.15 million households stuck on social housing waiting lists, while there was a net loss of over 17,000 social homes in the last year’, PolicyMogul, 28 January 2020, policymogul.com/monitor/key-updates/6587/shelter-1-15-million-households-stuck-on-social-housing-waiting-lists-while-there-was-a-net-loss-of-over-17-000-social-homes-in-the-last-year 6,850 social homes were sold off: You’ll notice a slight decline in the number of Right to Buy sales here between 2020 and 2021.

And yet, because of the financialisaton of housing, tenants have been turned into consumers: they pay landlords to provide a service – housing. But the truth is we have often more rights as consumers when we rent a car, buy a fridge-freezer or take out a loan than we do as private renters. Even free marketeer think tanks such as the Adam Smith Institute have begun to criticise this in recent years, calling for the consumer rights we’re used to having in other markets, from utilities to financial services, to be applied to the private rented sector. ‘It’s so hopeless,’ Amy said, sighing. ‘It takes him weeks and weeks to do anything. And then, when he does call workmen and get them to come over, they always ask me for payment.


Affluence Without Abundance: The Disappearing World of the Bushmen by James Suzman

access to a mobile phone, agricultural Revolution, Anthropocene, back-to-the-land, clean water, discovery of the americas, equal pay for equal work, European colonialism, full employment, invention of agriculture, invisible hand, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, means of production, Occupy movement, open borders, out of africa, post-work, quantitative easing, rewilding, The Chicago School, The Future of Employment, The Wealth of Nations by Adam Smith, trade route, trickle-down economics, unemployed young men, We are the 99%

This was because, among foraging Ju/’hoansi, self-interest was always policed by its shadow, jealousy, and jealousy in turn ensured that everyone got their fair share. Jealousy was the “invisible hand” of the Ju/’hoan social economy. Yet it exerted its influence very differently from the “invisible hand” famously imagined by Adam Smith in The Wealth of Nations. For Smith, man “intends only his own gain,” but in doing so he is guided by an invisible hand “to promote an end which was no part of his intention.” And this, according to Smith, is to promote the interests of society more effectively than man could, even if he had intended to. Smith believed that trade and enterprise in pursuit of personal enrichment and unburdened by regulatory interference ensured the fairest and most effective “distribution of the necessaries of life” and so advanced the interests of society.

Schuster, “Khoisan Hunter-Gatherers Have Been the Largest Population Throughout Most of Modern-Human Demographic History.” Nature Communications 5, article no. 5692 (December 4, 2014). Chapter 3: A Beachside Brawl 1   E. G. Ravenstein, trans., A Journal of the First Voyage of Vasco da Gama (Cambridge, MA: Cambridge University Press, 2010), 1497–99. 2   Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, vol. 1 (London: W. Strahan, 1776). Chapter 4: The Settlers 1   Noel Mostert, Frontiers (London: Jonathan Cape, 1992), 110. 2   R. Raven-Hart, The Cape of Good Hope, 1652–1702: The First Fifty Years of Dutch Colonisation as Seen by Callers (Cape Town: A. A. Balkema, 1971), 205. 3   Mostert, Frontiers, 115. 4   Ibid., 117. 5   Ibid., 118. 6   Robert Moffat, Missionary Labours and Scenes in Southern Africa (New York: Robert Carter, 1843), 54, 59. 7   Thomas Smith and John O.

In tandem with Christopher Columbus’s accidental discovery of the Americas, da Gama’s voyage to the Indies would later be hailed as the “big bang” of economic globalization—the moment that catalyzed the transformation of the world from a series of often discrete economic communities into a single complex and multifaceted economic system. Articulating a view that would later be reaffirmed by many others, Adam Smith, the “father of economics,” declared da Gama’s voyage and Columbus’s “discovery” of the Americas to be “the two greatest and most important events recorded in the history of mankind.”2 Whether this particular moment was more important than any others in the emergence of a globalized economy is debatable.


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About Time: A History of Civilization in Twelve Clocks by David Rooney

Albert Einstein, Boeing 747, Boris Johnson, British Empire, Charles Babbage, classic study, cloud computing, colonial rule, COVID-19, Danny Hillis, Doomsday Clock, European colonialism, Ford Model T, friendly fire, High speed trading, interchangeable parts, Islamic Golden Age, James Watt: steam engine, John Harrison: Longitude, joint-stock company, Kevin Kelly, Kickstarter, Korean Air Lines Flight 007, Lewis Mumford, low skilled workers, Nelson Mandela, Ronald Reagan, Scramble for Africa, Seymour Hersh, smart grid, Stewart Brand, The Wealth of Nations by Adam Smith, transatlantic slave trade, Whole Earth Catalog, women in the workforce, éminence grise

But though he hated the apparent isolation of the Cape, and returned to Britain a few months later, Thomas Henderson was proud to play his role in Britain’s growing prosperity. With his clocks and his gun, he was helping the ships of the British Empire move defiantly and freely across the globe. THE ECONOMIST ADAM Smith said that the discovery of a sea route between Europe and Asia via the Cape of Good Hope was one of the two “greatest and most important events recorded in the history of mankind” (the other was the so-called discovery of America).2 He was writing about what made nations rich, and his book The Wealth of Nations was published on March 9, 1776. Fifteen days later, John Harrison died, having invented the marine chronometer. Southern Africa was one of so many places in the world where the maritime expansion of Western empires was keenly, repeatedly and violently felt.

., 2015), 124. 2.Sharma, Sawai Jai Singh, 290–91. 3.Quoted in Susan Johnson-Roehr, “The Spatialization of Knowledge and Power at the Astronomical Observatories of Sawai Jai Singh II, c. 1721–1743 CE” (Urbana: University of Illinois at Urbana-Champaign, 2011), 228. 4.Quoted in Raymond Mercier, “Account by Joseph Dubois of Astronomical Work under Jai Singh Sawā’ī,” Indian Journal of History of Science 28, no. 2 (1993): 162. 5.Quoted in “Full Text: ‘Bin Laden’s Message,’” BBC News, 12 November 2002, http://news.bbc.co.uk/1/hi/world/middle_east/2455845.stm. 6.Translated from the French original quoted in René Taton, “Les Origines et les débuts de l’Observatoire de Paris,” Vistas in Astronomy 20 (1976): 67. 7.Bernard Lovell, The Story of Jodrell Bank (New York and Evanston, Ill.: Harper & Row, 1968), 196. 6. EMPIRES 1.Quoted in Brian Warner, Astronomers at the Royal Observatory Cape of Good Hope: A History with Emphasis on the Nineteenth Century (Cape Town: A. A. Balkema, 1979), 34. 2.Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Vol. II (London, 1776), 235. 3.Robert Percival, An Account of the Cape of Good Hope (London, 1804), 9. 4.David Gill, A History and Description of the Royal Observatory, Cape of Good Hope (London: HMSO, 1913), x. 5.Quoted in Warner, Astronomers at the Royal Observatory, 34. 6.Quoted in Brian Warner, Royal Observatory, Cape of Good Hope 1820–1831: The Founding of a Colonial Observatory (Dordrecht: Kluwer Academic Publishers, 1995), 180–81. 7.John Cannon, “Masons,” Cape Town Gazette and African Advertiser, August 12, 1825, 2. 8.Quoted in Warner, Royal Observatory, Cape of Good Hope 1820–1831, 182. 9.Quoted in Brian Warner, Charles Piazzi Smyth, Astronomer-Artist: His Cape Years 1835–1845 (Cape Town: A.

., 162 Thorndike, Sybil, 178 Thwaites and Reed, 202, 202 time passage of, 58–59 wasting, 40–41 time balls, 99–100, 103, 104–5, 124–25 time capsules, 214–17, 215, 223, 226 timescales, 76–77 time-stamping, 75–77, 79, 81 time standardization clockmaking trade changes and, 132 electric clocks and, 144–46, 148, 149, 153–54 imperialism/colonialism and, 174–75 observatories and, 97 public control and, 153, 156–57, 161 pubs and, 149–51 railways and, 146–48, 161 resistance against, 166 working hours and, 151–53 See also Greenwich Mean Time tomb of Henri-Claude d’Harcourt (Jean-Baptiste Pigalle), 59–60 Tomorrow Never Dies, 213 Toms, Daniela, 188 Tower of the Winds (Athens), 12–14, 13 transits, 111 Treatise of Self-Denial, A (Richard Baxter), 40 Triumph of Death, The (Pieter Bruegel), 61–62, 61 “Triumph of Time” (Petrarch), 58–59 Tryon, George, 179–80 “Tyranny of the Clock, The” (George Woodcock), 161 Ulugh Beg (Timurid ruler), 91–92 Valerius, Manius, 9, 10, 12 vanitas pictures, 62–63 Varro, Marcus Terentius, 53 Venezuela, 193 Verhoef, Henk, 68 Victoria (queen of England), 126 Victorian culture, 121–27 commerce and, 121, 122–24, 125–26, 127 modernity and, 125, 128, 135, 149 morality and, 150 navigation and, 124–25 regulators and, 126–27 Vidyādhar, 83–84 virtue Lorenzetti on, 46–51, 52, 54, 55 temperance as, 53–55 See also morality war astronomy and, 94–96 Daylight Saving Time and, 155, 203–4 GPS clocks and, 199, 204, 207–9 nuclear missiles, 202–3 Osaka time capsule and, 217 political identity and power and, 190–92 postmodern, 205–6 rolling ball clocks and, 201–2 terrorism and, 206–7 wristwatches and, 203 war on terror, 206–7 wasting time, 40–41 watches invention of, 40 Puritanism and, 40–41 war and, 203 water clocks ancient Greece, 12 ancient Rome, 12 Baghdad, Iraq, 29 castle clock, Diyār Bakr, 26–29, 27, 43 Damascus, Syria, 29 earliest use of, 15 Fez, Morocco, 29 Goths, 14 hourglasses and, 51 monastery use, 30, 32 Tlemcen, Algeria, 29 Watt, James, 130 Wealth of Nations, The (Adam Smith), 100 Webb, Sidney, 151 Wedgwood, Josiah, 130, 164 Whitehurst, John, 164 Willett, William, 153–55, 156 Williams, Laura, 222 Winne, St. Andrew St. John, 155 wireless time signals, 116–17, 147 Woodcock, George, 161 working hours, 151–53, 162–64 world-time clocks, 114–16, 115 World War I, 155, 203, 204 World War II, 38, 204, 217 Worshipful Company of Clockmakers, 7 wristwatches, 203 Wu Hung, 25 Wysocka, Lidia, 183 Yun Yu, 194 Zohar, 31 Copyright © 2021 by David Rooney The credits on pp. 259–260 constitute an extension of this copyright page.


pages: 295 words: 87,204

The Capitalist Manifesto by Johan Norberg

AltaVista, anti-communist, barriers to entry, Berlin Wall, Bernie Sanders, Big Tech, Boris Johnson, business climate, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, carbon tax, Charles Babbage, computer age, coronavirus, COVID-19, creative destruction, crony capitalism, data is not the new oil, data is the new oil, David Graeber, DeepMind, degrowth, deindustrialization, Deng Xiaoping, digital map, disinformation, Donald Trump, Elon Musk, energy transition, Erik Brynjolfsson, export processing zone, failed state, Filter Bubble, friendshoring, gig economy, Gini coefficient, global supply chain, Google Glasses, Greta Thunberg, Gunnar Myrdal, Hans Rosling, Hernando de Soto, Howard Zinn, income inequality, independent contractor, index fund, Indoor air pollution, industrial robot, Intergovernmental Panel on Climate Change (IPCC), invention of the printing press, invisible hand, Jeff Bezos, Jeremy Corbyn, job automation, job satisfaction, Joseph Schumpeter, land reform, liberal capitalism, lockdown, low cost airline, low interest rates, low skilled workers, Lyft, manufacturing employment, Mark Zuckerberg, means of production, meta-analysis, Minecraft, multiplanetary species, Naomi Klein, Neal Stephenson, Nelson Mandela, Network effects, open economy, passive income, Paul Graham, Paul Samuelson, payday loans, planned obsolescence, precariat, profit motive, Ralph Nader, RAND corporation, rent control, rewilding, ride hailing / ride sharing, Ronald Coase, Rosa Parks, Salesforce, Sam Bankman-Fried, Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, Snapchat, social distancing, social intelligence, South China Sea, Stephen Fry, Steve Jobs, tech billionaire, The Spirit Level, The Wealth of Nations by Adam Smith, TikTok, Tim Cook: Apple, total factor productivity, trade liberalization, transatlantic slave trade, Tyler Cowen, Uber and Lyft, uber lyft, ultimatum game, Virgin Galactic, Washington Consensus, working-age population, World Values Survey, X Prize, you are the product, zero-sum game

Michael Hicks & Srikant Devaraj, ‘The myth and reality of manufacturing in America’, Center for Business and Economic Research, Ball State University, 2015. 4. ‘China’s future economic potential hinges on its productivity’, The Economist, 14 August 2021. 5. Philippe Aghion, Céline Antonin & Simon Bunel, The Power of Creative Destruction: Economic Upheaval and the Wealth of Nations, Belknap Press, 2021, p.51f. 6. S. L. Price, Playing Through the Whistle, First Grove Atlantic, 2016, chap.11. 7. J. D. Vance, Hillbilly Elegy: A Memoir of a Family and Culture in Crisis, William Collins, 2016, p.55. 8. Daniel Clark, ‘Detroit autoworkers’ elusive post-war boom’, The Metropol Blog. 9.

US Bureau of Labor Statistics, ‘Quarterly census of employment and wages: Employment and wages, annual averages 2019’, Table 4, www.bls.gov/cew/publications/employment-and-wages-annual-averages/2019/home.htm. 4. Autor et al 2017. 5. Philippe Aghion, Céline Antonin & Simon Bunel, The Power of Creative Destruction: Economic Upheaval and the Wealth of Nations, Belknap Press, 2021, p.66f. 6. Esteban Rossi-Hansberg and Chang-Tai Hsieh, ‘The industrial revolution in services’, NBER Working Paper no.25968, June 2019. See also Ryan Bourne, ‘Does rising industry concentration signify monopoly power?’, Economic Policy Brief, no.2, 13 February 2020, Cato Institute. 7.

This was ‘crossing the river by touching the stones’ as Deng put it, and it was the Chinese people who had put the stones in the right place. The economist Weiying Zhang says the reform process was about ‘becoming good at using spontaneous forces and turning spontaneous forces into conscious policy.’ The process was not planned, controlled or even foreseen. It was, Weiying writes in an explicit reference to Adam Smith, as if it was controlled by an ‘invisible hand’.11 Everything that took China out of poverty happened outside the five-year plans. By the mid-1990s, the last four five-year plans had been abandoned before they reached halfway, and the plans thereafter were more about vague objectives than governance and commands.


The First Tycoon by T.J. Stiles

book value, British Empire, business cycle, business logic, buttonwood tree, buy and hold, buy low sell high, California gold rush, Cornelius Vanderbilt, credit crunch, Edward Glaeser, gentleman farmer, informal economy, invisible hand, Isaac Newton, James Watt: steam engine, joint-stock company, margin call, Monroe Doctrine, new economy, public intellectual, risk free rate, short selling, Snow Crash, strikebreaker, The Wealth of Nations by Adam Smith, three-masted sailing ship, tontine, transatlantic slave trade, transcontinental railway, vertical integration, working poor

“So long as immense numbers of swine are allowed to traverse the streets,” wrote the travel-guide author, “so long will the inhabitants think themselves justified in throwing out their garbage to them for food; and so long will the streets of New-York remain proverbial for their filth.”23 The same tension between sophistication and simplicity—if not exactly squalor—could be felt off the streets as well, in the countinghouses, where clerks perched on high stools and scratched with quills in copy books, where porters lumbered in and out with sacks, crates, and barrels. A quarter of a century had passed since Adam Smith had explained the division of labor in The Wealth of Nations; yet this commercial community remained a city of the unspecialized. Apart from artisans who sold merely what they made, the economy belonged to general merchants. “Their activities,” writes historian George Rogers Taylor, “comprehended almost every aspect of business.”

Though some on the committee grumbled about not getting everything they wanted, most agreed that the plan he presented was a reasonable compromise.3 Reasonable is a word that historians have rarely linked to the Commodore's name, but it defined his behavior as a railroad leader. He was especially reasonable in his attempts to cooperate with his fellow corporate titans. There was nothing new about that, of course. Adam Smith himself observed in The Wealth of Nations, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public.” As we have seen, formal and informal devices to control competition arose simultaneously with competition itself in American history.

Horwitz, The Transformation of American Law, 1780–1860 (Cambridge, Mass.: Harvard University Press, 1977), xii–xv, 110–30. Also of interest is Pauline Maier, “The Revolutionary Origins of the American Corporation,” WMQ, 3rd ser., vol. 50, no. 1 (January 1993): 51–84. As she notes, Adam Smith criticized corporations as vehicles of mercantilist monopoly; see, for example, book 1, chap. X, part II of The Wealth of Nations. On monopolies in American tradition, see Herbert Hovenkamp, “Technology, Politics, and Regulated Monopoly: An American Historical Perspective,” Texas Law Review 62, no. 7 (April 1984): 1263–1312; Thomas P. Campbell Jr., “Chancellor Kent, Chief Justice Marshall, and the Steamboat Case,” Syracuse Law Review 25 (1974): 497–534; W.


pages: 242 words: 68,019

Why Information Grows: The Evolution of Order, From Atoms to Economies by Cesar Hidalgo

Ada Lovelace, Albert Einstein, Arthur Eddington, assortative mating, business cycle, Claude Shannon: information theory, David Ricardo: comparative advantage, Douglas Hofstadter, Everything should be made as simple as possible, Ford Model T, frictionless, frictionless market, George Akerlof, Gödel, Escher, Bach, income inequality, income per capita, industrial cluster, information asymmetry, invention of the telegraph, invisible hand, Isaac Newton, James Watt: steam engine, Jane Jacobs, job satisfaction, John von Neumann, Joi Ito, New Economic Geography, Norbert Wiener, p-value, Paul Samuelson, phenotype, price mechanism, Richard Florida, Robert Solow, Ronald Coase, Rubik’s Cube, seminal paper, Silicon Valley, Simon Kuznets, Skype, statistical model, Steve Jobs, Steve Wozniak, Steven Pinker, Stuart Kauffman, tacit knowledge, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, working-age population

Hidalgo, “The Network Structure of Economic Output,” Journal of Economic Growth 16, 4 [2011]: 309–342) as well as the dynamics of these variables over time (I am doing work with Cristian Figueroa on this topic). CHAPTER 10: THE SIXTH SUBSTANCE 1. The definition of physical capital is technically broader than machinery, however, since it is used to indicate all past production. For example, physical capital can also refer to the stock of grain owned by a flour mill. 2. Adam Smith, The Wealth of Nations (London: T. Nelson and Sons, 1887), 116. 3. Ibid. 4. Kuznets originally generated the concept of gross national product (GNP), which was the official metric at the time. Gross domestic product (GDP) displaced GNP as the official metric in the 1990s. GDP considers the production of goods and services within a country.

The idea of scale economies is that the per-unit cost of items decreases as we make more of them. In simple words, it is the difference between cooking dinner for one and cooking for a family of five. Certainly, cooking for five does not take five times the effort or ingredients than cooking for one. Adam Smith’s division of labor, on the other hand, is one of the mechanisms that can help explain scale economies. The division of labor implies that it is more efficient to have each worker focus on a small part of the construction of a pin or a car than to have each worker attempt to build that pin or car from start to finish.

That extra factor is the knowhow and knowledge accumulated at the collective level, which gives rise to the diversity and sophistication of economic activities that I call economic complexity. Describing nature in terms of factors of production, such as capital and labor, has a long tradition in economics. Adam Smith decomposed the economy into land, labor, and machinery—the last being a mixture of what modern economists refer to as physical capital and technology.1 Smith equated machinery, or fixed capital, with an increase in people’s ability to produce work, and hence he saw the accumulation of physical capital as a determinant of economic growth.


pages: 383 words: 108,266

Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions by Dan Ariely

air freight, Al Roth, Alan Greenspan, Bear Stearns, behavioural economics, Bernie Madoff, Burning Man, butterfly effect, Cass Sunstein, collateralized debt obligation, compensation consultant, computer vision, corporate governance, credit crunch, Daniel Kahneman / Amos Tversky, David Brooks, delayed gratification, endowment effect, financial innovation, fudge factor, Gordon Gekko, greed is good, housing crisis, IKEA effect, invisible hand, John Perry Barlow, lake wobegon effect, late fees, loss aversion, market bubble, Murray Gell-Mann, payday loans, Pepsi Challenge, placebo effect, price anchoring, Richard Thaler, second-price auction, Silicon Valley, Skinner box, Skype, subprime mortgage crisis, The Wealth of Nations by Adam Smith, Upton Sinclair

Given our human fallibilities, quirks, and irrational tendencies, it seems to me that our models of behavior and, more important, our recommendations for new policies and practices should be based on what people actually do rather than what they are supposed to be doing under the assumption that they are completely rational. This seemingly radical idea is, in fact, a very old idea in economics. Before Adam Smith, the grandfather of modern economics, wrote his magnum opus, Inquiry into the Nature and Causes of the Wealth of Nations (1776), he wrote The Theory of Moral Sentiments (1759), a book that is equally important but much more psychologically oriented. In The Theory of Moral Sentiments, Smith notes that emotions, feelings, and morality are aspects of human behavior which the economist should not ignore (or, worse, deny) but instead treat as topics worthy of investigation.

I wish I could tell you that I would often persuade my conversational partner to accept my point of view, but in almost all cases it would become very clear that neither of us was going to be converted to the other’s viewpoint. Of course, I ran into the biggest difficulties when arguing for irrationality with card-carrying rational economists, whose disregard of my experimental data was almost as intense as their nearly religious belief in rationality (if Adam Smith’s “invisible hand” doesn’t sound like God, I don’t know what does). This basic sentiment was expressed succinctly by two fabulous Chicago economists, Steven Levitt and John List, suggesting that the practical usefulness of behavioral economics has been shown to be marginal at best: Perhaps the greatest challenge facing behavioral economics is demonstrating its applicability in the real world.

In conventional economics, the assumption that we are all rational implies that, in everyday life, we compute the value of all the options we face and then follow the best possible path of action. What if we make a mistake and do something irrational? Here, too, traditional economics has an answer: “market forces” will sweep down on us and swiftly set us back on the path of righteousness and rationality. On the basis of these assumptions, in fact, generations of economists since Adam Smith have been able to develop far-reaching conclusions about everything from taxation and health-care policies to the pricing of goods and services. But, as you will see in this book, we are really far less rational than standard economic theory assumes. Moreover, these irrational behaviors of ours are neither random nor senseless.


pages: 223 words: 58,732

The Retreat of Western Liberalism by Edward Luce

"World Economic Forum" Davos, 3D printing, affirmative action, Airbnb, Alan Greenspan, basic income, Berlin Wall, Bernie Sanders, Boris Johnson, Branko Milanovic, bread and circuses, Bretton Woods, Brexit referendum, business cycle, call centre, carried interest, centre right, Charles Lindbergh, cognitive dissonance, colonial exploitation, colonial rule, computer age, corporate raider, cuban missile crisis, currency manipulation / currency intervention, disinformation, Dissolution of the Soviet Union, Doha Development Round, Donald Trump, double entry bookkeeping, driverless car, Erik Brynjolfsson, European colonialism, everywhere but in the productivity statistics, Evgeny Morozov, fake news, Fall of the Berlin Wall, Francis Fukuyama: the end of history, future of work, gentrification, George Santayana, gig economy, Gini coefficient, global pandemic, global supply chain, Great Leap Forward, illegal immigration, imperial preference, income inequality, independent contractor, informal economy, Internet of things, Jaron Lanier, knowledge economy, lateral thinking, Les Trente Glorieuses, liberal capitalism, Marc Andreessen, Mark Zuckerberg, Martin Wolf, mass immigration, means of production, meritocracy, microaggression, Monroe Doctrine, moral panic, more computing power than Apollo, mutually assured destruction, new economy, New Urbanism, Norman Mailer, offshore financial centre, one-China policy, opioid epidemic / opioid crisis, Peace of Westphalia, Peter Thiel, plutocrats, precariat, purchasing power parity, reserve currency, reshoring, Richard Florida, Robert Gordon, Robert Solow, Ronald Reagan, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Silicon Valley billionaire, Skype, Snapchat, software is eating the world, South China Sea, Steve Bannon, Steve Jobs, superstar cities, telepresence, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas L Friedman, Tyler Cowen, Tyler Cowen: Great Stagnation, universal basic income, unpaid internship, Washington Consensus, We are the 99%, We wanted flying cars, instead we got 140 characters, white flight, World Values Survey, Yogi Berra

‘I believe that the rising intolerance and incivility and the eroding generosity and openness that have marked important aspects of American society in the recent past have been, in significant part, a consequence of the stagnation of American middle-class living standards,’ writes Ben Friedman, in the The Moral Consequences of Economic Growth.22 De Tocqueville talked admiringly of America’s ‘restlessness of temper’. Today, in a society where Americans are increasingly ‘bowling alone’, as Robert Putnam put it, the great French chronicler might be moved to talk about America’s shortness of temper. Adam Smith, the great theorist of free trade economics, is revered for his The Wealth of Nations. His companion work, The Theory of Moral Sentiments, is mostly forgotten. Yet it is the more important of the two. In it, Smith sets out why capitalism works best in societies where there are high levels of trust between its participants. When social trust falls, the cost of doing business rises.

Summers. 19 Financial Times, 20 June 2016, <https://www.ft.com/content/ a5d5a8fe-36f5-11e6-a780-b48ed7b6126f>, and Edward Luce, ‘US workforce dropouts explain Donald Trump’s rise’, Financial Times, 21 June 2016, <https://www.ft.com/content/ 5c8d0758-37c4-11e6-9a05-82a9b15a8ee7>. 20 Edward Luce, ‘Drugs, painkillers and the New Hampshire primary’, Financial Times, 7 February 2016, <https://www.ft.com/content/78d5ba76-cbff-11e5-a8ef-ea66e967dd44>. 21 Anne Case and Angus Deaton, ‘Rising Morbidity and Mortality in Midlife among White Non-Hispanic Americans in the 21st Century’, Proceedings of the National Academy of Sciences of the United States of America, 112:49 (2015), <http://www.pnas.org/content/112/49/15078.full>. 22 Benjamin M. Friedman, The Moral Consequences of Economic Growth (Vintage, New York, 2006 (ebook)). 23 Adam Smith, The Wealth of Nations, Book 1 (1776). 24 Central Intelligence Agency, The World Fact Book 2016 (Central Intelligence Agency, Washington DC, 2016), <https://www.cia.gov/library/publications/the-world-factbook/fields/2177.html>. 25 Tyler Cowen, The Complacent Class: The Self-Defeating Quest for the American Dream (St Martin’s Press, New York, 2017), p. 82. 26 Ibid., p. 12. 27 Milanovic, Global Inequality. 28 Stephen S.


pages: 515 words: 142,354

The Euro: How a Common Currency Threatens the Future of Europe by Joseph E. Stiglitz, Alex Hyde-White

"there is no alternative" (TINA), "World Economic Forum" Davos, Alan Greenspan, bank run, banking crisis, barriers to entry, battle of ideas, behavioural economics, Berlin Wall, Bretton Woods, business cycle, buy and hold, capital controls, carbon tax, Carmen Reinhart, cashless society, central bank independence, centre right, cognitive dissonance, collapse of Lehman Brothers, collective bargaining, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, currency peg, dark matter, David Ricardo: comparative advantage, disintermediation, diversified portfolio, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial innovation, full employment, George Akerlof, Gini coefficient, global supply chain, Great Leap Forward, Growth in a Time of Debt, housing crisis, income inequality, incomplete markets, inflation targeting, information asymmetry, investor state dispute settlement, invisible hand, Kenneth Arrow, Kenneth Rogoff, knowledge economy, light touch regulation, low interest rates, manufacturing employment, market bubble, market friction, market fundamentalism, Martin Wolf, Mexican peso crisis / tequila crisis, money market fund, moral hazard, mortgage debt, neoliberal agenda, new economy, open economy, paradox of thrift, pension reform, pensions crisis, price stability, profit maximization, purchasing power parity, quantitative easing, race to the bottom, risk-adjusted returns, Robert Shiller, Ronald Reagan, Savings and loan crisis, savings glut, secular stagnation, Silicon Valley, sovereign wealth fund, the payments system, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, transfer pricing, trickle-down economics, Washington Consensus, working-age population

There is, of course, the notion that economic interdependence increases the costs of war, and therefore makes war less likely. The EU brought about extensive economic integration. The question is, whether the additional economic integration (if any) resulting from a monetary union would have any significant incremental effect. 7 Adam Smith’s classic work was The Wealth of Nations (1776). 8 Ricardo (1772–1823) was the father of the theory of comparative advantage. 9 The existence of which can actually strengthen arguments for economic integration. 10 Joseph E. Stiglitz, “Devolution, Independence, and the Optimal Provision of Public Goods,” Economics of Transportation 4, nos. 1–2 (March–June 2015): 82–94. 11 See my book with Bruce C.

Will having a monetary union move Europe closer to attaining those conditions? Is having a monetary union necessary for achieving such a goal? And how important is it for Europe to play that role? The counterargument In earlier centuries, the ability to exercise “power” on the global scene mattered a great deal. The wealth of nations depended to a large extent on military power. The conquest of colonies was how a relatively small island, Great Britain, became a dominant global power. Fortunately, we have a new balance of power that greatly circumscribes the exercise of military power. Even when a country wins a war, its ability to receive the spoils of war are limited.

This, too, is a cross-cutting theme of our times: the neoliberal economic agenda may not have succeeded in increasing average growth rates, but of this we can be sure: it has succeeded in increasing inequality. The euro provides a detailed case study on how this has been accomplished. Two other themes relate more directly to work on economic systems in which I have long been engaged. It is now (finally) widely recognized that markets on their own are not efficient.14 Adam Smith’s invisible hand—by which individuals’ pursuit of self-interest is supposed to lead, in the aggregate, to the well-being of the entire society—is invisible because it is simply not there. And far too little attention has been paid to the instability of the market economy. Crises have been part of capitalism since the beginning.15 The standard model used by economists simply assumes that it is in equilibrium; in other words, if there is ever a dip in the economy, it quickly reverts to its normal path.16 The notion that the economy quickly converges to equilibrium after an upset is key in understanding the construction of the eurozone.


pages: 828 words: 232,188

Political Order and Political Decay: From the Industrial Revolution to the Globalization of Democracy by Francis Fukuyama

Affordable Care Act / Obamacare, Andrei Shleifer, Asian financial crisis, Atahualpa, banking crisis, barriers to entry, Berlin Wall, blood diamond, British Empire, centre right, classic study, clean water, collapse of Lehman Brothers, colonial rule, conceptual framework, Cornelius Vanderbilt, cotton gin, crony capitalism, Day of the Dead, deindustrialization, Deng Xiaoping, disruptive innovation, double entry bookkeeping, Edward Snowden, Erik Brynjolfsson, European colonialism, facts on the ground, failed state, Fall of the Berlin Wall, first-past-the-post, Francis Fukuyama: the end of history, Francisco Pizarro, Frederick Winslow Taylor, full employment, Gini coefficient, Glass-Steagall Act, Great Leap Forward, Hernando de Soto, high-speed rail, Home mortgage interest deduction, household responsibility system, income inequality, information asymmetry, invention of the printing press, iterative process, Kickstarter, knowledge worker, labour management system, land reform, land tenure, life extension, low interest rates, low skilled workers, manufacturing employment, means of production, Menlo Park, Mohammed Bouazizi, Monroe Doctrine, moral hazard, Nelson Mandela, new economy, open economy, out of africa, Peace of Westphalia, Port of Oakland, post-industrial society, post-materialism, price discrimination, quantitative easing, RAND corporation, rent-seeking, road to serfdom, Ronald Reagan, scientific management, Scientific racism, Scramble for Africa, Second Machine Age, Silicon Valley, special economic zone, stem cell, subprime mortgage crisis, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, too big to fail, trade route, transaction costs, Twitter Arab Spring, Tyler Cowen, Tyler Cowen: Great Stagnation, Vilfredo Pareto, women in the workforce, work culture , World Values Survey, zero-sum game

The Spanish government, however, imposed strict rules limiting economic exchange—a system known as mercantilism—under the mistaken belief that this would maximize its income from the colonies. Exports from the New World could go only to Spain, indeed, to a single port in Spain; they were required to travel in Spanish ships; and the colonies were not permitted to compete with Spanish producers of manufactured goods. Mercantilism, as Adam Smith was to demonstrate in The Wealth of Nations, created huge inefficiencies and was highly detrimental to economic growth. It also had very significant political consequences: access to markets and the right to make productive economic investments were limited to individuals or corporations favored by the state. This meant that the route to personal wealth lay through the state and through gaining political influence.

To avoid this problem, some economists choose an absolute level of consumption, ranging from a low of US$5 a day, or $1,800 in parity purchasing power per year, up to a range of $6,000–$31,000 annual income in 2010 U.S. dollars. This fixes one problem but creates another, since an individual’s perception of class status is often relative rather than absolute. As Adam Smith noted in The Wealth of Nations, a pauper in eighteenth-century England might have lived like a king in Africa. Sociologists, in a tradition beginning with Karl Marx, tend not to look at measures of income but instead at how one’s income is earned—occupational status, level of education, and assets. For the purpose of understanding the political implications of a growing middle class, the sociological approach is vastly preferable.

The Industrial Revolution in turn rested on the systematic application of the scientific method and its incorporation into an institutional structure of universities and research organizations, which could then be translated into technological innovations.4 FIGURE 2. Real Income per Person in England, 1200–2000 SOURCE: Gregory Clark, A Farewell to Alms The sudden shift to a higher level of growth had a huge effect on societies via an expanding division of labor. The third chapter of Adam Smith’s Wealth of Nations is titled “The Division of Labor is Limited by the Extent of the Market.” Smith began the book with his famous description of a pin factory. Instead of a single craftsman pulling, cutting, and sharpening individual pins, each task is given to a specialized worker, which vastly increases the factory’s productivity.


pages: 316 words: 117,228

The Code of Capital: How the Law Creates Wealth and Inequality by Katharina Pistor

Andrei Shleifer, Asian financial crisis, asset-backed security, barriers to entry, Bear Stearns, Bernie Madoff, Big Tech, bilateral investment treaty, bitcoin, blockchain, Bretton Woods, business cycle, business process, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collateralized debt obligation, colonial rule, conceptual framework, Corn Laws, corporate governance, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, digital rights, Donald Trump, double helix, driverless car, Edward Glaeser, Ethereum, ethereum blockchain, facts on the ground, financial innovation, financial intermediation, fixed income, Francis Fukuyama: the end of history, full employment, global reserve currency, Gregor Mendel, Hernando de Soto, income inequality, initial coin offering, intangible asset, investor state dispute settlement, invisible hand, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Rogoff, land reform, land tenure, London Interbank Offered Rate, Long Term Capital Management, means of production, money market fund, moral hazard, offshore financial centre, phenotype, Ponzi scheme, power law, price mechanism, price stability, profit maximization, railway mania, regulatory arbitrage, reserve currency, Robert Solow, Ronald Coase, Satoshi Nakamoto, secular stagnation, self-driving car, seminal paper, shareholder value, Silicon Valley, smart contracts, software patent, sovereign wealth fund, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, too big to fail, trade route, Tragedy of the Commons, transaction costs, Wolfgang Streeck

See also Jonathan Nitzan and Shimshon Bichler, “New Imperialism or New Capitalism?,” Review (Fernand Braudel Center) 29, no. 1 (2006):1–86, esp. p. 26. 13. Piketty, Capital. 14. The title of chap. 3 of his book. 15. Bernard Rudden, “Things as Things and Things as Wealth,” Oxford Journal of Legal Studies 14, no. 1 (1994):81–97, pp. 82–83. 16. Adam Smith, The Wealth of Nations (Chicago: University of Chicago Press, 1776), book IV, chapter 2, p. 477. 17. Ibid., p. 475. 18. Ibid. Emphasis added. The second force behind the invisible hand is more familiar. Individuals in pursuit of their self-interest, Smith argues, will choose from many projects the one with the greatest value “either of money or of other goods” and will do so more effectively than a king, council, or senator. 19.

(New York: Norton, 1981), highlighting the role of property rights allocation in America’s Wild West; and Robert Cooter and Hans-Bernd Schäfer, Solomon’s Knot: How Law Can End the Poverty of Nations (Princeton, NJ: Princeton University Press, 2011) suggesting that property rights help resolve the “double trust” problem by offering legal protection to the party most exposed to this problem. 76. Ronald H. Coase, “The Problem of Social Cost,” Journal of Law and Economics 3 (1960):1–44. 77. Adam Smith et al., Lectures on Jurisprudence, The Glasgow Edition of the Works and Correspondence of Adam Smith; 5 (Indianapolis: Liberty Classics, 1982); Part I: Of Justice, p. 8. 78. William Blackstone, Commentaries on the Laws of England, vol. 1 (Oxford: Clarendon Press, 1765), Facsimile Vol. 1, Chapter 1, “Of the Absolute Rights of Individuals” (emphasis added); available online at https://lonang.com/library /reference/blackstone-commentaries-law-england/. 79.

For each of these assets, the legal coding ultimately determines their capacity to bestow wealth on their holders. It also provides them with a powerful defense against challengers: “But it’s legal.” Law’s Guiding Hand The legal code of capital may be invisible to the casual observer, but that does not make it less real. Some may find it easier to believe in the market’s “invisible hand” immortalized by Adam Smith, than to spend their time decoding capital’s legal structures.16 And yet, changes in the legal structure have fundamentally altered the conditions for Smith’s invisible hand to do its work. As is well known, Smith argued that the pursuit of individual self-interest will inevitably benefit society.


pages: 363 words: 92,422

A Fine Mess by T. R. Reid

accelerated depreciation, Affordable Care Act / Obamacare, Alan Greenspan, Bernie Sanders, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, carried interest, centre right, clean water, Donald Trump, Double Irish / Dutch Sandwich, game design, Gini coefficient, High speed trading, Home mortgage interest deduction, Honoré de Balzac, income inequality, industrial robot, land value tax, loss aversion, mortgage tax deduction, obamacare, Occupy movement, offshore financial centre, oil shock, plutocrats, race to the bottom, Ronald Reagan, seigniorage, Silicon Valley, Skype, Snapchat, sovereign wealth fund, Tax Reform Act of 1986, Tesla Model S, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Tobin tax, We are the 99%, WikiLeaks

A sin tax is the exception to the consensus view among economists that taxes should be “neutral”—that is, designed so that people base their decisions on business or personal grounds, not on tax considerations. But taxes imposed on what we don’t want people to do are specifically designed to influence our decisions and conduct. The father of modern economics, Adam Smith, strongly endorsed this kind of tax in his famous study The Wealth of Nations: “Sugar, rum, and tobacco, are commodities which are nowhere necessaries of life, which are become objects of almost universal consumption, and which are therefore extremely proper subjects of taxation.” For Smith, taxes on sugar, rum, and tobacco had a double benefit: they discourage consumption of unhealthy products, thus reducing the cost of health care over time; they also bring in a steady flow of revenues, because those who smoke, drink, and eat candy generally do so even when the national economy is in a slump.

., 11–12, 229–30, 241–48, 254–55 See also goods and services tax (GST) Vano, Vladimir, 106 Walgreens, 157–58 Wall Street, 10, 65, 70, 180–81, 184, 255 Wall Street Journal, 109, 119, 162–63, 169, 184, 190–91, 199, 205, 236–37 Wandell, Keith, 156 War of 1812, 34–35 Warren, Elizabeth, 117, 223, 253 Washington, D.C., 30, 69, 84–85, 120, 131, 136, 156, 169, 184, 198–99, 224 Washington Post, 116 water (safe, drinking), 39, 177–79 wealth, 110 wealth tax, 17, 124–25, 128–32, 173, 183, 192–93 See also gross domestic product (GDP); inequality, economic; rich, the; superrich, the Wealth of Nations, The (Smith), 37 Wegelin & Co. (Switzerland), 205–6 welfare state, 80 widow’s mite, 27–28, 135 Wilson, Woodrow, 1 World Bank, 16–17, 23–24, 50–52, 57, 77, 126, 182 World Health Organization, 49, 176 world wars, 1, 50, 106, 121, 228 Zolt, Eric, 12 * See the “Tax Computation Worksheet” on p. 89 of the IRS publication 1040 Instructions 2015.

When the journal Addiction studied changes in alcohol taxes around the world, it concluded that a 10% increase in the tax on a drink reduces alcohol consumption by about 5%, which is enough to avoid tens of thousands of deaths and accidents each year.7 After British Columbia raised liquor taxes in 2002, deaths attributed to alcohol dropped by 32% over the next six years; the Canadian government attributes this to the higher price of booze. As obesity has become a bulging health problem in many wealthy countries, the so-called sugar tax has begun to spread as a way to cut the consumption of high-calorie cola, candy, and junk food. Adam Smith would presumably approve. France, Denmark, and Belgium have all imposed various versions of the “fat tax.” Mexico, where the problem of obesity is even greater than in the United States, imposed new taxes in 2014 on sugared soda pop and junk foods like potato chips, cookies, and cheese curls. The sugar tax makes a regular Coke cost about 25% more than a Diet Coke; it makes a candy bar significantly more expensive than an apple.


pages: 372 words: 89,876

The Connected Company by Dave Gray, Thomas Vander Wal

A Pattern Language, Alan Greenspan, Albert Einstein, Amazon Mechanical Turk, Amazon Web Services, Atul Gawande, Berlin Wall, business cycle, business process, call centre, Clayton Christensen, commoditize, complexity theory, creative destruction, David Heinemeier Hansson, digital rights, disruptive innovation, en.wikipedia.org, factory automation, folksonomy, Googley, index card, industrial cluster, interchangeable parts, inventory management, Jeff Bezos, John Markoff, Kevin Kelly, loose coupling, low cost airline, market design, minimum viable product, more computing power than Apollo, power law, profit maximization, Richard Florida, Ruby on Rails, Salesforce, scientific management, self-driving car, shareholder value, side project, Silicon Valley, skunkworks, software as a service, South of Market, San Francisco, Steve Jobs, Steven Levy, Stewart Brand, subscription business, systems thinking, tacit knowledge, The Wealth of Nations by Adam Smith, Tony Hsieh, Toyota Production System, two-pizza team, Vanguard fund, web application, WikiLeaks, work culture , Zipcar

For example, Amazon created a platform where people can make money by linking to Amazon products from their blogs and web pages. It’s easy to join—signing up as an Amazon affiliate takes only a few minutes. Shopping malls will offer very low rents to attract “anchor stores” that will help attract shoppers and other tenants to the mall. What’s the incentive to perform? As Adam Smith wrote in The Wealth of Nations, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” Some platforms are only available to paid employees. Some are open to qualified parties like suppliers, partners, or franchisees. Others are open to anyone who wants to join.

Information Rules: A Strategic Guide to the Network Economy By Carl Shapiro and Hal R. Varian, Harvard Business Review Press, 1998. The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail By Clayton Christensen, Harvard Business Review Press, 1997. An Inquiry into the Nature and Causes of the Wealth of Nations By Adam Smith, 1776. Jack: Straight from the Gut By Jack Welch and John A. Byrne, Business Plus, 2001. Just in Time for Today and Tomorrow By Taiichi Ohno and Setsuo Mito, Productivity Press, 1988. The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation By Ikujiro Nonaka and Hirotaka Takeuchi, Oxford University Press, 1995.

If your company is at or near peak effectiveness for a particular purpose, and the environment around you is shifting, you may need to undergo fundamental structural change in order to become adaptive. How Did We Get Here? Dividing labor and standardizing work is a good thing. Right? Dividing Work Division of labor, as Adam Smith pointed out in the 1700s, has the potential to increase productivity. But division of labor also leads to interdependency: every worker relies more heavily on others in order to be able to do the job, and as the number of handoffs increases, so does the potential for dropped balls. As the number of divisions grows, so grows the interdependence.


pages: 324 words: 93,175

The Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home by Dan Ariely

Alvin Roth, An Inconvenient Truth, assortative mating, Bear Stearns, behavioural economics, Burning Man, business process, cognitive dissonance, Cornelius Vanderbilt, corporate governance, Daniel Kahneman / Amos Tversky, Demis Hassabis, end world poverty, endowment effect, Exxon Valdez, first-price auction, Ford Model T, Frederick Winslow Taylor, George Akerlof, happiness index / gross national happiness, hedonic treadmill, IKEA effect, Jean Tirole, job satisfaction, knowledge economy, knowledge worker, loss aversion, name-letter effect, Peter Singer: altruism, placebo effect, Richard Thaler, Saturday Night Live, search costs, second-price auction, Skinner box, software as a service, subprime mortgage crisis, sunk-cost fallacy, The Wealth of Nations by Adam Smith, ultimatum game, Upton Sinclair, young professional

Why did the nice people at MIT and SAP design the system this way? Why did they break tasks into so many components, put each person in charge of only small parts, and never show them the overall progress or completion of their tasks? I suspect it all has to do with the ideas of efficiency brought to us by Adam Smith. As Smith argued in 1776 in The Wealth of Nations, division of labor is an incredibly effective way to achieve higher efficiency in the production process. Consider, for example, his observations of a pin factory: . . . the division of labour has been very often taken notice of, the trade of the pin-maker; a workman not educated to this business (which the division of labour has rendered a distinct trade), nor acquainted with the use of the machinery employed in it (to the invention of which the same division of labour has probably given occasion), could scarce, perhaps, with his utmost industry, make one pin in a day, and certainly could not make twenty.

So in essence Stephen and I are academic relatives, and I feel as if he is my younger (but much taller) brother. He is smart and creative, and it has been a privilege to watch him advance in his academic adventures. Stephen is currently a doctoral student at Duke University, and if his advisers had any say in the matter, we would never let him leave. Notes 1. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Chicago: University of Chicago Press, 1977), 44–45. 2. George Loewenstein, “Because It Is There: The Challenge of Mountaineering . . . for Utility Theory,” Kyklos 52, no. 3 (1999): 315–343. 3. Laura Shapiro, Something from the Oven: Reinventing Dinner in 1950s America (New York: Viking, 2004). 4. www.foodnetwork.com/recipes/sandra-lee/sensuous-chocolate-truffles-recipe/index.html. 5.

In fact, I suspect that the idea of alienation was less relevant in Marx’s time, when, even if employees tried hard, it was difficult to find meaning at work. In today’s economy, as we move to jobs that require imagination, creativity, thinking, and round-the-clock engagement, Marx’s emphasis on alienation adds an important ingredient to the labor mix. I also suspect that Adam Smith’s emphasis on the efficiency in the division of labor was more relevant during his time, when the labor in question was based mostly on simple production, and is less relevant in today’s knowledge economy. From this perspective, division of labor, in my mind, is one of the dangers of work-based technology.


pages: 336 words: 90,749

How to Fix Copyright by William Patry

A Declaration of the Independence of Cyberspace, barriers to entry, big-box store, borderless world, bread and circuses, business cycle, business intelligence, citizen journalism, cloud computing, commoditize, content marketing, creative destruction, crowdsourcing, death of newspapers, digital divide, en.wikipedia.org, facts on the ground, Frederick Winslow Taylor, George Akerlof, Glass-Steagall Act, Gordon Gekko, haute cuisine, informal economy, invisible hand, John Perry Barlow, Joseph Schumpeter, Kickstarter, knowledge economy, lone genius, means of production, moral panic, new economy, road to serfdom, Ronald Coase, Ronald Reagan, search costs, semantic web, shareholder value, Silicon Valley, The Chicago School, The Wealth of Nations by Adam Smith, trade route, transaction costs, trickle-down economics, Twitter Arab Spring, Tyler Cowen, vertical integration, winner-take-all economy, zero-sum game

See Mira Rajan’s excellent new book, Moral Rights: Principles, Practice and New Technology (2011, Oxford University Press). See Ludwig von Mises, Bureaucracy 11 (1944, 2007 edition, Liberty Fund, Inc.): “A genius is always a teacher, never a pupil; he is always self-made. He does not owe anything to the favor of those in power.” Adam Smith, 1 The Wealth of Nations, Part 1, Chapter X, page 124, quoted in Ruth Towse, A Textbook of Cultural Economics 297 (2010, Cambridge University Press). Smith was, apparently, incensed at the exorbitant fees earned by castrati, id. at 13. See also the inappropriately named Classical Music Without Fear 31 (2003, Indiana University Press) (noting that in Italy alone at the end of the 16th century, four thousand boys were being castrated for musical careers, making a most peculiar kind of growth industry).

Zorina Khan, Copyright Piracy and Development: United States Evidence in the Nineteenth Century, 10 Revista de Economia Institucional, Number 18, First Semester 2008; B. Zorina Khan, Does Copyright Piracy Pay? The Effects of U.S. International Copyright Laws on the Market for Books, 1790–1920, NBER Working Paper No. 10271(February 2004). 16. The passage in question is in the Wealth of Nations, and reads: “It is the great multiplication of the productions of all the different arts, in consequence of the division of labor, which occasions, in 316 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. NOTES TO PAGES 253–256 a well-governed society, that universal opulence which extends itself to the lowest ranks of the people.”

Contrary to the belief that copyright laws lead to a diversity of offerings, the myth of the solitary genius and the superstar system support a choking off of diversity in favor of the winner-take-all approach that leaves the few with almost everything and the many with little. There is, of course, no shortage of individuals who are quite eager to be commoditized in this way because it promises them fame and fortune. Justin Bieber is just a product, and very happily so. The ability of distributors to charge monopoly prices for superstars was a phenomenon noted by Adam Smith way back in 1776: The exorbitant rewards of players, opera-singers, operadancers, &c are founded upon those two principles; the rarity and beauty of the talent, and the discredit of employing them in this manner.35 Whether the talent displayed by superstars is in fact rare is questionable (especially in the area of popular culture), but the purpose of proclaiming a superstar’s talent to be rare is easy enough to understand.


pages: 369 words: 94,588

The Enigma of Capital: And the Crises of Capitalism by David Harvey

accounting loophole / creative accounting, Alan Greenspan, anti-communist, Asian financial crisis, bank run, banking crisis, Bernie Madoff, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business climate, call centre, capital controls, cotton gin, creative destruction, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, deskilling, equal pay for equal work, European colonialism, failed state, financial innovation, Frank Gehry, full employment, gentrification, Glass-Steagall Act, global reserve currency, Google Earth, Great Leap Forward, Guggenheim Bilbao, Gunnar Myrdal, guns versus butter model, Herbert Marcuse, illegal immigration, indoor plumbing, interest rate swap, invention of the steam engine, Jane Jacobs, joint-stock company, Joseph Schumpeter, Just-in-time delivery, land reform, liquidity trap, Long Term Capital Management, market bubble, means of production, megacity, microcredit, military-industrial complex, Money creation, moral hazard, mortgage debt, Myron Scholes, new economy, New Urbanism, Northern Rock, oil shale / tar sands, peak oil, Pearl River Delta, place-making, Ponzi scheme, precariat, reserve currency, Ronald Reagan, Savings and loan crisis, sharing economy, Shenzhen special economic zone , Silicon Valley, special drawing rights, special economic zone, statistical arbitrage, structural adjustment programs, subprime mortgage crisis, technological determinism, the built environment, the market place, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, Thorstein Veblen, Timothy McVeigh, too big to fail, trickle-down economics, urban renewal, urban sprawl, vertical integration, white flight, women in the workforce

Above all, ‘the unprecedented shift in relative wealth and economic power roughly from west to east now under way will continue’. This ‘unprecedented shift’ has reversed the long-standing drain of wealth from east, south-east and south Asia to Europe and North America that has been occurring since the eighteenth century – a drain that Adam Smith noted with regret in The Wealth of Nations. The rise of Japan in the 1960s, followed by South Korea, Taiwan, Singapore and Hong Kong in the 1970s, and then the rapid growth of China after 1980, later accompanied by industrialisation spurts in Indonesia, India, Vietnam, Thailand and Malaysia during the 1990s, has altered the centre of gravity of capitalist development, although it has not done so smoothly.

.: Limits to Growth 72 meat-based diets 73, 74 Medicare 28–9, 224 Mellon, Andrew 11, 98 mercantilism 206 merchant capitalists 40 mergers 49, 50 forced 261 Merrill Lynch 12 Merton, Robert 100 methane gas 73 Mexico debt crisis (1982) 10, 19 northern Miexico’s proximity to the US market 36 peso rescue 261 privatisation of telecommunications 29 and remittances 38 standard of living 10 Mexico City 243 microcredit schemes 145–6 microeconomics 237 microenterprises 145–6 microfinance schemes 145–6 Middle East, and oil issue 77, 170, 210 militarisation 170 ‘military-industrial complex’ 91 minorities: colonisation of urban neighbourhoods 247, 248 Mitterrand, François 198 modelling of markets 262 modernism 171 monarchy 249 monetarism 237 monetisation 244 money centralised money power 49–50, 52 a form of social power 43, 44 limitlessness of 43, 47 loss of confidence in the symbols/quality of money 114 universality of 106 monoculture 186 Monopolies Commission 52 monopolisation 43, 68, 95, 113, 116, 221 Monsanto 186 Montreal Protocol (1989) 76, 187 Morgan Stanley 19 Morishima, Michio 70 Morris, William 160 mortgages annual rate of change in US mortgage debt 7 mortgage finance for housing 170 mortgage-backed bonds futures 262 mortgage-backed securities 4, 262 secondary mortgage market 173, 174 securitisation of local 42 securitisation of mortgage debt 85 subprime 49, 174 Moses, Robert 169, 171, 177 MST (Brazil) 257 multiculturalism 131, 176, 231, 238, 258 Mumbai, India anti-Muslim riots (early 1990s) 247 redevelopment 178–9 municipal budgets 5 Museum of Modern Art, New York 21 Myrdal, Gunnar 196 N Nandigram, West Bengal 180 Napoleon III, Emperor 167, 168 national debt 48 National Economic Council (US) 11, 236 national-origin quotas 14 nationalisation 2, 4, 8, 224 nationalism 55–6, 143, 194, 204 NATO 203 natural gas 188 ‘natural limits’ 47 natural resources 30, 71 natural scarcity 72, 73, 78, 80, 83, 84, 121 nature and capital 88 ‘first nature’ 184 relation to 121, 122 ‘the revenge of nature’ 185 ‘second nature’ 184, 185, 187 as a social product 188 neocolonialism 208, 212 neoliberal counter-revolution 113 neoliberalism 10, 11, 19, 66, 131, 132, 141, 172, 175, 197, 208, 218, 224, 225, 233, 237, 243, 255 Nepal: communist rule in 226 Nevada, foreclosure wave in 1 New Deal 71 ‘new economy’ (1990s) 97 New Labour 45, 255 ‘new urbanism’ movement 175 New York City 11 September 2001 attacks 41 fiscal crisis (1975) 10, 172, 261 investment banks 19, 28 New York metropolitan region 169, 196 Nicaragua 189 Niger delta 251 non-governmental organisations (NGOs) 35, 253–4 non-interventionism 10 North Africa, French import of labour from 14 North America, settlement in 145 North American Free Trade Association (NAFTA) 200 Northern Ireland emergency 247 Northern Rock 2 Norway: Nordic cris (1992) 8 nuclear power 188 O Obama, Barack 11, 27, 34, 210 Obama administration 78, 121 O’Connor, Jim 77, 78 offshoring 131 Ogoni people 251 oil cheap 76–7 differential rent on oil wells 83 futures 83, 84 a non-renewable resource 82 ‘peak oil’ 38, 73, 78, 79, 80 prices 77–8, 80, 82–3, 261 and raw materials prices 6 rents 83 United States and 76–7, 79, 121, 170, 210, 261 OPEC (Organisation of Oil-Producing Countries) 83, 84 options markets currency 262 equity values 262 unregulated 99, 100 Orange County, California bankruptcy 100, 261 Organisation for Economic Cooperation and Development (OECD) 51 organisational change 98, 101 organisational forms 47, 101, 121, 127, 134, 238 Ottoman Empire 194 ‘over the counter’ trading 24, 25 overaccumulation crises 45 ozone hole 74 ozone layer 187 P Pakistan: US involvement 210 Palley, Thomas 236 Paris ‘the city of light’ 168 epicentre of 1968 confrontations 177, 243 Haussmann’s rebuilding of 49, 167–8, 169, 171, 176 municipal budget crashes (1868) 54 Paris Commune (1871) 168, 171, 176, 225, 243, 244 Partnoy, Frank: Ubfectious Greed 25 patents 221 patent laws 95 patriarchy 104 pensions pension funds 4, 5, 245 reneging on obligations 49 Péreire brothers 49, 54, 98, 174 pesticides 185, 186, 187 petty bourgeois 56 pharmaceutical sector 129, 245 philanthropy 44 Philippines: excessive urban development 8 Phillips, Kevin 206 Pinochet, General Augusto 15, 64 plant 58 Poland, lending to 19 political parties, radical 255–6 politics capitalist 76 class 62 co-revolutionary 241 commodified 219 depoliticised 219 energy 77 identity 131 labour organizing 255 left 255 transformative 207 pollution air 77 oceanic 74 rights 21 ‘Ponts et Chaussées’ organisation 92 Ponzi schemes 21, 114, 245, 246 pop music 245–6 Pope, Alexander 156 population growth 59, 72, 74, 121, 167 and capital accumulation 144–7 populism 55–6 portfolio insurance 262 poverty and capitalism 72 criminalisation and incarceration of the poor 15 feminisation of 15, 258 ‘Great Society’ anti-poverty programmes 32 Prague 243 prices commodity 37, 73 energy 78 food grain 79–80 land 8, 9, 182–3 oil 8, 28, 37–8, 77–8, 80, 82–3, 261 property 4, 182–3 raw material 37 reserve price 81–2 rising 73 share 7 primitive accumulation 58, 63–4, 108, 249 private consortia 50 private equity groups 50 private property and radical egalitarianism 233, 234 see also property markets; property rights; property values privatisation 10, 28, 29, 49, 251, 256, 257 pro-natal policies 59 production expansion of 112, 113 inadequate means of 47 investment in 114 liberating the concept 87 low-profit 29 offshore 16 production of urbanisation 87 reorganisation and relocation of 33 revolutionising of 89 surplus 45 technologies 101 productivity agreements 14, 60, 96 agricultural 119 cotton industry 67 gains 88, 89 Japan and West Germany 33 rising 96, 186 products development 95 innovation 95 new lines 94, 95 niches 94 profit squeeze 65, 66, 116 profitability constrains 30 falling 94, 131 of the financial sector 51 and wages 60 profits easy 15 excess 81, 90 falling 29, 72, 94, 116, 117 privatising 10 rates 70, 94, 101 realisation of 108 proletarianisation 60, 62 property markets crash in US and UK (1973–75) 8, 171–2, 261 overextension in 85 property market-led Nordic and Japanese bank crises 261 property-led crises (2007–10) 10, 261 real estate bubble 261 recession in UK (after 1987) 261 property rights 69, 81–2, 90, 122, 179, 198, 233, 244, 245 Property Share Price Index (UK) 7 property values 171, 181, 197, 248 prostitution 15 protectionism 31, 33, 43, 211 punctuated equilibrium theory of natural evolution 130 Putin, Vladimir 29, 80 Q Q’ing dynasty 194 quotas 16 R R&D (research and development) 92, 95–6 race issues 104 racism 61, 258 radical egalitarianism 230–34 railroads 42, 49, 191 Railwan, rise of (1970s) 35 rare earth metals 188 raw materials 6, 16, 37, 58, 77, 101, 113, 140, 144, 234 RBS 20 Reagan, Ronald 15, 64, 131, 141 Reagan-Thatcher counter revolution (early 1980s) 71 Reagan administration 1, 19 Reagan recession (1980–82) 60, 261 Real Estate Investment Trusts (US) 7 recession 1970s 171–2 language of 27 Reagan (1980–82) 60, 261 Red Brigade 254 reforestation 184 refrigeration 74 reinvestment 43, 45, 66–7, 110–12, 116 religious fundamentalism 203 religious issues 104 remittances 38, 140, 147 rentiers 40 rents differential rent 81, 82, 83 on intellectual property rights 221 land 182 monetisation of 48, 109 monopoly 51, 81–2, 83 oil 83 on patents 221 rising 181 reproduction schemas 70 Republican Party (US) 11, 141 reserve price 81 resource values 234 Ricardo, David 72, 94 risks, socialising 10 robbery 44 Robinson, Joan 238 robotisation 14, 136 Rockefeller, John D. 98 Rockefeller brothers 131 Rockefeller foundation 44, 186 Roman Empire 194 Roosevelt, Franklin D. 71 Rothschild family 98, 163 Royal Society 91, 156 royalties 40 Rubin, Robert 98 ‘rule of experts’ 99, 100–101 Russia bankruptcy (1998) 246, 261 capital flight crisis 261 defaults on its debt (1998) 6 oil and natural gas flow to Ukraine 68 oil production 6 oligarchs 29 see also Soviet Union S Saddam Hussein 210 Saint-Simon, Claude Henri de Rouvroy, Comte de 49 Saint-Simonians 87, 168 Salomon Brothers 24 Samuelson, Robert 235, 239 Sandino, Augusto 189 Sanford, Charles 98 satellites 156 savings 140 Scholes, Myron 100 Schumer, Charles 11 Schumpeter, Joseph 46 Seattle battle of (1999) 38, 227 general strike (1918) 243 software development in 195 Second World War 32, 168–70, 214 sectarianism 252 securitisation 17, 36, 42 Sejong, South Korea 124–6 service industries 41 sexism 61 sexual preferences issues 104, 131, 176 Shanghai Commune (1967) 243 shark hunting 73, 76 Shell Oil 79, 251 Shenzhen, China 36 shop floor organisers (shop stewards) 103 Silicon Valley 162, 195, 216 Singapore follows Japanese model 92 industrialisation 68 rise of (1970s) 35 slavery 144 domestic 15 slums 16, 151–2, 176, 178–9 small operators, dispossession of 50 Smith, Adam 90, 164 The Wealth of Nations 35 social democracy 255 ‘social democratic’ consensus (1960s) 64 social inequality 224 social relations 101, 102, 104, 105, 119, 121, 122, 123, 126, 127, 135–9, 152, 240 loss of 246 social security 224 social services 256 social struggles 193 social welfarism 255 socialism 136, 223, 228, 242, 249 compared with communism 224 solidarity economy 151, 254 Soros, George 44, 98, 221 Soros foundation 44 South Korea Asian Currency Crisis 261 excessive urban development 8 falling exports 6 follows Japanese model 92 rise of (1970s) 35 south-east Asia: crash of 1997–8 6, 8, 49, 246 Soviet Union in alliance with US against fascism 169 break-up of 208, 217, 227 collapse of communism 16 collectivisation of agriculture 250 ‘space race’ (1960s and 1970s) 156 see also Russia space domination of 156–8, 207 fixed spaces 190 ‘space race’ (1960s and 1970s) 156 Spain property-led crisis (2007–10) 5–6, 261 unemployment 6 spatial monopoly 164–5 special drawing rights 32, 34 special economic zones 36 special investment vehicles 36, 262 special purpose entities 262 speculation 52–3 speculative binges 52 speed-up 41, 42 stagflation 113 stagnation 116 Stalin, Joseph 136, 250 Standard Oil 98 state formation 196, 197, 202 state-corporate nexus 204 ‘space race’ (1960s and 1970s) 156 state-finance nexus 204, 205, 237, 256 blind belief in its corrective powers 55 ‘central nervous system’ for capital accumulation 54 characteristics of a feudal institution 55 and the current crisis 118 defined 48 failure of 56–7 forms of 55 fusion of state and financial powers 115 innovation in 85 international version of 51 overwhelmed by centralised credit power 52 pressure on 54 radical reconstruction of 131 role of 51 and state-corporate research nexus 97 suburbanisation 171 tilts to favour particular interests 56 statistical arbitrage strategies 262 steam engine, invention of 78, 89 Stiglitz, Joseph 45 stimulus packages 261 stock markets crash (1929) 211, 217 crashes (2001–02) 261 massive liquidity injections (1987) 236, 261 Stockton, California 2 ’structural adjustment’ programmes vii, 19, 261 subcontracting 131 subprime loans 1 subprime mortgage crisis 2 substance abuse 151 suburbanisation 73, 74, 76–7, 106–7, 169, 170, 171, 181 Summers, Larry 11, 44–5, 236 supermarket chains 50 supply-side theory 237 surveillance 92, 204 swaps credit 21 Credit Default 24, 262 currency 262 equity index 262 interest rate 24, 262 Sweden banking system crash (1992) 8, 45 Nordic crisis 8 Yugoslav immigrants 14 Sweezey, Paul 52, 113 ‘switching crises’ 93 systematic ‘moral hazard’ 10 systemic risks vii T Taipei: computer chips and household technologies in 195 Taiwan falling exports 6 follows Japanese model 92 takeovers 49 Taliban 226 tariffs 16 taxation 244 favouring the rich 45 inheritance 44 progressive 44 and the state 48, 145 strong tax base 149 tax rebates 107 tax revenues 40 weak tax base 150 ‘Teamsters for Turtles’ logo 55 technological dynamism 134 technologies change/innovation/new 33, 34, 63, 67, 70, 96–7, 98, 101, 103, 121, 127, 134, 188, 193, 221, 249 electronic 131–2 ‘green’ 188, 221 inappropriate 47 labour fights new technologies 60 labour-saving 14–15, 60, 116 ‘rule of experts’ 99, 100–101 technological comparative edge 95 transport 62 tectonic movements 75 territorial associations 193–4, 195, 196 territorial logic 204–5 Thailand Asian Currency Crisis 261 excessive urban development 8 Thatcher, Margaret, Baroness 15, 38, 64, 131, 197, 255 Thatcherites 224 ‘Third Italy’, Bologna 162, 195 time-space compression 158 time-space configurations 190 Toys ‘R’ Us 17 trade barriers to 16 collapses in foreign trade (2007–10) 261 fall in global international trade 6 increase in volume of trading 262 trade wars 211 trade unions 63 productivity agreements 60 and US auto industry 56 trafficking human 44 illegal 43 training 59 transport costs 164 innovations 42, 93 systems 16, 67 technology 62 Treasury Bill futures 262 Treasury bond futures 262 Treasury instruments 262 TRIPS agreement 245 Tronti, Mario 102 Trotskyists 253, 255 Tucuman uprising (1969) 243 Turin: communal ‘houses of the people’ 243 Turin Workers Councils 243 U UBS 20 Ukraine, Russian oil and natural gas flow to 68 ultraviolet radiation 187 UN Declaration of Human Rights 234 UN development report (1996) 110 Un-American Activities Committee hearings 169 underconsumptionist traditions 116 unemployment 131, 150 benefits 60 creation of 15 in the European Union 140 job losses 93 lay-offs 60 mass 6, 66, 261 rising 15, 37, 113 and technological change 14, 60, 93 in US 5, 6, 60, 168, 215, 261 unionisation 103, 107 United Fruit Company 189 United Kingdom economy in serious difficulty 5 forced to nationalise Northern Rock 2 property market crash 261 real average earnings 13 train network 28 United Nations 31, 208 United States agricultural subsidies 79 in alliance with Soviet Union against fascism 169 anti-trust legislation 52 auto industry 56 blockbusting neighbourhoods 248 booming but debt-filled consumer markets 141 and capital surplus absorption 31–2 competition in labour markets 61 constraints to excessive concentration of money power 44–5 consumerism 109 conumer debt service ratio 18 cross-border leasing with Germany 142–3 debt 158, 206 debt bubble 18 fiscal crises of federal, state and local governments 261 health care 28–9 heavy losses in derivatives 261 home ownership 3 housing foreclosure crises 1–2, 4, 38, 166 industries dependent on trade seriously hit 141 interventionism in Iraq and Afghanistan 210 investment bankers rescued 261 investment failures in real estate 261 lack of belief in theory of evolution 129 land speculation scheme 187–8 oil issue 76–7, 79, 80, 121, 170, 210, 261 population growth 146 proletarianisation 60 property-led crisis (2007–10) 261 pursuit of science and technology 129 radical anti-authoritarianism 199 Reagan Recession 261 rescue of financial institutions 261 research universities 95 the reversing origins of US corporate profits (1950–2004) 22 the right to the city movement 257 ‘right to work’ states 65 savings and loan crisis (1984–92) 8 secondary mortgage market 173 ‘space race’ (1960s and 1970s) 156 suburbs 106–7, 149–50, 170 train network 28 unemployment 5, 6, 60, 168, 215, 261 unrestricted capitalist development 113 value of US stocks and homes, as a percentage of GDP 22 and Vietnam War 171 wages 13, 62 welfare provision 141 ‘urban crisis’ (1960s) 170 urban ‘heat islands’ 77 urban imagineering 193 urban social movements 180 urbanisation 74, 85, 87, 119, 131, 137, 166, 167, 172–3, 174, 240, 243 US Congress 5, 169, 187–8 US Declaration of Independence 199 US National Intelligence Council 34–5 US Senate 79 US Supreme Court 179 US Treasury and Goldman Sachs 11 rescue of Continental Illinois Bank 261 V Vanderbilt family 98 Vatican 44 Veblen, Thorstein 181–2 Venezuela 256 oil production 6 Vietnam War 32, 171 Volcker, Paul 2, 236 Volcker interest rate shock 261 W wage goods 70, 107, 112, 162 wages and living standards 89 a living wage 63 national minimum wage 63 rates 13, 14, 59–64, 66, 109 real 107 repression 12, 16, 21, 107, 110, 118, 131, 172 stagnation 15 wage bargaining 63 Wal-Mart 17, 29, 64, 89 Wall Street, New York 35, 162, 200, 219, 220 banking institutions 11 bonuses 2 ‘Party of Wall Street’ 11, 20, 200 ‘War on Terror’ 34, 92 warfare 202, 204 Wasserstein, Bruce 98 waste disposal 143 Watt, James 89 wealth accumulation by capitalist class interests 12 centralisation of 10 declining 131 flow of 35 wealth transfer 109–10 weather systems 153–4 Weather Underground 254 Weill, Sandy 98 Welch, Jack 98 Westphalia, Treaty of (1648) 91 Whitehead, Alfred North 75 Wilson, Harold 56 wind turbines 188 women domestic slavery 15 mobilisation of 59, 60 prostitution 15 rights 176, 251, 258 wages 62 workers’ collectives 234 working hours 59 World Bank 36, 51, 69, 192, 200, 251 ‘Fifty Years is Enough’ campaign 55 predicts negative growth in the global economy 6 World Bank Development Report (2009) 26 World Trade Organisation (WTO) 200, 227 agreements 69 street protests against (Seattle, 1999) 55 TRIPS agreement 245 and US agricultural subsidies 79 WorldCom 8, 100, 261 worldwide web 42 Wriston, Walter 19 X X-rays 99 Y Yugoslavia dissolution of 208 ethnic cleansings 247 Z Zapatista revolutionary movement 207, 226, 252 Zola, Émile 53 The Belly of Paris 168 The Ladies’ Paradise 168

The kind of society that emerged was grounded in private property rights, juridical individualism, some version of free markets and free trade. The state increasingly saw its role as the management of this economy as a way to augment its wealth and power. None of this worked perfectly according to the rubrics of John Locke and Adam Smith, and one only has to read Charles Dickens’s Bleak House, with its interminable legal struggles in Chancery, to recognise that British society was and still is constituted as a perpetual power struggle between the old and the new social orders. But in Britain and its erstwhile colony the United States the coercive laws of competition that flowed from these new institutional arrangements were allowed broadly to do their work unhindered by class and status repressions.


Human Frontiers: The Future of Big Ideas in an Age of Small Thinking by Michael Bhaskar

"Margaret Hamilton" Apollo, 3D printing, additive manufacturing, AI winter, Albert Einstein, algorithmic trading, AlphaGo, Anthropocene, artificial general intelligence, augmented reality, autonomous vehicles, backpropagation, barriers to entry, basic income, behavioural economics, Benoit Mandelbrot, Berlin Wall, Big bang: deregulation of the City of London, Big Tech, Bletchley Park, blockchain, Boeing 747, brain emulation, Brexit referendum, call centre, carbon tax, charter city, citizen journalism, Claude Shannon: information theory, Clayton Christensen, clean tech, clean water, cognitive load, Columbian Exchange, coronavirus, cosmic microwave background, COVID-19, creative destruction, CRISPR, crony capitalism, cyber-physical system, dark matter, David Graeber, deep learning, DeepMind, deindustrialization, dematerialisation, Demis Hassabis, demographic dividend, Deng Xiaoping, deplatforming, discovery of penicillin, disruptive innovation, Donald Trump, double entry bookkeeping, Easter island, Edward Jenner, Edward Lorenz: Chaos theory, Elon Musk, en.wikipedia.org, endogenous growth, energy security, energy transition, epigenetics, Eratosthenes, Ernest Rutherford, Eroom's law, fail fast, false flag, Fellow of the Royal Society, flying shuttle, Ford Model T, Francis Fukuyama: the end of history, general purpose technology, germ theory of disease, glass ceiling, global pandemic, Goodhart's law, Google Glasses, Google X / Alphabet X, GPT-3, Haber-Bosch Process, hedonic treadmill, Herman Kahn, Higgs boson, hive mind, hype cycle, Hyperloop, Ignaz Semmelweis: hand washing, Innovator's Dilemma, intangible asset, interchangeable parts, Internet of things, invention of agriculture, invention of the printing press, invention of the steam engine, invention of the telegraph, invisible hand, Isaac Newton, ITER tokamak, James Watt: steam engine, James Webb Space Telescope, Jeff Bezos, jimmy wales, job automation, Johannes Kepler, John von Neumann, Joseph Schumpeter, Kenneth Arrow, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, Large Hadron Collider, liberation theology, lockdown, lone genius, loss aversion, Louis Pasteur, Mark Zuckerberg, Martin Wolf, megacity, megastructure, Menlo Park, Minecraft, minimum viable product, mittelstand, Modern Monetary Theory, Mont Pelerin Society, Murray Gell-Mann, Mustafa Suleyman, natural language processing, Neal Stephenson, nuclear winter, nudge unit, oil shale / tar sands, open economy, OpenAI, opioid epidemic / opioid crisis, PageRank, patent troll, Peter Thiel, plutocrats, post scarcity, post-truth, precautionary principle, public intellectual, publish or perish, purchasing power parity, quantum entanglement, Ray Kurzweil, remote working, rent-seeking, Republic of Letters, Richard Feynman, Robert Gordon, Robert Solow, secular stagnation, shareholder value, Silicon Valley, Silicon Valley ideology, Simon Kuznets, skunkworks, Slavoj Žižek, sovereign wealth fund, spinning jenny, statistical model, stem cell, Steve Jobs, Stuart Kauffman, synthetic biology, techlash, TED Talk, The Rise and Fall of American Growth, the scientific method, The Wealth of Nations by Adam Smith, Thomas Bayes, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, TikTok, total factor productivity, transcontinental railway, Two Sigma, Tyler Cowen, Tyler Cowen: Great Stagnation, universal basic income, uranium enrichment, We wanted flying cars, instead we got 140 characters, When a measure becomes a target, X Prize, Y Combinator

While on the ground there seemed to be evidence that returns were increasing, in that big companies tended to get bigger, the mathematics of markets indicated that they should tend towards an equilibrium where profit evaporated in the face of sheer competitive force. The mystery also extended to answering a further fundamental question in economics: how does economic growth occur? As David Warsh records in his magnificent book, Knowledge and the Wealth of Nations, it wasn't until the 1980s that the puzzle was solved.34 This is the story of how ideas became central to economics. Understanding how ideas are formed and shared, where they come from, how they work, and crucially, the mechanisms, tools, incentives and costs in their creation, went from peripheral concern to the heartland of modern growth theory.

, Growthecon, accessed 29 March 2021, available at https://growthecon.com/blog/BLS-TFP/ Vollset, Stein Emil et al. (2020), ‘Fertility, mortality, migration, and population scenarios for 195 countries and territories from 2017 to 2100’, The Lancet, Vol. 396 No. 10258, pp. 1285–1306 Wallace-Wells, David (2019), The Uninhabitable Earth: A Story of the Future, London: Penguin Warsh, David (2007), Knowledge and the Wealth of Nations: A Story of Economic Discovery, New York: W.W. Norton Watney, Caleb (2020), ‘Cracks in the Great Stagnation’, Agglomerations, accessed 7 January 2021, available at https:// www.agglomerations.tech/cracks-in-the-great-stagnation/ Watson, Peter (2001), The Modern Mind: An intellectual history of the 20th century, London: HarperCollins Watson, Peter (2006), Ideas: A History from Fire to Freud, London: Phoenix Watson, Peter (2017), Convergence: The Idea at the Heart of Science, London: Simon and Schuster Weightman, Gavin (2015), Eureka: How Invention Happens, New Haven, CT: Yale University Press Weiman, Carl (2017), Improving How Universities Teach Science: Lessons from the Science Education Initiative, Cambridge, MA: Harvard Business Review Press Weitzman, Martin (1996), ‘Hybridizing Growth Theory’, The American Economic Review, Vol. 86 No. 2, pp. 207–12 Wellcome Trust (2020), ‘What Researchers Think About the Culture They Work In’, Wellcome.org, accessed 21 January 2020, available at https://wellcome.org/reports/what-researchers-think-about-research-culture?

Some changes were wrought by those without scientific backgrounds – think of George Stephenson and his Rocket – but science did still contribute to technology, as with Joseph Black or Alessandro Volta. New business forms, pioneered by technologists like James Watt or entrepreneurs like Arkwright, dovetailed with original theories from the likes of Adam Smith. They are all connected – ideas in science and philosophy, politics and technology, directed and undirected, lucky accidents and long programmes, all co-evolving and informing one another.8 Whether you were a grand philosophe at an aristocratic Parisian salon or a sooty-handed Derbyshire engineer, you could be part of a revolution in ideas, built from ideas.


pages: 164 words: 57,068

The Second Curve: Thoughts on Reinventing Society by Charles Handy

"Friedman doctrine" OR "shareholder theory", Abraham Maslow, Airbnb, Alan Greenspan, basic income, Bernie Madoff, bitcoin, bonus culture, British Empire, call centre, Clayton Christensen, corporate governance, delayed gratification, Diane Coyle, disruptive innovation, Edward Snowden, falling living standards, future of work, G4S, greed is good, independent contractor, informal economy, Internet of things, invisible hand, joint-stock company, joint-stock limited liability company, Kickstarter, Kodak vs Instagram, late capitalism, mass immigration, megacity, mittelstand, Occupy movement, payday loans, peer-to-peer lending, plutocrats, Ponzi scheme, Robert Solow, Ronald Coase, shareholder value, sharing economy, Skype, Social Responsibility of Business Is to Increase Its Profits, Stanford marshmallow experiment, Steve Jobs, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transaction costs, Veblen good, Walter Mischel

It was that clever device by which selfishness became justified, even if the maxim of ‘greed is good’ was going a bit too far. Adam Smith, the godfather of economics, said it, so it had become a hallowed truth, almost the foundation stone of capitalism. So how could it all have gone so wrong? Let us be clear from the start: Adam Smith did not say that the ‘invisible hand’ would allow self-interest to work for the good of all. He only mentioned that metaphor once in his book The Wealth of Nations, and that was to suggest that an invisible hand would incline a merchant to invest at home rather than in foreign lands.

Will we dissolve into ghettos of religion and race or will we find something better than war or economic success to build a united country? Bigger than all these issues is that old philosophical conundrum – what are we striving for anyway, as individuals and as a society? Is selfishness necessary for economic growth, or could we find a better measure of success? Is altruism and a concern for others, what Adam Smith called sympathy, part of our nature or does it have to be learnt or acquired? New thinking is not the prerogative of those in authority. They are often too wedded to their accustomed ways, to that first curve, to conceive that another way might be possible. The thinking could and should start with ourselves.


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The Power of Gold: The History of an Obsession by Peter L. Bernstein

Alan Greenspan, Albert Einstein, Atahualpa, bread and circuses, Bretton Woods, British Empire, business cycle, California gold rush, central bank independence, double entry bookkeeping, Edward Glaeser, Everybody Ought to Be Rich, falling living standards, financial innovation, floating exchange rates, Francisco Pizarro, German hyperinflation, Hernando de Soto, Isaac Newton, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, large denomination, liquidity trap, long peace, low interest rates, Money creation, money: store of value / unit of account / medium of exchange, old-boy network, Paul Samuelson, price stability, profit motive, proprietary trading, random walk, rising living standards, Ronald Reagan, seigniorage, the market place, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, trade route

King, 1925. Shaw, Bernard, 1928. The Intelligent Woman's Guide to Socialism and Capitalism. Reprinted by New Transaction Books, New Brunswick, NJ, 1984. Skousen, Mark, 1977. Economics of a Pure Gold Standard. Irvington-on-Hudson: The Foundation for Economic Education. Smith, Adam, 1776. The Wealth of Nations. Amherst, NY: Prometheus Press, 1991. Smith, Martin, 1996. Bookwatch: The General Strike. International Socialism, March (from www.google.com). Sraffa, P., The Works and Correspondence of David Ricardo. Cambridge: Cambridge University Press. Stein, Herbert, 1984. Presidential Economics: The Making of Economic Policy from Roosevelt to Reagan and Beyond.

Evidence developed by modern economists indicates that average per capita wealth in Asia in the sixteenth and seventeenth centuries was close to average per capita wealth in Europe.35 Adam Smith himself pointed out that China was one of the richest and most fertile countries in the world.36 Averages can be dangerously deceptive when the dispersion around them is wide. The per capita figure for Europe is of some value as at least suggestive, but the per capita measure for China, or any part of Asia at that time, obscures the reality that a tiny number of people lived in an environment of luxury and indulgence while the masses existed at levels that were horrible even by the standards of the poorest people in Europe. Adam Smith was eloquent on the subject.

Desperate, the Inca complied, accepting baptism with the name Juan de Atahualpa in honor of Saint John the Baptist, on whose day this unhappy event happened to fall. Then the executioner performed his gruesome task while the Spaniards muttered prayers for the salvation of the Inca's soul. The end of the story of the Conquerors reads like a morality tale. Adam Smith decried "the sacred thirst of gold" that drove the explorers and Conquerors into the New World, and he was right .16 The quenching of that thirst led most of these men to a bad end, beginning with Balboa himself. Pizarro's original company broke into factions that drowned the spirit of their great adventure in bloody internecine quarrels over leadership and spoils.


The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities by Mancur Olson

barriers to entry, British Empire, business cycle, California gold rush, collective bargaining, correlation coefficient, David Ricardo: comparative advantage, full employment, income per capita, Kenneth Arrow, market clearing, Norman Macrae, Pareto efficiency, Phillips curve, price discrimination, profit maximization, rent-seeking, Robert Solow, Sam Peltzman, search costs, selection bias, Simon Kuznets, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, urban decay, working poor

North, Structure and Change in Economic History (New York and London: W. W. Norton, 1981). 7. Braudel, Capitalism and Material Life, pp. 404-05. 8. Herbert Kisch, "Growth Deterrents of a Medieval Heritage: The Aachen Area Woolen Trades before 1790," Journal of Economic History 24 (December 1964):517-37. 9. Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations, ed. R. H. Campbell. A. S. Skinner, and W. B. Todd (Oxford: Clarendon Press, 1976), p. 146. 10. See, for example, Christopher Hill, The Century of Revolution, 1603-1709 (New York: W. W. Norton, 1961), and J. H. Plumb, The Origins of Political Stability in England, 1675-1725 (Boston: Houghton Mifflin, 1967). 11. 1 am grateful to Jan De Vries for helpful conversations about the Dutch Republic as well as other matters.

Far more than in Britain, continental business enterprise was a class activity, recruiting practitioners from a group limited by custom and law. In France, commercial enterprise had traditionally entailed derogation from noble status.' 5 It is not surprising that Napoleon once derided Britain as a "nation of shopkeepers" and that even Adam Smith found it expedient to use this phrase in his criticism of Britain's mercantilistic policies. 16 The ubiquitous observations suggesting that the Continent's class structures have by now become in some respects more flexible than Britain's would hint that we should look for processes that might have broken down class barriers more rapidly on the Continent than in Great Britain, or for processes that might have raised or erected more new class barriers in Britain than on the Continent, or for both.

When jurisdictional integration occurs, new special-interest groups matching the scale of the larger jurisdiction will not immediately spring up, because, as we know from Implication 2, such coalitions emerge only gradually in stable situations. It will not, however, take small groups as long to organize as large ones (Implication 3). The great merchants involved in larger-scale trade, often over longer distances, were among the first groups to organize or collude on a national scale. They were often extremely successful; as Adam Smith pointed out, the influence of the "merchants" gave the great governments of Europe the policy of "mercantilism," which favored influential merchants and their allies at the expense of the rest of the nation. Often this involved severely protectionist policies that protected the influential merchants from foreign competitors-mercantilism is, to this day, nearly synonymous with protectionism.


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Capitalism and Freedom by Milton Friedman

"Friedman doctrine" OR "shareholder theory", affirmative action, Berlin Wall, central bank independence, Corn Laws, Deng Xiaoping, floating exchange rates, Fractional reserve banking, full employment, invisible hand, Joseph Schumpeter, liquidity trap, market friction, minimum wage unemployment, price discrimination, rent control, road to serfdom, Ronald Reagan, secular stagnation, Simon Kuznets, the market place, The Wealth of Nations by Adam Smith, union organizing

Warren Nutter, The Extent of Enterprise Monopoly in the United States, 1899–1939 (Chicago: University of Chicago Press, 1951) and George J. Stigler, Five Lectures on Economic Problems (London; Longmans, Green and Co., 1949), pp. 46–65. 2 “Some Comments on the Significance of Labor Unions for Economic Policy,” in David McCord Wright (ed.), The Impact of the Union (New York: Harcourt, Brace, 1951), pp. 204–34. 3 The Wealth of Nations (1776), Bk. I, chap. x, Pt. II (Cannan ed. London, 1930), p. 130. 4 Ibid, Bk. IV, chapter ii, p. 421. Chapter IX Occupational Licensure THE OVERTHROW OF the medieval guild system was an indispensable early step in the rise of freedom in the Western world. It was a sign of the triumph of liberal ideas, and widely recognized as such, that by the mid-nineteenth century, in Britain, the United States, and to a lesser extent on the continent of Europe, men could pursue whatever trade or occupation they wished without the by-your-leave of any governmental or quasi-governmental authority.

For evidence of that, it is enough to point to the call for contributions to the symposium Capitalism, Socialism and Democracy issued by the editors of Commentary in 1978, which went in part: “The idea that there may be an inescapable connection between capitalism and democracy has recently begun to seem plausible to a number of intellectuals who once would have regarded such a view not only as wrong but even as politically dangerous.” My contribution consisted of an extensive quotation from Capitalism and Freedom, a briefer one from Adam Smith, and a closing invitation: “Welcome aboard.”1 Even in 1978, of the 25 contributors to the symposium other than myself, only 9 expressed views that could be classified as sympathetic to the central message of Capitalism and Freedom. The change in the climate of opinion was produced by experience, not by theory or philosophy.

If they commit the same acts in the course of labor dispute, they may well get off scot free. Union actions involving actual or potential physical violence or coercion could hardly take place if it were not for the unspoken acquiescence of the authorities. 3. Private Collusion The final source of monopoly is private collusion. As Adam Smith says, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”3 Such collusion or private cartel arrangements are therefore constantly arising. However, they are generally unstable and of brief duration unless they can call government to their assistance.


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Rebel Cities: From the Right to the City to the Urban Revolution by David Harvey

Alan Greenspan, Bretton Woods, business cycle, collateralized debt obligation, commoditize, creative destruction, David Graeber, deindustrialization, financial innovation, Garrett Hardin, gentrification, Guggenheim Bilbao, Hernando de Soto, high-speed rail, housing crisis, illegal immigration, indoor plumbing, invisible hand, Jane Jacobs, late capitalism, Lewis Mumford, Long Term Capital Management, low interest rates, market bubble, market fundamentalism, means of production, military-industrial complex, moral hazard, mortgage debt, mortgage tax deduction, Murray Bookchin, New Urbanism, Ponzi scheme, precariat, profit maximization, race to the bottom, radical decentralization, Robert Shiller, Savings and loan crisis, special economic zone, the built environment, the High Line, The Wealth of Nations by Adam Smith, Tragedy of the Commons, transcontinental railway, urban planning, We are the 99%, William Langewiesche, Works Progress Administration

In effect, individuals maintain, extend, and socialize their private property right through value- creation and supposedly free and fair market exchange. This is h ow, says Adam Smith, the wealth of nations is most easily created and the common go od best served. He was not entirely wrong. The presumption is, however, that markets can be fair and free, and in classical political economy it was assumed that the state would intervene to make them so (at least that is what Adam Smith advises statesmen to do). But there is an ugly corollary to Locke's theory. Individuals who fail to pro duce value have n o claim to property. The dispossession of indigenous populations in North America by "productive" colonists was justified because indigenous populations did not produce value. 15 So how does Marx deal with all of this?

The justification for private property rights in liberal theory, after all, is that they should serve to maximize the common good when socially integrated through th e institutions of fair and free market exchange. A commonwealth (said Hobbes) is produced through pr ivatizing competitive interests within a framework of strong state power. Th is opinion, articulated by liberal theorists such as John Locke and Adam Smith, continues to be preached. Th ese days, the trick, of course, is to downplay the need for strong state power while in fact deploying it-sometimes brutally. Th e solution to the problems of global poverty, the World B ank continues to assure us (lean ing heavily on the theories of de Soto), is private prop erty r ights for all slum-dwellers and access to m icro-finance (wh ich just h appens to yield the world's financi­ ers hefty rates of return while driving not a few participants to commit suicide in the face of debt peonage) Y Yet the myth prevails: once the inherent entrepreneurial instin cts of the poor are liberated as a force of nature, it is said, then all will be well and the problem of chronic poverty will be broken and the common wealth enhanced.

They thereby realize far- reaching control over production and marketing, and hence stabilize their business environment to allow for rational calcula­ tion and long- term planning, the reduction of risk and uncertainty, and 94 REBEL CITIES more generally guarantee themselves a relatively peaceful and untrou­ bled existence. The visible hand of the corporation, as Alfred Chandler terms it, has consequently been of far greater importance to capitalist his­ torical geography than the invisible hand of the market made so much of by Adam Smith, and paraded ad nauseam before us in recent years as the guiding power in the neoliberal ideology of contemporary globalization.7 But it is here that the mirror image of the first contradiction comes most clearly into view: market processes crucially depend upon the indi­ vidual monopoly of capitalists (of all sorts) over ownership of the means of production, including finance and land.


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Cogs and Monsters: What Economics Is, and What It Should Be by Diane Coyle

3D printing, additive manufacturing, Airbnb, Al Roth, Alan Greenspan, algorithmic management, Amazon Web Services, autonomous vehicles, banking crisis, barriers to entry, behavioural economics, Big bang: deregulation of the City of London, biodiversity loss, bitcoin, Black Lives Matter, Boston Dynamics, Bretton Woods, Brexit referendum, business cycle, call centre, Carmen Reinhart, central bank independence, choice architecture, Chuck Templeton: OpenTable:, cloud computing, complexity theory, computer age, conceptual framework, congestion charging, constrained optimization, coronavirus, COVID-19, creative destruction, credit crunch, data science, DeepMind, deglobalization, deindustrialization, Diane Coyle, discounted cash flows, disintermediation, Donald Trump, Edward Glaeser, en.wikipedia.org, endogenous growth, endowment effect, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, Evgeny Morozov, experimental subject, financial deregulation, financial innovation, financial intermediation, Flash crash, framing effect, general purpose technology, George Akerlof, global supply chain, Goodhart's law, Google bus, haute cuisine, High speed trading, hockey-stick growth, Ida Tarbell, information asymmetry, intangible asset, Internet of things, invisible hand, Jaron Lanier, Jean Tirole, job automation, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, knowledge worker, Les Trente Glorieuses, libertarian paternalism, linear programming, lockdown, Long Term Capital Management, loss aversion, low earth orbit, lump of labour, machine readable, market bubble, market design, Menlo Park, millennium bug, Modern Monetary Theory, Mont Pelerin Society, multi-sided market, Myron Scholes, Nash equilibrium, Nate Silver, Network effects, Occupy movement, Pareto efficiency, payday loans, payment for order flow, Phillips curve, post-industrial society, price mechanism, Productivity paradox, quantitative easing, randomized controlled trial, rent control, rent-seeking, ride hailing / ride sharing, road to serfdom, Robert Gordon, Robert Shiller, Robert Solow, Robinhood: mobile stock trading app, Ronald Coase, Ronald Reagan, San Francisco homelessness, savings glut, school vouchers, sharing economy, Silicon Valley, software is eating the world, spectrum auction, statistical model, Steven Pinker, tacit knowledge, The Chicago School, The Future of Employment, The Great Moderation, the map is not the territory, The Rise and Fall of American Growth, the scientific method, The Signal and the Noise by Nate Silver, the strength of weak ties, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, Uber for X, urban planning, winner-take-all economy, Winter of Discontent, women in the workforce, Y2K

But most new goods and services, the source of the astonishing increase in prosperity for the past quarter of a millennium, would not have become available without market capitalism. It is important to underline the word ‘competitive’ in this statement. There is confusion between markets and business in public debate. As Adam Smith famously pointed out in The Wealth of Nations, businessmen will naturally be inclined to combine against the public interest to improve their profits. A ‘pro-business’ policy helping a large company or an oligopolistic sector of the economy make more money is not at all the same as a ‘pro-market’ or ‘pro-economy’ policy, although the distinction is often elided.

We have in mind a concept of social welfare. Surely it is right to aim for the perspective of the impartial observer, to try to make an objective assessment of the welfare effects of a policy intervention. This is a constant theme of liberal theories of justice, such as John Rawls’s (1971) famous ‘veil of ignorance’ or Adam Smith’s ‘impartial spectator’. At the same time, we know that economists and policy advisers are only human, responding to incentives and maximising our own utility. This is exactly why public choice theory and the New Public Management (Lapuente and Van de Walle 2020) came to emphasise the personal incentives and interests of decision-makers.

Although welfare economics—the study of the benefit to society of economic outcomes or choices—necessarily underpins policy evaluation, and is widely used in practical contexts (such as cost-benefit analysis or competition assessments), economists have paid little attention to it in recent times. Indeed, economics has insisted for more than eighty years on a strict separation between ‘is’ and ‘ought’, between ‘positive’ and ‘normative’. Pigou (1908) represented an older tradition, writing: ‘Ethics and economics are mutually dependent.’ Adam Smith made the same link. While realistic about human nature, he observed that everyone appreciates that ‘his own interest is connected with the prosperity of society’ (Smith 2000 [1759]; see also Rothschild 2001). But in a departure from this tradition, the positivist movement represented in economics by Lionel Robbins led the discipline to rule out inter-personal welfare comparisons.


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Philanthrocapitalism by Matthew Bishop, Michael Green, Bill Clinton

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Abraham Maslow, Albert Einstein, An Inconvenient Truth, anti-communist, AOL-Time Warner, barriers to entry, battle of ideas, Bernie Madoff, Big Tech, Bob Geldof, Bonfire of the Vanities, business process, business process outsourcing, Charles Lindbergh, clean tech, clean water, corporate governance, corporate social responsibility, Dava Sobel, David Ricardo: comparative advantage, digital divide, do well by doing good, don't be evil, family office, financial innovation, full employment, global pandemic, global village, Global Witness, God and Mammon, Hernando de Soto, high net worth, Ida Tarbell, Intergovernmental Panel on Climate Change (IPCC), invisible hand, James Dyson, John Elkington, John Harrison: Longitude, joint-stock company, junk bonds, knowledge economy, knowledge worker, Larry Ellison, Live Aid, lone genius, Marc Andreessen, Marc Benioff, market bubble, mass affluent, Michael Milken, microcredit, Mikhail Gorbachev, Neil Armstrong, Nelson Mandela, new economy, offshore financial centre, old-boy network, PalmPilot, peer-to-peer lending, performance metric, Peter Singer: altruism, plutocrats, profit maximization, profit motive, Richard Feynman, risk tolerance, risk-adjusted returns, Ronald Coase, Ronald Reagan, Salesforce, scientific management, seminal paper, shareholder value, Silicon Valley, Slavoj Žižek, South Sea Bubble, sovereign wealth fund, SpaceShipOne, stem cell, Steve Jobs, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade liberalization, transaction costs, trickle-down economics, Tyler Cowen, wealth creators, winner-take-all economy, working poor, World Values Survey, X Prize

At first, it was not clear if this unprecedented gift could actually be invested as Omidyar wanted but “we are finding more and more investment opportunities,” he says. Omidyar peppers his conversation with references to Adam Smith. He even has a bust of the eighteenth-century Scottish author of The Wealth of Nations in his office. A crucial point in the evolution of his thinking about philanthropy came, he says, when “I rediscovered Adam Smith, who said that in the right environment, the right kind of business model will inevitably lead to social benefit by pursuing traditional financial goals.” As Omidyar explains, “It can be very difficult to measure a nonprofit’s social impact.

This system driven by self-interest is responsible for the great innovations that have improved the lives of billions.” In other words, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest,” as the great eighteenth-century economist Adam Smith put it in The Wealth of Nations. Indeed, one of the insights that the newly rich philanthropists are bringing to their giving is an appreciation of the virtues of business. People such as Mo Ibrahim and organizations such as the Shell Foundation understand that job-creating economic growth is a far better way to help the majority of poor people than aid handouts.

Charity Rediscovered: A Study of Philanthropic Effort in Nineteenth-Century Liverpool. Liverpool, U.K.: Liverpool University Press, 1992. Simon, William E. A Time for Truth. Reader’s Digest Association, 1978. Slack, P. Poverty and Policy in Tudor and Stuart England. London: Longman, 1988. Smith, A. An Inquiry into the Nature and Causes of the Wealth of Nations 1776. A facsimile of the first edition with an introduction by Edwin Connor, Chicago: University of Chicago Press, 1977. Smith, A. The Theory of Moral Sentiments. Amherst, NY: Prometheus Books, 2000. Sobel, Dava. Longitude: The True Story of a Lone Genius Who Solved the Greatest Scientific Problem of His Time.


pages: 651 words: 180,162

Antifragile: Things That Gain From Disorder by Nassim Nicholas Taleb

"World Economic Forum" Davos, Air France Flight 447, Alan Greenspan, Andrei Shleifer, anti-fragile, banking crisis, Benoit Mandelbrot, Berlin Wall, biodiversity loss, Black Swan, business cycle, caloric restriction, caloric restriction, Chuck Templeton: OpenTable:, commoditize, creative destruction, credit crunch, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, discrete time, double entry bookkeeping, Emanuel Derman, epigenetics, fail fast, financial engineering, financial independence, Flash crash, flying shuttle, Gary Taubes, George Santayana, Gini coefficient, Helicobacter pylori, Henri Poincaré, Higgs boson, high net worth, hygiene hypothesis, Ignaz Semmelweis: hand washing, informal economy, invention of the wheel, invisible hand, Isaac Newton, James Hargreaves, Jane Jacobs, Jim Simons, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Arrow, knowledge economy, language acquisition, Lao Tzu, Long Term Capital Management, loss aversion, Louis Pasteur, mandelbrot fractal, Marc Andreessen, Mark Spitznagel, meta-analysis, microbiome, money market fund, moral hazard, mouse model, Myron Scholes, Norbert Wiener, pattern recognition, Paul Samuelson, placebo effect, Ponzi scheme, Post-Keynesian economics, power law, principal–agent problem, purchasing power parity, quantitative trading / quantitative finance, Ralph Nader, random walk, Ray Kurzweil, rent control, Republic of Letters, Ronald Reagan, Rory Sutherland, Rupert Read, selection bias, Silicon Valley, six sigma, spinning jenny, statistical model, Steve Jobs, Steven Pinker, Stewart Brand, stochastic process, stochastic volatility, synthetic biology, tacit knowledge, tail risk, Thales and the olive presses, Thales of Miletus, The Great Moderation, the new new thing, The Wealth of Nations by Adam Smith, Thomas Bayes, Thomas Malthus, too big to fail, transaction costs, urban planning, Vilfredo Pareto, Yogi Berra, Zipf's Law

And in some countries such as Brazil, even today, top bankers are made unconditionally liable to the extent of their own assets. Which Adam Smith? Many right-wingers-in-love-with-large-corporations keep citing Adam Smith, famous patron saint of “capitalism,” a word he never uttered, without reading him, using his ideas in a self-serving selective manner—ideas that he most certainly did not endorse in the form they are presented.4 In Book IV of The Wealth of Nations, Smith was extremely chary of the idea of giving someone upside without downside and had doubts about the limited liability of joint-stock companies (the ancestor of the modern limited liability corporation).

The fragilista mistakes the economy for a washing machine that needs monthly maintenance, or misconstrues the properties of your body for those of a compact disc player. Adam Smith himself made the analogy of the economy as a watch or a clock that once set in motion continues on its own. But I am certain that he did not quite think of matters in these terms, that he looked at the economy in terms of organisms but lacked a framework to express it. For Smith understood the opacity of complex systems as well as the interdependencies, since he developed the notion of the “invisible hand.” Click here for a larger image of this table. But alas, unlike Adam Smith, Plato did not quite get it. Promoting the well-known metaphor of the ship of state, he likens a state to a naval vessel, which, of course, requires the monitoring of a captain.

Matt Ridley’s Anti-Teleological Argument The great medieval Arabic-language skeptic philosopher Algazel, aka Al-Ghazali, who tried to destroy the teleology of Averroes and his rationalism, came up with the famous metaphor of the pin—now falsely attributed to Adam Smith. The pin doesn’t have a single maker, but twenty-five persons involved; these are all collaborating in the absence of a central planner—a collaboration guided by an invisible hand. For not a single one knows how to produce it on his own. In the eyes of Algazel, a skeptic fideist (i.e., a skeptic with religious faith), knowledge was not in the hands of humans, but in those of God, while Adam Smith calls it the law of the market and some modern theorist presents it as self-organization. If the reader wonders why fideism is epistemologically equivalent to pure skepticism about human knowledge and embracing the hidden logics of things, just replace God with nature, fate, the Invisible, Opaque, and Inaccessible, and you mostly get the same result.


pages: 391 words: 22,799

To Serve God and Wal-Mart: The Making of Christian Free Enterprise by Bethany Moreton

affirmative action, American Legislative Exchange Council, anti-communist, Berlin Wall, big-box store, Bretton Woods, Buckminster Fuller, collective bargaining, company town, corporate personhood, creative destruction, deindustrialization, desegregation, Donald Trump, emotional labour, estate planning, eternal september, Fall of the Berlin Wall, Frederick Winslow Taylor, George Gilder, global village, Great Leap Forward, informal economy, invisible hand, liberation theology, longitudinal study, market fundamentalism, Mont Pelerin Society, mortgage tax deduction, Naomi Klein, new economy, post-industrial society, postindustrial economy, prediction markets, price anchoring, prosperity theology / prosperity gospel / gospel of success, Ralph Nader, RFID, road to serfdom, Ronald Reagan, scientific management, Silicon Valley, Stewart Brand, strikebreaker, The Wealth of Nations by Adam Smith, union organizing, walkable city, Washington Consensus, white flight, Whole Earth Catalog, work culture , Works Progress Administration

The NEP, for example, helped publicize a Young Americas Foundation study blaming the Reagan recession on pervasive Keynesianism in college economics textbooks.100 American Studies regularly hosted supporters of the Austrian school of hard-Â�right economics from the Mont Pelerin Society and its American offshoot, the Foundation for Economic Education. The college celebrated the nation’s bicentennial with a program honoring the concurrent two hundredth anniversary of the publication of The Wealth of Nations.101 In 1979, Harding’s business department took the additional step of establishing the Belden Center for Private Enterprise Education, named in honor of an inÂ�deÂ�penÂ�dent Arkansas manufacturer. Its activities included the publication of an annual almanac of “mankind’s onward march through the centuries to economic freedom and greater material blessings” and a quarterly pamphlet, The Entrepreneur, written entirely by the center’s director and dedicated to articles on “capÂ�italism, personified so well by Wal-Â�Mart.”102 The Private Enterprise Center supported the student “Capitalism Corps” and the academic business club.

Even at schools that taught economics as a theoretical discipline, SIFE invariably entered through the business departments. A small number of committed ideologues provided some of the fire in SIFE’s belly, but only at a remove from the core theories they represented. SIFE students read “I, Pencil,” not The Wealth of Nations nor even The Road to Serfdom. Sometimes, however, the students veered toward contradictions between their ideological models and conÂ�flicting economic values. In the midst of the intense focus on entrepreneurial heroism and government profligacy, Malone College’s 1987 projÂ�ect stood out for its explicit reference to the basis of the postindustrial economy.

See Students in Free Enterprise Silent majority, 3, 41 Silicon Valley, 172 Siloam Springs, AR, 32–33 Small Business Administration, 149–150 Small Business Development Centers, 150 Small businesses, 150–151, 157, 160–161, 185–186, 210, 212 Small Business Institutes, 150, 167 Small farms/farmers, 8, 12–14, 16, 20, 23, 29–30, 37, 44, 50, 52–53, 55, 57, 270. See also Agriculture; Rural issues Small-town issues, 38, 40–42, 44, 46–47, 80, 84, 133, 153, 238 Smith, Adam, 126, 154, 175, 211, 220; The Wealth of Nations, 167 Social capÂ�ital, 54, 125 Socialism, 16, 26, 142, 146, 155, 170, 175, 194, 248 Social Security, 2, 10, 30, 54, 71, 330n42 Soderquist, Don, 89, 117–118, 132, 162–163, 208, 249; The Wal-Mart Way, 163 Southern Baptist Convention, 92, 95, 112, 120, 142, 156, 158, 188, 250, 259, 267 Southern Methodist University, 134, 156, 163 Southwest Baptist University, 186–189, 191, 212 Southwestern Life Insurance, 179–180 Soviet Â�Union, 156, 170–171, 196, 218, 220, 225–226, 233, 249 Spanish language, 55, 224, 234–237, 245 Sponsorship.


pages: 503 words: 131,064

Liars and Outliers: How Security Holds Society Together by Bruce Schneier

Abraham Maslow, airport security, Alvin Toffler, barriers to entry, behavioural economics, benefit corporation, Berlin Wall, Bernie Madoff, Bernie Sanders, Brian Krebs, Broken windows theory, carried interest, Cass Sunstein, Chelsea Manning, commoditize, corporate governance, crack epidemic, credit crunch, CRISPR, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Graeber, desegregation, don't be evil, Double Irish / Dutch Sandwich, Douglas Hofstadter, Dunbar number, experimental economics, Fall of the Berlin Wall, financial deregulation, Future Shock, Garrett Hardin, George Akerlof, hydraulic fracturing, impulse control, income inequality, information security, invention of agriculture, invention of gunpowder, iterative process, Jean Tirole, John Bogle, John Nash: game theory, joint-stock company, Julian Assange, language acquisition, longitudinal study, mass incarceration, meta-analysis, microcredit, mirror neurons, moral hazard, Multics, mutually assured destruction, Nate Silver, Network effects, Nick Leeson, off-the-grid, offshore financial centre, Oklahoma City bombing, patent troll, phenotype, pre–internet, principal–agent problem, prisoner's dilemma, profit maximization, profit motive, race to the bottom, Ralph Waldo Emerson, RAND corporation, Recombinant DNA, rent-seeking, RFID, Richard Thaler, risk tolerance, Ronald Coase, security theater, shareholder value, slashdot, statistical model, Steven Pinker, Stuxnet, technological singularity, The Market for Lemons, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Timothy McVeigh, too big to fail, traffic fines, Tragedy of the Commons, transaction costs, ultimatum game, UNCLOS, union organizing, Vernor Vinge, WikiLeaks, World Values Survey, Y2K, Yochai Benkler, zero-sum game

Stulz (2007), “The Economics of Conflicts of Interest in Financial Institutions,” Journal of Financial Economics, 85 (2007): 267–96. Chapter 13 result is price-fixing Robert Schuettinger and Eamonn F. Butler (1979), Forty Centuries of Wage and Price Controls: How Not to Fight Inflation, The Heritage Institute. Adam Smith Adam Smith (1776), The Wealth of Nations. global citric acid cartel John M. Connor (1998), “The Global Citric Acid Conspiracy,” Agribusiness, 14:435–52. computer-memory cartel U.S. Department of Justice (5 Oct 2005), “Samsung Agrees to Plead Guilty and to Pay $300 Million Criminal Fine for Role in Price Fixing Conspiracy: Korean Company Pays Second Largest Criminal Antitrust Fine in U.S.

Zoe R. Donaldson and Larry J. Young (2008), “Oxytocin, Vasopressin, and the Neurogenetics of Sociality,” Science, 322:900–4. someone's oxytocin Michael Kosfield, Marcus Heinfichs, Paul J. Zak, Urs Fischbacher, and Ernst Fehr (2003), “Oxytocin Increases Trust in Humans,” Nature, 435:673–6. Adam Smith Adam Smith (1759), The Theory of Moral Sentiments. non-kin groups Martin A. Nowak (2006), “Five Rules for the Evolution of Cooperation,” Science, 314:1560–3. Martin A. Nowak and Roger Highfield (2011), SuperCooperators: Altruism, Evolution, and Why We Need Each Other to Succeed, Free Press. Indirect reciprocity Martin A.

Nelson, and Uri Simonsohn (2011), “False Positive Psychology: Undisclosed Flexibility in Data Collection and Analaysis Allows Presenting Anything as Significant,” Psychological Science, 22:1359–66. narrow and unrepresentative Joseph Henrich, Steven J. Heine, and Ara Norenzayan (2010), “The Weirdest People in the World?” Behavioral & Brain Sciences, 33:61–83. Adam Smith Adam Smith (1759), The Theory of Moral Sentiments. Chapter 2 sticks as weapons Jill D. Pruetz and Paco Bertolani (2007), “Savanna Chimpanzees, Pan troglodytes verus, Hunt with Tools,” Current Biology, 17:412–17. using rocks Giacomo Bernardi (2011), “The Use of Tools by Wrasses (Labridae),” Coral Reefs, published online before print.


pages: 505 words: 138,917

Open: The Story of Human Progress by Johan Norberg

Abraham Maslow, additive manufacturing, affirmative action, Albert Einstein, anti-globalists, basic income, Berlin Wall, Bernie Sanders, Bletchley Park, Brexit referendum, British Empire, business cycle, business process, California gold rush, carbon tax, citizen journalism, classic study, Clayton Christensen, clean water, cognitive dissonance, collective bargaining, Corn Laws, coronavirus, COVID-19, creative destruction, crony capitalism, decarbonisation, deindustrialization, Deng Xiaoping, digital map, Donald Trump, Edward Jenner, fake news, Fall of the Berlin Wall, falling living standards, Filter Bubble, financial innovation, flying shuttle, Flynn Effect, Francis Fukuyama: the end of history, future of work, Galaxy Zoo, George Gilder, Gini coefficient, global pandemic, global supply chain, global village, green new deal, humanitarian revolution, illegal immigration, income per capita, Indoor air pollution, indoor plumbing, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Islamic Golden Age, James Watt: steam engine, Jane Jacobs, Jeff Bezos, job automation, John von Neumann, joint-stock company, Joseph Schumpeter, Kickstarter, knowledge economy, labour mobility, Lao Tzu, liberal capitalism, manufacturing employment, mass immigration, negative emissions, Network effects, open borders, open economy, Pax Mongolica, place-making, profit motive, RAND corporation, regulatory arbitrage, rent control, Republic of Letters, road to serfdom, Ronald Reagan, Schrödinger's Cat, sharing economy, side project, Silicon Valley, Solyndra, spice trade, stem cell, Steve Bannon, Steve Jobs, Steve Wozniak, Steven Pinker, tacit knowledge, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, trade liberalization, trade route, transatlantic slave trade, Tyler Cowen, Uber for X, ultimatum game, universal basic income, World Values Survey, Xiaogang Anhui farmers, zero-sum game

Ridley, The Rational Optimist: How Prosperity Evolves. London, Fourth Estate, 2010, p. 91. 3 C. Wheelan, Naked Economics: Undressing the Dismal Science. New York, W. W. Norton & Company, 2002, p. 187. 4 A. Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations in The Glasgow Edition of the Works and Correspondence of Adam Smith. Indianapolis, Liberty Fund, 1776/1981, p. 29. 5 A. S. Brooks et al., ‘Longdistance stone transport and pigment use in the earliest Middle Stone Age’, Science, 360(6384), 2018. 6 P. Farb, Man’s Rise to Civilization: As Shown by the Indians of North America From Primeval Times to the Coming of the Industrial State.

It can be set up anywhere, and it runs on nothing but human imagination and on keeping protectionists (or parents) away. It’s not a foreign plot, it is the fastest way to prosper more from what you produce yourself, and the only way for poor countries to get rich and for rich countries to get richer. Mankind has, thought the Scottish philosopher and economist Adam Smith, ‘a disposition to truck, barter and exchange’.4 Wherever we look in history, people exchange – favours, ideas, goods and services. And the deeper archaeologists dig, the further back they push the evidence of human exchange. It goes thousands of years back in history and, according to some recent, astonishing findings, trade is as old as mankind itself.

As the economist and politician William Beveridge pointed out in 1931, if other countries have bad harbours that are inaccessible to our ships it is bad, but it would be even worse if we responded by throwing rocks in our own harbours.62 The meaningless trade balance While these are serious concerns, ‘[n]othing, however, can be more absurd than this whole doctrine of the balance of trade’, as the founder of classical economics, Adam Smith, told his mercantilist contemporaries. They thought exports were good and imports bad, and that it was a problem if we bought more from a certain place than they bought from us. Smith’s point was that you derive the benefit of trade from the goods and services you receive, not the ones you produce, just like the material benefit from work is not the effort you exert, but the goods and services this work buys you.


pages: 294 words: 89,406

Lying for Money: How Fraud Makes the World Go Round by Daniel Davies

Alan Greenspan, bank run, banking crisis, Bernie Madoff, bitcoin, Black Swan, Bretton Woods, business cycle, business process, collapse of Lehman Brothers, compound rate of return, cryptocurrency, fake it until you make it, financial deregulation, fixed income, Frederick Winslow Taylor, Gordon Gekko, high net worth, illegal immigration, index arbitrage, junk bonds, Michael Milken, multilevel marketing, Nick Leeson, offshore financial centre, Peter Thiel, Ponzi scheme, price mechanism, principal–agent problem, railway mania, Ronald Coase, Ronald Reagan, Savings and loan crisis, scientific management, short selling, social web, South Sea Bubble, tacit knowledge, tail risk, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, time value of money, vertical integration, web of trust

In other words, many things about the way the business world is organised make a lot more sense when you realise that they exist because of the constant drive for countries to become less like Greece and more like Canada. And as industrial society develops, it becomes easier to be a victim. In The Wealth of Nations, Adam Smith described how prosperity derived from the division of labour – the eighteen distinct operations that went into the manufacture of a pin, for example. While this was going on, the modern world also saw a growing division of trust. In previous eras when people set out across continents to discover new worlds, they had known that they were stepping out into the unknown, but Mr Gauger was at the cutting edge of a new reality.

It had been recognised much earlier that collusion between business people tends to raise prices at the expense of the general public. Adam Smith’s Wealth of Nations has a famous passage that ‘People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.’ These days, the intellectual battles of the Progressive Era have been so comprehensively won by the anti-cartel side that it’s hard to convince ourselves that there hasn’t always been a sense of moral odour hanging around the practice of price fixing. But it’s surprisingly recent. The famous passage from Adam Smith is immediately followed by one saying ‘It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice.’

That’s how the majority of frauds happen, by number, and this model of ‘incidental’ fraud is one that fits pretty well into a normal risk management framework. Risk and quality Quality control is one of the ‘planning’ disciplines which look like they possibly ought to be part of economics, but which didn’t get scooped up into the big intellectual adventure that started with Adam Smith and have therefore remained largely free of ideological and psychological baggage. That’s useful, as it’s clearly related to the economic concept of risk and return, which has more baggage than a budget flight to a golfing resort. The advantage of a ‘quality control’ way of thinking over a ‘risk management’ way of thinking is that it is less dependent on making assumptions about the statistical properties of bad events, so you can apply it to things which are sui generis or which haven’t been seen before.


pages: 384 words: 93,754

Green Swans: The Coming Boom in Regenerative Capitalism by John Elkington

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, agricultural Revolution, Anthropocene, anti-fragile, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, Berlin Wall, bitcoin, Black Swan, blockchain, Boeing 737 MAX, Boeing 747, Buckminster Fuller, business cycle, Cambridge Analytica, carbon footprint, carbon tax, circular economy, Clayton Christensen, clean water, cloud computing, corporate governance, corporate social responsibility, correlation does not imply causation, creative destruction, CRISPR, crowdsourcing, David Attenborough, deglobalization, degrowth, discounted cash flows, distributed ledger, do well by doing good, Donald Trump, double entry bookkeeping, drone strike, Elon Musk, en.wikipedia.org, energy transition, Extinction Rebellion, Future Shock, Gail Bradbrook, Geoffrey West, Santa Fe Institute, George Akerlof, global supply chain, Google X / Alphabet X, green new deal, green transition, Greta Thunberg, Hans Rosling, hype cycle, impact investing, intangible asset, Internet of things, invention of the wheel, invisible hand, Iridium satellite, Jeff Bezos, John Elkington, Jony Ive, Joseph Schumpeter, junk bonds, Kevin Kelly, Kickstarter, M-Pesa, Marc Benioff, Mark Zuckerberg, Martin Wolf, microplastics / micro fibres, more computing power than Apollo, move fast and break things, Naomi Klein, Nelson Mandela, new economy, Nikolai Kondratiev, ocean acidification, oil shale / tar sands, oil shock, opioid epidemic / opioid crisis, placebo effect, Planet Labs, planetary scale, plant based meat, plutocrats, Ponzi scheme, radical decentralization, Ralph Nader, reality distortion field, Recombinant DNA, Rubik’s Cube, Salesforce, self-driving car, shareholder value, sharing economy, Sheryl Sandberg, Silicon Valley, smart cities, smart grid, sovereign wealth fund, space junk, Steven Pinker, Stewart Brand, supply-chain management, synthetic biology, systems thinking, The future is already here, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Tim Cook: Apple, urban planning, Whole Earth Catalog

Interestingly, the tenth and final theme that O’Reilly flagged was the need to reinvent the discipline of economics, the master discipline of capitalism. Among the books he had been reading were Kate Raworth’s Doughnut Economics, Mariana Mazzucato’s The Value of Everything, and Russ Roberts’s How Adam Smith Can Change Your Life. Just in case his readers thought that the last book was another hymnal to Smith’s “invisible hand,” O’Reilly underscored the fact that the main point of reference in the book was not Smith’s 1776 book, The Wealth of Nations, but The Theory of Moral Sentiments, which Smith had published seventeen years earlier. The key argument in that work was that social norms play a crucial role in reining in self-interest.

It’s an ideology whose credibility is fatally compromised because of the perverse outcomes it has engineered: runaway climate change, the biggest inter-generational crime ever committed, and gross inequality—a scar on the conscience of humanity. Capitalism needs to be reinvented for the 21st century. This means discarding the tired reflex that has driven economic development since Adam Smith first proclaimed its utility over two hundred years ago—self-interest—in favor of working for the common good. The famous “invisible hand” has reached its limitations and instead inclusive capitalism is needed to establish a new social contract that truly leaves no one behind. It also requires supercharging inventive models of cooperation, which recognize that you can only deliver real transformational change—at speed, at scale, and with maximum impact—provided you join forces in deep and purposeful collaboration with others.

As blind both to Black and Gray Swan futures some of those crazy people are warning about as they are to possible Green Swan opportunities. We will explore how new forms of wealth are being created tomorrow by people previously seen as marginal, irrelevant even. Ultimately, the genius of capitalism links to Adam Smith’s “invisible hand,” with the individual self-interest of businesspeople driving the innovation and production that potentially serve the interests of the many. Ideas that start on the margins can push—or be sucked—into the mainstream. Failed experiments are allowed to die, with the most productive capitalist economies allowing for a certain amount of failure.


pages: 235 words: 62,862

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

"World Economic Forum" Davos, Alan Greenspan, autonomous vehicles, banking crisis, Bartolomé de las Casas, basic income, Berlin Wall, Bertrand Russell: In Praise of Idleness, Branko Milanovic, cognitive dissonance, computer age, conceptual framework, credit crunch, David Graeber, Diane Coyle, driverless car, Erik Brynjolfsson, everywhere but in the productivity statistics, Fall of the Berlin Wall, Ford Model T, Francis Fukuyama: the end of history, Frank Levy and Richard Murnane: The New Division of Labor, full employment, George Gilder, George Santayana, 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 Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, Kodak vs Instagram, low skilled workers, means of production, megacity, meta-analysis, microcredit, minimum wage unemployment, Mont Pelerin Society, Nathan Meyer Rothschild: antibiotics, Occupy movement, offshore financial centre, Paul Samuelson, Peter Thiel, post-industrial society, precariat, public intellectual, radical decentralization, RAND corporation, randomized controlled trial, Ray Kurzweil, Ronald Reagan, Rutger Bregman, Second Machine Age, Silicon Valley, Simon Kuznets, Skype, stem cell, Steven Pinker, TED Talk, telemarketer, The future is already here, The Future of Employment, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tyler Cowen, 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

Although this document enabled the king to take out a few more loans, it came too late to stop the Revolution in 1789. The meaning of the term “national income” has actually never been fixed, fluctuating with the latest intellectual currents and the imperatives of the moment. Every era has its own idiosyncratic ideas about what defines a country’s wealth. Take Adam Smith, father of modern economics, who believed that the wealth of nations was founded not only on agriculture, but also manufacturing. The entire service economy, by contrast – a sector that spans everything from entertainers to lawyers and constitutes roughly two-thirds of the modern economy – Smith argued “adds to the value of nothing.”18 Nevertheless, as cash flows shifted from farms to factories and then from production lines to office towers, figures for tabulating all this wealth kept pace.

Juliet Schor, The Overworked American. The Unexpected Decline of Leisure (1992), p. 47. It’s worth noting that hunters and gathers probably worked even less. Archeologists estimate their workweek at no more than 20 hours. 30. Benjamin Kline Hunnicutt, Kellogg’s Six-Hour Day (1996), p. 35. 31. In his classic work The Wealth of Nations, Adam Smith wrote: “The man who works so moderately as to be able to work constantly, not only preserves his health the longest, but in the course of the year, executes the greatest quantity of works.” 32. Benjamin Kline Hunnicutt, Kellogg’s Six-Hour Day (1996), p. 62. 33. Kellogg’s workday was briefly back at eight hours during WWII, but after the war a large majority of his employees voted to resume the six-hour workday; it wasn’t until Kellogg’s cornflake factory managers were allowed to set hours themselves that, one by one, they ramped workdays up to eight hours again.


pages: 202 words: 62,901

The People's Republic of Walmart: How the World's Biggest Corporations Are Laying the Foundation for Socialism by Leigh Phillips, Michal Rozworski

Alan Greenspan, Anthropocene, Berlin Wall, Bernie Sanders, biodiversity loss, call centre, capitalist realism, carbon footprint, carbon tax, central bank independence, Colonization of Mars, combinatorial explosion, company town, complexity theory, computer age, corporate raider, crewed spaceflight, data science, decarbonisation, digital rights, discovery of penicillin, Elon Musk, financial engineering, fulfillment center, G4S, Garrett Hardin, Georg Cantor, germ theory of disease, Gordon Gekko, Great Leap Forward, greed is good, hiring and firing, independent contractor, index fund, Intergovernmental Panel on Climate Change (IPCC), Internet of things, inventory management, invisible hand, Jeff Bezos, Jeremy Corbyn, Joseph Schumpeter, Kanban, Kiva Systems, linear programming, liquidity trap, mass immigration, Mont Pelerin Society, Neal Stephenson, new economy, Norbert Wiener, oil shock, passive investing, Paul Samuelson, post scarcity, profit maximization, profit motive, purchasing power parity, recommendation engine, Ronald Coase, Ronald Reagan, sharing economy, Silicon Valley, Skype, sovereign wealth fund, strikebreaker, supply-chain management, surveillance capitalism, technoutopianism, TED Talk, The Nature of the Firm, The Wealth of Nations by Adam Smith, theory of mind, Tragedy of the Commons, transaction costs, Turing machine, union organizing, warehouse automation, warehouse robotics, We are all Keynesians now

Unlike the localized gift-exchange economy of prehistory, ancient Mesopotamia saw systems of centralized redistribution that mimic today’s welfare states: taxes and levies in, transfers of goods and services out. Alongside writing and mathematics, building blocks of civilization that developed in tandem with economic record keeping, the ancients also developed money—only not in the way some economists imagine. In an oft-repeated passage from The Wealth of Nations, Adam Smith wrote that “the propensity to truck, barter, and exchange one thing for another” led to the division of labor, the invention of money and greater economic complexity. This bit of make-believe has been passed down for centuries and can still be found in most introductory economics textbooks.

In much of mainstream economics, the firm is just a mathematical equation that consumes inputs and produces outputs. How it does this is rarely asked; its internal workings are insufficiently interesting. Or sufficiently embarrassing. Willful disregard for the reality of planning is common enough. Adam Smith, the eighteenth-century Scot now considered the father of economics, is famous for introducing the “invisible hand” of the market. By this he meant no mystical force, but the idea that while individuals are making decisions whether to sell or to buy in the pursuit of self-interest, they are “led by an invisible hand to promote an end which was no part of [their] intention”—the welfare of society realized through a market system.

In the years immediately following this overhaul, over 10 percent of total NHS spending already went to for-profit providers. Against the Market The story of the NHS since the 1990s is not just one of a conflict between planning and markets; it is also a reminder that markets need to be made and sustained, a point well understood by the neoliberals who set out to do just this. Markets are human creations; indeed, Adam Smith’s prehistory of plucky Neolithic humans getting by through “truck and barter” is as inaccurate as the creationist Eden where humans rode dinosaurs. Rather than being natural and inevitable, markets are a planned institution. The NHS is a perfect example of such conscious effort going into the creation of something that is ultimately antidemocratic—where the strength of your voice is the size of your wallet—not to mention anarchic and often irrational.


pages: 275 words: 84,980

Before Babylon, Beyond Bitcoin: From Money That We Understand to Money That Understands Us (Perspectives) by David Birch

"World Economic Forum" Davos, agricultural Revolution, Airbnb, Alan Greenspan, bank run, banks create money, bitcoin, blockchain, Bretton Woods, British Empire, Broken windows theory, Burning Man, business cycle, capital controls, cashless society, Clayton Christensen, clockwork universe, creative destruction, credit crunch, cross-border payments, cross-subsidies, crowdsourcing, cryptocurrency, David Graeber, dematerialisation, Diane Coyle, disruptive innovation, distributed ledger, Dogecoin, double entry bookkeeping, Ethereum, ethereum blockchain, facts on the ground, fake news, fault tolerance, fiat currency, financial exclusion, financial innovation, financial intermediation, floating exchange rates, Fractional reserve banking, index card, informal economy, Internet of things, invention of the printing press, invention of the telegraph, invention of the telephone, invisible hand, Irish bank strikes, Isaac Newton, Jane Jacobs, Kenneth Rogoff, knowledge economy, Kuwabatake Sanjuro: assassination market, land bank, large denomination, low interest rates, M-Pesa, market clearing, market fundamentalism, Marshall McLuhan, Martin Wolf, mobile money, Money creation, money: store of value / unit of account / medium of exchange, new economy, Northern Rock, Pingit, prediction markets, price stability, QR code, quantitative easing, railway mania, Ralph Waldo Emerson, Real Time Gross Settlement, reserve currency, Satoshi Nakamoto, seigniorage, Silicon Valley, smart contracts, social graph, special drawing rights, Suez canal 1869, technoutopianism, The future is already here, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, wage slave, Washington Consensus, wikimedia commons

Since paying interest was forbidden by the church, selling tallies at a discount became a key means for the Crown to borrow money without God noticing what was going on. The discount on the tallies, being equivalent to the interest rate for government debt, varied just as one would expect. As economic circumstances changed, so did the discount rate. As Adam Smith notes in An Inquiry into the Nature and Causes of the Wealth of Nations (Book V, Chapter 3: ‘Of public debts’), in the time of William of Orange the discount reached 60 per cent when the Bank of England suspended transactions during a debasement of the coinage. Clearly, then, the tally system could be (and was) abused by the exchequer selling tallies that they would not redeem, but the Crown soon learned not to renege on tallies since doing so meant that the discount on future tallies would increase and the exchequer would be hit hard.

Part II The Present: Money That We Think We Understand The judicious operations of banking, by substituting paper in the room of a great part of this gold and silver, enables the country to convert a great part of this dead stock into active and productive stock. — Adam Smith (1723–90) in An Inquiry into the Nature and Causes of the Wealth of Nations (Volume I, Book II, Chapter II) During Victorian times the combination of technology and regulation brought us to a vision of money and markets that we recognize. This vision is one of a central bank in control of nation state currency, money creation by fractional reserve banks and paper circulating in the place of commodities.

The unbearable lightness of digital money. Journal of Payment Strategy and Systems 9(3), 229–241. IBSintelligence. 2013. In the fast lane. IBS Journal, 4 April, p. 22. Issing, O. 2000. New techologies in payments: a challenge to monetary policy. European Central Bank, 28 June. Jacobs, J. 1985. Cities and the Wealth of Nations. Toronto: Random House. Jacomb, M. 1998. The city to come. The Spectator, 8 November, p. 17. Jansen, M. 2013. Bitcoin: the political ‘virtual’ of an intangible material currency. International Journal of Community Currency Research 17(A), 8–18. Jay, P. 2000. Globalisation: boats not bytes.


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Winner-Take-All Politics: How Washington Made the Rich Richer-And Turned Its Back on the Middle Class by Paul Pierson, Jacob S. Hacker

accounting loophole / creative accounting, active measures, affirmative action, air traffic controllers' union, Alan Greenspan, asset allocation, barriers to entry, Bear Stearns, Bonfire of the Vanities, business climate, business cycle, carried interest, Cass Sunstein, clean water, collective bargaining, corporate governance, Credit Default Swap, David Brooks, desegregation, employer provided health coverage, financial deregulation, financial innovation, financial intermediation, fixed income, full employment, Glass-Steagall Act, Home mortgage interest deduction, Howard Zinn, income inequality, invisible hand, John Bogle, knowledge economy, laissez-faire capitalism, Martin Wolf, medical bankruptcy, moral hazard, Nate Silver, new economy, night-watchman state, offshore financial centre, oil shock, Paul Volcker talking about ATMs, Powell Memorandum, Ralph Nader, Ronald Reagan, Savings and loan crisis, shareholder value, Silicon Valley, Tax Reform Act of 1986, The Wealth of Nations by Adam Smith, three-martini lunch, too big to fail, trickle-down economics, union organizing, very high income, War on Poverty, winner-take-all economy, women in the workforce

Efforts to address these inequities were blocked in legislatures highly attentive to business concerns. Where laws promoting social reform were passed, they were thrown out by the courts. Lest this critique be seen as deeply radical in spirit, it is worth quoting a little-noticed passage in Adam Smith’s 1776 The Wealth of Nations, now viewed as the bible of limited-government free-market economics. “Wherever there is great property,” Smith wrote, “there is great inequality… Civil government, so far as it is instituted for the security of property, is in reality, instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.”15 (Smith, a resolute skeptic about the rationality of unfettered financial markets, also authored the phrase “other people’s money,” which titled Brandeis’s famous work.)

Bush (Naperville, IL: Sourcebooks, 2003), 72–73. 12 Melvin I. Urofsky, Louis D. Brandeis: A Life (New York: Pantheon Books, 2009), 326. 13 Quoted in Ibid., 320. 14 Cass Sunstein, The Second Bill of Rights: FDR’s Unfinished Revolution and Why We Need It More Than Ever (New York: Basic Books, 2004), 20–25. 15 Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations (Edinburgh: Thomas Nelson and Peter Brown, 1827), 277, 279. 16 Walter Lippmann, Drift and Mastery: An Attempt to Diagnose the Current Unrest (New York: Mitchell Kennerley, 1914), 36–37. 17 Ibid., 100. 18 Frances E. Lee and Bruce I. Oppenheimer, Sizing Up the Senate: The Unequal Consequences of Equal Representation (Chicago: University of Chicago Press, 1999); John D.

During his tenure as CEO, Fuld made $490 million (before taxes) cashing in stock options and stock he received as compensation.”68 Friends in High Places The myth of America’s winner-take-all economy is that government does not have much to do with it. Skyrocketing gains at the top are simply the impersonal beneficence of Adam Smith’s “invisible hand,” the natural outcome of free-market forces. Listen to Sanford Weill, the former chairman of Citigroup: “People can look at the last twenty-five years and say this is an incredibly unique period of time. We didn’t rely on somebody else to build what we built.”69 Weill may not have relied on “somebody else” during this “unique period.”


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Against the Gods: The Remarkable Story of Risk by Peter L. Bernstein

Alan Greenspan, Albert Einstein, Alvin Roth, Andrew Wiles, Antoine Gombaud: Chevalier de Méré, Bayesian statistics, behavioural economics, Big bang: deregulation of the City of London, Bretton Woods, business cycle, buttonwood tree, buy and hold, capital asset pricing model, cognitive dissonance, computerized trading, Daniel Kahneman / Amos Tversky, diversified portfolio, double entry bookkeeping, Edmond Halley, Edward Lloyd's coffeehouse, endowment effect, experimental economics, fear of failure, Fellow of the Royal Society, Fermat's Last Theorem, financial deregulation, financial engineering, financial innovation, full employment, Great Leap Forward, index fund, invention of movable type, Isaac Newton, John Nash: game theory, John von Neumann, Kenneth Arrow, linear programming, loss aversion, Louis Bachelier, mental accounting, moral hazard, Myron Scholes, Nash equilibrium, Norman Macrae, Paul Samuelson, Philip Mirowski, Post-Keynesian economics, probability theory / Blaise Pascal / Pierre de Fermat, prudent man rule, random walk, Richard Thaler, Robert Shiller, Robert Solow, spectrum auction, statistical model, stocks for the long run, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, Thomas Bayes, trade route, transaction costs, tulip mania, Vanguard fund, zero-sum game

In the 1780s, he wrote a book on the American Revolution with the almost endless title of Observations on the Importance of the American Revolution and the Means of Making it a Benefit to the World in which he expressed his belief that the Revolution was ordained by God. At some personal risk, he cared for the American prisoners of war who had been transferred to camps in England. Benjamin Franklin was a good friend, and Adam Smith was an acquaintance. Price and Franklin read and criticized some of the draft chapters of The Wealth of Nations as Smith was writing it. One freedom bothered Price: the freedom to borrow. He was deeply concerned about the burgeoning national debt, swollen by the wars against France and by the war against the colonies in North America. He complained that the debt was "funding for eternity" and dubbed it the "Grand National Evil."18 But Price was not just a minister and a passionate defender of human freedom.

It is for this reason that probability is to us the "guide of life," since to us, as Locke says, "in the greatest part of our concernment, God has afforded only the Twilight, as I may so say, of Probability, suitable, I presume, to that state of Mediocrity and Probationership He has been pleased to place us in here."10 INTRODUCTION 1. Quoted in Keynes, 1921, frontispiece to Chapter XXVIII. 2. Personal conversation. 3. Arrow, 1992, p. 46. CHAPTER 1 1. Quoted in Ignatin and Smith, 1976, p. 80. The quotation is from Book I, Chapter X, of The Wealth of Nations. 2. Keynes, 1936, p. 159. 3. Ibid., p. 150. 4. This entire paragraph is from Bolen, 1976. 5. Excellent background on all this may be found in David, 1962, pp. 2-21. 6. See David, 1962, p. 34. 7. Hayano, 1982. 8. Johnson, 1995. 9. See David, p. 2. 10. Sambursky, 1956, p. 36. 11. Ibid., p. 37. 12.

Human beings have always been infatuated with gambling because it puts us head-to-head against the fates, with no holds barred. We enter this daunting battle because we are convinced that we have a powerful ally: Lady Luck will interpose herself between us and the fates (or the odds) to bring victory to our side. Adam Smith, a masterful student of human nature, defined the motivation: "The overweening conceit which the greater part of men have of their own abilities [and] their absurd presumption in their own good fortune."' Although Smith was keenly aware that the human propensity to take risk propelled economic progress, he feared that society would suffer when that propensity ran amuck.


Building and Dwelling: Ethics for the City by Richard Sennett

Anthropocene, Big Tech, Buckminster Fuller, car-free, classic study, clean water, cognitive dissonance, company town, complexity theory, creative destruction, dematerialisation, Deng Xiaoping, double helix, Downton Abbey, driverless car, East Village, en.wikipedia.org, Evgeny Morozov, Frank Gehry, gentrification, ghettoisation, housing crisis, illegal immigration, informal economy, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, Joseph Schumpeter, Kickstarter, Lewis Mumford, Mark Zuckerberg, Masdar, mass immigration, means of production, megacity, megaproject, new economy, Nicholas Carr, Norbert Wiener, open borders, place-making, plutocrats, post-truth, Richard Florida, Shoshana Zuboff, Silicon Valley, Silicon Valley startup, SimCity, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, surveillance capitalism, systems thinking, tacit knowledge, the built environment, The Chicago School, The Death and Life of Great American Cities, the High Line, The Wealth of Nations by Adam Smith, urban planning, urban renewal, Victor Gruen, Yochai Benkler

The eighteenth-century economist Jean-Baptiste Say answered this question in his loi des débouchés (law of the markets), which postulated that ‘increased supply creates its own demand’, the idea being that an increase, for example, in supplies of milk will spur consumption because the milk is plentiful and cheap. For cities like Delhi, Say’s law doesn’t work out so nicely: burgeoning population numbers create demand for services which the municipality can’t provide. A more forceful answer to ‘why grow big?’ appeared in the writings of Adam Smith. As formulated in The Wealth of Nations (1776), larger markets will trigger the division of labour in production; a modern example is that great demand for cheap automobiles replaced hand-built coachwork before the First World War, and throughout the 1920s fine-tuned different tasks on the assembly line. The urban analogue to Smith would be that if 10,000 people are targeted for an area which formerly housed 2,000, then the houses themselves will be made according to the division of labour, with apartments of different sizes and shapes, other spaces put to specialized uses, like parking garages dug out below gardens, and so on.

sewers Shanghai Bund and cellular grid collective life in Communist Party Plan delinquency fast-track growth flash-flooding of highways to nowhere landscape projects parks project Plan Voisin and pollution Pudong district restoration in roads Shanghai Tower speed of development streetscape towers as trading post with West traffic transformation and urban explosion waterways World Expo (2010) Xintiandi Yanlord Garden see also shikumen shell form Shelley, Percy Bysshe ‘Ozymandias’ shikumen Shukhov, Vladimir sidewalks Siena Silicon Valley Silk Road Simmel, Georg ‘Die Großstädte und das Geistesleben’ ‘The Stranger’ ‘The Metropolis and Mental Life’ Sinclair, Iain Sixtus V, Pope skyscrapers Slamecka, Norman Smith, Adam, The Theory of Moral Sentiments The Wealth of Nations socialism cooperative non-Marxian sociality Solà-Morales, Manuel de solar energy Solnit, Rebecca Songdo, South Korea Soros, George sound, ambient flat-line intensity and intelligibility porous reverberation time warning South Korea Spain expulsion of Jews and Muslims Speer, Albert spotlighting Stadtluft macht frei (medieval saying) Stalin, Joseph start-ups Stein, Gertrude Stendhal (Marie-Henri Beyle) The Red and the Black storms Stradivarius (Antonio Stradivari) strangers, encounters with exclusion of integration of neighbours as protection from reading street furniture street-smarts limits on streetscapes Strogatz, Steven sublimity Sudhir, Mr, conversation with author and ‘eyes on the street’ at home imagined as urban designer and intimacy as marginal figure and open city as seller of dubious goods threats to Sullivan, Louis sustainability of safety Sweden ‘swerves’ (clinamens) Swift, Jonathan, Gulliver’s Travels synchronous spaces Syria tacit behaviour technology effects friction-free or user-friendly smart start-ups sustainable Terry, Quinlan Tessen Soki Thailand, clothing industry Thimphu, Bhutan Thomas, W.

All the open forms discussed in this book invite active engagement, because none is stable or self-sufficing. If the open cité is a place of doing rather than being, what it does not do is arouse sympathy for others. Adam Smith, in The Theory of Moral Sentiments, provided one of the first physiological explanations of how sympathy works. When you see a man fall in the street you run to help him because you can imagine the pain as your own kneecap shattering. In Kantstrasse, passers-by following Adam Smith would have imagined themselves leaning against a wall in distress, and so asked me if they could help.8 The golden rule transforms this physiological response into an ethical command.


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Superminds: The Surprising Power of People and Computers Thinking Together by Thomas W. Malone

Abraham Maslow, agricultural Revolution, Airbnb, Albert Einstein, Alvin Toffler, Amazon Mechanical Turk, Apple's 1984 Super Bowl advert, Asperger Syndrome, Baxter: Rethink Robotics, bitcoin, blockchain, Boeing 747, business process, call centre, carbon tax, clean water, Computing Machinery and Intelligence, creative destruction, crowdsourcing, data science, deep learning, Donald Trump, Douglas Engelbart, Douglas Engelbart, driverless car, drone strike, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, experimental economics, Exxon Valdez, Ford Model T, future of work, Future Shock, Galaxy Zoo, Garrett Hardin, gig economy, happiness index / gross national happiness, independent contractor, industrial robot, Internet of things, invention of the telegraph, inventory management, invisible hand, Jeff Rulifson, jimmy wales, job automation, John Markoff, Joi Ito, Joseph Schumpeter, Kenneth Arrow, knowledge worker, longitudinal study, Lyft, machine translation, Marshall McLuhan, Nick Bostrom, Occupy movement, Pareto efficiency, pattern recognition, prediction markets, price mechanism, radical decentralization, Ray Kurzweil, Rodney Brooks, Ronald Coase, search costs, Second Machine Age, self-driving car, Silicon Valley, slashdot, social intelligence, Stephen Hawking, Steve Jobs, Steven Pinker, Stewart Brand, technological singularity, The Nature of the Firm, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Tim Cook: Apple, Tragedy of the Commons, transaction costs, Travis Kalanick, Uber for X, uber lyft, Vernor Vinge, Vilfredo Pareto, Watson beat the top human players on Jeopardy!

It is the “global mind”—the combination of all the people, computers, and other kinds of intelligence on the earth.14 We’ll see that, in some ways, the global mind already exists and is getting smarter all the time. And the book will conclude with some reflections on how we can use our global collective intelligence to make choices that are not just smart but also wise. Part I What Are Superminds? CHAPTER 1 Would You Recognize a Supermind If You Saw It on the Street? When Adam Smith wrote The Wealth of Nations, in 1776, he said that buyers and sellers in a market who do what’s best for themselves are often “led by [the] invisible hand” of the market to also do what’s best for society. For instance, if you can make more profit for yourself by selling mustard ice cream instead of mocha from your ice cream truck, then that’s also the way your business can contribute more economic value to society.1 Of course, there are certainly situations where maximizing your own profit isn’t what’s best for society.

CHAPTER 13 How Can We Work Together in New Ways? In Adam Smith’s famous pin factory, dividing the work of a single pin maker into many smaller tasks done by different specialized workers led to vast increases in productivity. But even Smith, when he wrote about this in 1776, probably didn’t realize how important this division of labor would be in driving economic progress for centuries to come. Much of the prosperity we enjoy today—you might even say much of the collective intelligence of today’s organizations—results from this specialization of work. The early factories that Adam Smith described—in fact, the advances of the Industrial Revolution in general—depended on more than just new technologies.

Industry Starting in the 1700s, division of labor and more complex kinds of coordination went much further as humans developed the factories and machines of the Industrial Age. New technologies coupled with new ways of organizing work allowed vastly increased productivity. For instance, the Scottish economist Adam Smith famously used the example of a pin factory to illustrate the power of division of labor. In this factory, what was formerly the task of a single pin maker was divided into 18 separate tasks, like cutting wires and sharpening points, each done by a different specialized worker. Dividing up the work in this way, among a larger group of people, led to a vast increase in productivity.


pages: 376 words: 109,092

Paper Promises by Philip Coggan

accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, Alan Greenspan, balance sheet recession, bank run, banking crisis, barriers to entry, Bear Stearns, Berlin Wall, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, bond market vigilante , Bretton Woods, British Empire, business cycle, call centre, capital controls, Carmen Reinhart, carried interest, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, currency risk, debt deflation, delayed gratification, diversified portfolio, eurozone crisis, Fall of the Berlin Wall, falling living standards, fear of failure, financial innovation, financial repression, fixed income, floating exchange rates, full employment, German hyperinflation, global reserve currency, Goodhart's law, Greenspan put, hiring and firing, Hyman Minsky, income inequality, inflation targeting, Isaac Newton, John Meriwether, joint-stock company, junk bonds, Kenneth Rogoff, Kickstarter, labour market flexibility, Les Trente Glorieuses, light touch regulation, Long Term Capital Management, low interest rates, manufacturing employment, market bubble, market clearing, Martin Wolf, Minsky moment, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, Myron Scholes, negative equity, Nick Leeson, Northern Rock, oil shale / tar sands, paradox of thrift, peak oil, pension reform, plutocrats, Ponzi scheme, price stability, principal–agent problem, purchasing power parity, quantitative easing, QWERTY keyboard, railway mania, regulatory arbitrage, reserve currency, Robert Gordon, Robert Shiller, Ronald Reagan, savings glut, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, Suez crisis 1956, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, time value of money, too big to fail, trade route, tulip mania, value at risk, Washington Consensus, women in the workforce, zero-sum game

But, except for the very rich who might want an apartment in central London, houses are not things that people from other economies tend to wish to buy. In general, economic welfare improves when we create tradable goods and services: pharmaceuticals, manufactured goods, video games or raw materials. Adam Smith worked all this out in The Wealth of Nations when he declared that, ‘Though a house . . . may yield a revenue to its proprietor but it cannot yield any to the public, nor serve in the function of a capital to it, and the revenue of the whole body of the people can never be in the smallest degree increased by it.’ In short, a belief that a nation can prosper from higher house prices makes one think of the mythical island where every household earned its living by taking in its neighbour’s washing.

Then it might make sense for people to accept paper money issued by a stable regime, for the prosperity of the economy would allow it to redeem its paper promises. It is no accident, then, that the European experiments with paper money emerged in the eighteenth century, when the population and economic output of the continent began its long period of growth. The same era saw the development of the study of economics, led by Adam Smith, and the rejection of the earlier mercantilist approach. Wealth was not merely a matter of accumulating more bullion; it flowed from the rise of trade and industrial activity. That the Law experiment did not destroy the use of paper money was perhaps due to a fundamental problem with precious metals – they are easy to steal.

However, that return should not be greater than the economic return on the asset against which it is lent. So if one lends money against the security of land, and the rental income on the land is 4 per cent, the interest rate should not be 5 per cent. Where rates do exceed this economic return, Belloc argued that the result is gradually to transfer all wealth into the hands of the investor class. Adam Smith had also made a distinction between productive and consumptive loans. It made sense, in his view, for someone to borrow money if they thought they could earn a higher return than the interest they paid; for example by starting a business. It did not make sense to borrow money to finance immediate consumption.


The-General-Theory-of-Employment-Interest-and-Money by John Maynard Keynes

bank run, behavioural economics, business cycle, collective bargaining, declining real wages, delayed gratification, full employment, invisible hand, laissez-faire capitalism, low interest rates, marginal employment, means of production, moral hazard, Paul Samuelson, price stability, profit motive, quantitative easing, secular stagnation, The Wealth of Nations by Adam Smith, We are all Keynesians now, working-age population

The Economist as Saviour As an intellectual achievement, The General Theory ranks with only a handful of other works in economics—the tiny set of books that transformed our perception of the world, so that once people became aware of what those books had to say they saw everything differently. Adam Smith did that in The Wealth of Nations: suddenly the economy was not just a collection of people getting and spending, it was a self-regulating system in which each individual “is led by an invisible hand to promote an end which was no part of his intention”. The General Theory is in the same league: suddenly the idea that mass unemployment is the result of inadequate demand, long a fringe heresy, became completely comprehensible, indeed obvious.

Furthermore, he favoured a low rate of interest as increasing the chance of savings finding their outlet in new investment rather than in debts; and for this reason, in a passage for which he was severely taken to task by Bentham,23 he defended a moderate application of the usury laws.24 Moreover, Bentham’s criticisms were 23 24 In his Letter to Adam Smith appended to his Defence of Usury. Wealth of Nations, Book II, chap. 4. 314 J. M. Keynes mainly on the ground that Adam Smith’s Scotch caution was too severe on ‘projectors’ and that a maximum rate of interest would leave too little margin for the reward of legitimate and socially advisable risks. For Bentham understood by projectors ‘all such persons, as, in the pursuit of wealth, or even of any other object, endeavour, by the assistance of wealth, to strike into any channel of invention…upon all such persons as, in the line of any of their pursuits, aim at anything that can be called improvement…It falls, in short, upon every application of the human powers, in which ingenuity stands in need of wealth for its assistance.’

I find it in the idea that it is the function of the rate of interest to preserve equilibrium, not between the demand and the supply of new capital goods, but between the demand and the supply of money, that is to say between the demand for liquidity and the means of satisfying this demand. I am here returning to the doctrine of the older, pre-nineteenth century ­economists. Montesquieu, for example, saw this truth with considerable clarity,1—Montesquieu who was the real French equivalent of Adam Smith, the greatest of your economists, head and shoulders above the physiocrats in penetration, clear-headedness and good sense (which are the qualities an economist should have). But I must leave it to the text of this book to show how in detail all this works out. I have called this book the General Theory of Employment, Interest and Money; and the third feature to which I may call attention is the treatment of money and prices.


pages: 487 words: 151,810

The Social Animal: The Hidden Sources of Love, Character, and Achievement by David Brooks

"World Economic Forum" Davos, Abraham Maslow, Albert Einstein, asset allocation, assortative mating, Atul Gawande, behavioural economics, Bernie Madoff, business process, Cass Sunstein, choice architecture, classic study, clean water, cognitive load, creative destruction, Daniel Kahneman / Amos Tversky, David Brooks, delayed gratification, deliberate practice, disintermediation, Donald Trump, Douglas Hofstadter, Emanuel Derman, en.wikipedia.org, fake it until you make it, fear of failure, financial deregulation, financial independence, Flynn Effect, George Akerlof, Henri Poincaré, hiring and firing, impulse control, invisible hand, Jeff Hawkins, Joseph Schumpeter, labor-force participation, language acquisition, longitudinal study, loss aversion, medical residency, meta-analysis, mirror neurons, Monroe Doctrine, Paul Samuelson, power law, Richard Thaler, risk tolerance, Robert Shiller, school vouchers, six sigma, social intelligence, Stanford marshmallow experiment, Steve Jobs, Steven Pinker, tacit knowledge, the scientific method, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, Tyler Cowen, Walter Mischel, young professional

Both sides assumed there was a direct relationship between improving material conditions and solving problems. Both sides neglected matters of character, culture, and morality. In other words, they split Adam Smith down the middle. Smith wrote one book, The Wealth of Nations, in which he described economic activity and the invisible hand. But he wrote another book, The Theory of Moral Sentiments, in which he described how sympathy and the unconscious desire for esteem molded individuals. Smith believed that the economic activity described in The Wealth of Nations rested upon the bedrock described in The Theory of Moral Sentiments. But in recent decades, the former book became famous, while the latter was cited but never applied.

Rationalists gain prestige and authority because they have supposedly mastered the science of human behavior. Once the science goes, all their prestige goes with it. This scientism has expressed itself most powerfully, over the last fifty years, in the field of economics. Economics did not start out as a purely rationalist enterprise. Adam Smith believed that human beings are driven by moral sentiments and their desire to seek and be worthy of the admiration of others. Thorstein Veblen, Joseph Schumpeter, and Friedrich Hayek expressed themselves through words not formulas. They stressed that economic activity was conducted amidst pervasive uncertainty.

For some reason he never took on the really big figures—Napoleon, Lincoln, Washington, Franklin Roosevelt. But he focused on admirable, accomplished men and women, and in a quieter way gave his readers models of how to live. At the time Erica was struggling with Taggert, Harold was working on a book about the British Enlightenment. He was doing a group portrait of David Hume, Adam Smith, Edmund Burke, and some of the thinkers, politicians, economists, and conversationalists who had dominated eighteenth-century British thought. One evening he told Erica about the difference between the French and British Enlightenments, because he thought it might be useful to her at work. The French Enlightenment was led by thinkers like Descartes, Rousseau, Voltaire, and Condorcet.


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Economic Dignity by Gene Sperling

active measures, Affordable Care Act / Obamacare, antiwork, autism spectrum disorder, autonomous vehicles, basic income, behavioural economics, benefit corporation, Bernie Sanders, Big Tech, Cass Sunstein, collective bargaining, company town, corporate governance, cotton gin, David Brooks, desegregation, Detroit bankruptcy, disinformation, Donald Trump, Double Irish / Dutch Sandwich, driverless car, Elon Musk, employer provided health coverage, Erik Brynjolfsson, Ferguson, Missouri, fulfillment center, full employment, gender pay gap, ghettoisation, gig economy, Gini coefficient, green new deal, guest worker program, Gunnar Myrdal, housing crisis, Ida Tarbell, income inequality, independent contractor, invisible hand, job automation, job satisfaction, labor-force participation, late fees, liberal world order, longitudinal study, low skilled workers, Lyft, Mark Zuckerberg, market fundamentalism, mass incarceration, mental accounting, meta-analysis, minimum wage unemployment, obamacare, offshore financial centre, open immigration, payday loans, Phillips curve, price discrimination, profit motive, race to the bottom, RAND corporation, randomized controlled trial, Richard Thaler, ride hailing / ride sharing, Ronald Reagan, Rosa Parks, Second Machine Age, secular stagnation, shareholder value, Sheryl Sandberg, Silicon Valley, single-payer health, speech recognition, stock buybacks, subprime mortgage crisis, tech worker, TED Talk, The Chicago School, The Future of Employment, The Wealth of Nations by Adam Smith, Toyota Production System, traffic fines, Triangle Shirtwaist Factory, Uber and Lyft, uber lyft, union organizing, universal basic income, W. E. B. Du Bois, War on Poverty, warehouse robotics, working poor, young professional, zero-sum game

Monthly Labor Review, Bureau of Labor Statistics, United States Department of Labor, March 2019, https://www.bls.gov/opub/mlr/2019/article/is-the-us-labor-market-for-truck-drivers-broken.htm. CHAPTER ELEVEN: AN ECONOMIC DIGNITY WAGE 1. Dennis C. Rasmussen, “The Problem with Inequality according to Adam Smith,” Atlantic, June 9, 2016, https://www.theatlantic.com/business/archive/2016/06/the-problem-with-inequality-according-to-adam-smith/486071/. 2. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London: W. Strahan and T. Cadell, 1776). 3. Theodore Roosevelt, address before the Convention of the National Progressive Party (Chicago, August 1912), Social Security Administration, accessed November 10, 2019, https://www.ssa.gov/history/trspeech.html. 4.

If we want the dignity of work to be a reality and not an empty promise, work must pay enough to allow all workers to care for their families without economic deprivation or extreme hours blocking them from being there and enjoying the precious moments of loving relationships. This is hardly a new or radical concept. Even free-market champion Adam Smith said centuries ago, “They who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed, and lodged.”1 In The Wealth of Nations, he wrote that even for the lowest-skilled worker there must be a wage “consistent with common humanity” and that “a man must always live by his work, and his wages must at least be sufficient to maintain him . . . otherwise it would be impossible for him to bring up a family.”2 As noted earlier, in 1912, Teddy Roosevelt called for “a living wage” that was robust enough to ensure that workers have reasonable time off and enough resources to provide for young children, retirement, and periods of illness.3 Just over two decades later, FDR struck the same notes when he stated it is “plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country.”

This can be seen in the Trump administration’s simplistic notion that any new regulation—no matter what its virtue—can be justified only if it is paired with the repeal of two others. This is not to say that some regulations are not oppressive, poorly constructed, out of date, and worthy of review or repeal. But that review should not start from the presumption that any new rule on market structure interferes with pure markets. Indeed, even Adam Smith, the father of market competition, based his famous argument—that the “invisible hand” of individual pursuit of self-interest in free competitive markets will benefit the common good—on the idea that competition would be structured by government policymakers to prevent government or private sector monopoly power.


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Scots and Catalans: Union and Disunion by J. H. Elliott

active measures, agricultural Revolution, banking crisis, British Empire, centre right, land tenure, mass immigration, mobile money, new economy, North Sea oil, Red Clydeside, sharing economy, The Wealth of Nations by Adam Smith, urban renewal, work culture

John Robertson, ‘An Elusive Sovereignty: The Course of the Union Debate in Scotland 1698–1707’, in John Robertson (ed.), A Union for Empire: Political Thought and the British Union of 1707 (Cambridge, 1995), pp. 198–227, at pp. 199–200. 102. For the Darien scheme see Douglas Watt, The Price of Scotland: Darien , Union and the Wealth of Nations (Edinburgh, 2007); David Armitage, ‘The Scottish Vision of Empire: Intellectual Origins of the Darien Venture’, in Robertson (ed.), Union for Empire , ch. 4; Whatley, Scots and the Union , pp. 166–73; Ferguson, Scotland’s Relations with England , pp. 176–9. 103. Whatley, Scots and the Union , p. 173; Watt, The Price of Scotland , p. 63; Sir Walter Scott, The Tales of a Grandfather (3 vols., 1827–30, repr.

Estat, nació, socialisme. Estudis sobre el cas espanyol . Barcelona, 1982. Villanueva López, Jesús. Política y discurso histórico en la España del siglo XVII. Las polémicas sobre los orígines medievales de Cataluña . Alicante, 2004. Watt, Douglas. The Price of Scotland: Darien, Union and the Wealth of Nations . Edinburgh, 2007. Wedgwood, Cicely V. ‘Anglo-Scottish Relations, 1603–1640’, Transactions of the Royal Historical Society , 4, ser. 32 (1950), pp. 31–48. Whatley, Christopher A. The Scots and the Union . Edinburgh, 2006. Willson, D. H. King James VI and I . London, 1956. Withers, Charles W.

Union expanded and facilitated the process of cultural and intellectual interchange between the two countries, introducing, where it had not already existed, a dash of emulation to the response of the Scots to an increasingly dominant English culture. 122 It also signalled new paths that were there for the taking. In particular, the notion of improvement so eagerly embraced by the Scots opened the way for them to develop the science of political economy that was to be central to their Enlightenment. David Hume and Adam Smith between them were to illustrate the dependence of modern society on material improvement, offering their own recipes for the continuation of social and economic progress. 123 There was, however, another way in which Union is likely to have encouraged the process of Enlightenment. The very fact of Scotland’s political relegation to provincial status provided an inducement not simply to emulate the English but to shine in alternative fields of endeavour.


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

affirmative action, Affordable Care Act / Obamacare, airline deregulation, Alan Greenspan, Andrei Shleifer, banking crisis, barriers to entry, Basel III, battle of ideas, Bear Stearns, behavioural economics, Berlin Wall, business cycle, 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, electricity market, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, framing effect, full employment, George Akerlof, Gini coefficient, Glass-Steagall Act, Great Leap Forward, income inequality, income per capita, indoor plumbing, inflation targeting, information asymmetry, invisible hand, jobless men, John Bogle, John Harrison: Longitude, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, London Interbank Offered Rate, lone genius, low interest rates, low skilled workers, Marc Andreessen, Mark Zuckerberg, market bubble, market fundamentalism, mass incarceration, medical bankruptcy, microcredit, moral hazard, mortgage tax deduction, negative equity, obamacare, offshore financial centre, paper trading, Pareto efficiency, patent troll, Paul Samuelson, Paul Volcker talking about ATMs, payday loans, Phillips curve, price stability, profit maximization, profit motive, public intellectual, purchasing power parity, race to the bottom, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, search costs, shareholder value, short selling, Silicon Valley, Simon Kuznets, spectrum auction, Steve Jobs, stock buybacks, subprime mortgage crisis, 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, Tragedy of the Commons, transaction costs, trickle-down economics, ultimatum game, uranium enrichment, very high income, We are the 99%, wealth creators, women in the workforce, zero-sum game

Basu uses the metaphor of a magic show to describe the way the discussion of economics on the political right draws attention to the conclusion of this theorem—that markets are efficient—and away from the very special and unrealistic conditions under which the conclusion holds—perfect markets. Like a good magician, a free-market economist succeeds by drawing spectators’ attention to what he wants them to see—the rabbit jumping out of the hat—while distracting their attention from other things—how the rabbit got into the hat in the first place. 6. Adam Smith, The Wealth of Nations (1776; New York: P. F. Collier, 1902), p. 207. 7. See Carmen Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton: Princeton University Press, 2009). 8. A derivative is just a financial instrument the return to which is derived on the basis of something else, e.g., the performance of a stock or the price of oil or the value of a bond.

For instance, in systems where representation in Congress (parliament) are proportional to the total vote garnered in a state. Some countries have a mix of “district” representatives (as we have) and proportional representation. 27. Adam Smith understood as much. See his The Theory of Moral Sentiments (1759), published in 2000 by Prometheus Books, in Amherst, NY. See also Emma Rothschild and Amartya Sen, “Adam Smith’s Economics,” The Cambridge Companion to Adam Smith (Cambridge: Campbridge University Press, 2006), pp. 319–65, especially the discussion of the commonwealth beginning on p. 347. INDEX Abed, Fazle Hasan, 196 Acacia Research Corporation, 203 Accenture, 360 advertising, 147, 335, 348, 354 see also marketing affirmative action, 282 Afghanistan, 143, 176, 209, 211, 218 Africa, 23, 40 African Americans: discrimination against, 68, 69, 70, 71, 129, 303, 305, 308, 328, 367, 369 disenfranchisement of, 345, 349 wealth of, 13, 70, 71, 329, 384 agriculture: government subsidies in, 51, 64, 179, 180, 320, 326, 379 in Great Depression, 56–57, 231, 233 AIG, 35, 49, 67, 180, 253, 369 airlines, deregulation of, 317 air traffic controllers, 65 Alien Torts Statute, 59 Ally, 374 Alperovitz, Gar, 78 alternative minimum tax, 394 American Airlines, 318 American Tobacco Company, 317 Andreessen, Marc, 318 Angelides, Phil, 372 antiglobalization movement, xiii, 277 Apple, 203, 360 Arab Spring, ix–xi, xiv, 287 Archer Daniels Midland (ADM), 51, 320 Arnall, Roland, 333 Asia, 64, 157 financial crisis in, 61, 231, 352, 353 AT&T, 44, 203, 317 Atkinson, Anthony B., xxiii auction theory, 50 austerity, 207, 220, 221, 230–36 Australia, 5, 14, 18, 22, 135, 286 autoworkers, 67 balanced-budget multiplier, 217–18, 379 Bangladesh, microcredit schemes in, 196, 197 bankers: bonuses for, x, xiv, xv, 21, 79, 141, 169, 245, 247, 270, 319, 333, 363 criminal prosecution of, xvi, 70, 119, 199, 205–6, 372, 373 economic influence of, xxii–xxiii, 79–80, 240 private incentives of, 33, 34, 87, 90, 96, 109–10 risky behavior by, xi, xxiii, 37, 90, 101, 109, 171, 198, 239–40, 246, 247, 269, 270, 336, 387 see also corporations; financial markets; financial sector Bank of America, 70, 374 bankruptcy: corporate, 313 derivatives claims in, 49, 271 government regulation of, 30 personal, 10, 275, 301 reform of, 58 student debt in, 58, 94, 195, 196, 265, 271, 323, 371 see also Chapter 11; foreclosures bankruptcy law, 193–97, 201, 202, 270, 271, 284 Bardeen, John, 41 Bartel, Larry, xxiv Basov, Nikolay, 315 Bear Stearns, 388 Belgium, 19, 22, 286 Berlusconi, Silvio, 349 Bernanke, Ben, 247, 248, 252, 257, 389 Berners-Lee, Tim, 41, 315 Bhutan, 122, 312 Bilmes, Linda, 176 Bipartisan Policy Center, 207 Bischoff, Kendra, 75 BlackBerry, 203 Blankfein, Lloyd, 124 Bloomberg, Michael, xiv bondholders, 168, 240, 261 bonds, municipal, 212, 378 Bowles, Erskine, 207 Bowles-Simpson Deficit Reduction Commission, 207, 221, 379, 380 Brattain, Walter, 41 Brazil, 5, 51, 249 economic growth in, 139, 298, 353 Bridgestone/Firestone, 104 British Petroleum (BP), xviii, 99, 189, 190, 367, 374 “Buffett rule,” 395 Buffett, Warren, 77, 180, 269, 333, 395, 396 Burnham, Walter Dean, 130 Bush, George W., 71, 73, 86, 87, 97, 101, 114, 169, 177, 208, 212, 221, 228, 330, 360, 383 Bush administration, xiv, 167, 168, 171, 178 business: anticompetitive behavior in, 44–46, 317, 318 corruption in, 176 government partnerships with, 174 government regulation of, 47 innovations in, 35, 46, 41, 78, 96, 178–79, 314, 315 political power of, 47, 50, 51, 62, 95, 99, 101, 111, 131–32, 135, 136, 285, 286, 319, 325, 350 teamwork in, 113, 343 trust in, 121–22 see also corporations; financial sector business, small, 61, 167, 225, 226, 241, 245, 395 California, electricity market liberalization in, 177–78 campaign finance, 37, 47, 131–32, 135, 136, 162, 196, 200, 206, 285–86, 319, 325, 350, 373, 397 Canada, 5, 18, 19 capital, 59, 323 social, 122–23, 125, 135 capital controls, 60, 181, 182, 277, 353 capital gains, 71–72, 87, 88, 115, 211, 274, 297, 298, 315, 330, 361, 378, 395 Cardoso, Enrique, 5 Carter, Jimmy, 71 Cayman Islands, 270 cell phones, 98, 203, 274 Census Bureau, U.S., 27, 305 Central Intelligence Agency (CIA), 209 Chait, Jonathan, 19, 116–17 Chapter 11, 284, 313, 363 see also bankruptcy Chavez, Hugo, 40 Cheney, Richard, 101 Chicago school, 44–45, 47, 256, 317, 391 child care, 10, 301 Chile, 141, 258 China, 19, 54, 64, 249, 280 economic strength of, 144, 175 inflation in, 259–60 Citibank, 204–5, 369, 387 cities, community segregation in, 75–76 Citizens United v.

Of course, not all the inequality in our society is a result of rent seeking, or of government’s tilting the rules of the game in favor of those at the top. Markets matter, as do social forces (like discrimination). This chapter focuses on the myriad forms that rent seeking takes in our society, and the next turns to the other determinants of inequality. GENERAL PRINCIPLES Adam Smith’s invisible hand and inequality Adam Smith, the father of modern economics, argued that the private pursuit of self-interest would lead, as if by an invisible hand, to the well-being of all.5 In the aftermath of the financial crisis, no one today would argue that the bankers’ pursuit of their self-interest has led to the well-being of all.


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Salt: A World History by Mark Kurlansky

British Empire, clean water, Deng Xiaoping, domestication of the camel, haute cuisine, Hernando de Soto, Honoré de Balzac, invention of movable type, long peace, Mahatma Gandhi, spice trade, The Wealth of Nations by Adam Smith, trade route

Salt A World History Mark Kurlansky To my parents, Roslyn Solomon and Philip Mendel Kurlansky, who taught me to love books and music and to Talia Feiga, who opened worlds while she slept in the crook of my arm. The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. —Adam Smith, The Wealth of Nations, 1776 All our invention and progress seem to result in endowing material forces with intellectual life, and in stultifying human life into a material force. —Karl Marx, speech, 1856 Dreams are not so different from deeds as some may think. All the deeds of men are only dreams at first.

Caribbean salt merchants stockpiled it in the basements of their homes. The Chinese, the Romans, the French, the Venetians, the Hapsburgs, and numerous other governments taxed it to raise money for wars. Soldiers and sometimes workers were paid in salt. It was often used as money. In his 1776 treatise on capitalism, The Wealth of Nations, Adam Smith pointed out that almost anything of value could be used for money. He cited as examples tobacco, sugar, dried cod, and cattle and stated that “salt is said to be a common instrument of commerce and exchanges in Abyssinia.” But he offered the opinion that the best currency was made of metal because it was physically durable, even if its value was as ephemeral as other commodities.

Turks Islands Landfall: A History of the Turks and Caicos Islands. Grand Turk: 1997. Sahagún, Fray Bernardino de. Historia general de las cosas de la Nueva España. Mexico City: Porrua, 1969. Schama, Simon. Citizens: A Chronicle of the French Revolution. New York: Alfred A. Knopf, 1989 Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. Ed. Edwin Cannan. 1776. Reprint, New York: Modern Library, 1937. Tacitus. The Agricola and the Germania. Trans. H. Mattingly. New York: Penguin Books, 1970. Testart, Alain. Des mythes et des croyances: Esquisse d’une théorie générale. Paris: Editions de la Maison des Sciences de l’homme, 1991.


pages: 791 words: 85,159

Social Life of Information by John Seely Brown, Paul Duguid

Alvin Toffler, business process, Charles Babbage, Claude Shannon: information theory, computer age, Computing Machinery and Intelligence, cross-subsidies, disintermediation, double entry bookkeeping, Frank Gehry, frictionless, frictionless market, future of work, George Gilder, George Santayana, global village, Goodhart's law, Howard Rheingold, informal economy, information retrieval, invisible hand, Isaac Newton, John Markoff, John Perry Barlow, junk bonds, Just-in-time delivery, Kenneth Arrow, Kevin Kelly, knowledge economy, knowledge worker, lateral thinking, loose coupling, Marshall McLuhan, medical malpractice, Michael Milken, moral hazard, Network effects, new economy, Productivity paradox, Robert Metcalfe, rolodex, Ronald Coase, scientific management, shareholder value, Shoshana Zuboff, Silicon Valley, Steve Jobs, Superbowl ad, tacit knowledge, Ted Nelson, telepresence, the medium is the message, The Nature of the Firm, the strength of weak ties, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, Turing test, Vannevar Bush, Y2K

., and Darryl Stickel. 1996. "The Road to Hell: The Dynamics of Distrust in an Era of Quality." In Trust in Organizations: Frontiers of Theory and Research, edited by Roderick M. Kramer and Tom R. Tyler, 196 215. Thousand Oaks, CA: Sage. Smith, Adam. 1937. An Inquiry into the Nature and Causes of the Wealth of Nations. New York: Modern Library. Smith, Douglas K., and Robert C. Alexander. 1988. Fumbling the Future: How Xerox Invented, Then Ignored, the First Personal Computer. New York: Morrow. Spender, J-C., and R. M. Grant. 1996. "Knowledge and the Firm: Overview." Strategic Management Journal 17 (1): 5 9.

"There's potential for a lot of mayhem once bots are introduced on a wide scale," another researcher concluded. 25 The research suggests that frictionless markets, run by rationally calculating bots, may not be the efficient economic panacea some have hoped for. Social friction and "inertia" may usefully dampen volatility and increase stability. De Long and Froomkin even suggest that such frictionlessness might disable the "Invisible Hand." The great classical economist Adam Smith used the image of the invisible hand to describe forces that reconcile the pursuit of private interests through markets with the public good and with what we have called the social fabric. If not actually producing good, at least the invisible hand prevents the pursuit of private interests from doing harm.

With this sharp distinction between value-adding and non-value-adding processes, reengineering insisted on sweeping away old practices. "Forget all you know," managers were told. "Don't automate, obliterate." Like all organizational fads, it also puffed itself up with some grandiose claims. Hammer and Champy, for instance, insisted they were transcending Adam Smith, one of the most enlightened thinkers of the eighteenth century and a pervasive influence on modern economics. Slogans aside, there was enough substance for reengineering to acquire an impressive following. Hewlett-Packard, AT&T, IBM, Xerox, Ford, NYNEX, Seagram, and a host of other corporations Page 93 great and small reengineered.


The Techno-Human Condition by Braden R. Allenby, Daniel R. Sarewitz

"World Economic Forum" Davos, Abraham Maslow, airport security, Anthropocene, augmented reality, carbon credits, carbon footprint, clean water, cognitive dissonance, cognitive load, coherent worldview, conceptual framework, creative destruction, Credit Default Swap, decarbonisation, different worldview, Edward Jenner, facts on the ground, friendly fire, Hans Moravec, industrial cluster, information security, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Jane Jacobs, land tenure, Lewis Mumford, life extension, Long Term Capital Management, market fundamentalism, mutually assured destruction, Nick Bostrom, nuclear winter, Peter Singer: altruism, planetary scale, precautionary principle, prediction markets, radical life extension, Ralph Waldo Emerson, Ray Kurzweil, Silicon Valley, smart grid, source of truth, stem cell, Stewart Brand, synthetic biology, technoutopianism, the built environment, The Wealth of Nations by Adam Smith, transcontinental railway, We are as Gods, Whole Earth Catalog

Harper Torchbooks. Hill, J., J. Lines, and M. Rowland. 2006. Insecticide-treated nets. Advances in Parasitology 61: 77-126. Hirsch, F. 1976. Social Limits to Growth. iUniverse. Hughes, J. 2004. Citizen Cyborg. Westview. Hutchins, E. 1995. Cognition in the Wild. MIT Press. Jacobs, J. 1984. Cities and the Wealth of Nations. Vintage Books. Johnson, M. 1993. Moral Imagination: Implications of Cognitive Science for Ethics. University of Chicago Press. Johnsson-Latham, G. 2007. A study in gender equality as a prerequisite for sustainable development: What we know about the extent to which women globally live in a more sustainable way than men, leave a smaller ecological footprint, and cause less climate damage.

Meanwhile, the underlying science and technology necessary to feed the consumption compulsion will be driven by the ongoing quest by technologically advanced states for military and economic advantage. So let us dispose here of a tempting analogy between transhumanist claims (rooted as they are in defense of individual liberty) and Adam Smith's famous "invisible hand." Just as innovation and productivity are optimized as individuals, driven by self-interest, strive for economic benefit, won't society be made better by individuals striving after various enhancements? The analogy would be false. The "invisible hand" is just a recognition of an information-processing mechanism; it integrates decisions made on the basis of individual preference into supply and demand curves that describe the efficient distribution of scarce resources.

., the economy), in part because it decentralizes decision making across active agents and in part because the only outcome it aims to deliver is efficient allocation of information, prices, and stuff. But-and this is the critical part-the market enables efficient use of resources, not a fair, or even stable, distribution of resources across society-it does not guarantee that the world will get better, and Adam Smith well understood this fact. The early history of capitalism was one of violence and poverty alongside great wealth, huge social dislocation, and oligarchic monopolies, as documented in the novels of Dickens, Dreiser, and many others. A more socially stable and, yes, advanced (if 98 Chapter 5 still highly imperfect) capitalism evolved only when dampers on rampant market freedom, such as unions, anti-monopolistic policies, and unemployment insurance, were adopted-almost always after bruising political battles and occasional paroxysms of civil unrest.


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The Right Side of History by Ben Shapiro

Abraham Maslow, Bernie Sanders, Black Lives Matter, classic study, Donald Trump, Filter Bubble, Great Leap Forward, Herbert Marcuse, illegal immigration, income inequality, Internet Archive, Isaac Newton, Johannes Kepler, labor-force participation, longitudinal study, means of production, microaggression, Peace of Westphalia, Plato's cave, Ronald Reagan, Steven Pinker, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, W. E. B. Du Bois, white picket fence, women in the workforce

.), 47. 23. Laurence Berns, “Thomas Hobbes,” in History of Political Philosophy, 396–419. 24. John Locke, Two Treatises of Government, 3rd ed. (New York: Cambridge University Press, 1988), Book 1, Sec. 30. 25. Ibid., Book 2, Sec. 57. 26. Ibid., Book 2, Sec. 222. 27. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London: Methuen, 1776), Book IV, Chapter 9, Sec. 50. 28. Thomas Jefferson, “To Henry Lee,” May 8, 1825, in The Works of Thomas Jefferson, ed. Paul Leicester Ford, vol. 10, Federal Edition (New York: G. P. Putnam’s Sons, 1904–1905), 342–43. 29. Michael Pakaluk, “Aristotle, Natural Law, and the Founders,” NLNRAC.org, http://www.nlnrac.org/classical/aristotle#_ednref3. 30.

This book is filled with old ideas—ideas from people we may dimly remember from our days in high school and college and Sunday school, but whose central importance we’ve essentially forgotten. Those ideas, I’ll argue, are crucial. We must learn them anew. This doesn’t mean that I believe philosophers changed history on their own. I don’t think Adam Smith invented capitalism any more than Immanuel Kant invented morality. But these philosophers and thinkers offer a window into the most important ideas of their time. Tolstoy famously asks in War and Peace what moves history, and concludes that history is merely the progression of all of the various forces at play in the universe, channeled into action in a particular moment.

Any government doing so would allow citizens to revert to a state of nature, in which the citizens could set up a new government: “whenever the legislators endeavor to take away, and destroy the property of the people, or to reduce them to slavery under arbitrary power, they put themselves into a state of war with the people, who are thereupon absolved from any farther obedience, and are left to the common refuge, which God hath provided for all men, against force and violence . . . [power] devolves to the people, who have a right to resume their original liberty.”26 Locke’s philosophy would not merely influence the Founding Fathers of the United States, as we will see—it would shape the foundations of free market enterprise. The vision of Adam Smith (1723–1790) of natural liberty almost precisely mirrors Locke’s vision of natural right: The obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men.


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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

Alan Greenspan, assortative mating, call centre, clean water, commoditize, company town, 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, insecure affluence, It's morning again in America, Jane Jacobs, Joan Didion, John Maynard Keynes: Economic Possibilities for our Grandchildren, knowledge economy, knowledge worker, labor-force participation, late capitalism, low interest rates, low skilled workers, manufacturing employment, mass immigration, McMansion, Michael Shellenberger, mortgage tax deduction, new economy, off grid, oil shock, PageRank, Paradox of Choice, Ponzi scheme, positional goods, post-industrial society, post-materialism, principal–agent problem, recommendation engine, Richard Florida, rolodex, Ronald Reagan, Silicon Valley, Skype, statistical model, Ted Nordhaus, The Death and Life of Great American Cities, The Great Moderation, the long tail, the strength of weak ties, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tragedy of the Commons, transaction costs, women in the workforce, Yom Kippur War

American Express presaged Ronald Reagan’s “Morning in America” 1984 campaign message by promising that for every purchase made with the charge card, the company would donate one penny to the fund supporting the restoration of the Statue of Liberty (never mind the implications of the fact that we needed to go begging in the private sector to take care of something that was government property—this was the Reagan administration, after all). The effort raised $1.7 million of the $62 million cost of the project.61∗ Any economy is a moral system. That was something that Adam Smith recognized almost three hundred years ago. (He was, actually a moral philosopher by training and the author of A Theory of Moral Sentiments, a book that was almost as important to philosophers as The Wealth of Nations was to economists.) And with the Amex-Lady Liberty campaign, our moral economy took a new turn. We must remember that in a post-materialist society we don’t really need most of what we charge on our plastic cards in any meaningful sense of the word.

Never mind that women of varying economic means faced starkly different calculations: If we don’t like inequality the solution is not to constrain choices, it’s to have a more progressive tax policy. And never mind that many of the women in the audience mumbled that the economist should have studied testicular cancer. All these phenomena are a result of commensurability: the fact that money is a universal medium that can price anything. It was wonderful in the time of Adam Smith. After all, with barter, how could you trade a cow for salt? You would be entitled to so much salt that you’d have to organize multiple trades to make the transaction happen. But with money, it’s magic. Now every sale doesn’t have to be a purchase at the same time. Money is freedom. Freedom to make our worldly goods disappear in a poof of green only to reappear later when we need them.

The basic paradox back in this pastoral yesteryear was pretty much the same as it is today: Everyone acting in their own interest leads to failure, or “the tragedy of the commons,” since, without formal or informal restrictions, the land will become overgrazed to the point of desertification. The same is true for a wide range of common pool resources today: peace and quiet, a drive free from advertisements, clean air, spam-free Internet arteries, and even darkness so we can see the stars at night. One individual’s freedom to “truck and barter” (as Adam Smith famously termed economic activity) increasingly impinges on many others’ rights to be left alone (think junk mail). Likewise, an enormous amount of the costs of doing business are not born by the players involved but rather by the rest of us (think junk mail again, or plastic water bottles and landfill).


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Money: The True Story of a Made-Up Thing by Jacob Goldstein

Alan Greenspan, Antoine Gombaud: Chevalier de Méré, back-to-the-land, bank run, banks create money, Bear Stearns, Berlin Wall, Bernie Sanders, bitcoin, blockchain, break the buck, card file, central bank independence, collective bargaining, coronavirus, COVID-19, cryptocurrency, David Graeber, Edmond Halley, Fall of the Berlin Wall, fiat currency, financial innovation, Fractional reserve banking, full employment, German hyperinflation, Glass-Steagall Act, index card, invention of movable type, invention of writing, Isaac Newton, life extension, M-Pesa, Marc Andreessen, Martin Wolf, Menlo Park, Mikhail Gorbachev, mobile money, Modern Monetary Theory, money market fund, probability theory / Blaise Pascal / Pierre de Fermat, Ronald Reagan, Ross Ulbricht, Satoshi Nakamoto, Second Machine Age, side hustle, Silicon Valley, software is eating the world, Steven Levy, the new new thing, the scientific method, The Wealth of Nations by Adam Smith, too big to fail, transaction costs

Tariffs and quotas, Hume wrote, “serve to no purpose but to check industry, and rob ourselves and our neighbors of the common benefits of art and nature.” Hume published this argument in a book called Political Discourses. It was wildly popular. Also, not trivially, Hume seems to have influenced his best friend, Adam Smith, who called Hume’s work on money and trade “ingenious.” In 1776, Smith published An Inquiry Into the Nature and Causes of the Wealth of Nations. It was the birth of modern economics. Also, it was a pretty Humey book. A nation doesn’t get wealthy by piling on tariffs to “increase… the quantity of gold and silver,” Smith wrote. “In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest.”

Not only did the islanders have to want what Mademoiselle Zélie offered (a concert); Zélie had to want what the islanders offered (pigs, chickens, coconuts). Human societies solved that problem, Jevons said, by agreeing on some relatively durable, relatively scarce thing to use as a token of value. We solved the problem of barter by inventing money. Adam Smith had said the same thing a hundred years earlier, and Aristotle had said something similar a few thousand years before that. This theory—that money emerged from barter—is elegant and powerful and intuitive, but it suffers from one key weakness: there’s no evidence that it’s true. “No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money,” the anthropologist Caroline Humphrey wrote in 1985, summarizing what anthropologists and historians had been pointing out for decades.

The economic historian Joel Mokyr provided useful details about the Luddites in an interview. Chapter 10 Hume’s Political Discourses was published in 1752. The chapter on trade is “Of the Balance of Trade.” The Infidel and the Professor, by Dennis C. Rasmussen, helped me understand Hume’s work and, especially, Hume’s influence on Adam Smith. Britain’s unintentional creation of the gold standard is described in Davies. Galbraith is good on the rise of the free silver movement in the United States. Details on William Jennings Bryan come from A Godly Hero: The Life of William Jennings Bryan, by Michael Kazin. The rock critic Greil Marcus used the phrases “anxiety and success” and “terror and deliverance” in Bob Dylan by Greil Marcus.


pages: 288 words: 16,556

Finance and the Good Society by Robert J. Shiller

Alan Greenspan, Alvin Roth, bank run, banking crisis, barriers to entry, Bear Stearns, behavioural economics, benefit corporation, Bernie Madoff, buy and hold, capital asset pricing model, capital controls, Carmen Reinhart, Cass Sunstein, cognitive dissonance, collateralized debt obligation, collective bargaining, computer age, corporate governance, Daniel Kahneman / Amos Tversky, democratizing finance, Deng Xiaoping, diversification, diversified portfolio, Donald Trump, Edward Glaeser, eurozone crisis, experimental economics, financial engineering, financial innovation, financial thriller, fixed income, full employment, fundamental attribution error, George Akerlof, Great Leap Forward, Ida Tarbell, income inequality, information asymmetry, invisible hand, John Bogle, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, land reform, loss aversion, Louis Bachelier, Mahatma Gandhi, Mark Zuckerberg, market bubble, market design, means of production, microcredit, moral hazard, mortgage debt, Myron Scholes, Nelson Mandela, Occupy movement, passive investing, Ponzi scheme, prediction markets, profit maximization, quantitative easing, random walk, regulatory arbitrage, Richard Thaler, Right to Buy, road to serfdom, Robert Shiller, Ronald Reagan, selection bias, self-driving car, shareholder value, Sharpe ratio, short selling, Simon Kuznets, Skype, social contagion, Steven Pinker, tail risk, telemarketer, Thales and the olive presses, Thales of Miletus, The Market for Lemons, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, Vanguard fund, young professional, zero-sum game, Zipcar

“Sympathy and Callousness: The Impact of Deliberative Thought on Donations to Identi able and Statistical Victims.” Organizational Behavior and Human Decision Processes 102(2):143– 53. Smith, Adam. 1761. The Theory of Moral Sentiments, Second Edition. London: A. Millar in the Strand. ———. 1776. An Inquiry into the Nature and Causes of the Wealth of Nations. London: Ward, Lock & Bowden & Co. Sprenkle, Case. 1964. “Warrant Prices as Indicators of Expectations and Preferences.” In Paul Cootner, ed., The Random Character of Stock Market Prices, 412–74. Cambridge, MA: MIT Press. Stanley, Thomas J. 1991. Selling to the Affluent. New York: McGraw-Hill.

And the best way to do this is to build good moral behavior into the culture of Wall Street through the creation and observance of best practices in its various professions—CEOs, traders, accountants, investment bankers, lawyers, philanthropists. When Adam Smith wrote his classic Wealth of Nations in 1776, a book long acclaimed as marking the beginning of modern economics, the pressing issue for thinkers and critics of the day was tariffs.4 Private interests lobbied governments to put their interests ahead of public interests and push tari s up so high as to make it impossible for lowercost foreign producers to compete. But Adam Smith and other economists who followed him were successful in clarifying the importance of trade for the widespread wealth of nations. Since Adam Smith, lobbyists for special interests have found it much harder to push up tari s, and trade is substantially free today—a vital institution in creating the remarkable growth and widespread prosperity we have seen since the revolutions of the eighteenth century.

One can buy the nest wine, but in truth it is only incrementally di erent from other wines produced for the multitudes. Certainly some wealthy people do strive to own multiple large homes, expensive cars, and other luxury items, but we must assume there is diminishing satisfaction in amassing such possessions. This fact was noted by Adam Smith in his Theory of Moral Sentiments: It is to no purpose, that the proud and unfeeling landlord views his extensive elds, without a thought for the wants of his brethren, in imagination consumes himself the whole harvest that grows upon them. The homely and vulgar proverb, that the eye is larger than the belly, never was more fully veri ed than with regard to him.


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Democracy Incorporated by Sheldon S. Wolin

affirmative action, Berlin Wall, British Empire, centre right, coherent worldview, collective bargaining, colonial rule, corporate governance, creative destruction, cuban missile crisis, David Ricardo: comparative advantage, dematerialisation, Donald Trump, Fall of the Berlin Wall, full employment, illegal immigration, invisible hand, It's morning again in America, mass incarceration, money market fund, mutually assured destruction, new economy, offshore financial centre, Plato's cave, public intellectual, radical decentralization, Ralph Nader, Ronald Reagan, school vouchers, single-payer health, stem cell, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen

See also Bernard Bailyn, Ideological Origins of the American Revolution (Cambridge: Harvard University Press, 1967), and Gordon Wood, The Creation of the American Republic, 1776–1787 (Chapel Hill: University of North Carolina Press, 1969), especially chaps. 2, 3. and 11. 15. Still suggestive is Harold Rosenberg’s The Tradition of the New, 2nd ed. (Boston: Da Capo, 2001). 16. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, ed. W. B. Todd (Oxford: Clarendon Press, 1976), 1:454, 456. 17. I do not want to be understood as assuming that in the distant or recent past the United States was in possession of a more or less ideal system and that it has suddenly been hijacked by right-wing fanatics.

It was pictured as a system but of decentralized powers working best when left alone (laissez-faire, laissez passer) so that “the market” operated freely. The market furnished the structure by which spontaneous economic activities would be coordinated, exchange values set, and demand and supply adjusted. It operated, as Adam Smith famously wrote, by an unseen hand that connected participants and directed their endeavors toward the common benefit of all, even though the actors were motivated primarily by their own selfish ends. One of Smith’s fundamental contentions was that while individuals were capable of making rational decisions on a small scale, no one possessed the powers required for rationally comprehending a whole society and directing its activities.

An economy where power was dispersed among countless actors, and where markets supposedly were dominated by no one, rapidly gave way to forms of concentrated power—trusts, monopolies, holding companies, and cartels—able to set (or strongly influence) prices, wages, supplies of materials, and entry into the market itself. Adam Smith was now joined to Charles Darwin, the free market to the survival of the fittest. The emergence of the corporation marked the presence of private power on a scale and in numbers thitherto unknown, the concentration of private power unconnected to a citizen body. Despite the power of corporations over political processes and the economy, a determined political and economic opposition arose demanding curbs on corporate power and influence.


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Time Paradox by Philip G. Zimbardo, John Boyd

Albert Einstein, behavioural economics, cognitive dissonance, Drosophila, endowment effect, heat death of the universe, hedonic treadmill, impulse control, indoor plumbing, loss aversion, mental accounting, meta-analysis, Monty Hall problem, Necker cube, overconfidence effect, Ronald Reagan, science of happiness, The Wealth of Nations by Adam Smith, twin studies

Schor, The Overspent American: Why We Want What We Don’t Need (New York: Perennial, 1999); and P. L. Wachtel, Poverty of Affluence: A Psychological Portrait of the American Way of Life (New York: Free Press, 1983). 12. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776), book 1 (New York: Modern Library, 1994). 13. Adam Smith, The Theory of Moral Sentiments (1759; Cambridge: Cambridge University Press, 2002). 14. N. Ashraf, C. Camerer, and G. Loewenstein, “Adam Smith, Behavorial Economist,” Journal of Economic Perspectives 19: 131–45 (2005). 15. Smith, The Theory of Moral Sentiments. 16. Some theorists have argued that societies exhibit a cyclic pattern in which people do come to realize that money doesn’t buy happiness but then forget this lesson a generation later.

Once we’ve eaten our fill of pancakes, more pancakes are not rewarding, hence we stop trying to procure and consume them. But not so, it seems, with money. As Adam Smith, the father of modern economics, wrote in 1776: “The desire for food is limited in every man by the narrow capacity of the human stomach; but the desire of the conveniences and ornaments of building, dress, equipage, and household furniture, seems to have no limit or certain boundary.”12 If food and money both stop pleasing us once we’ve had enough of them, then why do we continue to stuff our pockets when we would not continue to stuff our faces? Adam Smith had an answer. He began by acknowledging what most of us suspect anyway, which is that the production of wealth is not necessarily a source of personal happiness.


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Winners Take All: The Elite Charade of Changing the World by Anand Giridharadas

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist lawyer, affirmative action, Airbnb, benefit corporation, Bernie Sanders, bitcoin, Black Lives Matter, Boeing 747, Brexit referendum, Burning Man, Capital in the Twenty-First Century by Thomas Piketty, carried interest, cognitive dissonance, collective bargaining, corporate raider, corporate social responsibility, critical race theory, crowdsourcing, David Brooks, David Heinemeier Hansson, deindustrialization, disintermediation, do well by doing good, Donald Trump, Edward Snowden, Elon Musk, fake it until you make it, fake news, food desert, friendly fire, gentrification, global pandemic, high net worth, hiring and firing, housing crisis, Hyperloop, impact investing, income inequality, independent contractor, invisible hand, Jeff Bezos, Kevin Roose, Kibera, Kickstarter, land reform, Larry Ellison, Lyft, Marc Andreessen, Mark Zuckerberg, microaggression, new economy, Occupy movement, offshore financial centre, opioid epidemic / opioid crisis, Panopticon Jeremy Bentham, Parag Khanna, Paul Graham, Peter Thiel, plutocrats, profit maximization, public intellectual, risk tolerance, rolodex, Ronald Reagan, shareholder value, sharing economy, Sheryl Sandberg, side hustle, side project, Silicon Valley, Silicon Valley billionaire, Silicon Valley startup, Skype, social distancing, Social Responsibility of Business Is to Increase Its Profits, Steven Pinker, systems thinking, tech baron, TechCrunch disrupt, technoutopianism, TED Talk, The Chicago School, The Fortune at the Bottom of the Pyramid, the High Line, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, Travis Kalanick, trickle-down economics, Two Sigma, Uber and Lyft, uber lyft, Upton Sinclair, Vilfredo Pareto, Virgin Galactic, work culture , working poor, zero-sum game

For more of the Economic Policy Institute’s work on wage stagnation and rising productivity, see “Understanding the Historic Divergence Between Productivity and a Typical Worker’s Pay,” by Josh Bivens and Lawrence Mishel (EPI Briefing Paper No. 406, September 2015). The first Adam Smith quote comes from The Wealth of Nations, book I, chapter 2; the second, from The Theory of Moral Sentiments, part IV, chapter 1. Michael Porter’s quote on the power of business to solve problems comes from his essay “Creating Shared Value,” coauthored with Mark R. Kramer (Harvard Business Review, January–February 2011).

* * * — Behind Asher’s Portfolios with Purpose, Rosenstein’s Asana, and countless other similarly minded initiatives, there stands a radical theory. It is a new twist on an old idea about the beneficial side effects of self-interest. The long-standing idea took root in the emerging commercial societies of urban Europe a few centuries ago. Its most famous statement is Adam Smith’s declaration about the social benefits of human selfishness: It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

The winners of commerce were no longer told to ignore the social good and keep their contribution to it indirect and unintentional. They were to focus on social improvement directly and intentionally. Rosenstein shouldn’t just start a software company, but one he thought most likely to improve the condition of humankind. In the journey from Adam Smith’s theory to that of the win-win, the entrepreneur is transformed from an incidental booster of the common good into a unique figure specially capable of tending to it. Business goes from being a sector with positive social benefits to being the principal vessel for human betterment. “Businesses acting as business, not as charitable donors, are the most powerful force [my italics] for addressing the pressing issues we face,” the Harvard Business School professor Michael Porter declared in one formulation of the idea.


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Origin Story: A Big History of Everything by David Christian

"World Economic Forum" Davos, Albert Einstein, Anthropocene, Arthur Eddington, butterfly effect, Capital in the Twenty-First Century by Thomas Piketty, Cepheid variable, colonial rule, Colonization of Mars, Columbian Exchange, complexity theory, cosmic microwave background, cosmological constant, creative destruction, cuban missile crisis, dark matter, demographic transition, double helix, Easter island, Edward Lorenz: Chaos theory, Ernest Rutherford, European colonialism, Francisco Pizarro, Haber-Bosch Process, Harvard Computers: women astronomers, Isaac Newton, James Watt: steam engine, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kickstarter, Kim Stanley Robinson, Large Hadron Collider, Late Heavy Bombardment, Marshall McLuhan, microbiome, nuclear winter, Paris climate accords, planetary scale, rising living standards, Search for Extraterrestrial Intelligence, Stephen Hawking, Steven Pinker, Stuart Kauffman, TED Talk, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, trade route, Yogi Berra

By uniting in some measure the most distant parts of the world, by enabling them to relieve one another’s wants, to increase one another’s enjoyments, and to encourage one another’s industry, their general tendency would seem to be beneficial. To the natives, however, both of the East and West Indies, all the commercial benefits which can have resulted from those events have been sunk and lost in the dreadful misfortunes which they have occasioned. —ADAM SMITH, AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS I sell here, sir, what all the world desires to have—POWER. —MATTHEW BOULTON, THE MAJOR INVESTOR IN JAMES WATT’S IMPROVED STEAM ENGINE When describing previous thresholds of increasing complexity, we have offered some educated guesses about the Goldilocks conditions that made them possible.

By 1800, it seemed that most farmable land was already being farmed. Adam Smith, the founder of modern economics, argued that societies would soon be using all available energy. Then growth would stall; wages would fall, and so, too, would populations as farming societies came face to face with the limits on energy flows that all other organisms do when they have filled up their niche.13 Some societies, such as the Netherlands and England, already seemed to be pushing at these limits. In the Netherlands, farmers had to gouge farmland from the sea, while England faced growing shortages of timber for heating, housing, and shipbuilding. By Adam Smith’s time, as Alfred Crosby puts it: “Humanity had hit a ceiling in its utilization of sun energy.”14 Pressure to find new sources of energy would eventually conjure up the mega-innovations that we describe today as the fossil-fuels revolution.

In this way, there emerged a close symbiotic relationship between European traders and rulers. Rulers protected and supported commerce, and in return they got the right to tax and profit from commercial wealth. This was the earliest and crudest form of capitalism, a system admired by European economists from Adam Smith to Karl Marx. The emerging partnership between European governments and entrepreneurs took many forms. The Russian trade in vodka is a case in point.12 Distilling appeared in sixteenth-century Russia. Almost immediately, officials in the government of Ivan the Terrible (whose nickname refers to his brutal treatment of his own nobles) realized that if they could stop peasants from distilling at home (which wasn’t hard to do, because distilling required a great deal of skill and equipment), they could make a lot of money, as liquor would be one of the few goods that peasants had to buy from others.


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The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class?and What We Can Do About It by Richard Florida

affirmative action, Airbnb, back-to-the-city movement, basic income, Bernie Sanders, bike sharing, blue-collar work, business climate, Capital in the Twenty-First Century by Thomas Piketty, clean water, Columbine, congestion charging, creative destruction, David Ricardo: comparative advantage, declining real wages, deindustrialization, Donald Trump, East Village, edge city, Edward Glaeser, failed state, Ferguson, Missouri, gentrification, Gini coefficient, Google bus, high net worth, high-speed rail, income inequality, income per capita, industrial cluster, informal economy, Jane Jacobs, jitney, Kitchen Debate, knowledge economy, knowledge worker, land value tax, low skilled workers, Lyft, megacity, megaproject, Menlo Park, mortgage tax deduction, Nate Silver, New Economic Geography, new economy, New Urbanism, occupational segregation, off-the-grid, opioid epidemic / opioid crisis, Paul Graham, plutocrats, RAND corporation, rent control, rent-seeking, restrictive zoning, Richard Florida, rising living standards, Ronald Reagan, secular stagnation, self-driving car, Silicon Valley, SimCity, sovereign wealth fund, streetcar suburb, superstar cities, tech worker, the built environment, The Chicago School, The Death and Life of Great American Cities, the High Line, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, trickle-down economics, Tyler Cowen, Uber and Lyft, uber lyft, universal basic income, upwardly mobile, urban decay, urban planning, urban renewal, urban sprawl, white flight, young professional

Later, David Ricardo developed his own “law of rent” to describe the economic windfall that accrues to landlords simply by virtue of their owning land, or, as he put it, “that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil.” In The Wealth of Nations, Adam Smith decried the selfish “indolence” of landlords. Today’s urban rentiers have more to gain from increasing the scarcity of usable land than from maximizing its productive and economically beneficial uses. The end result is the rise of what The Economist’s Ryan Avent has dubbed the “parasitic city,” in which wealthy homeowners and landlords capture a disproportionate share of economic output and wealth.

Hans Brems, “Cantillon Versus Marx: The Land Theory and the Labor Theory of Value,” History of Political Economy 10, no. 4 (1978): 669–678; Anthony Brewer, “Cantillon and the Land Theory of Value,” History of Political Economy 20, no. 1 (1988): 1–14; David Ricardo, “On Rent,” in On the Principles of Political Economy and Taxation (London: John Murray, 1821), chap. 2, available at www.econlib.org/library/Ricardo/ricP.html; Adam Smith, The Wealth of Nations, Bantam Classics Reprint (New York: Bantam, 2003 [1776]). 22. Ryan Avent, “The Parasitic City,” The Economist, June 3, 2013, www.economist.com/blogs/freeexchange/2013/06/london-house-prices; Noah Smith, “Piketty’s Three Big Mistakes,” Bloomberg View, March 27, 2015, www.bloombergview.com/articles/2015-03-27/piketty-s-three-big-mistakes-in-inequality-analysis.

.), 144 Veblen, Thorstein, 40 venture capital investment correlations for, 222 (table) in San Francisco, 9, 43, 44 (table), 45 in startup cities, 43–45, 44 (table), 49 variable of, 221 Vernon, Raymond, 128 Vienna, 16 (table), 17 wage inequality defined, 218 in economic inequality, xvi, 49–50, 85–90, 112, 114, 186, 218 wages of creative class, 31–32 minimum, increase in, 204–205 pay gap in, 14–15 of service class, 31–32 variable of, 220 of working class, 31–32 Wagner Act of 1935, 204 walk to work, variable of, 221 walkability, 137 Washington, DC, 41, 155 in Amtrak Corridor, 197–198 creativity in, 54 gentrification in, 59–60, 67 housing costs in, 29, 29 (fig.), 31, 31 (table), 157 as Patchwork Metropolis, 136–137, 136 (fig.) ranking of, 16 (table), 17 venture capital in, 44 (table), 45 The Wealth of Nations (Smith, A.), 26 wealthy segregation of, 102–103, 102 (table), 219 in suburbs, 161–163, 161 (table), 162 (table) See also global super-rich West Chelsea, 37 Whole Foods, 205–206 Wilson, Fred, 46 Wilson, William Julius, 102 winner-take-all economics, 14–15 winner-take-all urbanism clustering force in, 13–14 results of, 186 rise of, xx, 6, 11, 216 social safety net and, 209–210 superstar cities in, 13–20, 20 (fig.), 171 working class defined, 217 disadvantages of, xiv–xv, xviii, 6–7 gentrification and, 56 in Patchwork Metropolis, 122–123, 130–135, 138–139, 142–146, 148–149 segregation of, 104–108, 107 (table), 219 shrinking of, 202–203 wages of, 31–32 youthification, 62–63 zoning inclusionary, 201–202 New Urban Luddism and, 27–28, 191 reform, 11, 28, 191–192 Zurich, 16 (table), 17


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Fully Automated Luxury Communism by Aaron Bastani

"Peter Beck" AND "Rocket Lab", Alan Greenspan, Anthropocene, autonomous vehicles, banking crisis, basic income, Berlin Wall, Bernie Sanders, Boston Dynamics, Bretton Woods, Brexit referendum, capital controls, capitalist realism, cashless society, central bank independence, collapse of Lehman Brothers, computer age, computer vision, CRISPR, David Ricardo: comparative advantage, decarbonisation, deep learning, dematerialisation, DIY culture, Donald Trump, double helix, driverless car, electricity market, Elon Musk, energy transition, Erik Brynjolfsson, fake news, financial independence, Francis Fukuyama: the end of history, future of work, Future Shock, G4S, general purpose technology, Geoffrey Hinton, Gregor Mendel, housing crisis, income inequality, industrial robot, Intergovernmental Panel on Climate Change (IPCC), Internet of things, Isaac Newton, James Watt: steam engine, Jeff Bezos, Jeremy Corbyn, Jevons paradox, job automation, John Markoff, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, Kuiper Belt, land reform, Leo Hollis, liberal capitalism, low earth orbit, low interest rates, low skilled workers, M-Pesa, market fundamentalism, means of production, mobile money, more computing power than Apollo, new economy, off grid, pattern recognition, Peter H. Diamandis: Planetary Resources, post scarcity, post-work, price mechanism, price stability, private spaceflight, Productivity paradox, profit motive, race to the bottom, rewilding, RFID, rising living standards, Robert Solow, scientific management, Second Machine Age, self-driving car, sensor fusion, shareholder value, Silicon Valley, Simon Kuznets, Slavoj Žižek, SoftBank, stem cell, Stewart Brand, synthetic biology, technological determinism, technoutopianism, the built environment, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, transatlantic slave trade, Travis Kalanick, universal basic income, V2 rocket, Watson beat the top human players on Jeopardy!, We are as Gods, Whole Earth Catalog, working-age population

Kevin Kelly When Capital Becomes Labour In 2011 the Economist, in circulation since 1843, posed its readers a question: ‘What happens when … machines are smart enough to become workers? In other words, when capital becomes labour?’ While early giants of classical political economy, such as Adam Smith and David Ricardo, did not view capitalist society as defined by conflict between classes, they did presume that labour would always remain distinct from ‘capital stock’, and that workers could never equate to human-made goods used in production such as machinery, tools and buildings. Yet nearly 250 years after Smith wrote The Wealth of Nations, the publication most committed to defending his legacy was now uncertain whether one of the central premises of his thinking would endure for much longer.

See also luxury populism Post, Mark, 170–2, 175, 176 post-capitalism information and, 59–60 without communism, 56–9 poverty, 24–5 Preston Model, 208–11, 213 private space industry, 120–1 privatisation, 202–4, 207, 209–10 production, mode of, 195 productivity paradox, 233 productivity revolution, 60–3 progressive procurement, 207 property-owning democracy, 25 prototype politics, 198 PV (photovoltaic) cells, 47, 102–5 radical politics, revival of, 27–8 railway lines, 33–4 realism, capitalist, 17–9 red politics, 188–92 Rees-Mogg, Jacob, 206–7 Reformation, 240, 241 regeneration, 207 Reither, Walter, 70–1 Relativity Space, 123, 124 renewable energy about, 104, 108 financing, 219–20 generating and storing, 218–19 green movement and, 238–9 transitioning to, 218–19 renewables, 106 ‘Reopening the American Frontier: Exploring How the Outer Space Treaty Will Impact American Commerce and Settlement in Space’, 129 Resolution Foundation, 58 resources asteroid mining, 119–20 globalism and, 197 post-scarcity in, 117–37 private space industry, 120–1 space, 119–37 Ricardo, David, 69, 233 rice production, 161–2 Richards, Bob, 124 Rifkin, Jeremy, 79 Rio Earth Summit, 98, 197 robots about, 78, 133 Atlas, 82–3, 132 da Vinci surgery robot, 90 information technology and robotics, 76 ‘KIVA’, 89 rise of, 80–2 Rocket Lab, 121, 122, 123 Romer, Paul, 63–5, 199–200 Roosevelt, Franklin, 194 Rutter, Brad, 80 Sanders, Bernie, 29, 30 Saturn V, 120, 122 Saudi Arabia, 220–1 Schumpeter, Joseph, 36 Scottish National Party, 28 Second Disruption, 11, 32–6, 72–4, 79, 94, 96, 106, 134, 139, 141, 163, 188, 190, 192, 198, 201, 208, 217, 232–3, 236, 238, 241 Selden, Mike, 172, 173 self-regulation, consequences of, 206 ‘Sermon on Indulgences and Grace’ (Luther), 241 Silicon Valley, 196 ‘Six Laws of Technology’ (Kranzberg), 237 Skelton, Noel, 25 Smith, Adam, 69, 233 ‘Social Prosperity for the Future’, 214 socialised capital market, 230–2 socialism, 191 society, electoralism and, 194–6 soil fertility, 118 ‘solar home’, 113–14 solar power/energy about, 101–5, 107 Global South and, 106–11 in Saudi Arabia, 220–1 Solow, Robert, 233 Sondergaard, Peter, 87 space asteroid mining, 133–4 falling costs of, 122–4 mineral wealth in, 134–7 Moon Express, 125–6 near-Earth asteroids (NEAs), 130–1 Outer Space Treaty (1967), 127 as private industry, 120–1 private sector, 132–3 SPACE Act (2015), 2, 9 Space Launch System, 120 Space Shuttle programme, 122 SpaceX, 119–21, 122, 133–4, 156 speculative economy, repressing the, 229–30 Sputnik, 137, 153 state socialism, 213 steam engine, 93, 95, 149, 164, 201, 238 steam power, 33 Summers, Larry, 64–5, 116, 199–200 Supplemental Nutrition Assistance Program, 24 surplus, food, disruptions and, 159–60 sustenance about, 178–9 cultured meat, 170–5 egg whites, 177–9 food, surplus and disruptions, 159–60 meat from vegetables, 175–7 milk, 177–9 planetary limits, 160–4 post-scarcity in, 159–81 synthetic meat, 168–70 wine, 177–81 synthetic meat, 168–70 Syriza, 28, 30 TALEN (transcription activator-like effector-based nucleases), 150 Taylor, Frederick, 60–3, 85 Taylorism, 60–3 technological unemployment, 86–8 technology Marx on, 237 relationship between politics and, 237 Technology and Unemployment report, 53 Terran 1 rocket, 124 Tesla, 84, 85, 106 Thatcher, Margaret, 206–7 Third Disruption, 11, 37–48, 70, 79, 82, 92, 116, 143–4, 148, 156, 171, 185–8, 192–6, 201, 212–4, 217, 221, 226, 232, 234, 236, 238, 241–3 3-D Magnetic Recording technology, 45–6 3-D printing, 122–4, 127 Tithebarn project, 208 transatlantic telegraph cable, 34 transcription activator-like effector-based nucleases (TALEN), 150 transportation, in UK, 215 travel, exponential, 39–40 Trump, Donald, 21, 24, 29, 30 Trussell Trust, 24 Turnspit dog, 72–3 Uber, 84, 85 UBI (Universal Basic Income), 224–6 UBS (Universal Basic Services), 207–8, 213–17, 224, 226, 236 UK ageing in Britain, 141–4 healthcare in, 215–16 transportation in, 215 UKIP, 28 unemployment, 26 unfreedom, 214 unions, in Britain, 211–12 Universal Basic Income (UBI), 224–6 Universal Basic Services (UBS), 207–8, 213–17, 224, 226, 236 University College London, 90 US Department of Agriculture, 178 US Food and Drug Administration, 153 US National Institute of Health, 147 US National Space Council, 129 US Senate Committee on Commerce, Science and Transportation, 129 utopia, from crisis to, 48–9 V2, 137 Valeti, Uma, 173 vegetables, meat from, 175–7 Verne, Jules Around the World in Eighty Days, 33 von Braun, Wernher, 120, 128 voting, 195 wage-labour, 35 Wagner, Erika, 135 Wales, 114 Watson (computer), 80 Watson, James, 144, 149 Watt, James, 33 Watt’s steam engine, 93, 95, 149, 201, 238 The Wealth of Nations (Smith), 69–70 wheat production, 161–2, 165 Whole Foods Market, 88 Wikipedia, 235 wind power/energy, 111–13 windfall tax, 230 wine, cellular agriculture and, 177–81 work, future of, 92–3 worker-owned cooperatives, 209–10 worker-owned economy, 207–8, 211–12, 219 World Bank, 221, 222 Wycliffe, John, 239–41 Xplorer, 132 Yang (factory worker), 1–2 ZFNs (zinc finger nucleases), 150 zinc, 118 zinc finger nucleases (ZFNs), 150 Žižek, Slavoj, 17n

The information it expresses is the value of all economic transactions within a fixed period of time, usually a year. That is, all the goods and services that are produced, sold and purchased. Given its centrality in any discussion of what kind of economic model is preferable, it’s easy to presume that the idea of GDP is as old as capitalism itself – that it was perhaps contrived by the likes of Adam Smith or David Ricardo. Yet to the contrary, it is a relatively recent development, devised by the economist Simon Kuznets in the 1930s in response to the Great Depression. It turns out that the central imperative of modern societies – that economic growth should be pursued as an end in itself – only started to reign supreme a century and a half after the Second Disruption began.


pages: 287 words: 80,180

Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant by W. Chan Kim, Renée A. Mauborgne

Asian financial crisis, Blue Ocean Strategy, borderless world, call centre, classic study, cloud computing, commoditize, creative destruction, disruptive innovation, endogenous growth, Ford Model T, haute couture, index fund, information asymmetry, interchangeable parts, job satisfaction, Joseph Schumpeter, Kickstarter, knowledge economy, machine translation, market fundamentalism, NetJets, Network effects, RAND corporation, Salesforce, Skype, telemarketer, The Wealth of Nations by Adam Smith, There's no reason for any individual to have a computer in his home - Ken Olsen, Thomas Kuhn: the structure of scientific revolutions, Vanguard fund, zero-sum game

Blue Ocean Strategy has won numerous awards including “The Best Business Book of 2005” Prize at the Frankfurt Book Fair. It was also selected as a “Top Ten Business Book of 2005” by Amazon.com, and as one of the forty most influential books in the History of the People’s Republic of China (1949–2009), along with Adam Smith’s The Wealth of Nations and Milton Friedman’s Free to Choose. Kim is ranked number two in The Thinkers50 listing of the World’s Top Management Gurus. In 2014, Kim, along with his colleague Renée Mauborgne, received the Carl S. Sloane Award for Excellence from the Association of Management Consulting Firms due to the impact their management research has made on the global consulting industry.

Blue Ocean Strategy has won numerous awards including “The Best Business Book of 2005” Prize at the Frankfurt Book Fair. It was also selected as a “Top Ten Business Book of 2005” by Amazon.com, and as one of the forty most influential books in the History of the People’s Republic of China (1949–2009) along with Adam Smith’s The Wealth of Nations and Milton Friedman’s Free to Choose. Mauborgne is ranked number two in The Thinkers50 listing of the World’s Top Management Gurus. She is the highest-placed woman ever on Thinkers50. In 2014, Mauborgne, along with her colleague W. Chan Kim, received the Carl S. Sloane Award for Excellence from the Association of Management Consulting Firms due to the impact their management research has made on the global consulting industry.


pages: 385 words: 133,839

The Coke Machine: The Dirty Truth Behind the World's Favorite Soft Drink by Michael Blanding

"World Economic Forum" Davos, An Inconvenient Truth, carbon footprint, classic study, clean water, collective bargaining, corporate social responsibility, Exxon Valdez, Gordon Gekko, Internet Archive, laissez-faire capitalism, market design, military-industrial complex, MITM: man-in-the-middle, Naomi Klein, Nelson Mandela, New Journalism, Pepsi Challenge, Ponzi scheme, profit motive, Ralph Nader, rolodex, Ronald Reagan, shareholder value, stock buybacks, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, union organizing, Upton Sinclair, Wayback Machine

The Coca-Cola Com­ pany’s practice continues to be one of engagement in conversations with all stakeholders—including supporters and critics—as long those discussions can be fair and objective.” 22 THE COKE MACHINE did succeed in transplanting the survival of the corporation itself. After dozens of British families lost their fortunes from the collapse of the no­ torious South Seas Company in 1720, Parliament banned the risky prop­ ositions. When the father of capitalism himself, Adam Smith, wrote The Wealth of Nations in 1776, he spoke out against corporations, arguing that the “directors of such companies . . . being the managers rather of other people’s money than of their own, it cannot well be expected that they should watch over it with the same anxious vigilance with which the part­ ners in a private copartnery.”

Page 21 wasn’t entirely removed: Graham and Roberts, 19. NOTES 299 Page 21 needed to raise at least $50,000: Allen, 38. Page 21 One of the very first corporations: Joel Bakan, The Corporation: The Pathological Pursuit of Profit and Power (New York: Simon & Schuster, 2004), 8. Page 22 “directors of such companies”: Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London: T. Nelson & Sons, 1895), 311. Page 22 The corporation took off: Bakan, 7. Page 22 more than three hundred: Jack Beatty, ed., Colossus: How the Corporation Changed America (New York: Broadway Books, 2001), 5. Page 22 And unlike their British counterparts . . . beginning in the 1830s: Beatty, 45–46.

New York: Jeremy P. Tarcher, 2000. Singer, Peter. One World: The Ethics of Globalization. New Haven, CT: Yale University Press, 2002. Sivulka, Juliann. Soap, Sex, and Cigarettes: A Cultural History of American Advertising. Belmont, CA: Wadsworth, 1998. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. London: T. Nel­ son & Sons, 1895 (orig. pub. 1776). Snitow, Alan, and Deborah Kaufman, with Michael Fox. Thirst: Fighting the Corporate Theft of Our Water. San Francisco: John Wiley & Sons, 2007. Solnit, David, and Rebecca Solnit. The Battle of the Story of the Battle of Seattle. Edinburgh, Scotland: AK Press, 2009.


Making Globalization Work by Joseph E. Stiglitz

"World Economic Forum" Davos, affirmative action, Alan Greenspan, Andrei Shleifer, Asian financial crisis, banking crisis, barriers to entry, benefit corporation, Berlin Wall, blood diamond, business process, capital controls, carbon tax, central bank independence, corporate governance, corporate social responsibility, currency manipulation / currency intervention, Doha Development Round, Exxon Valdez, Fall of the Berlin Wall, Firefox, full employment, Garrett Hardin, Gini coefficient, global reserve currency, Global Witness, Great Leap Forward, Gunnar Myrdal, happiness index / gross national happiness, illegal immigration, income inequality, income per capita, incomplete markets, Indoor air pollution, informal economy, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), inventory management, invisible hand, John Markoff, Jones Act, Kenneth Arrow, Kenneth Rogoff, low interest rates, low skilled workers, manufacturing employment, market fundamentalism, Martin Wolf, microcredit, moral hazard, negative emissions, new economy, North Sea oil, offshore financial centre, oil rush, open borders, open economy, price stability, profit maximization, purchasing power parity, quantitative trading / quantitative finance, race to the bottom, reserve currency, rising living standards, risk tolerance, Seymour Hersh, Silicon Valley, special drawing rights, statistical model, the market place, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, Tragedy of the Commons, trickle-down economics, union organizing, Washington Consensus, zero-sum game

ABN Amro, a major Dutch bank, not only talks about sustainability in its lending practices but has projects helping development in a number of countries. Many companies have gone to what is called the triple bottom line, focusing not only on profits but on impacts on the environment and broader issues of social responsibility. 15.The Wealth of Nations (New York: Modern Library, 1937), p. 128. 16.An additional level of complexity is added by international agreements that are supposed to deal with anti-competitive behavior. While the WTO allows countries to use dumping duties, as we saw in chapter 3, dumping, as traditionally defined, has little to do with anti-competitive behavior.

I hope that this book, like its predecessor, will help transform the globalization debate—and, ultimately, the political processes which shape globalization. Globalization is the field on which some of our major societal conflicts—including those over basic values—play out. Among the most important of those conflicts is that over the role of government and markets. It used to be that conservatives could appeal to Adam Smith’s “invisible hand”—the notion that markets and the pursuit of self-interest would lead, as if by an invisible hand, to economic efficiency. Even if they could admit that markets, by themselves, might not engender a socially acceptable distribution of income, they argued that issues of efficiency and equity should be separated.

Mexico’s public expenditures of around 19 percent of GDP—more than a third financed by oil revenues—are markedly lower than those of Brazil or the United States, and are insufficient to finance needed public investment in education, research, and infrastructure. TRADE LIBERALIZATION: THEORY AND PRACTICE The British economist Adam Smith, the founder of modern economics, was a strong champion of both free markets and free trade, and his arguments are compelling: free trade allows countries to take advantage of their comparative advantage, with all nations benefiting as each one specializes in the areas in which it excels. Large trading areas allow firms and individuals to specialize further and become even better at what they do.


pages: 422 words: 131,666

Life Inc.: How the World Became a Corporation and How to Take It Back by Douglas Rushkoff

Abraham Maslow, Adam Curtis, addicted to oil, affirmative action, Alan Greenspan, Amazon Mechanical Turk, An Inconvenient Truth, anti-globalists, AOL-Time Warner, banks create money, Bear Stearns, benefit corporation, big-box store, Bretton Woods, car-free, Charles Lindbergh, colonial exploitation, Community Supported Agriculture, complexity theory, computer age, congestion pricing, corporate governance, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, death of newspapers, digital divide, don't be evil, Donald Trump, double entry bookkeeping, easy for humans, difficult for computers, financial innovation, Firefox, full employment, General Motors Futurama, gentrification, Glass-Steagall Act, global village, Google Earth, greed is good, Herbert Marcuse, Howard Rheingold, income per capita, invention of the printing press, invisible hand, Jane Jacobs, John Nash: game theory, joint-stock company, Kevin Kelly, Kickstarter, laissez-faire capitalism, loss aversion, market bubble, market design, Marshall McLuhan, Milgram experiment, military-industrial complex, moral hazard, multilevel marketing, mutually assured destruction, Naomi Klein, negative equity, new economy, New Urbanism, Norbert Wiener, peak oil, peer-to-peer, place-making, placebo effect, planned obsolescence, Ponzi scheme, price mechanism, price stability, principal–agent problem, private military company, profit maximization, profit motive, prosperity theology / prosperity gospel / gospel of success, public intellectual, race to the bottom, RAND corporation, rent-seeking, RFID, road to serfdom, Ronald Reagan, scientific management, short selling, Silicon Valley, Simon Kuznets, social software, Steve Jobs, Telecommunications Act of 1996, telemarketer, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, trade route, trickle-down economics, union organizing, urban decay, urban planning, urban renewal, Vannevar Bush, vertical integration, Victor Gruen, white flight, working poor, Works Progress Administration, Y2K, young professional, zero-sum game

Conner, A People’s History of Science (New York: Nation Books, 2005), 190-95, and Peter Russell, Prince Henry “the Navigator”: A Life (New Haven: Yale University Press, 2001), 372-74. 30 Reductionism promoted a fragmented view Clive Ponting, A Green History of the World (New York: Penguin, 1991), 154. 31 By selling their lands Fernand Braudel, Afterthoughts on Material Civilization and Capitalism (Baltimore: Johns Hopkins Press, 1977), 60. 33 In Bengal, for example Arnold Pacey, Technology in World Civilization: A Thousand-Year History (Cambridge, Mass.: MIT Press, 1991), 102. 34 “By preferring the support of domestic” Adam Smith, The Wealth of Nations, Books IV-V, Penguin Classics Edition (New York: Penguin Classics, 1999), 32. 35 For one, the economic globalization David Korten, When Corporations Rule the World, 2nd ed. (San Francisco: Berrett-Koehler Publishers, 2001), 39. 37 As a result, debt payments Ibid., 64. 42 In the 1970s, for example Dean Foust and Maria Mallory, “The Boom Belt: There’s No Speed Limit on Growth along the South’s I-85,” BusinessWeek, September 27, 1993: 98-104, and Korten, When Corporations Rule, 132. 42 In 1993, South Carolina Foust and Mallory, “The Boom Belt,” 98–104, and Korten, When Corporations Rule, 132. 44 As of 2000, by utilizing Wal-Mart Watch, http://walmartwatch.com/ (accessed March 20, 2008). 44 After peaking at more Anne D’Innocenzio, “Wal-Mart Scales Back Expansion in Tough Economy,” USA Today, October 28, 2008.

Corporations were also required to demonstrate that they had a specific beneficial purpose other than making money—such as getting a bridge built or a waterway opened. Having fought against a foreign megacorporation, the founders understood the dangers inherent in the kind of centralized economic authority demanded by corporatism. Just like Adam Smith, they hated big government and big corporations alike, envisioning the ideal business landscape characterized by locally scaled firms and farmers, unencumbered by large, dehumanizing monopolies. Thomas Jefferson considered “freedom from monopolies” one of the fundamental human rights. James Madison praised self-sufficiency and appropriately scaled enterprises: “The class of citizens who provide at once their own food and their own raiment, may be viewed as the most truly independent and happy.

Charters gave corporations the exclusive right to vertically integrate anything they needed onto the credit side of the balance sheet, no matter the cost to the territory. The only thing they had to fear was revolution—but to attack a chartered corporation meant facing the army of the empire that underwrote it. It was these seventeenth-and eighteenth-century equivalents of no-bid contracts to Halliburton that led Adam Smith to write Wealth of Nations. While celebrated today by corporate libertarians as philosophical justification for free-trade policies, the book was meant as an attack on the scale and effects of chartered monopoly. By arguing—now famously—that “self-interest” might promote a more just society, he was speaking in the context of an economy already heavily tilted against individual human agency.


pages: 506 words: 133,134

The Lonely Century: How Isolation Imperils Our Future by Noreena Hertz

"Friedman doctrine" OR "shareholder theory", Airbnb, airport security, algorithmic bias, Asian financial crisis, autism spectrum disorder, Bernie Sanders, Big Tech, big-box store, Broken windows theory, call centre, Capital in the Twenty-First Century by Thomas Piketty, car-free, Cass Sunstein, centre right, conceptual framework, Copley Medal, coronavirus, correlation does not imply causation, COVID-19, dark matter, deindustrialization, Diane Coyle, digital divide, disinformation, Donald Trump, driverless car, emotional labour, en.wikipedia.org, Erik Brynjolfsson, Evgeny Morozov, fake news, Fellow of the Royal Society, future of work, gender pay gap, gentrification, gig economy, Gordon Gekko, greed is good, Greta Thunberg, happiness index / gross national happiness, housing crisis, illegal immigration, independent contractor, industrial robot, Jane Jacobs, Jeff Bezos, Jeremy Corbyn, Jessica Bruder, job automation, job satisfaction, karōshi / gwarosa / guolaosi, Kevin Roose, knowledge economy, labor-force participation, lockdown, longitudinal study, low interest rates, low skilled workers, Lyft, Mark Zuckerberg, mass immigration, means of production, megacity, meta-analysis, move fast and break things, Network effects, new economy, Pepto Bismol, QWERTY keyboard, Ray Oldenburg, remote working, rent control, RFID, robo advisor, Ronald Reagan, Salesforce, San Francisco homelessness, Second Machine Age, Shoshana Zuboff, side hustle, Silicon Valley, Skype, Snapchat, social distancing, Social Responsibility of Business Is to Increase Its Profits, SoftBank, Steve Jobs, surveillance capitalism, TaskRabbit, tech worker, The Death and Life of Great American Cities, The Future of Employment, The Great Good Place, the long tail, The Wealth of Nations by Adam Smith, TikTok, Tim Cook: Apple, Uber and Lyft, uber lyft, urban planning, Wall-E, warehouse automation, warehouse robotics, WeWork, work culture , working poor, workplace surveillance

The political objective of making citizens feel that someone is watching their back is not irreconcilable with capitalism. Indeed, it is a fundamental misunderstanding of capitalism to assume that its neoliberal ‘dog eat dog’, ‘every man for himself’ variant is its only form. Even Adam Smith, the father of capitalism, whilst best known as an eloquent advocate of free markets and individual freedom, wrote extensively in The Theory of Moral Sentiment (the precursor to The Wealth of Nations) about the importance of empathy, community and pluralism.5 He understood that the state has a clear role to play in providing the infrastructure of community – and that when the markets need to be reined in to protect society, reined in they should be.6 Elsewhere, Asian, Scandinavian and indeed continental European forms of capitalism through much of the twentieth century were distinct from the neoliberal tradition in terms of the greater role they accorded the state and the emphasis they placed on communitarian values.

On gender and neoliberalism see for example Andrea Cornwall, Jasmine Gideon and Kalpana Wilson, ‘Reclaiming Feminism: Gender and Neoliberalism’, Institute of Development Studies Bulletin 39, no. 6 (December 2008), https://doi.org/10.1111/j.1759-5436.2008.tb00505.x; or more comprehensively, Nancy Fraser, Fortunes of Feminism: From State-Managed Capitalism to Neoliberal Crisis (Verso, 2013). 5 Adam Smith, The Theory of Moral Sentiments, ed. Ryan Patrick Hanley (Penguin Random House, 2010). 6 David J. Davis, ‘Adam Smith, Communitarian’, The American Conservative, 19 December 2013, https://www.theamericanconservative.com/articles/adam-smith-communitarian/; Jack Russell Weinstein, Adam Smith’s Pluralism, (Yale University Press, 2013); Jesse Norman, ‘How Adam Smith Would Fix Capitalism’, Financial Times, 21 June 2018, https://www.ft.com/content/6795a1a0-7476-11e8-b6ad-3823e4384287. 7 This would amount to roughly $287 billion given the size of the US economy.

In a formal academic setting, participants wouldn’t know which questions are reverse-scored. 36 Rhitu Chatterjee, ‘Americans Are A Lonely Lot, And Young People Bear The Heaviest Burden’, NPR, 1 May 2018, https://www.npr.org/sections/health-shots/2018/05/01/606588504/americans-are-a-lonely-lot-and-young-people-bear-the-heaviest-burden; ‘Loneliness and the Workplace: 2020 U.S. Report’, Cigna, January 2020, 3, https://www.multivu.com/players/English/8670451-cigna-2020-loneliness-index/docs/CignaReport_1579728920153-379831100.pdf. 37 See for example E.G. West, ‘The Political Economy of Alienation: Karl Marx and Adam Smith’, Oxford Economic Papers 21, no. 2 (March 1969), 1–23, https://www.jstor.org/stable/2662349?seq=1; Fay Bound Alberti, ‘Stop medicalising loneliness – history reveals it’s society that needs mending’, The Conversation, 19 November 2019, https://theconversation.com/stop-medicalising-loneliness-history-reveals-its-society-that-needs-mending-127056; Bill Callanan, ‘Loneliness as a Theme in the Life and Writings of C.G.


pages: 322 words: 87,181

Straight Talk on Trade: Ideas for a Sane World Economy by Dani Rodrik

3D printing, airline deregulation, Asian financial crisis, bank run, barriers to entry, behavioural economics, Berlin Wall, Bernie Sanders, blue-collar work, Bretton Woods, BRICs, business cycle, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Carmen Reinhart, carried interest, central bank independence, centre right, collective bargaining, conceptual framework, continuous integration, corporate governance, corporate social responsibility, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, Donald Trump, endogenous growth, Eugene Fama: efficient market hypothesis, eurozone crisis, export processing zone, failed state, financial deregulation, financial innovation, financial intermediation, financial repression, floating exchange rates, full employment, future of work, general purpose technology, George Akerlof, global value chain, income inequality, inflation targeting, information asymmetry, investor state dispute settlement, invisible hand, Jean Tirole, Kenneth Rogoff, low interest rates, low skilled workers, manufacturing employment, market clearing, market fundamentalism, meta-analysis, moral hazard, Nelson Mandela, new economy, offshore financial centre, open borders, open economy, open immigration, Pareto efficiency, postindustrial economy, precautionary principle, price stability, public intellectual, pushing on a string, race to the bottom, randomized controlled trial, regulatory arbitrage, rent control, rent-seeking, Richard Thaler, Robert Gordon, Robert Shiller, Ronald Reagan, Sam Peltzman, Silicon Valley, Solyndra, special economic zone, spectrum auction, Steven Pinker, tacit knowledge, The Rise and Fall of American Growth, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, total factor productivity, trade liberalization, transaction costs, Tyler Cowen, unorthodox policies, Washington Consensus, World Values Survey, zero-sum game, éminence grise

Today, mercantilism is typically dismissed as an archaic and blatantly erroneous set of ideas about economic policy. And, in their heyday, mercantilists certainly did defend some very odd notions, chief among which was the view that national policy ought to be guided by the accumulation of precious metals—gold and silver. Adam Smith’s 1776 treatise The Wealth of Nations masterfully demolished many of these ideas. Smith showed, in particular, that money should not be confused for wealth. As he put it, “the wealth of a country consists, not in its gold and silver only, but in its lands, houses, and consumable goods of all different kinds.” But it is more accurate to think of mercantilism as a different way to organize the relationship between the state and the economy—a vision that holds no less relevance today than it did in the eighteenth century.

They have consistently minimized distributional concerns, even though it is now clear that the distributional impact of, say, the North American Free Trade Agreement or China’s entry into the World Trade Organization was significant for the most directly affected communities in the United States. They have overstated the magnitude of aggregate gains from trade deals, though such gains have been relatively small since at least the 1990s. They have endorsed the propaganda portraying today’s trade deals as “free trade agreements,” even though Adam Smith and David Ricardo would turn over in their graves if they read the details of, say, the Trans-Pacific Partnership on intellectual property rules or investment regulations. This reluctance to be honest about trade has cost economists their credibility with the public. Worse still, it has fed their opponents’ narrative.

Remove constraints on what politicians can do, he implied, and all you will get are silly interventions that throttle markets and stall the engine of economic growth. This criticism reflects a serious misunderstanding of how markets really function. Raised on textbooks that obscure the role of institutions, economists often imagine that markets arise on their own, with no help from purposeful, collective action. Adam Smith may have been right that “the propensity to truck, barter, and exchange” is innate to humans, but a wide array of nonmarket institutions is needed to capitalize on this propensity. Consider all that is required. Modern markets need an infrastructure of transport, logistics, and communication, much of it the result of public investments.


Power Systems: Conversations on Global Democratic Uprisings and the New Challenges to U.S. Empire by Noam Chomsky, David Barsamian

"World Economic Forum" Davos, affirmative action, Affordable Care Act / Obamacare, Albert Einstein, American ideology, Chelsea Manning, collective bargaining, colonial rule, corporate personhood, David Brooks, discovery of DNA, double helix, drone strike, failed state, Great Leap Forward, Herbert Marcuse, high-speed rail, Howard Zinn, hydraulic fracturing, income inequality, inflation targeting, Intergovernmental Panel on Climate Change (IPCC), Julian Assange, land reform, language acquisition, Martin Wolf, Mohammed Bouazizi, Naomi Klein, Nelson Mandela, new economy, no-fly zone, obamacare, Occupy movement, oil shale / tar sands, pattern recognition, Powell Memorandum, public intellectual, quantitative easing, Ralph Nader, Ralph Waldo Emerson, single-payer health, sovereign wealth fund, The Wealth of Nations by Adam Smith, theory of mind, Tobin tax, union organizing, Upton Sinclair, uranium enrichment, WikiLeaks

Daniel Kruger, “Japan Overtakes China as Largest Holder of Treasuries,” Bloomberg News, 16 February 2010. 16. For data, see the regular report of the Federal Reserve Board, Department of the Treasury, “Major Foreign Holders of Treasury Securities.” Available at http://www.treasury.gov. 17. Adam Smith, The Wealth of Nations: Books IV–V (New York: Penguin Books, 1999), p. 247. 18. Ibid., p. 25. 19. Francisco Rodriguez and Arjun Jayadev, The Declining Labor Share of Income, United Nations Development Programme, Human Development Research Paper 2010/36 (November 2010). See also Eva Cheng, “China: Wage Share Plunges,” Green Left Weekly, 19 October 2007. 20.

Part of the doctrinal system in the United States is the pretense that we’re all a happy family, there are no class divisions, and everybody is working together in harmony. But that’s radically false. Furthermore, it’s known to be false. At least, it has been for a long time. Take a dangerous radical like, say, Adam Smith, whom people worship but don’t read. He said that in England the people who own the society make policy. The people who own the place are the “merchants and manufacturers.” They’re “the principal architects” of policy, and they carry it out in their own interests, no matter how harmful the effects on the people of England, which is not their business.17 Of course, he was an old-fashioned conservative, so he had moral values.


pages: 511 words: 151,359

The Asian Financial Crisis 1995–98: Birth of the Age of Debt by Russell Napier

Alan Greenspan, Asian financial crisis, asset allocation, bank run, banking crisis, banks create money, Berlin Wall, book value, Bretton Woods, business cycle, Buy land – they’re not making it any more, capital controls, central bank independence, colonial rule, corporate governance, COVID-19, creative destruction, credit crunch, crony capitalism, currency manipulation / currency intervention, currency peg, currency risk, debt deflation, Deng Xiaoping, desegregation, discounted cash flows, diversification, Donald Trump, equity risk premium, financial engineering, financial innovation, floating exchange rates, Fractional reserve banking, full employment, Glass-Steagall Act, hindsight bias, Hyman Minsky, If something cannot go on forever, it will stop - Herbert Stein's Law, if you build it, they will come, impact investing, inflation targeting, interest rate swap, invisible hand, Japanese asset price bubble, Jeff Bezos, junk bonds, Kickstarter, laissez-faire capitalism, lateral thinking, Long Term Capital Management, low interest rates, market bubble, mass immigration, means of production, megaproject, Mexican peso crisis / tequila crisis, Michael Milken, Money creation, moral hazard, Myron Scholes, negative equity, offshore financial centre, open borders, open economy, Pearl River Delta, price mechanism, profit motive, quantitative easing, Ralph Waldo Emerson, regulatory arbitrage, rent-seeking, reserve currency, risk free rate, risk-adjusted returns, Ronald Reagan, Savings and loan crisis, savings glut, Scramble for Africa, short selling, social distancing, South China Sea, The Wealth of Nations by Adam Smith, too big to fail, yield curve

The forces behind the global economy are also those that deepen liberty, the free flow of ideas and information, open borders and easy travel, the rule of law, fair and even-handed enforcement, protection for consumers, a skilled and educated work force. Each of these things matters not only to the wealth of nations, but to the health of nations. If citizens tire of waiting for democracy and free markets to deliver a better life for themselves and their children, there is a risk that democracy and free markets, instead of continuing to thrive together, will shrivel together. Nothing was done. Greenspan’s reduction in interest rates sparked a much more rapid economic improvement than the policy makers at the IMF in their ‘the world is coming to an end’ mode could have expected.

Author’s opinion That was an opinion I proffered in March 1997 and the boom ended in July! Given the likely ultimate denouement for this boom it was a recommendation based upon the greater fool theory. There was a clear lesson from the red chip boom that it just wasn’t possible to work out when the world would run out of greater fools. According to Adam Smith: The really old generation, the greybeards, they’re the ones with General Motors, AT&T, Texaco, Du Pont, Union Carbide, all those stocks nobody has heard of for years. The middle-aged generation has IBM, Polaroid and Xerox, and can listen to rock and roll music without getting angry. But life belongs to the swingers today.

Think back to the fires of youth my boy.” It was true I could hear the old 1961 Glee Club singing the nostalgic Alumni Song. “I loved 1961,” I said. “I love stocks selling at a hundred times earnings. The only problem is that after 1961 came 1962, and everybody papered the playroom with the stock certificates.” Adam Smith, The Money Game, 1967 Perhaps the advice I gave in June 1997 was more accurate: The greybeards survived and made it to retirement with their GMs and AT&Ts. The middle-aged generation ended up owning what became the Nifty-50, but presumably sold too early as they were transformed into greybeards by the early 1970s.


pages: 692 words: 167,950

The Ripple Effect: The Fate of Fresh Water in the Twenty-First Century by Alex Prud'Homme

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, activist fund / activist shareholder / activist investor, American Society of Civil Engineers: Report Card, big-box store, bilateral investment treaty, carbon credits, carbon footprint, clean water, commoditize, company town, corporate raider, Deep Water Horizon, en.wikipedia.org, Exxon Valdez, Garrett Hardin, hydraulic fracturing, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Joan Didion, John Snow's cholera map, Louis Pasteur, mass immigration, megacity, oil shale / tar sands, oil-for-food scandal, peak oil, remunicipalization, renewable energy credits, Report Card for America’s Infrastructure, rolling blackouts, Ronald Reagan, seminal paper, Silicon Valley, The Wealth of Nations by Adam Smith, Tragedy of the Commons, urban sprawl, William Langewiesche

See also Edythe Jensen, “Intel water recycling stinking up Chandler subdivision,” AZCentral.com, July 9, 2008. 342 “135,000 gallons of water to produce one ton of alfalfa”: Robert Glennon, Unquenchable (Washington, DC: Island Press, 2009), p. 201. 342 “water neutral”: Ling Woo Liu, “Water Pressure,” Time, June 12, 2008. CONCLUSION: THE RIPPLE EFFECT 343 Adam Smith wrote of the diamond-water paradox: “Adam Smith,” Wikipedia: http://en.wikipedia.org/wiki/Paradox_of_value; Adam Smith: “An Inquiry into the Nature and Causes of the Wealth of Nations” (1776), Library of Economics and Liberty: http://www.econlib.org/library/Smith/smWN.html. 343 Alan Moores: Alan Moores, “ ‘Water: The Epic Struggle for Wealth, Power, and Civilization’: Water as the new oil,” Seattle Times, January 2, 2010. 343 the Dust Bowl drove 2.5 million people: “Dust Bowl,” History.com: http://www.history.com/topics/dust-bowl. 344 by providing irrigators with federal subsidies: Environmental Working Group: http://reports.ewg.org/content/research/10. 344 “a blood sport”: Peter Rogers and Susan Leal, Running Out of Water (New York: Palgrave Macmillan, 2010), p. 20. 345 Pat Mulroy: Mulroy interview.

We pollute it unthinkingly, price it too cheaply, and take too much of it from the environment too quickly—usually in the service of short-term gains. Consequently, freshwater is the earth’s most undervalued resource. Since Copernicus, economists and philosophers have observed that while no substance is more precious than water, none is more likely to be free. In The Wealth of Nations, Adam Smith famously labeled this the “diamond-water paradox” (aka “the paradox of value”): while water is essential for survival, diamonds—which have only aesthetic value—command a far higher price in the marketplace. Until, that is, water runs out and panic sets in. At that point, humans will do almost anything to get their hands on H2O.

As Cooper put it, “Lots of little, constant improvements eventually add up to big improvements.” And in this drying century, every drop counts. CONCLUSION The Ripple Effect Till taught by pain Men really know not what good water’s worth. —Lord Byron, Don Juan VALUING WATER In 1776, the Scottish economist Adam Smith wrote of the diamond-water paradox, “Nothing is more useful than water; but it will purchase scarce anything; scarce anything can be had in exchange for it. A diamond, on the contrary, has scarce any use-value; but a very great quantity of other goods may frequently be had in exchange for it.” Two and a half centuries later, it should be obvious that this valuation is imbalanced.


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Naked Economics: Undressing the Dismal Science (Fully Revised and Updated) by Charles Wheelan

affirmative action, Alan Greenspan, Albert Einstein, Andrei Shleifer, barriers to entry, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, Boeing 747, Bretton Woods, business cycle, buy and hold, capital controls, carbon tax, Cass Sunstein, central bank independence, classic study, clean water, collapse of Lehman Brothers, congestion charging, creative destruction, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, currency risk, Daniel Kahneman / Amos Tversky, David Brooks, demographic transition, diversified portfolio, Doha Development Round, Exxon Valdez, financial innovation, fixed income, floating exchange rates, George Akerlof, Gini coefficient, Gordon Gekko, Great Leap Forward, greed is good, happiness index / gross national happiness, Hernando de Soto, income inequality, index fund, interest rate swap, invisible hand, job automation, John Markoff, Joseph Schumpeter, junk bonds, Kenneth Rogoff, libertarian paternalism, low interest rates, low skilled workers, Malacca Straits, managed futures, market bubble, microcredit, money market fund, money: store of value / unit of account / medium of exchange, Network effects, new economy, open economy, presumed consent, price discrimination, price stability, principal–agent problem, profit maximization, profit motive, purchasing power parity, race to the bottom, RAND corporation, random walk, rent control, Richard Thaler, rising living standards, Robert Gordon, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Sam Peltzman, school vouchers, seminal paper, Silicon Valley, Silicon Valley startup, South China Sea, Steve Jobs, tech worker, The Market for Lemons, the rule of 72, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, transaction costs, transcontinental railway, trickle-down economics, urban sprawl, Washington Consensus, Yogi Berra, young professional, zero-sum game

Incentives matter. When we are paid on commission, we work harder; if the price of gasoline goes up, we drive less; if my three-year-old daughter learns that she will get an Oreo if she cries while I’m talking on the phone, then she will cry while I am talking on the phone. This was one of Adam Smith’s insights in The Wealth of Nations: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Bill Gates did not drop out of Harvard to join the Peace Corps; he dropped out to found Microsoft, which made him one of the richest men on the planet and launched the personal computer revolution in the process—making all of us better off, too.

First, many intellectually curious people are missing a subject that is provocative, powerful, and highly relevant to almost every aspect of our lives. Economics offers insight into policy problems ranging from organ donation to affirmative action. The discipline is intuitive at times and delightfully counterintuitive at others. It is peppered with great thinkers. Some, such as Adam Smith and Milton Friedman, have captured mainstream attention. But others, such as Gary Becker and George Akerlof, have not gotten the recognition outside of academe that they deserve. Too many people who would gladly curl up with a book on the Civil War or a biography of Samuel Johnson have been scared away from a subject that should be accessible and fascinating.

It was a money-losing proposition in the short run; the East German currency was still worthless—scraps of paper to the rest of the world. But it was a brilliant business decision made faster than any government body could ever hope to act. By 1995, per capita consumption of Coca-Cola in the former East Germany had risen to the level in West Germany, which was already a strong market. In a sense, it was Adam Smith’s invisible hand passing Coca-Cola through the Berlin Wall. Coke representatives weren’t undertaking any great humanitarian gesture as they passed beverages to the newly liberated East Germans. Nor were they making a bold statement about the future of communism. They were looking after business—expanding their global market, boosting profits, and making shareholders happy.


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After the New Economy: The Binge . . . And the Hangover That Won't Go Away by Doug Henwood

"World Economic Forum" Davos, accounting loophole / creative accounting, affirmative action, Alan Greenspan, AOL-Time Warner, Asian financial crisis, barriers to entry, Benchmark Capital, book value, borderless world, Branko Milanovic, Bretton Woods, business cycle, California energy crisis, capital controls, corporate governance, corporate raider, correlation coefficient, credit crunch, deindustrialization, dematerialisation, deskilling, digital divide, electricity market, emotional labour, ending welfare as we know it, feminist movement, fulfillment center, full employment, gender pay gap, George Gilder, glass ceiling, Glass-Steagall Act, Gordon Gekko, government statistician, greed is good, half of the world's population has never made a phone call, income inequality, indoor plumbing, intangible asset, Internet Archive, job satisfaction, joint-stock company, Kevin Kelly, labor-force participation, Larry Ellison, liquidationism / Banker’s doctrine / the Treasury view, low interest rates, manufacturing employment, Mary Meeker, means of production, Michael Milken, minimum wage unemployment, Naomi Klein, new economy, occupational segregation, PalmPilot, pets.com, post-work, profit maximization, purchasing power parity, race to the bottom, Ralph Nader, rewilding, Robert Gordon, Robert Shiller, Robert Solow, rolling blackouts, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, statistical model, stock buybacks, structural adjustment programs, tech worker, Telecommunications Act of 1996, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, total factor productivity, union organizing, War on Poverty, warehouse automation, women in the workforce, working poor, zero-sum game

Trikteralism (Boston: South End Press). Slocum,Tyson (2001). "Blind Faith: How Deregulation and Enron's Influence Over Government Looted Billions fix)m Americans," Public Citizen, December <www.citizen.org/ docvmients/Blind_Faith.pdf^. Smith, Adam (1976). An Inquiry Into the Nature and Causes of the Wealth of Nations, edited by R.H. CampbeU and A.S. Skirmer (Oxford:The Clarendon Press) <socserv2.mcmaster.ca/ ~econ/ugcm/3113/smith/wealth/index.html>. Smith, Paul (1996). Millennial Dreams (London and New York: Verso). Smith, Roy, and Ingo Walter (2000). "The Death of Universal Banks," Financial Times, March 14, p. 17.

The problems multiply over the long term: there were noVCRs or Palm Pilots in 1965; what does their development mean to the changed cost of Hving thirty-five years later? A relative measure avoids all these problems. And second, relative measures comport much more closely with the way people perceive themselves. As no less revered an authority than Adam Smith (1976, bk.V, chap. 2, pt. 2, art. 4) defined it in 1776, poverty was characterized by the want of "necessaries," which he in turn defined no After the New Economy as "not only the commodities which are indispensably necessary for the support of Hfe, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without

He went to Stanford, got an MBA and a PhD; and taught at the Harvard Business School, which he left for the Ford Foundation and then the U.S. Agency for International Development (AID). Korten shares these details "to es-tabHsh the depth of [his] conservative roots"—a theme that recurs in his hymns to Adam Smith. While with AID, Korten had an epiphany—AID was too big, too bureaucratic, and too centraHzed, stifling local autonomy and initiative. He left AID for the NGO world, where people were "asking basic questions about the nature and process of development." Korten exhibits an American distaste of big government, apparently without noticing that the U.S. has one of the most decentralized systems of governance on earth, with an array of states, locaHties, and special-purpose districts overlapping and competing for responsibility.


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Why the West Rules--For Now: The Patterns of History, and What They Reveal About the Future by Ian Morris

addicted to oil, Admiral Zheng, agricultural Revolution, Albert Einstein, anti-communist, Apollo 11, Arthur Eddington, Atahualpa, Berlin Wall, British Empire, classic study, Columbian Exchange, conceptual framework, cotton gin, cuban missile crisis, defense in depth, demographic transition, Deng Xiaoping, discovery of the americas, Doomsday Clock, Eddington experiment, en.wikipedia.org, falling living standards, Flynn Effect, Ford Model T, Francisco Pizarro, global village, God and Mammon, Great Leap Forward, hiring and firing, indoor plumbing, Intergovernmental Panel on Climate Change (IPCC), invention of agriculture, Isaac Newton, It's morning again in America, James Watt: steam engine, Kickstarter, Kitchen Debate, knowledge economy, market bubble, mass immigration, Medieval Warm Period, Menlo Park, Mikhail Gorbachev, military-industrial complex, mutually assured destruction, New Journalism, out of africa, Peter Thiel, phenotype, pink-collar, place-making, purchasing power parity, RAND corporation, Ray Kurzweil, Ronald Reagan, Scientific racism, sexual politics, Silicon Valley, Sinatra Doctrine, South China Sea, special economic zone, Steve Jobs, Steve Wozniak, Steven Pinker, strong AI, Suez canal 1869, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, Thomas Malthus, trade route, upwardly mobile, wage slave, washing machines reduced drudgery

To the horror of conservatives, tradesmen were spending hours in coffee shops, the poor were calling tea a “necessary,” and farmers’ wives were buying pianos. The British were beginning to feel they were not like other people. In 1776 the Scottish sage Adam Smith had called them “a nation of shopkeepers” in his Inquiry into the Nature and Causes of the Wealth of Nations, but he had meant it as a compliment; Britons’ regard for their own well-being, Smith insisted, was making everyone richer. Just think, he said, of the contrast between Britain and China. China had been “long one of the richest, that is, one of the most fertile, best cultivated, most industrious, and most populous, countries of the world,” but had already “acquired that full complement of riches which the measure of its laws and institutions permits it to acquire.”

., 521 Gray, Elisha, 567–68 Great Chain of Being, 83 Great Chain of Energy, 83–86, 108, 143, 156, 381 Great Cloud Sutra, 340 Great Divergence, The (Pomeranz), 20, 40–41, 168 Great Leap Forward, 62n, 544, 546, 547 Great Proletarian Cultural Revolution, 545–46, 548 Great Pyramid, 187–88, 370 Great Wall, 279, 441, 442 Greece, 159, 310, 367 archaeological sites in, 219, 291, 395 Christianity in, 325 classical, see Greeks, ancient Greeks, ancient, 22, 137, 193, 197, 198, 216–20, 429n, 474 agriculture of, 107 in Anatolia, 199 Axial thought of, 259–63 in Bactria, 271 in China, 275 cities of, 23, 142, 268, 289, 317 colonies of, 234, 239–40, 242, 244, 365, 368, 465 historical texts of, 30, 249–50 living standards of, 250 Macedon and, 268–69 metallurgy of, 233 mythology of, 241, 277 philosophy of, 14, 93, 255, 327 Romans and, 269–70, 280, 286, 289 social development of, 225 trade of, 200, 239 Greenland, 371, 398, 421 Green Party, 106 Gregory VII, Pope, 369 Guangdong (China), 588 Guangwu, Emperor, 299 Guangxu, Emperor, 523 Guangzhou (China), 432–33, 484, 501n, 515, 517 Gui people, 221 Gujarat, 431 Gu Kaizhi, 321 guns, 143, 407, 482, 499, 521, 573, 577, 591 in China, 15, 396, 407, 457–59, 576 European, 143, 159, 402–404, 419, 430, 431, 433, 465, 484 in Japan, 440, 443, 483, 517, 520 Guns, Germs, and Steel (Diamond), 17, 117 Gutians, 191 Gu Yanwu, 473–74, 481 Habsburgs, 445–49, 460–62, 466, 486, 526, 528, 551, 567, 573, 574 Habuba Kabira (Syria), 184 Hadrian, 307 Hagia Sophia (Constantinople), 343, 403 Haiti, 34, 460 Hamlet (Shakespeare), 62, 436 Han Chinese, 169 Han dynasty, 285, 317, 334, 338, 341, 354, 355, 457, 474, 546 collapse of, 300–304, 309, 563, 569, 576, 587 Confucianism during, 262, 320–21, 420 energy consumption during, 380–81 founding of, 283, 284 Roman Empire compared with, 285, 289, 291, 298, 207, 319 Xiongnu and, 293–95, 298, 299, 310 Hangzhou (China), 153, 384, 387 Hann (China), 265n Hannibal, 270 Han Yu, 375, 376 Hard Times (Dickens), 503 Hardy, Thomas, 468 Hargreaves, James, 496 Harris, Robert, 579 Harvard University, 47, 58n, 59n, 124, 542 Heart of Darkness (Conrad), 519, 520 “Heaven-Man Teaching,” 322 Hebrew Bible, 137, 182, 191, 234, 235, 247, 249, 255, 276, 324, 351 Ecclesiasticus, 365 Judges, 219 Psalms, 261–62 Heidelberg Man, 54–56 Heinlein, Robert, 27–28, 89, 559 Héloïse, 370–71 Hemudu (China), 122 Henry, Prince (“the Navigator”), 414, 416 Henry IV, Emperor, 369 Henry V (Shakespeare), 436 Henry VII, King, 416, 417 Heraclitus, 93 Heraclius, Emperor, 343, 348, 349, 352, 354n Herodotus, 30, 32, 249–50, 277–78 Heyerdahl, Thor, 421n Hezbollah, 605 Hezekiah, King, 247 Hideyoshi, Toyotomi, 440–41, 443, 444, 448, 449, 457, 483, 567 Hilly Flanks, 86, 87, 89, 96–105, 113, 121, 177, 179–81, 189, 200 archaeological sites in, 90, 96, 97, 101–105, 124 culture of, 120, 129 family groups in, 101–104 farming in, 31, 34, 97–101, 107, 114, 117–19, 159, 179, 184, 367, 561, 562, 577 languages of, 110 migration from, 111, 116 pottery from, 122 religion in, 102, 123, 125–27 Younger Dryas period in, 92, 93, 96 Hindus, 431 Hiroshima (Japan), 532, 534, 610, 614, 617 History of the Decline and Fall of the Roman Empire, The (Gibbon), 307, 326, 490 Hitler, Adolf, 532, 551, 578–79, 595 Hitler Youth, 106 Hittites, 197–99, 214–21, 225 Hobbes, Thomas, 131 Hoelun, 388 Hohenzollerns, 528 Hohle Fels (Germany), 79 Hokkaido (Japan), 129 Holland, see Netherlands Holy Roman Empire, 403n, 445, 446, 448, 454 Holy Sepulcher, Church of (Jerusalem), 372 Homer, 137, 199, 217, 239, 286 Homo antecessor, 54–55 Homo erectus, 50–55, 60, 68, 70, 72, 80, 154 Homo ergaster, 50, 51, 54n, 68 Homo habilis, 43, 45–46, 48, 54n, 63, 150, 617 Homo sapiens, 60–61, 63, 66–68, 70, 71n, 72, 80, 88, 114, 183, 380, 593, 517, 618 H1N1 influenza, 603 Hong Kong, 6, 127, 548 Hong Liangji, 506 Hong Xiuquan, 9–10 Honshu (Japan), 129 Hongwu, Emperor, 405–406, 441, 575 Hormuz (Iran), 393, 429 Hoshea, King, 247 Huan, Marquis, 244 Huang Sheng, 424, 425 Huizong, Emperor, 386, 389, 575 Human Immunodeficiency Virus (HIV), 603 Human Relations Area Files, 139 Hume, David, 474, 475 Hungary, 276, 312, 368, 391, 402, 442, 446, 549 Academy of Sciences of, 65 Huns, 312–16, 345 hunter-gatherers, 100–101, 105–106, 109, 121, 127, 277, 368, 430, 597 energy consumption of, 154, 381 Ice Age, 85, 86, 491 modern, 76, 104, 140; see also foraging Huntington, Ellsworth, 30 Hurrians, 196–97, 220, 221 Husayn, 357–58 Hussein, Saddam, 90, 180 Hyksos, 197, 198 Ibrahim, Sultan (“the Crazy”), 452 Ice Age, 35, 67, 79–80, 100, 149, 270, 617, 620 effects of warming following, 77, 81–86, 88, 91 end of, 14, 31, 32, 89, 116, 140, 154, 158, 160, 167, 263, 271, 558, 559, 561, 562, 590, 619, 626 human survival strategies during, 76–77, 92, 132, 381, 491 Neanderthal adaptation to, 56 Iceland, 371, 398, 421 Iliad (Homer), 199 Incas, 460, 515 India, 16, 23, 32, 297, 365, 416, 520, 605, 620n; ancient, 268, 292 Britain and, 273–74, 339n, 495 Buddhism in, 263, 329, 340–42, 437 environmental impacts of, 609 industrial development in, 522 Mongol invasion of, 574 opium in, 7, 515 Portugal and, 430–32 prehistoric, 49, 50, 97 Romans in, 273–75 Indochina, 306, 535 Indonesia, 535 industrial revolution, 11, 13, 19–21, 100, 380, 413, 491, 503, 510, 542, 565, 572–77, 585, 608, 611 British, 13, 19–21, 40, 379, 382, 494–98, 500, 501–507, 510, 511, 572, 596, 620 social development and, 32, 36, 167, 169, 228, 383, 385, 392, 449, 498, 500, 501, 515, 559, 593, 597, 611, 616–17 information technology, 149, 157, 268, 395, 542, 583, 591–93, 596 Inquiry into the Nature and Causes of the Wealth of Nations (Smith), 39–40, 490, 501 Intel, 592 International Age, 197, 198, 234, 236 International Association of Athletic Federations, 594 International Astronomical Union, 613n International Business Machines (IBM), 542, 596, 597 International Congress of Anthropology and Prehistoric Archaeology (Lisbon, 1880), 74 International Energy Agency, 612 International Institute for Strategic Studies, 151 International Monetary Fund (IMF), 547–48, 586 Internet, 151, 592, 595 IQ tests, 570 Iran, 23, 99, 138, 312, 342, 360, 366, 367, 392, 605 ancient, 179, 184, 191, 196, 197, 203, 225, 248, 254n, 292, 323, 328, 335 Islamic Revolution in, 180 Iraq, 90, 138, 159, 358–61, 366, 392, 398, 551, 605 ancient, 93, 107 (see also Mesopotamia) Inquisition in, 358 invasion of Kuwait by, 180 plague in, 397 Ireland, 371, 450, 451, 472n famine in, 505 Irene, Empress, 363 iron, 233, 380–82, 388, 521, 524, 604 industrialization and, 495, 497, 498, 506, 510 for tools, 233, 251, 395 for weapons, 128, 276, 380, 386, 403 irrigation, 155, 181, 192, 196, 200, 250, 265, 286, 315, 319, 360–61, 389, 499, 561 Isabella, Queen, 416, 430 Ishmael, 351 Isis, 323 Islam, 354, 361, 414, 446, 563 Christian attacks on, 362, 372–73 extremist, 180, 551, 603 holiest shrines of, 408 origins of, 349–52, 357 plague and, 398 scholarship of, 370, 571; see also Muslims Isma’ili Shiites, 364n Israel, 90, 97, 197, 535, 605 ancient, 233, 235, 246–48, 262 archaeological sites in, 86, 88, 240 Lost Tribes of, 391 Israelites, 200, 218, 219, 234–35, 247 Italy, 159, 215, 225, 270, 346–47, 371, 392, 404, 410, 467, 567 archaeological sites in, 59, 198, 200, 289–90 Goth invasion of, 314, 317 Habsburgs and, 446, 461 literacy in, 379 Renaissance, 416–20, 569, 575, 589 social development in, 268 trade of, 275, 315, 316, 365 tribesmen of, 240 Ivan, Tsar (“the Terrible”), 457, 458, 460 Jackson, Peter, 53 Jacob, 191, 199, 276 Jacobinism, 504 Jacques, Martin, 11, 589 Jade Cong, Age of, 205 Jainism, 254n, 255 Jamaica, 485 Jamestown Colony, 465, 502 Jamuka, 388 Janissaries, 444, 452 Japan, 32, 33, 136, 160, 400, 421, 440–43, 450, 480, 483–84, 494, 567, 633 ancient, 127–29 Buddhism in, 342 China and, 15, 52, 211, 306, 360, 361, 411, 441–43, 475, 531, 533 closing of, 483–84, 530 during Cold War, 534, 535 deforestation in, 451 economy of, 11, 12, 360, 406, 531, 535, 543, 551, 570, 584 energy consumption in, 150, 153, 630 health in, 538 labor costs in, 501, 502 opening to West of, 10, 14, 483, 517–18, 520–21 Portugal and, 435, 440, 442 prehistoric, 68 Russian war with, 17, 525–26, 528 social development in, 144, 150–51, 153, 158, 522–25, 643 technology in, 597, 617 in World War II, 17, 52, 531–34, 578, 579 Jaspers, Karl, 254–55 Java, 47, 60n Jerf al-Ahmar (Syria), 96, 101, 123 Jericho (Palestine), 102, 104–105, 129 Jerusalem, 234, 249, 348, 372–73 Christian Kingdom of, 373 Jesuits, 477–79 Jesus, 255, 256, 324–26, 348, 351, 352, 372, 398, 513 Jews, 365, 370, 427, 472, 513, 532 ancient, 249, 256 (see also Israelites) persecution and slaughter of, 372, 391, 399, 513, 579 Jiahu (China), 122–24, 129, 204, 212 Jiangzhai (China), 122 Jiankang (China), 305, 306, 319, 321, 329, 334–37; see also Nanjing Jin (China), 244, 245, 251–53, 262, 265n, 279 Jin dynasty, 304–306, 311, 317, 318 Jingdi, Emperor, 284–85 Jinsha (China), 214, 215 Jobs, Steve, 542 Jocelyn, Lord Robert, 143 John, King, 416 John the Baptist, 372 John of Ephesus, Bishop, 346, 347 Johnson, Lyndon Baines, 141 Johnson, Samuel, 32, 39, 40 Jordan, 197 archaeological sites in, 100, 102, 124 Joseph, 191–93, 224 Journal of the Plague Year (Defoe), 455 Journey to the West, 436–37 Judah, 234, 235, 247, 248 Judaism, 324, 327, 351–52; see also Hebrew Bible Julius Caesar (Shakespeare), 436 Jurchen Empire, 386–87, 389, 392, 575, 576 Justinian, Emperor, 343–49, 353, 616 Ka’ba (Mecca), 351 Kadesh (Syria), 199, 214 Kaifeng (China), 153, 155, 380–83, 386–87, 389, 392, 419, 422, 451, 482, 493, 575 Kangxi, Emperor, 477, 479–81 Kant, Immanuel, 472, 474, 475, 532 kaozheng (evidential research), 473, 477 Karakhanid Empire, 366 Karakorum (Mongolia), 393 Karluk Turks, 366 Kassites, 197 Katanda (Congo), 64 Kazakhstan, 196, 220, 249, 277, 312, 606n Keightley, David, 212, 213 Kennedy, John F., 434, 580, 616 Kennedy, Paul, 248 Kenyon, Kathleen, 102, 105 Kepler, Johannes, 113 Keynes, John Maynard, 529–30 Khaldun, Ibn, 396 Khitans, 374, 376, 386, 389 Khmers, 360 Khrushchev, Nikita, 541, 542, 544, 580, 616 Khubilai Khan, 392, 575 Khufu, King, 187 Khusrau II, King, 343, 347–49, 352, 353, 616 Kidd, Captain William, 485 Kim Il Sung, 16 Kim Jong Il, 16, 194 Kipling, Rudyard, 620–21 Kissinger, Henry, 266 Kizzuwatna, 198 Klein, Richard, 59n Koguryo, 354 Kon-Tiki (Heyerdahl), 421n Koran, 255, 351, 353, 358, 574 Korea, 159, 290, 342, 354, 360, 406, 441, 443, 483, 524 prehistoric, 127–28 Korean War, 534–35, 543, 590 Koukounaries (Greece), 219 Kubrick, Stanley, 63 Kuropatkin, Aleksei Nikolaevich, 526 Kurosawa, Akira, 440n Kurzweil, Ray, 592–96, 614, 617, 618 Kuwait, Iraqi invasion of, 180 Kynge, James, 553 Kyoto protocol, 609 Kyrgyzstan, 459, 606n Kyushu (Japan), 129 Lagos (Nigeria), 149 Lake Agassiz (North America), 91–93 Lamentation over Ur, The (Sumerian poem), 194 Landes, David, 17 Laws, The (Plato), 260 League of Nations, 610 Leakey, Louis, 43 Leakey, Mary, 43 Lebanon, ancient, 190, 200, 239 Le Clerc, Peg-Leg, 462 Lee, James, 18n Legalist Tradition, 257, 259, 265 Leibniz, Gottfried, 470n, 481 Lenin, V.

Long-term lock-in theories of Western rule often start from this fact: the West’s lead, they argue, was a cause rather than a consequence of the industrial revolution, and we need to look back further in time—perhaps much further—to explain it. Or do we? The historian Kenneth Pomeranz, whose book The Great Divergence I mentioned in the introduction, insists that Adam Smith and all the cheerleaders for the West who followed him were actually comparing the wrong things. China is as big and as varied, Pomeranz points out, as the whole continent of Europe. We should not be too surprised, then, that if we single out England, which was Europe’s most developed region in Smith’s day, and compare it with the average level of development in the whole of China, England scores higher.


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The Myth of Meritocracy: Why Working-Class Kids Still Get Working-Class Jobs (Provocations Series) by James Bloodworth

Berlin Wall, Bernie Sanders, Bob Geldof, Boris Johnson, cognitive dissonance, Downton Abbey, gender pay gap, glass ceiling, income inequality, light touch regulation, meritocracy, precariat, The Bell Curve by Richard Herrnstein and Charles Murray, the strength of weak ties, The Wealth of Nations by Adam Smith, unpaid internship, upwardly mobile, We are the 99%, zero-sum game

It would lead them to despise their lot in life instead of making them good servants in agriculture and other work to which their rank in society had destined them …’9 Even among those seeking reform, educating the poor was typically framed in terms of how it would benefit capitalists, rather than how it might improve the lot of workers. Introducing his own policy, William Forster warned that if the British workforce remained unskilled, ‘they will become overmatched in the competition of the world’.10 In the eighteenth century, Adam Smith, champion of the free market and author of the influential The Wealth of Nations, argued along similar lines in favour of educating the poor. For proponents of the free market, nepotism and Britain’s rigid social order were impediments to an efficient economy. The best jobs invariably went not to those in possession of the most brilliant minds but to the well-connected or to the progeny of the wealthiest families.


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The Scandal of Money by George Gilder

Affordable Care Act / Obamacare, Alan Greenspan, bank run, behavioural economics, Bernie Sanders, bitcoin, blockchain, borderless world, Bretton Woods, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, Claude Shannon: information theory, Clayton Christensen, cloud computing, corporate governance, cryptocurrency, currency manipulation / currency intervention, currency risk, Daniel Kahneman / Amos Tversky, decentralized internet, Deng Xiaoping, disintermediation, Donald Trump, fiat currency, financial innovation, Fractional reserve banking, full employment, George Gilder, glass ceiling, guns versus butter model, Home mortgage interest deduction, impact investing, index fund, indoor plumbing, industrial robot, inflation targeting, informal economy, Innovator's Dilemma, Internet of things, invisible hand, Isaac Newton, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Jeff Bezos, John Bogle, John von Neumann, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, Law of Accelerating Returns, low interest rates, Marc Andreessen, Mark Spitznagel, Mark Zuckerberg, Menlo Park, Metcalfe’s law, Money creation, money: store of value / unit of account / medium of exchange, mortgage tax deduction, Nixon triggered the end of the Bretton Woods system, obamacare, OSI model, Paul Samuelson, Peter Thiel, Ponzi scheme, price stability, Productivity paradox, proprietary trading, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, Ray Kurzweil, reality distortion field, reserve currency, road to serfdom, Robert Gordon, Robert Metcalfe, Ronald Reagan, Sand Hill Road, Satoshi Nakamoto, Search for Extraterrestrial Intelligence, secular stagnation, seigniorage, Silicon Valley, Skinner box, smart grid, Solyndra, South China Sea, special drawing rights, The Great Moderation, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Tim Cook: Apple, time value of money, too big to fail, transaction costs, trickle-down economics, Turing machine, winner-take-all economy, yield curve, zero-sum game

Nordhaus, “Do Real-Output and Real-Wage Measures Capture Reality? The History of Lighting Suggests Not,” Cowles Foundation for Research in Economics at Yale University, 1998. This epochal paper was delivered first to the National Bureau of Economic Research in 1993. I first encountered it in David Warsh’s definitive Knowledge and the Wealth of Nations (New York, NY: W. W. Norton, 2007), 336. 5.Nicholas Eberstadt, “How the World Is Becoming More Equal,” Wall Street Journal, August 26, 2014. Eberstadt documents that globally life spans have never been so long and evenly distributed, with even China now reaching an average of longer than seventy years. 6.Thomas Sowell, “Income Distribution,” The Thomas Sowell Reader (New York, NY: Basic Books, 2011), 98–107. 7.Charles Gave, “Of Wicksell and Fed Fallacies,” Gavekal Research, September 4, 2014, p. 4.

Since Homo economicus or Homo sumptuarius could never build that new computer architecture, find that biotech peptide, or design that wireless network, we tell the entrepreneur who did that in fact he “didn’t build that.” Surprisingly, Homo economicus is not a notion of the Left. Many conservatives sport Adam Smith neckties as emblems of their reverence for the founder of the science of economics. Yet Adam Smith was the source of the idea—inspired by the Industrial Revolution’s steam engines, pin factories, and other mechanical apparatus—that the economy is itself a “great machine.” Every cog and gear, he said, is precisely adapted to its role and purpose.


pages: 190 words: 56,531

Where We Are: The State of Britain Now by Roger Scruton

bitcoin, blockchain, Brexit referendum, business cycle, Corn Laws, Donald Trump, Downton Abbey, Fellow of the Royal Society, fixed income, garden city movement, George Akerlof, housing crisis, invention of the printing press, invisible hand, Jeremy Corbyn, Khartoum Gordon, mass immigration, Naomi Klein, New Journalism, old-boy network, open borders, payday loans, Peace of Westphalia, sceptred isle, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, Tragedy of the Commons, web of trust

Lawrence, London, 1907. 8Ernest Gellner, Nations and Nationalism, Oxford, 1983; Benedict Anderson, Imagined Communities, 2nd edn, London, 1991; Eric Hobsbawm, Nations and Nationalism since 1780, Cambridge, 1990; Elie Kedourie, Nationalism, London, 1960; Kenneth Minogue, Nationalism, London, 1967. 9See Adam Smith, Inquiry into the Nature and the Causes of the Wealth of Nations, 1776, and the discussion of ‘invisible hand’ explanations in Robert Nozick, Anarchy, State and Utopia, Oxford, 1974. The invisible-hand theory was generalized by F. A. Hayek to produce a comprehensive account of legal and institutional development, in Law, Legislation and Liberty, 2 vols, London, 1976. 10F.

There you have a brief summary of American history: people settling together, solving their conflicts by law, making that law for themselves, and in the course of this process defining themselves as a ‘we’, whose shared assets are the land and its law. The ‘invisible hand’ process, which was so illuminatingly discussed by Adam Smith, depends upon, and is secretly guided by, a legal and institutional framework.9 Under a rule of law, for example, the free interaction of individuals will result in a market economy. In the legal vacuum of post-communist Russia, by contrast, this free interaction of individuals has produced a command economy in the hands of gangsters.


pages: 169 words: 52,744

Big Capital: Who Is London For? by Anna Minton

"there is no alternative" (TINA), Airbnb, Berlin Wall, Big bang: deregulation of the City of London, Boris Johnson, Capital in the Twenty-First Century by Thomas Piketty, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, Donald Trump, eurozone crisis, Fall of the Berlin Wall, Frank Gehry, gentrification, high net worth, high-speed rail, housing crisis, illegal immigration, Kickstarter, land bank, land value tax, market design, new economy, New Urbanism, offshore financial centre, payday loans, post-truth, quantitative easing, rent control, rent gap, Right to Buy, Russell Brand, sovereign wealth fund, the built environment, The Wealth of Nations by Adam Smith, urban renewal, working poor

This tax would siphon off the profits of soaring land values for local benefits. In keeping with the postwar ethos, the language of the report was shot through with the need to foster the public good, but the idea of a land tax is not limited to the left and has been promoted by such figures as Adam Smith, the eighteenth-century father of classical economic theory. Writing in The Wealth of Nations in 1776, Smith argued that a tax on ‘ground rent’ would prevent landowners from gaining monopolies. It took until 1909 for reforming Prime Minister Lloyd George to make the first attempt to introduce such a tax, with the backing of Churchill, who famously said: ‘Roads are made … electric light turns night into day … and all the while the landlord sits still … To not one of these improvements does the land monopolist … contribute, and yet by every one of them the value of his land is enhanced.’

While this would require the same shift in political culture needed to rewrite the social contract with regard to planning, there is some comfort to be drawn from the growing and unlikely alliance of policymakers and campaigners beginning to make common cause around these issues. Top of the list is the need for a development land tax to recoup rising land values and keep markets under control, championed by luminaries from Adam Smith and Lloyd George to Churchill. This has been investigated and recommended by government inquiry after government inquiry.fn3 It is part of the system in countries including Denmark, Singapore, Hong Kong and parts of the US and Australia, which are hardly bastions of socialism but which are prepared to intervene in property markets to safeguard decent housing.


pages: 304 words: 85,291

Cities: The First 6,000 Years by Monica L. Smith

Anthropocene, bread and circuses, classic study, clean water, diversified portfolio, failed state, financial innovation, gentrification, hiring and firing, invention of writing, Jane Jacobs, New Urbanism, payday loans, place-making, Ponzi scheme, SimCity, South China Sea, telemarketer, the built environment, The Fortune at the Bottom of the Pyramid, the strength of weak ties, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, trade route, urban planning, urban renewal, wikimedia commons

But sometimes people from cities migrate outward for agricultural work, as has been documented in places as diverse as ancient Mesopotamia and India as well as very recent Europe (Margaret Grieco, in a wonderful study of low-income London neighborhoods in the early twentieth century, showed how women were the driving force of negotiating work picking hops and peas and set up entire temporary neighborhoods out in the countryside). Cities’ many different entrepreneurial niches gave people more ways to acquire goods as well as more goods to acquire. Thousands of years before Adam Smith wrote The Wealth of Nations and extolled the virtues of the division of labor in factories, managers already knew that production costs could be reduced if workers each made only part of an object and combined their efforts rather than making items from start to finish on their own. In cities, artisans also reduced costs by making goods that looked the same as high-end products but were composed of less-expensive materials, such as copying costly stone beads in clay or substituting glass for laboriously hand-carved stone bowls and chalices.

Alisdair Rogers and Steven Vertovec (Oxford: Berg, 1995), 189–212. For India, see Monica L. Smith and Rabindra Kumar Mohanty, “Monsoons, Rice Production, and Urban Growth: The Microscale Management of Water Abundance,” Holocene (2018), 28(8): 1325–1333. Producers also sought efficiencies: The classic text of Western economics is Adam Smith’s The Wealth of Nations, interestingly published in the same year as the United States’ declaration of independence from Britain in 1776. For an archaeological perspective on manufacturing efficiencies, see Monica L. Smith, “The Concept of Copies: An Archaeological View of the Terracotta Ornaments from Sisupalgarh, India,” West 86th: A Journal of Decorative Arts, Design History, and Material Culture 22, no. 1 (2015): 23–43.


pages: 353 words: 98,267

The Price of Everything: And the Hidden Logic of Value by Eduardo Porter

Alan Greenspan, Alvin Roth, AOL-Time Warner, Asian financial crisis, Ayatollah Khomeini, banking crisis, barriers to entry, behavioural economics, Berlin Wall, British Empire, capital controls, carbon tax, Carmen Reinhart, Cass Sunstein, clean water, Credit Default Swap, Deng Xiaoping, Easter island, Edward Glaeser, European colonialism, Fall of the Berlin Wall, financial deregulation, financial engineering, flying shuttle, Ford paid five dollars a day, full employment, George Akerlof, Glass-Steagall Act, Gordon Gekko, guest worker program, happiness index / gross national happiness, housing crisis, illegal immigration, immigration reform, income inequality, income per capita, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jean Tirole, John Maynard Keynes: technological unemployment, Joshua Gans and Andrew Leigh, junk bonds, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, longitudinal study, loss aversion, low skilled workers, Martin Wolf, means of production, Menlo Park, Mexican peso crisis / tequila crisis, Michael Milken, Monkeys Reject Unequal Pay, new economy, New Urbanism, peer-to-peer, pension reform, Peter Singer: altruism, pets.com, placebo effect, precautionary principle, price discrimination, price stability, rent-seeking, Richard Thaler, rising living standards, risk tolerance, Robert Shiller, Ronald Reagan, search costs, Silicon Valley, stem cell, Steve Jobs, Stewart Brand, superstar cities, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade route, transatlantic slave trade, ultimatum game, unpaid internship, urban planning, Veblen good, women in the workforce, World Values Survey, Yom Kippur War, young professional, zero-sum game

It based its analysis on the fact that it would save about four hundred lives a year—which added up to a benefit of some 250 million Australian dollars a year—at an annual cost of about 130 million Australian dollars in lost excise taxes because Australians would smoke less. These techniques provide a new measure of the wealth of nations. Economists at the University of Chicago added up the value to Americans of their increased life expectancy to conclude that increases in longevity between 1970 and 2000 added $3.2 trillion per year to the national wealth of the United States. DO WE KNOW HOW MUCH WE ARE WORTH? Despite its democratic appeal, this metric too is troubling.

The data on the impact on happiness of your neighbors’ wealth are in Erzo Luttmer, “Neighbors as Negatives: Relative Earnings and Well-Being,” Quarterly Journal of Economics, Vol. 120, No. 3, August 2005, pp. 963-1002; and Mary Daly and Dan Wilson, “Keeping Up with the Joneses and Staying Ahead of the Smiths: Evidence from Suicide Data,” Federal Reserve Bank of San Francisco Working Paper, April 2006. The thesis about how stagnant happiness may confer evolutionary advantages is in Luis Rayo and Gary Becker, “Evolutionary Efficiency and Happiness,” Journal of Political Economy, Vol. 115, No. 2, 2007. Adam Smith’s quote about happiness as deception is in Adam Smith, The Theory of Moral Sentiments, 11th edition (Edinburgh: printed for Cadell and Davies et al., 1812), p. 317. Easterlin’s views about the pointlessness of growth are in Richard Easterlin, “Feeding the Illusion of Growth and Happiness: A Reply to Hagerty and Venhoven,” Social Indicators Research, Vol. 74, No. 3, 2005, pp. 429-443. 73-77 The American Trade-Off: Data on Americans’ stagnant happiness are found in Bruno Frey and Alois Stutzer, “What Can Economists Learn from Happiness Research?”

The Church gradually lost its grip on society as trade and private enterprise expanded throughout Europe. Religious dogma lost its appeal as an analytical tool. Still, the penchant to view prices through the lens of justice survived the development of capitalism, thriving well into the eighteenth century. Adam Smith and David Ricardo, the two foremost thinkers of the classical age of economics, struggled with the notion of inherent value, which they viewed as a function of the labor content of products, distinct from the market price set by the vagaries of supply and demand. Smith, for instance, argued that the labor value of products amounted to whatever it cost to feed, clothe, house, and educate workers to make them—with a little extra to allow them to reproduce.


pages: 324 words: 101,552

The Pineapple: King of Fruits by Francesca Beauman

British Empire, Columbian Exchange, Corn Laws, Fellow of the Royal Society, Honoré de Balzac, Isaac Newton, John Harrison: Longitude, language of flowers, Maui Hawaii, refrigerator car, The Wealth of Nations by Adam Smith, trade route

Surviving records of shopkeepers, such as Abraham Dent of the village of Kirkby Stephen near Manchester, show that even in the depths of the countryside customers had access to produce from all over the world – ginger, quinine, cinnamon and the like. Evidently, Britain was becoming more and more dependent on trade with its colonies, a state of affairs upheld by Adam Smith’s influential opinion piece The Wealth of Nations (1776) in which he put forward the proposition that ‘Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.’51 As the force of British imperialism penetrated territories to the West, the potency of the pineapple as a symbol of the power of the empire increased accordingly.

Yet the man who really deserves our respect, for it was he who was the first to cultivate the pineapple on a grand scale in Europe, is a wealthy Dutch cloth merchant named Pieter de la Court, the son of the Dutch politician, economist and philosopher Pieter de la Court van der Voort.16 One of the latter’s most influential works was The True Interest of Holland (1662) in which he advocates not only the principle of free trade, but also, in a precursor to the writings of men like Adam Smith, the idea that the pursuit of pleasure is a prerequisite to the wealth of a nation. This soon found practical expression on the family estate Allemansgeest at Voorschoten, near Leiden, where his son oversaw the cultivation of many foreign fruits, including the pineapple, by his gardener, William de Vinck.

Grafting, Budding, Inoculating and the Management of an orchard and Fruit Trees . . . under Indenture . . . for four or five pounds a year.’ The other prerequisite was that he be over thirty, ‘as they are more Likely to be Riotous and Troublesome if young’. But the candidate who turned up on the doorstep of Mount Clare later the same year by the name of John Adam Smith only partially fulfilled these credentials.54 Smith’s brilliance is undeniable from the evidence at hand – even with Hale’s instructions to help him, the construction of a pinery was an enormously challenging task. However, Smith was also a convict. This was not unusual – by 1770, over 10,000 felons had landed in the colony under Britain’s transportation policy.55 With Smith apparently rather difficult to keep track of, an advertisement placed by a disgruntled Carroll in the Maryland Gazette in May 1773 ran thus: TEN POUNDS REWARD.


pages: 586 words: 159,901

Wall Street: How It Works And for Whom by Doug Henwood

accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, affirmative action, Alan Greenspan, Andrei Shleifer, asset allocation, asset-backed security, bank run, banking crisis, barriers to entry, bond market vigilante , book value, borderless world, Bretton Woods, British Empire, business cycle, buy the rumour, sell the news, capital asset pricing model, capital controls, Carl Icahn, central bank independence, computerized trading, corporate governance, corporate raider, correlation coefficient, correlation does not imply causation, credit crunch, currency manipulation / currency intervention, currency risk, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, dematerialisation, disinformation, diversification, diversified portfolio, Donald Trump, equity premium, Eugene Fama: efficient market hypothesis, experimental subject, facts on the ground, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, George Akerlof, George Gilder, Glass-Steagall Act, hiring and firing, Hyman Minsky, implied volatility, index arbitrage, index fund, information asymmetry, interest rate swap, Internet Archive, invisible hand, Irwin Jacobs, Isaac Newton, joint-stock company, Joseph Schumpeter, junk bonds, kremlinology, labor-force participation, late capitalism, law of one price, liberal capitalism, liquidationism / Banker’s doctrine / the Treasury view, London Interbank Offered Rate, long and variable lags, Louis Bachelier, low interest rates, market bubble, Mexican peso crisis / tequila crisis, Michael Milken, microcredit, minimum wage unemployment, money market fund, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, oil shock, Paul Samuelson, payday loans, pension reform, planned obsolescence, plutocrats, Post-Keynesian economics, price mechanism, price stability, prisoner's dilemma, profit maximization, proprietary trading, publication bias, Ralph Nader, random walk, reserve currency, Richard Thaler, risk tolerance, Robert Gordon, Robert Shiller, Savings and loan crisis, selection bias, shareholder value, short selling, Slavoj Žižek, South Sea Bubble, stock buybacks, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Market for Lemons, The Nature of the Firm, The Predators' Ball, The Wealth of Nations by Adam Smith, transaction costs, transcontinental railway, women in the workforce, yield curve, zero-coupon bond

"Pension Reform, the Stock Market, Capital Formation, and Economic Growth; A Critical Commentary on the World Bank's Proposals," mimeo, Cambridge University, Economics Department (December). Sloan, Allan (1994). "KKR Deal Makes a Silk Purse Out of a Cow's Ear," New York Newsday, September 18, p. A86. Smith, Adam (1976). An Inquiry Into the Nature and Causes of the Wealth of Nations, edited by R.H. Campbell and A.S. Skinner (Oxford: The Clarendon Press). Southern Finance Project (1993). "The Wages of Banking" (Charlotte, N.C.: Southern Finance Project, October 1). Spencer, Herbert (1972). "Joint-Stock Companies," excerpts from Principles of Sociology (1896), vol. 3, part 8, and "Railway Morals and Public Policy" (1854), from Essays, vol. 2 (1868) reprinted inJ.D.Y.

'"^ the marketeers defend themselves Many of the architects of financial theory continued to defend their progeny's real world effects in the 1980s. In a speech reprinted in the Wall Street Journal, Harry Markowitz (1991), one of the creators of modern portfolio theory and CAPM, predictably summoned Adam Smith to defend program trading, Salomon Brothers' mortgage-backed bond depart- WALL STREET merit, and junk bond finance: "My own view is that the invisible hand could work its magic through mere humans is an essential part of Adam Smith's insight. Not many thousands of years ago, men like this would have clubbed each other over hunting rights. A few hundreds of years ago they would have hacked each other with axes and swords.

Stiglitz and his collaborators (Greenwald and Stiglitz 1984; 1987; Stiglitz 1988) argue that informational problems explain credit rationing, which in turn can explain both the business cycle and unemployment.^^ Though economists treat the lemons problem as if it were a recent discovery, it's really as old as the classics. Adam Smith (1976, Book II, Chapter 4), in recommending a legal ceiling on the rate of interest, observed: If the legal rate of interest in Great Britain, for example, was fixed so high as eight or ten percent, the greater part of the money which was to be lent would be lent to prodigals and projectors, who alone would be willing to give this high interest.


The State and the Stork: The Population Debate and Policy Making in US History by Derek S. Hoff

affirmative action, Alan Greenspan, Alfred Russel Wallace, back-to-the-land, British Empire, business cycle, classic study, clean water, creative destruction, David Ricardo: comparative advantage, demographic transition, desegregation, Edward Glaeser, feminist movement, full employment, garden city movement, Garrett Hardin, George Gilder, Gregor Mendel, Gunnar Myrdal, guns versus butter model, Herman Kahn, immigration reform, income inequality, income per capita, invisible hand, It's morning again in America, Jane Jacobs, John Maynard Keynes: technological unemployment, Joseph Schumpeter, labor-force participation, Lewis Mumford, manufacturing employment, mass immigration, New Economic Geography, new economy, old age dependency ratio, open immigration, Paul Samuelson, peak oil, pensions crisis, profit motive, public intellectual, Ralph Waldo Emerson, road to serfdom, Robert Solow, Ronald Reagan, scientific management, Scientific racism, secular stagnation, Simon Kuznets, The Chicago School, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, Thorstein Veblen, Tragedy of the Commons, trickle-down economics, urban planning, urban sprawl, W. E. B. Du Bois, wage slave, War on Poverty, white flight, zero-sum game

Smith anticipated Malthus in assuming that fertility moves in tandem with the level of subsistence, but his system was more happily self-regulating. He wrote, “It is in this manner [through market forces] that the demand for men, like that for any other commodity, necessarily regulates the production of men; quickens it when it goes on too slowly, and stops it when it advances too fast” (Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations [1776; reprint, New York: P. F. Collier and Son, 1909], 84). Smith also intimated that China’s large population produced its wealth (Onuf and Onuf, Nations, Markets, and War, 96). 66. Smith, Wealth of Nations, 86. 67. Bernard Semmel, “Malthus: ‘Physiocracy’ and the Commercial System,” Economic History Review, n.s. 17, no. 3 (1965): 522–35. 68.

These celebrants included the common farmers who moved westward and the railroad boosters who recruited them and promoted new towns in the name of democratic settlement. Some American intellectuals, too, looked favorably upon population growth. Drawing on the “classical liberalism” of Enlightenment theorists John Locke and Adam Smith, these optimists assumed that maximizing human freedom and choice, especially in the realm of the market, would unleash societal changes and technological innovations that would outpace resource pressures stemming from demographic expansion. Yet many learned Americans harbored deep reservations about growth.

Its proponents not only viewed people as the building blocks of national power and wealth but also assumed that an export-driven economy could thrive only by preserving a pool of surplus (and hence poorly paid) workers, so as to keep production costs low.13 Republican ideology postulated that societies pass through several phases, progressing from the primitive to the commercialized, usually the four stages envisioned by Scottish theorist Adam Smith: hunting, pasturage, agriculture, and commerce.14 Population growth propels progress from one stage to the next because the need to increase food production necessitates social changes. Smith and classical liberals writing in his tradition welcomed the final stage because they believed that market-based societies enhance individual freedom and social peace.


The Empire Project: The Rise and Fall of the British World-System, 1830–1970 by John Darwin

anti-communist, banking crisis, Bretton Woods, British Empire, capital controls, classic study, cognitive bias, colonial rule, Corn Laws, disinformation, European colonialism, floating exchange rates, full employment, imperial preference, Joseph Schumpeter, Khartoum Gordon, Kickstarter, labour mobility, land tenure, liberal capitalism, liquidationism / Banker’s doctrine / the Treasury view, Mahatma Gandhi, Monroe Doctrine, new economy, New Urbanism, open economy, railway mania, reserve currency, Right to Buy, rising living standards, scientific management, Scientific racism, South China Sea, Suez canal 1869, Suez crisis 1956, tacit knowledge, the market place, The Wealth of Nations by Adam Smith, trade route, transaction costs, transcontinental railway, undersea cable

By 1960, it was only a question of how to preserve as much influence as possible in a superpower world. But why begin the history of Britain's world-system in the 1830s and 1840s? After all, Adam Smith, from whose sceptical phrase this book takes its main title, saw the discovery of America and the rounding of the Cape as decisive moments in the history of the world. By the 1770s, when The Wealth of Nations was published, the British had won a great North American empire, and were in the process of seizing a second vast empire on the Indian sub-continent. If they had lost much of the first by the mid-1780s, they had certainly gained a good deal of the second.

And, amid the huge general crisis that embroiled most of Eurasia after 1917, the appeal of British ‘modernity’ on which the Victorians had relied first came under siege and then faded away. When Whitehall rolled up the map of the world in the late 1960s, the substance of world power had already shrivelled up, leaving only the ghost of the British world-system. It only remained to acknowledge its passing. Notes Preface and acknowledgments 1. A. Smith, The Wealth of Nations [1776] (Everyman edn, 1910), p. 430. 2. J. A. Gallagher, The Decline, Revival and Fall of the British Empire (Cambridge, 1982), p. 73. 3. J. Gallagher and R. Robinson, ‘The Imperialism of Free Trade’, Economic History Review New Series, 6, 1 (1953), pp. 1–15. 4. P. Cain and A. G. Hopkins, British Imperialism 1688–2000 (new edn, 2002); J.

Marshall on ‘Britain and the World in the Eighteenth Century’, Transactions of the Royal Historical Society, 1998, 1999, 2000. For a longer perspective, see B. Simms, Three Victories and a Defeat: The Rise and Fall of the First British Empire, 1714–1783 (2007). 20. B. R. Mitchell, Abstract of British Historical Statistics (Cambridge, 1971), p. 130. 21. The closing lines of the Wealth of Nations. Chapter 1 1. C. W. Dilke, Greater Britain (1869). 2. For Naoroji's views, see chapter 5. 3. PP 1867–8 (197) VI.789, Select Committee on Duties Performed by the British Army in India and the Colonies: Report, Proceedings. 4. Reflected in the appointment of the Royal (Carnarvon) Commission on Colonial Defence 1879–82.


pages: 51 words: 14,616

The Communist Manifesto by Karl Marx, Friedrich Engels

Anton Chekhov, Johann Wolfgang von Goethe, joint-stock company, means of production, Ralph Waldo Emerson, The Wealth of Nations by Adam Smith, Upton Sinclair, W. E. B. Du Bois

Somerset Maugham, 0-553-21392-X THE BALLAD OF THE SAD CAFE AND OTHER STORIES, Carson McCullers, 0-553-27254-3 THE HEART IS A LONELY HUNTER, Carson McCullers, 0-553-26963-1 THE MEMBER OF THE WEDDING, Carson McCullers, 0-553-25051-5 BILLY BUDD, SAILOR AND OTHER STORIES, Herman Melville, 0-553-21274-5 MOBY-DICK, Herman Melville, 0-553-21311-3 ON LIBERTY and UTILITARIANISM, John Stuart Mill, 0-553-21414-4 THE ANNOTATED MILTON, John Milton, 0-553-58110-4 THE SCARLET PIMPERNEL, Baroness Emmuska Orczy, 0-553-21402-0 COMMON SENSE, Thomas Paine, 0-553-21465-9 THE DIALOGUES OF PLATO, Plato, 0-553-21371-7 THE TELL-TALE HEART AND OTHER WRITINGS, Edgar Allan Poe, 0-553-21228-1 CYRANO DE BERGERAC, Edmond Rostand, 0-553-21360-1 IVANHOE, Sir Walter Scott, 0-553-21326-1 THE COMPLETE WORKS OF SHAKESPEARE (25 vols.), William Shakespeare PYGMALION and MAJOR BARBARA, George Bernard Shaw, 0-553-21408-X FRANKENSTEIN, Mary Shelley, 0-553-21247-8 THE JUNGLE, Upton Sinclair, 0-553-21245-1 THE WEALTH OF NATIONS, Adam Smith, 0-553-58597-5 ONE DAY IN THE LIFE OF IVAN DENISOVICH, Alexander Solzhenitsyn, 0-553-24777-8 THE COMPLETE PLAYS OF SOPHOCLES, Sophocles, 0-553-21354-7 DR. JEKYLL AND MR. HYDE, Robert Louis Stevenson, 0-553-21277-X KIDNAPPED, Robert Louis Stevenson, 0-553-21260-5 TREASURE ISLAND, Robert Louis Stevenson, 0-553-21249-4 DRACULA, Bram Stoker, 0-553-21271-0 UNCLE TOM'S CABIN, Harriet Beecher Stowe, 0-553-21218-4 GULLIVER'S TRAVELS AND OTHER WRITINGS, Jonathan Swift, 0-553-21232-X VANITY FAIR, William Makepeace Thackeray, 0-553-21462-4 WALDEN AND OTHER WRITINGS, Henry David Thoreau, 0-553-21246-X DEMOCRACY IN AMERICA, Alexis de Tocqueville, 0-553-21464-0 ANNA KARENINA, Leo Tolstoy, 0-553-21346-6 THE DEATH OF IVAN ILYICH, Leo Tolstoy, 0-553-21035-1 THE ADVENTURES OF HUCKLEBERRY FINN, Mark Twain, 0-553-21079-3 THE ADVENTURES OF TOM SAWYER, Mark Twain, 0-553-21128-5 THE COMPLETE SHORT STORIES OF MARK TWAIN, Mark Twain, 0-553-21195-1 A CONNECTICUT YANKEE IN KING ARTHUR'S COURT, Mark Twain, 0-553-21143-9 LIFE ON THE MISSISSIPPI, Mark Twain, 0-553-21349-0 THE PRINCE AND THE PAUPER, Mark Twain, 0-553-21256-7 PUDD'NHEAD WILSON, Mark Twain, 0-553-21158-7 20,000 LEAGUES UNDER THE SEA, Jules Verne, 0-553-21252-4 AROUND THE WORLD IN EIGHTY DAYS, Jules Verne, 0-553-21356-3 FROM THE EARTH TO THE MOON, Jules Verne, 0-553-21420-9 THE AENEID OF VIRGIL, Virgil, 0-553-21041-6 CANDIDE, Voltaire, 0-553-21166-8 THE INVISIBLE MAN, H.


pages: 426 words: 83,128

The Journey of Humanity: The Origins of Wealth and Inequality by Oded Galor

agricultural Revolution, Alfred Russel Wallace, Andrei Shleifer, Apollo 11, Berlin Wall, bioinformatics, colonial rule, Columbian Exchange, conceptual framework, COVID-19, creative destruction, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, deindustrialization, demographic dividend, demographic transition, Donald Trump, double entry bookkeeping, Easter island, European colonialism, Fall of the Berlin Wall, Francisco Pizarro, general purpose technology, germ theory of disease, income per capita, intermodal, invention of agriculture, invention of movable type, invention of the printing press, invention of the telegraph, James Hargreaves, James Watt: steam engine, Joseph-Marie Jacquard, Kenneth Arrow, longitudinal study, loss aversion, Louis Pasteur, means of production, out of africa, phenotype, rent-seeking, rising living standards, Robert Solow, Scramble for Africa, The Death and Life of Great American Cities, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Malthus, Walter Mischel, Washington Consensus, wikimedia commons, women in the workforce, working-age population, World Values Survey

Might the forces that governed both the protracted economic ice age and our escape from it foster our understanding of why current living conditions are so unequal across the globe? Fuelled by the conviction, and the evidence, that in order to understand the causes of the vast inequality in the wealth of nations we would have to identify the principal driving forces behind the process of development as a whole, I have developed a unified theory that seeks to encompass the journey of humanity in its entirety.[4] In shedding light on the forces that governed the transition from an epoch of stagnation to an era of sustained growth in living standards, it reveals the fingerprints of the distant past in the fate of nations.

Uncovering the deep-rooted factors behind this global disparity leads us to reverse the course of our journey and to take major sequential steps far back in history, ultimately reverting to the place where it all began – the exodus of Homo sapiens from Africa tens of thousands of years ago. We shall consider institutional, cultural, geographical and societal factors that emerged in the ancient past and propelled societies on their distinct historical trajectories, influencing the timing of their escape from the epoch of stagnation, and inducing the gap in the wealth of nations. Institutional reforms, at random critical junctures in the course of history, occasionally placed countries on different paths and contributed to their divergence over time. Likewise, the proliferation of distinct cultural norms contributed to the variation in the movement of the great cogs of history across the globe.[6] Figure 2.

Suffice to say, the modern era of sustained improvement in living standards is hardly equivalent to a Garden of Eden, where social and political strife are absent. Massive inequities and injustices persist. Instead, in order to understand and help mitigate the ultimate causes of the immeasurable inequality in the wealth of nations, this book is designed to faithfully present an interdisciplinary, scientifically based narrative of the evolution of societies since the emergence of Homo sapiens. In accordance with the cultural tradition that views technological development as progress,[9] the outlook derived from this exploration can be described as fundamentally hopeful, in terms of the overarching trajectory of societies across the globe.


pages: 302 words: 83,116

SuperFreakonomics by Steven D. Levitt, Stephen J. Dubner

agricultural Revolution, airport security, An Inconvenient Truth, Andrei Shleifer, Atul Gawande, barriers to entry, behavioural economics, Bernie Madoff, Boris Johnson, call centre, clean water, cognitive bias, collateralized debt obligation, creative destruction, credit crunch, Daniel Kahneman / Amos Tversky, deliberate practice, Did the Death of Australian Inheritance Taxes Affect Deaths, disintermediation, endowment effect, experimental economics, food miles, indoor plumbing, Intergovernmental Panel on Climate Change (IPCC), John Nash: game theory, Joseph Schumpeter, Joshua Gans and Andrew Leigh, longitudinal study, loss aversion, Louis Pasteur, market design, microcredit, Milgram experiment, Neal Stephenson, ocean acidification, oil shale / tar sands, patent troll, power law, presumed consent, price discrimination, principal–agent problem, profit motive, randomized controlled trial, Richard Feynman, Richard Thaler, selection bias, South China Sea, Stanford prison experiment, Stephen Hawking, The Wealth of Nations by Adam Smith, too big to fail, trickle-down economics, ultimatum game, urban planning, William Langewiesche, women in the workforce, young professional

Keith Chen and Laurie Santos, “The Evolution of Rational and Irrational Economic Behavior: Evidence and Insight from a Non-Human Primate Species,” chapter from Neuroeconomics: Decision Making and the Brain, ed. Paul Glimcher, Colin Camerer, Ernst Fehr, and Russell Poldrack (Academic Press, Elsevier, 2009). / 212 “Nobody ever saw a dog”: see Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, ed. Edwin Cannon (University of Chicago Press, 1976; originally published in 1776). / 214 Day traders are also loss-averse: see Terrance Odean, “Are Investors Reluctant to Realize Their Losses?” Journal of Finance 53, no. 5 (October 1998). SEARCHABLE TERMS Note: Entries in this index, carried over verbatim from the print edition of this title, are unlikely to correspond to the pagination of any given e-book reader.

Keith Chen, the son of Chinese immigrants, is a hyper-verbal, sharp-dressing thirty-three-year-old with spiky hair. After an itinerant upbringing in the rural Midwest, Chen attended Stanford, where after a brief infatuation with Marxism, he made an about-face and took up economics. Now he is an associate professor of economics at Yale. His research agenda was inspired by something written long ago by Adam Smith, the founder of classical economics: “Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog. Nobody ever saw one animal by its gestures and natural cries signify to another, this is mine, that yours; I am willing to give this for that.” In other words, Smith was certain that humankind alone had a knack for monetary exchange.

Honore and Adriana Lleras-Muney, “Bounds in Competing Risks Models and the War on Cancer,” Econometrica 76, no. 6 (November 2006). WAR: NOT AS DANGEROUS AS YOU THINK?: Derived from “U.S. Active Duty Military Deaths 1980 through 2008 (as of April 22, 2009),” prepared by the Defense Manpower Data Center for Department of Defense; thanks to a reader named Adam Smith (seriously) for alerting us to these data. HOW TO CATCH A TERRORIST: This section is drawn from “Identifying Terrorists Using Banking Data,” Steven D. Levitt and A. Danger Powers, working paper; and from author interviews with Ian Horsley (a pseudonym), primarily in London. / 89 Bank fraud in the U.K.: gleaned from the Association for Payment Clearing Services (APACS). / 92 False positives in cancer screening: see Jennifer Miller Croswell et al., “Cumulative Incidence of False-Positive Results in Repeated, Multimodal Cancer Screening,” Annals of Family Medicine 7 (2009). / 92 Mike Lowell: see Jimmy Golen, “Lowell: Baseball Held to Higher Standard,” The Associated Press, January 18, 2008. / 92 Release of terror suspects: see Alan Travis, “Two-Thirds of U.K.


pages: 258 words: 83,303

Why Your World Is About to Get a Whole Lot Smaller: Oil and the End of Globalization by Jeff Rubin

addicted to oil, air freight, banking crisis, Bear Stearns, big-box store, BRICs, business cycle, carbon footprint, carbon tax, collateralized debt obligation, collective bargaining, creative destruction, credit crunch, David Ricardo: comparative advantage, decarbonisation, energy security, food miles, Ford Model T, hydrogen economy, illegal immigration, immigration reform, Intergovernmental Panel on Climate Change (IPCC), invisible hand, James Watt: steam engine, Jevons paradox, Just-in-time delivery, low interest rates, market clearing, megacity, megaproject, North Sea oil, oil shale / tar sands, oil shock, peak oil, profit maximization, reserve currency, South Sea Bubble, subprime mortgage crisis, the market place, The Wealth of Nations by Adam Smith, trade liberalization, work culture , zero-sum game

If you were rich enough, you just set up a laboratory wherever you could find the space (perhaps at your country home) and got to work classifying frogs. Money is generally more difficult to come by than frogs, so it was probably not a coincidence that the preeminent nineteenth-century economic theorist was a millionaire (in today’s dollars). David Ricardo had already made his fortune on the London Stock Exchange when he read Adam Smith’s The Wealth of Nations and became interested in the study of where wealth comes from. Ricardo’s idea of comparative advantage is very simple, and very persuasive. It goes something like this: if everybody does what they are best at, rather than what they are just good at, and does only that, everybody will be better off.

Recessions don’t diminish our dependence on oil; they just cut back a little on our appetite for it. When we start to feel a little better, we will be guzzling it again, and we may well be left wanting more. Because unlike after past oil shocks, there is no post-shock boost in oil supply to look forward to any more. If we wait for Adam Smith’s invisible hand to pull abundant sources of new cheap oil out of the ground, we are going to be waiting for Godot. Governments around the world may be thrusting bailout money into the hands of businesses and taxpayers, but you can count on one thing. There will be no energy bailout. Just as I had good news and bad news for the oilmen, part 2 of this book will have good news and bad news for you too.

And of course this record increase in oil prices, with the aid of a world financial crisis to boot, has also brought the economy to its knees, but not before oil demand defied the laws of economic gravity for the better part of a decade. In fact, for most of that decade, world oil demand was growing faster than it did at the turn of the millennium, when oil was only a fraction of the price. That’s not the way a demand curve is supposed to behave. Somehow, Adam Smith’s invisible hand had been misled or misguided into consuming more oil just when it was expected to burn less. Why did oil have to skyrocket all the way to nearly $150 per barrel before the world economy stopped growing? Prices half that amount should have stopped global oil demand in its tracks long before the recession hit in late 2008.


pages: 313 words: 84,312

We-Think: Mass Innovation, Not Mass Production by Charles Leadbeater

1960s counterculture, Andrew Keen, barriers to entry, bioinformatics, c2.com, call centre, citizen journalism, clean water, cloud computing, complexity theory, congestion charging, death of newspapers, Debian, digital divide, digital Maoism, disruptive innovation, double helix, Douglas Engelbart, Edward Lloyd's coffeehouse, folksonomy, frictionless, frictionless market, future of work, game design, Garrett Hardin, Google Earth, Google X / Alphabet X, Hacker Ethic, Herbert Marcuse, Hernando de Soto, hive mind, Howard Rheingold, interchangeable parts, Isaac Newton, James Watt: steam engine, Jane Jacobs, Jaron Lanier, Jean Tirole, jimmy wales, Johannes Kepler, John Markoff, John von Neumann, Joi Ito, Kevin Kelly, knowledge economy, knowledge worker, lateral thinking, lone genius, M-Pesa, Mark Shuttleworth, Mark Zuckerberg, Marshall McLuhan, Menlo Park, microcredit, Mitch Kapor, new economy, Nicholas Carr, online collectivism, Paradox of Choice, planetary scale, post scarcity, public intellectual, Recombinant DNA, Richard Stallman, Shoshana Zuboff, Silicon Valley, slashdot, social web, software patent, Steven Levy, Stewart Brand, supply-chain management, synthetic biology, the Cathedral and the Bazaar, The Death and Life of Great American Cities, the long tail, the market place, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Tragedy of the Commons, Whole Earth Catalog, work culture , Yochai Benkler, Zipcar

F. 45 Small Is Beautiful 45 Schwartz, Jonathan 202 Schwarz, Michiel xi science 53–4, 60 open and collaborative approaches to 195 research 132 shared 154–7, 158, 159–65 search engines 36, 212 Second Life 5, 45, 70 self-confidence 72 self-control 236 self-governance 59, 79, 80, 97, 104, 174, 194, 232, 239 self-help 44–5, 146, 152, 200, 205, 206 self-management 89 self-organising networks 8, 168 self-regulation 49, 79, 165 Sen, Amartya: Development as Freedom 194–5 Sennett, Richard 215–16 Seoul, South Korea 203, 204 service sectors 129, 130 Shanda 106–7 Shanwei, Guandong province, China 192 shareholder ownership 121, 122, 123, 125 sharing 223 enabled by the web 6, 7, 26 shared use of common resources 27 the We-Think ethos 23, 24 see also idea-sharing Shi Tao 190–91 Shuttleworth, Mark 80, 118 Sibelius Software Ltd xi, 219 Siemens 135 Silicon Valley, California 133, 136 Silver, Jeremy xi, 219 Sims, The (computer game) 105–6, 149, 226, 228 simulation technologies 227 Situationist International 45, 46 SixDegrees.com 34 Skoll, Jeff 217 Slashdot 33, 34, 70 Smales, Andrew 33 Smith, Adam 224 The Theory of Moral Sentiments 229 The Wealth of Nations 224 SMS (Short Message Service) messaging 101–2 social justice 194 social surveillance 211 SocialText 36 Society for Sustainable Mobility 135 software 60, 61, 129 BASIC 46 blogging 36, 74 bugs 70, 72, 165 and changes on web pages 31 created by groups on the web 7, 23 distributed testing 72, 74 free 7 hacking 104 open-source 47, 56, 65, 66, 68, 69, 74, 75, 78, 108, 128, 134, 155, 200–203, 228 patents 97 social-networking 177 stealing of 47, 51 Sokol, Dan 46–7 Sony 140 Sopranos, The (television series) 182 source code 66, 197, 200, 229 SourceForge.net 45, 68 South America: access to the web 5 South Korea 203, 204, 215, 231 Ministry of Information and Communications 203 Soviet Union, former 189, 190, 210 Spallek, Heiko xi–xii Spanish elections (March 2004) 186–7 Spreadshirt 135 Squid Labs 134 stalkers 3 Stanford Research Institute, Palo Alto, California 39 Star Trek series 103 Star Wars (film) 137 Starbucks 109–10 Stony Brook University, New York State 165 Sullivan, Tim xi Sun Microsystems 202 supply and demand 100 Swarm of Angles (open-source film-making project) xi Swiki 36 synthetic biology 164–5 System/360 computer 77, 78 T Taylor, Charles 215 Technorati 33, 86 teenagers, on-line 213–16 television 2, 30, 34, 57, 129, 147, 171, 172, 173, 176, 183, 233 Teragrid 155 terror, terrorists 1, 3, 168, 169, 232, 235, 237 thinking barefoot 205–6 collaborative 20 creative 87 Descartes on 19–20 diverse 79 group-think 23, 210–11 individual 20, 21, 23 lateral 113 shared thoughts 81 Thurmond, Senator Strom 181–2 Tiananmen Square demonstrations (1989) 191 Time magazine 56 Tomcat 68 tools available to amateurs 103, 231–2 creating computer games 74 for creativity 218, 219 distribution of 84 education 148, 149 for genetic engineering 235 and groups 76–7 healthcare 151 idea-sharing 222 in science 154, 155, 161, 162–3, 197 search 227 social tagging 86 and Web 2.0 success stories 75 Torvalds, Linus 65, 66, 68, 96, 227 Toshiba 140 Toyota 135, 219 Trackback 33 trade unions 188 ‘tragedy of the commons’ argument 51, 124 transparency 184, 236, 237 Trekkies 103 Trevithick, Richard 55 Tribe, The (avant garde publication) 42 Trippi, Joe 177–8 Tropicalismo 202 Turkle, Sherry 211 Turner, Fred 38, 46 Tuxphone 136 Txtpower.org 186 U Ubuntu 80, 82, 118 Uganda 206 Ukraine: ’colour revolution’ 187 UN World Development Report (2003) 196 University of California 160, 213 University of Michigan 193 Library 144 Unix operating system 74 urbanisation 150, 188 US National Human Genome Research Institute 160 US National Institute of Health 159 US Office of the Director of National Intelligence 152 US Super Bowl (2007) 104–5 Usmanov, Alisher 30 V value chains 98 values collaborative 90, 112 community 91 diverse 79 van Neumann, John 137 Venezuela 202–3 Ventura, Jesse 180 videos 142, 216, 218 amateurism 105 by performance artists 2 and human-rights groups 206 political 182 real 57 self-expression 1 sharing online 75 social-networking sites 20 video-sharing sites 7, 34, 86 YouTube xiii, 46, 57 Vietnam 189–90, 191 virtual worlds 4–5, 7, 21 viruses computer 3, 4, 233–4 genomes of 165 visionaries 48 Vista operating system 47 Vodafone 207 voluntarism 128, 145 W Wal-Mart 218 Wales, Jimmy 13, 14–15, 18, 21 Wandsworth, Jeffrey 154 Warhol, Andy 105 Waterston, Bob 63 Watson, James D. 52, 62, 76 Watt, James 54–5 Watt engine 54–5, 56 Watts, Duncan 212 Wayprecht, Karl 156 We-Think approach to work 111–12, 114 collective self-help 44–5 combining ideas 77 common pools of resources 49 conditions necessary for 84, 86 corporate models of 97 culture 28, 59, 62, 169, 194, 230, 232–3, 238 defined 19 and democracy 170, 221, 239 design and research 166 and the developing world 204 and eBay rating system 217 in education 148, 149 entrepreneurs 91 and equality 208 examples of 19 file-sharing 58 and freedom 213, 221 Full 85, 86–7 and healthcare 150 impact on culture and economy 129–32 and innovation 89, 93, 95, 125, 126 leadership 117, 118–19 Linux community 65, 66 Low 85 making sense of web content 32, 34, 36, 59 Medium 85, 86 No 85, 86 organisational recipe 21, 87, 89 and ownership 121 potency of 59 and public services 145, 146, 149, 150 rise of 88 and service sectors 130 social justice 194 successful projects’ basis collaborate 67, 79–80, 81, 82 connect 67, 75–9 contribute 67, 70, 71, 72, 73, 74–5 core 67, 68–9 create 67, 82–3 vital ingredients of 61–2 ways it could go wrong 23–4, 84 working for free 23 worm project as a recipe for 64–5 Web 2.0 27, 30, 31–2, 40, 42, 45, 51, 70, 75, 179 web, the bloggers’ ability to act as a public watchdog 181–2 censorship 190–91 and civic organisations 189 collaborative 200 connectedness: pros and cons 3–4, 5 and creative conversations 95 creativity 1–2, 3, 5, 19, 26, 218–21, 222, 227 criminal use of 3, 168–9 decentralisation 7, 13 democracy 1, 3, 5, 6, 7, 170, 173–4, 176, 178, 184, 189, 191, 192 destroying as much as it creates 2–3 development of 5 electronic trail 210 enters mainstream politics 176 and equality 2, 192–3 fears of loss of freedom 208, 210 hypertext 35, 39 impact on the developing world 166 innovation 2, 5, 7, 225 knowledge 2, 3 MoveOn network 188–9 openness 3, 13 origins of 5, 6, 47–8 and political journalists 170–71 power of 24–5, 185, 233 and privacy 210 sharing ideas 6, 7, 26 social vs. individualistic thinking 19–20 surveillance 2 underlying culture of 7 Weber, Steven 69 weblogs 33, 142 websites author’s website ix–xiv political 176 sharing ideas 68 Wellcome Trust 160 Wheal Prosper mine, Cornwall 55 Whole Earth Catalog 40, 63 Whole Earth ’Lectronic Link 40 wiki farms 36 wiki-economy 90 Wikimedia Foundation 15 Wikipedia 1, 4, 12–21, 23, 36, 84, 85, 86, 97, 126, 127, 141, 148, 152, 161, 191, 195, 226, 228, 231, 235 wikis 31, 59, 77, 165 defined 13, 35 history of 35–6 internal 152 openness and decentralisation 13 role of 36 scientists 159 Ubuntu 80 wiki culture 14 wiki version of part of We-Think ix, xiii Wilson, E.

Cherished institutions and familiar ways of working will be threatened along with the privileged role of professional, authoritative sources of knowledge. The idea that sharing might become the economy’s motive force is deeply unsettling to some because it turns conventional wisdom on its head. From Adam Smith’s Wealth of Nations written in 1749 through to Hernando de Soto’s recent The Mystery of Capital, economists have argued that private property provides the basis for capital – the elixir at the heart of capitalism, which propels its constant growth and renewal. Karl Marx called capital ‘the hen that lays the golden eggs’ – that part of a nation’s assets that allows new ventures to be initiated and productivity increased.

De Soto’s thesis has attracted its share of criticism from those who point out, on the one hand, that property rights cannot be created without law and good government and, on the other, that property rights are not worth that much unless the owners have the capacity to do something with their land. My own reservation is more basic still. De Soto, following in Adam Smith’s footsteps, might be right in contending that private property animates the industrial and agricultural economy of land and things. But in an economy of ideas, much – and perhaps most – of the animating capital is shared. The web’s significance is that it makes sharing central to the dynamism of economies that have hitherto been built on private ownership.


pages: 432 words: 124,635

Happy City: Transforming Our Lives Through Urban Design by Charles Montgomery

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Abraham Maslow, accelerated depreciation, agricultural Revolution, American Society of Civil Engineers: Report Card, Apollo 11, behavioural economics, Bernie Madoff, Boeing 747, British Empire, Buckminster Fuller, car-free, carbon credits, carbon footprint, centre right, City Beautiful movement, clean water, congestion charging, correlation does not imply causation, data science, Donald Shoup, East Village, edge city, energy security, Enrique Peñalosa, experimental subject, food desert, Frank Gehry, General Motors Futurama, gentrification, Google Earth, happiness index / gross national happiness, hedonic treadmill, Home mortgage interest deduction, housing crisis, income inequality, income per capita, Induced demand, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jane Jacobs, license plate recognition, McMansion, means of production, megacity, Menlo Park, meta-analysis, mortgage tax deduction, New Urbanism, Panopticon Jeremy Bentham, peak oil, Ponzi scheme, power law, rent control, restrictive zoning, ride hailing / ride sharing, risk tolerance, science of happiness, Seaside, Florida, Silicon Valley, starchitect, streetcar suburb, the built environment, The Death and Life of Great American Cities, the High Line, The Spirit Level, The Wealth of Nations by Adam Smith, trade route, transit-oriented development, upwardly mobile, urban planning, urban sprawl, wage slave, white flight, World Values Survey, zero-sum game, Zipcar

The architect believed that highways—and, apparently, new flying machines—would set urbanites free to inhabit and work on their own autonomous plots in the countryside. (Courtesy of the Frank Lloyd Wright Foundation Archives [The Museum of Modern Art|Avery Architectural & Fine Arts Library, Columbia University, New York], © Frank Lloyd Wright Foundation, Scottsdale, AZ) In his Inquiry into the Nature and Causes of the Wealth of Nations, Bentham’s contemporary Adam Smith warned that it was a deception to believe that wealth and comfort alone would bring happiness. But this didn’t stop his followers or the governments they advised from relying on the crude measures of income when measuring human progress over the next two centuries. As long as economic numbers grew, economists insisted that life was getting better and people were getting happier.

There Is No Such Thing as an Externality Even before widespread acknowledgment of human-caused climate change, Jane Jacobs warned that the city is a fantastically complex organism that can be thrown into an unhealthy imbalance by attempts to simplify it in form or function. In Cities and the Wealth of Nations she warned specifically about the tendency for designers and planners to overscale: the larger an organism or economy, the more unstable it would become in changing times, and the less the likelihood that the system would be able to self-correct. Most city builders paid no attention. They pursued greater integration with global systems, relied more heavily on national and multinational industries and retailers to fuel their economies, and altered their cities’ very bone structure to accommodate extreme dispersal.

You are unlikely to say you are happy when you cannot offer food, shelter, and security to your children. But in the world’s rich countries, working harder to earn more money gets less effective once you’ve passed the average income mark. After that, each extra dollar delivers proportionately less satisfaction. If money isn’t everything, what is the full recipe for happiness? Adam Smith’s followers in classical economics have never produced a plausible answer, but the surveys offer a few. People who are well educated rate their happiness higher than those who aren’t. Employed people are happier than unemployed people—even in European states where generous welfare policies insulate citizens from the most destructive effects of unemployment.


pages: 538 words: 121,670

Republic, Lost: How Money Corrupts Congress--And a Plan to Stop It by Lawrence Lessig

air traffic controllers' union, Alan Greenspan, asset-backed security, banking crisis, carbon tax, carried interest, circulation of elites, cognitive dissonance, corporate personhood, correlation does not imply causation, crony capitalism, David Brooks, Edward Glaeser, Filter Bubble, financial deregulation, financial innovation, financial intermediation, Glass-Steagall Act, Greenspan put, invisible hand, jimmy wales, low interest rates, Martin Wolf, meta-analysis, Mikhail Gorbachev, moral hazard, Pareto efficiency, place-making, profit maximization, public intellectual, Ralph Nader, regulatory arbitrage, rent-seeking, Ronald Reagan, Sam Peltzman, Savings and loan crisis, Silicon Valley, single-payer health, The Wealth of Nations by Adam Smith, too big to fail, TSMC, Tyler Cowen, upwardly mobile, WikiLeaks, Yochai Benkler, Zipcar

The $150 million is calculated as follows: $1 per thousand page views, an estimated fourteen billion page views per month, times twelve months is at least $150 million. 30. Interview with author, May 4, 2007. 31. “Therefore I Travel, Company Profile of Lonely Planet,” Tony Wheeler, Lonely Planet, available at link #16. 32. Adam Smith, The Wealth of Nations, vol. 1, ed. Edwin Cannan (Chicago: University of Chicago Press, 1976), 477 (book IV, chapter II: “Of Restraints upon the Importation from foreign Countries of such Goods as can be produced at Home”). Chapter 3. 1 + 1 = 1. Paul Krugman, “Boiling the Frog,” New York Times, July 13, 2009, at A19.

In none of these cases was government regulation necessary. In none of the cases did some professional body, such as the Bar Association or the AMA, need to intervene to force the companies to do what was “right.” “What was right” coincided perfectly with what was in the best interest of these entities. As Adam Smith famously said, they were “in this, as in many other cases, led by an invisible hand to promote an end which was no part of [their] intention.”32 That’s not always true of course. Indeed, as we’ll see, pursuing self-interest alone, without the proper regulatory structure, is often fatal to the public interest.

As Rajan and Zingales describe: “Capitalism’s biggest political enemies are not the firebrand trade unionists spewing vitriol against the system but the executives in pin-striped suits extolling the virtues of competitive markets with every breath while attempting to extinguish them with every action.”40 The perpetual danger is that this competition will be “distorted by incumbents,”41 because of an obvious fact not about markets, but about humans: “Those in power… prefer to stay in power. They feel threatened by free markets”42—even if it was free markets that gave them their power! This is not a new point. Adam Smith, founding father of the modern free-market movement (even if, like most founding fathers, his work is only indirectly and partially understood by those who follow him most vigorously), famously condemned the very heroes of free-market wealth: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”hatрsly), f43 It was from this recognition that Smith offered his rule for interpreting any proposal by successful incumbents for regulating the market.


pages: 310 words: 90,817

Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown by Detlev S. Schlichter

bank run, banks create money, British Empire, business cycle, capital controls, Carmen Reinhart, central bank independence, currency peg, fixed income, Fractional reserve banking, German hyperinflation, global reserve currency, inflation targeting, Kenneth Rogoff, Kickstarter, Long Term Capital Management, low interest rates, market clearing, Martin Wolf, means of production, Money creation, money market fund, moral hazard, mortgage debt, open economy, Ponzi scheme, price discovery process, price mechanism, price stability, pushing on a string, quantitative easing, reserve currency, rising living standards, risk tolerance, savings glut, the market place, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, We are all Keynesians now, Y2K

It also provided from the start a topic of research and debate for the young science of economics. One of the most remarkable and colorful of the early economists was Richard Cantillon. His treatise Essai sur la Nature du Commerce en General,15 posthumously published in 1755 and thus a quarter of a century before Adam Smith’s The Wealth of Nations (1776), already dealt with, among many other things, some of the effects on the economy of an expanding money supply through banking.16 Cantillon already showed that the new money would not simply lift all prices and certainly not lift them proportionally to the money inflow. The early recipients of new money gain at the expense of later participants.

Russia, default S safekeeping, gold savings voluntary savings glut theory secular deflation silver Smith, Adam Southern Song Dynasty specie stability, decreased state-bank alliance state, paper money and stimulus, benefit myth T Theorie des Geldes und der Umlaufinittel Tracy, Count Antoine Destutt de U U.S. inflation, China and underconsumption, myth of United States, paper money and use-value V Veblen, Thorstein Volcker, Paul Vreeland, Edward B. W Walras, Leon warehouse receipt Washington, George wealth demand, money demand versus The Wealth of Nations wire transfers World Bank WorldCom Y Yuan Dynasty

Richard Cantillon, Essay on the Nature of Commerce in General/Essai sur la Nature du Commerce en General (New Brunswick, NJ: Transaction Publishers; 2001), translated by Henry Higgs, pp. 5–130. 16. Friedrich August von Hayek, “Richard Cantillon (c. 1680–1734)” in idem., The Trend of Economic Thinking, Volume 3 of The Collected Works of F. A. Hayek, edited by W. W. Bartley III and Stephen Kresge (London: Routledge, 1991), pp. 245–294; Murray N. Rothbard, Economic Thought before Adam Smith (Cheltenham, UK: Edward Elgar, 1995), pp. 343–362. 17. Niall Ferguson, The Ascent of Money: A Financial History of the World (London: Penguin Books, 2009), p. 139. 18. Mark Skousen, The 100 Percent Gold Standard: Economics of a Pure Money Commodity (Lanham, MD: University Press of America, 1980), p. 45. 19.


pages: 850 words: 224,533

The Internationalists: How a Radical Plan to Outlaw War Remade the World by Oona A. Hathaway, Scott J. Shapiro

9 dash line, Albert Einstein, anti-globalists, bank run, Bartolomé de las Casas, battle of ideas, British Empire, clean water, colonial rule, continuation of politics by other means, David Ricardo: comparative advantage, Donald Trump, facts on the ground, failed state, false flag, gentleman farmer, humanitarian revolution, index card, long peace, Monroe Doctrine, new economy, off-the-grid, oil shale / tar sands, open economy, Peace of Westphalia, power law, public intellectual, Ronald Reagan, Scientific racism, Scramble for Africa, South China Sea, spice trade, Steven Pinker, The Wealth of Nations by Adam Smith, trade liberalization, uranium enrichment, zero-sum game

In his 1776 classic work, An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith demonstrated that specialization in production allows for economies of scale, improving efficiency and growth.20 In 1817, David Ricardo showed that countries could gain from trade even if one was more efficient at producing all traded goods—what mattered was their comparative advantage.21 These revolutionary ideas swept the Western world. And yet growth in global trade was sluggish. From the end of the eighteenth century, when Adam Smith first launched his famous critique of mercantilism, until the early twentieth, global trade rose from just under 10 percent of global GDP to just over 20 percent.22 This tepid response is puzzling.

Our claim that weak states were no longer threatened with conquest is consistent not only with the data in the previous chapter but also with the argument and findings of Tanisha Fazal, who documents the decline of state death in the second half of the twentieth century. Tanisha Fazal, State Death: The Politics and Geography of Conquest, Occupation, and Annexation (Princeton, NJ: Princeton University Press, 2007). 20. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London: W. Strahan and T. Cadell, 1776). 21. David Ricardo, On the Principles of Political Economy and Taxation (London: John Murray, Albermarle-Street, 1817). 22. Mohamed Nagdy and Max Roser, “International Trade (2016),” OurWorldInData.org, accessed January 17, 2016, http://ourworldindata.org/data/global-interconnections/international-trade/. 23.

They worried that Germany was not yet prepared for these wars of expansion. Hitler had a starkly different vision for Germany than did Stresemann. Instead of integration into the global economy, Hitler planned to use war in order to accumulate as much territory as possible. Lebensraum was based on a pre-modern, almost feudal, conception of economics: the wealth of nations as determined by area of farmland rather than volume of trade. But Hitler’s plan was built on a crackpot racial theory as well. On his demented worldview, the German people were entitled to Eastern lands because they were superior to Slavs. Just as humans used animals for their own purposes, Aryans have conquered inferior races to achieve their cultural greatness.


pages: 898 words: 266,274

The Irrational Bundle by Dan Ariely

accounting loophole / creative accounting, air freight, Albert Einstein, Alvin Roth, An Inconvenient Truth, assortative mating, banking crisis, Bear Stearns, behavioural economics, Bernie Madoff, Black Swan, Broken windows theory, Burning Man, business process, cashless society, Cass Sunstein, clean water, cognitive dissonance, cognitive load, compensation consultant, computer vision, Cornelius Vanderbilt, corporate governance, credit crunch, Credit Default Swap, Daniel Kahneman / Amos Tversky, delayed gratification, Demis Hassabis, Donald Trump, end world poverty, endowment effect, Exxon Valdez, fake it until you make it, financial engineering, first-price auction, Ford Model T, Frederick Winslow Taylor, fudge factor, Garrett Hardin, George Akerlof, Gordon Gekko, greed is good, happiness index / gross national happiness, hedonic treadmill, IKEA effect, Jean Tirole, job satisfaction, John Perry Barlow, Kenneth Arrow, knowledge economy, knowledge worker, lake wobegon effect, late fees, loss aversion, Murray Gell-Mann, name-letter effect, new economy, operational security, Pepsi Challenge, Peter Singer: altruism, placebo effect, price anchoring, Richard Feynman, Richard Thaler, Saturday Night Live, Schrödinger's Cat, search costs, second-price auction, Shai Danziger, shareholder value, Silicon Valley, Skinner box, Skype, social contagion, software as a service, Steve Jobs, subprime mortgage crisis, sunk-cost fallacy, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tragedy of the Commons, ultimatum game, Upton Sinclair, Walter Mischel, young professional

Why did the nice people at MIT and SAP design the system this way? Why did they break tasks into so many components, put each person in charge of only small parts, and never show them the overall progress or completion of their tasks? I suspect it all has to do with the ideas of efficiency brought to us by Adam Smith. As Smith argued in 1776 in The Wealth of Nations, division of labor is an incredibly effective way to achieve higher efficiency in the production process. Consider, for example, his observations of a pin factory: . . . the division of labour has been very often taken notice of, the trade of the pin-maker; a workman not educated to this business (which the division of labour has rendered a distinct trade), nor acquainted with the use of the machinery employed in it (to the invention of which the same division of labour has probably given occasion), could scarce, perhaps, with his utmost industry, make one pin in a day, and certainly could not make twenty.

So in essence Stephen and I are academic relatives, and I feel as if he is my younger (but much taller) brother. He is smart and creative, and it has been a privilege to watch him advance in his academic adventures. Stephen is currently a doctoral student at Duke University, and if his advisers had any say in the matter, we would never let him leave. Notes 1. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Chicago: University of Chicago Press, 1977), 44–45. 2. George Loewenstein, “Because It Is There: The Challenge of Mountaineering . . . for Utility Theory,” Kyklos 52, no. 3 (1999): 315–343. 3. Laura Shapiro, Something from the Oven: Reinventing Dinner in 1950s America (New York: Viking, 2004). 4. www.foodnetwork.com/recipes/sandra-lee/sensuous-chocolate-truffles-recipe/index.html. 5.

In conventional economics, the assumption that we are all rational implies that, in everyday life, we compute the value of all the options we face and then follow the best possible path of action. What if we make a mistake and do something irrational? Here, too, traditional economics has an answer: “market forces” will sweep down on us and swiftly set us back on the path of righteousness and rationality. On the basis of these assumptions, in fact, generations of economists since Adam Smith have been able to develop far-reaching conclusions about everything from taxation and health-care policies to the pricing of goods and services. But, as you will see in this book, we are really far less rational than standard economic theory assumes. Moreover, these irrational behaviors of ours are neither random nor senseless.


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Masters of Management: How the Business Gurus and Their Ideas Have Changed the World—for Better and for Worse by Adrian Wooldridge

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, affirmative action, Alan Greenspan, barriers to entry, behavioural economics, Black Swan, blood diamond, borderless world, business climate, business cycle, business intelligence, business process, carbon footprint, Cass Sunstein, Clayton Christensen, clean tech, cloud computing, collaborative consumption, collapse of Lehman Brothers, collateralized debt obligation, commoditize, company town, corporate governance, corporate social responsibility, creative destruction, credit crunch, crowdsourcing, David Brooks, David Ricardo: comparative advantage, disintermediation, disruptive innovation, do well by doing good, don't be evil, Donald Trump, Edward Glaeser, Exxon Valdez, financial deregulation, Ford Model T, Frederick Winslow Taylor, future of work, George Gilder, global supply chain, Golden arches theory, hobby farmer, industrial cluster, intangible asset, It's morning again in America, job satisfaction, job-hopping, joint-stock company, Joseph Schumpeter, junk bonds, Just-in-time delivery, Kickstarter, knowledge economy, knowledge worker, lake wobegon effect, Long Term Capital Management, low skilled workers, Mark Zuckerberg, McMansion, means of production, Menlo Park, meritocracy, Michael Milken, military-industrial complex, mobile money, Naomi Klein, Netflix Prize, Network effects, new economy, Nick Leeson, Norman Macrae, open immigration, patent troll, Ponzi scheme, popular capitalism, post-industrial society, profit motive, purchasing power parity, radical decentralization, Ralph Nader, recommendation engine, Richard Florida, Richard Thaler, risk tolerance, Ronald Reagan, science of happiness, scientific management, shareholder value, Silicon Valley, Silicon Valley startup, Skype, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, Steven Levy, supply-chain management, tacit knowledge, technoutopianism, the long tail, The Soul of a New Machine, The Wealth of Nations by Adam Smith, Thomas Davenport, Tony Hsieh, too big to fail, vertical integration, wealth creators, women in the workforce, young professional, Zipcar

Senior managers are as familiar with the business lounge of their local airports as with their own sitting room. Web surfers can communicate with people almost anywhere in the world at the press of a button. The world’s ever-growing army of investors has its savings tied up with the global markets. (Remember Adam Smith’s observation, in The Wealth of Nations, that, while “the proprietor of land is necessarily a citizen of the particular country in which his estate lies . . . the proprietor of stock is properly a citizen of the world, and is not necessarily attached to any particular country.”) Shoppers expect to be able to buy fresh kiwi fruit in the depths of winter, regardless of environmental crisis or recession.

News & World Report, 60 USS Enterprise, 174 Valenti, Jack, 403 Van Reneen, John, 12 Venture capitalists, 196 Vernon, Raymond, 272 Vertical integration, 166 Viadeo, 359 Virgin Airlines, 155, 320 Vivendi, 159, 298 Vodafone, 310 Volkswagen, 53 Von Karajan, Herbert, 257 Wadhwa, Vivek, 175, 370 Waiting for Superman, 332 Walgreens, 264 Wall Street Journal, 60, 112, 114, 264, 316, 364, 383 Walmart, 36, 39, 118, 151, 155, 173, 241, 376 Wang, Charles, 185 The War for Talent, 10, 365 Warren, Rick, 76 Washington Monthly, 364 Washington Post, 118–119 Wasnik, Mukul, 53 Wasserman, Noam, 302 Waterman, Robert, 4, 10, 54, 65, 95, 99–102, 257, 319 Watkins, Michael, 308 Watson, Thomas, 310–311 The Wealth of Nations (A. Smith), 270 Weill, Sandy, 402 Welbourne, Edward, 386–387 Welch, Jack, 4–5, 18, 65–66, 75–76, 154, 160, 197, 292–298, 302, 306, 320, 376, 380 Welch, Suzy, 65–66, 306 Wells, Frank, 302 Wenger, Ekkehard, 296–297 Westinghouse, 302 Wharton Business School, 41, 57, 78 What I Didn’t Learn in Business School: How Strategy Works in the Real World (Barney and Clifford), 55 What Would Google Do?

The discipline still awaits its Joseph Schumpeter or John Maynard Keynes. It lacks rules of debate, so the discipline remains open to anybody with an axe to grind—much as economics was open to the likes of Karl Marx. However, just as anybody wanting to know about economics a hundred years ago could draw on writers such as Alfred Marshall, Adam Smith, and David Ricardo, management theory already has its founding fathers—among them, Alfred Sloan and Peter Drucker. Management theory has also generated debates on such momentous subjects as globalization, the nature of work, and the changing structure of companies. Despite its adolescent excesses, the discipline has generated ideas that work.


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Money for Nothing by Thomas Levenson

Albert Einstein, asset-backed security, bank run, British Empire, carried interest, clockwork universe, credit crunch, do well by doing good, Edmond Halley, Edward Lloyd's coffeehouse, experimental subject, failed state, fake news, Fellow of the Royal Society, fiat currency, financial engineering, financial innovation, Fractional reserve banking, income inequality, Isaac Newton, joint-stock company, land bank, market bubble, Money creation, open economy, price mechanism, quantitative easing, Republic of Letters, risk/return, side project, South Sea Bubble, The Wealth of Nations by Adam Smith, tontine

The elaborate and complex web of financial abstractions produced by securitization and its derivatives had created a mathematically opaque tower of numbers and interdependent promises that obscured just how much risk supposedly prudent investors had accepted.* * * * — AS IN THE South Sea Bubble, there was nothing abstract about the Great Recession. It caused terrible pain to untold numbers of individuals and families, lives wounded by lost homes and drained savings. It slashed the wealth of nations: the US economy fell by over 4 percent in the immediate aftermath of Lehman’s failure and didn’t get back to precrisis levels of employment and production for years. Millions lost jobs, and, as always, such widespread misery cost lives: suicide rates rose in parallel with the unemployment rate in the US and through much of Europe.

Journal of Modern History 88 no. 2 (June 2016): 275–305. Simmel, Georg. The Philosophy of Money. Oxford: Routledge and Kegan Paul, 2011. Sinclair, John. The History of the Public Revenue of the British Empire. 3rd ed. London: A. Strahan, 1803. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. 1776. Electronic ed.: Amsterdam: MetaLibri, 2007. Smythe, William J. Map-making, Landscapes and Memory: A Geography of Colonial and Early Modern Ireland c. 1530–1750. Notre Dame, IN: University of Notre Dame Press, 2006. Spang, Rebecca L. Stuff and Money in the Time of the French Revolution.

He sent to London for new surveying tools, to be produced by modern methods—“The said Petty, consideringe the vastnesse of the worke, thought of dividinge both the art of makinge instruments, as also using them into many parts.” That is: he set it up so that one craftsman would make measuring chains, another compass needles; woodworkers would concentrate on building cases; and so on. This isn’t quite Adam Smith on the manufacture of pins, but Petty’s idea is recognizably kin to that vision of rationalizing human behavior to some greater (and more interchangeable) end. Armed with these standardized kits, teams of surveyors and assistants set out, guarded by soldiers, and working with designated “bounders”—men who could confirm local property lines set out across Ireland.


Doppelganger: A Trip Into the Mirror World by Naomi Klein

"World Economic Forum" Davos, 2021 United States Capitol attack, 3D printing, anti-communist, anti-globalists, autism spectrum disorder, benefit corporation, Bernie Sanders, Big Tech, bitcoin, Black Lives Matter, blood diamond, Boris Johnson, Boycotts of Israel, Cambridge Analytica, capitalist realism, ChatGPT, citizen journalism, Climategate, contact tracing, coronavirus, COVID-19, crisis actor, critical race theory, dark matter, deep learning, deepfake, deplatforming, disinformation, Donald Trump, Edward Snowden, Elon Musk, fake news, false flag, feminist movement, George Floyd, glass ceiling, global pandemic, global supply chain, green new deal, Greta Thunberg, hive mind, Intergovernmental Panel on Climate Change (IPCC), Internet Archive, Jeffrey Epstein, Johann Wolfgang von Goethe, lab leak, Lewis Mumford, lockdown, Mark Zuckerberg, mass immigration, mass incarceration, medical residency, military-industrial complex, moral panic, Naomi Klein, Nelson Mandela, neurotypical, new economy, opioid epidemic / opioid crisis, Parler "social media", pattern recognition, Peter Thiel, phenotype, profit motive, QAnon, QR code, Ralph Waldo Emerson, randomized controlled trial, Rosa Parks, Scientific racism, Scramble for Africa, shared worldview, sharing economy, Sheryl Sandberg, Shoshana Zuboff, Silicon Valley, Slavoj Žižek, smart cities, social distancing, Steve Bannon, surveillance capitalism, tech billionaire, tech bro, The Wealth of Nations by Adam Smith, TikTok, trade route, transatlantic slave trade, trickle-down economics, union organizing, W. E. B. Du Bois, Wayback Machine, women in the workforce

But Bannon and Trump co-opted it to describe any form of power—economic, judicial, journalistic, intelligence—that posed a barrier to their unfettered and often unconstitutional exercise of power, while simultaneously deploying it as an easy scapegoat for their failures. Nothing was ever their responsibility; it was always the fault of the “deep state.” In The Wealth of Nations, published in 1776, Adam Smith wrote, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” The English writer and publisher Mark Fisher went further, remarking in 2013 that much of what is packaged as conspiracies today is “the ruling class showing class solidarity”—by which he meant that it’s mostly just ultrarich people, in business and government, having one another’s back.

“If Covid was really serious”: Nikou Asgari, “‘A Form of Brainwashing’: Why Trump Voters Are Refusing to Have a Vaccine,” Financial Times, July 20 2021. “sovereign citizens”: “Sovereign Citizens Movement,” Southern Poverty Law Center, accessed November 8, 2022. popularized by leftists in Turkey: Ryan Gingeras, “How the Deep State Came to America,” War on the Rocks, February 4, 2019. “People of the same trade”: Adam Smith, The Wealth of Nations (1776; repr. London: David Campbell Publishers, 1991), 116. “the ruling class showing class solidarity”: Mark Fisher, “Exiting the Vampire Castle,” Open Democracy, November 24, 2013. Republished with permission from The North Star (original publication date November 22, 2013). “Abuse of power begets conspiracy”: Marcus Gilroy-Ware, After the Fact?

Seventeen sex Seymour, Richard “Shadow, The” (Andersen) Shadow Lands Shakespeare, William Sheffer, Edith shock, shock doctrine; Covid and Shock Doctrine, The (Klein) shootings, mass Siebenkās (Jean Paul) Silberman, Steve Silicon Valley; see also tech companies Simmons, Russell Simpson, Leanne Betasamosake Sinclair, Murray Singh, Lilly Sister Outsider (Lorde) 60 Minutes Slate slavery “slavery forever” video Slobodian, Quinn smallpox Smalls, Chris smart cities Smith, Adam Smith, Zadie Snowden, Edward social credit systems Social Democrats socialism; Jewish attraction to social media; avatars on; content moderators and; Covid and; digital doubles on; enclosure process and; Facebook; hacking of accounts on; influencers on; Instagram; Twitter, see Twitter; vaccine-autism myth on; YouTube, see YouTube social networks Social Security societies Son, John Sonalker, Anuja Soros, George souls South Africa South Korea Soviet Union Spain Spanish Inquisition Spartacus League Spectator, The speechlessness spyware Stalin, Joseph Starbucks State Department Status Update (Marwick) Steer Tech Stepford Wives, The sterilization, forced Stevenson, Robert Louis Stone, I.


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Wealth, Poverty and Politics by Thomas Sowell

affirmative action, Alan Greenspan, Albert Einstein, British Empire, Capital in the Twenty-First Century by Thomas Piketty, colonial exploitation, colonial rule, Cornelius Vanderbilt, correlation does not imply causation, cotton gin, Deng Xiaoping, desegregation, European colonialism, full employment, government statistician, Great Leap Forward, Gunnar Myrdal, Herman Kahn, income inequality, income per capita, invention of the sewing machine, invisible hand, low skilled workers, mass immigration, means of production, minimum wage unemployment, New Urbanism, profit motive, rent control, Scramble for Africa, Simon Kuznets, Steve Jobs, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, transatlantic slave trade, transcontinental railway, trickle-down economics, vertical integration, very high income, W. E. B. Du Bois, War on Poverty

The very word “slave” derived from the word for Slav— not only in English, but also in other European languages, as well as in Arabic20— because Slavs were so widely enslaved by fellow Europeans (and others) for centuries before Africans began to be brought in chains to the Western Hemisphere.21 In ancient Rome, the slaves included thousands of Greeks, as well as Britons, Syrians and Jews.22 China in centuries past was “one of the largest and most comprehensive markets for the exchange of human beings in the world.”23 India has been estimated to have had more slaves than that in the entire Western Hemisphere— including children kidnapped by the original Thugs.24 In some of the cities of Southeast Asia, slaves were a majority of the population.25 As of the time when the United States was formed in 1776, Adam Smith wrote in The Wealth of Nations (published that same year) that Western Europe was the only part of the world where slavery had been “abolished altogether.”26 But even Western Europeans held many slaves in their overseas colonies. Over the centuries, the consolidation of various regions of the world into nations with armies and navies reduced the number of places that could be raided for slaves without great costs and risks.

David Brion Davis, The Problem of Slavery in the Age of Revolution: 1770–1823 (Ithaca: Cornell University Press, 1975), p. 63. 25. Martin A. Klein, “Introduction: Modern European Expansion and Traditional Servitude in Africa and Asia,” Breaking the Chains, edited by Martin A. Klein, p. 11. 26. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Modern Library, 1937), p. 365. 27. Ellen Churchill Semple, Influences of Geographic Environment, p. 275; A. Sheriff, “Localisation and Social Composition of the East African Slave Trade, 1858–1873,” The Economics of the Indian Ocean Slave Trade in the Nineteenth Century, edited by William Gervase Clarence-Smith (London: Frank Cass and Company, 1989), pp. 133–134, 142, 144; R.W.

They speak for or against competing beliefs or competing theories. If the study of facts cannot always be definitive, it can at least be clarifying. And there are few issues more in need of clarification than issues involving wealth, poverty and politics. Thomas Sowell The Hoover Institution Stanford University Chapter 1 ISSUES The wealth of nations depends upon an infinite variety of causes. Alexander Hamilton It may be both understandable and commendable that people living in the most prosperous nations today are often shocked by the far lower standards of living in Third World countries, or by how the less fortunate people in their own society live.


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Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier by Edward L. Glaeser

affirmative action, Andrei Shleifer, Berlin Wall, Boeing 747, British Empire, Broken windows theory, carbon footprint, carbon tax, Celebration, Florida, classic study, clean water, company town, congestion charging, congestion pricing, Cornelius Vanderbilt, declining real wages, desegregation, different worldview, diversified portfolio, Edward Glaeser, Elisha Otis, endowment effect, European colonialism, Fairchild Semiconductor, financial innovation, Ford Model T, Frank Gehry, global village, Guggenheim Bilbao, haute cuisine, high-speed rail, Home mortgage interest deduction, James Watt: steam engine, Jane Jacobs, job-hopping, John Snow's cholera map, junk bonds, Lewis Mumford, machine readable, Mahatma Gandhi, McMansion, megacity, megaproject, Michael Milken, mortgage debt, mortgage tax deduction, New Urbanism, place-making, Ponzi scheme, Potemkin village, Ralph Waldo Emerson, rent control, RFID, Richard Florida, Rosa Parks, school vouchers, Seaside, Florida, Silicon Valley, Skype, smart cities, Steven Pinker, streetcar suburb, strikebreaker, Thales and the olive presses, the built environment, The Death and Life of Great American Cities, the new new thing, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, upwardly mobile, urban planning, urban renewal, urban sprawl, vertical integration, William Shockley: the traitorous eight, Works Progress Administration, young professional

“Sources of Welfare Disparities Across and Within Regions of Brazil: Evidence from the 2002-03 Household Budget Survey.” World Bank Poverty Reduction Group, Policy Research Working Paper 4803, Dec. 2008. Small, Kenneth, and Erik Verhoef. The Economics of Urban Transportation. New York: Routledge, 2007. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations, 3d ed. Basel: J. J. Tourneisen and J. L. LeGrand, 1791; New York: Cosimo, 2007. Smith, Lewis. “Traffic Still Light in London Charge Zone.” Times (London), Mar. 1, 2003. Smith, Russell A. “The Taft-Hartley Act and State Jurisdiction over Labor Relations.” Michigan Law Review 46, no. 5 (Mar. 1948): 593-624.

In 1908, Ford introduced his Model T at the bargain price of $825 (about $19,000 in 2010 currency). Five years later, Ford started producing the Model T on a moving assembly line, which increased his factory’s speed and efficiency. Of course, the process of mass industrialization—dividing complicated manufacturing processes into small, straightforward tasks—long predated Ford. In 1776, Adam Smith was extolling the efficiencies created by the division of labor in a pin factory. Ford simply took this process one step further, using machines to move parts along and making sure that his workers’ actions meshed perfectly. The last chapter discussed Jevons’s complementarity corollary, according to which more efficient information technology makes information learned face-to-face more valuable, but not all new technologies increase the returns from knowledge.

But in New York, that ratio is more than reversed; in Manhattan there are 4.7 times more people working in restaurants than in groceries, and between 1998 and 2008, employment in Manhattan restaurants increased by 55 percent. While theaters illustrate the urban edge in paying for fixed costs, restaurants show the benefits that come because cities allow for the division of labor and specialization. Adam Smith noted that the division of labor is limited by the extent of the market and wrote that “In the lone houses and very small villages which are scattered about in so desert a country as the Highlands of Scotland, every farmer must be butcher, baker and brewer for his own family.” Isolation meant that each family had to produce its own food.


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Sapiens: A Brief History of Humankind by Yuval Noah Harari

Admiral Zheng, agricultural Revolution, Albert Einstein, Alfred Russel Wallace, An Inconvenient Truth, Apollo 11, Atahualpa, British Empire, cognitive dissonance, correlation does not imply causation, credit crunch, David Graeber, Easter island, Edmond Halley, European colonialism, Francisco Pizarro, glass ceiling, global village, Great Leap Forward, greed is good, income per capita, invention of gunpowder, Isaac Newton, joint-stock company, joint-stock limited liability company, Kickstarter, liberal capitalism, life extension, low interest rates, Mahatma Gandhi, megacity, Mikhail Gorbachev, military-industrial complex, Neil Armstrong, out of africa, personalized medicine, Ponzi scheme, Silicon Valley, South China Sea, stem cell, Steven Pinker, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, urban planning, zero-sum game

Today, there is so much credit in the world that governments, business corporations and private individuals easily obtain large, long-term and low-interest loans that far exceed current income. The Economic History of the World in a Nutshell The belief in the growing global pie eventually turned revolutionary. In 1776 the Scottish economist Adam Smith published The Wealth of Nations, probably the most important economics manifesto of all time. In the eighth chapter of its first volume, Smith made the following novel argument: when a landlord, a weaver, or a shoemaker has greater profits than he needs to maintain his own family, he uses the surplus to employ more assistants, in order to further increase his profits.

You always insist that the order sustaining society is an objective reality created by the great gods or by the laws of nature. People are unequal, not because Hammurabi said so, but because Enlil and Marduk decreed it. People are equal, not because Thomas Jefferson said so, but because God created them that way. Free markets are the best economic system, not because Adam Smith said so, but because these are the immutable laws of nature. You also educate people thoroughly. From the moment they are born, you constantly remind them of the principles of the imagined order, which are incorporated into anything and everything. They are incorporated into fairy tales, dramas, paintings, songs, etiquette, political propaganda, architecture, recipes and fashions.

Beginning in the eighteenth century, religions and ideologies such as liberalism, socialism and feminism lost all interest in the afterlife. What, exactly, happens to a Communist after he or she dies? What happens to a capitalist? What happens to a feminist? It is pointless to look for the answer in the writings of Marx, Adam Smith or Simone de Beauvoir. The only modern ideology that still awards death a central role is nationalism. In its more poetic and desperate moments, nationalism promises that whoever dies for the nation will forever live in its collective memory. Yet this promise is so fuzzy that even most nationalists do not really know what to make of it.


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Why Stock Markets Crash: Critical Events in Complex Financial Systems by Didier Sornette

Alan Greenspan, Asian financial crisis, asset allocation, behavioural economics, Berlin Wall, Black Monday: stock market crash in 1987, Bretton Woods, Brownian motion, business cycle, buy and hold, buy the rumour, sell the news, capital asset pricing model, capital controls, continuous double auction, currency peg, Deng Xiaoping, discrete time, diversified portfolio, Elliott wave, Erdős number, experimental economics, financial engineering, financial innovation, floating exchange rates, frictionless, frictionless market, full employment, global village, implied volatility, index fund, information asymmetry, intangible asset, invisible hand, John von Neumann, joint-stock company, law of one price, Louis Bachelier, low interest rates, mandelbrot fractal, margin call, market bubble, market clearing, market design, market fundamentalism, mental accounting, moral hazard, Network effects, new economy, oil shock, open economy, pattern recognition, Paul Erdős, Paul Samuelson, power law, quantitative trading / quantitative finance, random walk, risk/return, Ronald Reagan, Schrödinger's Cat, selection bias, short selling, Silicon Valley, South Sea Bubble, statistical model, stochastic process, stocks for the long run, Tacoma Narrows Bridge, technological singularity, The Coming Technological Singularity, The Wealth of Nations by Adam Smith, Tobin tax, total factor productivity, transaction costs, tulip mania, VA Linux, Y2K, yield curve

Indeed, the general equilibrium theory is nothing but a formalization of the idea that “everything in the economy affects everything else” [244]. The historical root and best pictorial synthesis of this idea is found in the work of 18th-century Scotsman Adam Smith. Smith’s masterpiece [384], An Inquiry into the Nature and Causes of the Wealth of Nations, introduced the then-radical notion that selfish, greedy individuals, if allowed to pursue their interests largely unchecked, would interact to produce a wealthier society as if guided by an “invisible hand.” Smith never worked out a proof that this invisible hand existed.

Confidence in beliefs about social groups as an outcome of message exposure and its role in belief change persistence, Communication Research 19, 597–617. 383. Small, P. (2000). The Entrepreneurial Web (Addison-Wesley, Reading, MA). 384. Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations (Printed for W. Strahan and T. Cadell, London); (1805) 11th ed. with notes, supplementary chapters, and a life of Dr. Smith, by William Playfair (Printed for T. Cadell and W. Davies, London). r efe rences 415 385. Smith, J. Q., Harrison, P. J., and Zeeman, E. C. (1981). The analysis of some discontinuous decision processes, European Journal of Operational Research 7, 30–43. 386.

Karl Marx thought capitalists would be so greedy they would 84 chapter 4 bring down the system. But they all shared Smith’s view of economics as the study of people trying to maximize their material well being. In 1954, K. Arrow and G. Debreu [16] published an article that in essence mathematically proved the existence of Adam Smith’s invisible hand. This “general equilibrium” proof, which relies on a set of very restricted assumptions of an idealized world, has been a mainstay of graduate-level economics training ever since. The most important tool in this analysis was game theory: the study of situations, like poker or chess games, in which players have to make their decisions based on guesses about what the other player is going to do next.


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What Algorithms Want: Imagination in the Age of Computing by Ed Finn

Airbnb, Albert Einstein, algorithmic bias, algorithmic management, algorithmic trading, AlphaGo, Amazon Mechanical Turk, Amazon Web Services, bitcoin, blockchain, business logic, Charles Babbage, Chuck Templeton: OpenTable:, Claude Shannon: information theory, commoditize, Computing Machinery and Intelligence, Credit Default Swap, crowdsourcing, cryptocurrency, data science, DeepMind, disruptive innovation, Donald Knuth, Donald Shoup, Douglas Engelbart, Douglas Engelbart, Elon Musk, Evgeny Morozov, factory automation, fiat currency, Filter Bubble, Flash crash, game design, gamification, Google Glasses, Google X / Alphabet X, Hacker Conference 1984, High speed trading, hiring and firing, Ian Bogost, industrial research laboratory, invisible hand, Isaac Newton, iterative process, Jaron Lanier, Jeff Bezos, job automation, John Conway, John Markoff, Just-in-time delivery, Kickstarter, Kiva Systems, late fees, lifelogging, Loebner Prize, lolcat, Lyft, machine readable, Mother of all demos, Nate Silver, natural language processing, Neal Stephenson, Netflix Prize, new economy, Nicholas Carr, Nick Bostrom, Norbert Wiener, PageRank, peer-to-peer, Peter Thiel, power law, Ray Kurzweil, recommendation engine, Republic of Letters, ride hailing / ride sharing, Satoshi Nakamoto, self-driving car, sharing economy, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, Silicon Valley startup, SimCity, Skinner box, Snow Crash, social graph, software studies, speech recognition, statistical model, Steve Jobs, Steven Levy, Stewart Brand, supply-chain management, tacit knowledge, TaskRabbit, technological singularity, technological solutionism, technoutopianism, the Cathedral and the Bazaar, The Coming Technological Singularity, the scientific method, The Signal and the Noise by Nate Silver, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, transaction costs, traveling salesman, Turing machine, Turing test, Uber and Lyft, Uber for X, uber lyft, urban planning, Vannevar Bush, Vernor Vinge, wage slave

In the end what we typically see are a small number of options that are all strongly recommended: the first step in a carefully choreographed user experience that depends as much on emotional outcomes as financial ones. The emotional valence of financial transactions goes beyond affective labor, tracing its roots to Adam Smith and the Theory of Moral Sentiments, an important counterpoint to his better-known arguments about capitalism in The Wealth of Nations. Smith argues in Moral Sentiments that social cohesion and the effective functioning of a marketplace depend on a logic of virtuous action that has imagination at its root. We can never know the lived experience of others, but social engagement depends on imagining that experience in its joy and pain.

Taken together, these new models of work herald a novel form of alienated labor for the algorithmic age. In our science fiction present, humans are processors handling simple tasks assigned by an algorithmic apparatus. Drawing on the historical figure of the automaton, a remarkable collection of Mechanical Turk-powered poetry titled Of the Subcontract, and Adam Smith’s conception of empathy in his Theory of Moral Sentiments, I explore the consequences of computational capitalism on politics, empathy, and social value. The root of the algorithmic sea change is the reimagination of value in computational terms. Chapter 5 leads with the flash crash in 2010 and the growing dominance of algorithmic trading in international markets (described by journalist Michael Lewis’s Flash Boys, among others) to frame a reading of Bitcoin and related cryptocurrencies.

., 59 Jenkins, Henry, 102 Johansson, Scarlett, 78 Jonze, Spike, 11, 77–79, 84–85 Journalists, 3 automatization and, 38 Bitcoin and, 12 cultural values and, 171–172 Facebook and, 116, 170, 172 gamification and, 116 Gawker Media and, 170–175, 210n35 Google and, 75 Siri and, 58 Thiel and, 170–171 transactional algorithms and, 151 “Trending Topics” widget and, 180 Uber and, 129 Kael, Pauline, 175 Kasparov, Gary, 135–138 Kindle, 195 Kirschenbaum, Matthew, 47–48 Kiva Systems, 134 Kline, Ronald, 31 KnowledgeGraph, 71–73, 75, 94 Knuth, Donald, 17–18 Kurzweil, Ray, 184 Labor, 7, 18, 46, 122 Adam Smith on, 146 affective, 145–148 arbitrage and, 97, 112, 123–145 Bitcoin and, 164, 178 capitalism and, 165 cloud warehouses and, 131–445 culture machines and, 93, 119 deep structures of, 123 faking sincerity and, 146–147 feedback systems and, 145–148 HITs and, 135, 139, 141, 145 identity and, 146–147 intellectual, 12 interface economy and, 123–145 ludic, 120 mandatory smiles and, 146 Marx on, 165 Mechanical Turk and, 135–145 pickers and, 132–134 Taylorism and, 93 worker conditions and, 8, 132–134, 139–140 Lambda calculus, 24 Langlois, Ganaele, 111 Language abstraction and, 2, 24 advertisements and, 178 algorithms and, 24–28, 33–41, 44, 51, 54–55 cognition and, 39 color words and, 4 culture machines and, 39–40 epistemological layers and, 4, 11, 148, 155, 157, 175, 177, 188 ethos of information and, 159 grammar and, 2, 16, 25, 38–41, 62–64, 110–112, 138, 178–179 imagination and, 38, 185, 196 incompleteness and, 24, 40 as intellectual technology, 4 intelligent assistants and, 11, 57, 62, 64–65, 77 machine learning and, 2, 112 many registers of, 1–2 mathematics and, 2, 55 meaning and, 1 metaphor and, 183–184 (see also Metaphor) natural language processing (NLP) and, 62–63 of new media, 112, 122 plasticity and, 38, 191 power of, 1–2, 4–5 procedural, 3–4, 6 reality and, 1 rhetoric and, 6, 16, 22, 30, 45, 89, 96, 101, 104, 110, 112, 123, 127, 136 Siri and, 57–65, 71–84 spoken, 2, 58, 60, 62–63, 67, 84, 185 symbolic, 2, 26, 38–41 tricks and, 3–4 Turing Machine and, 33, 41 universal, 5 vocabulary and, 2, 4, 25, 138, 160, 190 Wiener and, 28 Language of New Media, The (Manovich), 122 Lawsuits, 90, 171, 175 Leibniz, Gottfried Wilhelm, 25–27, 72 Lem, Stanislaw, 184 Levy, Steven, 3 Lewis, Michael, 12, 151, 153, 168 Leyden, Peter, 160 Library Computer Access/Retrieval System (LCARS), 67–68 Life magazine, 31 Literacy, 5, 39, 52, 75, 109, 129, 159, 177 LiveJournal, 209n20 Loebner Prize, 87, 203n50 Logic general substitutability and, 33 Gödel and, 24, 40 halting states and, 41–46 information theory and, 10, 27 invisibly exclusionary, 110 pragmatist approach and, 18–25, 42, 58, 62 process and, 41–46 proofs and, 15, 24–25, 41, 44 rationality and, 38, 40 symbolic, 2, 21, 24, 39, 41, 44, 54–55 “Long Boom, The” (Schwartz and Leyden), 160–161 Lyft, 123, 127–130, 145, 148 Machine learning artificial intelligence (AI) and, 2, 15, 28, 42, 62, 66, 71, 85, 90, 112, 181–186, 191 big data and, 90 computationalist approach and, 183 DeepMind and, 28, 66, 181–182 Google and, 66, 181–186, 191 imagination and, 181–186 language and, 2, 112 Netflix and, 182–183 neural networks and, 28, 31, 39, 182–183, 185 Siri and, 62, 182 (see also Siri) Turing Machine and, 182 (see also Turing Machine) Macy Conferences, 30, 199n42 Madrigal, Alexis, 92, 94–95 Magic agency and, 78 artificial intelligence and, 135–136 cached content and, 159 code as, 1–5, 8, 10, 16, 49–50, 196 computation as, 4, 8, 10, 46, 52, 59–60, 94, 96, 121, 161 constructed reality and, 39 curses and, 1 data cloud and, 131, 134 fantasy and, 121, 124, 126 government currency and, 172 hacker powers as, 3, 51 incantations and, 1, 3–5, 51, 196 invisible sides of system and, 178 machines and, 137–138, 188 Memex and, 188 metaphors for, 32–36 myths and, 1–2, 10, 16 ontology and, 62–65 ratings and, 130 rational language for, 25 shamans and, 1, 3, 5 Siri and, 59–60, 62–65 sourcery and, 3, 10, 17, 21, 33–34 symbolic, 105 Manjoo, Farhad, 75 Manovich, Lev, 112, 122 Market impacts advertisements and, 34 (see also Advertisements) arbitrage and, 152, 161 attention and, 119 automobiles and, 127 Bitcoin and, 163–180 crashes and, 151 cryptocurrency and, 160–180 digital identity and, 159 digital trading and, 152 eliminating vulnerability and, 161–162 encryption and, 153, 162–163 fungible space and, 54 gaming and, 119, 121 gaming the system and, 153 Google and, 66 high frequency trading (HFT) and, 151–158, 168–169, 177 hyperinflation and, 166 international trade and, 12 invisible hand and, 33 labor and, 8 (see also Labor) Mechanical Turk and, 135–145 NASDAQ and, 152 Netflix and, 87, 97, 107–110, 114–115 NYSE and, 152 parallel computing and, 139 pension funds and, 151, 168 Siri and, 59, 75–77 stock market and, 12, 15, 154 transaction fees and, 164–165 transparency and, 160–164, 168, 171, 177–178 virtuous action and, 146 Wall Street and, 16, 66, 109, 151, 153, 171, 185 Marx, Karl, 165 Master Algorithm, The (Domingos), 183 Materiality, 26, 47–49, 53, 133 Mathematics abstract symbolism, 2, 55 algebra, 17 Babylonian, 17 Berlinski and, 9, 181 calculus, 24, 26, 30, 34, 44–45, 98, 148, 186 complexity, 28 computationalist approach and, 23, 183, 185 Conway and, 29–30 culture machines and, 49–50 Descartes and, 26, 69, 75 effective computability and, 40 “extended mind” hypothesis and, 40 Fibonacci sequence, 17 Golden Ratio, 2 Hilbert and, 23 Hindu-Arabic numerals, 17 language and, 2, 55 Leibniz and, 25–26, 72 logic, 2, 10, 24 machine duplication and, 22 materiality and, 26 Moschovakis and, 17 Nakamoto and, 161–162 Netflix Prize and, 87–91 ontology and, 84 perceived reality and, 20 Post and, 9 Pragmatic Chaos and, 90 proofs, 15, 24–25, 41, 44 pure, 47 reality and, 34 Rendell and, 30 Shannon and, 27 Strogatz and, 44, 183 theory of computation and, 18 Turing and, 6–9, 23–30, 33, 39–43, 54, 73, 79–82, 87, 138, 142, 182, 186 Mathesis universalis, 25–26, 28, 72 Matrix, The (film), 3, 36, 109 Maturana, Humberto, 28–29 McClelland, Mac, 132–133 McCloud, Scott, 110, 154–155 McCulloch-Pitts Neuron, 28, 39 Meaning acceleration of epistemological change and, 188–189 algorithms and, 35–36, 38, 44–45, 50, 54–55 belonging and, 122 black boxes and, 7, 15–16, 47–48, 51, 55, 64, 72, 92–93, 96, 136, 138, 146–147, 153, 162, 169–171, 179 Chun on, 35 Cow Clicker and, 116, 118–119 cultural exchange and, 12, 111–112 data mining and, 175 decision-making and, 20, 28, 34, 37, 90 digital culture and, 3, 7, 18, 22, 43, 49, 66, 87, 156, 160, 191, 193–194 endless hunt for, 184 imagination and, 184 (see also Imagination) intimacy and, 75 language and, 1 Mechanical Turk and, 136–140 metaphor and, 183–184 (see also Metaphor) obfuscations and, 7, 55, 64 organization of, 8 PageRank and, 169 Siri and, 65 structures of, 89, 96 value and, 155 vs. information, 9, 9–10 Mechanical Turk Google and, 12, 135–145 history of original, 136–138 meaning and, 136–140 as metaphor, 143 von Kempelen and, 135 worker conditions and, 139–140 Mechanisms (Kirschenbaum), 47–48 Memex, 186–189, 195 Memory computation and, 18, 21, 37, 43–44, 51, 56, 58, 69, 75, 159–160, 176, 185–186, 191–193 culture and, 43 human, 37, 43–44 process and, 21 technical, 51, 192 understanding and, 37 Metaphor, 121 assumption of code and, 43 cathedral of computation and, 6–8, 27, 33, 49, 51 Church-Turing thesis and, 41–42 cloud, 131 for communication, 32–36 computational, 22 cultural, 50, 54 effective computability and, 34 human cognition and, 39 imagination and, 183–184, 189 interfaces and, 25, 60 Mechanical Turk and, 143 Netflix as, 96, 104 obelisk and, 155 reality and, 10, 50 Samantha (Her) and, 84–85 Microsoft, 97, 144, 152 Miners (Bitcoin), 165, 167–168, 171–172, 175–179 Money abstraction and, 153, 159, 161, 165–167, 171–175 algorithmic trading and, 12, 20, 99, 155 arbitrage and, 151–152, 155–163, 169–171, 175–179 Bitcoin and, 160–180 as collective symbol, 165–166 ontology and, 156–159, 178–179 Moore’s Law, 43 Morowitz, Harold, 23 Moschovakis, Yiannis, 17 Moth machine (Wiener), 31–32, 34 Musk, Elon, 191 My Mother Was a Computer (Hayles), 21, 93 Myths ancient, 28 Campbell on, 94 code and, 7–8, 16, 44 cultural space and, 5 culture machine and, 55 fantasy and, 78 government currency and, 172 human-computer interaction and, 36, 51 magic and, 1–2, 10, 16 material reality and, 47 ontology and, 26 origin, 68 personalization and, 106–107 power of language and, 6, 44, 196 Sumerian, 3, 5, 16 unitary simplicity and, 49 Nakamoto, Satoshi, 161–162, 165–167 Nam-shubs, 1, 3–6, 37–40, 56, 135 Nardi, Bonnie, 121 NASDAQ, 152 Natural-Born Cyborgs (Clark), 37 Natural language processing (NLP), 62–63 Natural selection, 44 Negri, Antonio, 145 Netflix, 161 abstraction of aesthetics and, 87–112, 205n36 abundant choices and, 176 arbitrage and, 94, 97, 109–112, 124 art of personalization and, 97–103 Bogost on, 92–95 business model of, 87–88 Cinematch and, 88–90, 95 commissioned shows of, 97–98 computationalist approach and, 90, 104 consumer desire and, 93–96 disruptive technologies and, 124 effective computability and, 93 Facebook and, 91, 110 fan making and, 100–101 FCC and, 90 genre categories of, 94 ghost in the machine and, 55, 95, 183 gutter problem and, 110 Hastings and, 97–98 House of Cards and, 11, 54, 92, 98–112, 192 influence of, 87 interface economy and, 124 Leibniz and, 26 machine learning and, 182–183 market issues and, 87, 97, 107–110, 114–115 metaphor and, 96, 104 ontology and, 92, 94, 96 original content by, 97–98 parsing data and, 182 personalization and, 97–103, 109 Pragmatic Chaos and, 89–90 predictor ensemble and, 89–90 quantum mechanics and, 91–94, 96, 99, 112 recommendation algorithm competition of, 87–91 rejection of big-data approach and, 11 serendipitous glitches and, 55 Spoiler Foiler and, 101–102, 108 streaming and, 90 system behavior and, 16 taggers and, 54, 88, 92–93, 96, 99 techno-utopian rhetoric and, 16 Neural networks, 28, 31, 39, 182–183, 185 New Digital Age, The (Schmidt), 66 Newitz, Annalee, 60 Newton, Isaac, 17, 166 New York Stock Exchange (NYSE), 152 New York Times, 170 Nielsen ratings, 102 Note Book (Nunokawa), 53 @NSA_prismbot, 194–195 Nunokawa, Jeff, 53 Nyby, Christian I., II, 95 Of the Subcontract, Or Principles of Poetic Right (Thurston), 12, 140–145 OK Google, 51 One-way functions, 162–163 Ontology Apple and, 62–63, 65 computationalist approach and, 8 consciousness and, 178 culture machines and, 62–65, 68–69 Google and, 159–160 ideology and, 68 imagination and, 69, 73–74 of information, 8, 63, 69–71 mathematics and, 84 meaning and, 8, 21–22, 26, 39 money and, 156–159, 178–179 Netflix and, 92, 94, 96 Siri and, 62–65, 71–73, 82, 84 work of algorithms and, 122 Open source software, 6, 162, 167 ORION, 19, 47 Orwellian surveillance, 132–134 Page, Larry, 155–156 PageRank, 20, 111, 155–159, 169, 177–178, 189 Pariser, Eli, 46, 50 Parisian Great Exhibition, 80 Pasquale, Frank, 21 Pension funds, 151, 168 Perfect knowledge, 13, 65, 71, 73, 190 Perry Mason (TV series), 95–96 Phaedrus (Plato), 37 Phoenix, Joaquin, 77 Pickers, 132–134 Pitts, Walter, 28 Planned Parenthood, 64 Plato, 4, 31, 37–38, 40, 82 Popova, Maria, 175–176 Post, Emil, 9 Pragmatic Chaos (Netflix), 89–90 Pragmatist approach algorithmic, 2, 18–25, 42 effective computability and, 25–26 experimental humanities and, 193 growing power of computation and, 27 justice and, 146 models of reason and, 47 reframing humanities and, 193 Siri and, 58, 62 Privacy, 49, 62, 75, 90, 160–161, 163, 173 Private keys, 163 Programmability, 16, 178 Programmable culture, 169–175 Programmed Visions (Chun), 33 Project Loon, 66 Proofs, 15, 24–25, 41, 44 Protocol (Galloway), 50 Public keys, 163 Purdy, Jedediah, 146–147 Quantum mechanics Netflix and, 91–94, 96, 99, 112 Wiener and, 26–27 Raley, Rita, 194–195 Ramsey, Stephen, 52 Raymond, Eric, 6 Reading Machines (Ramsey), 52 Religion, 1, 7, 9, 49, 69, 71, 80, 136 Rendell, Paul, 30 Rice, Stephen P., 144–145 Rid, Thomas, 199n42 Riskin, Jessica, 136–137 Robotics, 31, 34, 43–45, 132–134, 188 Rood of Grace, 137 Rotten Tomatoes, 96 RSE encryption, 163 Samantha (Her), 77–85, 154, 181 Sample, Mark, 194–195 Sandvig, Christian, 107, 131 Sarandos, Ted, 98, 100, 104 Schmidt, Eric, 66, 73, 127 Schwartz, Peter, 160–161 Scorsese, Martin, 59 Searle, John, 4 Shannon, Claude, 27 Sharing economy, 54, 123, 127–129, 145, 148 Shoup, Donald, 127 Silicon Valley, 3, 9, 30–31, 49, 54, 87, 100, 124, 182 SimCity (game), 194 Simondon, Gilbert, 40, 42–44, 53, 59, 84, 106, 118 Singhal, Amit, 72, 76 Siri abortion scandal and, 64 abstraction and, 64–65, 82–84 anticipation and, 73–74 as beta release, 57 CALO and, 57–58, 63, 65, 67, 79, 81 cognition and, 57–65, 71–84 computationalist approach and, 65, 77 consciousness and, 57–65, 71–84 conversation and, 57–65, 71–84 DARPA and, 11, 57–58 Easter eggs in, 60, 148 effective computability and, 58, 62, 64, 72–76, 81 emotional work and, 148 Enlightenment and, 71–76, 79–80, 82 gender and, 60–61, 80 interfaces and, 59–60, 63, 75, 77 intimacy and, 11, 75–81 language and, 57–65, 71–84 launch of, 57 machine learning and, 62–65, 182 market issues and, 59, 75–77 meaning and, 65 ontology and, 62–65, 71–73, 82, 84 parsing data and, 182 performing knowledge and, 59–61 quest for knowledge and, 71–75, 82, 84 reading, 58–59 reduced abilities of, 59 speed of, 131 Skinner boxes, 61, 115–116, 119–120, 122 Smith, Adam, 12, 146–147 Smith, Kevin, 88 Sneakers (film), 3 Snow Crash (Stephenson), 1, 3–5, 9, 17, 36, 38, 50 Social behavior, 22, 146 addiction and, 114–119, 121–122 discrimination and, 21, 130 exploitationware and, 115–116 Social gaming, 114, 118, 120–122 Social media, 6 Arab Spring and, 111, 186 changing nature of, 171 digital culture and, 3, 7, 18, 22, 43, 49, 66, 87, 156, 160, 191, 193–194 Enlightenment and, 173 identity formation and, 191 in-person exchanges and, 195 intellectual connection and, 186 newsfeeds and, 116, 177–178 peer review and, 194 raising awareness and, 174 Spoiler Foiler (Netflix) and, 101–102, 108 transaction streams and, 177 Uber and, 148 Software agency and, 6 Apple and, 59, 62 apps and, 6, 8, 9, 15, 59, 83, 91, 94, 102, 113–114, 124, 128, 145, 149 blockchains and, 163–168, 171, 177, 179 cathedrals of computation and, 6–8, 27, 33, 49, 51 Chun on, 33, 42, 104 Church-Turing thesis and, 25 consciousness and, 77 dehumanizing nature of, 116 depersonification of, 6 digital materiality and, 53 experience and, 34 as foundation of computational expression, 47 imagination and, 186, 194 in-house affect and, 59 interfaces and, 124 (see also Interfaces) logic of general substitutability and, 33 Manovich and, 112 material layers and, 48 as metaphor for metaphors, 35 Metaverse, 50 networks vs. individuals and, 118 open source, 6, 162, 167 Pasquale on, 21 reality and, 10 self-modification and, 1, 38 Weizenbaum and, 33–40 Solaris (Lem), 184 Sourcery, 3, 10, 17, 21, 33–34 Space of computation, 2–5, 9, 21, 42, 45, 76, 154, 185 Spacey, Kevin, 98–99, 106–107 Spoiler Foiler (Netflix), 101–102, 108 SRI International, 57, 59, 63, 169 Srinivasan, Balaji, 169 Star Fleet Federation, 67 Star Trek computer anticipation and, 73–74 conversation and, 67 Google and, 11, 65–82, 159, 186 interfaces and, 67–68 LCARS and, 67–68 Memex and, 186–189, 195 public expectations and, 67 Star Trek: The Next Generation (TV series), 67 Stephenson, Neal, 1, 3–5, 9, 17, 36, 38, 50, 51 Stiegler, Bernard, 43–44, 53, 106 Streaming content, 49, 54, 87, 90–92, 97, 99, 101–102, 104, 205n39 Strogatz, Steven, 44, 183 Sumerian myths, 3, 5, 16 SuperPACs, 174 Symbolic logic, 2, 21, 24, 39, 41, 44, 54–55 Symposium (Plato), 82 Tacit negotiation, 20 Taggers, 54, 88, 92–93, 96, 99 Tanz, Jason, 116 TaskRabbit, 124 Taylorism, 93 Teller, Astro, 66 Terminator (film series), 191 Terrorism, 163, 178 Theory of Communicative Action, The (Habermas), 109 Theory of Moral Sentiments (Smith), 12, 146–147 Thiel, Peter, 170–171, 174 Third parties, 59, 114, 125, 132–133, 147, 162, 170–171 Thurston, Nick, 12, 140–145 Tindr, 128 Transaction fees, 164–165 Transcendent Man (Kurzweil), 184 Transparency bazaar model and, 6 cryptocurrency and, 160–164, 168, 171, 177–178 feedback and, 146 freedom and, 9 interfaces and, 189 market issues and, 160–164, 168, 171, 177–178 politics of algorithms and, 18, 20 proprietary platforms and, 9 Traveling salesman problem, 19 “Trending Topic” widget, 180 Turing, Alan, 8, 23, 42, 79–80, 182 Turing Machine, 182 Berlinski and, 9, 24 computability boundary and, 23–24 concept of, 23 effective computability and, 42 finite-time processes and, 42 game of life and, 29–31 language and, 33, 41 McCulloch-Pitts Neuron and, 28 as though experiment, 23–24 as uniting platform, 25 Turing’s Cathedral (Dyson), 6 Turing test, 43, 79–82, 87, 138, 142 Turner, Fred, 3, 46 Twain, Mark, 151 Twitter, 53, 101–102, 173, 177, 179, 194–195, 210n43 Uber, 9, 12, 97, 138 abstraction levels of, 129 African Americans and, 130 business model of, 54, 93–94, 96 feedback system of, 145–148 interface economy and, 123–133, 145, 147 massive infrastructure of, 131 threats to, 129 Ubiquitous computation algorithms and, 3–4, 15, 33, 43, 54, 119, 124–125, 127, 178, 189–190 Bitcoin and, 178 colonization of margins and, 119 gamification and, 124 imagination and, 189–190 interfaces and, 189 Uber and, 125, 127 Unit Operations (Bogost), 118 U.S.S.


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Leading From the Emerging Future: From Ego-System to Eco-System Economies by Otto Scharmer, Katrin Kaufer

Affordable Care Act / Obamacare, agricultural Revolution, Albert Einstein, Asian financial crisis, Basel III, behavioural economics, Berlin Wall, Branko Milanovic, cloud computing, collaborative consumption, collapse of Lehman Brothers, colonial rule, Community Supported Agriculture, creative destruction, crowdsourcing, deep learning, dematerialisation, Deng Xiaoping, do what you love, en.wikipedia.org, European colonialism, Fractional reserve banking, Garrett Hardin, Glass-Steagall Act, global supply chain, happiness index / gross national happiness, high net worth, housing crisis, income inequality, income per capita, intentional community, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Johann Wolfgang von Goethe, Joseph Schumpeter, Kickstarter, market bubble, mass immigration, Mikhail Gorbachev, Mohammed Bouazizi, mutually assured destruction, Naomi Klein, new economy, offshore financial centre, Paradox of Choice, peak oil, ride hailing / ride sharing, Ronald Reagan, Silicon Valley, smart grid, Steve Jobs, systems thinking, technology bubble, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, Tragedy of the Commons, vertical integration, Washington Consensus, working poor, Zipcar

Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (Boston: Beacon Press, [1944] 2010). 10. Paul. J. Crutzen et al., “N2O Release from Agro-Biofuel Production Negates Global Warming Reduction by Replacing Fossil Fuels,” Atmospheric Chemistry and Physics 8 (2008): 389–95. 11. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Chicago: University of Chicago Press, [1904] 1976), 18. Chapter 3. Transforming Thought 1. Ernst Haeckel, Generelle Morphologie der Organismen. Allgemeine Grundzüge der organischen Formen-Wissenschaft, mechanisch begründet durch die von Charles Darwin reformirte Descendenz-Theorie, Band 2 (Berlin: G.

The last column in table 2 anticipates an emerging stage that we refer to as Society 4.0 or, to use another placeholder term, the co-creative eco-system economy, which innovates at the scale of the whole system. In this developmental framework, each system’s players operate with a different state of awareness. The 1.0 economies operate according to the primacy of traditional awareness: complying with existing mindsets and rules. The 2.0 economies awaken to the ego-system awareness that Adam Smith famously captured when he wrote: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”11 In 3.0 economies, this self-interest is widened and mitigated by the self-interest of other stakeholders who organize collectively to bring their interests to the table through labor unions, government, NGOs, and other entities.

Combined with industrial organization and the contemporary type of schooling, new forms of production initiated unprecedented growth and shifted the center of gravity from individual human skills to industrial organization and mass production. In order to make this shift possible, a new dimension of financial investments was required to facilitate the blending of all these components. Thus the Industrial Revolution actually gave capital a new meaning—the meaning that we associate with it today. Adam Smith was one of the first to emphasize the profit expectation. Karl Marx used the term capital to describe the central category of his economic analysis. He described the movement of capital from money (M) to real capital and finally back to money (M’). The difference between M and M’ was profit, which was the progress achieved throughout this cycle.


pages: 339 words: 88,732

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

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, access to a mobile phone, additive manufacturing, Airbnb, Alan Greenspan, 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, basic income, Baxter: Rethink Robotics, Boston Dynamics, British Empire, business cycle, business intelligence, business process, call centre, carbon tax, Charles Lindbergh, Chuck Templeton: OpenTable:, clean water, combinatorial explosion, computer age, computer vision, congestion charging, congestion pricing, corporate governance, cotton gin, creative destruction, crowdsourcing, data science, David Ricardo: comparative advantage, digital map, driverless car, employer provided health coverage, en.wikipedia.org, Erik Brynjolfsson, factory automation, Fairchild Semiconductor, 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, G4S, game design, general purpose technology, global village, GPS: selective availability, Hans Moravec, happiness index / gross national happiness, illegal immigration, immigration reform, income inequality, income per capita, indoor plumbing, industrial robot, informal economy, intangible asset, inventory management, James Watt: steam engine, Jeff Bezos, Jevons paradox, jimmy wales, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, Khan Academy, Kiva Systems, knowledge worker, Kodak vs Instagram, law of one price, low skilled workers, Lyft, Mahatma Gandhi, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Mars Rover, mass immigration, 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, One Laptop per Child (OLPC), pattern recognition, Paul Samuelson, payday loans, post-work, power law, price stability, Productivity paradox, profit maximization, Ralph Nader, Ray Kurzweil, recommendation engine, Report Card for America’s Infrastructure, Robert Gordon, Robert Solow, Rodney Brooks, Ronald Reagan, search costs, 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 Cathedral and the Bazaar, the long tail, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, Vernor Vinge, warehouse robotics, Watson beat the top human players on Jeopardy!, winner-take-all economy, Y2K

Dale Jorgenson and Barbara Fraumeni, “The Accumulation of Human and Nonhuman Capital, 1948–84,” in The Measurement of Saving, Investment, and Wealth (Chicago, IL: University of Chicago Press for National Bureau of Economic Research, 1989), p. 230, http://www.nber.org/chapters/c8121.pdf. 25. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, ed. Edwin Cannan (Library of Economics and Liberty, 1904), http://www.econlib.org/library/Smith/smWN20.html (accessed September 23, 2013). 26. Ana Aizcorbe, Moylan Carol, and Robbins Carol, “Toward Better Measurement of Innovation and Intangibles,” BEA Briefing, January 2009, http://www.bea.gov/scb/pdf/2009/01%20January/0109_innovation.pdf. 27.

It is also a contribution to the nation’s capital stock. According to Dale Jorgenson and Barbara Fraumeni, the value of human capital in the United States is five to ten times larger than the value of all the physical capital in the United States.24 Human capital has not always been this important to the economy. The great economist Adam Smith understood that one of the great drawbacks of the first machine age was the way it forced workers to do repetitive tasks. In 1776, he noted, “The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding.”25 As we’ll discuss further later in the book, investments in human capital will be increasingly important as routine tasks become automated and the need for human creativity increases.

Schreyer, Peter Schumpeter, Joseph science: effect of digitization on government support of prizes in rapid progress in science fiction robots in SCIgen Sears Second Industrial Revolution second machine age: career opportunities in characteristics of complementary innovations in economic data relevant to intangible assets of interventions for key advances of long-term recommendations for mental power boosted by metrics of second machine age (continued) policy recommendations for Power Law distributions in reality of values of see also digitization SecondMachineAge.com self-organizing learning environments (SOLEs) semiconductors Sen, Amartya senses, human sensorimotor skills sensors, digital Shabtai, Ehud Shakespeare, William Shannon, Claude Shapiro, Carl Shinar, Amir Siciliano, Francis SIGGRAPH conference Silicon Valley Simon, Herbert Simon, Julian Sims, Peter Singapore: education system in Electronic Road Pricing System in singularity Singularity Is Near, The (Kurzweil) Siri Siu, Henry Sixteenth Amendment Skype smartphone applications smartphones Smith, Adam Smith, Michael social media Social Progress Index Social Security Socrates software open source solar flares Solow, Robert Sony PlayStation 3 South Korea, education system in Soviet Union speech recognition Spence, Michael Spiegel, Eric Spotify Sprague, Shawn spread bounty vs. in education productivity consequences of in wages see also inequality SRI International standardized testing Star Trek Startup America Partnership steam engine Stern, Scott Stiglitz, Joseph Stiroh, Kevin Stuxnet Summers, Lawrence superstars social acceptability of taxation of see also “winner-take-all” markets Sweden, income inequality in Systrom, Kevin Syverson, Chad Tabarrok, Alex Taipale, Kim Taiwan, automation in Target TaskRabbit taxes consumption on economic rents negative income payroll Pigovian value-added Tea Party technological progress adjusting to combinatorial nature of digitization in economic theories about employment implications of exponential nature of; see also innovation; Moore’s Law future of halting of interventions suggested for side effects of technology: in developing world history of major advances in see also digitization; general purpose technologies (GPTs) Teilhard de Chardin, Pierre teraflop Terenzini, Patrick Thackeray, William Makepeace Theory of Economic Development, The (Schumpeter) Thrun, Sebastian Time Tinbergen, Jan Tobin, James Tolkien, J.


pages: 382 words: 114,537

On the Clock: What Low-Wage Work Did to Me and How It Drives America Insane by Emily Guendelsberger

Adam Curtis, Affordable Care Act / Obamacare, Airbnb, Amazon Picking Challenge, autism spectrum disorder, basic income, behavioural economics, Bernie Sanders, call centre, Capital in the Twenty-First Century by Thomas Piketty, cognitive dissonance, company town, David Attenborough, death from overwork, deskilling, do what you love, Donald Trump, Erik Brynjolfsson, Ford Model T, Ford paid five dollars a day, Frederick Winslow Taylor, fulfillment center, future of work, hive mind, housing crisis, independent contractor, Jeff Bezos, Jessica Bruder, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, Jon Ronson, karōshi / gwarosa / guolaosi, Kiva Systems, late capitalism, Lean Startup, market design, McDonald's hot coffee lawsuit, McJob, Minecraft, Nicholas Carr, Nomadland, obamacare, opioid epidemic / opioid crisis, Panopticon Jeremy Bentham, pattern recognition, precariat, Richard Thaler, San Francisco homelessness, scientific management, Second Machine Age, security theater, self-driving car, Silicon Valley, Silicon Valley startup, speech recognition, TaskRabbit, tech worker, The Future of Employment, The Wealth of Nations by Adam Smith, Tony Hsieh, Toyota Production System, Travis Kalanick, union organizing, universal basic income, unpaid internship, Upton Sinclair, wage slave, working poor

There was no mystery in the “one best way,” and that removed the job security of skilled workers, further shifting the balance of power toward factory owners. Division of labor wasn’t new. The productivity benefits of having many workers collaborate on a multistep manufacturing process had been famously described more than a century earlier by Adam Smith in 1776’s The Wealth of Nations, a founding document of the then-new system of capitalism. Smith famously uses the example of a pin* factory—like Taylor with his pig iron, Smith chose pins specifically because they were seen as “very trifling” to manufacture: One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations; to put it on, is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the paper; and the important business of making a pin is, in this manner, divided into about eighteen distinct operations.

Fitz The Mythology of Work: How Capitalism Persists Despite Itself, Peter Fleming Live Work Work Work Die: A Journey into the Savage Heart of Silicon Valley, Corey Pein Confronting Dystopia: The New Technological Revolution and the Future of Work, Eva Paus On economics An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith Capital, Karl Marx “Economic Possibilities for Our Grandchildren” (essay), John Maynard Keynes The Great Risk Shift: The New Economic Insecurity and the Decline of the American Dream, Jacob S. Hacker Capital in the Twenty-First Century, Thomas Piketty The Economics of Inequality, Thomas Piketty Who Gets What—and Why: The New Economics of Matchmaking and Market Design, Alvin E.

Each person, therefore… might be considered as making four thousand eight hundred pins in a day. But if they had all wrought separately and independently, and without any of them having been educated to this peculiar business, they certainly could not each of them have made twenty, perhaps not one pin in a day. What’s less well known about The Wealth of Nations is that Smith also describes the ill effects of monotonous, highly divided labor on the day-to-day experience of workers: The man whose whole life is spent in performing a few simple operations… has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur.


pages: 160 words: 46,449

The Extreme Centre: A Warning by Tariq Ali

Affordable Care Act / Obamacare, Berlin Wall, bonus culture, BRICs, British Empire, centre right, deindustrialization, Dr. Strangelove, Edward Snowden, Fall of the Berlin Wall, financial deregulation, first-past-the-post, full employment, Great Leap Forward, labour market flexibility, land reform, light touch regulation, means of production, Mikhail Gorbachev, military-industrial complex, Monroe Doctrine, mortgage debt, negative equity, Neil Kinnock, North Sea oil, obamacare, offshore financial centre, popular capitalism, reserve currency, Ronald Reagan, South China Sea, The Chicago School, The Wealth of Nations by Adam Smith, trade route, trickle-down economics, Washington Consensus, Westphalian system, Wolfgang Streeck

The interrelationship between the two is likely to determine the course of the twenty-first century, with Europe remaining attached to the Atlantic. _______________ 1 Witness Thatcher in Eastern Europe, Blair in the Balkans and Middle East and, most recently, Cameron lecturing Putin on the Ukraine. 2 The coinage is that of Adam Smith, who argued in The Wealth of Nations that China was such a paralysed state that it could not move forward or backward: ‘China seems to have been long stationary, and had possibly long ago acquired that full complement of riches which is consistent with the nature of its laws and institutions’, and ‘inferior to what, with other laws and institutions, the nature of its soil and climate, and situation might admit of’ (I.ix.15).

I. 191–92 Lévy, Dominique 145n Liberal Democrat Party 17–18, 20, 34 Libya 119, 149, 153, 166 Lileikis, Aleksandras 8n Linux 174–75 Livingstone, Ken 37n LJ Group 47 LloydsPharmacy’s Healthcare Advisory Panel 47, 53 Lugo, Fernando 152 M5S (Five Star Movement) 187–91 McCartney, Ian 51 Mair, Peter 9, 10–11n; Ruling the Void 146n Major, John 37 Malnick, Edward 44n Mandelson, Peter 21, 66 Marshall Plan 88 Marx, Karl 172 May, Theresa 81n Mearsheimer, John 142n, 162–64 Meek, James, Private Island 19n Mendick, Robert 44n Merkel, Angela 131n Milburn, Alan 13, 46–47, 53, 58–59 Miliband, David 36, 40–41 Miliband, Ed 17, 40–41, 82 Milne, Alasdair 61, 65 Milne, Seumas 41n, 80; The Enemy Within 13n Milošević, Slobodan 117 miners’ strike 19n, 65 Monbiot, George 79, 80 Monnet, Jean 89–90 Morales, Evo 177, 182n Morgan, Sally 52–53 Morris, Emily 9n Morrison, Herbert 25 Mullen, Mike 160 Munif, Abdelrahman 138n Murdoch, Rupert 7, 44, 66, 80 Murdoch, Wendy 44 Murphy, Darren 53 Nairn, Tom 73 Napolitano, Giorgio 187 National Health Alliance Party 58 National Health Service 22, 43, 49–50, 50; Coalition policy 54–55, 58; funding 56, 57, 60; Pollock interview 55–60; Private Finance Initiative 29, 54, 58–59, 148–49n; privatization 53, 56–58; National Hunger March Against the Means Test, 1932 61–62 NATO 105, 109–10, 149, 153; development of 110–20; French withdrawal 113; future of 120–21; membership 111–13; post–Cold War 113–20, 129–30 Negri, Antonio 105 neoliberalism 7, 8, 11–12, 17, 25, 55, 91, 92–98, 144–47, 148–49, 174, 178–79, 183, 191 New Labour 5–6, 13; and the BBC 66; and big money 42; devolution policy 29–30; education policy 37–38; electoral victory, 1997 20–22; electoral victory, 2001 32–33; electoral victory, 2005 33–34; and the EU 30–31; foreign policy 31–32; leadership competition, 2011 40–41; market culture 25–29; NHS policy 29, 54, 58–59; political geography 32–33; and Scotland 75 New York Times 8n, 167 North sea oil 7 Norway 71, 111 NSA 124, 174 Obama, Barack 3, 92, 141, 150–52, 152 occupation movements 95, 143 Ofsted 53 Olympic Delivery Authority 53 Paddington Station rail crash 28–29 Papademos, Lucas 179–80 Pemberton, Max 54n People’s Vow 84, 85–86 Pepsico 47 Pizzarotti, Federico 188 Plaid Cymru 29 Podemos 9, 9–10, 15, 102, 107, 184–86 Polanyi, Karl, The Great Transformation 136–37 Pollock, Allyson 55–60 Portugal 9, 94, 100, 101, 112, 121, 144, 179 Powell, Colin 153–54, 155 Powell, Enoch 103 Prentis, Dave 149n Prescott, John 13, 27, 28 Priest, Dana 117n Private Finance Initiatives 29, 54, 58–59, 148–49 privatization 7, 11, 27–29, 53 Putin, Vladimir 130n, 141 railways 27–29 Rambouillet Agreement 118 Raynsford, Nick 51 Reagan, Ronald 3, 6, 12 Reid, Melanie 79 Reith, Lord John 61 Renzi, Matteo 187 Revolution in Military Affairs (RMA) 153 Rome, Treaty of 88, 107 Roosevelt, Franklin D. 145 Russia 115–16, 121, 127, 129–30, 141, 159, 161, 163, 168, 172, 173, 191; revolution of 1917 175 Salmond, Alex 80 Sarkozy, Nicolas 113, 131 Saudi Arabia 45–46, 138n, 150 Savile, Jimmy 64–65 Scotland 5, 9, 41; ‘Better Together’ campaign 77; health policy 56; the Highland Clearances 74; Independence Campaign 15, 77–79; Independence Campaign media coverage 78–81; Independence Referendum, 2014 68–72, 81–82; New Labour policy 29–30; the People’s Vow 84, 85–86; post-referendum 82–84; Radical Independence Campaign 83, 186; rise of nationalism 74–77; Scottish Labour Party 82; Scottish National Party (SNP) 29, 71, 75, 78, 82, 83; Scottish Parliament 75, 81; the Union 72–73; voter registration 68–69 Scott, Sir Walter 73 Second World War 11, 88, 90 Short, General Michael 117 Simitis, Costas 179 SITA 50 Smilde, David 177n Smith, Adam, The Wealth of Nations 126n Smith, John 20, 75 Smith, Richard 53 Snowden, Edward 124 social democracy, collapse of 2–3 Solana, Javier 112–13 sovereign debt crisis, 2008 91–92, 98–99, 179–83 Soviet Union 90, 145; fall of 2, 97–98, 113, 133, 137, 142, 145–46, 152; and NATO 111–12 Spain 9, 14, 15, 31, 94, 99–100, 102, 107, 107–8, 112–13, 144, 179, 181–86 Stevens, Simon 53 Stiglitz, Joseph 155, 156 Stobart, Luke 184n Straw, Jack 13, 45–46 Streeck, Wolfgang 10–11n; Buying Time 108 Sturgeon, Nicola 83 Syriza 9, 9–10, 15, 76, 102, 107, 180–81, 184 Taliban 118–19, 150 Thatcher, Margaret 3, 5, 12, 13–15, 19, 23, 33, 34, 42n, 63–64, 65, 74, 124 third way 3, 31, 33 Thompson, Mark 65 Todd, Emmanuel, After the Empire 141n Torvalds, Linus 175 Tsipras, Alexis 180, 184 Turkey 111, 137 Ukip 18, 84, 190 unemployment 19, 23, 99–100, 102, 103, 106–7, 136, 158, 181 United Arab Emirates 150 UnitedHealth UK 53 United States of America 1–2, 12–13, 18, 98, 172; British relationship with 31–32, 123, 131; budget deficit 157–58, 160; and capitalism 135–40; and China 158–68, 169; defence spending 127, 141, 154, 155–56, 157, 165; Democrats 20–21, 148; economic performance 23–25; enemies 127–29; and the EU 88, 97; exercise of power 140–47; First Gulf War 152–54; GDP 160; global economic crisis, 2008 144–47; health funding 56–57; hegemony 123–27, 129–31, 134–35, 140–47, 149–52, 161, 168–69; inequality 24–25; invasion of Iraq, 2003 154–55; Middle East policy 150–51; military policy 152–57; and NATO 110, 114, 114–15, 118, 120, 121, 149; overseas military bases 157; war on terror 128–29, 155 Venezuela 79, 96, 151, 152, 177, 178 Verhofstadt, Guy 104–5 Versailles, Treaty of 90 Vietnam 172; Vietnam War 129, 153 Vine, David 150–52 Wales 29–30, 56 Walt, Stephen 164–65 Warner, Lord Norman 49–50 Warsaw Pact 112, 114 Washington Consensus 91, 131, 142 Weinberger, Caspar 153 Whitlam, Gough 2 Wilde, Oscar 87 Wilpert, Gregory 176n Wilson, Brian 52 Wilson, Harold 25, 45 Windrush Ventures Ltd 43–44 Wine, Martin 167n Wood, Tony, Chechnya 130n World Bank 11 Wu Ming 188 Xansa PLC 49–50 Xuetong, Yan 133, 165 Yeltsin, Boris 130 Yugoslavia, former 112, 114–18, 130 Zilliacus, Konni 111–12


pages: 524 words: 120,182

Complexity: A Guided Tour by Melanie Mitchell

Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Albert Einstein, Albert Michelson, Alfred Russel Wallace, algorithmic management, anti-communist, Arthur Eddington, Benoit Mandelbrot, bioinformatics, cellular automata, Claude Shannon: information theory, clockwork universe, complexity theory, computer age, conceptual framework, Conway's Game of Life, dark matter, discrete time, double helix, Douglas Hofstadter, Eddington experiment, en.wikipedia.org, epigenetics, From Mathematics to the Technologies of Life and Death, Garrett Hardin, Geoffrey West, Santa Fe Institute, Gregor Mendel, Gödel, Escher, Bach, Hacker News, Hans Moravec, Henri Poincaré, invisible hand, Isaac Newton, John Conway, John von Neumann, Long Term Capital Management, mandelbrot fractal, market bubble, Menlo Park, Murray Gell-Mann, Network effects, Norbert Wiener, Norman Macrae, Paul Erdős, peer-to-peer, phenotype, Pierre-Simon Laplace, power law, Ray Kurzweil, reversible computing, scientific worldview, stem cell, Stuart Kauffman, synthetic biology, The Wealth of Nations by Adam Smith, Thomas Malthus, Tragedy of the Commons, Turing machine

Thomas Malthus’s Essay on the Principle of Population (1798) drew Darwin’s attention to the fact that population growth leads to competition for food and other resources. Malthus’s essay was about human population growth, but Darwin would adapt these ideas to explain the evolution of all living organisms via a continual “struggle for existence.” Darwin also read Adam Smith’s free-market manifesto, The Wealth of Nations (1776). This book exposed him to Smith’s notion of the invisible hand in economics, whereby a collection of individuals acting in their own self-interest produces maximum benefit for the entire community. From his own observations in South America and elsewhere, Darwin was acutely struck by the tremendous variation among living beings and by the apparent adaptation of different species to their environments.

., Viva Lamarck: A brief history of the inheritance of acquired characteristics. Aeon 2:2, 1997, pp. 5–39. “You care for nothing but shooting, dogs, and rat-catching”: Darwin, C. and Barlow, N. D., The Autobiography of Charles Darwin. Reissue edition, New York: W. W. Norton, 1958/1993, p. 28. “Darwin also read Adam Smith’s free-market manifesto”: Darwin writes in a letter to W. D. Fox (January 1829), “My studies consist of Adam Smith & Locke.” The Correspondence of Charles Darwin, Volume 1 (F. Burkhardt and S. Smith, editors). Cambridge, U.K.: Cambridge University Press, 1985, p. 72. “the type of beak was adapted”: For further reading on this, see Weiner, J., The Beak of the Finch: A Story of Evolution in Our Time.

This microscopic self-interest has historically been thought to push markets as a whole—on the macroscopic level—toward an equilibrium state in which the prices of goods are set so there is no way to change production or consumption patterns to make everyone better off. In terms of profitability or consumer satisfaction, if someone is made better off, someone else will be made worse off. The process by which markets obtain this equilibrium is called market efficiency. The eighteenth-century economist Adam Smith called this self-organizing behavior of markets the “invisible hand”: it arises from the myriad microscopic actions of individual buyers and sellers. Economists are interested in how markets become efficient, and conversely, what makes efficiency fail, as it does in real-world markets. More recently, economists involved in the field of complex systems have tried to explain market behavior in terms similar to those used previously in the descriptions of other complex systems: dynamic hard-to-predict patterns in global behavior, such as patterns of market bubbles and crashes; processing of signals and information, such as the decision-making processes of individual buyers and sellers, and the resulting “information processing” ability of the market as a whole to “calculate” efficient prices; and adaptation and learning, such as individual sellers adjusting their production to adapt to changes in buyers’ needs, and the market as a whole adjusting global prices.


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World Without Mind: The Existential Threat of Big Tech by Franklin Foer

artificial general intelligence, back-to-the-land, Berlin Wall, big data - Walmart - Pop Tarts, Big Tech, big-box store, Buckminster Fuller, citizen journalism, Colonization of Mars, computer age, creative destruction, crowdsourcing, data is the new oil, data science, deep learning, DeepMind, don't be evil, Donald Trump, Double Irish / Dutch Sandwich, Douglas Engelbart, driverless car, Edward Snowden, Electric Kool-Aid Acid Test, Elon Musk, Evgeny Morozov, Fall of the Berlin Wall, Filter Bubble, Geoffrey Hinton, global village, Google Glasses, Haight Ashbury, hive mind, income inequality, intangible asset, Jeff Bezos, job automation, John Markoff, Kevin Kelly, knowledge economy, Law of Accelerating Returns, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, means of production, move fast and break things, new economy, New Journalism, Norbert Wiener, off-the-grid, offshore financial centre, PageRank, Peace of Westphalia, Peter Thiel, planetary scale, Ray Kurzweil, scientific management, self-driving car, Silicon Valley, Singularitarianism, software is eating the world, Steve Jobs, Steven Levy, Stewart Brand, strong AI, supply-chain management, TED Talk, the medium is the message, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas L Friedman, Thorstein Veblen, Upton Sinclair, Vernor Vinge, vertical integration, We are as Gods, Whole Earth Catalog, yellow journalism

CHAPTER FOUR: JEFF BEZOS DISRUPTS KNOWLEDGE “I’m grumpy when I’m forced to read a physical book”: “Jeff Bezos in Conversation with Steven Levy,” Wired Business Conference, June 15, 2009. creating an “everything store”: Brad Stone, The Everything Store (Little, Brown and Company, 2013), 24. Adam Smith, it’s fair to say, didn’t anticipate Jeff Bezos: My discussion of the economics of knowledge relies on David Warsh’s excellent Knowledge and the Wealth of Nations (W.W. Norton, 2006). called “rivalry”—if I own a shovel, you can’t own that shovel: Paul M. Romer, “Endogenous Technological Change,” Journal of Political Economy 98, no. 5 (October 1990): S71–102. “We can’t stop copying on the Internet, because the Internet is a copying machine”: Cory Doctorow, Information Doesn’t Want to Be Free (McSweeney’s, 2014), 41.

.* We rely on a small handful of companies to provide us with a sense of hierarchy, to identify what we should read and what we should ignore, to pick informational winners and losers. It’s incredible economic and cultural power that they have amassed because of a sudden change in the strange economics of the commodity they traffic in, a change they hastened. • • • ADAM SMITH, it’s fair to say, didn’t anticipate Jeff Bezos. When the Scotsman first sketched the workings of capitalism, he had plenty to say about land, labor, and capital. Those were the fundamental elements of markets, and they became the bedrock concepts of mainstream economics. Knowledge never entered deeply into Smith’s thinking about trade.


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A History of the World in 6 Glasses by Tom Standage

Berlin Wall, British Empire, Colonization of Mars, Copley Medal, Edmond Halley, Edward Lloyd's coffeehouse, Eratosthenes, European colonialism, gentleman farmer, interchangeable parts, invention of agriculture, Isaac Newton, joint-stock company, Kickstarter, laissez-faire capitalism, Lao Tzu, multiplanetary species, Neal Stephenson, out of africa, South Sea Bubble, spice trade, spinning jenny, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade

This period of rapid innovation in public and private finance, with the floating of joint-stock companies, the buying and selling of shares, the development of insurance schemes, and the public financing of government debt, all of which culminated in London's eventual displacement of Amsterdam as the world's financial center, is known today as the Financial Revolution. The need to fund expensive colonial wars made it necessary, and the fertile intellectual environment and speculative spirit of the coffeehouses made it possible. The financial equivalent of the Principia was The Wealth of Nations, written by the Scottish economist Adam Smith. It described and championed the emerging doctrine of laissez-faire capitalism, according to which the best way for governments to encourage trade and prosperity was to leave people to their own devices. Smith wrote much of his book in the British Coffee House, his base and postal address in London, and a popular meeting place for Scottish intellectuals, among whom he circulated chapters of his book for criticism and comment.

Opium and Tea The East India Company's fortunes revived in 1784, when the duty on tea imports to Britain was slashed, which lowered the price of legal tea, doubling the company's sales and wiping out smuggling. But the company's power was gradually curtailed amid growing concern over its enormous influence and the corrupt and self-enriching behavior of its officials. It was placed under the supervision of a board of control, answerable to Parliament. And in 1813, as enthusiasm for Adam Smith's advocacy of free trade gained ground, the company's monopoly on Asian trade was removed, except for China. The company concentrated less on trade and more on the administration of its vast territories in India; after 1800 the bulk of its revenue came from the collection of Indian land taxes. In 1834 the company's monopoly on trade with China was removed too.


Spite: The Upside of Your Dark Side by Simon McCarthy-Jones

affirmative action, Atul Gawande, Bernie Sanders, Brexit referendum, Daniel Kahneman / Amos Tversky, dark triade / dark tetrad, Donald Trump, Elon Musk, en.wikipedia.org, experimental economics, Extinction Rebellion, greed is good, Greta Thunberg, income inequality, Jeremy Corbyn, Jon Ronson, loss aversion, Menlo Park, meta-analysis, Milgram experiment, New Journalism, Nick Bostrom, p-value, profit maximization, rent-seeking, rewilding, selective serotonin reuptake inhibitor (SSRI), shareholder value, Steven Pinker, TED Talk, The Wealth of Nations by Adam Smith, theory of mind, Tragedy of the Commons, ultimatum game, WikiLeaks

Gadagkar, “Can Animals Be Spiteful?,” Trends in Ecology and Evolution 8, no. 7 (1993): 232–234. 4. R. Bshary and R. Bergmüller, “Distinguishing Four Fundamental Approaches to the Evolution of Helping,” Journal of Evolutionary Biology 21, no. 2 (2008): 405–420. 5. A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Project Gutenberg, 2009, updated 2019 [1776]), bk. 5, chap. 1, pt. 2, www.gutenberg.org/files/3300/3300-h/3300-h.htm. 6. As cited in R. H. Frank, T. Gilovich, and D. T. Regan, “Does Studying Economics Inhibit Co-operation?,” Journal of Economic Perspectives 7, no. 2 (1993): 159–171. 7. M.

But what about spiteful acts that don’t give you long-term benefits? How can we explain those? Do such acts even exist? Spite also poses a problem for economists. What kind of person acts against their self-interest? For the longest time, economists didn’t think there was a problem to explain. The famous eighteenth-century economist Adam Smith claimed that people were “not very frequently under the influence” of spite, and that even if it did occur we would be “restrained by prudential considerations.”5 Much later, in the 1970s, the American economist Gordon Tullock claimed that the average human was about 95 percent selfish.6 In the “greed is good” era of the 1980s, many may have believed that this estimate was on the low side.

Economists viewed humans as a creature called Homo economicus—a being that acted rationally to maximize its self-interest. Self-interest was typically, though not always, understood in financial terms.7 Yet, as I will discuss in Chapter 1, back in 1977 a groundbreaking study found that people were often quite happy to turn down free money. Adam Smith had been overoptimistic. Something very real and very powerful lurked in Tullock’s residual percentage. Spite involves harm, but what constitutes harm? Who gets to decide whether an act is harmful and thereby has the power to define an act as spiteful? To take an extreme example, does a suicide bomber, who thinks they will be rewarded in the next life and their family compensated in this life, harm themselves or not?


The Basque History of the World by Mark Kurlansky

anti-communist, borderless world, Frank Gehry, Guggenheim Bilbao, joint-stock company, open economy, spice trade, the market place, The Wealth of Nations by Adam Smith

In 1766, Xabier María de Munibe, the son of one of the founders of the Royal Guipúzcoan Company, founded the Real Sociedad Bascongada de los Amigos del País, the Royal Basque Society of Friends of the Country, an eighteenth century think tank that, in addition to studying everything Basque from science and engineering to gastronomy, discussed and promoted the precepts of modern capitalism. In this new age of capitalism, the Basques were demonstrating what their British contemporary, Adam Smith, would write about decades later. It was Smith’s contention in his 1776 bible of capitalism, The Wealth of Nations, that the wealth of a country was not the gold that it held but the goods and services it provided. When Smith was articulating this theory, he took the example of Spain. The nation was in precipitous decline after centuries of trying to enrich itself by extracting wealth, often literally gold, from its Latin American holdings.

—ILLUSTRATED GUIDE FOR THE TRAVELER TO SAN SEBASTIÁN, 1909 The Basques . . . are a religious, deep driking, non-swearing race who live on the mountainous south-eastern shores of the Bay of Biscay. They are profoundly nautical; they swing and fish in the Bay without ever feeling sea-sick. George Steer, THE TREE OF GERNIKA, 1938— * * * * * * The Basque Onomatopoeia Food is always, more or less, in demand. —Adam Smith, THE WEALTH OF NATIONS, 1776 * * * FOR THE REST of the world, the little-remembered Carlist Wars were to have only two lasting consequences: the invention of the political term liberal and the popularizing of the beret. These two brutal and complicated nineteenth-century civil wars were to shape the destiny of at least six generations of both Basques and Spaniards.


pages: 493 words: 98,982

The Tyranny of Merit: What’s Become of the Common Good? by Michael J. Sandel

affirmative action, Affordable Care Act / Obamacare, anti-communist, Berlin Wall, Bernie Sanders, Boris Johnson, Brexit referendum, Capital in the Twenty-First Century by Thomas Piketty, centre right, coronavirus, COVID-19, Credit Default Swap, Deng Xiaoping, Donald Trump, ending welfare as we know it, facts on the ground, Fall of the Berlin Wall, financial deregulation, financial engineering, financial innovation, global supply chain, helicopter parent, High speed trading, immigration reform, income inequality, Khan Academy, laissez-faire capitalism, meritocracy, meta-analysis, Nate Silver, new economy, obamacare, Occupy movement, open immigration, Paris climate accords, plutocrats, prosperity theology / prosperity gospel / gospel of success, Rishi Sunak, Ronald Reagan, smart grid, social distancing, Steve Jobs, Steven Levy, the market place, The Wealth of Nations by Adam Smith, W. E. B. Du Bois, Washington Consensus, Yochai Benkler

This involves an independent moral judgment that the labor market, however efficient, cannot provide. The notion that economic policy is ultimately for the sake of consumption is today so familiar that it is hard to think our way beyond it. “Consumption is the sole end and purpose of all production,” Adam Smith declared in The Wealth of Nations , “and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.” 39 John Maynard Keynes echoed Smith, proclaiming that consumption “is the sole end and object of all economic activity,” 40 and most contemporary economists agree.

Economy,” 1986, p. 17, usccb.org/upload/economic_justice_for_all.pdf . 38. For a more detailed account of the contrast between a civic and consumerist conception of politics, see Sandel, Democracy’s Discontent , pp. 4–7, 124–67, 201–49; Sandel, Justice: What’s the Right Thing to Do? (New York: Farrar, Straus and Giroux, 2009), pp. 192–99. 39. Adam Smith, The Wealth of Nations , Book IV, Chapter 8 (1776; reprint, New York: Modern Library, 1994), p. 715. 40. John Maynard Keynes, The General Theory of Employment, Interest, and Money (1936; reprint, London: Macmillan, St. Martin’s Press, 1973), p. 104. 41. See Sandel, Democracy’s Discontent , pp. 124–200. 42.


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Fred Schwed's Where Are the Customers' Yachts?: A Modern-Day Interpretation of an Investment Classic by Leo Gough

Albert Einstein, banking crisis, Bernie Madoff, book value, corporate governance, discounted cash flows, disinformation, diversification, fixed income, index fund, John Bogle, junk bonds, Long Term Capital Management, Michael Milken, Northern Rock, passive investing, Ralph Waldo Emerson, random walk, short selling, South Sea Bubble, The Nature of the Firm, the rule of 72, The Wealth of Nations by Adam Smith, transaction costs, young professional

OTHER TITLES IN THE INFINITE SUCCESS SERIES Adam Smith’s The Wealth of Nations Benjamin Franklin’s The Way to Wealth Bertrand Russell’s The Conquest of Happiness Carl von Clausewitz’s On War Charles Mackay’s Extraordinary Popular Delusions and the Madness of Crowds Frank Bettger’s How I Raised Myself from Failure to Success in Selling George S. Clason’s The Richest Man in Babylon Karl Marx’s Das Kapital Miyamoto Musashi’s The Book of Five Rings Napoleon Hill’s Think and Grow Rich Niccolo Machiavelli’s The Prince Ralph Waldo Emerson’s Self Reliance Robert Collier’s The Secret of the Ages Samuel Smiles’s Self-help Sun Tzu’s The Art of War FRED SCHWED’S WHERE ARE THE CUSTOMERS’ YACHTS?


Understanding Power by Noam Chomsky

anti-communist, Ayatollah Khomeini, Berlin Wall, Bretton Woods, British Empire, Burning Man, business climate, business cycle, cognitive dissonance, continuous integration, Corn Laws, cuban missile crisis, dark matter, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, deskilling, disinformation, European colonialism, Fall of the Berlin Wall, feminist movement, gentrification, global reserve currency, guns versus butter model, Howard Zinn, junk bonds, Korean Air Lines Flight 007, liberation theology, Mahatma Gandhi, Mikhail Gorbachev, military-industrial complex, Monroe Doctrine, mortgage tax deduction, Nixon triggered the end of the Bretton Woods system, Paul Samuelson, Ralph Nader, reserve currency, Ronald Reagan, Rosa Parks, school choice, Strategic Defense Initiative, strikebreaker, structural adjustment programs, systems thinking, the scientific method, The Wealth of Nations by Adam Smith, union organizing, wage slave, women in the workforce

In fact, there are no two points of view more antithetical than classical liberalism and capitalism—and that’s why when the University of Chicago publishes a bicentennial edition of Smith, they have to distort the text (which they did): because as a true classical liberal, Smith was strongly opposed to all of the idiocy they now spout in his name. So if you read George Stigler’s introduction to the bicentennial edition of The Wealth of Nations—it’s a big scholarly edition, University of Chicago Press, so it’s kind of interesting to look at—it is diametrically opposed to Smith’s text on point after point. 35 Smith is famous for what he wrote about division of labor: he’s supposed to have thought that division of labor was a great thing.

So when someone comes along claiming a scientific basis for some social policy or anything else having to do with human beings, I’d be very skeptical if I were you—because the knowledge just isn’t there right now, and may never be, either. Adam Smith: Real and Fake MAN: You said that classical liberalism was “anti-capitalist.” What did you mean by that? Well, the underlying, fundamental principles of Adam Smith and other classical liberals were that people should be free: they shouldn’t be under the control of authoritarian institutions, they shouldn’t be subjected to things like division of labor, which destroys them. So look at Smith: why was he in favor of markets?

Well, the underlying, fundamental principles of Adam Smith and other classical liberals were that people should be free: they shouldn’t be under the control of authoritarian institutions, they shouldn’t be subjected to things like division of labor, which destroys them. So look at Smith: why was he in favor of markets? He gave kind of a complicated argument for them, but at the core of it was the idea that if you had perfect liberty, markets would lead to perfect equality—that’s why Adam Smith was in favor of markets. 34 Adam Smith was in favor of markets because he thought that people ought to be completely equal—completely equal—and that was because, as a classical liberal, he believed that people’s fundamental character involves notions like sympathy, and solidarity, the right to control their own work, and so on and so forth: all the exact opposite of capitalism.


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The Ascent of Money: A Financial History of the World by Niall Ferguson

Admiral Zheng, Alan Greenspan, An Inconvenient Truth, Andrei Shleifer, Asian financial crisis, asset allocation, asset-backed security, Atahualpa, bank run, banking crisis, banks create money, Bear Stearns, Black Monday: stock market crash in 1987, Black Swan, Black-Scholes formula, Bonfire of the Vanities, Bretton Woods, BRICs, British Empire, business cycle, capital asset pricing model, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, classic study, collateralized debt obligation, colonial exploitation, commoditize, Corn Laws, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, Daniel Kahneman / Amos Tversky, deglobalization, diversification, diversified portfolio, double entry bookkeeping, Edmond Halley, Edward Glaeser, Edward Lloyd's coffeehouse, equity risk premium, financial engineering, financial innovation, financial intermediation, fixed income, floating exchange rates, Fractional reserve banking, Francisco Pizarro, full employment, Future Shock, German hyperinflation, Greenspan put, Herman Kahn, Hernando de Soto, high net worth, hindsight bias, Home mortgage interest deduction, Hyman Minsky, income inequality, information asymmetry, interest rate swap, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, iterative process, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", John Meriwether, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labour mobility, Landlord’s Game, liberal capitalism, London Interbank Offered Rate, Long Term Capital Management, low interest rates, market bubble, market fundamentalism, means of production, Mikhail Gorbachev, Modern Monetary Theory, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, Naomi Klein, National Debt Clock, negative equity, Nelson Mandela, Nick Bostrom, Nick Leeson, Northern Rock, Parag Khanna, pension reform, price anchoring, price stability, principal–agent problem, probability theory / Blaise Pascal / Pierre de Fermat, profit motive, quantitative hedge fund, RAND corporation, random walk, rent control, rent-seeking, reserve currency, Richard Thaler, risk free rate, Robert Shiller, rolling blackouts, Ronald Reagan, Savings and loan crisis, savings glut, seigniorage, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, spice trade, stocks for the long run, structural adjustment programs, subprime mortgage crisis, tail risk, technology bubble, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Bayes, Thomas Malthus, Thorstein Veblen, tontine, too big to fail, transaction costs, two and twenty, undersea cable, value at risk, W. E. B. Du Bois, Washington Consensus, Yom Kippur War

Both processes also exhibited a distinctly evolutionary character, with recurrent mutation (technical innovation), speciation (the creation of new kinds of firm) and punctuated equilibrium (crises that would determine which firms would survive and which would die out). In the words of Adam Smith, ‘The judicious operation of banking, by substituting paper in the room of a great part of . . . gold and silver . . . provides . . . a sort of waggon-way through the air.’ In the century after he published The Wealth of Nations (1776), there was an explosion of financial innovation which saw a wide variety of different types of bank proliferate in Europe and North America. The longest-established were bill-discounting banks, which helped finance domestic and international trade by discounting the bills of exchange drawn by one merchant on another.

Nor should we forget that some people in the microfinance business are in it to make money, not to end poverty. 73 It comes as something of a shock to discover that some microfinance firms are charging interest rates as high as 80 or even 125 per cent a year on their loans - rates worthy of loan sharks. The justification is that this is the only way to make money, given the cost of administering so many tiny loans. Glasgow has come a long way since my fellow Scotsman Adam Smith wrote the seminal case for the free market, The Wealth of Nations, in 1776. Like Detroit, it rose on the upswing of the industrial age. The age of finance has been less kind to it. But in Glasgow, as in North and South America, and as in South Asia, people are learning the same lesson. Financial illiteracy may be ubiquitous, but somehow we were all experts on one branch of economics: the property market.

Loan sharks may behave that way, but banks have evolved since the days of the Medici precisely in order (as the 3rd Lord Rothschild succinctly put it), to ‘facilitate the movement of money from point A, where it is, to point B, where it is needed’.48 Credit and debt, in short, are among the essential building blocks of economic development, as vital to creating the wealth of nations as mining, manufacturing or mobile telephony. Poverty, by contrast, is seldom directly attributable to the antics of rapacious financiers. It often has more to do with the lack of financial institutions, with the absence of banks, not their presence. It is only when borrowers in places like the East End of Glasgow have access to efficient credit networks that they can escape from the clutches of the loan sharks; only when savers can put their money in reliable banks that it can be channelled from the idle to the industrious.


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The Road Ahead by Bill Gates, Nathan Myhrvold, Peter Rinearson

Albert Einstein, Apple's 1984 Super Bowl advert, Berlin Wall, Bill Gates: Altair 8800, Bob Noyce, Bonfire of the Vanities, business process, California gold rush, Charles Babbage, Claude Shannon: information theory, computer age, Donald Knuth, first square of the chessboard, first square of the chessboard / second half of the chessboard, glass ceiling, global village, informal economy, invention of movable type, invention of the printing press, invention of writing, John von Neumann, knowledge worker, medical malpractice, Mitch Kapor, new economy, packet switching, popular electronics, Richard Feynman, Ronald Reagan, SimCity, speech recognition, Steve Ballmer, Steve Jobs, Steven Pinker, Ted Nelson, telemarketer, the scientific method, The Wealth of Nations by Adam Smith, transaction costs, Turing machine, Turing test, Von Neumann architecture

The more you know about it, the less disconcerting it will seem. Technology's role is to provide more flexibility and efficiency. Forward-looking business managers will have lots of opportunities to perform better in the years ahead. 8 FRICTION-FREE CAPITALISM When Adam Smith described the concept of markets in The Wealth of Nations in 1776, he theorized that if every buyer knew every seller's price, and every seller knew what every buyer was willing to pay, everyone in the "market" would be able to make fully informed decisions and society's resources would be distributed efficiently. To date we haven't achieved Smith's ideal because would-be buyers and would-be sellers seldom have complete information about one another.

I eventually changed my mind, but in a way my whole experience with the computer industry has been a series of economics lessons. I saw firsthand the effects of positive spirals and inflexible business models. I watched the way industry standards evolved. I witnessed the importance of compatibility in technology, of feedback, and of constant innovation. And I think we may be about to witness the realization of Adam Smith's ideal market, at last. But I'm not using those lessons just for theorizing about this future—I'm betting on it. Back when I was a teenager, I envisioned the impact that low-cost computers could have. "A computer on every desk and in every home" became Microsoft's corporate mission, and we have worked to help make that possible.

Capitalism, demonstrably the greatest of the constructed economic systems, has in the past decade clearly proved its advantages over the alternative systems. The information highway will magnify those advantages. It will allow those who produce goods to see, a lot more efficiently than ever before, what buyers want, and will allow potential consumers to buy those goods more efficiently. Adam Smith would be pleased. More important, consumers everywhere will enjoy the benefits. 9 EDUCATION: THE BEST INVESTMENT Great educators have always known that learning is not something you do only in classrooms, or only under the supervision of teachers. Today it is sometimes difficult for someone who wants to satisfy his curiosity or end his confusion to find the appropriate information.


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Can Democracy Work?: A Short History of a Radical Idea, From Ancient Athens to Our World by James Miller

Berlin Wall, Black Lives Matter, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, classic study, colonial rule, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Graeber, disinformation, Donald Trump, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, income inequality, Joseph Schumpeter, mass incarceration, means of production, Occupy movement, Plato's cave, public intellectual, Ralph Waldo Emerson, Republic of Letters, Steve Bannon, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, transatlantic slave trade, union organizing, upwardly mobile, Vilfredo Pareto

“The former promotes our happiness positively by uniting our affections, the latter negatively by restraining our vices. The one encourages intercourse, the other creates distinctions.” This was recognizably the same kind of potentially beneficent social order that the Scottish philosopher Adam Smith had described, also in 1776, in The Wealth of Nations. And it was this new world of enlightened self-government and commercial progress that Paine and Jefferson jointly championed as part of the revolutionary claims they both made on behalf of “common sense” (just as Condorcet had stressed the power of “common reason”). Still, reading Common Sense in conjunction with the Declaration, it’s hard to miss a tension between the two texts.

He was a permanent secretary of the French Academy of Sciences, a fellow of Britain’s Royal Society, and a member of the French Academy—all in addition to his activities as a lawmaker during the revolution. A mathematical prodigy, he was also a speculative philosopher equally comfortable with Cartesian metaphysics and the theory that all knowledge is derived from sense experience. A methodological individualist in the tradition of Adam Smith and his mentor, the French economist Turgot, he was a proponent of “social mathematics” as a source of enlightened public policy, a pioneer in the analysis of collective decision-making processes, “the godfather of modern probability theory”—and also an early advocate of equal rights for women and the abolition of slavery.

The discrepancy between the nation’s professed ideals and the reality of chattel slavery, combined with a sharp focus on voting as the most important means of political engagement, wasn’t the only distinctive feature of the new republic. Also important was the concurrent rise in America of the conviction that free labor and free trade were crucial guarantors of civic freedom. Appreciating what Adam Smith had called “the human propensity to truck, barter, and exchange one thing for another,” some American advocates of free institutions looked primarily to “society,” rather than government, in hopes of creating a commonwealth of self-reliant individuals—a vision eloquently expressed by Thomas Paine in Common Sense, a pamphlet that crystallized American popular opinion in the winter of 1776 and paved the way for the nation’s formal Declaration of Independence later that year


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Physics of the Future: How Science Will Shape Human Destiny and Our Daily Lives by the Year 2100 by Michio Kaku

agricultural Revolution, AI winter, Albert Einstein, Alvin Toffler, Apollo 11, Asilomar, augmented reality, Bill Joy: nanobots, bioinformatics, blue-collar work, British Empire, Brownian motion, caloric restriction, caloric restriction, cloud computing, Colonization of Mars, DARPA: Urban Challenge, data science, delayed gratification, digital divide, double helix, Douglas Hofstadter, driverless car, en.wikipedia.org, Ford Model T, friendly AI, Gödel, Escher, Bach, Hans Moravec, hydrogen economy, I think there is a world market for maybe five computers, industrial robot, Intergovernmental Panel on Climate Change (IPCC), invention of movable type, invention of the telescope, Isaac Newton, John Markoff, John von Neumann, Large Hadron Collider, life extension, Louis Pasteur, Mahatma Gandhi, Mars Rover, Mars Society, mass immigration, megacity, Mitch Kapor, Murray Gell-Mann, Neil Armstrong, new economy, Nick Bostrom, oil shale / tar sands, optical character recognition, pattern recognition, planetary scale, postindustrial economy, Ray Kurzweil, refrigerator car, Richard Feynman, Rodney Brooks, Ronald Reagan, Search for Extraterrestrial Intelligence, Silicon Valley, Simon Singh, social intelligence, SpaceShipOne, speech recognition, stem cell, Stephen Hawking, Steve Jobs, synthetic biology, telepresence, The future is already here, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, trade route, Turing machine, uranium enrichment, Vernor Vinge, Virgin Galactic, Wall-E, Walter Mischel, Whole Earth Review, world market for maybe five computers, X Prize

Blacksmiths and wagonmakers were eventually replaced by autoworkers. With the coming of the internal combustion engine, a person could now command hundreds of horsepower. Life expectancy began to grow, hitting forty-nine in the United States by the year 1900. Finally, we are in the third wave, where wealth is generated from information. The wealth of nations is now measured by electrons circulating around the world on fiber-optic cables and satellites, eventually dancing across computer screens on Wall Street and other financial capitals. Science, commerce, and entertainment travel at the speed of light, giving us limitless information anytime, anywhere.

IMPACT ON CAPITALISM These new technologies that we have been discussing in this book are so powerful that, by the end of the century, they are bound to have an impact on capitalism itself. The laws of supply and demand are the same, but the rise of science and technology has modified Adam Smith’s capitalism in many ways, from the way that goods are distributed to the nature of wealth itself. Some of the more immediate ways in which capitalism has been affected are as follows: • Perfect capitalism The capitalism of Adam Smith is based on the laws of supply and demand: prices are set when the supply for any good matches the demand. If an object is scarce and in demand, then its price rises. But the consumer and producer have only partial, imperfect understanding of supply and demand, and hence prices can vary widely from place to place.

But the consumer and producer have only partial, imperfect understanding of supply and demand, and hence prices can vary widely from place to place. So the capitalism of Adam Smith was imperfect. But this will gradually change in the future. “Perfect capitalism” is when the producer and the consumer have infinite knowledge of the market, so that prices are perfectly determined. For example, in the future, consumers will scan the Internet via their contact lenses and have infinite knowledge of all comparative prices and performances. Already, one can scan the Internet to find the best airline fares. This will eventually apply to all products sold in the world.


pages: 386

Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage, 1775-1821 by George Anthony Selgin

British Empire, correlation coefficient, flying shuttle, George Gilder, invention of the steam engine, Isaac Newton, James Watt: steam engine, large denomination, lone genius, profit motive, RAND corporation, school choice, seigniorage, The Wealth of Nations by Adam Smith, Tyler Cowen

London:]. Hatchard and]. Richardson. Smiles, Samuel. 1866. Lives ofBoulton and Watt. 2nd ed. London: John Murray. Smith, Adam. [1763] 1896. Lectures on justice, Police, Revenue, and Arms. Ed. Edwin Cannan. Oxford: Clarendon. Smith, Adam. [1776] 1925. An Inquiry into the Nature and Causes of the Wealth of Nations. London: Methuen. Smith, Charles W. 1995. "The English George III Contemporary Counterfeit Halfpenny Series: A Statistical Study of Production and Distribution." In Coinage of the American Confederation Period, ed. Philip L. Mossman, 23-53. New York: American Numismatic Society. Smith, Mark. 2002.

First of all, the pound sterling had ceased, sometime during the first decades of the century, to be a silver unit, having come to refer instead to a distinct quantity of gold-namely, 20/21 of a gold guinea. The change "came about without any action, or indeed any thought of action, on the part of the legislature" (Carlile 1901, 12). It was so subtle that many people, including the great Adam Smith, failed to notice it, thinking instead that because values continued for the most part to be quoted in pounds, shillings, and pence rather than in guineas, they could only refer to quantities of silver. The spontaneous s,vitch to gold units took place in part because of the increasing scale of payments, which made gold coins convenient for an increasing share of transactions, but also because the full-weight silver coins so abundantly supplied during the Great Recoinage of the 1690S had taken flight or had become badly impaired (Ruding 1840, 2:87).

Commercial Coins Deprived of small banknotes, ignored by the Royal Mint, sick of having to deal with bad shillings and doubtful halfpennies, and unable to make 35. Boase 1867,2, cited in L. White 1984,29-30. Compare Macleod 1892-93, 436ff. 36. The Bank of England had been issuing redeemable notes since its establishment in 1694, and Scottish banks had been doing the same for Inany decades before 1776. Sargent and Velde (2002,263) thus err in writing that Adam Smith "proposed that banks be allowed to issue paper notes if they would promise to convert them into specie on demand" and that he got the idea by observing the successful private issuance of copper tokens. Smith could not propose what was already established practice. Nor did he propose any further liberalization of Scottish banking law.


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The Prince by Niccolò Machiavelli, Peter Bondanella

the market place, The Wealth of Nations by Adam Smith

Petrarch, Canz. XVI, V. 93-96 Loved this book ? Similar users also downloaded: "The Art of War", Sun Tzu "Beyond Good and Evil", Friedrich Wilhelm Nietzsche "The Divine Comedy", Alighieri Dante "Ulysses", James Joyce "Tao Te Ching", Laozi "An Inquiry into the Nature and Causes of the Wealth of Nations", Adam Smith "War and Peace", Lev Nikolayevich Tolstoy "Utopia", Thomas More "Paradise Lost", John Milton "The Art of War", Niccolò Machiavelli www.feedbooks.com Food for the mind Table of Contents Title About Dedication: To the Magnificent Lorenzo Di Piero De’ Medici Chapter 1 - Of the Various Kinds of Princedom, and of the Ways in Which They Are Acquired Chapter 2 - Of Hereditary Princedoms Chapter 3 - Of Mixed Princedoms Chapter 4 - Why the Kingdom of Darius, Conquered by Alexander, Did Not, on Alexander’s Death, Rebel Against His Successors Chapter 5 - How Cities or Provinces Which Before Their Acquisition Have Lived Under Their Own Laws Are To Be Governed Chapter 6 - Of New Princedoms Which a Prince Acquires With His Own Arms and by Merit Chapter 7 - Of New Princedoms Acquired By the Aid of Others and By Good Fortune Chapter 8 - Of Those Who By Their Crimes Come to Be Princes Chapter 9 - Of the Civil Princedom Chapter 10 - How the Strength of All Princedoms Should Be Measured Chapter 11 - Of Ecclesiastical Princedoms Chapter 12 - How Many Different Kinds of Soldiers There Are, and of Mercenaries Chapter 13 - Of Auxiliary, Mixed, and National Arms Chapter 14 - Of the Duty of a Prince In Respect of Military Affairs Chapter 15 - Of the Qualities In Respect of Which Men, and Most of all Princes, Are Praised or Blamed Chapter 16 - Of Liberality and Miserliness Chapter 17 - Of Cruelty and Clemency, and Whether It Is Better To Be Loved or Feared Chapter 18 - How Princes Should Keep Faith Chapter 19 - That a Prince Should Seek to Escape Contempt and Hatred Chapter 20 - Whether Fortresses, and Certain Other Expedients to Which Princes Often Have Recourse, are Profitable or Hurtful Chapter 21 - How a Prince Should Bear Himself So As to Acquire Reputation Chapter 22 - Of the Secretaries of Princes Chapter 23 - That Flatterers Should Be Shunned Chapter 24 - Why the Princes of Italy Have Lost Their States Chapter 25 - What Fortune Can Effect in Human Affairs, and How She May Be Withstood Chapter 26 - An Exhortation to Liberate Italy from the Barbarians Recommendations


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The Shifts and the Shocks: What We've Learned--And Have Still to Learn--From the Financial Crisis by Martin Wolf

air freight, Alan Greenspan, anti-communist, Asian financial crisis, asset allocation, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, Basel III, Bear Stearns, Ben Bernanke: helicopter money, Berlin Wall, Black Swan, bonus culture, break the buck, Bretton Woods, business cycle, call centre, capital asset pricing model, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collateralized debt obligation, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, currency risk, debt deflation, deglobalization, Deng Xiaoping, diversification, double entry bookkeeping, en.wikipedia.org, Erik Brynjolfsson, Eugene Fama: efficient market hypothesis, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial deregulation, financial innovation, financial repression, floating exchange rates, foreign exchange controls, forward guidance, Fractional reserve banking, full employment, Glass-Steagall Act, global rebalancing, global reserve currency, Growth in a Time of Debt, Hyman Minsky, income inequality, inflation targeting, information asymmetry, invisible hand, Joseph Schumpeter, Kenneth Rogoff, labour market flexibility, labour mobility, Les Trente Glorieuses, light touch regulation, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, Long Term Capital Management, low interest rates, mandatory minimum, margin call, market bubble, market clearing, market fragmentation, Martin Wolf, Mexican peso crisis / tequila crisis, Minsky moment, Modern Monetary Theory, Money creation, money market fund, moral hazard, mortgage debt, negative equity, new economy, North Sea oil, Northern Rock, open economy, paradox of thrift, Paul Samuelson, price stability, private sector deleveraging, proprietary trading, purchasing power parity, pushing on a string, quantitative easing, Real Time Gross Settlement, regulatory arbitrage, reserve currency, Richard Feynman, risk-adjusted returns, risk/return, road to serfdom, Robert Gordon, Robert Shiller, Ronald Reagan, savings glut, Second Machine Age, secular stagnation, shareholder value, short selling, sovereign wealth fund, special drawing rights, subprime mortgage crisis, tail risk, The Chicago School, The Great Moderation, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, The Wealth of Nations by Adam Smith, too big to fail, Tyler Cowen, Tyler Cowen: Great Stagnation, vertical integration, very high income, winner-take-all economy, zero-sum game

Minsky, Stabilizing an Unstable Economy (New Haven: Yale University Press, 1986), and ‘Financial Instability and the Decline (?) of Banking: Future Policy Implications’, Working Paper No. 127, October 1994, The Jerome Levy Research Institute of Bard College, http://www.levyinstitute.org/pubs/wp127.pdf. 49. See ‘Chartalism’, http://en.wikipedia.org/wiki/Chartalism. 50. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776), Bk. V, ch. 3, paragraph 82, http://www.econlib.org/library/Smith/smWN22.html#B.V, Ch. 3, Of Public Debts. 51. Georg Friedrich Knapp, The State Theory of Money (London: Macmillan, 1924). 52. Abba P. Lerner, ‘Money as a Creature of the State’, Papers and Proceedings of the Fifty-Ninth Annual Meeting of the American Economic Association, American Economic Review, vol. 37, no. 2 (May 1947), pp. 312–17. 53.

‘Target Loans, Current Account Balances and Capital Flows: The ECB’s Rescue Facility’, National Bureau of Economic Research Working Paper No. 17626, November 2011. www.nber.org. Skidelsky, Robert. Keynes: The Return of the Master (London: Allen Lane, 2009). Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations, Book V, Chapter 3 (1776). http://www.econlib.org/library/Smith/smWN22.html#B.V, Ch. 3, Of Public Debts. Smithers, Andrew. The Road to Recovery: How and Why Economic Policy Must Change (London: Wiley, 2013). Smithers, Andrew and Stephen Wright. ‘Stock Markets and Central Bankers – The Economic Consequences of Alan Greenspan’, World Economics, vol. 3, no. 1 (2002), pp. 101–24.

(v) Financial innovation can be assumed to be beneficial, since market competition would winnow out any innovations which did not deliver value added. Each of these assumptions is now subject to extensive challenge on both theoretical and empirical grounds, with potential implications for the appropriate design of regulation and for the role of regulatory authorities.58 Behind all this was the assumption that self-interest would, via Adam Smith’s invisible hand, ensure a stable, dynamic and efficient financial system. This is the view that Alan Greenspan, probably the most influential spokesman for that point of view, recanted, when he told a congressional committee in October 2008 that he had found a ‘flaw’ in his thinking on markets.59 He then accepted that the pursuit of self-interest, however beneficial in the economy as a whole, does not necessarily lead to financial stability, because shareholders of financial institutions are either unaware of the risks their institutions are running or are prepared to let management make big gambles.


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Evil Geniuses: The Unmaking of America: A Recent History by Kurt Andersen

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, affirmative action, Affordable Care Act / Obamacare, air traffic controllers' union, airline deregulation, airport security, Alan Greenspan, always be closing, American ideology, American Legislative Exchange Council, An Inconvenient Truth, anti-communist, Apple's 1984 Super Bowl advert, artificial general intelligence, autonomous vehicles, basic income, Bear Stearns, Bernie Sanders, blue-collar work, Bonfire of the Vanities, bonus culture, Burning Man, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Cass Sunstein, centre right, computer age, contact tracing, coronavirus, corporate governance, corporate raider, cotton gin, COVID-19, creative destruction, Credit Default Swap, cryptocurrency, deep learning, DeepMind, deindustrialization, Donald Trump, Dr. Strangelove, Elon Musk, ending welfare as we know it, Erik Brynjolfsson, feminist movement, financial deregulation, financial innovation, Francis Fukuyama: the end of history, future of work, Future Shock, game design, General Motors Futurama, George Floyd, George Gilder, Gordon Gekko, greed is good, Herbert Marcuse, Herman Kahn, High speed trading, hive mind, income inequality, industrial robot, interchangeable parts, invisible hand, Isaac Newton, It's morning again in America, James Watt: steam engine, Jane Jacobs, Jaron Lanier, Jeff Bezos, jitney, Joan Didion, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, junk bonds, Kevin Roose, knowledge worker, lockdown, low skilled workers, Lyft, Mark Zuckerberg, market bubble, mass immigration, mass incarceration, Menlo Park, Naomi Klein, new economy, Norbert Wiener, Norman Mailer, obamacare, Overton Window, Peter Thiel, Picturephone, plutocrats, post-industrial society, Powell Memorandum, pre–internet, public intellectual, Ralph Nader, Right to Buy, road to serfdom, Robert Bork, Robert Gordon, Robert Mercer, Ronald Reagan, Saturday Night Live, Seaside, Florida, Second Machine Age, shareholder value, Silicon Valley, social distancing, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, Stewart Brand, stock buybacks, strikebreaker, tech billionaire, The Death and Life of Great American Cities, The Future of Employment, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Tim Cook: Apple, too big to fail, trickle-down economics, Tyler Cowen, Tyler Cowen: Great Stagnation, Uber and Lyft, uber lyft, union organizing, universal basic income, Unsafe at Any Speed, urban planning, urban renewal, very high income, wage slave, Wall-E, War on Poverty, We are all Keynesians now, Whole Earth Catalog, winner-take-all economy, women in the workforce, working poor, young professional, éminence grise

I still resist reducing messy political and economic reality to catchphrases like “vast right-wing conspiracy” and “the system is rigged,” but I discovered that in this case the blunt shorthand is essentially correct. It looks more like arson than a purely accidental fire, more like poisoning than a completely natural illness, more like a cheating of the many by the few. After all, as the god of the economic right himself, Adam Smith, wrote in capitalism’s 1776 bible, The Wealth of Nations: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Evil Geniuses is the book I wish had existed a dozen years ago to help clarify and organize and deepen and focus my thinking and understanding and anger and blame.

Sides, John, Michael Tesler, and Lynn Vavreck. Identity Crisis: The 2016 Presidential Campaign and the Battle for the Meaning of America. Princeton: Princeton University Press, 2018. Singleton, Christopher J. “Auto Industry Jobs in the 1980’s: A Decade of Transition.” Monthly Labor Review, February 1992, 18–27. Smith, Adam. The Wealth of Nations. Edited by Andrew S. Skinner. 1776; London: Penguin, 1999. Smith, Hedrick. Who Stole the American Dream? New York: Random House, 2013. Snyder, Timothy. The Road to Unfreedom. New York: Tim Duggan Books/Crown, 2018. Sommeiller, Estelle, Mark Price, and Ellis Wazeter. “Income Inequality in the U.S. by State, Metropolitan Area, and County.”

But in the real world, where humans operate businesses somewhere in the large range between break-even and maximum profitability, they always have leeway to be unnecessarily and uneconomically fair, trustworthy, decent, and responsible—that is, to take slightly smaller profit margins for the sake of good values and virtuous norms. Friedman, and fellow free-market purists ever since, constantly refer to Adam Smith, who came up with the “invisible hand” idea in the 1700s. But they distort him. Smith also argued in favor of sensible government intervention to improve and optimize free markets. Within a few years of the Friedman Doctrine, elite executives-in-training internalized and felt free to espouse it.


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On Grand Strategy by John Lewis Gaddis

British Empire, David Brooks, en.wikipedia.org, failed state, invisible hand, joint-stock company, long peace, Mikhail Gorbachev, military-industrial complex, Monroe Doctrine, Ronald Reagan, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, trade route, transcontinental railway

Enshrined formally in the 1648 Treaty of Westphalia, it saw little significance in the internal configuration of states: what mattered was their external behavior.63 But Machiavelli understands balancing in a second and subtler sense, conveyed more explicitly in The Discourses than in The Prince: [I]t is only in republics that the common good is looked to properly in that all that promotes it is carried out; and, however much this or that private person may be the loser on this account, there are so many who benefit thereby that the common good can be realized in spite of those few who suffer in consequence.64 This idea of an internal equilibrium within which competition strengthens community wouldn’t appear again until Adam Smith unveiled an “invisible hand” in The Wealth of Nations (1776), until the American Founding Fathers drafted and in The Federalist justified constitutional checks and balances (1787–88), and until Immanuel Kant linked republics, however distantly, with Perpetual Peace (1795). From all of this would emerge the twentieth-century idea of an international system consistent with order and justice, 65 although Augustine had foreseen it long before.

They revered what they believed to be Saxon common law, usurped by Normans, clawed back in Magna Carta, endangered by Stuarts, redeemed in 1688, but now at risk from the corruption of kings, parliaments, and colonial administrators. Their Declaration of Independence reinforced even as it reflected the intellectual liberations of 1776: Adam Smith’s The Wealth of Nations, the first volume of Edward Gibbon’s The Decline and Fall of the Roman Empire, and most powerfully Thomas Paine’s Common Sense, which found it “repugnant to reason, to the universal order of things, to all examples from former ages, to suppose, that this continent can longer remain subject to any external power.”30 Monarchies had arisen, Paine insisted, not through merit, but because they’d outlasted memories.


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Tyler Cowen-Discover Your Inner Economist Use Incentives to Fall in Love, Survive Your Next Meeting, and Motivate Your Dentist-Plume (2008) by Unknown

"World Economic Forum" Davos, airport security, Andrei Shleifer, big-box store, British Empire, business cycle, cognitive dissonance, cross-subsidies, fundamental attribution error, gentrification, George Santayana, haute cuisine, low interest rates, market clearing, microcredit, money market fund, pattern recognition, Ralph Nader, retail therapy, Stephen Hawking, The Wealth of Nations by Adam Smith, trade route, Tragedy of the Commons, transaction costs, Tyler Cowen

The Founding Fathers believed in the power of human liberty, that is, a society based on the idea of free and responsible individuals. It is a profoundly important fact, which I will discuss further in the next chapter, that you can't understand how incentives work if you don't understand the importance of a respect for human liberty. Economics, when it serves to boost "the wealth of nations," as Adam Smith called it, takes people from want and misery to health and plenitude. All that is true and important. But for this book we will start with our jobs, our choices, and our personal relationships as foundation stones for all subsequent decisions. "Saving the world" will have to wait until chapter nine.

Read his Maxims: We are so accustomed to disguising our true nature from others, that we end up disguising it from ourselves. 118 I DISCOVER YOUR INNER ECONOMIST Or how about: No matter what discoveries we may have made in the land of SELF-ESTEEM many undiscovered territories still remain. In the eighteenth century, Adam Smith described self-deception as a central feature of human behavior. Freud stressed how the subconscious structures an individual's portrait of reality to fit his or her neuroses and biases. Sartre placed self-deception at the core of his theory of the emotions; perhaps at some level he knew he was not intellectually honest in his endorsement of Stalin.


pages: 300 words: 78,475

Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream by Arianna Huffington

Alan Greenspan, American Society of Civil Engineers: Report Card, Apollo 13, Bear Stearns, Bernie Madoff, Bernie Sanders, call centre, carried interest, citizen journalism, clean water, collateralized debt obligation, Cornelius Vanderbilt, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, do what you love, extreme commuting, Exxon Valdez, full employment, Glass-Steagall Act, greed is good, Greenspan put, guns versus butter model, high-speed rail, housing crisis, immigration reform, invisible hand, knowledge economy, laissez-faire capitalism, late fees, low interest rates, market bubble, market fundamentalism, Martin Wolf, medical bankruptcy, microcredit, military-industrial complex, Neil Armstrong, new economy, New Journalism, offshore financial centre, Ponzi scheme, post-work, proprietary trading, Report Card for America’s Infrastructure, Richard Florida, Ronald Reagan, Rosa Parks, Savings and loan crisis, single-payer health, smart grid, The Wealth of Nations by Adam Smith, Timothy McVeigh, too big to fail, transcontinental railway, trickle-down economics, winner-take-all economy, working poor, Works Progress Administration

Alfred Marshall, one of the founding fathers of modern capitalism, in an address to the British Economics Association in 1890, called it “economic chivalry.”15 He explained that “the desire of men for approval of their own conscience and for the esteem of others is an economic force of the first order of importance.” There is a reason Adam Smith’s free-market gospel, The Wealth of Nations, was preceded by his Theory of Moral Sentiments.16 He knew that economic freedom could not flourish without a firm moral foundation. But that moral foundation is by no means inevitable. The “approval of their own conscience” and “the esteem of others” have gotten a lot cheaper in recent years.

16 Oct. 1995, www.newyorker.com. 13 By the end of the 1980s: Paul Krugman, “The Great Wealth Transfer,” Rolling Stone, 30 Nov. 2006. 14 They had, but rather than Ponce de León: Ibid. 15 Alfred Marshall, one of the founding fathers: Alfred Marshall, “Some Aspects of Competition: The Address of the President of Economic Science and Statistics of the British Association,” Nature XLII (1890): 497. 16 There is a reason Adam Smith’s: Amartya Sen, “The Economist Manifesto,” 23 Apr. 2010, www.newstatesman.com. 17 Given how close we were in 2008: David Herszenhorn, “Senate Acts on Credit-Rating Agencies,” 13 May 2010, www.nytimes.com. 18 “[The Bush] administration made …”: Jo Becker, Sheryl Gay Stolberg, and Stephen Labaton, “White House Philosophy Stoked Mortgage Bonfire,” 20 Dec. 2008, www.nytimes.com. 19 Even Alan Greenspan: Andrew Clark and Jill Treanor, “Greenspan—I Was Wrong About the Economy.


pages: 297 words: 77,362

The Nature of Technology by W. Brian Arthur

Andrew Wiles, Boeing 747, business process, Charles Babbage, cognitive dissonance, computer age, creative destruction, double helix, endogenous growth, financial engineering, Geoffrey West, Santa Fe Institute, haute cuisine, James Watt: steam engine, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kevin Kelly, knowledge economy, locking in a profit, Mars Rover, means of production, Myron Scholes, power law, punch-card reader, railway mania, Recombinant DNA, Silicon Valley, Simon Singh, sorting algorithm, speech recognition, Stuart Kauffman, technological determinism, technological singularity, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions

From “On Truth and Lie in an Extra-Moral Sense,” The Portable Nietzsche, Penguin, New York, 1976, p. 46. 36 “chunking” in cognitive psychology: The idea goes back to the 1950s; K. S. Lashley, “The problem of serial order in behavior,” in L. A. Jeffress, ed., Cerebral Mechanisms in Behavior, Wiley, New York, 1951; also F. Gobet, et al., “Chunking mechanisms in human learning,” Trends in Cognitive Sciences, 5, 6: 236–243, 2001. 37 Adam Smith: Smith, The Wealth of Nations, 1776, Chapter 1. 37 modules of technology… units: Baldwin and Clark show that modularization is increasing over time. 38 The hierarchy that forms: Herbert Simon talked of hierarchical systems, but not of recursiveness. 38 Recursiveness will be… principle: The related property, that the component entities resemble in some sense the higher level entities, is called “self-similarity.”

Partitioning technologies into groupings or modules corresponds to “chunking” in cognitive psychology, the idea that we break down anything complicated (the Second World War, say) into higher-level parts or chunks (the lead-up to the war, the outbreak of war, the invasion of the Soviet Union, the war in the Pacific, etc.) that we can more easily understand and manipulate. It costs something—mental effort at the very least—to partition the components of a technology into separate functional units. So it pays to divide a technology into such modules only if they are used repeatedly—only if there is sufficient volume of use. There is a parallel here with what Adam Smith said about the division of labor. Smith pointed out that it pays to divide a factory’s work into specialized jobs, but only if there is sufficient volume of production. Modularity, we can say, is to a technological economy what the division of labor is to a manufacturing one; it increases as given technologies are used more, and therefore as the economy expands.


pages: 241 words: 75,516

The Paradox of Choice: Why More Is Less by Barry Schwartz

accounting loophole / creative accounting, attribution theory, Atul Gawande, availability heuristic, Cass Sunstein, Daniel Kahneman / Amos Tversky, endowment effect, framing effect, hedonic treadmill, income per capita, job satisfaction, loss aversion, medical residency, mental accounting, Own Your Own Home, PalmPilot, Paradox of Choice, Pareto efficiency, peak-end rule, positional goods, price anchoring, psychological pricing, RAND corporation, Richard Thaler, science of happiness, search costs, The Wealth of Nations by Adam Smith

There’s another dimension See R. Frank, Choosing the Right Pond (New York: Oxford University Press, 1985); F. Hirsch, Social Limits to Growth (Cambridge, MA: Harvard University Press, 1976); and R. Frank and P. Cook, The Winner-Take-All Society (New York, Free Press, 1985). Chapter 5 Over two centuries ago Adam Smith’s The Wealth of Nations was published in 1776. For a more recent, impassioned defense of freedom of choice in the market, see M. Friedman and R. Friedman, Free to Choose (New York: Harcourt Brace, 1980). For more critical views of the market and its miracles, see my The Battle for Human Nature (New York: W.W.

You can be a vegan and I can be a carnivore. You can listen to hip-hop and I can listen to NPR. You can stay single and I can marry. Any time choice is restricted in some way, there is bound to be someone, somewhere, who is deprived of the opportunity to pursue something of personal value. Over two centuries ago Adam Smith observed that individual freedom of choice ensures the most efficient production and distribution of society’s goods. A competitive market, unhindered by the government and filled with entrepreneurs eager to pinpoint consumers’ needs and desires, will be exquisitely responsive to them. Supple, alert, unfettered by rules and constraints, producers of goods and providers of services will deliver to consumers exactly what they want.


pages: 555 words: 80,635

Open: The Progressive Case for Free Trade, Immigration, and Global Capital by Kimberly Clausing

"World Economic Forum" Davos, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, active measures, Affordable Care Act / Obamacare, agricultural Revolution, battle of ideas, Bernie Sanders, business climate, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, carbon tax, climate change refugee, corporate social responsibility, creative destruction, currency manipulation / currency intervention, David Ricardo: comparative advantage, Donald Trump, fake news, floating exchange rates, full employment, gig economy, global supply chain, global value chain, guest worker program, illegal immigration, immigration reform, income inequality, index fund, investor state dispute settlement, knowledge worker, labor-force participation, low interest rates, low skilled workers, Lyft, manufacturing employment, Mark Zuckerberg, meta-analysis, offshore financial centre, open economy, Paul Samuelson, precautionary principle, profit motive, purchasing power parity, race to the bottom, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, Silicon Valley, Tax Reform Act of 1986, tech worker, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transfer pricing, uber lyft, winner-take-all economy, working-age population, zero-sum game

The person who goes into debt throwing lavish parties, by contrast, does not typically benefit from financial returns later. 7. Multinational Corporations 1. Indeed, if one goes back to the East India Company (1600–1874) or the Hudson Bay Company (1670–), one finds two companies with extraordinary market power and control over international trade. In the Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith persistently critiques the market power of large businesses, and expresses dismay at the role of the state in sponsoring and facilitating their market power. For example, Smith argues: “To widen the market and to narrow the competition, is always the interest of the dealers.… The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention.

Many of us have benefitted immensely from the creativity and innovation of Apple, Google (Alphabet), Amazon, Starbucks, and other global giants. Yet, in this increasingly concentrated global environment, it is important that modern antitrust laws are used to preserve competition. As recognized since Adam Smith, market competition is vital for ensuring that market outcomes are consistent with the public interest. When companies become too large or powerful, this can hurt both consumers and the future path of innovation. Government regulation of monopoly power can be tricky, and there are legitimate disagreements about the threat monopolies pose to consumers.


pages: 286 words: 79,305

99%: Mass Impoverishment and How We Can End It by Mark Thomas

"there is no alternative" (TINA), "World Economic Forum" Davos, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, additive manufacturing, Alan Greenspan, Albert Einstein, anti-communist, autonomous vehicles, bank run, banks create money, behavioural economics, bitcoin, business cycle, call centre, Cambridge Analytica, central bank independence, circular economy, complexity theory, conceptual framework, creative destruction, credit crunch, CRISPR, declining real wages, distributed ledger, Donald Trump, driverless car, Erik Brynjolfsson, eurozone crisis, fake news, fiat currency, Filter Bubble, full employment, future of work, Gini coefficient, gravity well, income inequality, inflation targeting, Internet of things, invisible hand, ITER tokamak, Jeff Bezos, jimmy wales, job automation, Kickstarter, labour market flexibility, laissez-faire capitalism, Larry Ellison, light touch regulation, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, Modern Monetary Theory, Money creation, money: store of value / unit of account / medium of exchange, Nelson Mandela, Nick Bostrom, North Sea oil, Occupy movement, offshore financial centre, Own Your Own Home, Peter Thiel, Piper Alpha, plutocrats, post-truth, profit maximization, quantitative easing, rent-seeking, Robert Solow, Ronald Reagan, Second Machine Age, self-driving car, Silicon Valley, smart cities, Steve Jobs, The Great Moderation, The Wealth of Nations by Adam Smith, Tyler Cowen, warehouse automation, wealth creators, working-age population

Three widely used metaphors, with particular power to shape our thinking, are: the concept of the invisible hand of market forces; the notion of free markets; and the idea of economic laws. METAPHOR #1: THE INVISIBLE HAND OF MARKET FORCES We owe the concept of the invisible hand of market forces to Adam Smith and his book, An Enquiry into the Nature and Causes of the Wealth of Nations.18 In a much-cited passage, Smith says: As every individual, therefore, endeavours as much as he can, both to employ his capital in support of domestic industry, and so to direct that industry that its produce may be of greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can.

Nor is it always the worse for the society that it was no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it. The invisible hand of market forces is self-evidently a metaphor – nobody, not even the members of the Adam Smith Society, believes that there is a literal ‘invisible hand’ guiding our economy. Nevertheless, there is a problem: the phrase is so widely used, and so much taken for granted, that it is tempting to assume that the economy does indeed behave as though there were an invisible hand guiding every transaction in such a way as to produce the best possible outcome.


pages: 280 words: 76,638

Rebel Ideas: The Power of Diverse Thinking by Matthew Syed

adjacent possible, agricultural Revolution, Alfred Russel Wallace, algorithmic bias, behavioural economics, Bletchley Park, Boeing 747, call centre, Cass Sunstein, classic study, cognitive load, computer age, crowdsourcing, cuban missile crisis, deep learning, delayed gratification, drone strike, Elon Musk, Erik Brynjolfsson, Fairchild Semiconductor, fake news, Ferguson, Missouri, Filter Bubble, Firefox, invention of writing, James Dyson, Jeff Bezos, knowledge economy, lateral thinking, market bubble, mass immigration, microbiome, Mitch Kapor, persistent metabolic adaptation, Peter Thiel, post-truth, Richard Thaler, Ronald Reagan, Second Machine Age, self-driving car, seminal paper, Silicon Valley, social intelligence, Steve Jobs, Steve Wozniak, Stuart Kauffman, tech worker, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, traveling salesman, vertical integration

Geologists associated with historians, economists with chemists, philosophers with surgeons, lawyers with farmers, church ministers with architects.’58 The Oyster Club had among its founders the economist Adam Smith, the chemist Joseph Black and the geologist James Hutton. The Select Society included the architect James Adam, the medic Francis Home and the philosopher David Hume. These were the Wagon Wheels and Roundhouses of the Scottish Enlightenment, ideas colliding and diffusing. The blossoming of knowledge was remarkable. Hume wrote masterpieces in moral philosophy, political economy, metaphysics and history. Adam Smith, who was close friends with Hume, penned The Wealth of Nations, which remains arguably the most influential work in the history of economics.


pages: 248 words: 73,689

Age of the City: Why Our Future Will Be Won or Lost Together by Ian Goldin, Tom Lee-Devlin

15-minute city, 1960s counterculture, agricultural Revolution, Alvin Toffler, Anthropocene, anti-globalists, Berlin Wall, Bonfire of the Vanities, Brixton riot, call centre, car-free, carbon footprint, Cass Sunstein, charter city, Chuck Templeton: OpenTable:, clean water, cloud computing, congestion charging, contact tracing, coronavirus, COVID-19, CRISPR, data science, David Brooks, David Ricardo: comparative advantage, decarbonisation, deindustrialization, Deng Xiaoping, desegregation, Edward Glaeser, Edward Jenner, Enrique Peñalosa, fake news, Fall of the Berlin Wall, financial engineering, financial independence, future of work, General Motors Futurama, gentrification, germ theory of disease, global pandemic, global supply chain, global village, Haight Ashbury, Hernando de Soto, high-speed rail, household responsibility system, housing crisis, Howard Rheingold, income per capita, Induced demand, industrial robot, informal economy, invention of the printing press, invention of the wheel, Jane Jacobs, Jeff Bezos, job automation, John Perry Barlow, John Snow's cholera map, Kickstarter, knowledge economy, knowledge worker, labour mobility, Lewis Mumford, lockdown, Louis Pasteur, low interest rates, low skilled workers, manufacturing employment, Marshall McLuhan, mass immigration, megacity, Neal Stephenson, Network effects, New Urbanism, offshore financial centre, open borders, open economy, Pearl River Delta, race to the bottom, Ray Oldenburg, remote working, rent control, Republic of Letters, Richard Florida, ride hailing / ride sharing, rising living standards, Salesforce, Shenzhen special economic zone , smart cities, smart meter, Snow Crash, social distancing, special economic zone, spinning jenny, Steve Jobs, Stewart Brand, superstar cities, the built environment, The Death and Life of Great American Cities, The Great Good Place, The Wealth of Nations by Adam Smith, trade liberalization, trade route, Upton Sinclair, uranium enrichment, urban decay, urban planning, urban sprawl, Victor Gruen, white flight, working poor, working-age population, zero-sum game, zoonotic diseases

Not merely content with purchasing supplies from his local supermarket and assembling his lunch, he made all the ingredients himself, growing the wheat to bake his own bread, milking a cow to make his own cheese, and raising and slaughtering his own chicken. The process took six months and cost him $1,500.32 Today we would not survive long if cut off from the many-layered supply chains that provide us with food, clothing and shelter. The power of the division of labour is one of the foundational lessons of economics. In the opening of The Wealth of Nations, Adam Smith describes how workers in a pin factory could only ever produce a small fraction of their potential if they all sought to complete each step of the process on their own, rather than focusing on one specific stage of production. For Smith, specialization was the foundation of material prosperity in society.

During the seventeenth and eighteenth centuries, an informal community of intellectuals formed across Europe that came to be known as the Republic of Letters. Through written correspondence, they would disseminate new ideas and challenge one another’s thinking. The network included a range of figures such as Adam Smith, David Hume, Benjamin Franklin, Jean-Jacques Rousseau, Voltaire and many others who together forged the movement of free thinking and enquiry that came to be known as the European Enlightenment. Far from diminishing the importance of cities as centres of European thought, the Republic of Letters made them even more vital.


pages: 263 words: 77,786

Tomorrow's Capitalist: My Search for the Soul of Business by Alan Murray

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, Alvin Toffler, Berlin Wall, Bernie Sanders, Big Tech, Black Lives Matter, blockchain, Boris Johnson, call centre, carbon footprint, commoditize, coronavirus, corporate governance, corporate raider, corporate social responsibility, COVID-19, creative destruction, Credit Default Swap, decarbonisation, digital divide, disinformation, disruptive innovation, do well by doing good, don't be evil, Donald Trump, Ferguson, Missouri, financial innovation, Francis Fukuyama: the end of history, Frederick Winslow Taylor, future of work, gentrification, George Floyd, global pandemic, Greta Thunberg, gun show loophole, impact investing, income inequality, intangible asset, invisible hand, Jeff Bezos, job automation, knowledge worker, lockdown, London Whale, low interest rates, Marc Benioff, Mark Zuckerberg, market fundamentalism, means of production, minimum wage unemployment, natural language processing, new economy, old-boy network, price mechanism, profit maximization, remote working, risk-adjusted returns, Ronald Reagan, Salesforce, scientific management, shareholder value, side hustle, Silicon Valley, social distancing, Social Responsibility of Business Is to Increase Its Profits, The Future of Employment, the payments system, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Washington Consensus, women in the workforce, work culture , working poor, zero-sum game

New York: Palgrave Macmillan, 2007. 2. Milton Friedman. “A Friedman Doctrine—the Social Responsibility of Business Is to Increase Its Profits.” New York Times, September 13, 1970. 3. Milton Friedman. Capitalism and Freedom. Chicago: University of Chicago Press, 1962. 4. Adam Smith. An Inquiry into the Nature and Causes of the Wealth of Nations. London: W. Strahan and T. Cadell, 1776. 5. Friedman, “A Friedman Doctrine.” 6. Francis Fukuyama. The End of History and the Last Man. New York: Free Press, 1992. 7. “For Larry Summers, Milton Friedman Was a Devil Figure in His Youth.” Mostly Economics, August 17, 2010. 8.

He quoted his own book Capitalism and Freedom, where he wrote that in a free society “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”3 As a graduate student at the London School of Economics in the late 1970s, I had studied economic history and read the works of Adam Smith, who laid the foundation for Friedman’s view of a market economy. Smith wrote of an “invisible hand” that ensured the self-interested strivings of individuals combined for the greater good. “By pursuing his own interests, he frequently promotes that of the society more effectually than when he really intends to promote it,” Smith wrote.


pages: 274 words: 66,721

Double Entry: How the Merchants of Venice Shaped the Modern World - and How Their Invention Could Make or Break the Planet by Jane Gleeson-White

Affordable Care Act / Obamacare, Alan Greenspan, Bernie Madoff, Black Swan, British Empire, business cycle, carbon footprint, corporate governance, credit crunch, double entry bookkeeping, full employment, Gordon Gekko, income inequality, invention of movable type, invention of writing, Islamic Golden Age, Johann Wolfgang von Goethe, Johannes Kepler, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Mahbub ul Haq, means of production, Naomi Klein, Nelson Mandela, Ponzi scheme, shareholder value, Silicon Valley, Simon Kuznets, source of truth, spice trade, spinning jenny, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, traveling salesman, upwardly mobile

Even the most mundane professions have their history, and those mundane professions increasingly run the capitalist world. Norman Davies, 1996 Preface: Bobby Kennedy and the wealth of nations and corporations 1 Accounting: our first communications technology 2 Merchants and mathematics 3 Luca Pacioli: from Sansepolcro to celebrity 4 Pacioli’s landmark bookkeeping treatise of 1494 5 Venetian double entry goes viral 6 Double entry morphs: the industrial revolution and the birth of a profession 7 Double entry and capitalism—chicken and egg? 8 John Maynard Keynes, double entry and the wealth of nations 9 The rise and scandalous rise of a profession 10 Gross Domestic Product and how accounting could make or break the planet Epilogue Acknowledgements Notes Bibliography Index On 18 March 1968, three months before an assassin’s bullet cut short his life, Senator Robert F.

Economists Paul A. Samuelson and William D. Nordhaus call the GDP and other national accounts ‘truly among the great inventions of the twentieth century’. This is how in the twentieth century, double-entry bookkeeping became a measure not only of the wealth of firms and corporations, but also of the wealth of nations. But the accuracy and usefulness of national income measures have been questioned from the beginning, by Keynes and others, including Simon Kuznets himself. For example, Kuznets believed the national accounts should include the value of unpaid housework, despite the fact that including this vast contribution to the national economy would present statisticians with the difficult task of making monetary estimates of this valuable work.

In defence of Sombart, however, Eve Chiapello responds to his critics by suggesting that the links between capitalism and accounting are not so much historical as conceptual, that capitalism could only ‘be born conceptually’ thanks to double entry—which makes sense of the fact that the only historical links between accounting and capitalism that are outlined by Sombart and also affirmed by historians occur from the second half of the eighteenth century until the end of the nineteenth. It was during this period that the social science of political economy was born, that the work of Adam Smith, Thomas Malthus and David Ricardo was published (and influenced Marx’s thinking during the same era). The emerging social sciences looked to accounting for their foundations. It was double entry that allowed economists to build the models they used to analyse economies and revealed to Marx the building blocks of nineteenth-century industrial production and management.


pages: 326 words: 106,053

The Wisdom of Crowds by James Surowiecki

Alan Greenspan, AltaVista, Andrei Shleifer, Apollo 13, asset allocation, behavioural economics, Cass Sunstein, classic study, congestion pricing, coronavirus, Daniel Kahneman / Amos Tversky, experimental economics, Frederick Winslow Taylor, George Akerlof, Great Leap Forward, Gregor Mendel, Howard Rheingold, I think there is a world market for maybe five computers, interchangeable parts, Jeff Bezos, John Bogle, John Meriwether, Joseph Schumpeter, knowledge economy, lone genius, Long Term Capital Management, market bubble, market clearing, market design, Monkeys Reject Unequal Pay, moral hazard, Myron Scholes, new economy, offshore financial centre, Picturephone, prediction markets, profit maximization, Richard Feynman, Richard Feynman: Challenger O-ring, Richard Thaler, Robert Shiller, Ronald Coase, Ronald Reagan, seminal paper, shareholder value, short selling, Silicon Valley, South Sea Bubble, tacit knowledge, The Nature of the Firm, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Toyota Production System, transaction costs, ultimatum game, vertical integration, world market for maybe five computers, Yogi Berra, zero-sum game

Still, Defoe’s very emphasis on how valuable people found an honest businessman is probably evidence that there weren’t many honest businessmen. And the Quakers, after all, became known for their reliability precisely because it seemed exceptional. It’s certainly true that the benefits of honesty and the relationship between trust and healthy commerce were recognized. Adam Smith, in The Wealth of Nations, wrote, “when the greater part of people are merchants they always bring probity and punctuality into fashion,” while Montesquieu wrote of the way commerce “polishes and softens” men. But it wasn’t until the nineteenth century—not, coincidentally, the moment when capitalism as we know it flowered—that trust became, in a sense, institutionalized.

These systems are dramatically different from each other, but they do have this in common: in each, power does not fully reside in one central location, and many of the important decisions are made by individuals based on their own local and specific knowledge rather than by an omniscient or farseeing planner. In terms of decision making and problem solving, there are a couple of things about decentralization that really matter. It fosters, and in turn is fed by, specialization—of labor, interest, attention, or what have you. Specialization, as we’ve known since Adam Smith, tends to make people more productive and efficient. And it increases the scope and the diversity of the opinions and information in the system (even if each individual person’s interests become more narrow). Decentralization is also crucial to what the economist Friedrich Hayek described as tacit knowledge.

In fact, when Smith submitted a paper based on his experiment to the Journal of Political Economy, an ardently pro-market academic journal which was run by economists at the University of Chicago, the paper was rejected at first, because from the editors’ perspective all Smith had done was prove that the sun rose in the east. (The journal eventually did publish the paper, even though four referee judgments on it had come back negative.) After all, ever since Adam Smith economists had been arguing that markets did an excellent job of allocating resources. And in the 1950s, the economists Kenneth J. Arrow and Gerard Debreu had proved that, under certain conditions, the workings of the free market actually led to an optimal allocation of resources. So why were Smith’s experiments so important?


pages: 354 words: 105,322

The Road to Ruin: The Global Elites' Secret Plan for the Next Financial Crisis by James Rickards

"World Economic Forum" Davos, Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, asset allocation, asset-backed security, bank run, banking crisis, barriers to entry, Bayesian statistics, Bear Stearns, behavioural economics, Ben Bernanke: helicopter money, Benoit Mandelbrot, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, bitcoin, Black Monday: stock market crash in 1987, Black Swan, blockchain, Boeing 747, Bonfire of the Vanities, Bretton Woods, Brexit referendum, British Empire, business cycle, butterfly effect, buy and hold, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, cellular automata, cognitive bias, cognitive dissonance, complexity theory, Corn Laws, corporate governance, creative destruction, Credit Default Swap, cuban missile crisis, currency manipulation / currency intervention, currency peg, currency risk, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, debt deflation, Deng Xiaoping, disintermediation, distributed ledger, diversification, diversified portfolio, driverless car, Edward Lorenz: Chaos theory, Eugene Fama: efficient market hypothesis, failed state, Fall of the Berlin Wall, fiat currency, financial repression, fixed income, Flash crash, floating exchange rates, forward guidance, Fractional reserve banking, G4S, George Akerlof, Glass-Steagall Act, global macro, global reserve currency, high net worth, Hyman Minsky, income inequality, information asymmetry, interest rate swap, Isaac Newton, jitney, John Meriwether, John von Neumann, Joseph Schumpeter, junk bonds, Kenneth Rogoff, labor-force participation, large denomination, liquidity trap, Long Term Capital Management, low interest rates, machine readable, mandelbrot fractal, margin call, market bubble, Mexican peso crisis / tequila crisis, Minsky moment, Money creation, money market fund, mutually assured destruction, Myron Scholes, Naomi Klein, nuclear winter, obamacare, offshore financial centre, operational security, Paul Samuelson, Peace of Westphalia, Phillips curve, Pierre-Simon Laplace, plutocrats, prediction markets, price anchoring, price stability, proprietary trading, public intellectual, quantitative easing, RAND corporation, random walk, reserve currency, RFID, risk free rate, risk-adjusted returns, Robert Solow, Ronald Reagan, Savings and loan crisis, Silicon Valley, sovereign wealth fund, special drawing rights, stock buybacks, stocks for the long run, tech billionaire, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Bayes, Thomas Kuhn: the structure of scientific revolutions, too big to fail, transfer pricing, value at risk, Washington Consensus, We are all Keynesians now, Westphalian system

They cling to an old version of their science, are not open to new views, and discard data that contradict dogma. This decrepit landscape would be academic but for the fact that economists control powerful positions in central banks and finance ministries. Their use of outdated theory is not merely academic; it destroys the wealth of nations. This topic bears discussion before the next financial crisis because so much is at stake. The United States’ economy has grown, albeit sluggishly, for more than seven years since the last crisis as of this writing. That’s a historically long expansion. The time since 2008 roughly tracks the tempo of panics in 1987, 1994, 1998, and 2008.

Today every one of these nodes is distorted, imperfect, or both. Comparative advantage is a castle in the air—pleasant to imagine, yet totally unreal. Comparative advantage is the touchstone of the neoliberal consensus, the theoretical foundation for free trade, open capital accounts, and other facets of globalization. When David Ricardo, and earlier, Adam Smith, developed these free market and free trade ideas the world was on a gold standard; exchange rates were anchored to gold. Price comparisons were possible. In the absence of a gold standard or fixed exchange rates, how is the comparison to be made? In theory, floating fiat exchange rates allow comparisons and easy adjustment to terms of trade.

Elites realize money printing may produce not price inflation, but asset inflation, and form new bubbles that could burst and destroy confidence for two generations. The ice-nine solution is standing by if that happens. For now elites push on with reflation like a forlorn platoon neck-deep in the Big Muddy. Cul-de-sac The elite neoliberal consensus rests on rhetoric about free markets and free trade limned by economists from Adam Smith and David Ricardo to Milton Friedman. Yet free markets and free trade are flawed in theory, nonexistent in practice. Notionally, the free market paradigm resembles the popular board game Monopoly, invented in the Great Depression. In Monopoly, each player begins in the same space with the same amount of money, governed by the same rules.


pages: 389 words: 109,207

Fortune's Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street by William Poundstone

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", Albert Einstein, anti-communist, asset allocation, Bear Stearns, beat the dealer, Benoit Mandelbrot, Black Monday: stock market crash in 1987, Black-Scholes formula, Bletchley Park, Brownian motion, buy and hold, buy low sell high, capital asset pricing model, Claude Shannon: information theory, computer age, correlation coefficient, diversified portfolio, Edward Thorp, en.wikipedia.org, Eugene Fama: efficient market hypothesis, financial engineering, Henry Singleton, high net worth, index fund, interest rate swap, Isaac Newton, Johann Wolfgang von Goethe, John Meriwether, John von Neumann, junk bonds, Kenneth Arrow, Long Term Capital Management, Louis Bachelier, margin call, market bubble, market fundamentalism, Marshall McLuhan, Michael Milken, Myron Scholes, New Journalism, Norbert Wiener, offshore financial centre, Paul Samuelson, publish or perish, quantitative trading / quantitative finance, random walk, risk free rate, risk tolerance, risk-adjusted returns, Robert Shiller, Ronald Reagan, Rubik’s Cube, short selling, speech recognition, statistical arbitrage, Teledyne, The Predators' Ball, The Wealth of Nations by Adam Smith, transaction costs, traveling salesman, value at risk, zero-coupon bond, zero-sum game

This incident appears to be the grain of truth behind an MIT legend of piles of uncashed checks languishing in Shannon’s office. In the late 1950s, Shannon began an intensive study of the stock market that was motivated both by intellectual curiosity and desire for gain. He filled three library shelves with something like a hundred books on economics and investing. The titles included Adam Smith’s The Wealth of Nations, John von Neumann and Oskar Morgenstern’s Theory of Games and Economic Behavior, and Paul Samuelson’s Economics, as well as books with a more practical focus on investment. One book Shannon singled out as a favorite was Fred Schwed’s wry classic, Where Are the Customers’ Yachts? At the time he was designing the roulette computer with Thorp, Shannon kept notes in an MIT notebook.

In an era when Ivy League schools were often quietly anti-Semitic, it was an index of MIT’s outsider status that they were willing to hire a Jew just because he was smart. MIT’s technical focus was a good match for Samuelson’s gifts. Samuelson chose to view economics as a mathematical science. That was an unconventional approach at the time. From Adam Smith through John Maynard Keynes, economics had been mostly talk. At Harvard, economics was talk. At MIT, Samuelson made it math. Samuelson was as comfortable with differential equations as a physicist. His papers are full of “theorems,” as he called his results. To this Samuelson wedded an incisive wit that set his lectures and publications apart from the great, gray mass of economist-speak.

Some people don’t like the color of my hair, so they are going to say whatever they like.” Boesky had no illusions about the strong form of the efficient market hypothesis. His business plan was to convert inside information to capital growth. This procedure had a long history, some of it respectable. Stockbrokers in the age of Adam Smith freely traded tips and used them to make timely purchases and sales with their own money. This system was unfair to anyone not privy to the tips, though apparently not many people thought of it in quite that way. Prior to electronic communications, the unfairness was manifest. It took days for news to reach rural England.


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How the Post Office Created America: A History by Winifred Gallagher

British Empire, California gold rush, centre right, Charles Lindbergh, City Beautiful movement, clean water, collective bargaining, cotton gin, financial engineering, Ford Model T, glass ceiling, hiring and firing, indoor plumbing, military-industrial complex, Monroe Doctrine, New Urbanism, off-the-grid, pneumatic tube, public intellectual, Ralph Waldo Emerson, Republic of Letters, Silicon Valley, The Wealth of Nations by Adam Smith, transcontinental railway, traveling salesman, upwardly mobile, white flight, wikimedia commons, women in the workforce, Works Progress Administration

It also expedited shipping in Boston, New York City, and San Francisco, notably on Telegraph Hill. “It is said that as many days”: Herodotus, The Histories, ed. and trans. A. D. Godley, vol. 4, book 8, verse 98 (Cambridge, MA: Harvard University Press, 1924) ,pp. 96–97. “perhaps the only mercantile project”: Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, ed. John Ramsay McCulloch (Edinburgh: A & C Black, 1863), p. 368. “all letters which are brought from beyond the seas”: H. T. Peck, Selim H. Peabody, and Charles F. Richardson, eds., The International Cyclopaedia: A Compendium of Human Knowledge, vol. 12 (New York: Dodd, Mead, 1892), p. 72.

(The word “mail” derives from Middle English maille, or “metal link,” for the woven-metal bags carried by the armed couriers of the Hanseatic League, an organization formed at that time to protect the business interests of member German towns and merchant communities.) By the sixteenth century, the German Thurn und Taxis dynasty had begun to expand on the Holy Roman Empire’s imperial system to create the first public post, which transported correspondence for paying customers as well as officials throughout much of Europe. Adam Smith, the eighteenth-century Scottish social philosopher and political economist, said that a post is “perhaps the only mercantile project which has been successfully managed by, I believe, every sort of government.” Like sound currency, decent civil service, and efficient transportation, a mail system gradually became a sine qua non of nationhood.

Since 1757, he had been a mostly absentee postmaster general while also working in London as a lobbyist for several colonies, and the bon vivant had relished life abroad. In addition to his official duties, he conducted scientific experiments and tinkered with inventions, including a more efficient chimney damper and a glass “armonica.” He met David Hume and Adam Smith and was awarded honorary degrees from Oxford and St. Andrews universities, after which he was customarily addressed as “Dr. Franklin.” As much as he loved London’s social and intellectual tumult, however, he had grown increasingly disenchanted with Britain’s corrupt politics and egregious socioeconomic inequities.


pages: 358 words: 106,729

Fault Lines: How Hidden Fractures Still Threaten the World Economy by Raghuram Rajan

"World Economic Forum" Davos, accounting loophole / creative accounting, Alan Greenspan, Andrei Shleifer, Asian financial crisis, asset-backed security, assortative mating, bank run, barriers to entry, Bear Stearns, behavioural economics, Bernie Madoff, Bretton Woods, business climate, business cycle, carbon tax, Clayton Christensen, clean water, collapse of Lehman Brothers, collateralized debt obligation, colonial rule, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency manipulation / currency intervention, currency risk, diversification, Edward Glaeser, financial innovation, fixed income, floating exchange rates, full employment, Glass-Steagall Act, global supply chain, Goldman Sachs: Vampire Squid, Greenspan put, illegal immigration, implied volatility, income inequality, index fund, interest rate swap, Joseph Schumpeter, Kaizen: continuous improvement, Kenneth Rogoff, knowledge worker, labor-force participation, Long Term Capital Management, longitudinal study, low interest rates, machine readable, market bubble, Martin Wolf, medical malpractice, microcredit, money market fund, moral hazard, new economy, Northern Rock, offshore financial centre, open economy, Phillips curve, price stability, profit motive, proprietary trading, Real Time Gross Settlement, Richard Florida, Richard Thaler, risk tolerance, Robert Shiller, Ronald Reagan, Savings and loan crisis, school vouchers, seminal paper, short selling, sovereign wealth fund, tail risk, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, upwardly mobile, Vanguard fund, women in the workforce, World Values Survey

When Money Is the Measure of All Worth 1 This example relies on Peter Hoffman, Gilles Postel-Vinay, and Jean-Laurent Rosenthal, Surviving Large Losses: Financial Crises, the Middle Class, and the Development of Capital Markets (Cambridge, MA: Belknap Press, 2007), 149–51. 2 Adam Smith, An Inquiry into the Causes of the Wealth of Nations (Chicago: University of Chicago Press, 1976), 18. 3 Dan Ariely, Emir Kamenica, and Dražen Prelec, “Man’s Search for Meaning: The Case of Legos,” Journal of Economic Behavior and Organization 67, no. 3 (September 2008): 671–77. 4 See James Chanos, “Prepared Statement: U.S.

With subsidies and protection from the government, some favored champions have grown rapidly and profitably, acquiring technology, wealth, organizational capabilities, and stability. Government intervention has sometimes gone much further. K. Y. Yin, an electrical engineer who was also a voracious reader of economic texts (including Adam Smith), was Taiwan’s chief economic planner in the 1950s and is often referred to as the father of Taiwan’s industrial development.16 He commissioned a study in 1953 that identified plastics as an important area for Taiwan to enter. According to a possibly apocryphal story, Yin used his access to information on bank deposits to identify an individual, Y.

The Geneva bankers, who owed investors in harder Swiss currency, did not have the wherewithal to pay, and they defaulted, as in turn did many of the investors who had borrowed to invest in the “sure” thing. There are four important and enduring lessons from this historical mini-crisis. First, few have a better nose for a good moneymaking opportunity than bankers. It is not that bankers are excessively greedy. Even though Adam Smith did put self-interest at the heart of capitalism when he wrote, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest,” few businesspeople are entirely without concern for the impact of their activities on their societies.2 Rather, their willingness to exploit any advantage that will help them make money, however dodgy (albeit legal) it may be, stems partly from the nature of competitive banking, where there are few easy opportunities to make money, and partly from the way banker performance is measured—almost exclusively by how much money the banker makes rather than by her impact on real activity.


pages: 519 words: 104,396

Priceless: The Myth of Fair Value (And How to Take Advantage of It) by William Poundstone

availability heuristic, behavioural economics, book value, Cass Sunstein, collective bargaining, Daniel Kahneman / Amos Tversky, delayed gratification, Donald Trump, Dr. Strangelove, East Village, en.wikipedia.org, endowment effect, equal pay for equal work, experimental economics, experimental subject, feminist movement, game design, German hyperinflation, Henri Poincaré, high net worth, index card, invisible hand, John von Neumann, Kenneth Arrow, laissez-faire capitalism, Landlord’s Game, Linda problem, loss aversion, market bubble, McDonald's hot coffee lawsuit, mental accounting, meta-analysis, Nash equilibrium, new economy, no-fly zone, Paul Samuelson, payday loans, Philip Mirowski, Potemkin village, power law, price anchoring, price discrimination, psychological pricing, Ralph Waldo Emerson, RAND corporation, random walk, RFID, Richard Thaler, risk tolerance, Robert Shiller, rolodex, social intelligence, starchitect, Steve Jobs, The Chicago School, The Wealth of Nations by Adam Smith, three-martini lunch, ultimatum game, working poor

“I did not earn any money”: Zamir 2000, 5. 121 “Pittsburgh is not a culture”: Camerer interview, Nov. 28, 2008. 122 “We both expected the Machiguenga”: Siegfried 2004. 122 “That’s actually a tricky thing”: Camerer interview, Nov. 28, 2008. 122 44 percent average offer for Orma: Siegfried 2004. 123 a cultural X-ray: Ibid. 123 “Offering too much money”: Ibid. 123 “Adam Smith had this famous quote”: Camerer interview, Nov. 28, 2008. I’ve corrected Camerer’s extemporaneous (and near-exact) quotation from Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations. 123 Chimp experiment: Jensen, Call, and Tomasello 2007. 124 “It thus would seem”: Ibid., 109. 21. Attacking Heuristics 125 “I don’t know how much [Amos] anticipated”: Barbara Tversky interview, July 8, 2008. 125 “I am not really interested in the psychology of stupidity”: Kahneman, Nobel autobiography, nobelprize.org/nobel_prizes/economics/laureates/2002/kahneman=auto bio.html.

The vehemence of that reaction, and those to follow, may puzzle anyone who was not a part of it. It is worth saying a little about economists’ long, complex love-hate relationship with psychology. Economists live in the same world as everyone else. They have friends who buy overpriced time-shares and brothers-in-law who just don’t think. Adam Smith devoted many words to human foibles and their inevitable influence on markets. Psychology was in the lexicon of economics until the Second World War. Then things started to change. Under the influence of people like Samuelson and Milton Friedman, the field became progressively more mathematical.

The Au and Gnau of Papua New Guinea are hyperfair, and responders typically reject offers of more than 50 percent. In Au and Gnau culture, gifts and favors come with strings attached. They create an obligation to reciprocate, and most people would prefer not to have that burden. “Offering too much money, rather than being extremely generous, is actually being kind of mean,” Camerer explained. “Adam Smith had this famous quote, ‘It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.’ That invites the interpretation that markets flourish when people are just looking out for themselves. The message of this study was, cultures where people trade a lot seem to have this norm of fair sharing.


pages: 355 words: 63

The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics by William R. Easterly

Andrei Shleifer, business climate, business cycle, Carmen Reinhart, central bank independence, clean water, colonial rule, correlation does not imply causation, creative destruction, endogenous growth, financial repression, foreign exchange controls, Gini coefficient, government statistician, Gunnar Myrdal, income inequality, income per capita, inflation targeting, interchangeable parts, inventory management, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, large denomination, low interest rates, manufacturing employment, Money creation, Network effects, New Urbanism, open economy, PalmPilot, Productivity paradox, purchasing power parity, rent-seeking, Robert Solow, Ronald Reagan, selection bias, Silicon Valley, Simon Kuznets, The Wealth of Nations by Adam Smith, Thomas Malthus, total factor productivity, trade liberalization, Tragedy of the Commons, urban sprawl, Watson beat the top human players on Jeopardy!, Yogi Berra, Yom Kippur War

So how did Domar’s fixed ratio of production to machines make it into the analysis of poor countries’ growth? The Invention of Development The quest for a theory of growth and development has tormented us economists as long as there have been economists. In 1776, eco- 30 Chapter 2 nomics' founding father, Adam Smith, asked what determined the wealth of nations. In 1890, the great English economist Alfred Marshall said the quest for growth "gives to economic studiestheir chief and their highest interest."17 Nobel Prize winner Robert Lucas confessed in a 1988 article that once one starts to think about economic growth, "It is hard to think about anything else."

We often insult apparently doomed, lumbering organizations by calling them "dinosaurs" (this is pretty presumptuous on the part of homo sapiens, since our species has so far lived less than 1 percent as long as the dinosaurs).The fittest survive, and the less fit perish. This sounds a lot like the traditional idea that the most fit economies succeed in the long run. The similarity is not accidental. Darwin borrowed from Adam Smith the idea that invisible an hand could pick winners in a decentralized systemlike a market or an ecosystem. But now there are new views of what happened to the dinosaurs. They were doing fine until the earth got hit by an asteroid. In the words of one evolutionist,it was bad luck rather than bad genes that did them in.

Hadjmichael et al. 1996, p. 1 2. Inter-American Development Bank 1995, p. 19 3. Middle Eastern Department, 1996, p. 9. 4. World Bank 1993d, p. 191. 5. United Nations, 1996, p. 8 6. Solow 1957. 7. U.S. Statistical Abstract Calculation 1995. 8. The advantages of specialization have been emphasized by economists from Adam Smith to Paul Romer (1992). 9. Groliers on Compuserve, article on Luddites. 10. Baumol 1986 discusses data on long-run unemployment for the United Kingdom, United States, and Germany. 11. United Nations Development Programs Human Development Report, 1996, p. 2; 1993 HDR pp. 35-36 "Growth without employment." 12.


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Conscious Capitalism, With a New Preface by the Authors: Liberating the Heroic Spirit of Business by John Mackey, Rajendra Sisodia, Bill George

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Abraham Maslow, Bear Stearns, benefit corporation, Berlin Wall, Buckminster Fuller, business process, carbon footprint, collective bargaining, corporate governance, corporate social responsibility, creative destruction, crony capitalism, cross-subsidies, do well by doing good, en.wikipedia.org, Everything should be made as simple as possible, Fall of the Berlin Wall, fear of failure, Flynn Effect, income per capita, invisible hand, Jeff Bezos, job satisfaction, John Elkington, lone genius, low interest rates, Mahatma Gandhi, microcredit, Nelson Mandela, Occupy movement, profit maximization, Ralph Waldo Emerson, shareholder value, six sigma, social intelligence, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, Steven Pinker, systems thinking, The Fortune at the Bottom of the Pyramid, The Wealth of Nations by Adam Smith, too big to fail, union organizing, wealth creators, women in the workforce, zero-sum game

Economists, social critics, and business leaders largely disregarded the second and often more powerful aspect of human nature: the desire and need to care for others and for ideals and causes that transcend one’s self-interest. The founding father of modern capitalism, Adam Smith, recognized both of these powerful human motivations. His book The Theory of Moral Sentiments preceded his far better-known book, The Wealth of Nations, by seventeen years. In the earlier book, he outlined an ethics based on our ability to empathize with others and to care about their opinions. Through our ability to empathize, we are able to understand how other people are feeling and imagine what it would be like to be in their shoes.

Coupled with our overall higher collective intelligence, this means that many more of us are capable of comprehending and acting on greater complexity than ever before. We will discuss the rise in consciousness momentarily, but first, let’s take a look at a significant recent turning point in our history. 1989: The World Changes An extraordinary historical coincidence occurred when Adam Smith’s Wealth of Nations was published in 1776, the same year that the United States issued its Declaration of Independence. The world soon witnessed the incredible power of free people and free markets coming together, especially in the United States. This was unprecedented in human history; for the first time, ordinary people were masters of their own destiny as a matter of law, and could through diligence and enterprise rise from nothing to great heights of material prosperity and social esteem.

Conscious Capitalism recognizes that business is the ultimate positive-sum game, in which it is possible to create a Win6 for all the stakeholders of the business. No one has to lose, not even competitors; if competitors see each other as potential teachers and allies in helping each other improve, they can all become better and less antagonistic or complacent. Adam Smith’s “invisible hand” works fairly well at the market level to align what companies do with what people need. At the company level, however, it is essential that the “conscious mind” of management create a system in which all major stakeholders are aligned with the purpose of the organization and with each other.


pages: 124 words: 39,011

Beyond Outrage: Expanded Edition: What Has Gone Wrong With Our Economy and Our Democracy, and How to Fix It by Robert B. Reich

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Alan Greenspan, banking crisis, benefit corporation, business cycle, carried interest, collateralized debt obligation, collective bargaining, Cornelius Vanderbilt, Credit Default Swap, credit default swaps / collateralized debt obligations, desegregation, electricity market, Ford Model T, full employment, Glass-Steagall Act, Home mortgage interest deduction, job automation, low interest rates, Mahatma Gandhi, minimum wage unemployment, money market fund, Nelson Mandela, new economy, Occupy movement, offshore financial centre, plutocrats, Ponzi scheme, race to the bottom, Ronald Reagan, Savings and loan crisis, single-payer health, special drawing rights, The Wealth of Nations by Adam Smith, Tim Cook: Apple, too big to fail, trickle-down economics, women in the workforce, working poor, zero-sum game

A society where one set of religious views is imposed on a large number of citizens who disagree with them is not a democracy. It’s a theocracy. Yet an economy is built on a foundation of shared public morality. Adam Smith, the putative founder of modern economics, never called himself an economist. The separate field of economics didn’t exist in the eighteenth century, when Smith wrote. He called himself a moral philosopher. And the book he was proudest of wasn’t The Wealth of Nations but his Theory of Moral Sentiments—about the ties that bind people together into societies. Those ties are now being shredded in America by the regressives. Rather than stop the abuses of economic power and privilege that are characterizing so many decisions in the nation’s boardrooms and executive suites, they would rather stir up Americans about the most intimate decisions people make.


pages: 424 words: 115,035

How Will Capitalism End? by Wolfgang Streeck

"there is no alternative" (TINA), accounting loophole / creative accounting, air traffic controllers' union, Airbnb, Alan Greenspan, basic income, behavioural economics, Ben Bernanke: helicopter money, billion-dollar mistake, Bretton Woods, business cycle, 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, creative destruction, credit crunch, David Brooks, David Graeber, debt deflation, deglobalization, deindustrialization, disruptive innovation, en.wikipedia.org, eurozone crisis, failed state, financial deregulation, financial innovation, first-past-the-post, fixed income, full employment, Gini coefficient, global reserve currency, Google Glasses, haute cuisine, income inequality, information asymmetry, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, junk bonds, Kenneth Rogoff, labour market flexibility, labour mobility, late capitalism, liberal capitalism, low interest rates, market bubble, means of production, military-industrial complex, moral hazard, North Sea oil, offshore financial centre, open borders, pension reform, 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, tacit knowledge, technological determinism, The Future of Employment, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transaction costs, Uber for X, upwardly mobile, Vilfredo Pareto, winner-take-all economy, Wolfgang Streeck

It is high time for the mainstream of the discipline to remember its roots and join the battle, even though we know that the capitalist reorganization of the university that is under way everywhere is not least designed precisely to eliminate critical reflection, for the all-powerful purpose of economic efficiency. But then, if public sociology cannot make itself heard in this public, how can it hope ever to be noticed in the world of YouTube, Facebook, Fox TV and the BILD-Zeitung? Notes Introduction 1Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, New York: Oxford University Press 1993 [1776]. 2Bernard de Mandeville, The Fable of The Bees: or, Private Vices, Publick Benefits, Indianapolis, IN: Liberty Fund 1988 [1714]. 3Definitions of capitalism abound and tend to be both elaborate and eclectic, in the sense of consisting of changing combinations of selected characteristics.

See Jens Beckert, Imagined Futures: Fictionality in Economic Action, MPIfG Discussion Paper 11/8, Cologne: Max Planck Institute for the Study of Societies 2011; Jens Beckert, ‘The Transcending Power of Goods: Imaginative Value in the Economy’. In: Beckert, Jens and Patrick Aspers, eds, The Worth of Goods: Valuation and Pricing in the Economy, Oxford: Oxford University Press 2011, pp. 106–130. 25Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, p. 22. 26David Riesman with Nathan Glazer and Reuel Denney, The Lonely Crowd: A Study of the Changing American Character, New Haven, CT: Yale University Press 1950. 27Vance Packard, The Hidden Persuaders, New York: D. McKay Co 1957. 28This is an interesting contrast to economics which, thanks to its rational choice framework, can be prescriptive and analytical at the same time – or can dress up prescription as analysis. 29Note in this context also the inflationary use in American public speech of the word, ‘dream’, as in ‘American dream’, in a culture that is both the most consumerist on earth and, allegedly, steeped in Yankee rationalism and utilitarianism.

‘Money’ is, rather, primarily a weapon in this struggle, and prices are expressions of the struggle; they are instruments of calculation only as estimated quantifications of relative chances in this struggle of interests.3 Weber’s socio-political concept of money differs fundamentally from that of liberal economics.4 The founding documents of that tradition are Chapters IV and V of Adam Smith’s Wealth of Nations, in which money is explained as an increasingly universal medium of exchange, serving an (ultimately, unlimited) expansion of trade relations in ‘advanced societies’ – that is, societies based on a division of labour. Money replaces direct exchange by indirect exchange, through the interpolation of a universally available, easily transportable, infinitely divisible and durable intermediate commodity (a process described by Marx as ‘simple circulation’, C–M–C).


pages: 479 words: 113,510

Fed Up: An Insider's Take on Why the Federal Reserve Is Bad for America by Danielle Dimartino Booth

Affordable Care Act / Obamacare, Alan Greenspan, asset-backed security, bank run, barriers to entry, Basel III, Bear Stearns, Bernie Sanders, Black Monday: stock market crash in 1987, break the buck, Bretton Woods, business cycle, central bank independence, collateralized debt obligation, corporate raider, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, financial deregulation, financial engineering, financial innovation, fixed income, Flash crash, forward guidance, full employment, George Akerlof, Glass-Steagall Act, greed is good, Greenspan put, high net worth, housing crisis, income inequality, index fund, inflation targeting, interest rate swap, invisible hand, John Meriwether, Joseph Schumpeter, junk bonds, liquidity trap, London Whale, Long Term Capital Management, low interest rates, margin call, market bubble, Mexican peso crisis / tequila crisis, money market fund, moral hazard, Myron Scholes, natural language processing, Navinder Sarao, negative equity, new economy, Northern Rock, obamacare, Phillips curve, price stability, proprietary trading, pushing on a string, quantitative easing, regulatory arbitrage, Robert Shiller, Ronald Reagan, selection bias, short selling, side project, Silicon Valley, stock buybacks, tail risk, The Great Moderation, The Wealth of Nations by Adam Smith, too big to fail, trickle-down economics, yield curve

“Economists view the world as being the outcome of the ‘invisible hand,’ that is, a world where private decisions are unknowingly guided by prices to allocate resources efficiently,” Gorton said. He’d described the first thing I had ever learned from my father about laissez-faire—the philosophy cherished by all Fed economists—as first described in Adam Smith’s The Wealth of Nations. “The credit crisis raises the question of how it is that we could get slapped in the face by the invisible hand,” Gorton said. (Gorton’s quotes are taken from an updated paper that developed his ideas more fully.) “What happened? Many private decisions were made, over a long time, which created the shadow banking system.”

“Economists view the world as being the outcome”: FRBA: Gary Gorton, “Slapped in the Face by the Invisible Hand: Banking and the Panic of 2007” (paper, Federal Reserve Bank of Atlanta 2009 Financial Markets Conference: Financial Innovation and Crisis, May 11–13, 2009), 2, frbatlanta.org/-/media/Documents/news/conferences/2009/financial-markets-conference/gorton.pdf. He’d described the first thing: Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, first published in 1776. The book by the Scottish economist and moral philosopher was widely influential. I was surprised to learn that he never uses the term “laissez-faire” in the book. “The credit crisis raises”: Gorton, “Slapped in the Face by the Invisible Hand,” 2.


pages: 446 words: 117,660

Arguing With Zombies: Economics, Politics, and the Fight for a Better Future by Paul Krugman

affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, Andrei Shleifer, antiwork, Asian financial crisis, bank run, banking crisis, basic income, behavioural economics, benefit corporation, Berlin Wall, Bernie Madoff, bitcoin, blockchain, bond market vigilante , Bonfire of the Vanities, business cycle, capital asset pricing model, carbon footprint, carbon tax, Carmen Reinhart, central bank independence, centre right, Climategate, cognitive dissonance, cryptocurrency, David Ricardo: comparative advantage, different worldview, Donald Trump, Edward Glaeser, employer provided health coverage, Eugene Fama: efficient market hypothesis, fake news, Fall of the Berlin Wall, fiat currency, financial deregulation, financial innovation, financial repression, frictionless, frictionless market, fudge factor, full employment, green new deal, Growth in a Time of Debt, hiring and firing, illegal immigration, income inequality, index fund, indoor plumbing, invisible hand, it is difficult to get a man to understand something, when his salary depends on his not understanding it, job automation, John Snow's cholera map, Joseph Schumpeter, Kenneth Rogoff, knowledge worker, labor-force participation, large denomination, liquidity trap, London Whale, low interest rates, market bubble, market clearing, market fundamentalism, means of production, Modern Monetary Theory, New Urbanism, obamacare, oil shock, open borders, Paul Samuelson, plutocrats, Ponzi scheme, post-truth, price stability, public intellectual, quantitative easing, road to serfdom, Robert Gordon, Robert Shiller, Ronald Reagan, secular stagnation, Seymour Hersh, stock buybacks, The Chicago School, The Great Moderation, the map is not the territory, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, universal basic income, very high income, We are all Keynesians now, working-age population

In practical terms, this will translate into more cautious policy advice—and a reduced willingness to dismantle economic safeguards in the faith that markets will solve all problems. II. FROM SMITH TO KEYNES AND BACK The birth of economics as a discipline is usually credited to Adam Smith, who published The Wealth of Nations in 1776. Over the next 160 years an extensive body of economic theory was developed, whose central message was: Trust the market. Yes, economists admitted that there were cases in which markets might fail, of which the most important was the case of “externalities”—costs that people impose on others without paying the price, like traffic congestion or pollution.

But since baby-sitting opportunities arise only when someone goes out for the night, this meant that baby-sitting jobs were hard to find, which made members of the co-op even more reluctant to go out, making baby-sitting jobs even scarcer . . . In short, the co-op fell into a recession. O.K., what do you think of this story? Don’t dismiss it as silly and trivial: economists have used small-scale examples to shed light on big questions ever since Adam Smith saw the roots of economic progress in a pin factory, and they’re right to do so. The question is whether this particular example, in which a recession is a problem of inadequate demand—there isn’t enough demand for baby-sitting to provide jobs for everyone who wants one—gets at the essence of what happens in a recession.

First there were gold and silver coins, which were heavy, required lots of security, and consumed a lot of resources to produce. Then came bank notes backed by fractional reserves. These were popular because they were much easier to deal with than bags of coins; they also reduced the need for physical precious metals, which, as Adam Smith said, provided “a sort of waggon-way through the air,” freeing up resources for other uses. Even so, the system still required substantial amounts of commodity money. But central banking, in which private banks held their reserves as deposits at the central bank rather than in gold or silver, greatly reduced this need, and the shift to fiat money eliminated it almost completely.


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The New Sell and Sell Short: How to Take Profits, Cut Losses, and Benefit From Price Declines by Alexander Elder

Atul Gawande, backtesting, Bear Stearns, Boeing 747, buy and hold, buy low sell high, Checklist Manifesto, double helix, impulse control, low interest rates, paper trading, short selling, systematic trading, The Wealth of Nations by Adam Smith, uptick rule

Personal communication, 2007. Patterson, Jacqueline. Personal communication, 2006. Rauschkolb, James. Personal communication, 2007. Rhea, Robert. The Dow Theory. New York, NY: Barron’s, 1932. Schroeder, Alice. The Snowball: Warren Buffett and the Business of Life. New York, NY: Bantam, 2009. Smith, Adam. The Wealth of Nations. New York, NY: Bantam Classics, 2003. Steidlmeier, J. Peter. Presentation at a CompuTrac conference, 1986. Teweles, Richard J., and Frank J. Jones. The Futures Game, 3rd ed. New York, NY: McGraw Hill, 1998. Weis, David. Catching Trend Reversals: a video. New York, NY: elder.com, 2007.

Their covering slows down the decline, and that’s when the bargain hunters step in. Next thing you know, a bottom is in place and the stock is rising again. Short-selling dampens excessive price swings and benefits the public. I do not want to imply that short-sellers are a bunch of social workers. We aren’t. But as the great economist Adam Smith showed two centuries ago, people in the free market help others by doing what is best for themselves. Bears help the markets, as long as there is no collusion between them—no “bear raids.” This caveat applies equally to buying, to manipulating stocks upward. While the government has a legitimate role in policing the market, in its zeal, it slapped several illogical restrictions on short-sellers.

This is why we will bypass buying and take a closer look at shorting futures. Let us see how we can take advantage of their propensity for relatively slow and steady rises and sharp declines. Cocoa is a notoriously difficult market to trade. An American journalist who used to write under the pseudonym of Adam Smith in the 1970s quipped that if you ever feel a desire to trade cocoa futures, just lie down and wait until the feeling passes. Cocoa is notorious for its brief violent moves. As you can see on this chart, most of its violence is to the downside (Figure 8.1). Even in a relatively peaceful stock market, rallies tend to last longer than declines.


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The Socialist Manifesto: The Case for Radical Politics in an Era of Extreme Inequality by Bhaskar Sunkara

Affordable Care Act / Obamacare, agricultural Revolution, Bernie Sanders, British Empire, business climate, business cycle, capital controls, centre right, Charles Lindbergh, collective bargaining, Deng Xiaoping, deskilling, Donald Trump, equal pay for equal work, fake news, false flag, feminist movement, Ferguson, Missouri, Francis Fukuyama: the end of history, full employment, gig economy, Great Leap Forward, Gunnar Myrdal, happiness index / gross national happiness, high-speed rail, Honoré de Balzac, income inequality, inventory management, Jeremy Corbyn, labor-force participation, land reform, land value tax, Mark Zuckerberg, means of production, Meghnad Desai, Mikhail Gorbachev, Neil Kinnock, new economy, Occupy movement, postindustrial economy, precariat, race to the bottom, Ralph Waldo Emerson, self-driving car, Silicon Valley, SimCity, single-payer health, Steve Bannon, telemarketer, The Wealth of Nations by Adam Smith, too big to fail, union organizing, Upton Sinclair, urban renewal, We are all Keynesians now, We are the 99%

If successful, they would have resulted in a society where a radically transformed, democratic state held formerly private property and used it rationally under the direction and to the benefit of the people. How this would work in practice was beyond the scope of Marx’s ambition, and anyway, the question never came close to relevancy in his lifetime. Marx could not have been expected to see perfectly into the future. But he proved remarkably farsighted. Adam Smith wrote The Wealth of Nations in 1776 and died in 1790. He only saw the very beginning of capitalism. It was Marx who gazed at the great factory cities, steamboats, and railroads, and guessed that more marvels were to come. It was also Marx who never lost sight of the human cost of progress. His moral outrage made him a socialist, but he spent far more of his life examining capitalism than envisioning an alternative to it.

Even in the bleakest chapters in this book, an urgent commitment should be clear: if there is a future for humanity—free of exploitation, climate holocaust, demagoguery, and the war of all against all—then we must place our faith in the ability of people to save themselves and each other. PART I TWO GRAVEDIGGERS CAPITALISM SEEMS LIKE our destiny. Ever since we started beating animals to death with stones, we’ve been trading their furs. Adam Smith wrote about humanity’s “propensity to truck, barter, and exchange one thing for another.” We’ve been doing that in markets for millennia. Have the seeds of capitalism always existed, not just in our societies but in our souls? A close look at the system’s rise reveals something else. Namely, that it was an accident.


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The Great Tax Robbery: How Britain Became a Tax Haven for Fat Cats and Big Business by Richard Brooks

accounting loophole / creative accounting, bank run, Big bang: deregulation of the City of London, bonus culture, Bretton Woods, carried interest, Celtic Tiger, collateralized debt obligation, commoditize, Corn Laws, corporate social responsibility, crony capitalism, cross-border payments, Double Irish / Dutch Sandwich, financial deregulation, financial engineering, haute couture, information security, intangible asset, interest rate swap, Jarndyce and Jarndyce, mega-rich, Northern Rock, offshore financial centre, race to the bottom, shareholder value, short selling, supply-chain management, The Chicago School, The Wealth of Nations by Adam Smith, transfer pricing, two and twenty

Tax campaigner Nick Shaxson has cached the blog at http://treasureislands.org/progressive-tax-blog-reloaded/ 45‌ ‘Finance Company Regime’, KPMG, February 2012; http://www.kpmg.com/UK/en/WhatWeDo/Tax/Documents/finance-company-regime.pdf 46‌ Interview with author, 2011. 47‌ ARC response to GAAR proposal, 5 April 2012; http://www.fda.org.uk/Media/Union-questions-Government-stance-on-tax-avoidance.aspx 48‌ Webcast available at: http://www.aei.org/events/2012/09/27/uk-tax-reform-a-road-map-for-the-us/ 49‌ Speaking at Policy Exchange seminar, 8 December 2011. 50‌ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London: 1776), Book I, Chapter XI. 51‌ FoI response to author, 19 April 2011. 52‌ The service is outlined in E&Y’s website description of its tax policy development service; http://www.ey.com/UK/en/Services/Tax/Business-Tax/Tax-Policy-and-Controversy/Tax-Policy-Development 53‌ Finance Bill (no. 2), 1984 debate, April 1984 Hansard, vol. 58, columns 248–88. 54‌ Aon filing with Securities Exchange Commission, 13 January 2012. 55‌ Reported in Private Eye, issue 1349, September 2013. 56‌ Pfizer Inc directors’ conference call with analysts 29 April 2014. 57‌ Podcast by Bill Dodwell, Deloitte, September 2011; http://www.lexisauditorium.com/theatre.aspx?

‘We [the UK] have been quite fortunate in our leaders over a few years,’ he remarked by way of explanation for getting the offshore corporate tax breaks on the statute book.‌48 Or as Morris had put it a few months before: ‘We have business talking to government, we have government talking to advisers, we have everybody essentially trying to move in the same direction.’‌49 This was supposedly the modern way to make policy. In fact, a mere 235 years earlier, Adam Smith had seen the same kind of thing in action and observed: The proposal of any new law or regulation of commerce which comes from this order [businessmen], ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention.


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Ten Lessons for a Post-Pandemic World by Fareed Zakaria

"there is no alternative" (TINA), 15-minute city, AlphaGo, An Inconvenient Truth, anti-fragile, Asian financial crisis, basic income, Bernie Sanders, Boris Johnson, butterfly effect, Capital in the Twenty-First Century by Thomas Piketty, car-free, carbon tax, central bank independence, clean water, cloud computing, colonial rule, contact tracing, coronavirus, COVID-19, Credit Default Swap, David Graeber, Day of the Dead, deep learning, DeepMind, deglobalization, Demis Hassabis, Deng Xiaoping, digital divide, Dominic Cummings, Donald Trump, Edward Glaeser, Edward Jenner, Elon Musk, Erik Brynjolfsson, failed state, financial engineering, Francis Fukuyama: the end of history, future of work, gentrification, George Floyd, gig economy, Gini coefficient, global pandemic, global reserve currency, global supply chain, green new deal, hiring and firing, housing crisis, imperial preference, income inequality, Indoor air pollution, invention of the wheel, Jane Jacobs, Jeff Bezos, Jeremy Corbyn, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Snow's cholera map, junk bonds, lockdown, Long Term Capital Management, low interest rates, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Martin Wolf, means of production, megacity, Mexican peso crisis / tequila crisis, middle-income trap, Monroe Doctrine, Nate Silver, Nick Bostrom, oil shock, open borders, out of africa, Parag Khanna, Paris climate accords, Peter Thiel, plutocrats, popular capitalism, Productivity paradox, purchasing power parity, remote working, reserve currency, reshoring, restrictive zoning, ride hailing / ride sharing, Ronald Reagan, secular stagnation, Silicon Valley, social distancing, software is eating the world, South China Sea, Steve Bannon, Steve Jobs, Steven Pinker, Suez crisis 1956, TED Talk, the built environment, The Death and Life of Great American Cities, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas L Friedman, Tim Cook: Apple, trade route, UNCLOS, universal basic income, urban planning, Washington Consensus, white flight, Works Progress Administration, zoonotic diseases

McKinsey Global Institute, “Globalization in Transition: The Future of Trade and Value Chains,” January 2019, 72, https://www.mckinsey.com/~/media/mckinsey/featured%20insights/innovation/globalization%20in%20transition%20the%20future%20of%20trade%20and%20value%20chains/mgi-globalization%20in%20transition-the-future-of-trade-and-value-chains-full-report.ashx. 181 “South-South trade”: Susan Lund and Laura Tyson, “Globalization Is Not in Retreat: Digital Technology and the Future of Trade,” Foreign Affairs, May/June 2018. 181 less than 35% of Asia’s GDP: Organisation for Economic Co-operation and Development (OECD) Report: “Perspectives on Global Development 2019: Rethinking Development Strategies,” November 2018, Figure 4.9, 164, http://obela.org/system/files/persp_glob_dev-2019-en.pdf. 181 $120 billion: Benn Steil and Benjamin Della Rocca, “Belt and Road Tracker,” Council on Foreign Relations, Greenberg Center for Geoeconomic Studies, May 8, 2019, accessed July 13, 2020, https://www.cfr.org/article/belt-and-road-tracker. 181 495 million people: “Overview and Benefits of the CPTPP,” Government of Canada, February 11, 2019, https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cptpp-ptpgp/overview-apercu.aspx. 182 migrating out of Africa: Cassandra Love, “In Their Footsteps: Human Migration out of Africa,” National Geographic, January 18, 2019, https://www.nationalgeographic.org/article/their-footsteps-human-migration-out-africa/. 182 the long process of globalization: For a recent work that dates globalization substantially earlier than most accounts (globalization primarily within the Old World of Africa-Eurasia, but including Norse expeditions to Iceland, Greenland, and Canada), see: Valerie Hansen, The Year 1000: When Explorers Connected the World and Globalization Began (New York: Scribner, 2020). 182 “most important events”: Adam Smith, The Wealth of Nations, Volume II, Chap. VII, Part III, “Of the Advantages which Europe has derived From the Discovery of America, and from that of a Passage to the East Indies by the Cape of Good Hope,” referenced in Kevin H. O’Rourke and Jeffrey G. Williamson, “When Did Globalization Begin?,” European Review of Economic History 6, no. 1 (April 2002): 23–50, https://doi.org/10.1017/S1361491602000023, building on the work of J.

In the intervening millennia, the long process of globalization has continued apace, through wars and plagues. As empires rose—Persian, Roman, Incan, Mali, Mongol, and Ottoman—they all expanded trade routes, discovered new frontiers, and caused the intermingling of peoples. The point at which modern globalization was born can be dated more precisely. No less a luminary than Adam Smith suggested two years—1492 and 1498. In the former, Columbus “discovered” the Americas; in the latter, Vasco da Gama found a new route to Asia by going around Africa. Smith called these “the two greatest and most important events recorded in the history of mankind.” Why? They meant that the global economy had massively expanded, adding millions of new consumers and producers.


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A Hacker's Mind: How the Powerful Bend Society's Rules, and How to Bend Them Back by Bruce Schneier

4chan, Airbnb, airport security, algorithmic trading, Alignment Problem, AlphaGo, Automated Insights, banking crisis, Big Tech, bitcoin, blockchain, Boeing 737 MAX, Brian Krebs, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, computerized trading, coronavirus, corporate personhood, COVID-19, cryptocurrency, dark pattern, deepfake, defense in depth, disinformation, Donald Trump, Double Irish / Dutch Sandwich, driverless car, Edward Thorp, Elon Musk, fake news, financial innovation, Financial Instability Hypothesis, first-past-the-post, Flash crash, full employment, gig economy, global pandemic, Goodhart's law, GPT-3, Greensill Capital, high net worth, Hyman Minsky, income inequality, independent contractor, index fund, information security, intangible asset, Internet of things, Isaac Newton, Jeff Bezos, job automation, late capitalism, lockdown, Lyft, Mark Zuckerberg, money market fund, moral hazard, move fast and break things, Nate Silver, offshore financial centre, OpenAI, payday loans, Peter Thiel, precautionary principle, Ralph Nader, recommendation engine, ride hailing / ride sharing, self-driving car, sentiment analysis, Skype, smart cities, SoftBank, supply chain finance, supply-chain attack, surveillance capitalism, systems thinking, TaskRabbit, technological determinism, TED Talk, The Wealth of Nations by Adam Smith, theory of mind, TikTok, too big to fail, Turing test, Uber and Lyft, uber lyft, ubercab, UNCLOS, union organizing, web application, WeWork, When a measure becomes a target, WikiLeaks, zero day

HACKING THE MARKET 92trucks would shuffle: David Kocieniewski (20 Jun 2013), “A shuffle of aluminum, but to banks, pure gold,” New York Times, https://www.nytimes.com/2013/07/21/business/a-shuffle-of-aluminum-but-to-banks-pure-gold.html. 93the economic interests of businessmen: Adam Smith (1776), The Wealth of Nations, William Strahan, pp. 138, 219–220. 23. “TOO BIG TO FAIL” 98bail them out again if needed: Michael Greenberger (Jun 2018), “Too big to fail U.S. banks’ regulatory alchemy: Converting an obscure agency footnote into an ‘at will’ nullification of Dodd-Frank’s regulation of the multi-trillion dollar financial swaps market,” Institute for New Economic Thinking, https://www.ineteconomics.org/uploads/papers/WP_74.pdf. 24.

To some extent this arises from the natural complexity of our high-tech world, but to another extent it is a deliberate hack designed to impede users’ access to accurate information. •Monopolies eliminate choice. Monopolies aren’t new, and pre-capitalism they weren’t a hack. But in a market system composed of sellers competing for buyers, they subvert the market mechanism. Adam Smith wrote about this in 1776, explaining that the economic interests of businessmen are often misaligned with public interests. The goal of businessmen—and, of course, business enterprises—is to maximize profits. The goal of the public is to (more or less) maximize product quantity, quality, variety, and innovation, and minimize prices.


pages: 1,000 words: 247,974

Empire of Cotton: A Global History by Sven Beckert

agricultural Revolution, Bartolomé de las Casas, British Empire, colonial exploitation, colonial rule, company town, Corn Laws, cotton gin, creative destruction, crony capitalism, deindustrialization, European colonialism, flying shuttle, Francisco Pizarro, Great Leap Forward, imperial preference, industrial cluster, James Hargreaves, James Watt: steam engine, joint-stock company, laissez-faire capitalism, land tenure, Mahatma Gandhi, market fundamentalism, race to the bottom, restrictive zoning, scientific management, Silicon Valley, spice trade, spinning jenny, Suez canal 1869, The Wealth of Nations by Adam Smith, transaction costs, transatlantic slave trade, union organizing, vertical integration, women in the workforce, work culture

., 1886), 45; the European traveler is quoted in Jeremy Prestholdt, “On the Global Repercussions of East African Consumerism,” American Historical Review 109, no. 3 (June 1, 2004): 761, 765; Robert Harms, The Diligent: A Voyage Through the Worlds of the Slave Trade (New York: Basic Books, 2002), 81; Miles to Shoolbred, 25 July 1779, T70/1483, National Archives of the UK, Kew, as quoted in Metcalf, “A Microcosm of Why Africans Sold Slaves,” 388. 15. See also Carl Wennerlind, Casualties of Credit: The English Financial Revolution, 1620–1720 (Cambridge, MA: Harvard University Press, 2011); Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, bk. IV, ch. VII, pt. II, vol. II, Edwin Cannan, ed. (Chicago: University of Chicago Press, 1976), 75. 16. Mazzaoui, Italian Cotton, 162; Alfred P. Wadsworth and Julia De Lacy Mann, The Cotton Trade and Industrial Lancashire, 1600–1780 (Manchester: Manchester University Press, 1931), 116; Mann, The Cotton Trade of Great Britain, 5; Wolfgang von Stromer, Die Gründung der Baumwollindustrie in Mitteleuropa (Stuttgart: Hiersemann, 1978), 28; H.

Further examination of Egyptian cotton imports having convinced them that “thread is remarkably strong,” they concluded that “considering the advantages the pasha possesses and his vicinity, we conceive the British manufacturer is entitled to greater protection than the above duty, and it is the intention of the agents here to address government on this subject.”61 What they saw in Egypt impressed other observers as well. When in 1843 French textile manufacturer Jules Poulain studied the cotton mills of Egypt and provided Ali with a detailed report on his observations, he encouraged further efforts at industrialization. According to Poulain, “It is industry that makes the wealth of nations.” Poulain, along with Ali, believed that it was “natural [to] manufacture the product of one’s agriculture.” Indeed, the fact that Egypt grew its own cotton would be a comparative advantage vis-à-vis France and the United Kingdom. If the French succeeded in the Indian town of Pondicherry (where they had just opened a small spinning mill), Poulain believed, the Egyptians could succeed in Egypt as well, not least because an “immense advantage” comes from the fact that labor in Egypt was much cheaper.62 And here, at the labor question, Egypt’s story began to diverge.

., West African Economic and Social History: Studies in Memory of Marion Johnson (Madison: African Studies Program, University of Wisconsin Press, 1990), 90; Extract Letter, East India Company, Commercial Department, London, to Bombay, May 4, 1791, in Home Miss. 374, Oriental and India Office Collections, British Library, London; Cousquer, Nantes, 32; de Flaix is quoted in Richard Roberts, “West Africa and the Pondicherry Textile Industry,” in Roy, ed., Cloth and Commerce, 142. 51. Wadsworth and Mann, The Cotton Trade, 116, 127, 147; Inikori, Africans and the Industrial Revolution in England, 434–35, 448; Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, bk. IV, ch. I, vol. I, 470. 52. Wadsworth and Mann, The Cotton Trade, 122, 131, 151, 154; Extract Letter to Bombay, Commercial Department, May 4, 1791, in Home Miscellaneous 374, Oriental and India Office Collections, British Library, London. 53. Maurice Dobb, Studies in the Development of Capitalism (New York: International Publishers, 1947), 277; George Unwin, in introduction to George W.


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The Great Reset: How the Post-Crash Economy Will Change the Way We Live and Work by Richard Florida

"World Economic Forum" Davos, Alan Greenspan, banking crisis, big-box store, bike sharing, blue-collar work, business cycle, car-free, carbon footprint, collapse of Lehman Brothers, company town, congestion charging, congestion pricing, creative destruction, deskilling, edge city, Edward Glaeser, falling living standards, financial engineering, financial innovation, Ford paid five dollars a day, high net worth, high-speed rail, Home mortgage interest deduction, housing crisis, if you build it, they will come, income inequality, indoor plumbing, interchangeable parts, invention of the telephone, Jane Jacobs, Joseph Schumpeter, knowledge economy, Lewis Mumford, low skilled workers, manufacturing employment, McMansion, megaproject, Menlo Park, Nate Silver, New Economic Geography, new economy, New Urbanism, oil shock, Own Your Own Home, pattern recognition, peak oil, Ponzi scheme, post-industrial society, postindustrial economy, reserve currency, Richard Florida, Robert Shiller, scientific management, secular stagnation, Silicon Valley, Silicon Valley startup, social intelligence, sovereign wealth fund, starchitect, the built environment, The Wealth of Nations by Adam Smith, Thomas L Friedman, total factor productivity, urban decay, urban planning, urban renewal, white flight, young professional, Zipcar

Haughney, “Bloomberg Has Added Jobs, and Lost Some, Too.” 9. Based on an analysis of U.S. Bureau of Labor Statistics data by Charlotta Mellander. 10. Ibid. 11. Elizabeth Currid, The Warhol Economy (Prince ton, N.J.: Prince ton University Press, 2008). 12. Jane Jacobs, The Economy of Cities (New York: Vintage, 1970); Jacobs, Cities and the Wealth of Nations (New York: Vintage, 1985). 13. Patrick McGeehan, “After Reversal of Fortune, City Takes a New Look at Wall Street,” New York Times, February 22, 2009. 14. Fred Siegel and Harry Siegel, “Can Bloomberg’s ‘Luxury’ City Survive?” Wall Street Journal, October 14, 2009. Chapter 9: Who’s Next?

For our state-level findings, see Jason Rentfrow, Charlotta Mellander, and Richard Florida, “Happy States of America: A State-Level Analysis of Psychological, Economic, and Social Well-being,” Journal of Research in Personality 43, no. 3 (December 2009), 1073–1082; and my “Happy States and the Economic Crisis,” Atlantic, August 17, 2009. For our national-level findings, see my “Why Class Still Matters,” Atlantic, May 18, 2009; “Class and the Wealth of Nations,” Atlantic, May 19, 2009; “Class and Innovation,” Atlantic, May 20, 2009; “Class and Entrepreneurship,” Atlantic, May 21, 2009; “Class and the Happiness of Nations,” Atlantic, May 22, 2009; all retrieved from http://correspondents.theatlantic.com. 23. Edward Glaeser, “How Some Plaes Fare Better in Hard Times,” New York Times Economix (online), March 24, 2009, retrieved from http://economix.blogs.nytimes.com/2009/03/24/how-some-places-fare-better-in-hard-times. 24.

For our state-level findings, see Jason Rentfrow, Charlotta Mellander, and Richard Florida, “Happy States of America: A State-level Analysis of Psychological, Economic, and Social Well-being,” Journal of Research in Personality, 43, no. 6 (2009): 1073–1082; and my “Happy States and the Economic Crisis,” Atlantic, August 17, 2009. For our national-level findings see my “Why Class Still Matters,” Atlantic, May 18, 2009; “Class and the Wealth of Nations,” Atlantic, May 19, 2009; “Class and Innovation,” May 20, 2009; “Class and Entrepreneurship,” Atlantic, May 21, 2009; “Class and the Happiness of Nations,” Atlantic, May 22, 2009; all retrieved from http://correspondents.theatlantic.com. 11. Catherine Rampell, “The Mancession,” New York Times, August 10, 2009, retrieved from http://economix.blogs.nytimes.com/2009/08/10/the-mancession. 12.


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The Social Life of Money by Nigel Dodd

"hyperreality Baudrillard"~20 OR "Baudrillard hyperreality", accounting loophole / creative accounting, bank run, banking crisis, banks create money, behavioural economics, Bernie Madoff, bitcoin, Bitcoin Ponzi scheme, blockchain, borderless world, Bretton Woods, BRICs, business cycle, capital controls, capitalist realism, cashless society, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computer age, conceptual framework, credit crunch, cross-subsidies, currency risk, David Graeber, debt deflation, dematerialisation, disintermediation, Dogecoin, emotional labour, eurozone crisis, fiat currency, financial engineering, financial exclusion, financial innovation, Financial Instability Hypothesis, financial repression, floating exchange rates, Fractional reserve banking, gentrification, German hyperinflation, Goldman Sachs: Vampire Squid, Herbert Marcuse, Hyman Minsky, illegal immigration, informal economy, interest rate swap, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, Kickstarter, Kula ring, laissez-faire capitalism, land reform, late capitalism, liberal capitalism, liquidity trap, litecoin, London Interbank Offered Rate, M-Pesa, Marshall McLuhan, means of production, mental accounting, microcredit, Minsky moment, mobile money, Modern Monetary Theory, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, National Debt Clock, Neal Stephenson, negative equity, new economy, Nixon shock, Nixon triggered the end of the Bretton Woods system, Occupy movement, offshore financial centre, paradox of thrift, payday loans, Peace of Westphalia, peer-to-peer, peer-to-peer lending, Ponzi scheme, post scarcity, post-Fordism, Post-Keynesian economics, postnationalism / post nation state, predatory finance, price mechanism, price stability, quantitative easing, quantitative trading / quantitative finance, remote working, rent-seeking, reserve currency, Richard Thaler, risk free rate, Robert Shiller, Satoshi Nakamoto, scientific management, 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, Veblen good, Wave and Pay, Westphalian system, WikiLeaks, Wolfgang Streeck, yield curve, zero-coupon bond

Marx Today: Selected Works and Recent Debates, New York, Palgrave Macmillan. Skidelsky, R. and E. Skidelsky (2012). How Much Is Enough? The Love of Money, and the Case for the Good Life, London, Allen Lane. Smith, A. (2007). The Theory of Moral Sentiments, New York, Cosimo Classics. Smith, A. (2008). An Inquiry into the Nature and Causes of the Wealth of Nations, Oxford, U.K., Oxford University Press. Smith, D. W. (2003). “Deleuze and Derrida, Immanence and Transcendence: Two Directions in Recent French Thought.” Between Deleuze and Derrida, P. Patton and J. Protevi, Eds. London, Continuum: 46–66. Smith, D. W. (2012). Essays on Deleuze, Edinburgh, Scotland, Edinburgh University Press.

Historically, it has occurred in various ways: for example, through the seizure of land and the expulsion of the resident population. As Harvey notes, whatever form it takes, primitive accumulation invariably involves “appropriation and co-optation of pre-existing cultural and social achievements as well as confrontation and supersession” (Harvey 2005b: 146). Marx was not the first to discuss this idea. Adam Smith did so when trying to describe the accumulation of stock that necessitated the development of the division of labor (Perelman 2000: 25). Marx dismissed Smith’s argument (with its references to beehives and anthills) as mythical, likening it to the doctrine of original sin.25 Instead, Marx argues that the division of labor Smith sought to explain originated with the violent dispossession from small-scale producers of their means of production, leaving producers with no choice but to submit to the “freedom” of wage labor.

Excessive debt has long been portrayed, alongside drinking and gambling, as a form of self harm (Manning 2000), whereas freedom from debt is aligned with a principled and contented existence. “What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience?” Adam Smith once asked (Smith 2007: 41). As Janet Roitman suggests, within the social sciences debt is usually viewed as “something contracted, exterior to a primary, original situation,” and thus as “a perversion of deviation in human relations—an abnormal situation that needs to be rectified” (Roitman 2003: 212).


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How Asia Works by Joe Studwell

affirmative action, anti-communist, Asian financial crisis, bank run, banking crisis, barriers to entry, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, collective bargaining, crony capitalism, cross-subsidies, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, demographic dividend, Deng Xiaoping, failed state, financial deregulation, financial repression, foreign exchange controls, Gini coefficient, glass ceiling, Great Leap Forward, high-speed rail, income inequality, income per capita, industrial robot, Joseph Schumpeter, Kenneth Arrow, land reform, land tenure, large denomination, liberal capitalism, low interest rates, market fragmentation, megaproject, non-tariff barriers, offshore financial centre, oil shock, open economy, passive investing, purchasing power parity, rent control, rent-seeking, Right to Buy, Ronald Coase, South China Sea, The Wealth of Nations by Adam Smith, TSMC, urban sprawl, Washington Consensus, working-age population

The German territory lost to France came back with Napoleon’s defeat by the British in 1815, but the Prussians never forgot their humiliations at the battles of Jena and Auerstadt. They finally had their revenge in the 1870 war with France. 18. Friedrich List, The National System of Political Economy (London: Longmans, Green, 1885), pp. 368–9. List claimed that the British prime minister William Pitt carried a copy of The Wealth of Nations around with him and used its arguments in negotiations with the French ‘who were destitute of all experience and political insight’ to convince them that ‘by nature France was adapted for agriculture and the production of wine’. 19. Tariff protection in the United States pitted manufacturers in the north (in favour) against exporters of agricultural raw materials in the south and west (against).

The German view was put forward by the so-called Historical School, an informal affiliation of intellectuals that was the dominant force in the political economy and jurisprudence departments of German universities in the mid nineteenth century. The group held that the history of Britain showed that a successful developing state had to deploy protectionist industrial policies in order to nurture its manufacturers. The School rejected the newly fashionable pro-free market theories associated with Adam Smith and David Ricardo as inappropriate to Germany’s stage of development. Friedrich List, the group’s greatest luminary, contended that the free market evangelism emanating from Britain was motivated largely by opportunism based on the country’s global technological leadership. In an attack on the new profession of ‘economics’, he wrote: Any nation which by means of protective duties and restrictions on navigation has raised her manufacturing power and her navigation to such a degree of development that no other nation can sustain free competition with her can do nothing wiser than to throw away these ladders of her greatness, to preach to other nations the benefits of free trade, and to declare in penitent tones that she has hitherto wandered in the paths of error, and has now for the first time succeeded in discovering the truth.18 List’s views on development had formed while he was living in the United States between 1825 and 1832, when he had studied the arguments for a protectionist industrial policy to nurture ‘infant industries’ set out by Alexander Hamilton in his Report on the Subject of Manufactures submitted to Congress in 1791.

By 1987 the World Bank was writing that the vast, integrated Korean steel plant, Pohang Iron and Steel (now known as POSCO), was ‘arguably the world’s most efficient producer’;54 the Bank had refused to finance the plant. As of 1984, three-fifths of Korean exports came from the heavy and chemical industries Park had demanded, versus less than one-quarter at the start of the HCI drive in 1973. Along the way, Korean bureaucrats were reading not the rising American stars of neo-liberal economics, or even Adam Smith, but instead Friedrich List. The Korea and Taiwan scholar Robert Wade observed when he was teaching in Korea in the late 1970s that ‘whole shelves’ of List’s books could be found in the university bookshops of Seoul. When he moved to the Massachussetts Insitute of Technology, Wade found that a solitary copy of List’s main work had last been taken out of the library in 1966.55 Such are the different economics appropriate to different stages of development.


pages: 651 words: 161,270

Global Spin: The Corporate Assault on Environmentalism by Sharon Beder

American Legislative Exchange Council, battle of ideas, benefit corporation, Black Monday: stock market crash in 1987, business climate, centre right, clean water, corporate governance, Exxon Valdez, Gary Taubes, global village, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Elkington, laissez-faire capitalism, military-industrial complex, oil shale / tar sands, Oklahoma City bombing, old-boy network, planned obsolescence, precautionary principle, price mechanism, profit maximization, Ralph Nader, RAND corporation, Ronald Reagan, scientific management, shareholder value, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, the market place, The Wealth of Nations by Adam Smith, two and twenty, urban planning

Bennett, Jeff, and Walter Block, eds. 1991. Reconciling Economics and the Environment, Australian Institute for Public Policy, West Perth. Bennett, W. Lance. 1992. ‘White Noise: The Perils of Mass Mediated Democracy’, Communication Monographs 59 (December):401-406. Bernstam, Mikhail S. 1996. ‘The Wealth of Nations and the Environment’,World Wide Web: Institute of Economic Affairs. Bielski, Vince. 1995. ‘Armed and dangerous: the Wise Use movement meets the militias’, Sierra, September/October, 33-35. Bird, Hedda. 1994. ‘Marketing is dead, long live consumer marketing’, Pulp & Paper International 36 (2):57, 59.

It also sponsors policy conferences, provides radio commentators and even has its own daily radio programme.23 Like other libertarian think-tanks that have followed it, the Cato Institute calls for many government functions to be turned over to the private sector. James Smith, author of The Idea Brokers, says “its blend of fiscal conservatism, social tolerance, and a principled selfishness grounded in writers from Adam Smith to Ayn Rand” make it “the think-tank for yuppies”.24 However, according to The Economist : Cato’s vision, taken to its logical extreme (and people at the institute are keen on taking things to their logical extremes), would be an America in which a family does whatever it likes at home; pays virtually no taxes and expects no state provision or support; has its own tank and machine gun for defence; and ignores other countries.

Whilst the IEA pledged itself to be “independent of any political party” and therefore did not publish policy recommendations, the CPS was set up to convert the Tory party to economic liberalism and formulate policies for the Party that were in line with this philosophy. It seldom exceeded seven full-time employees and an annual budget of £150,000.34 The IEA, CPS and other think-tanks, including the Adam Smith Institute and the Institute of Directors (also small compared to the average US think-tank), were nonetheless effective in the British environment because of the “extreme centralisation of British political and public life”. This gave easy access to key people within government, the media and the financial sphere, and they needed only to concentrate their persuasion on “a strategic policy-making élite” to be effective.35 These ‘second-hand dealers in ideas’—to use the IEA’s own description of its role— were typically not intellectual originators but served to collect, distil and preserve certain strands of ideas and to diffuse them more widely, not least as detailed interventions in current policy debates.36 The CPS in particular has been accused of being an “intellectual jackdaw, gleaning most of its ideas from overseas experiments— and in particular from the US.


pages: 127 words: 51,083

The Oil Age Is Over: What to Expect as the World Runs Out of Cheap Oil, 2005-2050 by Matt Savinar

Alan Greenspan, Albert Einstein, clean water, disinformation, Easter island, energy security, hydrogen economy, illegal immigration, invisible hand, military-industrial complex, new economy, off-the-grid, oil shale / tar sands, oil shock, peak oil, post-oil, Ralph Nader, reserve currency, rolling blackouts, Rosa Parks, The Wealth of Nations by Adam Smith, Y2K

This absolute confidence in money ignores the fact oil is a physical resource; that oil can be, and is being exhausted. To illustrate: imagine that Mr. Adelman and a bearded, homeless guy are placed in a sealed "rat hole" out in the middle of the desert. Mr. Adelman, being a successful economist, brings with him a copy of The Wealth of Nations by Adam Smith, and his checkbook. The homeless guy, having once been very wealthy, brings $750,000 in cash, in addition to pictures of his long-lost sons. He's a bit nervous about being picked up by the local authorities, so he also brings his handgun. The only thing the two men have to eat is a loaf of bread.


pages: 131 words: 41,052

Why Europe Will Run the 21st Century by Mark Leonard

Berlin Wall, Celtic Tiger, continuous integration, cuban missile crisis, different worldview, European colonialism, facts on the ground, failed state, global reserve currency, Global Witness, invisible hand, knowledge economy, mass immigration, non-tariff barriers, North Sea oil, one-China policy, Panopticon Jeremy Bentham, pension reform, reserve currency, Robert Gordon, shareholder value, South China Sea, The Wealth of Nations by Adam Smith, Thomas Malthus, trade liberalization, Washington Consensus

For additional analysis see Dick Leonard and Mark Leonard’s Pro-European Reader (2002), London: Palgrave Macmillan. 4Duchêne, François (1994), Jean Monnet: The First Statesman of Interdependence, New York and London: Norton. 5Ibid. 6Ibid. 7Smith, Adam (1776), An Inquiry into the Nature and Causes of the Wealth of Nations. 8I am grateful to Ana Palacio for suggesting this evocative metaphor to me. 9Miller, Vaughne (2004), EC Legislation, Standard Note SN/IA/2888, London: House of Commons Library. 10Nugent, Neill (2003, 5th edn), The Government and Politics of the European Union, Basingstoke: Palgrave Macmillan. 11DTI (1994) Review of the implementation and enforcement of EC law in the UK, 1994 Efficiency Scrutiny Report, DTI, London.

For France, German containment was the key goal, backed up by the prospects for economic growth which access to German markets and productive capacity offered – what Jacques Delors described as the marriage contract on which the EEC was founded.5 All of these were calculations of national interest, and yet the outcome of their filtering through Monnet’s European institutions was a solution to the problem of European conflict.6 In Europe today, war is not simply undesirable – it is inconceivable. The founder of liberal economics, Adam Smith, developed the evocative idea of the ‘invisible hand’ of the market to explain how a system of perfect liberty, operating under the drives and constraint of human nature and intelligently designed institutions, would give rise to an orderly society rather than a ‘war of all against all’.7 In many ways, Monnet’s genius was to develop a ‘European invisible hand’ that allows an orderly European society to emerge from each country’s national interest. 8 And that is possibly the most powerful element of Monnet’s vision: he did not try to abolish the nation-state or nationalism – simply to change its nature by pooling sovereignty.


pages: 1,034 words: 241,773

Enlightenment Now: The Case for Reason, Science, Humanism, and Progress by Steven Pinker

3D printing, Abraham Maslow, access to a mobile phone, affirmative action, Affordable Care Act / Obamacare, agricultural Revolution, Albert Einstein, Alfred Russel Wallace, Alignment Problem, An Inconvenient Truth, anti-communist, Anton Chekhov, Arthur Eddington, artificial general intelligence, availability heuristic, Ayatollah Khomeini, basic income, Berlin Wall, Bernie Sanders, biodiversity loss, Black Swan, Bonfire of the Vanities, Brexit referendum, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, carbon tax, Charlie Hebdo massacre, classic study, clean water, clockwork universe, cognitive bias, cognitive dissonance, Columbine, conceptual framework, confounding variable, correlation does not imply causation, creative destruction, CRISPR, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, dark matter, data science, decarbonisation, degrowth, deindustrialization, dematerialisation, demographic transition, Deng Xiaoping, distributed generation, diversified portfolio, Donald Trump, Doomsday Clock, double helix, Eddington experiment, Edward Jenner, effective altruism, Elon Musk, en.wikipedia.org, end world poverty, endogenous growth, energy transition, European colonialism, experimental subject, Exxon Valdez, facts on the ground, fake news, Fall of the Berlin Wall, first-past-the-post, Flynn Effect, food miles, Francis Fukuyama: the end of history, frictionless, frictionless market, Garrett Hardin, germ theory of disease, Gini coefficient, Great Leap Forward, Hacker Conference 1984, Hans Rosling, hedonic treadmill, helicopter parent, Herbert Marcuse, Herman Kahn, Hobbesian trap, humanitarian revolution, Ignaz Semmelweis: hand washing, income inequality, income per capita, Indoor air pollution, Intergovernmental Panel on Climate Change (IPCC), invention of writing, Jaron Lanier, Joan Didion, job automation, Johannes Kepler, John Snow's cholera map, Kevin Kelly, Khan Academy, knowledge economy, l'esprit de l'escalier, Laplace demon, launch on warning, life extension, long peace, longitudinal study, Louis Pasteur, Mahbub ul Haq, Martin Wolf, mass incarceration, meta-analysis, Michael Shellenberger, microaggression, Mikhail Gorbachev, minimum wage unemployment, moral hazard, mutually assured destruction, Naomi Klein, Nate Silver, Nathan Meyer Rothschild: antibiotics, negative emissions, Nelson Mandela, New Journalism, Norman Mailer, nuclear taboo, nuclear winter, obamacare, ocean acidification, Oklahoma City bombing, open economy, opioid epidemic / opioid crisis, paperclip maximiser, Paris climate accords, Paul Graham, peak oil, Peter Singer: altruism, Peter Thiel, post-truth, power law, precautionary principle, precision agriculture, prediction markets, public intellectual, purchasing power parity, radical life extension, Ralph Nader, randomized controlled trial, Ray Kurzweil, rent control, Republic of Letters, Richard Feynman, road to serfdom, Robert Gordon, Rodney Brooks, rolodex, Ronald Reagan, Rory Sutherland, Saturday Night Live, science of happiness, Scientific racism, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, Silicon Valley ideology, Simon Kuznets, Skype, smart grid, Social Justice Warrior, sovereign wealth fund, sparse data, stem cell, Stephen Hawking, Steve Bannon, Steven Pinker, Stewart Brand, Stuxnet, supervolcano, synthetic biology, tech billionaire, technological determinism, technological singularity, Ted Kaczynski, Ted Nordhaus, TED Talk, The Rise and Fall of American Growth, the scientific method, The Signal and the Noise by Nate Silver, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, total factor productivity, Tragedy of the Commons, union organizing, universal basic income, University of East Anglia, Unsafe at Any Speed, Upton Sinclair, uranium enrichment, urban renewal, W. E. B. Du Bois, War on Poverty, We wanted flying cars, instead we got 140 characters, women in the workforce, working poor, World Values Survey, Y2K

Skwire, “How Capitalism Has Killed Laundry Day,” CapX, April 11, 2016, http://capx.co/external/capitalism-has-helped-liberate-the-housewife/, and data from the Bureau of Labor Statistics. 15. Not to be missed: H. Rosling, “The Magic Washing Machine,” TED talk, Dec. 2010, https://www.ted.com/talks/hans_rosling_and_the_magic_washing_machine. 16. Good Housekeeping, vol. 55, no. 4, Oct. 1912, p. 436, quoted in Greenwood, Seshadri, & Yorukoglu 2005. 17. From The Wealth of Nations. 18. Falling price of light: Nordhaus 1996. 19. Kelly 2016, p. 189. 20. “Yuppie kvetching”: Daniel Hamermesh and Jungmin Lee, quoted in E. Kolbert, “No Time,” New Yorker, May 26, 2014. Trends in leisure, 1965–2003: Aguiar & Hurst 2007. Leisure hours in 2015: Bureau of Labor Statistics 2016c.

Facts versus fears: Understanding perceived risk. In D. Kahneman, P. Slovic, & A. Tversky, eds., Judgment under uncertainty: Heuristics and biases. New York: Cambridge University Press. Smart, J. J. C., & Williams, B. 1973. Utilitarianism: For and against. New York: Cambridge University Press. Smith, A. 1776/2009. The wealth of nations. New York: Classic House Books. Smith, E. A., Hill, K., Marlowe, F., Nolin, D., Wiessner, P., et al. 2010. Wealth transmission and inequality among hunter-gatherers. Current Anthropology, 51, 19–34. Smith, H. L. 2008. Advances in age-period-cohort analysis. Sociological Methods and Research, 36, 287–96.

But few appealed to the law-giving, miracle-conjuring, son-begetting God of scripture. Many writers today confuse the Enlightenment endorsement of reason with the implausible claim that humans are perfectly rational agents. Nothing could be further from historical reality. Thinkers such as Kant, Baruch Spinoza, Thomas Hobbes, David Hume, and Adam Smith were inquisitive psychologists and all too aware of our irrational passions and foibles. They insisted that it was only by calling out the common sources of folly that we could hope to overcome them. The deliberate application of reason was necessary precisely because our common habits of thought are not particularly reasonable.


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A People's History of Poverty in America by Stephen Pimpare

affirmative action, British Empire, car-free, clean water, cognitive dissonance, Columbine, Daniel Kahneman / Amos Tversky, deindustrialization, delayed gratification, dumpster diving, East Village, Frederick Winslow Taylor, George Gilder, green new deal, hedonic treadmill, hiring and firing, Howard Zinn, illegal immigration, impulse control, income inequality, index card, it's over 9,000, Jane Jacobs, low skilled workers, Mahatma Gandhi, mass incarceration, meta-analysis, moral panic, Naomi Klein, New Urbanism, payday loans, Ralph Waldo Emerson, Robert Solow, Ronald Reagan, San Francisco homelessness, subprime mortgage crisis, The Bell Curve by Richard Herrnstein and Charles Murray, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, Thomas Malthus, union organizing, urban renewal, W. E. B. Du Bois, War on Poverty, white flight, working poor, Works Progress Administration

Department of Commerce, 1997, 8). 31 Luxembourg Income Study (LIS), “LIS Key Figures: Relative Poverty Rates for the Total Population, Children and the Elderly,” www.lisproject.org. 32 Howard Glennerster, “United States Poverty Studies and Poverty Measurement: The Past Twenty-Five Years,” Social Service Review (March 2002): 83–107; State of Working America 2002–03, epinet.org. 33 Katz, Undeserving Poor, 181. 34 John Kenneth Galbraith, The Affluent Society (Boston: Houghton Mifflin, 1958), 323. 35 Dwight Macdonald, “Our Invisible Poor,” New Yorker, January 19, 1963, 132. 36 In Hunter, Poverty, 1. 37 In Adam Smith, The Wealth of Nations (New York: Modern Library, 1776 [1994]). 38 Ibid. 39 Charles Murray, “What to Do About Welfare,” Commentary, December 1994. 40 William Julius Wilson, When Work Disappears: The World of the New Urban Poor (New York: Vintage, 1996), 160. 41 U.S. Census Bureau, “Service Annual Survey 2004,” April 2006. 42 B.A.

They are degraded for, in the literal sense, they live outside the grades or categories which the community regards as acceptable.34 Dwight Macdonald, in a New Yorker review of Galbraith’s The Affluent Society and Harrington’s The Other America, said it more succinctly: “Not to be able to afford a movie or a glass of beer is a kind of starvation—if everybody else can.”35 Nineteenth-century novelist William Dean Howells suggested that “poverty is not the lack of things, it is the fear and the dread of want.”36 “Poverty consists in feeling poor,” wrote Ralph Waldo Emerson.37 Even Adam Smith concedes the utility of such an approach: “Every man is rich or poor according to the degree to which he can afford to enjoy the necessaries, conveniences, and amusements of human life.”38 He elaborates later in Wealth of Nations:By necessaries I understand, not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order to be without.

Shloss, Morris Simon, David Simpson, Juanita Sims, Hank Sink, David slaves and slavery and assumed mental disease (drapetomania ) and Civil War service class distinctions ex-slaves’ narratives former slaves and tenant farming and the Freedmen’s Bureau impact of abolition on daily lives mortality rates and passive resistance to poverty and poor whites/Southern poverty as post–Civil War tramps and Thirteenth Amendment as welfare state institution “slumming,” slums. See urban communities of concentrated poverty Smeeding, Timothy Smith, Adam Smith, Billy G. Smith, Mary Social Security actual effects and African Americans and labor market effects and Townsend Plan Social Security Act of 1935 (SSA) Society for the Prevention of Cruelty to Children Society for the Relief of Poor Widows Solow, Robert Soss, Joe soup kitchens South, American history of welfare in New Deal programs in See also poor whites, Southern Southern Poverty Law Center Spargo, John Special Supplemental Nutrition Program for Women, Infants and Children (WIC) Spinks, Jackie Spott, Robert St.


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The Dawn of Innovation: The First American Industrial Revolution by Charles R. Morris

air freight, American ideology, British Empire, business process, California gold rush, Charles Babbage, clean water, colonial exploitation, computer age, Cornelius Vanderbilt, cotton gin, Dava Sobel, en.wikipedia.org, flying shuttle, Ford Model T, glass ceiling, high-speed rail, hiring and firing, Ida Tarbell, if you build it, they will come, interchangeable parts, Isaac Newton, Jacquard loom, James Hargreaves, James Watt: steam engine, John Harrison: Longitude, joint-stock company, lone genius, manufacturing employment, megaproject, new economy, New Urbanism, old age dependency ratio, On the Economy of Machinery and Manufactures, purchasing power parity, QWERTY keyboard, refrigerator car, Robert Gordon, scientific management, spinning jenny, Stephen Hawking, The Wealth of Nations by Adam Smith, trade route, transcontinental railway, traveling salesman, undersea cable

— Jew Rothschild, and his fellow Christian Baring.2 The sources of the growth are not readily explicable by changes in standard inputs like labor and capital, which suggests that much of it was driven by new technology. In other words, “Ingenuity, not accumulation, drove economic growth in this period.”3 A Very British Industrial Revolution In his famous account of the pin factory in the Wealth of Nations, Adam Smith explained how the division of labor so greatly increased labor output: “One man draws out the wire, another straights it, a third cuts it, a fourth points it, [etc. through eighteen steps].... Each person, therefore, making a tenth part of forty-eight thousand pins, might be considered as making four thousand eight hundred pins in a day.

CHAPTER TWO 1 Rory Muir, Britain and the Defeat of Napoleon, 1807–1815 (New Haven, CT: Yale University Press, 1996), 365; Niall Ferguson, The House of Rothschild, vol. 1: Money’s Prophets, 1798–1848 (New York: Viking Penguin, 1998), 96–98. 2 Cited in Ferguson, House of Rothschild, 111. 3 Joel Mokyr, The Enlightened Economy: An Economic History of Great Britain, 1700–1850 (New Haven, CT: Yale University Press, 2009), 257–260, has a good discussion of the issues; the quote is on 258. 4 Adam Smith, Wealth of Nations (Amherst, NY: Prometheus Books, 1991), 9–10. 5 Robert C. Allen, The British Industrial Revolution in Global Perspective (New York: Cambridge University Press, 2009), 146–147. The factor-price theory (high wages, cheap energy) as the spur to the British industrial revolution is from Allen. 6 See ibid., 14–22. 7 The brief summary here follows ibid., 182–212. 8 The classic account is H.

Scientific American Scott, Tom Scott, Winfield Scourge Scranton, George Scranton, Selden Sears and Roebuck Second Band of the United States Seminole wars Seward, William Sewing machines Sextants, development of Shannon, Chesapeake and Sharpe, Lucien Sharps, Christian Sharps rifle Sheaffe, Roger Sheffield steel Shih, Victor Shipbuilders’ war Shipping Shlakman, Vera Shoes Sholes, Christopher Shreve, Henry M. Siemens Siemens, Charles Simonson’s Singer, Isaac M. Sirius Slater, Samuel Slaughtering Slavery Small arms Smith, Adam Smith, Sidney Soap, making Social security system, Chinese Social unrest Society for Useful Manufactures Society in America (Trollope) Software Solvay technology Spence, Michael Sperry Rand Spindles Spinning Springfield Armory production at Standard Oil Company Standard Typewriter Company Standardization Starr, Nathan Starrucca Viaduct State Council Steam Boat Steam engines early Evans-model high-pressure machinery and mining industry and power from stationary Steam shovels Steamboats building explosions on western Steamships Stebbins, Josiah Steel production of(fig.)


pages: 329 words: 88,954

Emergence by Steven Johnson

A Pattern Language, agricultural Revolution, AOL-Time Warner, Brewster Kahle, British Empire, Claude Shannon: information theory, complexity theory, Danny Hillis, Douglas Hofstadter, edge city, epigenetics, game design, garden city movement, Gödel, Escher, Bach, hive mind, Howard Rheingold, hypertext link, invisible hand, Jane Jacobs, Kevin Kelly, late capitalism, Lewis Mumford, Marshall McLuhan, mass immigration, Menlo Park, mirror neurons, Mitch Kapor, Murano, Venice glass, Naomi Klein, new economy, New Urbanism, Norbert Wiener, PalmPilot, pattern recognition, pez dispenser, phenotype, Potemkin village, power law, price mechanism, profit motive, Ray Kurzweil, SimCity, slashdot, social intelligence, Socratic dialogue, stakhanovite, Steven Pinker, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, theory of mind, Thomas Kuhn: the structure of scientific revolutions, traveling salesman, trickle-down economics, Turing machine, Turing test, urban planning, urban renewal, Vannevar Bush

As a character in Jane Jacobs’s recent Socratic dialogue, The Nature of Economies, observes: “Adam Smith, back in 1775, identified prices of goods and rates of wages as feedback information, although of course he didn’t call it that because the word feedback was not in the vocabulary at the time. But he understood the idea. . . . In his sober way, Smith was clearly excited about the marvelous form of order he’d discovered, as well he should have been. He was far ahead of naturalists in grasping the principle of negative feedback controls.” Malda himself claims that neither The Wealth of Nations nor The Dungeon Master’s Guide were heavy in his thoughts in Geek House One.

People had been thinking about emergent behavior in all its diverse guises for centuries, if not millennia, but all that thinking had consistently been ignored as a unified body of work—because there was nothing unified about its body. There were isolated cells pursuing the mysteries of emergence, but no aggregation. Indeed, some of the great minds of the last few centuries—Adam Smith, Friedrich Engels, Charles Darwin, Alan Turing—contributed to the unknown science of self-organization, but because the science didn’t exist yet as a recognized field, their work ended up being filed on more familiar shelves. From a certain angle, those taxonomies made sense, because the leading figures of this new discipline didn’t even themselves realize that they were struggling to understand the laws of emergence.


pages: 342 words: 94,762

Wait: The Art and Science of Delay by Frank Partnoy

algorithmic trading, Atul Gawande, behavioural economics, Bernie Madoff, Black Swan, blood diamond, Cass Sunstein, Checklist Manifesto, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, computerized trading, corporate governance, cotton gin, Daniel Kahneman / Amos Tversky, delayed gratification, Flash crash, Frederick Winslow Taylor, George Akerlof, Google Earth, Hernando de Soto, High speed trading, impulse control, income inequality, information asymmetry, Isaac Newton, Long Term Capital Management, Menlo Park, mental accounting, meta-analysis, MITM: man-in-the-middle, Nick Leeson, paper trading, Paul Graham, payday loans, Pershing Square Capital Management, Ralph Nader, Richard Thaler, risk tolerance, Robert Shiller, Ronald Reagan, Saturday Night Live, scientific management, six sigma, social discount rate, Spread Networks laid a new fibre optics cable between New York and Chicago, Stanford marshmallow experiment, statistical model, Steve Jobs, systems thinking, The Market for Lemons, the scientific method, The Wealth of Nations by Adam Smith, upwardly mobile, Walter Mischel, work culture

Koopmans, “On the Concept of Optimal Economic Growth,” Academiae Scientiarum Scripta Varia 28(1, 1965): 1–75. 11. For an overview of these studies, see W. Kip Viscusi and Joseph E. Aldy, “The Value of a Statistical Life: A Critical Review of Market Estimates Throughout the World,” Journal of Risk and Uncertainty 27(1, 2003): 5–76. 12. Adam Smith, The Wealth of Nations (1776; University of Chicago Press, 1976), p. 112. 13. An excellent summary of the categories of methods is Ike Brannon, “What Is a Life Worth?” Regulation (Winter 2004–2005): 60–63. 14. Orley Ashenfelter and Michael Greenstone, “Using Mandated Speed Limits to Measure the Value of a Statistical Life,” Journal of Political Economy 112(S1, February 2004): S226–S267. 15.

Today, they put the value of a human life in the range of $7 million to $9 million. Why these numbers and not, say, “42”? Some clever economists estimate the value of a human life based on the choices we make about risky behavior: smoking cigarettes, driving a car, eating undercooked meat, or working a risky job.11 As Adam Smith noted, people’s wages reflect a tradeoff regarding “the ease or hardship, the cleanliness or dirtiness, the honourableness or dishonourableness of the employment.”12 There have been more than one hundred studies that attempt to determine the value of a human life based on the value we place on our lives in private decisions.13 One way to calculate the value of a human life is to look at how much more money a worker earns for doing a risky job.


pages: 998 words: 211,235

A Beautiful Mind by Sylvia Nasar

Al Roth, Albert Einstein, Andrew Wiles, Bletchley Park, book value, Brownian motion, business cycle, cognitive dissonance, Columbine, Dr. Strangelove, experimental economics, fear of failure, Gunnar Myrdal, Henri Poincaré, Herman Kahn, invisible hand, Isaac Newton, John Conway, John Nash: game theory, John von Neumann, Kenneth Arrow, Kenneth Rogoff, linear programming, lone genius, longitudinal study, market design, medical residency, Nash equilibrium, Norbert Wiener, Paul Erdős, Paul Samuelson, prisoner's dilemma, RAND corporation, Robert Solow, Ronald Coase, second-price auction, seminal paper, Silicon Valley, Simon Singh, spectrum auction, Suez canal 1869, The Wealth of Nations by Adam Smith, Thorstein Veblen, upwardly mobile, zero-sum game

The idea of exchange, the basis of economics, is nearly as old as man, and deal-making has been the stuff of legend since the Levantine kings and the pharaohs traded gold and chariots for weapons and slaves.3 Despite the rise of the great impersonal capitalist marketplace, with its millions of buyers and sellers who never meet face-to-face, the one-on-one bargain — involving wealthy individuals, powerful governments, labor unions, or giant corporations — dominates the headlines. But two centuries after the publication of Adam Smith’s The Wealth of Nations, there were still no principles of economics that could tell one how the parties to a potential bargain would interact, or how they would split up the pie.4 The economist who first posed the problem of the bargain was a reclusive Oxford don, Francis Ysidro Edgeworth, in 1881.5 Edgeworth and several of his Victorian contemporaries were the first to abandon the historical and philosophical tradition of Smith, Ricardo, and Marx and to attempt to replace it with the mathematical tradition of physics, writes Robert Heilbroner in The Worldly Philosophers.6 Edgeworth was not fascinated with economics because it justified or explained or condemned the world, or because it opened new vistas, bright or gloomy, into the future.

More than a century earlier, the French economist Antoine-Augustin Cournot had pointed out that problems of economic choice were greatly simplified when either none or a large number of other agents were present.16 Alone on his island, Robinson Crusoe doesn’t have to worry about others whose actions might affect him. Neither, though, do Adam Smith’s butchers and bakers. They live in a world with so many actors that their actions, in effect, cancel each other out. But when there is more than one agent but not so many that their influence may be safely ignored, strategic behavior raises a seemingly insoluble problem: “I think that he thinks that I think that he thinks,” and so forth.

The leap was a short one, from his observations of his hometown to his focus on the logical strategy necessary for the individual to maximize his own advantage and minimize his disadvantages. The Nash equilibrium, once it is explained, sounds obvious, but by formulating the problem of economic competition in the way that he did, Nash showed that a decentralized decision-making process could, in fact, be coherent — giving economics an updated, far more sophisticated version of Adam Smith’s great metaphor of the Invisible Hand. By his late twenties, Nash’s insights and discoveries had won him recognition, respect, and autonomy. He had carved out a brilliant career at the apex of the mathematics profession, traveled, lectured, taught, met the most famous mathematicians of his day, and become famous himself.


pages: 796 words: 223,275

The WEIRDest People in the World: How the West Became Psychologically Peculiar and Particularly Prosperous by Joseph Henrich

agricultural Revolution, Bartolomé de las Casas, behavioural economics, British Empire, charter city, cognitive dissonance, Columbian Exchange, correlation does not imply causation, cotton gin, Daniel Kahneman / Amos Tversky, dark matter, delayed gratification, discovery of the americas, Edward Glaeser, en.wikipedia.org, endowment effect, epigenetics, European colonialism, experimental economics, financial innovation, Flynn Effect, fundamental attribution error, glass ceiling, income inequality, invention of agriculture, Isaac Newton, James Hargreaves, James Watt: steam engine, Johannes Kepler, John Snow's cholera map, joint-stock company, knowledge economy, land reform, longitudinal study, Menlo Park, mental accounting, meta-analysis, New Urbanism, pattern recognition, Pearl River Delta, profit maximization, randomized controlled trial, Republic of Letters, rolodex, social contagion, social web, sparse data, spinning jenny, Spread Networks laid a new fibre optics cable between New York and Chicago, Stanford marshmallow experiment, tacit knowledge, The Wealth of Nations by Adam Smith, theory of mind, trade route, Tyler Cowen, ultimatum game, wikimedia commons, working-age population, World Values Survey, zero-sum game

Gum-Elastic and Its Varieties, with a Detailed Account of Its Applications and Uses and of the Discovery of Vulcanization (Vol. 1). New Haven, CT: Privately published by the author. Gorodnichenko, Y., and Roland, G. (2011). Individualism, innovation, and long-run growth. Proceedings of the National Academy of Sciences 108 (4), 1–4. Gorodnichenko, Y., and Roland, G. (2016). Culture, institutions, and the wealth of nations. Review of Economics and Statistics 99 (3), 402–416. Gould, R. A. (1967). Notes on hunting, butchering, and sharing of game among the Ngatatjara and their neighbors in the West Australian Desert. Kroeber Anthropological Society Papers 36, 41–66. Grantham, G. W. (1993). Divisions of labor: Agricultural productivity and occupational specialization in preindustrial France.

The impact of Protestantism on women’s literacy is particularly important, because the babies of literate mothers tend to be fewer, healthier, smarter, and richer as adults than those of illiterate mothers.23 When the Reformation reached Scotland in 1560, it was founded on the central principle of a free public education for the poor. The world’s first local school tax was established there in 1633 and strengthened in 1646. This early experiment in universal education soon produced a stunning array of intellectual luminaries, from David Hume to Adam Smith, and probably midwifed the Scottish Enlightenment. The intellectual dominance of this tiny region in the 18th century inspired Voltaire to write, “We look to Scotland for all our ideas of civilization.”24 Let’s follow the causal chain I’ve been linking together: the spread of a religious belief that every individual should read the Bible for themselves led to the diffusion of widespread literacy among both men and women, first in Europe and later across the globe.

2 Making a Cultural Species Nature, when she formed man for society, endowed him with an original desire to please, and an original aversion to offend his brethren. She taught him to feel pleasure in their favourable, and pain in their unfavourable regard. She rendered their approbation most flattering and most agreeable to him for its own sake; and their disapprobation most mortifying and most offensive. —Adam Smith (1759) in The Theory of Moral Sentiments (I.III.34) As they howled and beat on his chest, William Buckley figured they were going to kill him. Gradually, however, he realized that this small band of Australian hunter-gatherers was rejoicing because they had mistaken him for one of their deceased kinsmen.


Apocalypse Never: Why Environmental Alarmism Hurts Us All by Michael Shellenberger

"World Economic Forum" Davos, Albert Einstein, An Inconvenient Truth, Anthropocene, Asperger Syndrome, Bernie Sanders, Bob Geldof, Boeing 747, carbon footprint, carbon tax, Cesare Marchetti: Marchetti’s constant, clean tech, clean water, climate anxiety, Corn Laws, coronavirus, corporate social responsibility, correlation does not imply causation, cuban missile crisis, decarbonisation, deindustrialization, disinformation, Dissolution of the Soviet Union, Donald Trump, Dr. Strangelove, Elon Musk, energy transition, Extinction Rebellion, failed state, Garrett Hardin, Gary Taubes, gentleman farmer, global value chain, Google Earth, green new deal, Greta Thunberg, hydraulic fracturing, index fund, Indoor air pollution, indoor plumbing, Intergovernmental Panel on Climate Change (IPCC), Internet Archive, land tenure, Live Aid, LNG terminal, long peace, manufacturing employment, mass immigration, meta-analysis, Michael Shellenberger, microplastics / micro fibres, Murray Bookchin, ocean acidification, off grid, oil shale / tar sands, Potemkin village, precautionary principle, purchasing power parity, Ralph Nader, renewable energy transition, Rupert Read, School Strike for Climate, Solyndra, Stephen Fry, Steven Pinker, supervolcano, Ted Nordhaus, TED Talk, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, trade route, Tragedy of the Commons, union organizing, WikiLeaks, Y2K

The Power of Wealth In the eighteenth century, Britain pioneered the factory system, which combined people, machines, and energy in a way that made the manufacturing of clothing, shoes, and consumer products far faster and cheaper than the cottage-level, home-based crafts system that predated it. In the opening chapter of his 1776 book, The Wealth of Nations, Adam Smith explains that an individual worker is fifty times more productive when he is focused on a single task in making a pin than if he made the entire pin himself.44 Factories required people to harness energy to power machines. Owners built factories next to rivers so they could use water wheels.

,” Society for Economic Dynamics, 2008 Meeting Papers no. 826, https://EconPapers.repec.org/RePEc:red:sed008:826. 42. Benjamin Friedman, The Moral Consequences of Economic Growth (New York: Vintage, 2005). Steven Pinker, The Better Angels of Our Nature: Why Violence Has Declined (New York: Penguin, 2012). 43. Syarifah Nur Aida (Ipeh) (journalist) in discussion with the author, June 8, 2015. 44. Adam Smith, The Wealth of Nations (New York: Penguin, 1982), 109–110. 45. Michael Lind, Land of Promise: An Economic History of the United States (New York: Harper, 2012). 46. Ibid. 47. Margaret McMillan, Dani Rodrik, and Claudia Sepulveda, “Structural Change, Fundamentals, and Growth: A Framework and Case Studies,” NBER Working Paper 23378, National Bureau of Economic Research, May 2017, https://www.nber.org/papers/w23378.pdf, 10. 48.


pages: 485 words: 133,655

Water: A Biography by Giulio Boccaletti

active transport: walking or cycling, Anthropocene, Asian financial crisis, Bretton Woods, British Empire, business cycle, clean water, conceptual framework, Corn Laws, deindustrialization, demographic transition, Deng Xiaoping, energy transition, financial engineering, Great Leap Forward, invisible hand, John Snow's cholera map, joint-stock company, land reform, land tenure, linear programming, loose coupling, market fundamentalism, mass immigration, means of production, Medieval Warm Period, megaproject, Mohammed Bouazizi, new economy, Nixon triggered the end of the Bretton Woods system, oil shock, opioid epidemic / opioid crisis, Peace of Westphalia, phenotype, scientific management, South China Sea, Suez crisis 1956, text mining, the long tail, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, trade route, Washington Consensus, Works Progress Administration, Yom Kippur War, zero-sum game

The last subsistence crises of the Western world: Berger and Spoerer, “Economic Crises and the European Revolutions of 1848.” In fact, Marx went as far as to say: Marx, Capital, 284. Montesquieu had used China: Montesquieu, The Spirit of the Laws, 126. Marco Polo, who visited: Smith, The Wealth of Nations, 174. For the same reason, Marx largely ignored Russia: Karl Marx, “The British and Chinese Treaty.” New York Daily Tribune, October 15, 1858. Volkhovsky had been persecuted: Bergère, Sun Yat-sen, 65. Through her, Chernyshevsky revealed: Fokkema, Perfect Worlds, 211. And people transformed along with the landscape: Chernyshevsky, A Vital Question; or, What Is to Be Done, 384.

Cambridge: Cambridge University Press, 1990. Smil, Vaclav. Energy and Civilization: A History. Cambridge, MA: MIT Press, 2017. Smil, Vaclav. “Energy in the Twentieth Century: Resources, Conversions, Costs, Uses, and Consequences.” Annual Review of Energy and the Environment 25 (November 2000): 21–51. Smith, Adam. The Wealth of Nations, Books I–III. London: Penguin Classics, 1999. Smith, Carl. City Water, City Life: Water and the Infrastructure of Ideas in Urbanizing Philadelphia, Boston, and Chicago. Chicago: Chicago University Press, 2013. Smith, George O. World Atlas of Commercial Geology. Part II: Water Power of the World.

Yet back in Europe, a world of city-states and feudal lords was left bewildered and awestruck by what they heard of China and its canal. For centuries, Western visitors like the Jesuit Matteo Ricci, in the sixteenth century, wrote of it with admiration, impressed by tens of thousands of boats carrying rice and grain. Two centuries after Ricci and five after its construction, Adam Smith was still describing it as a key source of comparative advantage for the Chinese economy, still ahead of its Western counterparts, and still making a compelling case for the importance of state-led water infrastructure. China had not only shown that the medieval institutions of Europe were far from universal.


pages: 454 words: 139,350

Jihad vs. McWorld: Terrorism's Challenge to Democracy by Benjamin Barber

airport security, Alvin Toffler, anti-communist, Apple's 1984 Super Bowl advert, Ayatollah Khomeini, Berlin Wall, borderless world, Bretton Woods, British Empire, classic study, computer age, Corn Laws, Corrections Corporation of America, David Brooks, deindustrialization, Deng Xiaoping, digital map, export processing zone, Fall of the Berlin Wall, Francis Fukuyama: the end of history, full employment, George Gilder, global village, invisible hand, It's morning again in America, Joan Didion, Kevin Kelly, laissez-faire capitalism, late capitalism, Live Aid, market fundamentalism, Marshall McLuhan, minimum wage unemployment, new economy, Norbert Wiener, North Sea oil, off-the-grid, pirate software, Plato's cave, postnationalism / post nation state, profit motive, race to the bottom, Right to Buy, road to serfdom, Ronald Reagan, The Wealth of Nations by Adam Smith, Thomas L Friedman, undersea cable, vertical integration, young professional, zero-sum game

See, for example, John Kenneth Galbraith, “Capitalism’s Dark Shadows,” The Washington Monthly, (July/August i994), pp. 20-23, where Galbraith suggests there are those in the capitalist economy such as corporate managers, stockholders, professionals, retirees on social security, who actually prefer low growth and high employment despite its horrendous impact on most workers in the economy and on capitalism itself. 6. In his Theory of Moral Sentiments, Adam Smith offered an account of human behavior that went well beyond economic utility, and The Wealth of Nations leaves ample room for public authorities that retain responsibility for such public goods as education, health, welfare, public works, and control of the potentially “conspiratorial” aspects of markets (monopolies, for example). 7. Norman Birnbaum, “How New Is the New Germany?”

Governments have become the targets of alienated and disaffected clients and are not likely to be regarded as the instruments by which citizens can tame wild capitalism for some time. Markets have emerged triumphant from a war against the nation-state and the public interests they represent that has been waged at least since Adam Smith. Kenichi Ohmae of Japan, Herbert Henzler of West Germany, and Fred Gluck of the United States—three competitors in search of consensus—agreed back in 1990 on a “Declaration of Interdependence Toward the World in 2005.” Its paramount innovation was a call for the role of central governments to “change, so as to: allow individuals access to the best and cheapest goods and services from anywhere in the world; help corporations provide stable and rewarding jobs anywhere in the world regardless of the corporation’s national identity; coordinate activities with other governments to minimize conflicts arising from narrow interest; avoid abrupt changes in economic and social fundamentals.”9 Abrupt changes like democratization?

When economistic reformers think about government at all, it is in terms of negative constitutionalism—politics as antipolitics, law as a set of limits on popular rule rather than as a set of populist enabling principles.3 Serious students of the market who distinguish between totalitarian collectivism and the democratic search for common goods will want to dispute these quasi-anarchist libertarian dogmas.4 Notwithstanding the renewed popularity of the laissez-faire creed in England and America over the last few decades, amplified by a deeply felt repugnance for politics and politicians, there is a long and respectable tradition that is neither collectivist nor even welfare statist that disputes the putative sufficiency of markets and challenges their vaunted capacity for economic self-regulation.5 Contemporary critics like Andrew Bard Schmookler and Robert Kuttner are fierce critics of the social costs of applied laissez-faire policies in the Reagan-Thatcher era, but not even Adam Smith thought the market could do everything.6 Market relations are simply not a surrogate for social relations, let alone for democratic social relations, and it is only the zealous proponents of capitalism in its extreme laissez-faire version (what Robert Kuttner calls its utopian incarnation) who pretend otherwise.


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Rule Britannia: Brexit and the End of Empire by Danny Dorling, Sally Tomlinson

3D printing, Ada Lovelace, Alfred Russel Wallace, anti-communist, anti-globalists, Big bang: deregulation of the City of London, Boris Johnson, Brexit referendum, British Empire, Bullingdon Club, Cambridge Analytica, centre right, colonial rule, Corn Laws, correlation does not imply causation, David Ricardo: comparative advantage, deindustrialization, disinformation, Dominic Cummings, Donald Trump, Edward Snowden, electricity market, en.wikipedia.org, epigenetics, Etonian, falling living standards, Flynn Effect, gentrification, housing crisis, illegal immigration, imperial preference, income inequality, inflation targeting, invisible hand, Jeremy Corbyn, knowledge economy, market fundamentalism, mass immigration, megacity, New Urbanism, Nick Leeson, North Sea oil, offshore financial centre, out of africa, Right to Buy, Ronald Reagan, Silicon Valley, South China Sea, sovereign wealth fund, spinning jenny, Steven Pinker, Suez canal 1869, Suez crisis 1956, The Wealth of Nations by Adam Smith, Thomas Malthus, University of East Anglia, Wayback Machine, We are the 99%, wealth creators

Davey Smith, G. (2011) ‘Epidemiology, epigenetics and the “Gloomy Prospect”: embracing randomness in population health research and practice’, International Journal of Epidemiology, Vol. 40, No. 3, pp. 537–62, https://academic.oup.com/ije/article/40/3/537/747708 82 ‘While all of you are brothers, we will say in our tale, God in fashioning those who are fit to rule mingled gold in their generation, for this reason they are most precious, but in the helpers are silver, and iron and brass in the farmers and craftsmen. You are all kin, but for the most part you will breed according to your kind.’ Plato, The Republic, Book 3, Section 415a, quoted in Dorling, D. and Tomlinson, S. (2016) ‘The Creation of Inequality: Myths of Potential and Ability’, op. cit. 83 Smith, A. (1776) The Wealth of Nations, London: Strahan and Cadell. 84 Reay, D. (2017) Miseducation: Inequality, education and the working classes, Bristol: Policy Press. 85 Schatz, R., Staub, E., and Lavine, H. (1999) ‘On the Varieties of National Attachment: Blind Versus Constructive Patriotism’, Political Psychology, Vol. 20, No. 1, pp. 151–74, http://onlinelibrary.wiley.com/doi/10.1111/0162-895X.00140/abstract 86 http://www.loc.gov/pictures/item/2003675256/and https://atomicink.files.wordpress.com/2016/07/british_empire_union_wwi_poster.jpg 87 Edith Cavell, whose grave is depicted in the poster, was a British nurse shot at dawn in 1915 by the Germans for helping Allied soldiers in occupied Belgium escape.

The idea that most people can be educated and participate more equally in democracies continues to be a problem for – that is, a threat to – those who see themselves as superior. However, do not lose heart: as Adam Smith explained in 1776, the difference between a philosopher and a street porter ‘seems to arise not so much from nature as from habit, custom, and education’.83 The British ignored what Adam Smith knew about education, what Raymond Pearl explained, what thousands of educationalists have tried to convey in recent decades: that the golden children are a fantasy.84 There are no super-genes. We are not led by extraordinarily able people – that is obvious.

Trade is never free, and freedom means far more than having the right to trade. WHAT WAS FREE TRADE? What are the British actually good at? One thing the British produce is an unusual number of economists, including those who later came, through their work, to define the academic subject. Adam Smith, Thomas Malthus and James Mill are remembered now, perhaps unfairly, for talking about the magical invisible hand of the market (Smith), the problem of poor people having too much sex (Malthus), and how India was a basket case until the British arrived (Mill).5 Their ideas all had great influence, but none of those ideas have actually survived the test of time as much as those of their contemporary David Ricardo and his theories about free trade.6 David Ricardo, son of a Dutch stockbroker, was born in London in 1772.


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Who Owns England?: How We Lost Our Green and Pleasant Land, and How to Take It Back by Guy Shrubsole

Adam Curtis, Anthropocene, back-to-the-land, Beeching cuts, Boris Johnson, Capital in the Twenty-First Century by Thomas Piketty, centre right, congestion charging, Crossrail, deindustrialization, digital map, do-ocracy, Downton Abbey, false flag, financial deregulation, fixed income, fulfillment center, Garrett Hardin, gentrification, Global Witness, Goldman Sachs: Vampire Squid, Google Earth, housing crisis, housing justice, James Dyson, Jeremy Corbyn, Kickstarter, land bank, land reform, land tenure, land value tax, linked data, loadsamoney, Londongrad, machine readable, mega-rich, mutually assured destruction, new economy, Occupy movement, offshore financial centre, oil shale / tar sands, openstreetmap, place-making, plutocrats, profit motive, rent-seeking, rewilding, Right to Buy, Ronald Reagan, Russell Brand, sceptred isle, Stewart Brand, the built environment, the map is not the territory, The Wealth of Nations by Adam Smith, Tragedy of the Commons, trickle-down economics, urban sprawl, web of trust, Yom Kippur War, zero-sum game

Viscount Cowdray ‘Lord Cowdray speaks out against fracking’, BBC News, 7 September 2013, http://www.bbc.co­.uk/news/uk­-england­-23994674­ an alliance of baronets Ruth Hayhurst, ‘Yorkshire landowners back National Trust in INEOS legal challenge’, Drill Or Drop, 23 February 2018, https://drillordrop.com­/2018/02/23­/yorkshire­-landowners­-back­-national-trust-in-ineos-legal-challenge/ rigidly divorced M.L. Bush, The English Aristocracy: A Comparative Synthesis (Manchester University Press, 1984), p. 190. The rent of land Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776), Book I, Ch. XI. the euthanasia John Maynard Keynes, The General Theory of Employment, Interest and Money (1936), ch. 24. Bram Stoker’s Dracula An 1882 cartoon from San Francisco depicted landlords as vampire bats, squeezing rents from their tenants before enjoying champagne and a rich meal.

The 1994 Criminal Justice Act created a new, criminal offence – invented by the Major government to squash roads protesters and hunt saboteurs – of ‘aggravated trespass’, for cases where trespassers were deemed to be impeding the landowner from undertaking lawful activities. This, coupled with the more recent criminalisation of squatting, has closed down the space for taking direct action against unjust and unsustainable uses of land. Land has also been airbrushed from modern economic theory. All the classical economists – Adam Smith, Karl Marx, David Ricardo, John Stuart Mill – recognised land as a key factor of production, sitting alongside capital and labour as inputs to the economy. Land was different from capital and labour, however, in being of fixed supply, and in having no production costs: nature provided it for free.

Bush argues, throughout its history the English aristocracy has remained ‘rigidly divorced … from direct production’ and ‘preferred the rentier role’ as a means of getting filthy rich without getting their hands dirty. It’s this combination of inherited wealth and rent-seeking indigence that has drawn down much scorn upon the aristocracy in previous eras. ‘The rent of land is naturally a monopoly price,’ pointed out the classical free-market economist Adam Smith. ‘It is not at all proportioned to what the landlord may have laid out upon the improvement of the land … but to what the [tenant] can afford to give.’ John Maynard Keynes longed for ‘the euthanasia of the rentier’, noting that landlords need not work to obtain their income: ‘the owner of land can obtain rent because land is scarce’.


The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good by William Easterly

"World Economic Forum" Davos, airport security, anti-communist, Asian financial crisis, bank run, banking crisis, Bob Geldof, Bretton Woods, British Empire, call centre, clean water, colonial exploitation, colonial rule, Edward Glaeser, end world poverty, European colonialism, failed state, farmers can use mobile phones to check market prices, George Akerlof, Gunnar Myrdal, guns versus butter model, Hernando de Soto, income inequality, income per capita, Indoor air pollution, intentional community, invisible hand, Kenneth Rogoff, laissez-faire capitalism, land bank, land reform, land tenure, Live Aid, microcredit, moral hazard, Naomi Klein, Nelson Mandela, publication bias, purchasing power parity, randomized controlled trial, Ronald Reagan, Scramble for Africa, structural adjustment programs, The Fortune at the Bottom of the Pyramid, the scientific method, The Wealth of Nations by Adam Smith, Tragedy of the Commons, transaction costs, TSMC, War on Poverty, Xiaogang Anhui farmers

Without markets, I would be forced to grow the wheat, beans, and rice myself, milk the cow, process the grains and beans into edible form, and make the cheese and pasta. (I have no clue how to do any of the above.) Instead, I trade on the free market my economist services (which inexplicably find some buyers at New York University) and get money in return. I use this money to select home cooking items and to order takeout. Adam Smith celebrated specialization in The Wealth of Nations in 1776. Each of us has some innate advantages in doing some things and innate disadvantages in doing others. Market exchange makes it possible for us to determine what we are good at, to specialize in producing it, and to trade it for other things produced by people good at producing those things.

Economists have mathematical proofs that show that, under certain conditions, free markets lead to the best possible allocation of the economy’s resources for everyone—given each person’s initial stock of possessions. (Of course, it is disturbing that some people have tinier endowments than others; I will get to that later.) Adam Smith celebrated the social good achieved in this system, even though each of us is operating out of self-interest. The West often awards itself credit for having invented the market. This is nonsense. Any visit to an outdoor market in Africa, Asia, the Middle East, or Latin America will quickly convince you that markets are vibrant in poor countries.

Consumers pay the cost of asking a product to meet additional goals, and so there is no “tragedy of the commons” excess demand for goals on any one product. Consumers face tradeoffs between alternative products, choosing the one that gives the highest satisfaction for the lowest price. Economists since Adam Smith have also stressed the efficiency gains from specialization, which suggests that organizations and individuals should focus on a few things and not do others. Since firms can meet consumer goals more cheaply by specializing and having limited objectives, the free market also tends to produce specialized suppliers.


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Crisis Economics: A Crash Course in the Future of Finance by Nouriel Roubini, Stephen Mihm

Alan Greenspan, Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, barriers to entry, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, bond market vigilante , bonus culture, Bretton Woods, BRICs, British Empire, business cycle, call centre, capital controls, Carmen Reinhart, central bank independence, centralized clearinghouse, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, dark matter, David Ricardo: comparative advantage, debt deflation, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, fiat currency, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, financial intermediation, full employment, George Akerlof, Glass-Steagall Act, global pandemic, global reserve currency, Gordon Gekko, Greenspan put, Growth in a Time of Debt, housing crisis, Hyman Minsky, information asymmetry, interest rate swap, invisible hand, Joseph Schumpeter, junk bonds, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, Louis Bachelier, low interest rates, margin call, market bubble, market fundamentalism, Martin Wolf, means of production, Minsky moment, money market fund, moral hazard, mortgage debt, mortgage tax deduction, new economy, Northern Rock, offshore financial centre, oil shock, Paradox of Choice, paradox of thrift, Paul Samuelson, Ponzi scheme, price stability, principal–agent problem, private sector deleveraging, proprietary trading, pushing on a string, quantitative easing, quantitative trading / quantitative finance, race to the bottom, random walk, regulatory arbitrage, reserve currency, risk tolerance, Robert Shiller, Satyajit Das, Savings and loan crisis, savings glut, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, subprime mortgage crisis, Suez crisis 1956, The Great Moderation, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, too big to fail, tulip mania, Tyler Cowen, unorthodox policies, value at risk, We are all Keynesians now, Works Progress Administration, yield curve, Yom Kippur War

., April 8, 2005, online at http://www.federalreserve.gov/boarddocs/speeches/2005/20050408/default.htm. 33 slashing the rate: Jean Claude Trichet, “Activism and Alertness in Monetary Policy,” lecture to “Central Banks in the 21st Century” conference, Madrid, June 8, 2006, online at http://www.ecb.int/press/key/date/2006/html/sp060608_1.en.html. Chapter 2: Crisis Economists 39 “Practical men, who believe . . .”: Keynes, General Theory, 383. 40 “invisible hand”: Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London: Charles Knight, 1835), 3:112; Robert L. Heilbroner and Lester C. Thurow, Economics Explained (New York: Touchstone, 1987), 25-31. 40 economists refined and reworked: Denis P. O’Brien, “Classical Economics,” in Warren J. Samuels, Jeff E. Biddle, and John B.

When Markets Behave Badly Crisis economics is the study of how and why markets fail. Much of mainstream economics, by contrast, is obsessed with showing how and why markets work—and work well. This preoccupation arguably dates back to the origins of the profession of economics, beginning with the Scottish thinker Adam Smith. In his Wealth of Nations, he advanced the now-famous metaphor of the “invisible hand” to capture the seemingly miraculous process by which the selfish and divergent interests of individual economic actors somehow coalesce into a stable, self-regulating economic system. Out of the chaos of innumerable individual choices comes order.

Sunspots aside, the external cause idea remained highly appealing to members of the classical school of economics, which held that markets are fundamentally self-regulating; they can be disrupted by external events but are fundamentally resilient and could not collapse. A darker vision was offered by a more controversial thinker. Unlike Mill and Jevons (and most nineteenth-century economists), Karl Marx believed that crisis was part and parcel of capitalism and was a sign of its imminent, inevitable collapse. Indeed, if Adam Smith wrote to praise capitalism, Karl Marx wrote to bury it. History, Marx believed, is defined by a struggle between two antagonistic social groups: a capitalist class, or bourgeoisie, that owns the factories and other “means of production”; and an ever-growing landless proletariat class. Central to Marx’s analysis was his argument that the real value of goods depends on the human labor that goes into making them.


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Meat: A Benign Extravagance by Simon Fairlie

agricultural Revolution, air gap, Albert Einstein, back-to-the-land, Boris Johnson, call centre, carbon credits, carbon footprint, Community Supported Agriculture, deindustrialization, en.wikipedia.org, food miles, Food sovereignty, Garrett Hardin, gentleman farmer, Haber-Bosch Process, household responsibility system, Hugh Fearnley-Whittingstall, informal economy, Intergovernmental Panel on Climate Change (IPCC), Just-in-time delivery, land reform, Mahatma Gandhi, Martin Wolf, megacity, military-industrial complex, Northern Rock, Panamax, peak oil, precautionary principle, refrigerator car, rewilding, scientific mainstream, sexual politics, stem cell, The Wealth of Nations by Adam Smith, trade liberalization, Tragedy of the Commons, University of East Anglia, upwardly mobile, women in the workforce, zero-sum game

Their objection is that food will cost more (30 per cent more according to Günther’s estimate) and hence there will be correspondingly less wealth available for the purchase of energy intensive consumer goods, and the maintenance of parasitic elites and an overweight ‘creative class’. Two centuries ago, in The Wealth of Nations, Adam Smith observed how ‘the industry which is carried on in towns is everywhere in Europe more advantageous than in the countryside’. A greater share of ‘the whole annual produce of the labour of society … is given to the inhabitants of the town than would otherwise fall to them, and a less to those of the country’.101 The three main reason given by Smith for this inequality are: (i) The superior ability of urban capitalists and workers to form cartels and unions which make regulations and fix prices in their own favour.

Working as a shepherd, or a coppice worker, or a field worker, providing you are paid decently, is no more gruelling than working at a supermarket till, minding an injection moulding machine, or turning a treadmill in a gym, and a good deal more skilful and stimulating. To champion the virtues of a rural lifestyle against the arguments of today’s political economists, who better to cite than Adam Smith, the original Scotch philosopher, who famously began The Wealth of Nations by praising the division of labour involved in the manufacture of a pin? Not only the art of the farmer, the general operations of husbandry, but many inferior branches of country labour, require much more skill and experience than the greater part of mechanic trades … The man who ploughs the ground with a team of oxen, works with instruments of which the health, strength and temper, are very different upon different occasions.

DETR (2000), Our Towns and Cities: the Future, Urban White Paper, 2000, p 26. 96 Ibid. 97 Chapter 7: http://www.tlio.org.uk/chapter7/index.html 98 Hardy, D and Ward, C (1984), Arcadia for All, Five Leaves, 2004. 99 DCLG (2004), Planning Policy Statement 7. 100 Mark Thurstain Goodwin, of Ecofutures Ltd, based in Bath, has produced a map, based on census figures, depicting this phenomenon. 101 Smith, A (1776), The Wealth of Nations, Book I, Chapter X, part II. 102 Ibid. 103 Ibid., Book III, Chapter IV. 104 Ibid., Book I, Chapter XI, Part I. 105 For a comparison of European farm sizes and employment rates in the 1939s, see Warringer, D (1939), Economics of Peasant Farming, Oxford. 106 Hoskins, R (1998), The Perfect Pinta?


pages: 170 words: 49,193

The People vs Tech: How the Internet Is Killing Democracy (And How We Save It) by Jamie Bartlett

Ada Lovelace, Airbnb, AlphaGo, Amazon Mechanical Turk, Andrew Keen, autonomous vehicles, barriers to entry, basic income, Bernie Sanders, Big Tech, bitcoin, Black Lives Matter, blockchain, Boris Johnson, Californian Ideology, Cambridge Analytica, central bank independence, Chelsea Manning, cloud computing, computer vision, creative destruction, cryptocurrency, Daniel Kahneman / Amos Tversky, data science, deep learning, DeepMind, disinformation, Dominic Cummings, Donald Trump, driverless car, Edward Snowden, Elon Musk, Evgeny Morozov, fake news, Filter Bubble, future of work, general purpose technology, gig economy, global village, Google bus, Hans Moravec, hive mind, Howard Rheingold, information retrieval, initial coin offering, Internet of things, Jeff Bezos, Jeremy Corbyn, job automation, John Gilmore, John Maynard Keynes: technological unemployment, John Perry Barlow, Julian Assange, manufacturing employment, Mark Zuckerberg, Marshall McLuhan, Menlo Park, meta-analysis, mittelstand, move fast and break things, Network effects, Nicholas Carr, Nick Bostrom, off grid, Panopticon Jeremy Bentham, payday loans, Peter Thiel, post-truth, prediction markets, QR code, ransomware, Ray Kurzweil, recommendation engine, Renaissance Technologies, ride hailing / ride sharing, Robert Mercer, Ross Ulbricht, Sam Altman, Satoshi Nakamoto, Second Machine Age, sharing economy, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, Silicon Valley startup, smart cities, smart contracts, smart meter, Snapchat, Stanford prison experiment, Steve Bannon, Steve Jobs, Steven Levy, strong AI, surveillance capitalism, TaskRabbit, tech worker, technological singularity, technoutopianism, Ted Kaczynski, TED Talk, the long tail, the medium is the message, the scientific method, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, too big to fail, ultimatum game, universal basic income, WikiLeaks, World Values Survey, Y Combinator, you are the product

For example, with image recognition it works out which bits of a picture of a dog distinguish it as a dog. It is often impossible to tell how the machine worked out these rules – this is known as the interpretability problem. 3 Cited in Robert Peston, WTF (Hodder & Stoughton, 2017), p.215. Adam Smith spotted this in the eighteenth century. In The Wealth of Nations he predicted that machines would allow ‘one man to do the work of many’ and that would drive up productivity and profits. This, in turn, would stimulate the demand for more labour, because it allowed owners to hire more people and build more factories. Research from Georg Graetz and Guy Michaels has found that, while manufacturing employment has fallen in most developed countries between 1996 and 2012, it has fallen less sharply where investment in robotics has been greatest. 4 ‘Automation and anxiety’, The Economist, 25 June 2016. 5 According to Martin Ford, futurist and author of the award winning book Rise of the Robots it won’t happen immediately but within a decade or so. 6 Stick Shift: Autonomous Vehicles, Driving Jobs, and the Future of Work, March 2017, Centre for Global Policy Solutions. 7 Mark Fahey, ‘Driverless cars will kill the most jobs in select US states’, www.cnbc.com, 2 September 2016. 8 ‘Real wages have been falling for longest period for at least 50 years, ONS says’, Guardian, 31 January 2014.


pages: 189 words: 49,386

Letters From an Astrophysicist by Neil Degrasse Tyson

dark matter, do what you love, Isaac Newton, Johannes Kepler, Large Hadron Collider, microaggression, Pluto: dwarf planet, The Wealth of Nations by Adam Smith, unbiased observer

The list . . . 1.The Bible “ . . . to learn that it’s easier to be told by others what to think and believe than it is to think for yourself” 2.The System of the World by Isaac Newton “ . . . to learn that the universe is a knowable place.” 3.On the Origin of Species by Charles Darwin “ . . . to learn of our kinship with all other life on Earth.” 4.Gulliver’s Travels by Jonathan Swift “ . . . to learn, among other satirical lessons, that most of the time humans are Yahoos.” 5.The Age of Reason by Thomas Paine “ . . . to learn how the power of rational thought is the primary source of freedom in the world.” 6.The Wealth of Nations by Adam Smith “ . . . to learn that capitalism is an economy of greed, a force of nature unto itself.” 7.The Art of War by Sun Tzu “ . . . to learn that the act of killing fellow humans can be raised to an art.” 8.The Prince by Machiavelli “ . . . to learn that people not in power will do all they can to acquire it, and people in power will do all they can to keep it.”


pages: 150 words: 50,821

How to Be Human: An Autistic Man's Guide to Life by Jory Fleming

Albert Einstein, autism spectrum disorder, Isaac Newton, microbiome, neurotypical, public intellectual, Saturday Night Live, Skype, The Wealth of Nations by Adam Smith

I will respond to clarity and good communication, which can be evident in both or very much lacking in both. A really well-written book will probably beat a really good public speaker in most cases for me, but even a bad public speaker is much better than a very poorly written anything. I’ve been trying to make my way through a famous economics book, The Wealth of Nations by Adam Smith. It’s just so dry. He’s talking about grain prices, and there’s nothing to make those ideas easier to grasp and assimilate. I can at least get something from people that are dry and not the best at speaking, but if it’s a mind-numbingly boring book, I struggle with that. 5 Language Barriers Talking about Language: Decades of research have taught scientists that there is no single “language” spot inside the brain, but rather a complex circuitry that allows humans to express themselves through words.


pages: 307 words: 97,677

The Evolution of Useful Things by Henry Petroski

Buckminster Fuller, card file, human-factors engineering, industrial robot, Menlo Park, Ralph Waldo Emerson, The Wealth of Nations by Adam Smith, traveling salesman

Various editions. Segelcke, Nanna. Made in Norway. Oslo: Dreyer, 1990. Simon, Herbert A. The Sciences of the Artificial. 2nd ed. Cambridge, Mass.: MIT Press, 1981. Singleton, H. Raymond. A Chronology of Cutlery. Sheffield, Eng.: City Museums, 1970. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. Oxford: Clarendon Press, 1880. Squires, Arthur L. The Tender Ship: Governmental Management of Technological Change. Boston: Birkhäuser, 1986. Steadman, Philip. The Evolution of Designs: Biological Analogy in Architecture and the Applied Arts. Cambridge: University Press, 1979. Straub, Hans.

(photo credit 4.1) Pins were fashioned out of iron and bone by the Sumerians as long ago as 3000 B.C., and were used to hold clothes together. The manufacture of pins was industrialized long before it was mechanized, and the manual process was illustrated in Denis Diderot’s monumental L’Encyclopédie, completed in 1772. In a famous passage near the opening of Wealth of Nations, Adam Smith described how a pin was made to demonstrate the advantages of a division of labor: “One man draws the wire, another straightens it, a third cuts it, a fourth points it, a fifth grinds the top for receiving the head. William Cowper rendered the same process in verse—“One fuses metal o’er the fire; / A second draws it into wire”—thus showing that there is more than one way to make a point.

Wire could be drawn at the rate of sixty feet per minute, but only slightly more than one pin a second could be cut by a practiced worker. This would yield about four thousand pins per hour. The bottleneck in the manufacture of pins occurred when they were attached to cards or papers; the women who worked at that cottage industry accomplished the task at the rate of perhaps fifteen hundred per day. Adam Smith observed that, averaged over all the specialists that divided the labor (and as many as seventeen different people might work on each single pin), about forty-eight hundred pins per day per worker was the output. He speculated that without a division of labor, the output of a single person making each pin from start to finish might be as great as twenty but perhaps as small as a single pin per day.


pages: 829 words: 229,566

This Changes Everything: Capitalism vs. The Climate by Naomi Klein

"World Economic Forum" Davos, 1960s counterculture, activist fund / activist shareholder / activist investor, An Inconvenient Truth, Anthropocene, battle of ideas, Berlin Wall, Big Tech, big-box store, bilateral investment treaty, Blockadia, Boeing 747, British Empire, business climate, Capital in the Twenty-First Century by Thomas Piketty, carbon credits, carbon footprint, carbon tax, clean tech, clean water, Climategate, cognitive dissonance, coherent worldview, colonial rule, Community Supported Agriculture, complexity theory, crony capitalism, decarbonisation, degrowth, deindustrialization, dematerialisation, different worldview, Donald Trump, Downton Abbey, Dr. Strangelove, electricity market, energy security, energy transition, equal pay for equal work, extractivism, Exxon Valdez, failed state, fake news, Fall of the Berlin Wall, feminist movement, financial deregulation, food miles, Food sovereignty, gentrification, geopolitical risk, global supply chain, green transition, high-speed rail, hydraulic fracturing, ice-free Arctic, immigration reform, income per capita, Intergovernmental Panel on Climate Change (IPCC), Internet Archive, invention of the steam engine, invisible hand, Isaac Newton, James Watt: steam engine, Jones Act, Kickstarter, Kim Stanley Robinson, land bank, light touch regulation, man camp, managed futures, market fundamentalism, Medieval Warm Period, Michael Shellenberger, military-industrial complex, moral hazard, Naomi Klein, new economy, Nixon shock, Occupy movement, ocean acidification, off-the-grid, offshore financial centre, oil shale / tar sands, open borders, patent troll, Pearl River Delta, planetary scale, planned obsolescence, post-oil, precautionary principle, profit motive, quantitative easing, race to the bottom, Ralph Waldo Emerson, Rana Plaza, remunicipalization, renewable energy transition, Ronald Reagan, Russell Brand, scientific management, smart grid, special economic zone, Stephen Hawking, Stewart Brand, structural adjustment programs, Ted Kaczynski, Ted Nordhaus, TED Talk, the long tail, the scientific method, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, trickle-down economics, Upton Sinclair, uranium enrichment, urban planning, urban sprawl, vertical integration, Virgin Galactic, wages for housework, walkable city, Washington Consensus, Wayback Machine, We are all Keynesians now, Whole Earth Catalog, WikiLeaks

“Nature can be conquered,” Watt reportedly said, “if we can but find her weak side.”30 Little wonder then that the introduction of Watt’s steam engine coincided with explosive levels of growth in British manufacturing, such that in the eighty years between 1760 and 1840, the country went from importing 2.5 million pounds of raw cotton to importing 366 million pounds of raw cotton, a genuine revolution made possible by the potent and brutal combination of coal at home and slave labor abroad.31 This recipe produced more than just new consumer products. In Ecological Economics, Herman Daly and Joshua Farley point out that Adam Smith published The Wealth of Nations in 1776—the same year that Watt produced his first commercial steam engine. “It is no coincidence,” they write, “that the market economy and fossil fuel economy emerged at essentially the exact same time. . . . New technologies and vast amounts of fossil energy allowed unprecedented production of consumer goods.

And so they dreamed in public, showed humanity a better version of itself, modeled different values in their own behavior, and in the process liberated the political imagination and rapidly altered the sense of what was possible. They were also unafraid of the language of morality—to give the pragmatic, cost-benefit arguments a rest and speak of right and wrong, of love and indignation. In The Wealth of Nations, Adam Smith made a case against slavery that had little to do with morality and everything to do with the bottom line. Work by paid laborers, he argued, “comes cheaper in the end than that performed by slaves”: not only were slave owners responsible for the high costs of the “wear and tear” of their human property but, he claimed, paid laborers had a greater incentive to work hard.16 Many abolitionists on both sides of the Atlantic would embrace such pragmatic arguments.

Lauren Dubois, Haiti: The Aftershocks of History (New York: Metropolitan Books, 2012), 97–100. 14. Frantz Fanon, The Wretched of the Earth (New York: Grove, 2004), 55. 15. Kari Marie Norgaard, Living in Denial: Climate Change, Emotions, and Everyday Life (Cambridge, MA: MIT Press, 2011), 61. 16. Adam Smith, The Wealth of Nations, Books I–III, ed. Andrew Skinner (London: Penguin, 1999), 183–84, 488–89. 17. Seymour Drescher, The Mighty Experiment: Free Labor Versus Slavery in British Emancipation (Oxford: Oxford University Press, 2002), 34–35, 233; Thomas Clarkson, The History of the Rise, Progress, and Accomplishment of the Abolition of the African Slave-Trade, by the British Parliament, Vol. 2 (London: Longman, Hurst, Rees, and Orme, 1808), 580–81. 18.


words: 49,604

The Weightless World: Strategies for Managing the Digital Economy by Diane Coyle

Alan Greenspan, barriers to entry, Berlin Wall, Big bang: deregulation of the City of London, blue-collar work, Bretton Woods, business cycle, clean water, company town, computer age, Corn Laws, creative destruction, cross-subsidies, David Ricardo: comparative advantage, dematerialisation, Diane Coyle, Edward Glaeser, everywhere but in the productivity statistics, financial deregulation, flying shuttle, full employment, George Santayana, global village, Great Leap Forward, hiring and firing, Howard Rheingold, income inequality, informal economy, invention of the sewing machine, invisible hand, Jane Jacobs, Joseph Schumpeter, Kickstarter, knowledge economy, labour market flexibility, laissez-faire capitalism, lump of labour, Mahbub ul Haq, Marshall McLuhan, mass immigration, McJob, Meghnad Desai, microcredit, moral panic, Neal Stephenson, Network effects, new economy, Nick Leeson, night-watchman state, North Sea oil, offshore financial centre, pension reform, pension time bomb, pensions crisis, Robert Solow, Ronald Reagan, Silicon Valley, Snow Crash, spinning jenny, The Death and Life of Great American Cities, the market place, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tobin tax, Tragedy of the Commons, two tier labour market, very high income, War on Poverty, winner-take-all economy, working-age population

Whether for reasons of weightlessness or the reverse, some cities at least will become important centres of economic power. Perhaps, as in mediaeval and The Weightless World 22 renaissance times, the city state will become the key political unit. This development was foreseen by Jane Jacobs in her wonderful book Cities and the Wealth of Nations. The assumption underlying conventional economic analysis, she argues, is that the national economy is the salient unit, an assumption dating from the mercantilists of the sixteenth and seventeenth centuries. Only Marxist economic theory has diverged successfully from this assumption. She analyses the economy instead in terms of city units, hubs of trade and the centre of webs of economic relationships.

One of the powerhouses of London’s new economy has been built on the docks, the key site of the city’s former economic pre-eminence. Make a journey like this across any great city, and you cannot fail to be impressed by the variety, the amount of activity, the range of businesses, the numbers of people and the bustle. Jane Jacobs makes the same point in her classic book Cities and the Wealth of Nations. She notes that the key assumption in macroeconomics since the days of mercantilism has been that the nation state is the right basis for analysis; only Marxist theory was based on anything other than the nation. ‘Nations are not discrete economic units,’ she writes. The Weightless World 194 She goes on to argue that cities are the natural units, the milch-cows of the national economy, whose tax revenues fund subsidies to the rest, whose energy and creativity generate trade, innovation and economic growth.

Paul Hirst & Grahame Thompson (1996) Globalisation in Question, Polity Press, Cambridge. Mathew Horsman & Andrew Marshall (1994) After the Nation State, HarperCollins, London. Peter Huber (2 December 1996) ‘Cyber Power’, Forbes, New York. Mike Hudson (1995) Managing Without Profit, Penguin, London. Jane Jacobs (1984) Cities and the Wealth of Nations, Random House/Viking, London. Jane Jacobs (1961) The Life and Death of Great American Cities, Jonathan Cape, London. Thierry Jeantet (1986) La modernisation de la France par l’Economie Sociale. Peter Kenen, ed. (1994) Managing the World Economy, Institute for International Economics, Washington, DC.


There Is No Planet B: A Handbook for the Make or Break Years by Mike Berners-Lee

air freight, Anthropocene, autonomous vehicles, Big Tech, biodiversity loss, call centre, carbon footprint, carbon tax, cloud computing, dematerialisation, disinformation, driverless car, Easter island, Elon Musk, energy security, energy transition, fake news, food miles, Gini coefficient, global supply chain, global village, Hans Rosling, high-speed rail, income inequality, Intergovernmental Panel on Climate Change (IPCC), Jevons paradox, land reform, microplastics / micro fibres, negative emissions, neoliberal agenda, off grid, performance metric, post-truth, profit motive, shareholder value, Silicon Valley, smart cities, Stephen Hawking, systems thinking, TED Talk, The Spirit Level, The Wealth of Nations by Adam Smith, trickle-down economics, urban planning

And if someone going for a top job in one of those NGOs were to lose out to a better candidate they would be happy that an even better person existed to do the work. That would be a healthy market. One in which the best can rise to the top, whilst everyone helps everyone else to improve. This community-minded kind of market is very different from the greedy neoliberal ethic. In 1776, when Adam Smith published The Wealth of Nations and supposedly founded modern economics, one of his stipulations for a healthy market, often overlooked today, was the requirement for all players to be moral actors. The free market is provably incapable of dealing with global issues that require global governance. In his ‘Common Cause’ report, Tom Crompton called them ‘bigger than self’ problems, which can’t be addressed by individuals pursuing self-interest7.

(Berners-Lee) 32, 147–48, 227 hydrocarbons/hydrogen 72 hydroelectric power 75 hydro storage 72 ice 228 ICT (information and communication technology), impacts 84–85, 113–14 imperial units 242–44 income tax see tax system India, global distribution of fossil fuel reserves 89–90 individual actions see personal actions and effects individualism 119, 225–26, 228 indoor farming 45–46, 67–68 inequality 228 and citizen’s wage 154 energy use 60, 90–91, 131 food distribution 15–16 global deals 210 population growth 150–51 prisons/prisoners 156 tax system 142–45, 144 trickledown of wealth 130–31, 130 and values 169–71 wealth distribution 130–35, 131–40, 132, 134 insecurity 172–73 interdependencies, global/societal 189–90 Intergovernmental Panel on Climate Change 229 interstellar travel, impracticality of 117–18, 195, 237 interventionist economies 127–30 intrinsic motivation and values 143–44, 170–73 investment 140–42, 228–29 renewable energy sources 73, 87 sustainable farming 48–50 Index iodine, malnutrition 15 IPCC see Intergovernmental Panel on Climate Change Iraq, global distribution of fossil fuel reserves 89–90 Ireland, tax system 145 iron animal sources of food 19–20 malnutrition and inequalities of distribution 15 irrigation technology 45–46 Italy, wealth distribution 130–35, 133 Japan nuclear energy 76 sunlight/radiant energy 70, 70–71 Jevons paradox, energy efficiency 82–83 jobs see work/employment joined up perspectives 189–92, 221 journalists see media roles Kennedy, Bobby: speech on GNP 124 Keys to Performance (O’Connor) 180 kids 6–8, 187, 191, 229 kilocalories 12, 242–43 kinetic energy in a gas analogy 136–39 laboratory grown meat 45–46, 67–68 lag times, climate change 204–5 land requirements, sustainable travel 101–3, 102–3, 103–4 leadership 229–30 life expectancy, benefits of growth 123 life-minutes per person lost, diesel vehicles 109 lifestyles 4–5; see also personal actions and effects 283 limits to growth 221 big picture perspective 195 energy use 67–69, 68, 94–95, 208 21st century thinking skills 187–88 and values 170 local activities, appreciation of 123, 187–88, 191 local food, pros and cons 30–32, 230 luxury cruises 115–16 Maldives 210, 230 malnutrition 15–16 Marine Stewardship Council 33 market economies 127–30 materialistic values 174; see also consumption/consumerism maturity, need for 93, 121 Maxwell–Boltzmann distribution 136–38, 230, 265 measurement see metrics meat eating see animal sources of food media roles 231 promoting culture of truth 179–80 trust 182 messages, societal 172–74; see also values methane 79–81, 208–9, 231 metric units 242–44 metrics healthy economic growth 124–27 prisons/prisoners 156 and values 174 work/employment 151 micro-nutrients animal sources of food 19–20 malnutrition 15 Microsoft, carbon pricing scheme 147 mindfulness 174–75, 191, 193 284 misinformation 222 and trust 182, 184 and truth 175 and values 170 mitigation strategies, businesses 163–64 models, climate change 200–1, 204–5 molecular analogy of wealth distribution 136–39 Monbiot, George 236 motivation extrinsic/intrinsic 143–44, 172–73 and trust 181, 184 Musk, Elon 167 natural gas 224; see also fracking; methane neoliberalism 45, 129, 131, 172, 228, 232; see also free market Netherlands 70, 70–71, 149–50 neuroscience 232 nitrogen dioxide 108, 208–9 Norway 130–35, 138, 155–56 nuclear fusion 77, 232 nuclear power (fusion) 75–77, 231–32 obesity 16 ocean acidification 54–55, 232 O’Connor, Tim: Keys to Performance 180 oil 233; see also fossil fuels One Planet principles 160–62, 162 open-mindedness neuroscience 232 respect for 180 spirituality/belief systems 192 and trust 181–82, 184 optimism bias 233 over-simplification 182; see also complexity overeating 16 INDEX parental responsibility 233 Paris climate agreement 165–66 particulate air pollution 107–9 Patagonian Toothfish 33–34 pay rates 173; see also wealth distribution personal actions and effects 198–99, 233–34 air travel 112–13 antibiotics resistance 21 climate change 55 energy 97 feelings of insignificance in global systems 5–6 food/agricultural issues 30, 34–35, 40, 43, 50 population growth 150–51 promoting culture of truth 178–79 technological changes 168 values 174–75 wealth distribution 139 work/employment 153 ‘personal truths’ 176–77 perspectives big picture 186, 191, 195–97 businesses 159 joined up 189–92, 221 photocopying metaphor 219 photovoltaic technology 63–64, 66–67; see also solar energy physical growth mind-set 120 Planet B, lack of 117–18, 195, 237 planned economies 127–30 planning ahead, future scenarios 204–5 planning, urban 104 plastics 55–58, 56–57, 234 politicians see governmental roles; voting pollution, chicken farming 25–26; see also air pollution Index population growth 149–50, 234 feeding growing populations 46–47 investment in control measures 141, 150–51 personal actions and effects 150–51 risks of further growth 122 positive feedback mechanisms, climate change 200–1, 239 power, units of 242–43 prisons/prisoners 154–57, 157, 174, 234 problem-solving methods 5 profit-motive 159, 174 protein animal sources 17–18, 18 carbon footprints 23–25, 24 psychology 227–28 public service 174 questions and answers, reader contributions 194 reader contributions 9–10, 194 ready meals 238 rebalancing, evolutionary 6, 221 rebound effects 213, 235, 272 business strategies 163 climate change 52, 128, 165–66, 206–7, 206 energy efficiency 84, 207 virtual meetings 113–14 reductionism 189–90, 193 refugees 234–35 relatedness/belonging 266 religion 192–93 renewable energy sources 64, 208, 235 hydroelectric power 75 investment 141 limitations relative to fossil fuels 73–86, 85–87 285 using instead of/as well as fossil fuels 81–82 wind energy 73–74 see also biofuels; carbon capture and storage; solar energy respect 171, 180, 197 responsibility corporate 219 parents 233 super-rich 134–35 restaurants role food wastage 40 vegetarianism/veganism 28 retailing, food see food retailers revenge, prisoners 155–56 rice farming 29–30, 45–46, 235 rock weathering, carbon capture and storage 92 Rogers, Carl 172 Russia 210, 235 global distribution of fossil fuel reserves 89–90 sunlight/radiant energy 69–70, 70 Rwanda 70, 70–71, 172 salaries 173; see also wealth distribution Science Based Targets Initiative (SBTi) 164–66 scientific facts see facts scientific fundamentalism 176 scientific reductionism 189–90, 193 seabass, rebadging Patagonian toothfish as 33–34 sea travel 114–16, 235–36 self-awareness of simple/small/local 123, 187–88, 191 and trust 181, 184 self-reflection, 21st century thinking skills 188 286 sentient animals, treating decently 11, 17 shared-use vehicles 105–6 shareholder profits 159, 174 sharing 146 shifting baseline syndrome 236 shipping 114–16, 235–36 shock 236 simple things, appreciation of 123, 187–88, 191 simplistic thinking 182; see also complexity slavery and citizen’s wage 154 and employment 151 fishing industry 32, 34–35 slowing down 187–88, 196 small scale, appreciation of 123, 187–88, 191 Smith, Adam: The Wealth of Nations 129 social support structures, and values 173–74 solar energy 236 amount falling on earth 66 coping with intermittent sunlight 71–73 countries with highest radiant energy 69–71 countries with least radiant energy 70–71 relative to fossil fuel reserves 89 global distribution of radiant energy 69–71, 70 harnessing 66–67 South Korea, sunlight/radiant energy 70, 70–71 soya beans 21, 22, 236–37 space tourism 94, 100 spaceflight, impracticality of interstellar travel 117–18, 195, 237 INDEX Spain, wealth distribution 130–35, 133 spending practices, ethical consumerism 147–48, 168 spirituality/belief systems 192–93, 237 status symbols 173 sticking plasters (band aids) 237–38 storage of renewable energy 71–73 sunlight see solar energy supermarkets see food retailers super-rich responsibilities 134–35 taxation 145 wealth distribution 137 supply chains ethical consumerism 147–48 food and agriculture 48 science-based targets 165–66 systems approaches big picture perspective 196 businesses 159–62, 161 One Planet Living principles 160–62, 162 Taiwan, tax system 145 takeaways 238 tax system 238 carbon taxes 142–43 wealth distribution 138, 142–45 technological changes 239 agricultural 45–46 big picture perspective 195–96 business strategies 166–68 and economic growth 122–23 thinking skills big picture perspective 197 twenty-first century 185–92, 190–91 tipping points see trigger points town planning 104 transmission of renewable energy 73 Index travel and transport 99 air travel 110–14 autonomous cars 109–10 commuting 217 current rates 99–100, 100 cycling 116 diesel vehicles 107–9, 109 e-cars 106 food miles 30–32 future demands 100–1, 109–10 land needed for sustainable 101–3, 102–3, 103–4 sea travel 114–16 shared-use vehicles 105–6 spaceflight 117–18 urban 104–6 trickledown of wealth 130–31, 130, 239 trigger points, step changes in climate 2, 200–2 trust 180–84 truth 175–76, 239 big picture perspective 197 importance of seeking 177 media roles 179–80 ‘personal truths’ 176–77 promoting culture of 177–79 respect for 171 and trust 180–84 tsunami, December 2004 2 twenty-first century thinking skills 185–92, 190–91, 197 2-degree ‘safe limit’ for temperature rise 52, 200–1, 204–5, 239 unconditional positive regard 172 United Kingdom energy by end use 62, 62 gambling industry 139–40 nuclear energy 76 population growth 149–50 prisons/prisoners 155 287 sunlight/radiant energy 70, 70–71 wealth distribution 136–37 United States global distribution of fossil fuel reserves 89–90 prisons/prisoners 155–56 sunlight/radiant energy 69–70, 70 tax system 145 wealth distribution 130–35, 132–35 units, metric/imperial 242–44 urban planning 104 urban transport 104–6 value of human life 240 values 6–8, 169 big picture perspective 197 businesses 159, 174 changing for the better 172–75 and economics 119 evidence base for values choices 169–71 extrinsic/intrinsic 170–73 global cultural norms 171–72, 197 prisons/prisoners 156 technological changes 168 wealth distribution 132–33 work/employment 152–53 see also ethical consumerism vegetarianism/veganism 26–29 Venezuela, global distribution of fossil fuels 89–90 violent deaths 240 virtual travel 113–14 visions of future 8–9 businesses 159 vitamin A 15, 19–20, 247 voting, power of 240–41 climate change policies 51–53, 200–11 288 voting, power of (cont.) energy policies 59, 97 promoting culture of truth 178–80 see also democracy waking up 241 Wallis, Stewart 145 waste food 36–43, 241 mitigation 42–44, 43, 43 as proportion of food grown 12–15, 14 by region/type/processing stage 37, 38–39, 39 water use technology, in agriculture 45–46 watts 12, 242–43 wealth distribution economics 130–35, 131–40, 132, 134 tax system 138, 142–45, 144 see also inequality The Wealth of Nations (Smith) 129 INDEX weapons industry 152 weight, units of 244 wellbeing 241 benefits of growth 123 businesses, role of 158–59 and citizen’s wage 154 metrics of healthy growth 126 work/employment 151–52 Wellbeing Economy 267 wind energy 73–74 wisdom, need for 93, 121 work/employment 229 agricultural work 44–45, 222 and citizen’s wage 153–54 investment in sustainability 49–50 personal actions and effects 153 useful/beneficial 151–52 values 152–53 zinc 15, 19–20

(Berners-Lee) 32, 147–48, 227 hydrocarbons/hydrogen 72 hydroelectric power 75 hydro storage 72 ice 228 ICT (information and communication technology), impacts 84–85, 113–14 imperial units 242–44 income tax see tax system India, global distribution of fossil fuel reserves 89–90 individual actions see personal actions and effects individualism 119, 225–26, 228 indoor farming 45–46, 67–68 inequality 228 and citizen’s wage 154 energy use 60, 90–91, 131 food distribution 15–16 global deals 210 population growth 150–51 prisons/prisoners 156 tax system 142–45, 144 trickledown of wealth 130–31, 130 and values 169–71 wealth distribution 130–35, 131–40, 132, 134 insecurity 172–73 interdependencies, global/societal 189–90 Intergovernmental Panel on Climate Change 229 interstellar travel, impracticality of 117–18, 195, 237 interventionist economies 127–30 intrinsic motivation and values 143–44, 170–73 investment 140–42, 228–29 renewable energy sources 73, 87 sustainable farming 48–50 Index iodine, malnutrition 15 IPCC see Intergovernmental Panel on Climate Change Iraq, global distribution of fossil fuel reserves 89–90 Ireland, tax system 145 iron animal sources of food 19–20 malnutrition and inequalities of distribution 15 irrigation technology 45–46 Italy, wealth distribution 130–35, 133 Japan nuclear energy 76 sunlight/radiant energy 70, 70–71 Jevons paradox, energy efficiency 82–83 jobs see work/employment joined up perspectives 189–92, 221 journalists see media roles Kennedy, Bobby: speech on GNP 124 Keys to Performance (O’Connor) 180 kids 6–8, 187, 191, 229 kilocalories 12, 242–43 kinetic energy in a gas analogy 136–39 laboratory grown meat 45–46, 67–68 lag times, climate change 204–5 land requirements, sustainable travel 101–3, 102–3, 103–4 leadership 229–30 life expectancy, benefits of growth 123 life-minutes per person lost, diesel vehicles 109 lifestyles 4–5; see also personal actions and effects 283 limits to growth 221 big picture perspective 195 energy use 67–69, 68, 94–95, 208 21st century thinking skills 187–88 and values 170 local activities, appreciation of 123, 187–88, 191 local food, pros and cons 30–32, 230 luxury cruises 115–16 Maldives 210, 230 malnutrition 15–16 Marine Stewardship Council 33 market economies 127–30 materialistic values 174; see also consumption/consumerism maturity, need for 93, 121 Maxwell–Boltzmann distribution 136–38, 230, 265 measurement see metrics meat eating see animal sources of food media roles 231 promoting culture of truth 179–80 trust 182 messages, societal 172–74; see also values methane 79–81, 208–9, 231 metric units 242–44 metrics healthy economic growth 124–27 prisons/prisoners 156 and values 174 work/employment 151 micro-nutrients animal sources of food 19–20 malnutrition 15 Microsoft, carbon pricing scheme 147 mindfulness 174–75, 191, 193 284 misinformation 222 and trust 182, 184 and truth 175 and values 170 mitigation strategies, businesses 163–64 models, climate change 200–1, 204–5 molecular analogy of wealth distribution 136–39 Monbiot, George 236 motivation extrinsic/intrinsic 143–44, 172–73 and trust 181, 184 Musk, Elon 167 natural gas 224; see also fracking; methane neoliberalism 45, 129, 131, 172, 228, 232; see also free market Netherlands 70, 70–71, 149–50 neuroscience 232 nitrogen dioxide 108, 208–9 Norway 130–35, 138, 155–56 nuclear fusion 77, 232 nuclear power (fusion) 75–77, 231–32 obesity 16 ocean acidification 54–55, 232 O’Connor, Tim: Keys to Performance 180 oil 233; see also fossil fuels One Planet principles 160–62, 162 open-mindedness neuroscience 232 respect for 180 spirituality/belief systems 192 and trust 181–82, 184 optimism bias 233 over-simplification 182; see also complexity overeating 16 INDEX parental responsibility 233 Paris climate agreement 165–66 particulate air pollution 107–9 Patagonian Toothfish 33–34 pay rates 173; see also wealth distribution personal actions and effects 198–99, 233–34 air travel 112–13 antibiotics resistance 21 climate change 55 energy 97 feelings of insignificance in global systems 5–6 food/agricultural issues 30, 34–35, 40, 43, 50 population growth 150–51 promoting culture of truth 178–79 technological changes 168 values 174–75 wealth distribution 139 work/employment 153 ‘personal truths’ 176–77 perspectives big picture 186, 191, 195–97 businesses 159 joined up 189–92, 221 photocopying metaphor 219 photovoltaic technology 63–64, 66–67; see also solar energy physical growth mind-set 120 Planet B, lack of 117–18, 195, 237 planned economies 127–30 planning ahead, future scenarios 204–5 planning, urban 104 plastics 55–58, 56–57, 234 politicians see governmental roles; voting pollution, chicken farming 25–26; see also air pollution Index population growth 149–50, 234 feeding growing populations 46–47 investment in control measures 141, 150–51 personal actions and effects 150–51 risks of further growth 122 positive feedback mechanisms, climate change 200–1, 239 power, units of 242–43 prisons/prisoners 154–57, 157, 174, 234 problem-solving methods 5 profit-motive 159, 174 protein animal sources 17–18, 18 carbon footprints 23–25, 24 psychology 227–28 public service 174 questions and answers, reader contributions 194 reader contributions 9–10, 194 ready meals 238 rebalancing, evolutionary 6, 221 rebound effects 213, 235, 272 business strategies 163 climate change 52, 128, 165–66, 206–7, 206 energy efficiency 84, 207 virtual meetings 113–14 reductionism 189–90, 193 refugees 234–35 relatedness/belonging 266 religion 192–93 renewable energy sources 64, 208, 235 hydroelectric power 75 investment 141 limitations relative to fossil fuels 73–86, 85–87 285 using instead of/as well as fossil fuels 81–82 wind energy 73–74 see also biofuels; carbon capture and storage; solar energy respect 171, 180, 197 responsibility corporate 219 parents 233 super-rich 134–35 restaurants role food wastage 40 vegetarianism/veganism 28 retailing, food see food retailers revenge, prisoners 155–56 rice farming 29–30, 45–46, 235 rock weathering, carbon capture and storage 92 Rogers, Carl 172 Russia 210, 235 global distribution of fossil fuel reserves 89–90 sunlight/radiant energy 69–70, 70 Rwanda 70, 70–71, 172 salaries 173; see also wealth distribution Science Based Targets Initiative (SBTi) 164–66 scientific facts see facts scientific fundamentalism 176 scientific reductionism 189–90, 193 seabass, rebadging Patagonian toothfish as 33–34 sea travel 114–16, 235–36 self-awareness of simple/small/local 123, 187–88, 191 and trust 181, 184 self-reflection, 21st century thinking skills 188 286 sentient animals, treating decently 11, 17 shared-use vehicles 105–6 shareholder profits 159, 174 sharing 146 shifting baseline syndrome 236 shipping 114–16, 235–36 shock 236 simple things, appreciation of 123, 187–88, 191 simplistic thinking 182; see also complexity slavery and citizen’s wage 154 and employment 151 fishing industry 32, 34–35 slowing down 187–88, 196 small scale, appreciation of 123, 187–88, 191 Smith, Adam: The Wealth of Nations 129 social support structures, and values 173–74 solar energy 236 amount falling on earth 66 coping with intermittent sunlight 71–73 countries with highest radiant energy 69–71 countries with least radiant energy 70–71 relative to fossil fuel reserves 89 global distribution of radiant energy 69–71, 70 harnessing 66–67 South Korea, sunlight/radiant energy 70, 70–71 soya beans 21, 22, 236–37 space tourism 94, 100 spaceflight, impracticality of interstellar travel 117–18, 195, 237 INDEX Spain, wealth distribution 130–35, 133 spending practices, ethical consumerism 147–48, 168 spirituality/belief systems 192–93, 237 status symbols 173 sticking plasters (band aids) 237–38 storage of renewable energy 71–73 sunlight see solar energy supermarkets see food retailers super-rich responsibilities 134–35 taxation 145 wealth distribution 137 supply chains ethical consumerism 147–48 food and agriculture 48 science-based targets 165–66 systems approaches big picture perspective 196 businesses 159–62, 161 One Planet Living principles 160–62, 162 Taiwan, tax system 145 takeaways 238 tax system 238 carbon taxes 142–43 wealth distribution 138, 142–45 technological changes 239 agricultural 45–46 big picture perspective 195–96 business strategies 166–68 and economic growth 122–23 thinking skills big picture perspective 197 twenty-first century 185–92, 190–91 tipping points see trigger points town planning 104 transmission of renewable energy 73 Index travel and transport 99 air travel 110–14 autonomous cars 109–10 commuting 217 current rates 99–100, 100 cycling 116 diesel vehicles 107–9, 109 e-cars 106 food miles 30–32 future demands 100–1, 109–10 land needed for sustainable 101–3, 102–3, 103–4 sea travel 114–16 shared-use vehicles 105–6 spaceflight 117–18 urban 104–6 trickledown of wealth 130–31, 130, 239 trigger points, step changes in climate 2, 200–2 trust 180–84 truth 175–76, 239 big picture perspective 197 importance of seeking 177 media roles 179–80 ‘personal truths’ 176–77 promoting culture of 177–79 respect for 171 and trust 180–84 tsunami, December 2004 2 twenty-first century thinking skills 185–92, 190–91, 197 2-degree ‘safe limit’ for temperature rise 52, 200–1, 204–5, 239 unconditional positive regard 172 United Kingdom energy by end use 62, 62 gambling industry 139–40 nuclear energy 76 population growth 149–50 prisons/prisoners 155 287 sunlight/radiant energy 70, 70–71 wealth distribution 136–37 United States global distribution of fossil fuel reserves 89–90 prisons/prisoners 155–56 sunlight/radiant energy 69–70, 70 tax system 145 wealth distribution 130–35, 132–35 units, metric/imperial 242–44 urban planning 104 urban transport 104–6 value of human life 240 values 6–8, 169 big picture perspective 197 businesses 159, 174 changing for the better 172–75 and economics 119 evidence base for values choices 169–71 extrinsic/intrinsic 170–73 global cultural norms 171–72, 197 prisons/prisoners 156 technological changes 168 wealth distribution 132–33 work/employment 152–53 see also ethical consumerism vegetarianism/veganism 26–29 Venezuela, global distribution of fossil fuels 89–90 violent deaths 240 virtual travel 113–14 visions of future 8–9 businesses 159 vitamin A 15, 19–20, 247 voting, power of 240–41 climate change policies 51–53, 200–11 288 voting, power of (cont.) energy policies 59, 97 promoting culture of truth 178–80 see also democracy waking up 241 Wallis, Stewart 145 waste food 36–43, 241 mitigation 42–44, 43, 43 as proportion of food grown 12–15, 14 by region/type/processing stage 37, 38–39, 39 water use technology, in agriculture 45–46 watts 12, 242–43 wealth distribution economics 130–35, 131–40, 132, 134 tax system 138, 142–45, 144 see also inequality The Wealth of Nations (Smith) 129 INDEX weapons industry 152 weight, units of 244 wellbeing 241 benefits of growth 123 businesses, role of 158–59 and citizen’s wage 154 metrics of healthy growth 126 work/employment 151–52 Wellbeing Economy 267 wind energy 73–74 wisdom, need for 93, 121 work/employment 229 agricultural work 44–45, 222 and citizen’s wage 153–54 investment in sustainability 49–50 personal actions and effects 153 useful/beneficial 151–52 values 152–53 zinc 15, 19–20


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Capital in the Twenty-First Century by Thomas Piketty

accounting loophole / creative accounting, Asian financial crisis, banking crisis, banks create money, Berlin Wall, book value, Branko Milanovic, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, carbon tax, central bank independence, centre right, circulation of elites, collapse of Lehman Brothers, conceptual framework, corporate governance, correlation coefficient, David Ricardo: comparative advantage, demographic transition, distributed generation, diversification, diversified portfolio, European colonialism, eurozone crisis, Fall of the Berlin Wall, financial intermediation, full employment, Future Shock, German hyperinflation, Gini coefficient, Great Leap Forward, high net worth, Honoré de Balzac, immigration reform, income inequality, income per capita, index card, inflation targeting, informal economy, invention of the steam engine, invisible hand, joint-stock company, Joseph Schumpeter, Kenneth Arrow, low interest rates, market bubble, means of production, meritocracy, Money creation, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, open economy, Paul Samuelson, pension reform, power law, purchasing power parity, race to the bottom, randomized controlled trial, refrigerator car, regulatory arbitrage, rent control, rent-seeking, Robert Gordon, Robert Solow, Ronald Reagan, Simon Kuznets, sovereign wealth fund, Steve Jobs, Suez canal 1869, Suez crisis 1956, The Nature of the Firm, the payments system, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade liberalization, twin studies, very high income, Vilfredo Pareto, We are the 99%, zero-sum game

In 1860, the average price of a male slave of prime working age was roughly $2,000, whereas the average wage of a free farm laborer was on the order of $200.17 Note, however, that the price of a slave varied widely depending on various characteristics and on the owner’s evaluation; for example, the wealthy planter Quentin Tarantino portrays in Django Unchained is prepared to sell beautiful Broomhilda for only $700 but wants $12,000 for his best fighting slaves. In any case, it is clear that this type of calculation makes sense only in a slave society, where human capital can be sold on the market, permanently and irrevocably. Some economists, including the authors of a recent series of World Bank reports on “the wealth of nations,” choose to calculate the total value of “human capital” by capitalizing the value of the income flow from labor on the basis of a more or less arbitrary annual rate of return (typically 4–5 percent). These reports conclude with amazement that human capital is the leading form of capital in the enchanted world of the twenty-first century.

I welcome input from readers of the book or website, who can send comments and criticisms to piketty@ens.fr. Introduction 1. The English economist Thomas Malthus (1766–1834) is considered to be one of the most influential members of the “classical” school, along with Adam Smith (1723–1790) and David Ricardo (1772–1823). 2. There is of course a more optimistic school of liberals: Adam Smith seems to belong to it, and in fact he never really considered the possibility that the distribution of wealth might grow more unequal over the long run. The same is true of Jean-Baptiste Say (1767–1832), who also believed in natural harmony. 3.

Like Ricardo, Marx based his work on an analysis of the internal logical contradictions of the capitalist system. He therefore sought to distinguish himself from both bourgeois economists (who saw the market as a self-regulated system, that is, a system capable of achieving equilibrium on its own without major deviations, in accordance with Adam Smith’s image of “the invisible hand” and Jean-Baptiste Say’s “law” that production creates its own demand), and utopian socialists and Proudhonians, who in Marx’s view were content to denounce the misery of the working class without proposing a truly scientific analysis of the economic processes responsible for it.7 In short, Marx took the Ricardian model of the price of capital and the principle of scarcity as the basis of a more thorough analysis of the dynamics of capitalism in a world where capital was primarily industrial (machinery, plants, etc.) rather than landed property, so that in principle there was no limit to the amount of capital that could be accumulated.


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The Making of Global Capitalism by Leo Panitch, Sam Gindin

accounting loophole / creative accounting, active measures, airline deregulation, Alan Greenspan, anti-communist, Asian financial crisis, asset-backed security, bank run, banking crisis, barriers to entry, Basel III, Bear Stearns, Big bang: deregulation of the City of London, bilateral investment treaty, book value, Branko Milanovic, Bretton Woods, BRICs, British Empire, business cycle, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon credits, Carmen Reinhart, central bank independence, classic study, collective bargaining, continuous integration, corporate governance, creative destruction, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, currency peg, dark matter, democratizing finance, Deng Xiaoping, disintermediation, ending welfare as we know it, eurozone crisis, facts on the ground, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, floating exchange rates, foreign exchange controls, full employment, Gini coefficient, Glass-Steagall Act, global value chain, guest worker program, Hyman Minsky, imperial preference, income inequality, inflation targeting, interchangeable parts, interest rate swap, Kenneth Rogoff, Kickstarter, land reform, late capitalism, liberal capitalism, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, low interest rates, manufacturing employment, market bubble, market fundamentalism, Martin Wolf, means of production, military-industrial complex, money market fund, money: store of value / unit of account / medium of exchange, Monroe Doctrine, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, new economy, Nixon triggered the end of the Bretton Woods system, non-tariff barriers, Northern Rock, oil shock, precariat, price stability, proprietary trading, quantitative easing, Ralph Nader, RAND corporation, regulatory arbitrage, reserve currency, risk tolerance, Ronald Reagan, Savings and loan crisis, scientific management, seigniorage, shareholder value, short selling, Silicon Valley, sovereign wealth fund, special drawing rights, special economic zone, stock buybacks, structural adjustment programs, subprime mortgage crisis, Tax Reform Act of 1986, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transcontinental railway, trickle-down economics, union organizing, vertical integration, very high income, Washington Consensus, We are all Keynesians now, Works Progress Administration, zero-coupon bond, zero-sum game

No one ever considered Carnegie libraries steeped in the blood of the Homestead steel workers, but they are. We do not remember that the Rockefeller Foundation is founded on the dead miners of the Colorado Fuel and Iron Co. and a dozen other similar performances . . . It is a pity that Wall Street, with its ability to control all the wealth of nations . . . are still employing the best brains to serve greed and selfish interest. People can only stand so much, and one of these days there will be a settlement. We shall have one receivership too many, and one unnecessary depression out of which we will not come with the power still in the same old hands.”

., My Years with General Motors, New York: Doubleday, 1990. 71 Peter Dicken, Global Shift, New York: Guilford Press, 2003, p. 355. 72 See Alfred D. Chandler, Jr., “The United States: Engines of Economic Growth in the Capital-Intensive and Knowledge-Intensive Industries,” in Alfred D. Chandler, Franco Amatori, and Takashi Hikino, eds., Big Business and the Wealth of Nations, Cambridge, UK: CUP, 1997, pp. 83–98. 73 Tony Golding, The City: Inside the Great Expectations Machine, London: Pearson Education, 2001, pp. 25–6. 74 See R. C. Smith and I. Walter, Global Banking, New York: OUP, 1997. 75 U.S. Department of Commerce, Bureau of Economic Analysis, Corporate Profits After Tax by Industry, Table 6.19B, lines 12 and 52, available at bea.gov. 76 This was marked by Morgenthau’s resignation in 1945 and the shunting off to the IMF of White (who soon became one of the first prominent victims of the anti-Communist crusade), and the appointment, as secretary of the Treasury, first of “the cautious Fred Vinson” and then of the St.

Although there has also been a certain renewed fashionability of the term “empire” to designate the United States, the imperial practices of the American state are usually presented as accompanied by economic decline and explained in terms of fending off challenges from rival states.3 The reality, however, is that it was the immense strength of US capitalism which made globalization possible, and what continued to make the American state distinctive was its vital role in managing and superintending capitalism on a worldwide plane.4 The insights of an Adam Smith or a Karl Marx into capitalism’s DNA have often led people to imagine that globalization is no more than an inevitable outcome of capitalism’s structural tendencies to expansion. Yet the spread of capitalism throughout the world was not the automatic result of the operation of any historical “law”; it was brought about by human agents and the institutions they created, albeit under conditions not of their choice.


pages: 637 words: 199,158

The Tragedy of Great Power Politics by John J. Mearsheimer

active measures, Berlin Wall, Bretton Woods, British Empire, colonial rule, continuation of politics by other means, deindustrialization, discrete time, disinformation, Dissolution of the Soviet Union, Francis Fukuyama: the end of history, guns versus butter model, Herman Kahn, illegal immigration, long peace, Mikhail Gorbachev, Monroe Doctrine, mutually assured destruction, oil shock, Pareto efficiency, RAND corporation, Ronald Reagan, Simon Kuznets, South China Sea, Suez canal 1869, The Wealth of Nations by Adam Smith, Thomas L Friedman, Yom Kippur War

To take the most blatant example of his realism, the Soviet Union formed a non-aggression pact with Nazi Germany in August 1939—the infamous Molotov-Ribbentrop Pact—in hopes that the agreement would at least temporarily satisfy Hitler’s territorial ambitions in eastern Europe and turn the Wehrmacht toward France and the United Kingdom.40 When great powers confront a serious threat, in short, they pay little attention to ideology as they search for alliance partners.41 Security also trumps wealth when those two goals conflict, because “defence,” as Adam Smith wrote in The Wealth of Nations, “is of much more importance than opulence.”42 Smith provides a good illustration of how states behave when forced to choose between wealth and relative power. In 1651, England put into effect the famous Navigation Act, protectionist legislation designed to damage Holland’s commerce and ultimately cripple the Dutch economy.

Of course, we supported him only insofar as we didn’t want to see him defeated by the Japanese—in much the same way that Churchill, who had been our enemy since the first days of the Soviet Union, was sensible enough to support us in the war against Hitler.” Khrushchev Remembers: The Last Testament, trans. and ed. Strobe Talbott (Boston: Little, Brown, 1974), pp. 237–38. 41. See Walt, Origins of Alliances, pp. 5, 266–68. 42. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, ed. Edwin Cannan (Chicago: University of Chicago Press, 1976), Vol. 1, p. 487. All the quotes in this paragraph are from pp. 484–87 of that book. 43. For an overview of the Anglo-Dutch rivalry, see Jack S. Levy, “The Rise and Decline of the Anglo-Dutch Rivalry, 1609–1689,” in William R.

In fact, in the more than thirty major strategic air campaigns that have thus far been waged, air power has never driven the masses into the streets to demand anything.”66 Furthermore, modern industrial economies are not fragile structures that can be easily destroyed, even by massive bombing attacks. To paraphrase Adam Smith, there is a lot of room for ruin in a great power’s economy. This targeting strategy makes even less sense against minor powers, because they invariably have small industrial bases. But what about decapitation? As noted, that strategy failed against Iraq in 1991. It was also tried on three other occasions, none of which are included in the previous discussion because they were such small-scale attacks.


Basic Income: A Radical Proposal for a Free Society and a Sane Economy by Philippe van Parijs, Yannick Vanderborght

Airbnb, Albert Einstein, basic income, Berlin Wall, Bertrand Russell: In Praise of Idleness, carbon tax, centre right, collective bargaining, cryptocurrency, David Graeber, declining real wages, degrowth, diversified portfolio, Edward Snowden, eurozone crisis, Fall of the Berlin Wall, feminist movement, full employment, future of work, George Akerlof, Herbert Marcuse, illegal immigration, income per capita, informal economy, Jeremy Corbyn, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kickstarter, Marshall McLuhan, means of production, minimum wage unemployment, Money creation, open borders, Paul Samuelson, pension reform, Post-Keynesian economics, precariat, price mechanism, profit motive, purchasing power parity, quantitative easing, race to the bottom, road to serfdom, Robert Solow, Rutger Bregman, Second Machine Age, secular stagnation, selection bias, sharing economy, sovereign wealth fund, systematic bias, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, universal basic income, urban planning, urban renewal, War on Poverty, working poor

In Christopher Jencks and Paul E. Peterson, eds., The Urban Underclass, 411–436. Washington DC: The Brookings Institution. Sloman, Peter. 2016. “Beveridge’s Rival: Juliet Rhys-Â�Williams and the Campaign for Basic Income, 1942–55.” ConÂ�temporary British History 30(2): 203–223. Smith, Adam. 1776/1977. The Wealth of Nations, HarmondsÂ�worth: Penguin Books. Smith, Jeff. 2006. “Fund Basic Income Grants Not from Income but from Outgo.” Georgist Journal 104. www╉.Â�georgistjournal╉.Â�org╉/Â�104╉-Â�spring╉-Â�2006╉/Â�. Snowden, Edward. 2014. “A Nation Interview.” The Nation, November 17. www╉.Â�thenation╉ .Â�com ╉/Â�a rticle╉/Â�186129╉/Â�snowden╉-Â�exile╉-Â�exclusive╉-Â�interview. 362 B ibliogra p hy Soboul, Albert. 1962.

In France, for example, Génération Libre (Â�Free Generation), directed by phiÂ�losÂ�oÂ�pher Gaspard Koenig, has been playing an imporÂ�tant role in drawing attention to the idea in liberal circles and beyond, including by publishing a detailed proposal for France.94 Meanwhile Alternative Libérale (Liberal Alternative), chaired by Louis-Â�Marie Bachelot, advocates a basic income at a subnational level, so that each subna95 tional entity can choose its preferred level and compete with the others. Â� In the United Kingdom, the Adam Smith Institute has released a research report in which it advocates the implementation of an individual negative income tax that “should replace major means-Â�tested benefits.”96 In all Â�these cases, it is imporÂ�tant to look at the details of the proposal—Â�not just at the level of the basic income and how obligation-free it is, but also at what it is meant to replace and how it is supposed to be financed.

The sustainability of (genuine) domestic reÂ�distribution imposes firm limits on hospitality. This is true for conditional minimum-Â�income schemes, and is at least as true for an unconditional basic income. Would milder versions of this exclusionary strategy not suffice? Â�There are at least two possibilities. One consists of imposing a waiting period. Thus, Adam Smith discusses an EnÂ�glish rule to the effect that an “undisturbed residence” of forty days is required before poor Â�people can belong to the “own poor” for whom each parish has to provide.14 In the same vein, the guaranteed-Â�minimum-Â�income scheme for families introduced in the mid-1990s by Governor Cristovam Buarque in the federal district of Brasilia imposed a residence period of ten years before newcomers from other parts of Brazil could claim benefits.


pages: 490 words: 150,172

The Pencil: A History of Design and Circumstance by Henry Petroski

business climate, Charles Babbage, Douglas Hofstadter, Ford Model T, Gödel, Escher, Bach, Isaac Newton, James Watt: steam engine, Khartoum Gordon, Lewis Mumford, Menlo Park, On the Economy of Machinery and Manufactures, Ralph Waldo Emerson, the scientific method, The Wealth of Nations by Adam Smith, Thorstein Veblen

Others, being perhaps of a less literary bent, have been no less moved or inspired by something of their special choosing. As a grain of sand contains a world within it, so objects as apparently plain and simple as straight pins can hold a multitude of lessons and meanings to prick the mind into activity. Adam Smith opened his Inquiry Into the Nature and Causes of the Wealth of Nations with a classic description of straight-pin making in order to explain the effects of the division of labor: One man draws the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations; to put it on is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the paper.… Each person … might be considered as making four thousand eight hundred pins in a day.

Smiles, Samuel. Lives of the Engineers. Popular edition. London, 1904. ______. Selections from Lives of the Engineers: With an Account of Their Principal Works. Edited with an introduction by Thomas Parke Hughes. Cambridge, Mass., 1966. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. Chicago, 1952. Smith, Cyril Stanley. “Metallurgical Footnotes to the History of Art,” Proceedings of the American Philosophical Society, 116 (1972): 97–135. Smithwick, R. Fitzgerald. “How Our Pencils Are Made in Cumberland,” Art-Journal, 18, n.s. (1866): 349–51. Social Circle in Concord, [Mass.].

Thomson, p. 31, where the total production of forty countries is put at six billion annually. 3 “We are sure”: Schrodt, p. 32. 4 “To initialize”: Schrodt, p. 32. 5 “Have you considered”: Porter, p. 66. 6 “reverse engineering”: with thanks to Charles Townshend. 7 carpenter’s chalk: Huxley. 8 “the child who masters”: Faraday, p. vii. 9 “searching for a new pattern”: Lindbergh, p. 10. 10 “One man draws the wire”: Adam Smith, p. 3. 11 “perhaps the most important”: Babbage, p. 169. Cf. pp. 176–90. 12 Milton Friedman: Metz, p. 6. APPENDIX A From “How the Pencil Is Made” 1 “The graphite”: Fleming and Guptill, pp. 11–14. Reprinted courtesy of Koh-I-Noor Rapidograph, Inc. APPENDIX B A Collection of Pencils 1 monthly newsletter: Arthur T.


pages: 538 words: 145,243

Behemoth: A History of the Factory and the Making of the Modern World by Joshua B. Freeman

anti-communist, British Empire, Capital in the Twenty-First Century by Thomas Piketty, Charles Babbage, classic study, clean water, collective bargaining, company town, Corn Laws, corporate raider, cotton gin, deindustrialization, Deng Xiaoping, disruptive innovation, driverless car, en.wikipedia.org, factory automation, flying shuttle, Ford Model T, Ford paid five dollars a day, Frederick Winslow Taylor, global supply chain, Great Leap Forward, Herbert Marcuse, high-speed rail, household responsibility system, indoor plumbing, interchangeable parts, invisible hand, James Hargreaves, joint-stock company, knowledge worker, mass immigration, means of production, mittelstand, Naomi Klein, new economy, On the Economy of Machinery and Manufactures, Panopticon Jeremy Bentham, Pearl River Delta, post-industrial society, Ralph Waldo Emerson, rising living standards, Ronald Reagan, scientific management, Shenzhen special economic zone , Silicon Valley, special economic zone, spinning jenny, Steve Jobs, strikebreaker, techno-determinism, technoutopianism, the built environment, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tim Cook: Apple, transaction costs, union organizing, Upton Sinclair, urban planning, Vanguard fund, vertical integration, women in the workforce, working poor, Works Progress Administration, zero-sum game

“The way to make automobiles,” Henry Ford said, “is to make one automobile just like another . . . . just like one pin is like another pin when it comes from the pin factory, or one match is like another match when it comes from the match factory.” Ford, perhaps unconsciously, echoed Adam Smith’s famous use of pin manufacturing in The Wealth of Nations to illustrate the savings that could come from the division of labor in producing a standardized product. From 1909 on, the Ford Motor Company only produced the Model T. The vehicle’s different body styles all used the same chassis. For most of its history, it was available only in black.11 With just one model produced in high volume, Ford could invest heavily in equipment and experimentation to manufacture it as efficiently as possible.

Keith Sward, The Legend of Henry Ford (New York: Rinehart & Company, 1948), 9–27, 43–46. 10.Sward, The Legend of Henry Ford, 44–45; Hounshell, From the American System to Mass Production, 224. 11.Stephen Meyer, The Five Dollar Day; Labor Management and Social Control in the Ford Motor Company, 1908–1921 (Albany: State University of New York Press, 1981), 16, 18; Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations ([1776] London: Oxford University Press, 1904), 6–7; Hounshell, From the American System to Mass Production, 227. 12.Though various accounts at the time and after, including by the Ford company, have claimed that by the time of the introduction of the assembly line complete interchangeability of parts had been achieved, apparently for several years some filing and grinding of parts on the assembly line occurred.


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Corporate Warriors: The Rise of the Privatized Military Industry by Peter Warren Singer

Apollo 13, barriers to entry, Berlin Wall, blood diamond, borderless world, British Empire, colonial rule, conceptual framework, disinformation, failed state, Fall of the Berlin Wall, financial independence, full employment, Global Witness, Jean Tirole, joint-stock company, Machinery of Freedom by David Friedman, market friction, military-industrial complex, moral hazard, Nelson Mandela, new economy, no-fly zone, offshore financial centre, Peace of Westphalia, principal–agent problem, prisoner's dilemma, private military company, profit maximization, profit motive, RAND corporation, risk/return, rolodex, Ronald Coase, Ronald Reagan, Scramble for Africa, South China Sea, supply-chain management, The Nature of the Firm, The Wealth of Nations by Adam Smith, vertical integration

Paul Taibel, "Outsourcing & Privatization of Defense Infrastructure." A Business Executives for National Security Report, L 998. Available at http^/w'wwbens.org/pubs/outsrce.html. 13. J. Michael Brower, "Outland: The Vogue of DOD Outsourcing and Privatization," Acquisition Review Quarterly 4 (Fall 1997): $83—392; Adam Smith, The Wealth of Nations, 1776. Available at http://\v^\^v.socsci.nicmaster.ca/~ec<>n/'ugcm/3ll3/smith/'\vealth/wealbkorj 14. Before the advent of the state in the LtSoos, soldiers were privately equipped, being required to bring their own weapons and accoutrements to the battlefield. The universalizing effects of state bureaucracies quickly ended this practice, as uniform forces were mustered into the public service and states began to manufacture all their own weapons, from swords on up to battleships.

Parameters 31 (Winter 2001): 40-56. Singh, Jasit. Light Weapons and International Security. New Delhi: Institute for Defense Studies and Analysis, IQ95. Slaughter, Anne-Marie. "The Real New World Order." Foreign Affairs (September *997)- "Small But Victorious War." hvestiya. May 31, 2000. Smith, Adam. The Wealth of Nations. 177O. http://wwv.socsci.mcmaster.ca/~econ/ ugcm/gllg/smith/wealth/wealbko^ Smith, Charles. "Russian MIGs in Sudan." Nexosjnax.com, January 4, 2002. . "Wars and Rumors of Wars: Russian Mercenaries Flying for Ethiopia." World Net Daily, July 18, 2000. http://www.worldnetdaily.com/bluesky_smith_news/ 20000718_xnsof_russian_me.shtm Smith, Richard.

Health care, police, prisons, garbage collection, postal services, tax collection, utilities, education, and so on are all examples of services that have been shifted back and forth between being viewed as essential public responsibilities of the government to something best left to the private market.11 The terms "outsourcing** and "privatization** are used interchangeably to describe this relocation of service provision, often in the same breath.12 Both are generally accepted practices; indeed, the economic concept behind them can be traced back as far as the founding economist Adam Smith's writings in the 1700s.13 One area where the debate over public or private never ventured, though, was the military, the force that protects society. The production of the goods needed to wage war long ago became the domain of the market. But by the time the state had been accepted as the dominant means of government, the service side of war was understood to be the sole domain of government.14 In fact, providing for national, and hence their citizens', security was one of the most essential tasks of a government.


Crisis and Leviathan: Critical Episodes in the Growth of American Government by Robert Higgs, Arthur A. Ekirch, Jr.

Alistair Cooke, American ideology, business cycle, clean water, collective bargaining, creative destruction, credit crunch, declining real wages, endowment effect, fiat currency, fixed income, foreign exchange controls, full employment, Glass-Steagall Act, guns versus butter model, hiring and firing, Ida Tarbell, income per capita, Jones Act, Joseph Schumpeter, laissez-faire capitalism, land bank, manufacturing employment, means of production, military-industrial complex, minimum wage unemployment, plutocrats, post-industrial society, power law, price discrimination, profit motive, rent control, rent-seeking, Richard Thaler, road to serfdom, Ronald Reagan, Sam Peltzman, Savings and loan crisis, Simon Kuznets, strikebreaker, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, transcontinental railway, union organizing, Upton Sinclair, War on Poverty, Works Progress Administration

Among economists the Modernization Hypothesis often appears in the form of Wagner's Law. For a sensible critique of this vague notion, see Alan T. Peacock and Jack Wiseman, The Growth of Public Expenditure in the United Kingdom (Princeton, N.J.: Princeton University Press, 1961), pp. 16-20,24-28. 10. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Modern Library, 1937); F. A. Hayek, Law, Legislation and Liberty: A New Statement of the Liberal Principles of Justice and Political Economy, VOl. I. Rules and Order (Chicago: University of Chicago Press, 1973), pp. 35-54, esp. pp. 50-51. Also Thomas Sowell, Knowledge and Decisions (New York: Basic Books, 1980), esp. pp. 214-223; Israel M.

Increased specialization has made individuals less self-sufficient, more dependent on a vast network of exchange. Yet one cannot correctly infer that, merely because of growing complexities, economic affairs have required more governmental direction for their effective coordination. Many economists, from Adam Smith in the eighteenth century to Friedrich Hayek in the twentieth, have argued that an open market is the most effective system of socioeconomic coordination, the only one that systematically receives and responds to the ever-changing signals transmitted by millions of consumers and producers. 10 This argument turns the Modernization Hypothesis on its head: while the government might be able to coordinate economic activities in a simple economy, it could never successfully do so in a complex one.

Especially at the WIB, but to some extent in most of the emergency agencies, former businessmen dealt across the table with active businessmen. Naturally they found it easy to do business; and just as naturally the business they did was often, in effect, a conspiracy against competitors and consumers. (Adam Smith long ago warned that "[p]eople of the same trade seldom meet together . . . but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.... [T]he law ... ought to do nothing to facilitate such assemblies, much less to render them necessary.") The great scale on which business had been mobilized and brought into contact with powerful but often congenial governmental officials awakened many businessmen to the lucrative possibilities of working more closely with government than they had thought possible or desirable before the war.


Capital Ideas Evolving by Peter L. Bernstein

Albert Einstein, algorithmic trading, Andrei Shleifer, asset allocation, behavioural economics, Black Monday: stock market crash in 1987, Bob Litterman, book value, business cycle, buy and hold, buy low sell high, capital asset pricing model, commodity trading advisor, computerized trading, creative destruction, currency risk, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, diversification, diversified portfolio, endowment effect, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, fixed income, high net worth, hiring and firing, index fund, invisible hand, Isaac Newton, John Meriwether, John von Neumann, Joseph Schumpeter, Kenneth Arrow, London Interbank Offered Rate, Long Term Capital Management, loss aversion, Louis Bachelier, market bubble, mental accounting, money market fund, Myron Scholes, paper trading, passive investing, Paul Samuelson, Performance of Mutual Funds in the Period, price anchoring, price stability, random walk, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, seminal paper, Sharpe ratio, short selling, short squeeze, Silicon Valley, South Sea Bubble, statistical model, survivorship bias, systematic trading, tail risk, technology bubble, The Wealth of Nations by Adam Smith, transaction costs, yield curve, Yogi Berra, zero-sum game

“Advances in Prospect Theory: Cumulative Representation of Uncertainty,” Journal of Risk and Uncertainty, Vol. 5, No. 4, pp. 297–323. Von Neumann, John, and Oskar Morgenstern, 1944. Theory of Games and Economic Behavior, Princeton, NJ: Princeton University Press. Warsh, David, 2006. Knowledge and the Wealth of Nations: A Story of Economic Discovery, New York: W. W. Norton. bern_z02bbiblio.qxd 3/23/07 9:13 AM Page 260 bern_z03back.qxd 3/23/07 9:14 AM Page 261 Acknowledgments he help of others makes every project of this kind a richer task and surely more fun than it would have been without such assistance.

.* The resulting theoretical structure had no prior existence and only a few scattered roots in the past. Few triumphs in the history of ideas can compare with this achievement. Think of the centuries from Euclid to Isaac Newton to Albert Einstein or the 160 years in the development of modern economic theory from Adam Smith in 1776 to David Ricardo, Alfred Marshall, and Karl Marx in the nineteenth century, and finally to John Maynard Keynes in 1936. When I started work on this project early in 1989, all of my heroes were still alive, which was my prime motivation for telling the story at that moment. They were, indeed, very much alive.

bern_c16.qxd 3/23/07 246 9:12 AM Page 246 CA P I TA L I D E A S T O M O R ROW The miraculous vitality of markets is impossible to suppress, as even communist countries have learned. But the great theories of Capital Ideas have nurtured and guided the development of today’s markets to a much greater extent than most of the participants in these markets stop to realize. In the most vivid manner, Adam Smith’s Invisible Hand is always in play, while Joseph Schumpeter’s “perennial gale of creative destruction” blows compellingly, to a point where, as Schumpeter also reminds us, “Profit . . . is temporary by nature: it will vanish in the subsequent process of competition and adaptation.”7 Here is what the evolution of Capital Ideas is all about.


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Is the Internet Changing the Way You Think?: The Net's Impact on Our Minds and Future by John Brockman

A Declaration of the Independence of Cyberspace, Albert Einstein, AltaVista, Amazon Mechanical Turk, Asperger Syndrome, availability heuristic, Benoit Mandelbrot, biofilm, Black Swan, bread and circuses, British Empire, conceptual framework, corporate governance, Danny Hillis, disinformation, Douglas Engelbart, Douglas Engelbart, Emanuel Derman, epigenetics, Evgeny Morozov, financial engineering, Flynn Effect, Frank Gehry, Future Shock, Google Earth, hive mind, Howard Rheingold, index card, information retrieval, Internet Archive, invention of writing, Jane Jacobs, Jaron Lanier, John Markoff, John Perry Barlow, Kevin Kelly, Large Hadron Collider, lifelogging, lone genius, loss aversion, mandelbrot fractal, Marc Andreessen, Marshall McLuhan, Menlo Park, meta-analysis, Neal Stephenson, New Journalism, Nicholas Carr, One Laptop per Child (OLPC), out of africa, Paul Samuelson, peer-to-peer, pneumatic tube, Ponzi scheme, power law, pre–internet, Project Xanadu, Richard Feynman, Rodney Brooks, Ronald Reagan, satellite internet, Schrödinger's Cat, search costs, Search for Extraterrestrial Intelligence, SETI@home, Silicon Valley, Skype, slashdot, smart grid, social distancing, social graph, social software, social web, Stephen Hawking, Steve Wozniak, Steven Pinker, Stewart Brand, synthetic biology, Ted Nelson, TED Talk, telepresence, the medium is the message, the scientific method, the strength of weak ties, The Wealth of Nations by Adam Smith, theory of mind, trade route, upwardly mobile, Vernor Vinge, Whole Earth Catalog, X Prize, Yochai Benkler

For instance, the other day I recalled a famous passage from Adam Smith that I wanted to cite: something about an earthquake in China. I briefly considered scouring my shelves in search of my copy of The Wealth of Nations. But I have thousands of books spread throughout my house, and they are badly organized. I recently spent an hour looking for a title, and then another skimming its text, only to discover that it wasn’t the book I had wanted in the first place. And so it would have proved in the present case, for the passage I dimly remembered from Smith is to be found in The Theory of Moral Sentiments. Why not just type the words “adam smith china earthquake” into Google?


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The Irrational Economist: Making Decisions in a Dangerous World by Erwann Michel-Kerjan, Paul Slovic

"World Economic Forum" Davos, Alan Greenspan, An Inconvenient Truth, Andrei Shleifer, availability heuristic, bank run, behavioural economics, Black Swan, business cycle, Cass Sunstein, classic study, clean water, cognitive dissonance, collateralized debt obligation, complexity theory, conceptual framework, corporate social responsibility, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-subsidies, Daniel Kahneman / Amos Tversky, endowment effect, experimental economics, financial innovation, Fractional reserve banking, George Akerlof, hindsight bias, incomplete markets, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, iterative process, Kenneth Arrow, Loma Prieta earthquake, London Interbank Offered Rate, market bubble, market clearing, money market fund, moral hazard, mortgage debt, Oklahoma City bombing, Pareto efficiency, Paul Samuelson, placebo effect, precautionary principle, price discrimination, price stability, RAND corporation, Richard Thaler, Robert Shiller, Robert Solow, Ronald Reagan, Savings and loan crisis, social discount rate, source of truth, statistical model, stochastic process, subprime mortgage crisis, The Wealth of Nations by Adam Smith, Thomas Bayes, Thomas Kuhn: the structure of scientific revolutions, too big to fail, transaction costs, ultimatum game, University of East Anglia, urban planning, Vilfredo Pareto

Becker, The Economic Approach to Human Behavior (Chicago: Chicago University Press, 1976); and G. Becker, A Treatise of the Family (Cambridge, MA: Harvard University Press, 1981). 8 A. K. Sen, “Rational Fools: A Critique of the Behavioral Foundations of Economic Theory,” Philosophy and Public Affairs 6 (1977): 317-344. 9 This was apparent in his seminal book The Wealth of Nations, published in 1776. Unfortunately, many people forget that in his first and also very influential book, The Theory of Moral Sentiments (1759)—in which the image of the “invisible hand” is already employed—he also elaborated a morality centered on sympathy and benevolence to explain the source of mankind’s ability to form moral judgments—a critical element of decision making—in spite of man’s natural inclinations toward self-interest.

This leads us to ask: What should be the role of those who study or have a special knowledge of economics and other social sciences in ensuring the success of this transformation? Many pioneers of economics not only were advocates of specific theoretical programs but also participated directly in government. One example is Adam Smith, often cited as the father of modern economics. His work on self-interest was largely prompted by a critique of mercantilism and adherence to a moderate free-market policy (even though his earlier work focused on a morality based on sympathy and benevolence).9 But he was also one of the leading customs commissioners in Scotland appointed in 1778.

Schelling, Thomas Schoemaker, Paul Schwartz, Anna Science (journal) Securities Security interdependent international national Sen, Amartya Sen, Sankar Sensitivity September 11th, 2001 government aid following impact of risk assessments following Shleifer, Andrei Shu Zukang Sichuan province, earthquake in Sierra Club Silent Spring (Carson) Simon, Herbert Skillful weighing Slovic, Paul Small Business Administration (SBA) Smart Choices (Keeney and Hammond) Smith, Adam Smith, Vernon Social sciences Social Security Social welfare Socrates Spetzler, Carl Stage 1 risks Stage 2 risks Stern, Nicholas Stern Review Stock markets Storms Strategic Decisions Group Strömberg, David Stroop tasks Subprime mortgage crisis “Subway” uncertainty Sunstein, Cass Superfund Superstition Supplemental Security Income Supply-shock story “Sure Thing Principle” (Savage) Sustainability Terrorism governmental response to mega- preventing Terrorism Risk Insurance Act (TRIA) Thaler, Richard Theory of Games.


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The Great Reversal: How America Gave Up on Free Markets by Thomas Philippon

airline deregulation, Amazon Mechanical Turk, Amazon Web Services, Andrei Shleifer, barriers to entry, Big Tech, bitcoin, blockchain, book value, business cycle, business process, buy and hold, Cambridge Analytica, carbon tax, Carmen Reinhart, carried interest, central bank independence, commoditize, crack epidemic, cross-subsidies, disruptive innovation, Donald Trump, driverless car, Erik Brynjolfsson, eurozone crisis, financial deregulation, financial innovation, financial intermediation, flag carrier, Ford Model T, gig economy, Glass-Steagall Act, income inequality, income per capita, index fund, intangible asset, inventory management, Jean Tirole, Jeff Bezos, Kenneth Rogoff, labor-force participation, law of one price, liquidity trap, low cost airline, manufacturing employment, Mark Zuckerberg, market bubble, minimum wage unemployment, money market fund, moral hazard, natural language processing, Network effects, new economy, offshore financial centre, opioid epidemic / opioid crisis, Pareto efficiency, patent troll, Paul Samuelson, price discrimination, profit maximization, purchasing power parity, QWERTY keyboard, rent-seeking, ride hailing / ride sharing, risk-adjusted returns, Robert Bork, Robert Gordon, robo advisor, Ronald Reagan, search costs, Second Machine Age, self-driving car, Silicon Valley, Snapchat, spinning jenny, statistical model, Steve Jobs, stock buybacks, supply-chain management, Telecommunications Act of 1996, The Chicago School, the payments system, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, transaction costs, Travis Kalanick, vertical integration, Vilfredo Pareto, warehouse automation, zero-sum game

e  Adam Janofsky, “How AI can help stop cyberattacks,” Wall Street Journal, September 18, 2018. CHAPTER 15 Monopsony Power and Inequality Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate. ADAM SMITH, THE WEALTH OF NATIONS THERE ARE TWO TYPES of market power: monopoly and monopsony. Monopoly power is better known. A firm has monopoly power when it can charge a high price for its products because its clients have few other choices. It’s easy to visualize, and we have discussed its implications. A firm has monopsony power when it can exert market power on its employees and suppliers because they have few other places to sell their labor or their goods and services.

In other words, we are concerned with two fundamental issues. The first issue is how to make the pie as large as possible. The second issue is how to divide the pie. Economists study those choices because they want to understand the factors that foster growth and the factors that influence the distribution of income among individuals. At least since Adam Smith, we have understood that one of these factors is competition. Growth An economy can grow in exactly two ways: its labor force can expand, or its output per worker can increase. From the Roman Empire to the Industrial Revolution, population growth was slow and productivity growth was nil.


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A World Without Work: Technology, Automation, and How We Should Respond by Daniel Susskind

"World Economic Forum" Davos, 3D printing, agricultural Revolution, AI winter, Airbnb, Albert Einstein, algorithmic trading, AlphaGo, artificial general intelligence, autonomous vehicles, basic income, Bertrand Russell: In Praise of Idleness, Big Tech, blue-collar work, Boston Dynamics, British Empire, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, computer age, computer vision, computerized trading, creative destruction, David Graeber, David Ricardo: comparative advantage, deep learning, DeepMind, Demis Hassabis, demographic transition, deskilling, disruptive innovation, Donald Trump, Douglas Hofstadter, driverless car, drone strike, Edward Glaeser, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, fake news, financial innovation, flying shuttle, Ford Model T, fulfillment center, future of work, gig economy, Gini coefficient, Google Glasses, Gödel, Escher, Bach, Hans Moravec, income inequality, income per capita, industrial robot, interchangeable parts, invisible hand, Isaac Newton, Jacques de Vaucanson, James Hargreaves, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Joi Ito, Joseph Schumpeter, Kenneth Arrow, Kevin Roose, Khan Academy, Kickstarter, Larry Ellison, low skilled workers, lump of labour, machine translation, Marc Andreessen, Mark Zuckerberg, means of production, Metcalfe’s law, natural language processing, Neil Armstrong, Network effects, Nick Bostrom, Occupy movement, offshore financial centre, Paul Samuelson, Peter Thiel, pink-collar, precariat, purchasing power parity, Ray Kurzweil, ride hailing / ride sharing, road to serfdom, Robert Gordon, Sam Altman, Second Machine Age, self-driving car, shareholder value, sharing economy, Silicon Valley, Snapchat, social intelligence, software is eating the world, sovereign wealth fund, spinning jenny, Stephen Hawking, Steve Jobs, strong AI, tacit knowledge, technological solutionism, TED Talk, telemarketer, The Future of Employment, The Rise and Fall of American Growth, the scientific method, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, Travis Kalanick, Turing test, Two Sigma, Tyler Cowen, Tyler Cowen: Great Stagnation, universal basic income, upwardly mobile, warehouse robotics, Watson beat the top human players on Jeopardy!, We are the 99%, wealth creators, working poor, working-age population, Y Combinator

“Mastering Chess and Shogi by Self-Play with a General Reinforcement Learning Algorithm.” https://arxiv.org, arXiv:1712.01815v1 (2017) Silver, David, Julian Schrittwieser, Karen Simonyan, et al. “Mastering the Game of Go Without Human Knowledge.” Nature 550 (2017), 354–9. Singh, Satinder, Andy Okun, and Andrew Jackson. “Artificial Intelligence: Learning to Play Go from Scratch.” Nature 550 (2017): 336–37. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. Oxford: Oxford University Press, 1998. ________. The Theory of Moral Sentiments. London: Penguin Books, 2009. Snyder, Jacob. “Leisure in Aristotle’s Political Thought.” Polis: The Journal for Ancient Greek Political Thought 35, no. (2018). Solomonoff, Grace. “Ray Solomonoff and the Dartmouth Summer Research Project in Artificial Intelligence.”

It is true that in economics textbooks today, work is treated as an inescapably unpleasant activity that people do purely for the sake of an income; it causes “disutility,” or unhappiness, that is only offset by the happy fact it earns a wage in return. And this sort of view has a long intellectual history, stretching back to Adam Smith, who once described work as “toil and trouble.”2 But others have thought differently. Take Alfred Marshall, another giant of economic history. He proclaimed that “man rapidly degenerates unless he has some hard work to do, some difficulties to overcome,” and that “some strenuous exertion is necessary for physical and moral health.”

It is hard to argue that toiling in the factories and mills of the Industrial Revolution gave people a deep sense of fulfillment, for example. On the contrary, it was a life of gloom and despair. This is what enraged a young Karl Marx, prompting him to write at great length about “alienation,” the idea that certain work stopped human beings from becoming their true selves.28 This is why Adam Smith, so often held up as the standard-bearer for unfettered markets, nonetheless feared that the dull monotony of labor would cause people to turn “as stupid and ignorant as it is possible for a human creature to become.”29 And this is why Charles Fourier, an influential early-nineteenth-century French philosopher, described the working world of the time as a “veritable graveyard.”30 Nor do we have to go back to the Industrial Revolution, when workers lacked legal protections and were exploited and oppressed, to question the relationship between work and meaning.31 Look at how people spend their working lives today, whether it’s stacking shelves or making sandwiches, sweeping roads or collecting garbage, drafting legal contracts or reviewing financial accounts.


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The Next 100 Years: A Forecast for the 21st Century by George Friedman

American ideology, banking crisis, British Empire, business cycle, deindustrialization, Deng Xiaoping, gentleman farmer, illegal immigration, immigration reform, invisible hand, low earth orbit, low interest rates, mass immigration, megastructure, Monroe Doctrine, pink-collar, Ronald Reagan, South China Sea, The Wealth of Nations by Adam Smith, trade route, working poor

It is a method for thinking about the world and forecasting what will happen down the road. Economists talk about an invisible hand, in which the self-interested, short-term activities of people lead to what Adam Smith called “the wealth of nations.” Geopolitics applies the concept of the invisible hand to the behavior of nations and other international actors. The pursuit of short-term self-interest by nations and by their leaders leads, if not to the wealth of nations, then at least to predictable behavior and, therefore, the ability to forecast the shape of the future international system. Geopolitics and economics both assume that the players are rational, at least in the sense of knowing their own short-term self-interest.


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The Story of Work: A New History of Humankind by Jan Lucassen

3D printing, 8-hour work day, affirmative action, agricultural Revolution, Albert Einstein, anti-work, antiwork, Asian financial crisis, banking crisis, basic income, Berlin Wall, Black Lives Matter, blue-collar work, bread and circuses, Bretton Woods, Capital in the Twenty-First Century by Thomas Piketty, Charles Babbage, collective bargaining, Columbian Exchange, commoditize, computer age, coronavirus, COVID-19, demographic transition, deskilling, discovery of the americas, domestication of the camel, Easter island, European colonialism, factory automation, Fall of the Berlin Wall, fixed income, Ford Model T, founder crops, Frederick Winslow Taylor, full employment, future of work, Great Leap Forward, hiring and firing, income inequality, income per capita, informal economy, invisible hand, James Watt: steam engine, joint-stock company, knowledge economy, labour mobility, land tenure, long peace, mass immigration, means of production, megastructure, minimum wage unemployment, money: store of value / unit of account / medium of exchange, new economy, New Urbanism, out of africa, pension reform, phenotype, post-work, precariat, price stability, public intellectual, reshoring, scientific management, Scramble for Africa, Second Machine Age, stakhanovite, tacit knowledge, Thales of Miletus, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transatlantic slave trade, two and twenty, universal basic income, W. E. B. Du Bois, women in the workforce, working poor

Bijdragen, 9 (1963b), pp. 29–125. Slicher van Bath, Bernhard H. ‘Yield Ratios, 810–1820’, A.A.G. Bijdragen, 10 (1963c), pp. 1–264. Sloman, Peter. Transfer State: The Idea of a Guaranteed Income and the Politics of Redistribution in Modern Britain (Oxford: OUP, 2019). Smith, Adam. An Inquiry into the Nature and the Wealth of Nations. A careful reprint of edition (3 volumes) 1812 with notes by J.R. McCulloch (London: Ward, Lock & Co, n.d.). Smith, Andrew B. ‘Archeology and Evolution of Hunters and Gatherers’, in Richard B. Lee & Richard Daly (eds), The Cambridge Encyclopedia of Hunters and Gatherers (Cambridge: CUP, 2004), pp. 384–90.

Gouda, 15 December 2020 A NOTE ON HISTORIES, METHODS AND THEORIES OF WORK The story of work may not be one of straightforward development from then to now, but is the alternative version one of unsystematic diversity? Or is there an internal logic (albeit a complex one) to the narrative? The big names in social science thought so. Adam Smith, Karl Marx and Max Weber all anticipated a kind of engine propelling the changes in labour relations, however differently they thought about its fuel, the cylinder capacity and, in particular, its economy. What these thinkers have in common is the decisive force that they attribute to the market, from the moment that it burst forth in Western Europe, and especially in the Dutch Republic, in the early modern period.1 For Smith, the effects of that market were ultimately creative; for Marx, they were devastating.

In previous chapters, we have observed that the elite’s demeaning and pejorative opinions on work mean we are quick to forget other, more positive voices, inter alia from urban craftsmen. This positive appreciation of work now becomes much more dominant. Among the physiocrats, agriculture and agricultural work were most highly appreciated. Similarly, the Scottish economist and philosopher Adam Smith still believed that ‘the labour of farmers and country labourers is certainly more productive than that of merchants, artificers and manufacturers’, although in the next sentence he appears to refute this prevailing physiocratic idea: ‘The superior produce of the one class, however, does not render the other class barren or unproductive.’2 In the nineteenth century, the emancipation of industrial versus agricultural labour was quickly achieved, though moral objections to mechanization, deskilling and urbanization were long-lived and, in a way, still survive today.


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The Anarchy: The Relentless Rise of the East India Company by William Dalrymple

British Empire, colonial rule, company town, crony capitalism, Dava Sobel, deindustrialization, European colonialism, fake news, Fellow of the Royal Society, global reserve currency, John Harrison: Longitude, joint-stock company, land reform, lone genius, megacity, offshore financial centre, reserve currency, spice trade, surveillance capitalism, The Wealth of Nations by Adam Smith, too big to fail, upwardly mobile

Ten more banks folded across Europe within a fortnight, twenty more within the month: thirty banks going down like dominoes in less than three weeks.48 This had global repercussions, ranging from suicides in Virginia to, closer to home, the bankruptcy of Sir George Colebrooke, the chairman of the East India Company, which did little to restore confidence in his management. The Bank of England had to intervene, but the Bank itself was under threat. ‘We are here in a very melancholy Situation: Continual Bankruptcies, universal Loss of Credit, and endless Suspicions,’ David Hume wrote to Adam Smith from Edinburgh in June. ‘Do these Events any-wise affect your Theory? Or will it occasion the Revisal of any Chapters [of The Wealth of Nations]?’49 A month later, on 10 July 1772, a packet of bills worth the enormous sum of £747,195, remittances from India sent by Company officials returning home, arrived at India House in Leadenhall Street. There were now real anxieties about the state of EIC finances, as remittances sent for cashing in London between 1771 and 1772 looked to be heading towards the £1.5 million mark.50 Questions were asked as to whether the EIC should sanction payment of these remittances, but the account committee insisted on honouring the bills, ‘as it was alleged that the credit of the Company might be hurt in the severest manner by refusing’.

A business enterprise had now emerged from its chrysalis, transformed into an autonomous imperial power, backed by a vast army, already larger than that of the British Crown, and was poised now to exercise administrative control over 20 million Indians. A body of merchants had been transformed into the de facto sovereign rulers of much of northern India. As one contemporary observer put it: ‘Through many unexpected contingencies, an incorporated society of private traders [has become] a cabinet of Asiatic princes.’65 The result was what Adam Smith would call ‘a strange absurdity’ – a Company State.66 When, twenty years later, the tea merchant and traveller Thomas Twining stopped his boat trip up the Ganges to visit the now deserted site of the Battle of Buxar, he wrote in his diary that ‘here then may be said to terminate the extraordinary series of military achievements which brought the finest parts of Asia under the dominion of British merchants, who first appeared in the character of needy adventurers on the coasts of India.

See also Travers, Ideology and Empire in Eighteenth-Century India, pp. 61–2. 45Ralph Leycester to Warren Hastings, March 1772, BL, Add Mss 29133, f. 72. 46Quoted in Dirks, The Scandal of Empire, p. 15. 47The Monthly Review (1772); see also Robins, The Corporation That Changed the World, pp. 78, 96. 48Bowen, Revenue and Reform, p. 127; H. Hamilton, ‘The Failure of the Ayr Bank, 1772’, Economic History Review, 2nd series, VIII (1955–6), pp. 405–17. 49The Correspondence of Adam Smith, ed. E. C. Mossner and I. S. Ross, 2nd edn, Oxford, 1987, p. 162, quoted by Emma Rothschild in her brilliant unpublished essay, ‘The East India Company and the American Revolution’. 50Marshall, The Making and Unmaking of Empires, p. 212. 51Bowen, Revenue and Reform, p. 117. 52BL, Add Mss, 29133, f. 534, quoted in Bowen, Revenue and Reform, pp. 119–21. 53Bernstein, Dawning of the Raj, p. 81.


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Bread, Wine, Chocolate: The Slow Loss of Foods We Love by Simran Sethi

biodiversity loss, Chuck Templeton: OpenTable:, data science, food desert, Food sovereignty, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Ken Thompson, Louis Pasteur, microbiome, phenotype, placebo effect, Skype, TED Talk, The Wealth of Nations by Adam Smith, women in the workforce

81.Craves, “How ‘Wild’ Is Ethiopian Forest Coffee?” 82.Craves, “How ‘Wild’ Is Ethiopian Forest Coffee?” 83.Paul Hicks, “We All Drink Downstream,” Coffeelands (blog), Catholic Relief Services, April 17, 2015, http://coffeelands.crs.org/2015/04/we-all-drink-downstream/. 84.Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, ed. Kathryn Sutherland (New York: Oxford University Press, 1993), 14. 85.Christopher M. Bacon et al., eds., Confronting the Coffee Crisis: Fair Trade, Sustainable Livelihoods and Ecosystems in Mexico and Central America (Cambridge, MA: MIT Press, 2008), 44. 86.Jared Cummans, “The Ultimate Guide to Coffee Investing,” Commodity HQ, June 7, 2011, http://commodityhq.com/2011/the-ultimate-guide-to-coffee-investing/. 87.Charis Gresser and Sophia Tickell, Mugged: Poverty in Your Cup (Boston, MA: Oxfam Publishing, 2004), 17, http://www.oxfamamerica.org/explore/research-publications/mugged-poverty-in-your-coffee-cup/. 88.Gresser and Tickell, Mugged, 17. 89.

“The people who come here are looking for trees with a lot of life around them.” I bent down and touched the tiny saplings, the vibrant baby coffee. “They look ahead because they want to pass this on to the next generation. But with modernization, now people look for high production and go first for the market.” That market is guided by what economist Adam Smith called “the invisible hand”84—the unseen force that manages the supply and demand of goods. The hand that impacts the present and future of coffee. Mass-consumer coffee (think big brands sold in giant tins in grocery stores) is sourced in bulk on commodities markets, unlike specialty coffee, which involves smaller volumes.


pages: 463 words: 118,936

Darwin Among the Machines by George Dyson

Ada Lovelace, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Albert Einstein, anti-communist, backpropagation, Bletchley Park, British Empire, carbon-based life, cellular automata, Charles Babbage, Claude Shannon: information theory, combinatorial explosion, computer age, Computing Machinery and Intelligence, Danny Hillis, Donald Davies, fault tolerance, Fellow of the Royal Society, finite state, IFF: identification friend or foe, independent contractor, invention of the telescope, invisible hand, Isaac Newton, Jacquard loom, James Watt: steam engine, John Nash: game theory, John von Neumann, launch on warning, low earth orbit, machine readable, Menlo Park, Nash equilibrium, Norbert Wiener, On the Economy of Machinery and Manufactures, packet switching, pattern recognition, phenotype, RAND corporation, Richard Feynman, spectrum auction, strong AI, synthetic biology, the scientific method, The Wealth of Nations by Adam Smith, Turing machine, Von Neumann architecture, zero-sum game

., John von Neumann and Modern Economics (Oxford: Oxford University Press, 1989), 232. 37.Oskar Morgenstern, “The Theory of Games,” Scientific American 180, no. 5 (May 1949): 23. 38.Marvin Minsky, The Society of Mind (New York: Simon & Schuster, 1985), 18, 322. 39.Samuel Butler, Luck, or Cunning, as the main means of Organic Modification? (London: Trübner & Co., 1887); reprinted as vol. 8 of The Shrewsbury Edition of the Works of Samuel Butler (London: Jonathan Cape, 1924), 98. 40.Adam Smith, 1776, An Inquiry into the Nature and Causes of the Wealth of Nations, reprint of the 5th ed., vol. 1 (Chicago: University of Chicago Press, 1904), 477–478. 41.Paul Baran, “Is the UHF Frequency Shortage a Self Made Problem?” address to the Marconi Centennial Symposium, Bologna, Italy, 23 June 1995. 42.Carver Mead, Analog VLSI and Neural Systems (Reading, Mass.: Addison-Wesley, 1989), 147. 43.Irving J.

Any brain, machine, or other thing that has a mind must be composed of smaller things that cannot think at all.”38 Or, as Samuel Butler put it in 1887: “Man is only a great many amoebas, most of them dreadfully narrow-minded, going up and down the country with their goods and chattels.”39 The archetypal invisible hand of Adam Smith (“He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”)40 appears to be capable of building not only an economy, or a damage-resistant communications network, but a brainlike structure, perhaps a mind.


pages: 349 words: 114,038

Culture & Empire: Digital Revolution by Pieter Hintjens

4chan, Aaron Swartz, airport security, AltaVista, anti-communist, anti-pattern, barriers to entry, Bill Duvall, bitcoin, blockchain, Boeing 747, bread and circuses, business climate, business intelligence, business process, Chelsea Manning, clean water, commoditize, congestion charging, Corn Laws, correlation does not imply causation, cryptocurrency, Debian, decentralized internet, disinformation, Edward Snowden, failed state, financial independence, Firefox, full text search, gamification, German hyperinflation, global village, GnuPG, Google Chrome, greed is good, Hernando de Soto, hiring and firing, independent contractor, informal economy, intangible asset, invisible hand, it's over 9,000, James Watt: steam engine, Jeff Rulifson, Julian Assange, Kickstarter, Laura Poitras, M-Pesa, mass immigration, mass incarceration, mega-rich, military-industrial complex, MITM: man-in-the-middle, mutually assured destruction, Naomi Klein, national security letter, Nelson Mandela, new economy, New Urbanism, no silver bullet, Occupy movement, off-the-grid, offshore financial centre, packet switching, patent troll, peak oil, power law, pre–internet, private military company, race to the bottom, real-name policy, rent-seeking, reserve currency, RFC: Request For Comment, Richard Feynman, Richard Stallman, Ross Ulbricht, Russell Brand, Satoshi Nakamoto, security theater, selection bias, Skype, slashdot, software patent, spectrum auction, Steve Crocker, Steve Jobs, Steven Pinker, Stuxnet, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, trade route, transaction costs, twin studies, union organizing, wealth creators, web application, WikiLeaks, Y2K, zero day, Zipf's Law

It's so easy, fun, and potentially lucrative to work in small meritocracies that this lifestyle is today seen as a badge of success. With flatter playing fields, more competition, and larger markets, we've seen a dramatic fall in the prices of all goods that have a significant digital aspect, and in their development, production, or distribution. Adam Smith wrote, one cold Scottish night in 1776 at the dawn of the Industrial Revolution: "the wealth of nations comes from the division of labour, the pursuit of self-interest, and freedom of trade." He explained that economies and wealth are not cakes to be divided among the available hands and mouths. Instead, they are a product of how many of us there are, and how we organize ourselves.

When a successful natural monopoly emerges thanks to luck, regulation, or market forces, it eliminates a lot of waste -- also called "friction costs," "transaction costs," or perhaps "excess profits." Natural monopolies can create huge value. Vendors (those selling stuff) have a corresponding incentive to try to capture that value, restoring profits that would be lost by too much of Adam Smith's invisible hand. The natural monopoly can benefit users by releasing value. A good example: the Internet. It can also punish them by capturing users and then taxing them without mercy. Your mobile phone bill is a case in point. The dream of every self-respecting patent troll is to get patents on a widely used standard, CSIRO-style.


pages: 396 words: 113,613

Chokepoint Capitalism by Rebecca Giblin, Cory Doctorow

Aaron Swartz, AltaVista, barriers to entry, Berlin Wall, Bernie Sanders, Big Tech, big-box store, Black Lives Matter, book value, collective bargaining, commoditize, coronavirus, corporate personhood, corporate raider, COVID-19, disintermediation, distributed generation, Fairchild Semiconductor, fake news, Filter Bubble, financial engineering, Firefox, forensic accounting, full employment, gender pay gap, George Akerlof, George Floyd, gig economy, Golden age of television, Google bus, greed is good, green new deal, high-speed rail, Hush-A-Phone, independent contractor, index fund, information asymmetry, Jeff Bezos, John Gruber, Kickstarter, laissez-faire capitalism, low interest rates, Lyft, Mark Zuckerberg, means of production, microplastics / micro fibres, Modern Monetary Theory, moral hazard, multi-sided market, Naomi Klein, Network effects, New Journalism, passive income, peak TV, Peter Thiel, precision agriculture, regulatory arbitrage, remote working, rent-seeking, ride hailing / ride sharing, Robert Bork, Saturday Night Live, shareholder value, sharing economy, Silicon Valley, SoftBank, sovereign wealth fund, Steve Jobs, Steven Levy, stock buybacks, surveillance capitalism, Susan Wojcicki, tech bro, tech worker, The Chicago School, The Wealth of Nations by Adam Smith, TikTok, time value of money, transaction costs, trickle-down economics, Turing complete, Uber and Lyft, uber lyft, union organizing, Vanguard fund, vertical integration, WeWork

The world’s first modern copyright law, the 1710 Statute of Anne, gave authors exclusive rights for fourteen years. If they were still alive after that, they got fourteen years more. This dual term system was intended to benefit authors by giving them a chance to sell their works twice. Occasionally it worked: for example, Adam Smith sold the copyright in The Wealth of Nations for £300, and his publishers later paid him the same amount again to renew the copyright. But such instances were rare. In practice, most books stopped selling, or the author died, before the first term expired. Book and music sellers also routinely drafted contracts that claimed to extract rights forever, trying to stop authors reclaiming their rights once the first term was up.5 Even in the unlikely case where the author survived, and her book was still selling, she understood her rights, and had enough bargaining power to prevent the second term from being wrested away: she still might not have benefited from the second term.

“FREE” AS IN “FREE MARKET” If you learned your economics from Heinlein novels or the University of Chicago, you probably think that “free market” describes an economic system that is free from government interference—where all consensual transactions between two or more parties are allowed. But if you went to the source, Adam Smith’s Wealth of Nations, you’ll have found a very different definition of a free market: Smith’s concern wasn’t freedom from governments, it was freedom from rentiers. A rentier is someone who derives their income from “economic rents”: revenues derived from merely owning something. With a factory, you have workers who contribute labor, you have investors who build and maintain the physical plant, and you have the landlord, who siphons off some of the revenues derived from this activity because of his title to the dirt underneath the factory.


pages: 440 words: 108,137

The Meritocracy Myth by Stephen J. McNamee

Abraham Maslow, affirmative action, Affordable Care Act / Obamacare, American ideology, antiwork, Bernie Madoff, British Empire, business cycle, classic study, collective bargaining, computer age, conceptual framework, corporate governance, deindustrialization, delayed gratification, demographic transition, desegregation, deskilling, Dr. Strangelove, equal pay for equal work, estate planning, failed state, fixed income, food desert, Gary Kildall, gender pay gap, Gini coefficient, glass ceiling, helicopter parent, income inequality, informal economy, invisible hand, job automation, joint-stock company, junk bonds, labor-force participation, longitudinal study, low-wage service sector, marginal employment, Mark Zuckerberg, meritocracy, Michael Milken, mortgage debt, mortgage tax deduction, new economy, New Urbanism, obamacare, occupational segregation, old-boy network, pink-collar, plutocrats, Ponzi scheme, post-industrial society, prediction markets, profit motive, race to the bottom, random walk, Savings and loan crisis, school choice, Scientific racism, Steve Jobs, The Bell Curve by Richard Herrnstein and Charles Murray, The Spirit Level, the strength of weak ties, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, too big to fail, trickle-down economics, upwardly mobile, We are the 99%, white flight, young professional

But free markets themselves do not guarantee democracy, civil liberties, or political freedom. In one of the great coincidences of American history, America’s economic blueprint for a free-market economy was laid out in the same year, 1776, as its political blueprint for a democratic government. In that pivotal year, the Scottish economist Adam Smith published An Inquiry into the Nature and Causes of the Wealth of Nations ([1776] 1976), which became adopted in the United States as the informal bible of American free-market capitalism. It emphasized rational self-interest, individual competition, private ownership, and laissez-faire principles. At the time of the publication of Smith’s book, roughly three-fourths of the new nation’s labor force were, in fact, self-employed, comprising mostly small farmers, merchants, and artisans.

Pew Research Center for the People & the Press, May 4. http://www.people-press.org/files/legacy-pdf/Beyond-Red-vs-Blue-The-Political-Typology.pdf (accessed August 23, 2012). Price, Derek V. 2004. Borrowing Inequality: Race, Class, and Student Loans. Boulder, CO: Lynne Rienner. Smith, Adam. [1776] 1976. An Inquiry into the Nature and Causes of the Wealth of Nations. Ed. R. H. Campbell and A. S. Skinner. Oxford: Clarendon Press. Thomas, William I., and Dorothy Swaine Thomas. 1928. The Child in America: Behavior Problems and Programs. New York: Knopf. Turner, Frederick Jackson. 1947. The Frontier in American History. New York: Henry Holt. U.S. Census Bureau. 2000.

., 1.1-1.2 , 2 hard work beauty achieved through, 1 capitalism, associated with, 1 , 2 consumption as reward, 1 as determinant of inequality, 1 increased work hours as a coping strategy, 1.1-1.2 modest effects of, 1 self-made men and, 1 as a success factor, 1 , 2 , 3.1-3.2 , 4 , 5 , 6 health health care plans, 1.1-1.2 , 2 , 3 , 4.1-4.2 , 5 , 6 older workers, 1 wealth affecting, 1 , 2 , 3.1-3.2 , 4 , 5 Herrnstein, Richard, 1.1-1.2 , 2 hierarchy-of-needs theory, 1 , 2 higher education See college hiring practices, 1.1-1.2 , 2 , 3 Hispanics, 1 , 2 , 3 , 4 , 5 , 6 , 7 Hochschild, Jennifer, 1 hockey player success, 1.1-1.2 Home Advantage (Lareau), 1.1-1.2 home ownership, 1.1-1.2 , 2.1-2.2 , 3 , 4.1-4.2 homosexuality and discriminatory practices, 1.1-1.2 , 2 human capital, 1 , 2.1-2.2 , 3 , 4 , 5 , 6 I IBM, 1.1-1.2 immigrants, 1.1-1.2 , 2 , 3 , 4 , 5 , 6 , 7 individualism as culturally dominant, 1 democracy, expressed through, 1 , 2.1-2.2 as greatly valued, 1 , 2 immigrants and, 1.1-1.2 as part of the entrepreneurial personality, 1 pioneer spirit reinforcing, 1 through self-employment, 1 self-help books promoting, 1 inequalities charitable giving as a means of reducing, 1.1-1.2 conflict and functional theories of, 1.1-1.2 economic inequalities, 1 , 2 , 3 , 4.1-4.2 , 5 , 6 , 7 , 8 educational system and, 1 , 2.1-2.2 , 3.1-3.2 , 4 , 5 , 6 , 7 , 8 , 9 gender inequality, 1.1-1.2 government spending as a factor, 1 , 2 ideologies of, 1.1-1.2 labor unions working to reduce, 1 matrix of domination, 1 residential inequalities, 1 , 2 taxes and, 1.1-1.2 , 2 in wages and income, 1.1-1.2 , 2.1-2.2 , 3.1-3.2 , 4 , 5 , 6.1-6.2 in wealth, 1 , 2 , 3.1-3.2 , 4 , 5 , 6 , 7 , 8 , 9 inheritance advantages of wealth inheritance, 1 , 2.1-2.2 , 3 attitudes towards, 1 , 2 baby boomers and, 1.1-1.2 , 2 conflict theories, within, 1 cultural capital and, 1 , 2.1-2.2 , 3 , 4 domestic partnerships and, 1 estate and inheritance taxes, 1.1-1.2 , 2 of estates, 1 , 2 Forbes magazine, heirs listed in, 1.1-1.2 inequalities, perpetuating, 1 , 2 , 3 luck and, 1 as a natural right, 1 nepotism and, 1.1-1.2 as a nonmerit factor, 1.1-1.2 , 2 , 3 , 4 , 5 , 6 , 7 , 8 old money and, 1.1-1.2 parental motivation, 1.1-1.2 , 2 primogeniture, 1 relay race, compared to, 1 , 2.1-2.2 , 3 , 4 , 5 wealth distribution through, 1 women and inheritance of wealth, 1 In Praise of Nepotism: A Natural History (Bellow), 1.1-1.2 A An Inquiry into the Nature and Causes of the Wealth of Nations (Smith), 1 I integrity, 1 , 2.1-2.2 inter vivo transfers, 1.1-1.2 , 2 , 3 , 4 investments, economic, 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11.1-11.2 , 12 , 13 IQ and IQ tests, 1.1-1.2 , 2.1-2.2 , 3 , 4 , 5 , 6 irregular economy, 1 , 2.1-2.2 , 3 , 4 J Jencks, Christopher, 1 , 2 jobs See occupations Jones, Janelle, 1.1-1.2 K Kildall, Gary, 1.1-1.2 Kozol, Jonathan, 1 L labor unions, 1 , 2 , 3.1-3.2 Lareau, Annette, 1.1-1.2 Lears, Jackson, 1 Lewis, Oscar, 1.1-1.2 Livingstone, David W., 1 , 2 lookism, 1 , 2 , 3 , 4 , 5 , 6 lottery, 1 , 2 , 3.1-3.2 , 4 lower class See working class luck denial of, 1.1-1.2 , 2 with gambling, 1 getting ahead, as a factor in, 1 , 2 , 3.1-3.2 lottery and, 1 , 2 as a nonmerit factor, 1 as part of capitalism, 1 in striking it rich, 1 , 2 wealth attainment and, 1 , 2.1-2.2 , 3 M marriage career interruptions due to, 1 marrying into money, 1 , 2 the poor and, 1 , 2.1-2.2 sexual discrimination and, 1.1-1.2 , 2 trailing partners and hiring practices, 1 upper class and, 1 , 2 , 3 , 4.1-4.2 , 5 Marx, Karl, 1 Maslow, Abraham, 1 , 2 Massey, Douglas S., 1 , 2 Matthew effect, 1 , 2 matrix of domination, 1.1-1.2 Medicare, 1 , 2.1-2.2 mentors, 1 , 2.1-2.2 , 3 , 4 , 5.1-5.2 meritocracy affirmative action and, 1 American promotion of merit, 1.1-1.2 , 2 , 3.1-3.2 , 4 , 5 , 6 coping strategies, 1 , 2 credentials, lack of as a barrier, 1.1-1.2 as a desired outcome, 1 discrimination as the antithesis of merit, 1.1-1.2 , 2.1-2.2 , 3 , 4 , 5 , 6 , 7.1-7.2 , 8 , 9.1-9.2 , 10 , 11 education as a merit filter, 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 employment opportunities, 1.1-1.2 , 2.1-2.2 , 3 entrepreneurial success, 1 fairness of the system, 1 , 2.1-2.2 , 3 , 4 , 5 folklore of, 1 government spending and, 1.1-1.2 , 2 in the hiring process, 1.1-1.2 , 2 human capital factors, 1 , 2 , 3 income based on merit, 1 inheritance as a nonmerit factor, 1 , 2.1-2.2 , 3 , 4 , 5.1-5.2 , 6 , 7.1-7.2 , 8 , 9 , 10 , 11 , 12 , 13.1-13.2 intergenerational wealth transfers, 1.1-1.2 legacy preferences as nonmerit based, 1.1-1.2 , 2 luck as a nonmerit factor, 1 , 2 , 3 , 4 , 5.1-5.2 market trends, 1.1-1.2 meritocratic aristocracy, 1.1-1.2 nepotism as nonmeritorious, 1.1-1.2 the new elite as extra-meritorious, 1 noblesse oblige increasing potential for, 1 nonmerit factors suppressing merit, 1 , 2 , 3 , 4 , 5 Barack Obama as example of, 1.1-1.2 , 2 the past, reverence for, 1 physical attractiveness as a nonmerit factor, 1 , 2 pure merit system, 1.1-1.2 reform movements and, 1 , 2 self-employment as an expression of, 1 social and cultural capital as nonmerit factors, 1.1-1.2 , 2 , 3 , 4.1-4.2 , 5.1-5.2 , 6 , 7 , 8.1-8.2 , 9 , 10 , 11 structural mobility and, 1.1-1.2 talents and abilities of the merit formula, 1 , 2 , 3 , 4 , 5 , 6 taxes and nonmerit advantages, 1.1-1.2 Mexican Americans and Mexican immigrants, 1 , 2 , 3 , 4 Microsoft, 1.1-1.2 middle class America as not middle class, 1 asset building, 1 cultural capital, 1.1-1.2 deferment of gratification, 1 education and, 1 , 2 , 3 Great Recession affecting, 1 home ownership, 1 inner cities, flight from, 1 , 2 Barack Obama, background of, 1.1-1.2 old class vs. new, 1.1-1.2 precarious status of, 1.1-1.2 sports choices of, 1 upper-middle class, 1 , 2 T The Millionaire Mind (Stanley), 1 M millionaires, 1 , 2 , 3 minority groups affirmative action, 1.1-1.2 , 2.1-2.2 asset accumulation, 1.1-1.2 core employment, underrepresentation in, 1 disadvantages of, 1 discrimination experiences, 1 , 2.1-2.2 , 3 , 4.1-4.2 , 5 , 6.1-6.2 , 7 , 8 , 9 , 10 education issues, 1.1-1.2 as inner city dwellers, 1 opportunities expanding, 1 , 2 , 3 self-employment and, 1 social capital, lack of, 1 , 2 , 3 moral character, 1.1-1.2 , 2 Mormons, 1 Murray, Charles, 1.1-1.2 , 2 , 3.1-3.2 Muslims, 1.1-1.2 N National College Athletic Association (NCAA), 1 nepotism, 1.1-1.2 , 2 net worth affirmative action and, 1 defined, 1 by income group, 1 of minority groups, 1 of Barack Obama family, 1 of one percenters, 1 , 2 , 3 of Walton heirs, 1.1-1.2 wealth scale, 1.1-1.2 new elite, 1 , 2.1-2.2 noblesse oblige, 1.1-1.2 O Obama, Barack, 1.1-1.2 , 2 , 3 , 4 Obama, Michelle, 1.1-1.2 occupations attitude as a factor, 1 , 2 blue-collar jobs, 1 , 2 , 3 , 4 , 5 CEO salaries, 1.1-1.2 , 2 changes in opportunities, 1.1-1.2 , 2 cultural capital and, 1.1-1.2 , 2 the disabled and employment difficulties, 1 discrimination, 1 , 2 , 3.1-3.2 , 4 , 5 , 6 , 7 downsizing, 1.1-1.2 , 2 , 3 , 4 , 5 , 6 education linked to, 1 , 2.1-2.2 , 3.1-3.2 , 4.1-4.2 , 5 , 6.1-6.2 , 7.1-7.2 , 8 , 9.1-9.2 , 10.1-10.2 , 11 , 12.1-12.2 , 13 , 14.1-14.2 fastest growing jobs, 1.1-1.2 , 2.1-2.2 health hazards, 1 nepotism and, 1 , 2 occupational mobility, 1.1-1.2 , 2 occupational segregation, 1 , 2.1-2.2 outsourcing, 1.1-1.2 , 2 , 3 , 4 , 5 , 6 physical attraction and occupational success, 1 self-employment and, 1 self-made men, 1.1-1.2 social capital and occupational opportunities, 1 , 2 , 3 , 4 wages, 1.1-1.2 , 2 , 3 , 4 , 5.1-5.2 , 6.1-6.2 , 7.1-7.2 , 8 white-collar jobs, 1 , 2 , 3 , 4 , 5 , 6 Occupy Wall Street (OWS), 1 old boy networks, 1 , 2 , 3.1-3.2 old money, 1.1-1.2 , 2.1-2.2 Outliers: The Story of Success (Gladwell), 1 , 2 outsourcing, 1.1-1.2 , 2 , 3 , 4 , 5 , 6 ownership class, 1 , 2 , 3 , 4 P Paterson, Tim, 1 Peale, Norman Vincent, 1.1-1.2 pensions, 1.1-1.2 , 2 , 3 , 4 , 5 , 6 pink-collar ghetto, 1.1-1.2 poverty children affected by, 1 , 2 culture-of-poverty theory, 1.1-1.2 , 2 full-time work below poverty level, 1 as a matter of attitude, 1 meritocracy and, 1 , 2 minority rates of, 1 , 2 poverty threshold, 1 regional variations in poverty rates, 1.1-1.2 , 2 senior citizens and poverty rates, 1 U.S. poverty rates, 1 T The Power of Positive Thinking (Peale), 1.1-1.2 P Protestants and the Protestant ethic, 1.1-1.2 , 2 , 3 , 4 , 5 Puritan values, 1.1-1.2 R racism and racial issues affirmative action, 1.1-1.2 athletes and, 1 crime and the legal system, 1.1-1.2 disabilities, disproportionate experience of, 1 discrimination and, 1 , 2.1-2.2 , 3.1-3.2 , 4 , 5.1-5.2 , 6 , 7 , 8 in education, 1.1-1.2 employment, affecting, 1 Great Recession worsening racial equality, 1 home ownership, 1 ideologies of inequality, as part of, 1 income gaps, 1 language skills and, 1 Obama, election of, 1 , 2 scientific racism, 1.1-1.2 segregation, 1 , 2.1-2.2 , 3 social capital and, 1 , 2 , 3 , 4 white flight, 1 , 2 random-walk hypothesis, 1 recession See Great Recession references, 1 , 2 , 3 retirement as part of the American Dream, 1 , 2 delayment as a coping strategy, 1 , 2.1-2.2 , 3 home ownership and funding of, 1 as jeopardized, 1 , 2.1-2.2 proposed supplementation, 1 self-employment and, 1 , 2 , 3 right attitude, 1 , 2.1-2.2 , 3 , 4 , 5 , 6 , 7 T The Rise of Meritocracy, 1870–2033:An Essay on Education and Equality (Young), 1 , 2 R Rivera, Lauren, 1 Rosenau, Pauline Vaillancourt, 1.1-1.2 S Schmitt, John, 1.1-1.2 schools See education segregation educational, 1 , 2 , 3 occupational, 1 , 2 , 3 , 4.1-4.2 racial, 1 , 2.1-2.2 , 3 , 4 , 5 residential, 1 , 2 , 3.1-3.2 of the wealthy, 1.1-1.2 white flight, 1 See also discrimination self-employment American Dream, as exemplifying, 1 franchises, 1 freelancing, 1 , 2 income, 1.1-1.2 irregular economy and, 1.1-1.2 , 2 , 3 , 4 petty bourgeoisie and, 1 psychological characteristics, 1 rates of, diminished, 1 , 2 , 3 , 4.1-4.2 , 5 , 6 , 7.1-7.2 , 8 risk, 1 , 2 , 3.1-3.2 , 4 subcontractors, 1 taxes, 1.1-1.2 , 2 women and minorities, 1.1-1.2 self-help books, 1 , 2 self-made individuals, 1 , 2 , 3 , 4.1-4.2 , 5 , 6 sexual harassment, 1.1-1.2 Shapiro, Thomas, 1 , 2.1-2.2 slaves and slavery, 1 , 2 , 3 , 4 , 5 , 6 , 7 small businesses, 1 , 2 , 3 , 4 , 5.1-5.2 , 6 , 7.1-7.2 , 8 , 9 Smith, Adam, 1 social capital benefits of, 1.1-1.2 , 2 defined, 1 , 2 , 3 discrimination and, 1 , 2 economic opportunities, having access to, 1 , 2 , 3 education and, 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 mentorship as a form of, 1 nepotism and, 1.1-1.2 , 2 racism and lack of, 1 , 2 , 3 , 4 restricted access, effects of, 1.1-1.2 , 2.1-2.2 social climbing, 1 , 2 , 3.1-3.2 , 4 of U.S. presidents, 1.1-1.2 weak ties, 1.1-1.2 social climbing, 1 , 2 , 3.1-3.2 , 4 social clubs, 1 , 2 , 3.1-3.2 social mobility athletic and artistic abilities, associated with, 1 , 2.1-2.2 , 3 cultural capital as a factor in, 1 education link, 1 , 2 , 3 hard work as a factor, 1 individual merit, 1 integrity hindering, 1.1-1.2 marrying for money, 1 reduction of opportunities, 1 , 2 during Republican administrations, 1 role of government, 1 , 2 social climbing, 1.1-1.2 , 2 status attainment, 1 through self-employment, 1 social reform movements, 1.1-1.2 Social Register, 1 social reproduction theory, 1.1-1.2 , 2 Social Security, 1.1-1.2 , 2 , 3 , 4 , 5.1-5.2 Something for Nothing: Luck in America (Lears), 1.1-1.2 T the South, 1 , 2.1-2.2 , 3 , 4 , 5 S Stanley, Thomas, 1 status-attainment theory, 1.1-1.2 Stevens, Mitchell, 1 stock market, 1 , 2 , 3 , 4 student loans, 1 , 2.1-2.2 success athletic success, 1 , 2.1-2.2 attitudes associated with, 1 , 2 , 3.1-3.2 birth timing and, 1.1-1.2 , 2 cultural capital, 1 , 2 , 3 , 4 discrimination, achieving success through, 1 education, as a factor in, 1 , 2 , 3 , 4 , 5 entrepreneurial success, 1 , 2 , 3 God’s grace, success as sign of, 1 , 2 hard work and, 1 , 2 , 3.1-3.2 , 4 , 5 human capital factors, 1 individualism as key to, 1 intelligence as a determinant, 1 luck as important, 1 meritocracy myth and, 1 mind-power ethic as success formula, 1.1-1.2 moral character and, 1 , 2 , 3.1-3.2 , 4 parental involvement, 1.1-1.2 , 2 , 3.1-3.2 the right stuff, being made of as key, 1.1-1.2 , 2.1-2.2 , 3 , 4 small businesses and, 1 social capital increasing likelihood of, 1 , 2 , 3 suburban living as marker of, 1 10,000 hour rule, 1 women and, 1 , 2 supply side, 1 , 2 , 3 , 4 , 5 , 6.1-6.2 Survival of the Prettiest (Etcoff), 1.1-1.2 Swift, Adam, 1.1-1.2 T talent and abilities American aristocracy, 1 American Dream, leading to, 1 of athletes and celebrities, 1 education enhancing, 1 , 2 , 3.1-3.2 functional theory of inequality, 1 jobs matched to talent, 1 success achieved through, 1 , 2 , 3 , 4 , 5 , 6 talent-use gap, 1 upward mobility and, 1 , 2.1-2.2 , 3.1-3.2 taxes capital gains, 1.1-1.2 estate taxes, 1 , 2 , 3.1-3.2 government policies linked with, 1 , 2 incentives and credits, 1.1-1.2 income taxes, lowered by Republicans, 1 irregular economy, avoiding, 1.1-1.2 progressive taxation, 1.1-1.2 , 2 , 3 , 4 property taxes and school funding, 1.1-1.2 self-employment and, 1.1-1.2 , 2 Social Security affected by, 1 , 2 the South and lower taxes, 1 tax breaks for the wealthy, 1 , 2 , 3 , 4.1-4.2 of urban areas, 1 , 2 Thurow, Lester, 1 , 2.1-2.2 Tocqueville, Alexis de, 1.1-1.2 , 2 tracking, 1 , 2.1-2.2 , 3 , 4 Turner, Frederick Jackson, 1.1-1.2 U Unequal Childhoods (Lareau), 1 upper class charitable giving and, 1 cultural capital, holders of, 1 , 2 , 3.1-3.2 , 4.1-4.2 , 5 deferred gratification, capability of, 1 distinctive lifestyle, 1.1-1.2 , 2 education, 1 , 2 endogamy, tendency towards, 1.1-1.2 as exclusive, 1.1-1.2 , 2 as isolated, 1.1-1.2 one percenters as members, 1 Plymouth Puritans as wellspring, 1 political power, 1.1-1.2 social clubs, frequenting, 1.1-1.2 virtues found in, 1 WASP background of, 1 women of, 1 , 2 , 3 upward mobility attitudes as affecting, 1 barriers to, 1 through college education, 1 credentialism and, 1 downward mobility, vs., 1 through entrepreneurialism, 1 glass ceiling as limiting, 1 integrity as suppressing, 1.1-1.2 irregular economy, as avenue, 1 marriage as a means of, 1.1-1.2 Michelle Obama as example, 1 slowing rates of, 1 See also social climbing See also social mobility V Vedder, Richard, 1 , 2 virtue, 1.1-1.2 , 2 , 3 , 4 , 5 , 6 , 7 W Walmart, 1 Walton, Sam, 1 , 2 , 3 wealth accumulation gaps, 1 , 2 , 3 advantages of wealth inheritance, 1 , 2.1-2.2 capital investments, 1 charitable giving and the wealthy, 1 , 2.1-2.2 culture of, 1 , 2 discrimination and, 1 , 2 distribution as skewed, 1.1-1.2 Forbes magazine listings, 1.1-1.2 gambling, attainment through, 1 government intervention, 1.1-1.2 , 2 Great Recession affecting, 1 guilt feelings, 1.1-1.2 hard work as negligible, 1 inequalities of, 1 , 2 , 3.1-3.2 , 4 , 5 , 6 , 7 , 8 , 9 lottery, wealth attainment through, 1 luck as a factor, 1 , 2.1-2.2 , 3 marriage rates, affecting, 1 nepotism aiding in transference of, 1 old money, 1.1-1.2 , 2.1-2.2 one percenters, 1 , 2 , 3 , 4 , 5 ostentatious displays of, 1 political power, 1.1-1.2 property ownership producing, 1 , 2 pursuit of as a moral issue, 1.1-1.2 , 2 race affecting, 1 social and cultural capital, converted to, 1 , 2 the superwealthy, 1 , 2 , 3 , 4.1-4.2 tax breaks for the wealthy, 1 taxes on, 1.1-1.2 transfers of, 1.1-1.2 , 2 , 3.1-3.2 women and, 1 See also inheritance See also self-employment Weber, Max, 1.1-1.2 welfare, 1 , 2 , 3 , 4 , 5 , 6 , 7 white Anglo-Saxon Protestants (WASPs), 1.1-1.2 , 2 white-collar crime, 1.1-1.2 , 2 Wilson, William Julius, 1 , 2 Winfrey, Oprah, 1.1-1.2 Wisconsin school, 1.1-1.2 women attractiveness as a success factor, 1 , 2 , 3.1-3.2 discrimination against, 1 , 2 , 3 , 4 , 5.1-5.2 , 6.1-6.2 , 7.1-7.2 , 8.1-8.2 , 9.1-9.2 , 10 economic disparities, 1 , 2 , 3.1-3.2 educational attainment, 1.1-1.2 , 2 family concerns, 1.1-1.2 , 2.1-2.2 , 3.1-3.2 glass ceiling, experiencing, 1 , 2 , 3.1-3.2 , 4 inferiority, feelings of, 1.1-1.2 labor force participation, increasing, 1.1-1.2 , 2 mentorships, access to, 1 , 2.1-2.2 occupational disparities, 1 , 2 , 3.1-3.2 , 4.1-4.2 , 5.1-5.2 political underrepresentation, 1.1-1.2 self-employment and, 1.1-1.2 as trailing partners, 1 of the upper class, 1 , 2 , 3 working class American Dream and, 1 cultural capital, lack of, 1.1-1.2 , 2 economic instability, 1.1-1.2 education issues, 1 , 2 , 3 hard work and, 1 health risks, 1 home ownership, 1 lower class value stretch, 1 nepotism, effect of, 1 the new lower class, 1 women and incomes, 1 work See hard work See occupations Y Young, Michael, 1 , 2 About the Authors Stephen J.


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The Survival of the City: Human Flourishing in an Age of Isolation by Edward Glaeser, David Cutler

Affordable Care Act / Obamacare, agricultural Revolution, Alvin Toffler, Andrei Shleifer, autonomous vehicles, basic income, Big bang: deregulation of the City of London, Big Tech, Black Lives Matter, British Empire, business cycle, buttonwood tree, call centre, carbon footprint, Cass Sunstein, classic study, clean water, collective bargaining, Columbian Exchange, contact tracing, Corn Laws, Cornelius Vanderbilt, coronavirus, COVID-19, crack epidemic, defund the police, deindustrialization, Deng Xiaoping, desegregation, discovery of penicillin, Donald Trump, Edward Glaeser, Elisha Otis, Fellow of the Royal Society, flying shuttle, future of work, Future Shock, gentrification, George Floyd, germ theory of disease, global pandemic, global village, hiring and firing, Home mortgage interest deduction, Honoré de Balzac, income inequality, industrial cluster, James Hargreaves, Jane Jacobs, Jevons paradox, job automation, jobless men, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Snow's cholera map, knowledge worker, lockdown, Louis Pasteur, Mahatma Gandhi, manufacturing employment, mass incarceration, Maui Hawaii, means of production, megacity, meta-analysis, new economy, New Urbanism, Occupy movement, opioid epidemic / opioid crisis, out of africa, place-making, precautionary principle, RAND corporation, randomized controlled trial, remote working, Richard Florida, Salesforce, Saturday Night Live, Silicon Valley, Skype, smart cities, social distancing, Socratic dialogue, spinning jenny, superstar cities, Tax Reform Act of 1986, tech baron, TED Talk, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, TikTok, trade route, union organizing, universal basic income, Upton Sinclair, urban planning, working poor, Works Progress Administration, zero-sum game, zoonotic diseases

industry and its representatives: Kearns et al., “Sugar Industry and Coronary Heart Disease Research.” Meat producers have used: Gustin, “This Is How the Government Decides What You Eat.” The makers of electronic cigarettes: Sharpless, “How FDA Is Regulating E-Cigarettes.” “it is not from the benevolence”: Smith, The Wealth of Nations. lasting damage may result: Martuzzi, “The Precautionary Principle: In Action for Public Health.” penalties for opioid malfeasance: Spector, “In Emails, Sacklers Fret over Wealth, Opioid Business.” related to secondhand smoke: World Health Organization, “Worldwide Burden of Disease from Exposure to Second-Hand Smoke.”

Encyclopædia Britannica Online. March 24, 2020. www.britannica.com/biography/Joseph-William-Bazalgette. Smillie, W. G. “The National Board of Health, 1879–1883.” American Journal of Public Health and the Nation’s Health 33, no. 8 (August 1943): 925–30. https://doi.org/10.2105/AJPH.33.8.925. Smith, Adam. The Wealth of Nations. New York: Random House, 2020. Smith, Billy. Ship of Death: A Voyage That Changed the Atlantic World. New Haven, CT: Yale University Press, 2013. Smith, David. “Proof! Just Six Degrees of Separation between Us.” The Guardian (London), August 2, 2008. www.theguardian.com/technology/2008/aug/03/internet.email.

The makers of electronic cigarettes have been accused of hiding information about nicotine content and addictiveness, and illegally marketing to teens. Most profit-seeking companies will try to overstate the benefits of their products and understate any hidden costs, like the risks of addiction and death. We cannot hope to eliminate greed from the human condition. And we recognize that much good can come from pursuit of a dollar. Adam Smith, the father of economics, famously wrote that “it is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.” Yet, the incentive to mislead is particularly pernicious in the case of addictive goods and goods that harm health.


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A Generation of Sociopaths: How the Baby Boomers Betrayed America by Bruce Cannon Gibney

1960s counterculture, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, AlphaGo, American Society of Civil Engineers: Report Card, Bear Stearns, Bernie Madoff, Bernie Sanders, Black Lives Matter, bond market vigilante , book value, Boston Dynamics, Bretton Woods, business cycle, buy and hold, carbon footprint, carbon tax, Charles Lindbergh, classic study, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, corporate personhood, Corrections Corporation of America, currency manipulation / currency intervention, Daniel Kahneman / Amos Tversky, dark matter, DeepMind, Deng Xiaoping, Donald Trump, Downton Abbey, Edward Snowden, Elon Musk, ending welfare as we know it, equal pay for equal work, failed state, financial deregulation, financial engineering, Francis Fukuyama: the end of history, future of work, gender pay gap, gig economy, Glass-Steagall Act, Haight Ashbury, Higgs boson, high-speed rail, Home mortgage interest deduction, Hyperloop, illegal immigration, impulse control, income inequality, Intergovernmental Panel on Climate Change (IPCC), invisible hand, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Jane Jacobs, junk bonds, Kitchen Debate, labor-force participation, Long Term Capital Management, low interest rates, Lyft, Mark Zuckerberg, market bubble, mass immigration, mass incarceration, McMansion, medical bankruptcy, Menlo Park, Michael Milken, military-industrial complex, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, Neil Armstrong, neoliberal agenda, Network effects, Nixon triggered the end of the Bretton Woods system, obamacare, offshore financial centre, oil shock, operation paperclip, plutocrats, Ponzi scheme, price stability, prosperity theology / prosperity gospel / gospel of success, quantitative easing, Ralph Waldo Emerson, RAND corporation, rent control, ride hailing / ride sharing, risk tolerance, Robert Shiller, Ronald Reagan, Rubik’s Cube, Savings and loan crisis, school choice, secular stagnation, self-driving car, shareholder value, short selling, side project, Silicon Valley, smart grid, Snapchat, source of truth, stem cell, Steve Jobs, Stewart Brand, stock buybacks, survivorship bias, TaskRabbit, The Wealth of Nations by Adam Smith, Tim Cook: Apple, too big to fail, War on Poverty, warehouse robotics, We are all Keynesians now, white picket fence, Whole Earth Catalog, women in the workforce, Y2K, Yom Kippur War, zero-sum game

The German edition appeared in 1940, the English edition, in 1949. 3. Von Mises, Ludwig. Liberalism: In the Classical Tradition, ch. 11, Mises Institute, mises.org/library/liberalism-classical-tradition/html/p/30. 4. Say, Jean-Baptiste. A Treatise on Political Economy. See also Smith, Adam. The Wealth of Nations (note, however, that Smith, while favoring a limited role for government and emphasizing the market’s superior ability to organize itself, did endorse certain specific roles for the government, like the post, and the encouragement of certain industries—these specifics have now been lost to the generality of Smith’s Invisible Hand). 5.

Hoover and Mellon did more than history gives them credit for (i.e., they did more than absolutely nothing) and it’s never been clear if Mellon actually called for anyone to be “liquidated.” None of that mattered, because by the election of 1932, the market was clearly not healing itself. The other parts of Adam Smith’s hand might have been invisible, but the position of its middle digit could be easily detected. Americans therefore elected Franklin Roosevelt to pursue a more aggressive course. The electorate felt the poor deserved shelter, the jobless yearned for work, the bankers needed regulation, and the Hobbesian securities market needed its Leviathan; these, Roosevelt supplied.

However, a large body of work, especially by Amos Tversky and Daniel Kahneman, shows that humans are not wholly rational agents, that we are susceptible to numerous cognitive biases that drive our thinking away from the rational idea. These biases lurk in normal people, but sociopaths operate at even greater remove from the rational ideal, prey to needs for immediate gratification, fond of risk, and unable to plan for the future. Neoliberalism requires Adam Smith and John Stuart Mill’s homo economicus, the rational individual optimizing among his economic choices, but at best gets flawed homo sapiens, and from the 1970s on, must content itself with the Boomers’ homo sociopathicus. The results have not been good. The various problems of neoliberalism remained concealed for some time, because the New Deal’s success mooted the doctrine.


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The World in 2050: Four Forces Shaping Civilization's Northern Future by Laurence C. Smith

Boeing 747, Bretton Woods, BRICs, business cycle, clean water, climate change refugee, Climategate, colonial rule, data science, deglobalization, demographic transition, Deng Xiaoping, Easter island, electricity market, energy security, flex fuel, G4S, global supply chain, Google Earth, Great Leap Forward, guest worker program, Hans Island, hydrogen economy, ice-free Arctic, informal economy, Intergovernmental Panel on Climate Change (IPCC), invention of agriculture, invisible hand, land tenure, Martin Wolf, Medieval Warm Period, megacity, megaproject, Mikhail Gorbachev, New Urbanism, oil shale / tar sands, oil shock, peak oil, Pearl River Delta, purchasing power parity, Ronald Reagan, Ronald Reagan: Tear down this wall, side project, Silicon Valley, smart grid, sovereign wealth fund, special economic zone, standardized shipping container, The Wealth of Nations by Adam Smith, Thomas Malthus, trade liberalization, trade route, Tragedy of the Commons, UNCLOS, UNCLOS, urban planning, Washington Consensus, Y2K

For the past ten to twenty years, foreign direct investment has been at least as important. Effective governance and infrastructure are also critical. We will come to these later in the chapter. For more on how the level of urbanization is not always “coupled” to economic growth, see D. E. Bloom, D. Canning, G. Fink, “Urbanization and the Wealth of Nations,” Science 319 (2008). 46 Even slum cities in our poorest countries usually offer better economic opportunities than do surrounding rural areas, although the job sector is informal and quality of life low. Global employment in services now averages 40% of total employment, versus 39% in agriculture.

, yet still catch wild fish from the sea and use dirt and water to grow our food. Nuclear power is but a pale shadow of what was hoped for it in the 1950s. We still use boats, trucks, and trains to move goods. And even in this unprecedented era of globalization, the fundamental principles of our markets and economies differ surprisingly little from the days of Adam Smith, more than two hundred years ago. But in other, sneakier ways, things have changed profoundly. Imagine describing to a 1950 California tomato farmer how in the next fifty years he would grow genetically programmed seeds, see the water in his state tilted from one end to the other, and experience a tripling of the state’s population.

Up until the demise of the Bretton Woods monetary regulatory system in the early 1970s, it presided for three decades over what some have called the “golden age of controlled capitalism.”29 But by the 1980s, “controlled capitalism” had fallen to a revolution of “neoliberalism”—the deregulation and elimination of tariffs and other controls on international trade and capital flows. The neoliberalism movement was championed by British prime minister Margaret Thatcher and U.S. president Ronald Reagan, but was rooted in the ideas of Adam Smith. Throughout the 1980s and 1990s the IMF, WTO, and World Bank aggressively pursued agendas of liberalizing (deregulating) trade markets around the world, vigorously urged on by the United States.30 A common tactic was to require developing countries to accept neoliberal reforms to qualify for IMF or World Bank loans.


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Tobacco: A Cultural History of How an Exotic Plant Seduced Civilization by Iain Gately

Albert Einstein, Apollo 11, Bartolomé de las Casas, Berlin Wall, British Empire, business climate, Cape to Cairo, financial independence, Francisco Pizarro, Great Leap Forward, Isaac Newton, Mikhail Gorbachev, Neil Armstrong, Neil Kinnock, profit motive, surplus humans, the market place, The Wealth of Nations by Adam Smith, trade route, women in the workforce

Casanova’s favourite snuff box, given to him by the lovely nun MM, had a false bottom which concealed a picture of her naked beneath a portrait of her in her nun’s habit. 121 with unparalleled resolution, et seq., quoted by Mackenzie, p. 167. 121 I cannot see, Richard Steele, Tatler, no. 101. 125 How long has, Vintner’s and Tobacconist’s Advocate, quoted in Mackenzie, p. 180. 126 it is the highest, Adam Smith, The Wealth of Nations, Penguin Classics, 1986, Book II, ch. 3. 7 Come the Revolution 128 we proceeded for, et seq., Joseph Banks, Endeavour Journal, August 1768–1771, e-text from University of New South Wales. 132 one day they, quoted in Alan Morehead, The Fatal Impact, Hamish Hamilton, 1966, p. 43. 133 I endeavoured to, quoted in Morehead, The Fatal Impact, p. 78. 133 One page of Hawkesworth, ‘An Epistle from Mr Banks, Voyager, Monster Hunter and Amoroso’. 134 they may appear, The Journals of Captain Cook, Penguin Classics, 1999. 134 happy people, content, Banks, Journal. 137 These debts had, quoted in Calder, p. 329. 137 a rage for regulation, Edmund Burke, History of the Reign of George II, quoted in Paul Johnson, A History of the American People, Weidenfeld & Nicholson, 1997, p. 134. 138 The Americans must, Earl of Chatham (Pitt), quoted in Johnson, p. 141. 139 Men will speculate, quoted in Johnson, p. 125. 141 His clothing was, the Comte de Segur, quoted in Johnson, p. 166. 143 thirteen United States, this exchange is related in Johnson, p. 170. 8 Bandoleros, Scum and Dandies 146 In the count’s room, Leo Tolstoy, War and Peace, 1866.

The General P—S or Peace The distinction between necessities and luxuries was one of considerable importance at the time, and subject to fierce political debate. Prevailing opinion held that poor people would be spoiled if allowed access to luxuries, so it was necessary to define what was contained in this category and what was to be excluded. The poor found a friend in Adam Smith, Enlightenment figure, pipe smoker and disseminator of the new French science of Oeconomics to the English speaking world: it is the highest impertinence and presumption, therefore, in kings and ministers, to pretend to watch over the oeconomy of private people, and to restrain their expense, either by sumptuary laws, or by prohibiting the importation of foreign luxuries.


Why Things Bite Back: Technology and the Revenge of Unintended Consequences by Edward Tenner

air freight, Alfred Russel Wallace, animal electricity, blue-collar work, Charles Babbage, clean water, collective bargaining, computer age, dematerialisation, Donald Knuth, Edward Jenner, Exxon Valdez, gentrification, germ theory of disease, Herman Kahn, informal economy, job automation, John Harrison: Longitude, John von Neumann, Lewis Mumford, Loma Prieta earthquake, loose coupling, Louis Pasteur, machine translation, mass immigration, Menlo Park, nuclear winter, oil shock, placebo effect, planned obsolescence, Productivity paradox, Ralph Waldo Emerson, rising living standards, Robert X Cringely, safety bicycle, scientific management, Shoshana Zuboff, Silicon Valley, sugar pill, systems thinking, technoutopianism, The Soul of a New Machine, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Triangle Shirtwaist Factory

He expected that "[i]f they became apprentices at 12, they'd be cripples by middle age." The first medical reports of upper-limb pain appeared in the early eighteenth century. If by then it was already a well-established problem, it doubtless reflected rationalization of craft processes. Adam Smith's praise of the division of labor in The Wealth of Nations (1776) owed much to his belief that the changing activities of country workmen promoted "the habit of sauntering and of indolent careless application." Alternating tasks and tools may nevertheless have been healthy. On the other hand, the minute subdivision of activities Smith observed—as many as eighty persons were involved in making a button—may have been pushing workers to a dangerous pace.

When Hamlet declares it "sport to have the enginer/ Hoist with his own petar," his metaphor was of a crude small bomb used to blow away a gate or part of a wall, sometimes taking its creator with it. If men and women before 1800 or so had any idea of a malevolent machine, nobody knows about it. No student of early European popular culture I have asked has found an example of it. The elites who did most of the writing had little contact with the mechanics of a household. Adam Smith, in his Theory of Moral Sentiments, treats early mechanical consumer goods as playthings. The men who worked with the most complex and perilous machines of medieval and early modern Europe, sailors and miners, do not seem to have endowed ships and equipment with the malicious independent will so familiar to twentieth-century people.


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The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay by Emmanuel Saez, Gabriel Zucman

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, behavioural economics, Berlin Wall, book value, business cycle, carbon tax, Cass Sunstein, classic study, collective bargaining, Cornelius Vanderbilt, corporate governance, cross-border payments, Donald Trump, financial deregulation, government statistician, income inequality, income per capita, independent contractor, informal economy, intangible asset, Jeff Bezos, labor-force participation, Lyft, Mark Zuckerberg, market fundamentalism, Mont Pelerin Society, mortgage debt, mortgage tax deduction, new economy, offshore financial centre, oil shock, patent troll, profit maximization, purchasing power parity, race to the bottom, rent-seeking, ride hailing / ride sharing, Ronald Reagan, shareholder value, Silicon Valley, single-payer health, Skype, Steve Jobs, Tax Reform Act of 1986, The Wealth of Nations by Adam Smith, transfer pricing, trickle-down economics, uber lyft, very high income, We are the 99%

But just as capital taxes can be shifted to labor, so too can labor taxes be shifted to capital. This happens if labor is very elastic—that is, if people work substantially less when the taxation of their earnings rises. In one of the oldest and most famous analyses of tax incidence, Adam Smith in The Wealth of Nations explained how taxes on wages could be shifted to capital. If farmers are at the subsistence level (they earn no more than what they need to barely survive), taxing their wage would make them starve. In that event a wage tax would be shifted away from poor peasants toward wealthier landowners, as those owners would be forced to increase pay to keep their workforce alive.


pages: 411 words: 136,413

The Voice of Reason: Essays in Objectivist Thought by Ayn Rand, Leonard Peikoff, Peter Schwartz

affirmative action, Alan Greenspan, Apollo 11, Berlin Wall, British Empire, business process, cuban missile crisis, haute cuisine, invisible hand, Isaac Newton, laissez-faire capitalism, means of production, medical malpractice, Neil Armstrong, Plato's cave, profit motive, Ralph Nader, Recombinant DNA, Ronald Reagan, source of truth, The Wealth of Nations by Adam Smith, trade route, transcontinental railway, urban renewal, War on Poverty

Public discussion of the food problem understandably tends to focus on immediate matters, such as the amount of American aid to hold off imminent mass starvation in South Asia. But the conference is meant to take a longer view, and that means dealing with the most fundamental issues of population , resources and the wealth of nations. [Emphasis added.] It sure does. (No such issues were raised at that conference.) Mr. Lewis indicates, “State Department officials preparing for the conference seem modestly hopeful of agreed progress in defining the problems”—and lists some of the points they “sketch.” One such point reads: “There must be intensified international efforts to increase food production in the less developed countries, for example by scientific improvements in tropical agriculture.”

If you are sick (as I am) of hearing such accusations as “Americans represent only 6 percent of the world population, but consume 54 percent of its natural resources,” ask the accusers: “How can 6 percent of the world population feed 94 percent of it?” (This is the ultimate intention of all international-feeding schemes.) But the real question goes deeper than that. The real question lies in those “most fundamental issues of population, resources, and the wealth of nations” which Mr. Lewis mentioned, but did not discuss. Why are some nations wealthy and others not? Why do some nations produce abundance and others starve? The answer, strangely enough, is contained (implicitly) in Mr. Lewis’s column—and one can see it, without any further research, if one accepts his facts as facts (which they are).

(The exception is Japan, which, however, has never been a free country, and which is geographically unable to develop its agriculture to any significant extent.) The relevance of two of Mr. Lewis’s “fundamental issues” breaks down in the light of his own lists. “Population” and “resources” do not determine “the wealth of nations.” The countries of Europe’s Common Market are as densely populated as most of the countries on the hunger list. Russia has greater natural resources than the U.S., but they are untouched and unused. It is the presence of Russia on the hunger list that blasts all modern economic theories out of the realm of serious consideration.


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An Economist Gets Lunch: New Rules for Everyday Foodies by Tyler Cowen

agricultural Revolution, behavioural economics, big-box store, business climate, carbon footprint, carbon tax, cognitive bias, creative destruction, cross-subsidies, East Village, en.wikipedia.org, food miles, gentrification, guest worker program, haute cuisine, illegal immigration, informal economy, iterative process, mass immigration, oil shale / tar sands, out of africa, pattern recognition, Peter Singer: altruism, price discrimination, refrigerator car, tacit knowledge, The Wealth of Nations by Adam Smith, Tyler Cowen, Tyler Cowen: Great Stagnation, Upton Sinclair, winner-take-all economy, women in the workforce

Throughout, to find better eating, I will use this economic principle: Food is a product of economic supply and demand, so try to figure out where the supplies are fresh, the suppliers are creative, and the demanders are informed. Most food writings are not much concerned with economics, but the early history of my discipline is for the most part a theory of food production and distribution. Early economies were built upon agriculture and of course they still are in the world’s poorer countries. Adam Smith, who wrote The Wealth of Nations in 1776, was the father of modern economics and some of his best pedagogic examples had to do with the grain trade. Frédéric Bastiat, a leading nineteenth century French economist who remains in print to this day, focused on explaining how it is that Paris gets fed, even though no central planner sees to this fact.

., 248 Vongerichten, Jean-Georges, 249 Vowerk, 255–56 wait staff, 69–72, 95, 114. See also labor costs Wal-Mart, 159, 168, 196, 198–99, 207 Wang, Siyu, 41–42, 53 washing, 185 Washington, D.C., 77, 79, 101, 115 water resources, 6, 157, 172, 182 water transportation, 144, 171 wealth, 14, 150, 151–52, 190 The Wealth of Nations (Smith), 15 Weber, Christopher L., 171, 172 weddings, 97 Wegmans, 110, 191–92 Western Europe, 33–34 Western food, 218–19. See also specific cuisines West Hollywood, 75 wheat, 145, 157, 202 whiskey, 23 white cheeses, 5 Whitely, Mike, 86–87 Whole Foods, 3, 46, 191–92 Willard’s, 102 Windows on the World, 66 wines, 23, 63 Wolfgang Puck Pizza, 62–63 women in the workforce, 34–35 work styles, 255–56 World Bank, 159 World Trade Center, 66 World War I, 65 World War II, 18–19, 24–25, 29–30, 146 Yam Khao Pot (recipe), 251 Yelp.com, 47, 54, 134 Yemen, 157 Zagat, 80 Zambia, 163 Zengo, 80–81 Zhong, Chen-Bo, 169 Zimbabwe, 163 Zola, 227 zoning issues, 182 Zurich, Switzerland, 222


In the Age of the Smart Machine by Shoshana Zuboff

affirmative action, American ideology, blue-collar work, collective bargaining, computer age, Computer Numeric Control, conceptual framework, data acquisition, demand response, deskilling, factory automation, Ford paid five dollars a day, fudge factor, future of work, industrial robot, information retrieval, interchangeable parts, job automation, lateral thinking, linked data, Marshall McLuhan, means of production, old-boy network, optical character recognition, Panopticon Jeremy Bentham, pneumatic tube, post-industrial society, radical decentralization, RAND corporation, scientific management, Shoshana Zuboff, social web, systems thinking, tacit knowledge, The Wealth of Nations by Adam Smith, Thorstein Veblen, union organizing, vertical integration, work culture , zero-sum game

The correct wage, he reasoned, was that of a competitive market, which worked according to that "grand law, which we all believe to be of divine ori- gin, by which everyone who promotes his own true interest necessarily promotes, at the same time, the interests of society at large. ,,2 The Lockean virtues later expanded upon by Adam Smith's The Wealth of Nations were absorbed in the United States as political gospel. According to George Lodge, the formative impact of this fusion of political, economic, and theological thought upon early American en- trepreneurs cannot be overestimated: "Much of the power of Locke derived from the contention that the rights he asserted were in and of the nature of things.

In her discus- sion of the history of authority, Hannah Arendt argued that legitimacy can be "proven" only by an invocation of a source above or beyond the authorities themselves. Such a source might be the law of nature; the word of God; a coherent body of philosophy, such as the work of Karl Marx or Adam Smith; ancient customs sanctified by tradi- tion; or one great event in the past, such as the foundation of the body politic. "In all these cases, legitimacy derives from something outside the range of human deeds; it is either not man-made at all, like natural or divine law, or has at least not been made by those who happen to be in power. ,,3 The legitimating idea forms a religious context capable of infusing 222 AUTHORITY: THE SPIRITUAL DIMENSION OF POWER all members of a hierarchical organization with a sustaining belief in the appropriateness of the ranking rules with which their roles are de- termined. 4 The hierarchical order is meaningful and acceptable as long as people believe that such ranking rules reflect a higher order of moral necessity.

The religious valuation of restless, continuous, systematic work in a worldly calling, as the highest means to asceticism, and at the same time the surest and most evident proof of rebirth and genuine faith, must have been the most powerful conceivable lever for the expan- sion of the attitude toward life which we have here called the spirit of capitalism. 1 If success was a sign of virtue, then the employer and those closest to him could invoke divinity in their claim to authority. The philosophi- cal and economic treatises of John Locke and, later, Adam Smith explic- itly fused transcendent values with the concepts of ownership, a hierar- chical division of labor, and the competitive individualism of the free market. These were each considered to be part of God's natural order. Businesses operating according to these principles of economic organi- zation were thus conforming to a divine plan.


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America's Bank: The Epic Struggle to Create the Federal Reserve by Roger Lowenstein

bank run, Bear Stearns, Berlin Wall, Bretton Woods, business cycle, capital controls, central bank independence, Charles Lindbergh, corporate governance, fiat currency, financial independence, full employment, Glass-Steagall Act, Ida Tarbell, Long Term Capital Management, low interest rates, Michael Milken, Money creation, moral hazard, off-the-grid, old-boy network, quantitative easing, The Wealth of Nations by Adam Smith, Upton Sinclair, walking around money

Rhode Island legislative bosses: Sternstein, “Nelson W. Aldrich,” 52–53; and Aldrich, Old Money, 15–16. the hot issue was the tariff: Author’s correspondence with Douglas A. Irwin. had 170 volumes shipped: Biographer’s notes, Aldrich Papers, Reel 58. “the general liberty of trade”: Adam Smith, The Wealth of Nations (1776). highest concentration of industry: Sternstein, “Nelson W. Aldrich,” 194. family that ran the Sugar Trust: There is a rich literature on Aldrich’s relationship with the Sugar Trust; see especially Jerome L. Sternstein, “Corruption in the Guilded Age Senate: Nelson W. Aldrich and the Sugar Trust,” Capitol Studies: A Journal of the Capitol and Congress 6, no. 1 (Spring 1978), as well as Biographer’s notes, Aldrich Papers, Reel 59; and Sternstein, “Nelson W.

Geographically, therefore, the tariff debate mimicked that of silver, with agricultural regions fiercely resenting the tariff as an eastern, and Republican, policy prejudicial to their interests. Aldrich immersed himself in reading on this dense topic, and had 170 volumes shipped to his home in Washington (he had a fondness for his books, mostly dry tomes). He read on both sides of the tariff issue, including Adam Smith, who in the late eighteenth century expounded the classical view that “the general liberty of trade” increased the average prosperity of all. This fine theory did not sway Aldrich, who at ground level observed that the tariff was a blessing for Rhode Island, which had the highest concentration of industry of any state in the union.


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The Facebook Effect by David Kirkpatrick

"World Economic Forum" Davos, Andy Kessler, AOL-Time Warner, Benchmark Capital, billion-dollar mistake, Burning Man, delayed gratification, demand response, don't be evil, global village, happiness index / gross national happiness, Howard Rheingold, Jeff Bezos, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Marshall McLuhan, Max Levchin, Menlo Park, Network effects, Peter Thiel, rolodex, Salesforce, Sand Hill Road, sharing economy, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, Skype, social graph, social software, social web, SoftBank, Startup school, Steve Ballmer, Steve Jobs, Stewart Brand, the payments system, The Wealth of Nations by Adam Smith, UUNET, Whole Earth Review, winner-take-all economy, Y Combinator, Yochai Benkler

Apple veteran Dave Morin remembers driving home one night at 4 A.M after a particularly intense planning session, thinking, “This is what it must have been like building the first Macintosh.” To prepare for the new Facebook, Morin was reading Democracy in America by Alexis de Tocqueville, the classic nineteenth-century observation of the U.S. political and economic system, as well as Adam Smith’s The Wealth of Nations. Modesty of ambition has never characterized successful leaders at Facebook. It had been a marathon of programming. Adam D’Angelo and his team building the platform worked seven days a week for more than three months. The night before f8 they were almost—but not quite—ready. A core group crowded into a room at San Francisco’s W Hotel running through final fixes.

A year or so after he joined Google, the entrepreneurial programmer approached Marissa Mayer, a top company product executive, and told her that over the weekend he’d built the prototype for a new social network. Mayer and Google’s executives, who by policy encourage entrepreneurship among employees, embraced his project. Google was thinking of calling the project “Eden” or “Paradise.” Then one day Adam Smith, a product manager working with Buyukkokten, told Mayer that the engineer owned the Web address Orkut.com. The two felt Buyukkokten embodied the spirit of his service, so they just decided to name it after him. The well-conceived Orkut, a social network open to anyone, launched in January 2004, just two weeks before Thefacebook.com.


Virtual Competition by Ariel Ezrachi, Maurice E. Stucke

"World Economic Forum" Davos, Airbnb, Alan Greenspan, Albert Einstein, algorithmic management, algorithmic trading, Arthur D. Levinson, barriers to entry, behavioural economics, cloud computing, collaborative economy, commoditize, confounding variable, corporate governance, crony capitalism, crowdsourcing, Daniel Kahneman / Amos Tversky, David Graeber, deep learning, demand response, Didi Chuxing, digital capitalism, disintermediation, disruptive innovation, double helix, Downton Abbey, driverless car, electricity market, Erik Brynjolfsson, Evgeny Morozov, experimental economics, Firefox, framing effect, Google Chrome, independent contractor, index arbitrage, information asymmetry, interest rate derivative, Internet of things, invisible hand, Jean Tirole, John Markoff, Joseph Schumpeter, Kenneth Arrow, light touch regulation, linked data, loss aversion, Lyft, Mark Zuckerberg, market clearing, market friction, Milgram experiment, multi-sided market, natural language processing, Network effects, new economy, nowcasting, offshore financial centre, pattern recognition, power law, prediction markets, price discrimination, price elasticity of demand, price stability, profit maximization, profit motive, race to the bottom, rent-seeking, Richard Thaler, ride hailing / ride sharing, road to serfdom, Robert Bork, Ronald Reagan, search costs, self-driving car, sharing economy, Silicon Valley, Skype, smart cities, smart meter, Snapchat, social graph, Steve Jobs, sunk-cost fallacy, supply-chain management, telemarketer, The Chicago School, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, Travis Kalanick, turn-by-turn navigation, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, Watson beat the top human players on Jeopardy!, women in the workforce, yield management

Order of the President of the People’s Republic of China No. 68, Anti-Monopoly Law of the People’s Republic of China, Chapter 1, Article 1, http://www .china.org.cn/china/2011-02/11/content _ 21900178.htm. 5. U.S. Department of Justice Antitrust Division, Antitrust Division Manual, 4th ed., chap. 5 (Washington, DC: U.S. Department of Justice, March 2008). 6. Adam Smith, The Wealth of Nations (1776). 7. Unilateral Conduct Working Group, Report on the Objectives of Unilateral Conduct Laws, Assessment of Dominance/Substantial Market Power, and State-Created Monopolies (Moscow: International Competition Network, May 2007), http://www.internationalcompetitionnetwork.org/uploads /library/doc353.pdf. 8.

As the DOJ’s Antitrust Division warned, “regulation can be an imperfect and very costly substitute for ‘regulation’ by market forces. Accordingly, exceptions to the general rule of free market competition, protected by antitrust enforcement, should be permitted only on compelling evidence that competition cannot work or is inimical to some overriding social objective.”5 Thus, the modern interpretation of Adam Smith’s “invisible hand” 6 has been central to the changing attitudes toward antitrust enforcement. Many adherents of neoclassical economic theory assume competition to be “a self-initiating process,”7 which, when left alone by government regulators, will generally allocate resources efficiently toward users who value them the most.


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Narrative Economics: How Stories Go Viral and Drive Major Economic Events by Robert J. Shiller

agricultural Revolution, Alan Greenspan, Albert Einstein, algorithmic trading, Andrei Shleifer, autism spectrum disorder, autonomous vehicles, bank run, banking crisis, basic income, behavioural economics, bitcoin, blockchain, business cycle, butterfly effect, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, central bank independence, collective bargaining, computerized trading, corporate raider, correlation does not imply causation, cryptocurrency, Daniel Kahneman / Amos Tversky, debt deflation, digital divide, disintermediation, Donald Trump, driverless car, Edmond Halley, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, fake news, financial engineering, Ford Model T, full employment, George Akerlof, germ theory of disease, German hyperinflation, Great Leap Forward, Gunnar Myrdal, Gödel, Escher, Bach, Hacker Ethic, implied volatility, income inequality, inflation targeting, initial coin offering, invention of radio, invention of the telegraph, Jean Tirole, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, litecoin, low interest rates, machine translation, market bubble, Modern Monetary Theory, money market fund, moral hazard, Northern Rock, nudge unit, Own Your Own Home, Paul Samuelson, Philip Mirowski, plutocrats, Ponzi scheme, public intellectual, publish or perish, random walk, Richard Thaler, Robert Shiller, Ronald Reagan, Rubik’s Cube, Satoshi Nakamoto, secular stagnation, shareholder value, Silicon Valley, speech recognition, Steve Jobs, Steven Pinker, stochastic process, stocks for the long run, superstar cities, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, theory of mind, Thorstein Veblen, traveling salesman, trickle-down economics, tulip mania, universal basic income, Watson beat the top human players on Jeopardy!, We are the 99%, yellow journalism, yield curve, Yom Kippur War

“A Test of Conversational and Testimonial Messages versus Didactic Presentations of Nutrition Information.” Journal of Nutrition Education Behavior 35:255–59. Slovic, Paul, Melissa L. Finucane, Ellen Peters, and Donald G. MacGregor. 2007. “The Affect Heuristic.” European Journal of Operational Research 177(3):1333–52. Smith, Adam. 1869 [1776]. An Inquiry into the Origin and Causes of the Wealth of Nations. Oxford: Clarendon Press. [London: W. Strahan]. Smith, Walter E. 1879. The Recent Depression of Trade: Its Nature, Its Causes, and the Remedies Which Have Been Suggested for It. London: Trübner & Co. Smith, William, William Wayte, and G. E. Marindin. 1890. A Dictionary of Greek and Roman Antiquities.

That conclusion is a surprise, for hardly anyone talks of a pair of tax rates for a given revenue. Obviously, to fund the government, it is better to apply the lower of the two tax rates, not the higher. The notion that taxes might reduce the incentive to earn income and create jobs was hardly new. Adam Smith expressed the idea in the eighteenth century.6 Andrew Mellon, US treasury secretary from 1921 to 1932, was famous for his “trickle-down” economics, and, along with US president Calvin Coolidge (1923–29), successfully argued for reduction of income taxes that had remained high for a while after World War I.

McCabe, Brian J. 2016. No Place Like Home: Wealth, Community, and the Politics of Homeownership. New York: Oxford University Press. McCaffery, Edward. 2000. “Cognitive Theory and Tax.” In Cass Sunstein, ed., Behavioral Law and Economics. Cambridge: Cambridge University Press. McCloskey, Deirdre. 2016. “Adam Smith Did Humanomics: So Should We.” Eastern Economic Journal 42(4):503–13. McCullough, David. 1993. Truman. New York: Simon & Schuster. McDaniel, M. A., and G. O. Einstein. 1986. “Bizarre Imagery as an Effective Memory Aid: The Importance of Distinctiveness.” Journal of Experimental Psychology: Learning, Memory, and Cognition 12(1):54–65.


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Adaptive Markets: Financial Evolution at the Speed of Thought by Andrew W. Lo

Alan Greenspan, Albert Einstein, Alfred Russel Wallace, algorithmic trading, Andrei Shleifer, Arthur Eddington, Asian financial crisis, asset allocation, asset-backed security, backtesting, bank run, barriers to entry, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, bitcoin, Bob Litterman, Bonfire of the Vanities, bonus culture, break the buck, Brexit referendum, Brownian motion, business cycle, business process, butterfly effect, buy and hold, capital asset pricing model, Captain Sullenberger Hudson, carbon tax, Carmen Reinhart, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computerized trading, confounding variable, corporate governance, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, Daniel Kahneman / Amos Tversky, delayed gratification, democratizing finance, Diane Coyle, diversification, diversified portfolio, do well by doing good, double helix, easy for humans, difficult for computers, equity risk premium, Ernest Rutherford, Eugene Fama: efficient market hypothesis, experimental economics, experimental subject, Fall of the Berlin Wall, financial deregulation, financial engineering, financial innovation, financial intermediation, fixed income, Flash crash, Fractional reserve banking, framing effect, Glass-Steagall Act, global macro, Gordon Gekko, greed is good, Hans Rosling, Henri Poincaré, high net worth, housing crisis, incomplete markets, index fund, information security, interest rate derivative, invention of the telegraph, Isaac Newton, it's over 9,000, James Watt: steam engine, Jeff Hawkins, Jim Simons, job satisfaction, John Bogle, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, Joseph Schumpeter, Kenneth Rogoff, language acquisition, London Interbank Offered Rate, Long Term Capital Management, longitudinal study, loss aversion, Louis Pasteur, mandelbrot fractal, margin call, Mark Zuckerberg, market fundamentalism, martingale, megaproject, merger arbitrage, meta-analysis, Milgram experiment, mirror neurons, money market fund, moral hazard, Myron Scholes, Neil Armstrong, Nick Leeson, old-boy network, One Laptop per Child (OLPC), out of africa, p-value, PalmPilot, paper trading, passive investing, Paul Lévy, Paul Samuelson, Paul Volcker talking about ATMs, Phillips curve, Ponzi scheme, predatory finance, prediction markets, price discovery process, profit maximization, profit motive, proprietary trading, public intellectual, quantitative hedge fund, quantitative trading / quantitative finance, RAND corporation, random walk, randomized controlled trial, Renaissance Technologies, Richard Feynman, Richard Feynman: Challenger O-ring, risk tolerance, Robert Shiller, Robert Solow, Sam Peltzman, Savings and loan crisis, seminal paper, Shai Danziger, short selling, sovereign wealth fund, Stanford marshmallow experiment, Stanford prison experiment, statistical arbitrage, Steven Pinker, stochastic process, stocks for the long run, subprime mortgage crisis, survivorship bias, systematic bias, Thales and the olive presses, The Great Moderation, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Malthus, Thorstein Veblen, Tobin tax, too big to fail, transaction costs, Triangle Shirtwaist Factory, ultimatum game, uptick rule, Upton Sinclair, US Airways Flight 1549, Walter Mischel, Watson beat the top human players on Jeopardy!, WikiLeaks, Yogi Berra, zero-sum game

But the question of the how, the way markets actually incorporate information into prices is equally important—and much less obvious from the mathematics. Financial markets reflect new information in a remarkable way. To fully appreciate it, however, we’ll need to take a detour to an unexpected place: the eighteenth-century hog market. As far back as 1776, in The Wealth of Nations, Adam Smith used hog prices to illustrate supply and demand.31 Nowhere were these price movements more clearly evident than in the newly independent United States. The history of American westward expansion is also the history of pork, from the Virginia hams of colonial America to the rise of Chicago, the “Hog Butcher for the World,” to the Iowa center-cut pork chops and cans of Minnesota SPAM of today.

Smaers, Jeroen B., James Steele, Charleen R. Case, Alex Cowper, Katrin Amunts, and Karl Zilles. 2011. “Primate Prefrontal Cortex Evolution: Human Brains Are the Extreme of a Lateralized Ape Trend.” Brain, Behavior, and Evolution 77: 67–78. Smith, Adam. 2005. An Inquiry into the Nature and Causes of the Wealth of Nations. Chicago: University of Chicago Press. Smith, David V., Benjamin Y. Hayden, Trong-Kha Truong, Allen W. Song, Michael L. Platt, and Scott A. Huettel. 2010. “Distinct Value Signals in Anterior and Posterior Ventromedial Prefrontal Cortex.” Journal of Neuroscience 30: 2490–2495. Sobel, Russell S., and Todd M.

In fact, in a footnote to one of his most important ideas, Samuelson unabashedly announced that “this is essentially the method of thermodynamics, which can be regarded as a purely deductive science based on certain postulates (notably the First and Second Laws of Thermodynamics).”19 Since 1947, the economics literature has followed Samuelson’s lead, borrowing inspiration and methods alike from mathematical physics, including the development of rational expectations and the Efficient Markets Hypothesis. This borrowing was itself an adaptation to an environment. Many questions in economics became much more intellectually manageable after receiving the Samuelson treatment. We can read the classics of economists who came before Paul Samuelson—great thinkers like Adam Smith, John Stuart Mill, Karl Marx, or John Maynard Keynes—and become lost in the abstractions of their lengthy prose. Samuelson allowed economists to cut through their verbiage like a machete through thick brush, analyzing economic problems mathematically and rigorously, without having to interpret a text like a philosopher or a theologian.


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The War on Normal People: The Truth About America's Disappearing Jobs and Why Universal Basic Income Is Our Future by Andrew Yang

3D printing, Airbnb, assortative mating, augmented reality, autonomous vehicles, basic income, Bear Stearns, behavioural economics, Ben Horowitz, Bernie Sanders, call centre, corporate governance, cryptocurrency, data science, David Brooks, DeepMind, Donald Trump, Elon Musk, falling living standards, financial deregulation, financial engineering, full employment, future of work, global reserve currency, income inequality, Internet of things, invisible hand, Jeff Bezos, job automation, John Maynard Keynes: technological unemployment, Khan Academy, labor-force participation, longitudinal study, low skilled workers, Lyft, manufacturing employment, Mark Zuckerberg, megacity, meritocracy, Narrative Science, new economy, passive income, performance metric, post-work, quantitative easing, reserve currency, Richard Florida, ride hailing / ride sharing, risk tolerance, robo advisor, Ronald Reagan, Rutger Bregman, Sam Altman, San Francisco homelessness, self-driving car, shareholder value, Silicon Valley, Simon Kuznets, single-payer health, Stephen Hawking, Steve Ballmer, supercomputer in your pocket, tech worker, technoutopianism, telemarketer, The future is already here, The Wealth of Nations by Adam Smith, traumatic brain injury, Tyler Cowen, Tyler Cowen: Great Stagnation, Uber and Lyft, uber lyft, unemployed young men, universal basic income, urban renewal, warehouse robotics, white flight, winner-take-all economy, Y Combinator

Today, it needs to be steered to do so. The United States has reached a point where its current form of capitalism is faltering in producing an increasing standard of living for the majority of its citizens. It’s time for an upgrade. THE NEXT STAGE OF CAPITALISM Adam Smith, the Scottish economist who wrote The Wealth of Nations in 1776, is often regarded as the father of modern capitalism. His ideas of an invisible hand that guides the market, division of labor, and that self-interest and competition lead to wealth creation have been so deeply internalized that today we take most of them for granted.


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The Achievement Habit: Stop Wishing, Start Doing, and Take Command of Your Life by Bernard Roth

Albert Einstein, Build a better mousetrap, Burning Man, classic study, cognitive bias, correlation does not imply causation, deskilling, do what you love, fear of failure, functional fixedness, Mahatma Gandhi, Mark Zuckerberg, school choice, Silicon Valley, The Wealth of Nations by Adam Smith, zero-sum game

I also notice how having one person at the head of a group causes bottlenecks. If it is a hierarchical system, leaders need to be available, or things have to wait for them. If the leader is wrong, then the entire enterprise can be brought to ruin. There is a long-standing argument for the idea that one person needs to be in charge. It goes way back to Adam Smith’s writings in The Wealth of Nations. Even Friedrich Engels agreed with Smith that “a ship needs one captain.” I certainly am not an expert on ships, and I hate to disagree with the luminaries of both capitalism and communism, however, this is at variance with my experience. The flat, participatory model we developed worked very well and completely suited my personality.


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In Defense of Global Capitalism by Johan Norberg

anti-globalists, Asian financial crisis, capital controls, clean water, correlation does not imply causation, creative destruction, Deng Xiaoping, Edward Glaeser, export processing zone, Gini coefficient, Great Leap Forward, half of the world's population has never made a phone call, Hernando de Soto, illegal immigration, income inequality, income per capita, informal economy, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Joseph Schumpeter, Kenneth Rogoff, land reform, Lao Tzu, liberal capitalism, market fundamentalism, Mexican peso crisis / tequila crisis, Naomi Klein, new economy, open economy, prediction markets, profit motive, race to the bottom, rising living standards, Silicon Valley, Simon Kuznets, structural adjustment programs, The Wealth of Nations by Adam Smith, Tobin tax, trade liberalization, trade route, transaction costs, trickle-down economics, Tyler Cowen, union organizing, zero-sum game

Bernard Cassen, ‘‘Who Are the Winners, and Who Are the Losers of Globalization?’’ speech presented at The Amis UK Conference ‘‘Globalization in Whose Interest?’’ Conway Hall, London, June 17, 2000. 2. James Mill, Elements of Political Economy, 3d ed. (London: Baldwin, Cradock and Joy, 1826), chap. V, sec. 3. 3. Adam Smith, An Inquiry Into the Nature and Causes of The Wealth of Nations (Indianapolis: Liberty Classics, 1981), p. 488f. 4. Tomas Larsson predicted the collapse of the Seattle meeting for precisely this reason in his excellent book The Race to the Top: The Real Story of Globalization (Washington: Cato Institute, 2001) originally published in Swedish in 1999 as Va¨rldens klassresa. 5.


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Financial Fiasco: How America's Infatuation With Homeownership and Easy Money Created the Economic Crisis by Johan Norberg

accounting loophole / creative accounting, Alan Greenspan, bank run, banking crisis, Bear Stearns, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, business cycle, capital controls, central bank independence, collateralized debt obligation, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Brooks, diversification, financial deregulation, financial innovation, Greenspan put, helicopter parent, Home mortgage interest deduction, housing crisis, Howard Zinn, Hyman Minsky, Isaac Newton, Joseph Schumpeter, Long Term Capital Management, low interest rates, market bubble, Martin Wolf, Mexican peso crisis / tequila crisis, millennium bug, money market fund, moral hazard, mortgage tax deduction, Naomi Klein, National Debt Clock, new economy, Northern Rock, Own Your Own Home, precautionary principle, price stability, Ronald Reagan, savings glut, short selling, Silicon Valley, South Sea Bubble, The Wealth of Nations by Adam Smith, too big to fail

Press release, October 10, 2008. http://www.house.gov/sherman/press_ room-2007-2008/morenews/BailoutComment.html. Shlaes, Amity. The Forgotten Man: A New History of the Great Depression. New York: HarperCollins Publishers, 2007. Simpson, Glenn, and James Hagerty. "Countrywide Friends Got Good Loans." Wall Street Journal, June 7, 2008. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. Indianapolis: Liberty Fund, 1981. First published 1776. Solomon, Deborah, and David Enrich. "Devil Is in Bailout's Details." Wall Street Journal, October 15, 2008. Sorkin, Andrew Ross, ed. "As No-Short-Selling List Grows, Another Firm Chooses to Leave." Dealbook blog/New York Times, September 23, 2008. http://deal book.blogs.nytimes.com/2008/09/23 /as-no-short-selling-list-grows-another-firm- chooses-to-leave/?

The insurer AIG relied completely on its imperfect computer models that did not take the unexpected into account, and its bosses allowed huge deals that they could probably not make heads or tails of. They handled other people's money and they were given a free rein because the ownership structure of their institutions was weak: spread across a large number of funds that did not exercise adequate supervision over all the companies they had stakes in. As Adam Smith concluded long ago, this gives executives an opportunity to hijack companies and favor themselves rather than the owners: "The directors of such companies, however, being the managers rather of other people's money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own."9 There are companies with strong owners and there are companies without them that have still succeeded in developing internal controls and systems of remuneration to ensure that the owners' longterm profit is what governs behavior.


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Sleeping Giant: How the New Working Class Will Transform America by Tamara Draut

affirmative action, Affordable Care Act / Obamacare, always be closing, American ideology, antiwork, battle of ideas, big-box store, Black Lives Matter, blue-collar work, collective bargaining, creative destruction, David Brooks, declining real wages, deindustrialization, desegregation, Detroit bankruptcy, Donald Trump, Edward Glaeser, ending welfare as we know it, Ferguson, Missouri, financial deregulation, full employment, gentrification, immigration reform, income inequality, independent contractor, invisible hand, job satisfaction, knowledge economy, knowledge worker, low skilled workers, machine readable, mass incarceration, minimum wage unemployment, mortgage tax deduction, new economy, obamacare, occupational segregation, payday loans, pink-collar, plutocrats, Powell Memorandum, profit motive, public intellectual, race to the bottom, Ralph Nader, rent-seeking, rising living standards, Ronald Reagan, shared worldview, stock buybacks, TED Talk, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, trickle-down economics, union organizing, upwardly mobile, War on Poverty, white flight, women in the workforce, young professional

No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe and lodge the whole body of the people, should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed and lodged. —Adam Smith, The Wealth of Nations, 1776 Contents Cover Also by Tamara Draut Title Page Copyright Dedication Epigraph Introduction CHAPTER ONEThe Bargain-Basement Economy CHAPTER TWOThe New Indignity of Work CHAPTER THREEMeet the New Populists CHAPTER FOURThe Great Power Shift CHAPTER FIVEThe Legacy of Exclusion CHAPTER SIXThe Privilege of Visibility CHAPTER SEVENThe Sleeping Giant Stirs CHAPTER EIGHTA Better Deal The Blueprint for a Better Deal Acknowledgments Notes About the Author Introduction My father died a few short months after the city of Detroit declared bankruptcy.


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Makers by Chris Anderson

3D printing, Airbnb, Any sufficiently advanced technology is indistinguishable from magic, Apple II, autonomous vehicles, barriers to entry, Buckminster Fuller, Build a better mousetrap, business process, carbon tax, commoditize, company town, Computer Numeric Control, crowdsourcing, dark matter, David Ricardo: comparative advantage, deal flow, death of newspapers, dematerialisation, digital capitalism, DIY culture, drop ship, Elon Musk, factory automation, Firefox, Ford Model T, future of work, global supply chain, global village, hockey-stick growth, hype cycle, IKEA effect, industrial robot, interchangeable parts, Internet of things, inventory management, James Hargreaves, James Watt: steam engine, Jeff Bezos, job automation, Joseph Schumpeter, Kickstarter, Lean Startup, manufacturing employment, Mark Zuckerberg, means of production, Menlo Park, Neal Stephenson, Network effects, planned obsolescence, private spaceflight, profit maximization, QR code, race to the bottom, Richard Feynman, Ronald Coase, Rubik’s Cube, Scaled Composites, self-driving car, Sheryl Sandberg, side project, Silicon Valley, Silicon Valley startup, Skype, slashdot, South of Market, San Francisco, SpaceShipOne, spinning jenny, Startup school, stem cell, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, supply-chain management, the long tail, The Nature of the Firm, The Wealth of Nations by Adam Smith, TikTok, Tragedy of the Commons, transaction costs, trickle-down economics, vertical integration, Virgin Galactic, Whole Earth Catalog, X Prize, Y Combinator

Such entrepreneurs often state that their first obligation is to serve their community, and to make money second. Goods made by passionate consumers-turned-entrepreneurs tend to radiate a quality that displays craftsmanship rather than mass-manufactured efficiency. In a sense, this is just the extreme of the specialization that Adam Smith originally recognized in The Wealth of Nations as the key to an efficient market. People should do only what they do best, he said, and trade with others who make other specialized goods. No one person or town should try to do it all, since a society can do far more collectively with an efficient division of labor—comparative advantage plus trade equals growth.


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Shorter: Work Better, Smarter, and Less Here's How by Alex Soojung-Kim Pang

8-hour work day, airport security, Albert Einstein, behavioural economics, Bertrand Russell: In Praise of Idleness, Brexit referendum, business process, call centre, carbon footprint, centre right, classic study, cloud computing, colonial rule, death from overwork, disruptive innovation, Erik Brynjolfsson, future of work, game design, gig economy, Henri Poincaré, IKEA effect, iterative process, job automation, job satisfaction, job-hopping, Johannes Kepler, karōshi / gwarosa / guolaosi, Kickstarter, labor-force participation, longitudinal study, means of production, neurotypical, PalmPilot, performance metric, race to the bottom, remote work: asynchronous communication, remote working, Rutger Bregman, Salesforce, Second Machine Age, side project, Silicon Valley, Steve Jobs, tech worker, TED Talk, telemarketer, The Wealth of Nations by Adam Smith, women in the workforce, work culture , young professional, zero-sum game

If masters would always listen to the dictates of reason and humanity, they have frequently occasion rather to moderate, than to animate the application of many of their workmen. It will be found, I believe, in every sort of trade, that the man who works so moderately, as to be able to work constantly, not only preserves his health the longest, but, in the course of the year, executes the greatest quantity of work. Adam Smith, The Wealth of Nations (1776) The whole development of wealth rests on the creation of disposable time. Karl Marx, Grundrisse (1858) Introduction MAIN STREET, HUNTINGTON BEACH, CALIFORNIA When he first heard about the five-hour workday, David Rhoads thought, I want to give this to my employees.


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Were You Born on the Wrong Continent? by Thomas Geoghegan

Alan Greenspan, Albert Einstein, American Society of Civil Engineers: Report Card, An Inconvenient Truth, banking crisis, Bear Stearns, Berlin Wall, Bob Geldof, business logic, collective bargaining, corporate governance, cross-subsidies, dark matter, David Brooks, declining real wages, deindustrialization, disinformation, Easter island, ending welfare as we know it, facts on the ground, Gini coefficient, Glass-Steagall Act, haute cuisine, high-speed rail, income inequality, John Maynard Keynes: Economic Possibilities for our Grandchildren, knowledge economy, knowledge worker, laissez-faire capitalism, low skilled workers, Martin Wolf, McJob, military-industrial complex, minimum wage unemployment, mittelstand, offshore financial centre, Paul Samuelson, payday loans, pensions crisis, plutocrats, Prenzlauer Berg, purchasing power parity, Ralph Waldo Emerson, Robert Gordon, Ronald Reagan: Tear down this wall, Saturday Night Live, Silicon Valley, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, union organizing, Wolfgang Streeck, women in the workforce

Indeed, for some economists, while not applying it to Germany, this is now a fashionable idea. Think of all the buzz about the “knowledge” economy, which, in the world of academic economists, is an inquiry as to how knowledge drives economic growth. For finding out about this new economics, I refer the reader to David Warsh’s 2006 book, Knowledge and the Wealth of Nations, which introduces us to economists trying to untangle the connections between the kind of knowledge that comes from groups and economic growth. German worker control contributes to a group interaction that over time not only builds up but protects a certain amount of human capital, especially in engineering and quality control.

Army strikes union resorts/ex-spas unionization rates in the manufacturing sector wage-setting and works councils youth membership The Germans (Craig) Gerschenkron, Alexander Ghilarducci, Teresa Gibbon, Edward Gibbons, James Gini coefficient Giscard d’Estaing, Valery Glass-Steagall Act globalization and German capitalism and labor market flexibility “Globalization and Income Inequality” (Harjes) “Glühwein Festival” (Hamburg) Goethe-Institute Goldman Sachs Gordon, Robert Gramm, Phil Grass, Günter Green Party and European social democracies German coalition government and Agenda 2010 German coalition government and wages/unemployment German coalition government and welfare German coalition government and works councils Germany green technology Greenspan, Alan Guardian (UK) gun ownership Guns, Germs, and Steel: The Fates of Human Societies (Diamond) Gutteres, António Habermas, Jürgen Halliburton Hamburg, Germany Harjes, Thomas health care spending Heine, Heinrich Heinz (retired German labor leader) Hemingway, Ernest Herodotus Hesbaugh, Ted Hitler, Adolf Hitler’s Willing Executioners (Goldhagen) Hobsbawm, Eric Holocaust hours worked and GDP leisure time and standard-of-living How to Lie with Statistics (Huff) Huff, Darrell human capital Humboldt University (Berlin) IBZ Guest House (Berlin) IG Metall (German union) and CDU’s 2009 victory over SDP foreign-born members Frankfurt May Day parade (2001) works councils youth membership “Incentive for Working Hard” (Conference Board, May 2001) income equality/inequality An Inconvenient Truth (film) International Labor Organization (ILO) International Monetary Fund Iraq war Jesuits and papal social democracy jobs/employment artists big business employees cross-subsidies European social democracies and German unemployment Germany high-skill jobs and high-end precision goods manufacturing workforce and percent of adults holding an associate degree public employees (public-sector civil service jobs) self-employment skilled-labor shortage small business employees types of jobs available unemployment rates for college graduates U.S. Johnson, Diane Judt, Tony Kafka, Franz Kant, Immanuel Keynes, John Maynard Kiel, Germany Kinsley, Michael Knowledge and the Wealth of Nations (Warsh) “knowledge” economies Kohl, Helmut Krise. See financial meltdown of 2008 (the Krise) and German model labor markets (German). See German model of social democracy (labor and industry) labor movement (German). See German model of social democracy (unions and labor movement) Lafontaine, Oskar laissez-faire capitalism Landesbank (State Bank of Hesse) land-use planning Lane, Nathan law students and law education Germany U.S.

And in this part of western Germany, around Frankfurt, one is not really so much in Germany, or really so much in France, as in a place that is both, all at once: it’s the Kingdom of the Franks. So it is with “Rhineland” capitalism: it’s part French, part German. And it’s this Europe, the Frankish Europe, which is not Bismarck’s Europe, or Adam Smith’s Europe, but which is partly France, partly Germany, and which is, in sum, the Europe of Jean Monnet, that is, the native place of the only Western form of capitalism that can challenge ours right now. It’s the capitalism that’s got Catholicism, solidarity, and social justice, and it’s also the capitalism that has The Bells.


Lonely Planet Scotland by Lonely Planet

always be closing, biodiversity loss, British Empire, carbon footprint, clean water, country house hotel, demand response, Donald Trump, European colonialism, Ford Model T, gentrification, James Watt: steam engine, land reform, Neil Armstrong, North Ronaldsay sheep, North Sea oil, Northpointe / Correctional Offender Management Profiling for Alternative Sanctions, off-the-grid, retail therapy, rewilding, The Wealth of Nations by Adam Smith, three-masted sailing ship, tontine, upwardly mobile, urban decay, urban sprawl

Exhibits of national importance include an original copy of the National Covenant of 1638, but the big crowd-pleaser is the dog collar and feeding bowl that once belonged to Greyfriars Bobby, the city's most famous canine citizen. Canongate KirkyardCHURCH ( MAP GOOGLE MAP ; canongatekirk.org.uk; Canongate; h24hr; g35) The attractive curved gable of the Canongate Kirk, built in 1688, overlooks a kirkyard that contains the graves of several famous people, including the economist Adam Smith, author of The Wealth of Nations; Agnes MacLehose (the 'Clarinda' of Robert Burns' love poems); and poet Robert Fergusson (1750–74; there's a statue of him on the street outside the church). An information board just inside the gate lists famous graves and their locations. Fergusson was much admired by Robert Burns, who paid for his gravestone and penned the epitaph – take a look at the inscription on the back.

The Act of Union in 1707 further reduced Edinburgh’s importance, but its cultural and intellectual life flourished. In the second half of the 18th century a planned new town was created across the valley to the north of the Old Town. During the Scottish Enlightenment (c 1740–1830), Edinburgh became known as ‘a hotbed of genius’, inhabited by leading scientists and philosophers such as David Hume and Adam Smith. In the 19th century the population quadrupled to 400,000, not much less than today’s population, and the Old Town’s tene- ments were taken over by refugees from the Highland clearances and the Irish famines. A new ring of crescents and circuses was built to the north of New Town, and grey Victorian terraces spread south of the Old Town.

Kirkcaldy Pop 49,700 Kirkcaldy (kir-caw-day) wins no prizes for prettiness; its slightly shabby promenade sprawls along the edge of the sea for several miles, with spectacular pounding surf on windy days. The town is famous as the birthplace of 18th-century Enlightenment philosopher and economist Adam Smith (who features on English £20 notes issued between 2007 and 2016), but is only worth a stop for its excellent museum. There are hourly buses to St Andrews (£8.20, 1¼ hour) and Anstruther (£7.50, 1¼ hours). Two to four trains an hour run to Edinburgh (£7.90, 45 minutes) and Dundee (£11.70, 45 minutes).


pages: 470 words: 148,730

Good Economics for Hard Times: Better Answers to Our Biggest Problems by Abhijit V. Banerjee, Esther Duflo

3D printing, accelerated depreciation, affirmative action, Affordable Care Act / Obamacare, air traffic controllers' union, Airbnb, basic income, behavioural economics, Bernie Sanders, Big Tech, business cycle, call centre, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, carbon credits, carbon tax, Cass Sunstein, charter city, company town, congestion pricing, correlation does not imply causation, creative destruction, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, decarbonisation, Deng Xiaoping, Donald Trump, Edward Glaeser, en.wikipedia.org, endowment effect, energy transition, Erik Brynjolfsson, experimental economics, experimental subject, facts on the ground, fake news, fear of failure, financial innovation, flying shuttle, gentrification, George Akerlof, Great Leap Forward, green new deal, high net worth, immigration reform, income inequality, Indoor air pollution, industrial cluster, industrial robot, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, Jean Tirole, Jeff Bezos, job automation, Joseph Schumpeter, junk bonds, Kevin Roose, labor-force participation, land reform, Les Trente Glorieuses, loss aversion, low skilled workers, manufacturing employment, Mark Zuckerberg, mass immigration, middle-income trap, Network effects, new economy, New Urbanism, no-fly zone, non-tariff barriers, obamacare, off-the-grid, offshore financial centre, One Laptop per Child (OLPC), open economy, Paul Samuelson, place-making, post-truth, price stability, profit maximization, purchasing power parity, race to the bottom, RAND corporation, randomized controlled trial, restrictive zoning, Richard Thaler, ride hailing / ride sharing, Robert Gordon, Robert Solow, Ronald Reagan, Savings and loan crisis, school choice, Second Machine Age, secular stagnation, self-driving car, shareholder value, short selling, Silicon Valley, smart meter, social graph, spinning jenny, Steve Jobs, systematic bias, Tax Reform Act of 1986, tech worker, technology bubble, The Chicago School, The Future of Employment, The Market for Lemons, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, total factor productivity, trade liberalization, transaction costs, trickle-down economics, Twitter Arab Spring, universal basic income, urban sprawl, very high income, War on Poverty, women in the workforce, working-age population, Y2K

Schumacher, Small Is Beautiful: A Study of Economics as If People Mattered (London: Blond & Briggs, 1973). 66 Nirmala Banerjee, “Is Small Beautiful?,” in Change and Choice in Indian Industry, eds. Amiya Bagchi and Nirmala Banerjee (Calcutta: K. P. Bagchi & Company, 1981). 67 Chang-Tai Hsieh and Benjamin A. Olken, “The Missing ‘Missing Middle,’” Journal of Economic Perspectives 28, no. 3 (2014): 89–108. 68 Adam Smith, The Wealth of Nations (W. Strahan and T. Cadell, 1776). 69 Dave Donaldson, “Railroads of the Raj: Estimating the Impact of Transportation Infrastructure,” American Economic Review 108, nos. 4–5 (2018): 899–934. 70 Dave Donaldson and Richard Hornbeck, “Railroads and American Growth: A ‘Market Access’ Approach,” Quarterly Journal of Economics 131, no. 2 (2016): 799–858. 71 Arnaud Costinot and Dave Donaldson, “Ricardo’s Theory of Comparative Advantage: Old Idea, New Evidence,” American Economic Review 102, no. 3 (2012): 453–58. 72 Asher and Novosad, “Rural Roads and Local Economic Development.” 73 David Atkin and Dave Donaldson, “Who’s Getting Globalized?

In the early 1980s, Abhijit’s mother, Nirmala Banerjee, an economist with quite left-wing views, surveyed small firms in and around Kolkata, and was astounded by just how unproductive they were.66 Later evidence confirmed her insight. In India, small firms are much less productive than larger ones.67 But firms can only be large if the market is large. As Adam Smith wrote in 1776: “The division of labour is limited by the extent of the market.”68 This is why trade is valuable. Isolated communities cannot have productive firms. Indeed, national integration via railroad has had transformative impacts in many economies. In India, between 1853 and 1930, the British colonial administration oversaw the building of nearly forty-two thousand miles of railroad in India.


pages: 349 words: 86,224

Against the Grain: A Deep History of the Earliest States by James C. Scott

agricultural Revolution, Anthropocene, clean water, David Graeber, demographic dividend, demographic transition, deskilling, domesticated silver fox, facts on the ground, founder crops, invention of writing, joint-stock company, Louis Pasteur, mass immigration, means of production, Northpointe / Correctional Offender Management Profiling for Alternative Sanctions, the built environment, The Wealth of Nations by Adam Smith, trade route, zoonotic diseases

This codification of subsistence and ritual life around the domus was powerful evidence that, with domestication, Homo sapiens had traded a wide spectrum of wild flora for a handful of cereals and a wide spectrum of wild fauna for a handful of livestock. I am tempted to see the late Neolithic revolution, for all its contributions to large-scale societies, as something of a deskilling. Adam Smith’s iconic example of the productivity gains achievable through the division of labor was the pin factory, where each minute step of pin making was broken down into a task carried out by a different worker. Alexis de Tocqueville read The Wealth of Nations sympathetically but asked, “What can be expected of a man who has spent twenty years of his life putting heads on pins.”25 If this is a too bleak view of a breakthrough credited with making civilization possible, let us at least say that it represented a contraction of our species’ attention to and practical knowledge of the natural world, a contraction of diet, a contraction of space, and perhaps a contraction, as well, in the breadth of ritual life.


pages: 293 words: 81,183

Doing Good Better: How Effective Altruism Can Help You Make a Difference by William MacAskill

barriers to entry, basic income, behavioural economics, Black Swan, Branko Milanovic, Cal Newport, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, clean water, corporate social responsibility, correlation does not imply causation, Daniel Kahneman / Amos Tversky, David Brooks, Edward Jenner, effective altruism, en.wikipedia.org, end world poverty, experimental subject, follow your passion, food miles, immigration reform, income inequality, index fund, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, job automation, job satisfaction, Lean Startup, M-Pesa, mass immigration, meta-analysis, microcredit, Nate Silver, Peter Singer: altruism, power law, public intellectual, purchasing power parity, quantitative trading / quantitative finance, randomized controlled trial, self-driving car, Skype, Stanislav Petrov, Steve Jobs, Steve Wozniak, Steven Pinker, The Future of Employment, The Wealth of Nations by Adam Smith, Tyler Cowen, universal basic income, William MacAskill, women in the workforce

“jobs that make a difference”: “5 More Do-Good Jobs You’ve Never Considered,” Oprah, April 19, 2012, http://www.oprah.com/money/Jobs-That-Make-a-Difference-in-the-World. Which is more valuable: water or diamonds?: The apparent difficulty in answering this question is known as the paradox of value. It was discussed by Nicolaus Copernicus and John Locke, among others, but the most influential presentation appears in a passage of Adam Smith’s The Wealth of Nations: The things which have the greatest value in use have frequently little or no value in exchange; and, on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarce anything; scarce anything can be had in exchange for it.


pages: 309 words: 86,909

The Spirit Level: Why Greater Equality Makes Societies Stronger by Richard Wilkinson, Kate Pickett

"Hurricane Katrina" Superdome, basic income, Berlin Wall, classic study, clean water, Diane Coyle, epigenetics, experimental economics, experimental subject, Fall of the Berlin Wall, full employment, germ theory of disease, Gini coefficient, God and Mammon, impulse control, income inequality, Intergovernmental Panel on Climate Change (IPCC), knowledge economy, labor-force participation, land reform, longitudinal study, Louis Pasteur, meta-analysis, Milgram experiment, mirror neurons, moral panic, Murray Bookchin, offshore financial centre, phenotype, plutocrats, profit maximization, profit motive, Ralph Waldo Emerson, statistical model, The Chicago School, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, ultimatum game, upwardly mobile, World Values Survey, zero-sum game

Pickett, ‘The problems of relative deprivation: why some societies do better than others’, Social Science and Medicine (2007) 65 (9): 1965–78. 150. J. D. Willms, ‘Quality and inequality in children’s literacy: the effects of families, schools, and communities’, in D. P. Keating and C. Hertzman (eds), Developmental Health and the Wealth of Nations. New York: Guilford Press, 1999. 151. J. D. Willms, ‘Literacy proficiency of youth: evidence of converging socioeconomic gradients’, International Journal of Educational Research (2003) 39: 247–52. 152. A. Siddiqi, I. Kawachi, L. Berkman, S. V. Subramanian and C. Hertzman, ‘Variation of socioeconomic gradients in children’s developmental health across advanced capitalist societies: analysis of 22 OECD nations’, International Journal of Health Services (2007) 37 (1): 63–87. 153.

What this means is that when people lack money for essentials such as food, it is usually a reflection of the strength of their desire to live up to the prevailing standards. You may, for instance, feel it more important to maintain appearances by spending on clothes while stinting on food. We knew of a young man who was unemployed and had spent a month’s income on a new mobile phone because he said girls ignored people who hadn’t got the right stuff. As Adam Smith emphasized, it is important to be able to present oneself creditably in society without the shame and stigma of apparent poverty. However, just as the gradient in health ran right across society from top to bottom, the pressures of inequality and of wanting to keep up are not confined to a small minority who are poor.


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Empty Planet: The Shock of Global Population Decline by Darrell Bricker, John Ibbitson

"World Economic Forum" Davos, affirmative action, agricultural Revolution, Berlin Wall, Black Lives Matter, Brexit referendum, BRICs, British Empire, Columbian Exchange, commoditize, demographic dividend, demographic transition, Deng Xiaoping, Donald Trump, en.wikipedia.org, full employment, gender pay gap, gentrification, ghettoisation, glass ceiling, global reserve currency, Great Leap Forward, Gunnar Myrdal, Hans Rosling, Hernando de Soto, illegal immigration, income inequality, James Watt: steam engine, Jeff Bezos, John Snow's cholera map, Kibera, knowledge worker, labor-force participation, Mark Zuckerberg, megacity, New Urbanism, nuclear winter, off grid, offshore financial centre, out of africa, Potemkin village, purchasing power parity, reserve currency, Ronald Reagan, Silicon Valley, South China Sea, statistical model, Steve Jobs, Steven Pinker, The Wealth of Nations by Adam Smith, Thomas Malthus, transcontinental railway, upwardly mobile, urban planning, working-age population, young professional, zero-sum game

“The coming together of the continents was a prerequisite for the population explosion of the past two centuries, and certainly played a role in the Industrial Revolution,” argues historian Alfred Crosby.29 But of course, the real cause of increasing lifespans was the Industrial Revolution itself: the acceleration in scientific and industrial knowledge that bequeathed the world we inhabit today. James Watt’s steam engine went into commercial use in the remarkable year of 1776. (Also in that year, Adam Smith wrote The Wealth of Nations and the United States declared its independence from Great Britain.) Mechanized production accelerated productivity—the factory, the railway, the telegraph, electric light, the internal combustion engine. Those last three inventions were American; the United States was growing in wealth and power and confidence in the wake of its civil war.


pages: 303 words: 83,564

Exodus: How Migration Is Changing Our World by Paul Collier

Ayatollah Khomeini, Boris Johnson, charter city, classic study, Edward Glaeser, experimental economics, first-past-the-post, full employment, game design, George Akerlof, global village, guest worker program, illegal immigration, income inequality, informal economy, language acquisition, mass immigration, mirror neurons, moral hazard, open borders, radical decentralization, risk/return, Silicon Valley, sovereign wealth fund, Steven Pinker, tacit knowledge, The Wealth of Nations by Adam Smith, transaction costs, University of East Anglia, white flight, zero-sum game

Haidt argues that a sense of community is one of the six fundamental moral tastes that are virtually universal.3 Pinker attributes the dramatic decline in violence in Western society since the eighteenth century to an increased sense of empathy: especially through the growth of literacy and the popular novel, people became better able to put themselves in the position of others and imagine themselves as the victims of the violence done to others. Even psychoanalysis, traditionally the ultimate self-regarding mode of analysis, now roots personal problems in relational attitudes such as shame. Economics has long been the bastion of selfish, maximizing individualism. Its foundations were laid by Adam Smith in The Wealth of Nations, where he famously demonstrated that such behavior generates social benefits. But Smith also wrote The Theory of Moral Sentiments, about the foundations of mutual regard. Belatedly, that work is receiving its due recognition.4 It is being expanded by the new subdiscipline of neuroeconomics, in which the regard for others is neurologically grounded.5 Experimental economics has found that a propensity to trust is both valuable and varies between societies.


pages: 286 words: 79,601

Great American Hypocrites: Toppling the Big Myths of Republican Politics by Glenn Greenwald

affirmative action, anti-communist, cuban missile crisis, David Brooks, national security letter, Oklahoma City bombing, Ronald Reagan, Saturday Night Live, The Wealth of Nations by Adam Smith, Timothy McVeigh

Indeed, the Founders mandated in the Constitution that only Congress could declare war because they knew war would be less likely if those who bore the burden (which they assumed would be the nation’s citizens) were required to approve of any wars. One of the most destructive diseases of our political culture is how insulated American war cheerleaders and pundits are from the consequences of the wars they unleash. A remarkably prescient warning of precisely this disease came from Adam Smith in his 1776 An Inquiry into the Nature and Causes of the Wealth of Nations. It really is striking how perfectly Smith described our right-wing culture and their war-cheering, establishment media comrades: The ordinary expense of the greater part of modern governments in time of peace being equal or nearly equal to their ordinary revenue, when war comes they are both unwilling and unable to increase their revenue in proportion to the increase of their expense.


pages: 266 words: 86,324

The Drunkard's Walk: How Randomness Rules Our Lives by Leonard Mlodinow

Albert Einstein, Alfred Russel Wallace, Antoine Gombaud: Chevalier de Méré, Atul Gawande, behavioural economics, Brownian motion, butterfly effect, correlation coefficient, Daniel Kahneman / Amos Tversky, data science, Donald Trump, feminist movement, forensic accounting, Gary Kildall, Gerolamo Cardano, Henri Poincaré, index fund, Isaac Newton, law of one price, Monty Hall problem, pattern recognition, Paul Erdős, Pepto Bismol, probability theory / Blaise Pascal / Pierre de Fermat, RAND corporation, random walk, Richard Feynman, Ronald Reagan, Stephen Hawking, Steve Jobs, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Bayes, V2 rocket, Watson beat the top human players on Jeopardy!

Referring to Price as “I suppose a preacher at Newington Green,” Bayes died four months after writing his will.3 Despite Bayes’s casual reference, Richard Price was not just another obscure preacher. He was a well-known advocate of freedom of religion, a friend of Benjamin Franklin’s, a man entrusted by Adam Smith to critique parts of a draft of The Wealth of Nations, and a well-known mathematician. He is also credited with founding actuary science, a field he developed when, in 1765, three men from an insurance company, the Equitable Society, requested his assistance. Six years after that encounter he published his work in a book titled Observations on Reversionary Payments.


pages: 223 words: 10,010

The Cost of Inequality: Why Economic Equality Is Essential for Recovery by Stewart Lansley

"World Economic Forum" Davos, Adam Curtis, air traffic controllers' union, Alan Greenspan, AOL-Time Warner, banking crisis, Basel III, Big bang: deregulation of the City of London, Bonfire of the Vanities, borderless world, Branko Milanovic, Bretton Woods, British Empire, business cycle, business process, call centre, capital controls, collective bargaining, corporate governance, corporate raider, correlation does not imply causation, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, deindustrialization, Edward Glaeser, Everybody Ought to Be Rich, falling living standards, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, Goldman Sachs: Vampire Squid, high net worth, hiring and firing, Hyman Minsky, income inequality, James Dyson, Jeff Bezos, job automation, job polarisation, John Meriwether, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, laissez-faire capitalism, Larry Ellison, light touch regulation, Londongrad, Long Term Capital Management, low interest rates, low skilled workers, manufacturing employment, market bubble, Martin Wolf, Mary Meeker, mittelstand, mobile money, Mont Pelerin Society, Myron Scholes, new economy, Nick Leeson, North Sea oil, Northern Rock, offshore financial centre, oil shock, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, proprietary trading, Right to Buy, rising living standards, Robert Shiller, Robert Solow, Ronald Reagan, savings glut, shareholder value, The Great Moderation, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, Tyler Cowen, Tyler Cowen: Great Stagnation, Washington Consensus, Winter of Discontent, working-age population

We have it better than we’ve ever had it.’422 Despite the introduction of a new top 50 per cent tax rate on high earners, the UK’s tax system continues to be regressive, taking more proportionately from the poor than the rich. Several changes are needed. Most important, the tax system should be recast until this pattern is reversed. Indeed the British tax system was progressive until the mid-1980s.423 The progressive principle was advocated by the father of economics, Adam Smith in his book, The Wealth of Nations , published in 1776. It is a fundamental principle of fairness long enshrined in most national tax systems, and has been endorsed time and again by tax commissions. As the 1993 Ontario Fair Tax Commission put it, ‘After sifting through the arguments we have concluded that a fair tax system is one based primarily on the ability-to-pay principle, and that in turn, requires the overall tax system to be progressive.


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The Green New Deal: Why the Fossil Fuel Civilization Will Collapse by 2028, and the Bold Economic Plan to Save Life on Earth by Jeremy Rifkin

"World Economic Forum" Davos, 1919 Motor Transport Corps convoy, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, American Society of Civil Engineers: Report Card, autonomous vehicles, Bernie Sanders, Big Tech, bike sharing, blockchain, book value, borderless world, business cycle, business process, carbon footprint, carbon tax, circular economy, collective bargaining, corporate governance, corporate social responsibility, creative destruction, decarbonisation, digital rights, do well by doing good, electricity market, en.wikipedia.org, energy transition, failed state, general purpose technology, ghettoisation, green new deal, Greta Thunberg, high-speed rail, hydrogen economy, impact investing, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, it's over 9,000, Joseph Schumpeter, means of production, megacity, megaproject, military-industrial complex, Network effects, new economy, off grid, off-the-grid, oil shale / tar sands, peak oil, planetary scale, prudent man rule, remunicipalization, renewable energy credits, rewilding, Ronald Reagan, shareholder value, sharing economy, Sidewalk Labs, Silicon Valley, Skype, smart cities, smart grid, sovereign wealth fund, Steven Levy, subprime mortgage crisis, the built environment, The Wealth of Nations by Adam Smith, Tim Cook: Apple, trade route, union organizing, urban planning, vertical integration, warehouse automation, women in the workforce, zero-sum game

Randy and I then put the question directly to the states and cities of the northeastern and midwestern regions of the country and local and national labor unions: Would they “continue to allow their own capital to be used against them,” or “would they assert direct control over these funds in order to save their jobs and their communities”?17 Although the question we posed was more pragmatic and strategic, behind it was an ideological question that has plagued capitalism since Adam Smith penned The Wealth of Nations in 1776. We asked, “Who should control the means of production?”18 This question, we observed, was becoming more salient than ever as the financial community and global companies were using the deferred savings of union workers in the form of pension capital to relocate, not only to the Sunbelt but also beyond, setting up operations around the world, beggaring workforces in country after country, pitting workers and communities against each other to enlist the cheapest labor available and locating in communities where they could depend on lax or nonexistent environmental standards and few, if any, checks on the working conditions in their factories.


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The Great Demographic Reversal: Ageing Societies, Waning Inequality, and an Inflation Revival by Charles Goodhart, Manoj Pradhan

asset-backed security, banks create money, Berlin Wall, bonus culture, Boris Johnson, Branko Milanovic, Brexit referendum, business cycle, capital controls, carbon tax, central bank independence, commodity super cycle, coronavirus, corporate governance, COVID-19, deglobalization, demographic dividend, demographic transition, Deng Xiaoping, en.wikipedia.org, Fall of the Berlin Wall, financial independence, financial repression, fixed income, full employment, gig economy, Gini coefficient, Greta Thunberg, housing crisis, income inequality, inflation targeting, interest rate swap, job automation, Kickstarter, long term incentive plan, longitudinal study, low interest rates, low skilled workers, manufacturing employment, Martin Wolf, mass immigration, middle-income trap, non-tariff barriers, offshore financial centre, oil shock, old age dependency ratio, open economy, paradox of thrift, Pearl River Delta, pension reform, Phillips curve, price stability, private sector deleveraging, quantitative easing, rent control, savings glut, secular stagnation, shareholder value, special economic zone, The Great Moderation, The Wealth of Nations by Adam Smith, total factor productivity, working poor, working-age population, yield curve, zero-sum game

OECD Secretariat. (2019, October). Secretariat Proposal for a “Unified Approach” Under Pillar One, Public consultation document, OECD. Office for Budget Responsibility. (2018). Fiscal Sustainability Report. https://obr.uk/fsr/fiscal-sustainability-report-july-2018/. Smith, A. (1982). The Wealth of Nations: Books I–III. London: Penguin Classics. The Economist (2019, April 13). Interference Day: Independent Central Banks are Under Threat. That is bad news for the world. Chapter 14 Hamilton, J. D., Harris, E. S., Hatzius, J., & West, K.D. (2015, August). The Equilibrium Real Funds Rate: Past, Present and Future (Natural Bureau of Economic Research, No. 21476).

Without these services, as Hobbes (Leviathan, 1651—a must-read which is now available in Wordsworth Classics of World Literature, 2014) noted, not only would life be brutish and short, but land values would be low and uncertain. Again, the State provides a wide range of services, e.g. the value of a property and neighbourhood depends on the quality of the above-mentioned schools, hospitals, road and rail transport. Finally, land value depends on the degree to which others want to live and work in the area. As Adam Smith (1776, now available 1982),2 John Stuart Mill (1848, now available 2016) and other great economists have explained for over two centuries, the owner of urban or raw undeveloped land has done little or nothing to create the bare land value on which a building may be placed. As Mill (Principles of Political Economy, Book V, Ch.


pages: 338 words: 85,566

Restarting the Future: How to Fix the Intangible Economy by Jonathan Haskel, Stian Westlake

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, Andrei Shleifer, Big Tech, Black Lives Matter, book value, Boris Johnson, Brexit referendum, business cycle, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, Charles Lindbergh, charter city, cloud computing, cognitive bias, cognitive load, congestion charging, coronavirus, corporate governance, COVID-19, creative destruction, cryptocurrency, David Graeber, decarbonisation, Diane Coyle, Dominic Cummings, Donald Shoup, Donald Trump, Douglas Engelbart, Douglas Engelbart, driverless car, Edward Glaeser, equity risk premium, Erik Brynjolfsson, Estimating the Reproducibility of Psychological Science, facts on the ground, financial innovation, Francis Fukuyama: the end of history, future of work, general purpose technology, gentrification, Goodhart's law, green new deal, housing crisis, income inequality, index fund, indoor plumbing, industrial cluster, inflation targeting, intangible asset, interchangeable parts, invisible hand, job-hopping, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, knowledge economy, knowledge worker, lockdown, low interest rates, low skilled workers, Marc Andreessen, market design, Martin Wolf, megacity, mittelstand, new economy, Occupy movement, oil shock, patent troll, Peter Thiel, Phillips curve, postindustrial economy, pre–internet, price discrimination, quantitative easing, QWERTY keyboard, remote working, rent-seeking, replication crisis, risk/return, Robert Gordon, Robert Metcalfe, Robert Shiller, Ronald Coase, Sam Peltzman, Second Machine Age, secular stagnation, shareholder value, Silicon Valley, six sigma, skeuomorphism, social distancing, superstar cities, the built environment, The Rise and Fall of American Growth, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, total factor productivity, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, Uber for X, urban planning, We wanted flying cars, instead we got 140 characters, work culture , X Prize, Y2K

Hidden Champions of the Twenty-First Century: The Success Strategies of Unknown World Market Leaders. Cambridge, MA: Harvard University Press. Skelton, David. 2019. Little Platoons: How a Revived One Nation Can Empower England’s Forgotten Tows and Redraw the Political Map. London: Biteback Publishing. Smith, Adam. 1904. An Inquiry into the Nature and Causes of the Wealth of Nations. Edited by Edwin Cannan. 2 vols. London: Methuen & Co. Smith, James, Jack Leslie, Cara Pacitti, and Fahmida Rahman. 2019. “Recession Ready? Assessing the UK’s Macroeconomic Framework.” Resolution Foundation. https://www.resolutionfoundation.org/publications/recession-ready/. Subcommittee on Antitrust, Commercial and Administrative Law of the Committee on the Judiciary. 2020.

Douglass North, one of the pioneers of the New Institutional Economics, defined institutions more precisely as “the humanly devised constraints that shape human interaction.”2 So, for example, by this definition Harvard University is not an institution (even though it is old and grand), but “academic peer review,” “liberal arts education,” and any other practices and norms of universities are. Institutions and Economic Growth Critics of mainstream economics often accuse economists of underestimating the importance of institutions. Economists, they argue, are too quick to accept Adam Smith’s claim that prosperity depends on “little else … but peace, easy taxes, and a tolerable administration of justice”3 and to overlook the sprawling and intricate infrastructure of norms, rules, and expectations that underpins a modern market economy. To borrow Marx and Engels’s phrase, economists are accused of caring about “no other nexus between man and man than naked self-interest, than callous ‘cash payment.’ ”4 Economists defend themselves by pointing to the decades of research undertaken by practitioners of New Institutional Economics, who examined the relationship between institutions and economic performance, combining perspectives from history, law, political science, and other disciplines with rigorous economic analysis.


Scotland Travel Guide by Lonely Planet

agricultural Revolution, biodiversity loss, British Empire, carbon footprint, clean water, country house hotel, demand response, European colonialism, Ford Model T, James Watt: steam engine, land reform, North Ronaldsay sheep, North Sea oil, off-the-grid, oil shale / tar sands, Piper Alpha, place-making, retail therapy, smart cities, The Wealth of Nations by Adam Smith, three-masted sailing ship, tontine, upwardly mobile, urban decay, urban sprawl

Exhibits of national importance include an original copy of the National Covenant of 1638, but the big crowd-pleaser is the dog collar and feeding bowl that once belonged to Greyfriars Bobby , the city’s most famous canine citizen. Canongate Kirk CHURCH Downhill from Huntly House is the attractive curved gable of the Canongate Kirk, built in 1688. The kirkyard contains the graves of several famous people, including the economist Adam Smith (1723–90), author of The Wealth of Nations; Mrs Agnes MacLehose (the ‘Clarinda’ of Robert Burns’ love poems); and the 18th-century poet Robert Fergusson (1750–74). Fergusson was much admired by Robert Burns , who paid for the gravestone and penned the epitaph – take a look at the inscription on the back. SCOTTISH PARLIAMENT BUILDING The Scottish parliament building ( 0131-348 5200; www.scottish.parliament.uk; admission free; 9am-6.30pm Tue-Thu, 10am-5.30pm Mon & Fri in session, 10am-6pm Mon-Fri in recess Apr-Oct, 10am-4pm in recess Nov-Mar; ) , built on the site of a former brewery close to the Palace of Holyroodhouse, was officially opened by HM the Queen in October 2005.

The Act of Union in 1707 further reduced Edinburgh’s importance, but its cultural and intellectual life flourished. In the second half of the 18th century a planned new town was created across the valley to the north of the Old Town. During the Scottish Enlightenment (roughly 1740–1830), Edinburgh became known as ‘a hotbed of genius’, inhabited by leading scientists and philosophers such as David Hume and Adam Smith. In the 19th century the population quadrupled to 400,000, not much less than today’s, and the Old Town’s tenements were taken over by refugees from the Irish famines. A new ring of crescents and circuses was built to the north of New Town, and grey Victorian terraces spread south of the Old Town.

Kirkcaldy POP 46,912 Kirkcaldy (ker-caw-dee) sprawls along the edge of the sea for several miles and has a rather shabby promenade with spectacular pounding surf on windy days. It’s worth stopping in town to visit the excellent museum. Kirkcaldy is famous as the birthplace of 18th-century Enlightenment philosopher and economist Adam Smith, the man who features on the English £20 note. A short walk east from the train and bus stations, you’ll find the Kirkcaldy Museum & Art Gallery (War Memorial Gardens; admission free; 10.30am-5pm Mon-Sat, 2-5pm Sun) , which combines historical accounts with contemporary exhibits. The kids will have a ball as there are plenty of hands-on attractions.


pages: 433 words: 125,031

Brazillionaires: The Godfathers of Modern Brazil by Alex Cuadros

"World Economic Forum" Davos, affirmative action, Asian financial crisis, benefit corporation, big-box store, bike sharing, BRICs, buy the rumour, sell the news, cognitive dissonance, creative destruction, crony capitalism, Deng Xiaoping, Donald Trump, Elon Musk, facts on the ground, family office, financial engineering, high net worth, index fund, invisible hand, Jeff Bezos, Mark Zuckerberg, megaproject, NetJets, offshore financial centre, profit motive, prosperity theology / prosperity gospel / gospel of success, rent-seeking, risk/return, Rubik’s Cube, savings glut, short selling, Silicon Valley, sovereign wealth fund, stem cell, stock buybacks, tech billionaire, The Wealth of Nations by Adam Smith, too big to fail, transatlantic slave trade, We are the 99%, William Langewiesche

The curse of the cordial man—patrimonialism—isn’t exclusively Brazilian. It’s just an extreme version of a common relationship between wealth and political power. When winners emerge in the race for profit, free markets become less free. The winners gain leverage in government, and the line between public and private blurs. In The Wealth of Nations, Adam Smith himself warned of this danger—of businessmen as a class “whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public.” The same drive for expansion that can help progress along can also make it falter. Of course, what’s even more effective for billionaires is when they frame their quest for personal glory as a quest for society’s progress—when they frame special favors for their businesses as preconditions of economic growth—and their arguments trickle down.

Much as Eike touted an American culture of risk, Mauá held up the Anglo-Saxon line that self-interest was the engine of progress, and in this way too he went against the grain. The standard economic text in those days, the Viscount of Cairu’s Princípios de Economia Política, was supposed to be an adaptation of The Wealth of Nations, but Cairu jettisoned whatever concepts didn’t jibe with facts on the ground. Forget the invisible hand: “The sovereign of each nation must be considered the chief or head of a vast family, and thus care for all those therein like his children, cooperating for the greater good.” It was a “cordial man” approach to economic policy, state capitalism before the term ever existed.


World Cities and Nation States by Greg Clark, Tim Moonen

active transport: walking or cycling, Asian financial crisis, Berlin Wall, Big bang: deregulation of the City of London, Boris Johnson, business climate, clean tech, congestion charging, corporate governance, Crossrail, deindustrialization, Deng Xiaoping, driverless car, financial independence, financial intermediation, Francis Fukuyama: the end of history, full employment, gentrification, global supply chain, global value chain, high net worth, high-speed rail, housing crisis, immigration reform, income inequality, informal economy, Kickstarter, knowledge economy, low skilled workers, managed futures, megacity, megaproject, new economy, New Urbanism, Norman Mailer, open economy, Pearl River Delta, rent control, Richard Florida, Shenzhen special economic zone , Silicon Valley, smart cities, sovereign wealth fund, special economic zone, stem cell, supply-chain management, tacit knowledge, The Wealth of Nations by Adam Smith, trade route, transaction costs, transit-oriented development, upwardly mobile, urban planning, urban renewal, urban sprawl, War on Poverty, zero-sum game

Many scholars also argue for the impact of the early modern m ­ ilitary revolution, the rise of international trade and the implications of ­imperialism and slavery, all of which favoured the rise of large, professional, b ­ ureaucratic nation states at the expense of self‐governing cities. But it is important to remember this transformation did not wholly uproot the geographies of commerce. In The Wealth of Nations, Adam Smith (1776: 336) noted that political capitals were rarely centres of trade and industry beyond what was necessary for local consumption. He highlighted only London, Lisbon and Copenhagen as cities that were home both to parliaments and to international trading ­functions, because business conditions are often unfavourable in political centres.

Budget Highlights Financial Year 2009: Keeping Jobs Building for the Future. Available at www.mof.gov.sg/budget_2009/speech_toc/downloads/ FY2009_Budget_Highlights.pdf. Accessed 2016 Feb 16. Slack, E. and Côté, A. (2014). Comparative Urban Governance. Future of Cities. Working Paper. London: Government Office for Science. Smith, A. (1776). The Wealth of Nations. London: Penguin. Smith, D.A., Solinger, D.J. and Topik, S. (eds) (1999). States and Sovereignty in the Global Economy. London: Routledge, pp. 7–8. Smith, N. (2002). New globalism, new urbanism: Gentrification as global urban strategy. Antipode, 34(3): 434. Taylor, P. (1995). World Cities and territorial states: The rise of and fall of their mutuality.


pages: 501 words: 145,943

If Mayors Ruled the World: Dysfunctional Nations, Rising Cities by Benjamin R. Barber

"World Economic Forum" Davos, Aaron Swartz, Affordable Care Act / Obamacare, American Legislative Exchange Council, Berlin Wall, bike sharing, borderless world, Boris Johnson, Bretton Woods, British Empire, car-free, carbon footprint, Cass Sunstein, Celebration, Florida, classic study, clean water, congestion pricing, corporate governance, Crossrail, crowdsourcing, David Brooks, desegregation, Detroit bankruptcy, digital divide, digital Maoism, digital rights, disinformation, disintermediation, edge city, Edward Glaeser, Edward Snowden, Etonian, Evgeny Morozov, failed state, Fall of the Berlin Wall, feminist movement, Filter Bubble, gentrification, George Gilder, ghettoisation, global pandemic, global village, Hernando de Soto, Howard Zinn, illegal immigration, In Cold Blood by Truman Capote, income inequality, informal economy, information retrieval, Jane Jacobs, Jaron Lanier, Jeff Bezos, Lewis Mumford, London Interbank Offered Rate, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, Masdar, megacity, microcredit, Mikhail Gorbachev, mortgage debt, mutually assured destruction, new economy, New Urbanism, Nicholas Carr, Norman Mailer, nuclear winter, obamacare, Occupy movement, off-the-grid, Panopticon Jeremy Bentham, Peace of Westphalia, Pearl River Delta, peer-to-peer, planetary scale, plutocrats, Prenzlauer Berg, profit motive, Ralph Waldo Emerson, RFID, Richard Florida, Ronald Reagan, self-driving car, Silicon Valley, SimCity, Skype, smart cities, smart meter, Steve Jobs, Stewart Brand, technological determinism, technological solutionism, TED Talk, Telecommunications Act of 1996, The Death and Life of Great American Cities, The Fortune at the Bottom of the Pyramid, The future is already here, The Wealth of Nations by Adam Smith, Tobin tax, Tony Hsieh, trade route, UNCLOS, UNCLOS, unpaid internship, urban sprawl, Virgin Galactic, War on Poverty, zero-sum game

The metaphysics are mostly gone today, but current admirers of the city share the Enlightenment preoccupation with mobility, creativity, and innovation; they agree that inequality is amenable to mitigation and that cities can self-improve even where nations cannot and do not. In her Cities and the Wealth of Nations, Jane Jacobs observed that just because they are salient political and military entities, nations are not necessarily “the basic, salient entities of economic life.”9 It is rather the city and its capacity for innovation that grow urban economies. “Cities do not depend on the entire nation state for their growth” although “neither do they exist on their own here—they depend on surrounding regions.”10 No one since Jane Jacobs has made the argument for creative invention as an engine of urban growth and reform as compellingly (and controversially) as Richard Florida, with his focus on the captivating notion of the creative class.

Jane Jacobs writes: “Nations are political and military entities, and so are blocs of nations. But it doesn’t necessarily follow from this that they are also the basic salient entities of economic life or that they are particularly useful for probing the mysteries of economic structure, the reasons for the rise and decline of wealth.” Cities and the Wealth of Nations: Principles of Economic Life, New York: Random House, 1984, p. 31. 16. Saskia Sassen, The Global City: New York, London, Tokyo, Princeton, NJ: Princeton University Press, 2001, pp. 3–4. 17. Carlo Levi, Christ Stopped at Eboli: The Story of a Year, New York: Farrar, Straus and Giroux, 2006, p. 28.

Charles Murray, “Why Capitalism Has an Image Problem,” Wall Street Journal, July 30, 2012. 7. James Boswell, London Journal, cited in Danny Heitman, “Love Letter to London,” Wall Street Journal, July 28, 2012. 8. Denis Diderot, Rameau’s Nephew, 1769 (although not published in Diderot’s lifetime). 9. Jane Jacobs, Cities and the Wealth of Nations: Principles of Economic Life, New York: Random House, 1984, p. 31. 10. Ibid., p. 110. 11. Florida, Rise of the Creative Class, 2004 ed., p. 285. 12. Richard Florida, “For Creative Cities, the Sky Has Its Limits,” Wall Street Journal, July 28, 2012. The American Planning Association published a paper called “Growing Cities Sustainably” that debated the benefits and costs of the so-called “Compact City” model.


Europe: A History by Norman Davies

agricultural Revolution, Albert Einstein, anti-communist, Berlin Wall, bread and circuses, Bretton Woods, British Empire, business climate, centre right, charter city, classic study, clean water, Columbian Exchange, conceptual framework, continuation of politics by other means, Corn Laws, cuban missile crisis, Defenestration of Prague, discovery of DNA, disinformation, double entry bookkeeping, Dr. Strangelove, Edmond Halley, Edward Lloyd's coffeehouse, equal pay for equal work, Eratosthenes, Etonian, European colonialism, experimental economics, financial independence, finite state, Francis Fukuyama: the end of history, Francisco Pizarro, full employment, gentleman farmer, global village, Gregor Mendel, Honoré de Balzac, Index librorum prohibitorum, interchangeable parts, invention of agriculture, invention of movable type, Isaac Newton, James Hargreaves, James Watt: steam engine, Johann Wolfgang von Goethe, Johannes Kepler, John Harrison: Longitude, joint-stock company, Joseph-Marie Jacquard, Korean Air Lines Flight 007, land reform, liberation theology, long peace, Louis Blériot, Louis Daguerre, Mahatma Gandhi, mass immigration, Mikhail Gorbachev, military-industrial complex, Monroe Doctrine, Murano, Venice glass, music of the spheres, New Urbanism, North Sea oil, offshore financial centre, Peace of Westphalia, Plato's cave, popular capitalism, Potemkin village, purchasing power parity, Ralph Waldo Emerson, road to serfdom, sceptred isle, Scramble for Africa, spinning jenny, Suez canal 1869, Suez crisis 1956, Thales of Miletus, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transatlantic slave trade, Transnistria, urban planning, urban sprawl, W. E. B. Du Bois

‘Writers Campaign for Greek Scholar’, the Independent, 13 May 1994. MALET 1. Godfrey LeMay, ‘The Conspiracy of General Malet’, in P. Quennell (ed.), Diversions of History (London, 1954), 52–68. MARKET 1. See R. J. Heilbroner, ‘The Wonderful World of Adam Smith’, in The Worldly Philosophers: The Lives, Times, and Ideas of the Great Economic Thinkers, 6th edn. (London, 1991), 42–74. 2. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776). MARSTON 1. Sir G. N. Clark, ‘Marston’, in The Victoria History of the County of Oxford, v, ed. Mary D. Lobel (Oxford, 1957), 214–21. 2. Jennifer Sherwood and Nikolaus Pevsner, The Buildings of England: Oxfordshire (London, 1974), 699–700.

Smith’s career started at the age of 28 with the Chair of Moral Philosophy at Glasgow, where he published his Theory of Moral Sentiments (1759). It was an enquiry into the origins of approval and disapproval. He entered the realm of economics by asking himself about the implications of human greed, and how self-interest could work for the common good. The 900 pages of The Wealth of Nations (1776) were essentially an extended essay in pursuit of that quest. It shattered the protectionist philosophy of mercantilism, which had reigned supreme in economic thought for 200 years. Smith’s speculations led him to postulate the existence of ‘society’, in whose mechanisms all people participate, and to formulate the laws of ‘the market’.

In size and variety, the Biblioteca Corviniana had been second only to the Vatican Library. Thanks to the circumstances of its dispersal, its role in the spread of learning was probably second to none.1 Mercantilism, or ‘the mercantile system’, is a label that had little currency until popularized in the late eighteenth century, [MARKET] Yet the set of ideas which Adam Smith was to criticize formed the main stock of economic thought of the early modern period. Mercantilism has meant many things to many men; but in essence it referred to the conviction that in order to prosper, the modern state needed to manipulate every available legal, administrative, military, and regulatory device.


pages: 1,037 words: 294,916

Before the Storm: Barry Goldwater and the Unmaking of the American Consensus by Rick Perlstein

"there is no alternative" (TINA), affirmative action, Alan Greenspan, Alvin Toffler, anti-communist, anti-work, antiwork, Berlin Wall, bread and circuses, Bretton Woods, business climate, card file, collective bargaining, company town, cuban missile crisis, desegregation, distributed generation, Dr. Strangelove, Electric Kool-Aid Acid Test, ending welfare as we know it, George Gilder, haute couture, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Herman Kahn, index card, indoor plumbing, invisible hand, Joan Didion, liberal capitalism, Marshall McLuhan, means of production, military-industrial complex, mortgage debt, New Journalism, Norman Mailer, plutocrats, Project Plowshare, road to serfdom, Robert Bork, rolodex, Ronald Reagan, Rosa Parks, school vouchers, the medium is the message, The Wealth of Nations by Adam Smith, transcontinental railway, union organizing, Upton Sinclair, upwardly mobile, urban renewal, War on Poverty, Watson beat the top human players on Jeopardy!, white picket fence, Works Progress Administration

His entreaties were ignored. Goldwater broke ground for Bill Baroody’s conservative utopia on the first stop of his first tour, Los Angeles, with the help of University of Chicago economist Milton Friedman. “Every individual endeavors to employ his capital so that its produce may be of greatest value,” Adam Smith famously wrote in The Wealth of Nations (1776), “led by an invisible hand to promote an end which has no part of his intentions. By pursuing his own interests he frequently promotes that of society more effectively than when he really intends to promote it.” At Chicago, the revolutionary economics department was applying the gleaming instruments of mathematical proof to remove the qualifying “frequently” from that formulation, taking on every Keynesian orthodoxy their profession had come to hold dear.

.: Princeton University Press, 1996), 209-10, 227-28. 420 Flight to Detroit: Jack Bell, The Johnson Treatment, 267. 420 For Cadillac Square speech, see PPP: LBJ, 1049; and Shadegg, What Happened , 210. 420 Was open to charges of deception: Bundy to LBJ, September 23, 1964, cited in “LBJ’s Nuke Strike Rules Revealed,” Associated Press, May 7, 1998; see also W. W. Rostow to Bundy, September 9, 1964, LBJWHM6-3. 420 “Every individual endeavors”: Adam Smith, The Wealth of Nations (1776). For Friedman biography, see Milton Friedman and Rose Friedman, Two Lucky People: Memoirs (Chicago: University of Chicago Press, 1998). For refusing to speak to compulsory chapel, see ibid., 342. 421 For Friedman’s popular lectures and debates, see “The Economists,” Fortune, December 1950; Edith Kermit Roosevelt, Newark Sunday News, February 22, 1959; Cleveland Plain Dealer, March 14, 1952; WP, November 18, 1963; and Business Week, November 20, 1963 (all in Milton Friedman Papers, Box 1/Articles 1950-1963, HI). 421 For Joe Clark debate, see WP, June 4, 1961; and Philadelphia Daily News, June 4, 1961. 421 Friedman first wrote Goldwater: Friedman to BMG, December 6, 1960, Friedman Papers, Box 27/Goldwater, Barry; BMG response is January 17, 1961.

committee on Investigations; Post Office Committee; Rules Committee; (Margaret Chase) Smith elected to; Southern Republican candidates for; tax legislation in; unions and; and Vietnam War; Ways and Means Committee Senate Republican Campaign Committee Serbian-Americans Serling, Rod Seven Days in May (Knebel); film version of Seymour, Thaddeus Shadegg, Stephen Shakespeare, William Shank, Captain Edward G., Jr. Shell, Joe Sherman, General William Tecumseh Shindig (television show) Shorey, Gregory D. Shriver, R. Sargent Shuttlesworth, Fred Silent Spring (Carson) Simon, Frank Sinatra, Frank Sinclair, Upton Skousen, W. Cleon Sloan, Alfred P. Smathers, George Smith, Adam Smith, Al Smith, Ellison D. “Cotton Ed” Smith, Gerald L. K. Smith, Howard Smith, Howard K. Smith, Margaret Chase Smith, Marshall L. Smith, Tony Smith College Smoki Clan Smoot, Dan Smylie, Bob Snowden, Robert Socialistic Sixteenth, The (Rickenbacker) Social Security South Carolina: Democratic Party of ; Republican Party of Southern, Terry Southern Baptist Convention Southern California, University of Southern Christian Leadership Conference (SCLC) South Korea Southwick, Paul Soviet Union; and Berlin crisis; and CIA-led coup in Congo; Conscience of a Conservative on; and Cuban missile crisis; and doctrine of “deterrence” under Goldwater during World War II indoctrination of U.S. military personnel against; Nixon in, Oswald in; slave labor camps in; space program of; surplus wheat sales to; in United Nations; Vietnam and Spellman, Francis Cardinal Spencer, Stu Spencer-Roberts & Associates Spiegel, Der Spivak, Lawrence Spock, Benjamin Stagg, Tom Stalin, Joseph Standard Oil Stanford University Stanley, Scott Stassen, Harold State Department, U.S.


pages: 302 words: 92,546

Overdiagnosed: Making People Sick in the Pursuit of Health by H. Gilbert Welch, Lisa M. Schwartz, Steven Woloshin

23andMe, classic study, do well by doing good, double helix, Google Earth, Gregor Mendel, invisible hand, it's over 9,000, life extension, longitudinal study, mandelbrot fractal, medical residency, meta-analysis, phenotype, placebo effect, randomized controlled trial, Ronald Reagan, sugar pill, The Wealth of Nations by Adam Smith

My great-great-grandfather started a bank in the mid-nineteenth century and helped the federal government finance the Civil War. His offspring managed it over the next century.[back] The invisible hand is the term economists use to describe the self-regulating nature of markets to produce socially useful results. Although attributed to Adam Smith and his book The Wealth of Nations (published around the time of the American Revolution), he actually used the term only three times. [back] This is one of many ways to express the conditions required for a perfect market and is not intended to be a complete list. Instead I have focused on the conditions in medical care that clearly violate the perfect-market conditions.


pages: 295 words: 92,670

1494: How a Family Feud in Medieval Spain Divided the World in Half by Stephen R. Bown

Atahualpa, Bartolomé de las Casas, British Empire, charter city, Eratosthenes, European colonialism, Francisco Pizarro, Hernando de Soto, Peace of Westphalia, proprietary trading, spice trade, The Wealth of Nations by Adam Smith, trade route, two and twenty, UNCLOS

{ timeline } 1418—1420 Portuguese mariners discover and settle the Madeira Islands in the Atlantic Ocean 1425 Enrique of Castile born 1434 Gil Eannes sails south along the African coast past Cape Bojador, beginning the Portuguese naval exploration of Africa and the slave trade under Henry the Navigator 1439 Portuguese mariners discover and settle the Azores 1440 Probable date for Gutenberg's first printing press 1451 Isabella of Castile born; Christopher Columbus born 1452 Pope Nicholas V issues the bull Dum Diversas, which provides the moral authority for the slave trade 1453 Constantinople falls to the invading armies of Mehmet the Conqueror 1454 Enrique becomes king of Castile 1455 Pope Nicholas v issues the bull Romanus Pontifex, establishing Portuguese monopoly along the African coast — King Enrique marries Juana of Portugal 1462 Juana la Beltraneja born 1464—1468 War for the Castilian succession 1469 Isabella and Ferdinand secretly wed in Toledo 1474 King Enrique IV dies in Madrid, Isabella proclaimed queen of Castile; war with Portugal 1476 Battle of Toro — Christopher Columbus washed ashore in Portugal after shipwreck 1477 A new translation of Ptolemy's Geography published in Bologna 1478 Papal bull of Sixtus IV establishes the Inquisition in Castile 1479 Treaty of Alcáçovas ends war between Castile and Portugal 1480 Ferdinand Magellan born 1481 King Afonso V of Portugal dies; his son João becomes king — Pope Sixtus IV issues Aeterni Regis, sanctioning the terms of the Treaty of Alcáçovas and affirming Portuguese claims south and east in the Atlantic Ocean 1484 Columbus first proposes his “Enterprise of the Indies” to João II 1486 Rebuffed in Portugal, Columbus travels to Castile to persuade Isabella and Ferdinand 1488 Bartolomeu Dias rounds the southern tip of Africa for Portugal 1492 Rodrigo Borgia becomes pope — Fall of the Kingdom of Granada — Christopher Columbus sails across the Atlantic Ocean for Isabella and Ferdinand — Beginning of the expulsion of the Jews from Castile 1493 Pope Alexander vi issues the bull Inter Caetera and other bulls, dividing the world between Spain and Portugal 1494 The Treaty of Tordesillas is signed between Portugal and Spain 1497 English King Henry vii funds the voyage of John Cabot 1504 Queen Isabella dies 1506 Columbus dies 1513 Vasco Nuñez de Balboa crosses the Isthmus of Panama and beholds the Pacific Ocean 1517 Martin Luther nails his Ninety-Five Theses to the church door in Wittenberg 1519 Ferdinand Magellan sets off to circumnavigate he world for Charles i of Spain — Hernán Cortés launches expedition to conquer Mexico 1521 Martin Luther excommunicated 1523 Pedro de Alvarado subjugates the Mayans in the Yucatán 1524 Badajoz Conference to determine the Tordesillas Line in the Pacific 1529 Treaty of Zaragoza; Spain cedes the Spice Islands to Portugal 1533 Francisco Pizarro conquers the Inca Empire 1537 Pope John ii rescinds the papacy's support of slavery 1558 Elizabeth becomes queen of England 1562 Sir John Hawkins and the first English privateering voyage to the Caribbean 1565 Andrés de Urdaneta pioneers the Pacific route from Manila to Acapulco 1568 Inquisition declares the three million people of the United Provinces, who have strongly embraced Calvinism, to be heretics and condemned to death 1571 Battle of Lepanto; destruction of Ottoman naval power in the Mediterranean 1570s—1580s English privateers inspired by the famous voyages of Sir Francis Drake 1581 Philip II of Spain becomes king of Portugal, uniting the countries and creating a near-monopoly on oceanic trade from Europe 1583 Hugo Grotius, “the Father of International Law,” born in Delft 1588 Spanish Armada fails to conquer England 1600 English East India Company founded 1602 Dutch East India Company founded; Amsterdam stock exchange founded to deal in the company's stocks and bonds — The Portuguese ship Santa Catarina captured by a Dutch privateer 1609 Henry Hudson sails up the Hudson River for the Dutch East India Company — Hugo Grotius anonymously publishes Mare Liberum, “The Free Sea” 1610 Vatican places Mare Liberum on its Index of prohibited and banned books 1613 Scottish challenge to Mare Liberum by William Welwood: Abridgement of All Sea-Lawes 1618 John Selden writes Mare Clausum 1618—1648 Thirty Years War devastates central Europe 1620 Mayflower pilgrims arrive at Cape Cod and Plymouth Rock 1623 Dutch East India Company employees kill English East India Company employees during the Massacre of Amboyna 1625 Seraphim de Freitas publishes Imperio Lusitanorum Asiatico to challenge Grotius 1655 English forces capture Jamaica and turn it into a buccaneer haven 1670 In the American Treaty, Spain recognizes the legitimacy of the British colonies in North America 1702 Cornelius Bynkershoek publishes De Domino Maris, establishing the concept of territorial waters and the cannon shot rule 1750 Treaty of Madrid between Spain and Portugal recognizes Portuguese sovereignty over Brazil and effectively annuls the Treaty of Tordesillas 1757 The Battle of Plassey; English East India Company rule in India begins 1768—1761 Lieutenant James Cook leads his first voyage of discovery in the Pacific 1775—1783 The American War of Independence 1776 Adam Smith publishes The Wealth of Nations 1994 United Nations Convention on the Law of the Sea { acknowledgements } TURNING A manuscript into a beautiful book is not a lone endeavour. It takes the creative and talented work of a group with diverse skills. Once again I have had the benefit of the enthusiastic and professional team at Douglas & McIntyre.


pages: 313 words: 95,077

Here Comes Everybody: The Power of Organizing Without Organizations by Clay Shirky

Andrew Keen, Andy Carvin, Berlin Wall, bike sharing, bioinformatics, Brewster Kahle, c2.com, Charles Lindbergh, commons-based peer production, crowdsourcing, digital rights, en.wikipedia.org, Free Software Foundation, Garrett Hardin, hiring and firing, hive mind, Howard Rheingold, Internet Archive, invention of agriculture, invention of movable type, invention of the printing press, invention of the telegraph, jimmy wales, John Perry Barlow, Joi Ito, Kuiper Belt, liberation theology, Mahatma Gandhi, means of production, Merlin Mann, Metcalfe’s law, Nash equilibrium, Network effects, Nicholas Carr, Picturephone, place-making, Pluto: dwarf planet, power law, prediction markets, price mechanism, prisoner's dilemma, profit motive, Richard Stallman, Robert Metcalfe, Ronald Coase, Silicon Valley, slashdot, social software, Stewart Brand, supply-chain management, the Cathedral and the Bazaar, the long tail, The Nature of the Firm, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tragedy of the Commons, transaction costs, ultimatum game, Vilfredo Pareto, Wayback Machine, Yochai Benkler, Yogi Berra

Just as movable type raised the value of being able to read and write even as it destroyed the scribal tradition, globally free publishing is making public speech and action more valuable, even as its absolute abundance diminishes the specialness of professional publishing. For a generation that is growing up without the scarcity that made publishing such a serious-minded pursuit, the written word has no special value in and of itself. Adam Smith, in The Wealth of Nations, pointed out that although water is far more important than diamonds to human life, diamonds are far more expensive, because they are rare. The entire basis on which the scribes earned their keep vanished not when reading and writing vanished but when reading and writing became ubiquitous.


pages: 290 words: 94,968

Writing on the Wall: Social Media - the First 2,000 Years by Tom Standage

An Inconvenient Truth, Bill Duvall, British Empire, Dunbar number, Edmond Halley, Edward Lloyd's coffeehouse, Evgeny Morozov, invention of the printing press, invention of writing, Isaac Newton, knowledge worker, Leonard Kleinrock, Marc Andreessen, Mark Zuckerberg, Menlo Park, Mohammed Bouazizi, New Journalism, packet switching, place-making, Republic of Letters, sexual politics, social intelligence, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, theory of mind, yellow journalism

Some underwriters began to rent regular booths at Lloyd’s, and in 1771 a group of seventynine of them collectively established the Society of Lloyds, which survives to this day as Lloyd’s of London, the world’s leading insurance market. And just as Newton’s Principia, the foundational work of modern science, had its origins in a coffeehouse, so too did the work that played the equivalent role in economics: The Wealth of Nations, by the Scottish economist Adam Smith. He wrote much of his book in the British Coffee House, his base and postal address in London and a popular meeting place for Scottish intellectuals, among whom he circulated chapters of his book for criticism and comment. No doubt there was some time-wasting in coffee houses, as their critics claimed.


Deep Value by Tobias E. Carlisle

activist fund / activist shareholder / activist investor, Andrei Shleifer, availability heuristic, backtesting, behavioural economics, book value, business cycle, buy and hold, Carl Icahn, corporate governance, corporate raider, creative destruction, Daniel Kahneman / Amos Tversky, discounted cash flows, financial engineering, fixed income, Henry Singleton, intangible asset, John Bogle, joint-stock company, low interest rates, margin call, passive investing, principal–agent problem, Richard Thaler, risk free rate, riskless arbitrage, Robert Shiller, Rory Sutherland, shareholder value, Sharpe ratio, South Sea Bubble, statistical model, Teledyne, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, Tim Cook: Apple

Contents Preface ix Acknowledgments xv About the Author xvii CHAPTER 1 The Icahn Manifesto 1 CHAPTER 2 Contrarians at the Gate 19 CHAPTER 3 Warren Buffett: Liquidator to Operator 35 CHAPTER 4 The Acquirer’s Multiple 53 CHAPTER 5 A Clockwork Market 77 CHAPTER 6 Trading in Glamour: The Conglomerate Era 99 CHAPTER 7 Catch a Falling Knife 119 CHAPTER 8 The Art of the Corporate Raid 151 CHAPTER 9 How Hannibal Profits From His Victories 169 vii viii CONTENTS CHAPTER 10 Applied Deep Value 187 Index 217 Preface “The directors of such [joint-stock] companies, however, being the managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own.” —Adam Smith, The Wealth of Nations (1776) D eep value is investment triumph disguised as business disaster. It is a simple, but counterintuitive idea: Under the right conditions, losing stocks—those in crisis, with apparently failing businesses, and uncertain futures—offer unusually favorable investment prospects. This is a philosophy that runs counter to the received wisdom of the market.


pages: 310 words: 88,827

The Diary of a Bookseller by Shaun Bythell

invention of movable type, Jeff Bezos, Skype, The Wealth of Nations by Adam Smith

Take Hooper and Wigstead, the publisher of Francis Grose’s Antiquities of Scotland, whose pages contain the very first version to appear in a book of Burns’s Tam o’Shanter; William Creech, who published Sir John Sinclair’s first Statistical Account of Scotland – and introduced the word ‘statistic’ to the English language; John Wilson, who produced the Kilmarnock edition of Burns’s Poems, Chiefly in the Scottish Dialect; John Murray, the publisher of On the Origin of Species by Means of Natural Selection; William Strahan, who brought Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations to the world. More recent publishers have had a similar impact: Penguin, whose unexpurgated British edition of Lady Chatterley’s Lover saw them end up in court; Shakespeare & Company, who dared to publish Ulysses; small presses such as William Morris’s short-lived Kelmscott Press; and the Golden Cockerel Press, for whom the artist Eric Gill (the typeface designer behind Gill Sans, Perpetua and others) designed a typeface which he named after the press.


pages: 312 words: 93,836

Barometer of Fear: An Insider's Account of Rogue Trading and the Greatest Banking Scandal in History by Alexis Stenfors

Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Bear Stearns, Big bang: deregulation of the City of London, bonus culture, capital controls, collapse of Lehman Brothers, credit crunch, Credit Default Swap, Eugene Fama: efficient market hypothesis, eurozone crisis, financial deregulation, financial innovation, fixed income, foreign exchange controls, game design, Gordon Gekko, inflation targeting, information asymmetry, interest rate derivative, interest rate swap, London Interbank Offered Rate, loss aversion, mental accounting, millennium bug, Nick Leeson, Northern Rock, oil shock, Post-Keynesian economics, price stability, profit maximization, proprietary trading, regulatory arbitrage, reserve currency, Rubik’s Cube, Snapchat, Suez crisis 1956, the market place, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, work culture , Y2K

Washington DC: Securities and Exchange Commission (SEC). Available from: https://www.sec.gov/litigation/investreport/nd21a-report.txt [accessed 21 December 2016]. Simmel, G. (1906) ‘The sociology of secrecy and secret societies’. American Journal of Sociology, 11 (4), 441–98. Smith, A. (1991 [1776]) The Wealth of Nations. London: Everyman’s Library. SNB (2015) ‘Monetary policy strategy’. Swiss National Bank (SNB) website. Available from: http://www.snb.ch/en/iabout/monpol/id/monpol_strat#t7 [accessed 21 December 2016]. Soultanaeva, A. and Strömqvist, M. (2009) ‘The Swedish money market risk premium: experiences from the crisis’.

From the outside, it seemed too global, too competitive, too efficient – simply too perfect to have space for something that could be referred to as a ‘culture’. As in the case of LIBOR, this perception was false. ‘People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices,’31 Adam Smith wrote more than 200 years ago. The contours of a conspiracy, however, do not need to take shape in a smoke-filled cigar club or an electronic chatroom. Conventions, whether they later are classified as conspiracies or not, can also evolve on the desk, during a dinner, a seminar, a cigarette break or perhaps even in a classroom.


pages: 1,015 words: 170,908

Empire by Michael Hardt, Antonio Negri

"hyperreality Baudrillard"~20 OR "Baudrillard hyperreality", Berlin Wall, Bretton Woods, colonial rule, conceptual framework, disinformation, equal pay for equal work, European colonialism, Fall of the Berlin Wall, feminist movement, Francis Fukuyama: the end of history, global pandemic, global village, Haight Ashbury, Herbert Marcuse, informal economy, invisible hand, late capitalism, low skilled workers, mass immigration, means of production, Monroe Doctrine, Nelson Mandela, New Urbanism, open borders, post-Fordism, post-industrial society, postindustrial economy, scientific management, Scramble for Africa, social intelligence, The Wealth of Nations by Adam Smith, union organizing, urban planning, W. E. B. Du Bois

.: University Press ofNew England, 1994), Book I, chap. 6, p. 138. 28. See Bodin, On Sovereignty. 29. C. B. Macpherson, The Political Theory of Possessive Individualism (Oxford: Oxford University Press, 1962). 30. See ArifDirlik, The Postcolonial Aura (Boulder: Westview Press, 1997). 31. Adam Smith, The Nature and Causes of the Wealth of Nations (Oxford: Clarendon Press, 1976), Book IV, chap. ii, paragraph 9, p. 456. 32. Ibid., Book IV, Chapter ix, paragraph 51, p. 687. 33. Hegel, Elements of the Philosophy of Right, §261, p. 283. 34. See Michel Foucault, ‘‘La ‘gouvernementalite´,’ ’ in Dits et ećrits (Paris: Gallimard, 1994), 3:635–657. 35.

As ArifDirlik has noted, Eurocentrism distinguished itself from other ethnocentrisms (such as Sinocentrism) and rose to global prominence principally because it was supported by the powers ofcapital.30 European modernity is inseparable from capitalism. This cen- tral relationship between the form and the content of modern sovereignty is fully articulated in the work of Adam Smith. Smith begins with a theory ofindustry that poses the contradiction between private enrichment and public interest. A first synthesis ofthese two levels is confided to the ‘‘invisible hand’’ ofthe market: the capitalist ‘‘intends only his own gain,’’ but he is ‘‘led by an invisible hand to promote an end which was no part ofhis intention.’’31 This first synthesis, however, is precarious and fleeting.


pages: 518 words: 128,324

Destined for War: America, China, and Thucydides's Trap by Graham Allison

9 dash line, anti-communist, Berlin Wall, borderless world, Bretton Woods, British Empire, capital controls, Carmen Reinhart, conceptual framework, cuban missile crisis, currency manipulation / currency intervention, Deng Xiaoping, disruptive innovation, Donald Trump, Dr. Strangelove, escalation ladder, facts on the ground, false flag, Flash crash, Francis Fukuyama: the end of history, game design, George Santayana, Great Leap Forward, guns versus butter model, Haber-Bosch Process, Herman Kahn, high-speed rail, industrial robot, Internet of things, Kenneth Rogoff, liberal world order, long peace, Mark Zuckerberg, megacity, megaproject, middle-income trap, Mikhail Gorbachev, Monroe Doctrine, mutually assured destruction, Nelson Mandela, one-China policy, Paul Samuelson, Peace of Westphalia, public intellectual, purchasing power parity, RAND corporation, Ronald Reagan, Scramble for Africa, selection bias, Silicon Valley, Silicon Valley startup, South China Sea, special economic zone, spice trade, Suez canal 1869, synthetic biology, TED Talk, the rule of 72, The Wealth of Nations by Adam Smith, too big to fail, trade route, UNCLOS, Washington Consensus, zero-sum game

According to the Rule of 72—divide 72 by the annual growth rate to determine when an economy or investment will double—the Chinese economy has doubled every seven years. To appreciate how remarkable this is, we need a longer timeline. In the eighteenth century, Britain gave birth to the Industrial Revolution, creating what we now know as the modern world. In 1776, Adam Smith published The Wealth of Nations to explain how after millennia of poverty, market capitalism was creating wealth and a new middle class. Seventeen years later, an emissary from King George III (the same “mad King George” who lost the Revolutionary War to the US) arrived in China to propose establishing relations between the two nations.

The Economist, citing research from the Boston Consulting Group, notes that Asia’s wealth is expected to reach $75 trillion by 2020, while North America’s wealth will be $76 trillion. As BCG explains, “The U.S. will remain the world’s wealthiest country, although North America is expected to be surpassed by Asia-Pacific (including Japan) soon after 2020.” See “The Wealth of Nations,” Economist, June 17, 2015, http://www.economist.com/blogs/freeexchange/2015/06/asia-pacific-wealthier-europe; “Global Wealth 2016: Navigating the New Client Landscape,” Boston Consulting Group, June 2016, https://www.bcgperspectives.com/content/articles/financial-institutions-consumer-insight-global-wealth-2016/?


pages: 592 words: 133,460

Worn: A People's History of Clothing by Sofi Thanhauser

Airbnb, back-to-the-land, big-box store, business process, business process outsourcing, call centre, Caribbean Basin Initiative, colonial rule, Community Supported Agriculture, corporate social responsibility, cotton gin, COVID-19, deindustrialization, Deng Xiaoping, Dmitri Mendeleev, Donald Trump, export processing zone, facts on the ground, flying shuttle, global supply chain, Great Leap Forward, haute couture, Honoré de Balzac, indoor plumbing, invention of the sewing machine, invisible hand, microplastics / micro fibres, moral panic, North Ronaldsay sheep, off-the-grid, operation paperclip, out of africa, QR code, Rana Plaza, Ronald Reagan, sheep dike, smart cities, special economic zone, strikebreaker, The Wealth of Nations by Adam Smith, trade liberalization, trade route, transatlantic slave trade, Triangle Shirtwaist Factory, union organizing, upwardly mobile, Whole Earth Catalog, women in the workforce

GO TO NOTE REFERENCE IN TEXT “fifteen women including”: Federici, Caliban and the Witch, 73. GO TO NOTE REFERENCE IN TEXT The Highland Clearances: Richards, Debating the Highland Clearances, 6, 8. GO TO NOTE REFERENCE IN TEXT “in rustic hospitality”: Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 897. GO TO NOTE REFERENCE IN TEXT “thefts, outrages”: Marx, Capital, Volume One. GO TO NOTE REFERENCE IN TEXT The Bayeux Tapestry: Hoops, “What Is the Bayeux Tapestry? Why Is It in France?” GO TO NOTE REFERENCE IN TEXT “she was weaving”: Lattimore, The Iliad of Homer, 103.

“Reviving Khadi: From Freedom Fabric to Fashion Fabric.” Man-Made Textiles in India 42, no. 11 (November 2014): 409–13. Singhal, Arvind. “The Mahatma’s Message: Gandhi’s Contributions to the Art and Science of Communication.” China Media Research 6, no. 3 (July 2010): 103–6. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations, 1776. Project Gutenberg, 2010. Snipes, Shedra A., et al. “ ‘The Only Thing I Wish I Could Change Is That They Treat Us Like People and Not Like Animals’: Injury and Discrimination Among Latino Farmworkers.” Journal of Agromedicine 22, no. 1 (2017): 36–46. So, Alvin Y. The South China Silk District: Local Historical Transformation and World-System Theory.

Agrarian peasant society in the Highlands had looked stranger and stranger to its industrializing neighbors on the plains. In the Highlands, as in England formerly, most local production was consumed within the community. Barter was widespread, and rents were, at least partially, paid in kind and in services. Adam Smith used the Highlands prior to the Clearances as an example of the poverty of nations tied by antiquated restrictions and organization. It was a victim of the poor division of labor, he believed, consuming its products, absurdly, “in rustic hospitality at home.” Karl Marx, too, tried to distill the experience of the Highlands into theoretical material.


pages: 1,477 words: 311,310

The Rise and Fall of the Great Powers: Economic Change and Military Conflict From 1500 to 2000 by Paul Kennedy

agricultural Revolution, airline deregulation, anti-communist, banking crisis, Berlin Wall, book value, Bretton Woods, British Empire, cuban missile crisis, deindustrialization, Deng Xiaoping, disinformation, European colonialism, floating exchange rates, full employment, German hyperinflation, Great Leap Forward, guns versus butter model, Herman Kahn, imperial preference, industrial robot, joint-stock company, laissez-faire capitalism, long peace, means of production, military-industrial complex, Monroe Doctrine, mutually assured destruction, night-watchman state, North Sea oil, nuclear winter, oil shock, open economy, Peace of Westphalia, Potemkin village, price mechanism, price stability, RAND corporation, reserve currency, Ronald Reagan, Silicon Valley, South China Sea, South Sea Bubble, spice trade, spinning jenny, stakhanovite, Strategic Defense Initiative, Suez canal 1869, Suez crisis 1956, The Wealth of Nations by Adam Smith, trade route, University of East Anglia, upwardly mobile, zero-sum game

On the contrary, the ideology of laissez-faire political economy, which flourished alongside this early industrialization, preached the causes of eternal peace, low government expenditures (especially on defense), and the reduction of state controls over the economy and the individual. It might be necessary, Adam Smith had conceded in The Wealth of Nations (1776), to tolerate the upkeep of an army and a navy in order to protect British society “from the violence and invasion of other independent societies”; but since armed forces per se were “unproductive” and did not add value to the national wealth in the way that a factory or a farm did, they ought to be reduced to the lowest possible level commensurate with national safety.22 Assuming (or, at least, hoping) that war was a last resort, and ever less likely to occur in the future, the disciples of Smith and even more of Richard Cobden would have been appalled at the idea of organizing the state for war.

Bankers and arms dealers and artisans were essential, not peripheral, members of society. Gradually, unevenly, most of the regimes of Europe entered into a symbiotic relationship with the market economy, providing for it domestic order and a nonarbitrary legal system (even for foreigners), and receiving in taxes a share of the growing profits from trade. Long before Adam Smith had coined the exact words, the rulers of certain societies of western Europe were tacitly recognizing that “little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and tolerable administration of justice.… ”19 From time to time the less percipient leaders—like the Spanish administrators of Castile, or an occasional Bourbon king of France—would virtually kill the goose that laid the golden eggs; but the consequent decline in wealth, and thus in military power, was soon obvious to all but the most purblind.

This difficulty would be compounded, it seems fair to argue, because moving up that ladder would have involved not merely the acquisition of European equipment or even of European techniques: it would also have implied a wholesale borrowing of those general features which distinguished the societies of the West from all the others. It would have meant the existence of a market economy, if not to the extent proposed by Adam Smith then at least to the extent that merchants and entrepreneurs would not be consistently deterred, obstructed, and preyed upon. It would also have meant the existence of a plurality of power centers, each if possible with its own economic base, so that there was no prospect of the imposed centralization of a despotic oriental-style regime—and every prospect of the progressive, if turbulent and occasionally brutal, stimulus of competition.


pages: 381 words: 101,559

Currency Wars: The Making of the Next Gobal Crisis by James Rickards

"World Economic Forum" Davos, Alan Greenspan, Asian financial crisis, bank run, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Big bang: deregulation of the City of London, Black Swan, borderless world, Bretton Woods, BRICs, British Empire, business climate, buy and hold, capital controls, Carmen Reinhart, Cass Sunstein, collateralized debt obligation, complexity theory, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, currency manipulation / currency intervention, currency peg, currency risk, Daniel Kahneman / Amos Tversky, deal flow, Deng Xiaoping, diversification, diversified portfolio, Dr. Strangelove, Fall of the Berlin Wall, family office, financial innovation, floating exchange rates, full employment, game design, German hyperinflation, Gini coefficient, global rebalancing, global reserve currency, Great Leap Forward, guns versus butter model, high net worth, income inequality, interest rate derivative, it's over 9,000, John Meriwether, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, Long Term Capital Management, low interest rates, mandelbrot fractal, margin call, market bubble, Mexican peso crisis / tequila crisis, Money creation, money market fund, money: store of value / unit of account / medium of exchange, Myron Scholes, Network effects, New Journalism, Nixon shock, Nixon triggered the end of the Bretton Woods system, offshore financial centre, oil shock, one-China policy, open economy, paradox of thrift, Paul Samuelson, power law, price mechanism, price stability, private sector deleveraging, proprietary trading, quantitative easing, race to the bottom, RAND corporation, rent-seeking, reserve currency, Ronald Reagan, short squeeze, sovereign wealth fund, special drawing rights, special economic zone, subprime mortgage crisis, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, time value of money, too big to fail, value at risk, vertical integration, War on Poverty, Washington Consensus, zero-sum game

However, given their quasi-sovereign powers, they are more properly understood as extensions of the sovereign with private owners and managers. This arrangement bears comparison to regional Federal Reserve Banks in the United States, which are privately owned but act as a financial arm of the government. It was only in the late eighteenth century, with the industrial revolution and the publication of The Wealth of Nations by Adam Smith, that a more modern form of laissez-faire capitalism with private ownership and banking arose. Yet through the twentieth century, despite the success of private enterprise, state-controlled businesses still prevailed in societies dominated by communists, fascists, oligarchs and many other antidemocratic forces.


pages: 305 words: 98,072

How to Own the World: A Plain English Guide to Thinking Globally and Investing Wisely by Andrew Craig

Airbnb, Alan Greenspan, Albert Einstein, asset allocation, Berlin Wall, bitcoin, Black Swan, bonus culture, book value, BRICs, business cycle, collaborative consumption, diversification, endowment effect, eurozone crisis, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, Future Shock, index fund, information asymmetry, joint-stock company, Joseph Schumpeter, Long Term Capital Management, low cost airline, low interest rates, Market Wizards by Jack D. Schwager, mortgage debt, negative equity, Northern Rock, offshore financial centre, oil shale / tar sands, oil shock, passive income, pensions crisis, quantitative easing, Reminiscences of a Stock Operator, road to serfdom, Robert Shiller, Russell Brand, Silicon Valley, smart cities, stocks for the long run, the new new thing, The Wealth of Nations by Adam Smith, Yogi Berra, Zipcar

The Zulu Principle: Making Extraordinary Profits from Ordinary Shares. London: Orion, 1992. Simmons, Matthew R. Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. Hoboken: John Wiley & Sons, 2005. Smith, Adam: The Theory of Moral Sentiments. Cambridge: Cambridge University Press, 2002. ———. The Wealth of Nations. London: Penguin, 1999. Smith, David. The Age of Instability: The Global Financial Crisis and What Comes Next. London: Profile, 2010. Smith, Terry. Accounting for Growth: Stripping the Camouflage from Company Accounts. London: Century Business, 1992. Soros, George. The Age of Fallibility: The Consequences of the War on Terror.

You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits. New York: Simon & Schuster, 1999. Greene, Robert, and Joost Elffers. The 48 Laws of Power. London: Profile Books, 2002. Griffis, Michael, and Lita Epstein. Trading for Dummies. Hoboken: Wiley, 2009. Haakonssen, Knud. Adam Smith: The Theory of Moral Sentiments. Cambridge University Press, 2002. Hagstrom, Robert G. The Warren Buffet Way: Investment Strategies of the World’s Greatest Investor. New York: John Wiley & Sons, 1995. Hale, Tim. Smarter Investing: Simpler Decisions for Better Results. Harlow: FT Prentice Hall, 2006.


pages: 320 words: 97,509

Doctored: The Disillusionment of an American Physician by Sandeep Jauhar

Affordable Care Act / Obamacare, delayed gratification, illegal immigration, income inequality, independent contractor, Induced demand, medical malpractice, moral hazard, obamacare, PalmPilot, profit motive, randomized controlled trial, source of truth, stem cell, The Wealth of Nations by Adam Smith, Yogi Berra

If you want to understand why doctors behave the way they do, look at the schedule of Medicare payments. As in politics, just follow the money. SEVENTEEN Speed Dating We trust our health to the physician … Their reward must be such, therefore, as may give them that rank in the society which so important a trust requires. —Adam Smith, The Wealth of Nations, 1776 Despite the increased workload at the hospital, I needed to find another moonlighting opportunity to make up for the shortfall in income. Though I knew I’d have to purchase my own malpractice policy, I figured it would be worthwhile if I earned at least $35,000 per year moonlighting, roughly double the insurance premium.


pages: 1,233 words: 239,800

Public Places, Urban Spaces: The Dimensions of Urban Design by Matthew Carmona, Tim Heath, Steve Tiesdell, Taner Oc

"hyperreality Baudrillard"~20 OR "Baudrillard hyperreality", A Pattern Language, Arthur Eddington, Big bang: deregulation of the City of London, big-box store, Broken windows theory, Buckminster Fuller, car-free, carbon footprint, cellular automata, City Beautiful movement, Community Supported Agriculture, complexity theory, deindustrialization, disinformation, Donald Trump, drive until you qualify, East Village, edge city, food miles, Frank Gehry, Future Shock, game design, garden city movement, gentrification, global supply chain, Guggenheim Bilbao, income inequality, invisible hand, iterative process, Jane Jacobs, land bank, late capitalism, Lewis Mumford, longitudinal study, Masdar, Maslow's hierarchy, megaproject, megastructure, New Urbanism, peak oil, Peter Calthorpe, place-making, post-oil, precautionary principle, principal–agent problem, prisoner's dilemma, profit motive, Richard Florida, Seaside, Florida, starchitect, streetcar suburb, systems thinking, tacit knowledge, technological determinism, telepresence, the built environment, The Chicago School, The Death and Life of Great American Cities, The Great Good Place, the market place, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, Traffic in Towns by Colin Buchanan, Tragedy of the Commons, transaction costs, transit-oriented development, urban decay, urban planning, urban renewal, urban sprawl, vertical integration, zero-sum game

speculations on housing, urban design and human work’, in Stimpson, S; Dixler, E; Nelson, M; & Yatrakis, K (1980) (editors) Women and the American City, Chicago University Press, Chicago, 266–281 Hayward, R (1993), Talking tissues, in Hayward, R & McGlynn, S (1993) (editors) Making Better Places: Urban Design Now, Architectural Press, Oxford, 24–29 Hayward, R & McGlynn, S (1993) (Editors) Making Better Places, Urban Design Now, Butterworths Architectural Press, Oxford Healey, P (2006) Urban Complexity and Spatial Strategies: Towards a Relational Planning for Our Times, Routledge, London Healey, P (1997) Collaborative Planning, Macmillan, London Healey, P (1999) Institutionalist Analysis, communicative planning and shaping places’, Journal of Planning Education & Research 19, 111–121 Healey, P (1992) An institutional model of the development process, Journal of Property Research, 9, 33–44 Healey, P (1991a) Models of the development process: A review Journal of Property Research, 8, 219–238 Healey, P & Barrett, S (1990) Structure and agency in land and property development processes: Some ideas for research, Urban Studies, 27, 89–104 Heath, G; Brownson, R; Kruger, J; Miles, R; Powell, K; Ramsey, L & the Task Force on Community Preventive Services (2006) The effectiveness of urban design and land use and transport policies and practices to increase physical activity: A systematic review’, Journal of Physical Activity & Health, 3, Supplement 1, s55–s76 Heath, T (1997) The twenty-four hour city concept: A review of initiatives in British cities’, Journal of Urban Design, 2(2), 193–204 Heath, T & Stickland, R (1997) Safer Cities: The twenty-four hour concept, in Oc, T & Tiesdell, S Safer City Centres: Reviving the Public Realm, Paul Chapman, London, 170-183 Hebbert, M (2008) Re-enclosure of the urban picturesque: Green space transformations in post modern urbanism, Town Planning Review, 79(1), 31–59 Hebbert, M (2006) Town planning versus urbanismo, Planning Perspectives, 21, 233–251 Hebbert, M (2005) Engineering, urbanism and the struggle for street design, Journal of Urban Design, 10(1), 39–59 Hebbert, M (2003) New Urbanism – The movement in Context, Built Environment 29(3), 193–209 Hebbert, M (1998) London: More by Fortune than Design, Chichester, John Wiley & Son Hedges, C (2009) Empire of Illusion: The End of Literacy and the Triumph of the Spectacle, Nation Books, New York Henneberry, J (1998) Development Process’, course taught at the Department of Town and Regional Planning, University of Sheffield Hess, P M (2009) Avenues or arterials: The struggle to change street building practices in Toronto, Canada’, Journal of Urban Design 14(1), 1–28 Hiedegger, M (1969) Identity and Difference, Harper & Row, New York Hiedegger, M (1962) Being and Time, Harper & Row, New York Hillman, J (1990) Planning for Beauty, RFAC, London Hillman, J (1988) A New Look for London, HMSO, London Hillier B & Sahbaz O (2009) Crime and Urban Design: An Evidence-based Approach’ in Cooper R, Evans G& Boyko C (2009) (editors) Designing Sustainable Cities, Wiley-Blackwell, Chichester Hillier, B & Penn, A (2004a) Response to rejoinder to Hillier and Penn’, Environment & Planning B: Planning & Design, 31(4), 501–511 Hillier, B (1996a) Space is the Machine, Cambridge University Press, Cambridge Hillier, B (1996b) Cities as movement systems, Urban Design International, 1(1), 47–60 Hillier, B (1988) Against enclosure, in Teymur, N; Markus, T & Wooley, T (1988) (editors) Rehumanising Housing, Butterworths, London, 63–88 Hillier, B (1973) In defence of space, RIBA Journal, November, 539–544 Hillier, B; Penn, A; Hanson, J; Gajewski, T & Xu, J (1993) Natural movement: Or configuration and attraction in urban pedestrian movement’, Environment & Planning B: Planning & Design, 20, 29–66 Hillier, B; Leaman, A; Stansall, P & Bedford, M (1986) space syntax, Environment & Planning B: Planning & Design, 13, 147–185 Hillier, B & Hanson, J (1984) The Social Logic of Space, Cambridge University Press, Cambridge Hitchcock, H R & Johnson, P (1922) The International Style: Architecture Since 1922, W W Norton & Company, New York Hobbs, D; Hall, S; Winlow, S; Lister, S; & Hadfield, P (2000) Bouncers: The Art and Economics of Intimidation, final report to ESRC Research Programme: Violence, University of Durham, Durham Holden, A & Iveson, K (2003) Designs on the urban: New labour's urban renaissance and the spaces of citizenship, City, 7(1), 57–72 Holford, W G (1953) Design in town centres’, in Ministry of Housing & Local Government (MHLG) (1953) Design in Town & Village, HMSO, London Hollyoak, K (2002) Difficulties in providing access to brownfield sites and urban extensions, Municipal Engineer, 151, 117–124 Hont, I & Ignatieff, M (1983) Needs and justice in the wealth of nations: An introductory essay’, in Hont, I & Ignatieff, M (1983) (editors) Wealth and Virtue: The Shaping of Political Economy in Scottish Enlightenment, Cambridge University Press, Cambridge, 1–44 Hope, T (1986) Crime, community and environment Journal of Environmental Psychology, 6(1) 65–78 Hopkins J (2005) Music-makers and the Dreamers of Dreams, in Harvey S & Hopkins R (2000) ‘The food producing neighbourhood’, in Barton H (Editor) (2000) Sustainable Communities – The Potential for Eco-Neighbourhoods, Earthscan, London, 199–215 Horan, T A (2000) Digital Places: Building Our City of Bits, Urban Land Institute, Washington Hough, M (1984) City Form and Natural Process: Towards a new Urban Vernacular, Routledge, London Howard E (1889) Tomorrow: A Peaceful Path to Real Reform, Swan Sonnenschein, London Hubbard, P J (1992) Environment-behaviour studies and city design: A new agenda for research?

In addition, people are able to maximise their individual welfare, constrained only by their willingness and ability to pay. As Klosterman (1985: 6) explains, competitive markets ‘… co-ordinate the actions of individuals, provide incentives to individual action, and supply those goods and services which society wants, in the quantities which it desires, at the prices it is willing to pay.’ Adam Smith famously referred to this as the ‘invisible hand’ – that is, the invisible hand of competitive market processes, or as Desai (2002) describes: ‘… deep structures of interconnectedness beneath the seemingly chaotic and uncoordinated individual actions.’ Smith considered that, despite individuals pursuing their own advantage, the greatest benefit to society as a whole was achieved by their being free to do so, with each individual being ‘lead by an invisible hand to promote an end which was no part of his intention’.

It involves deregulating private activities and companies, the privatisation of previously ‘state’ or ‘collective’ services, the undermining of the collective powers of workers and providing the conditions for the private sector to find ever new sources of profitable activity.’ Elevating market exchanges over and above all other sets of connections between people, neo-liberalism seeks to minimise the role of the State and to allow Adam Smith’s invisible hand to do its work. Based on public choice critiques of government, the reduced role for the State was both because‘… it is presumed that states will always be inferior to markets in “guessing” what is necessary to do and because states are thought to be easily corruptible by private interest groups.’


Lonely Planet Scotland by Lonely Planet

always be closing, biodiversity loss, British Empire, carbon footprint, clean water, country house hotel, demand response, Donald Trump, European colonialism, Ford Model T, gentrification, James Watt: steam engine, land reform, North Ronaldsay sheep, North Sea oil, Northpointe / Correctional Offender Management Profiling for Alternative Sanctions, retail therapy, rewilding, The Wealth of Nations by Adam Smith, three-masted sailing ship, upwardly mobile, urban decay, urban sprawl

Exhibits of national importance include an original copy of the National Covenant of 1638, but the big crowd-pleaser is the dog collar and feeding bowl that once belonged to Greyfriars Bobby, the city’s most famous canine citizen. Canongate KirkyardCHURCH (map Google map; www.canongatekirk.org.uk; Canongate; hdawn-dusk; g300) The attractive curved gable of the Canongate Kirk, built in 1688, overlooks a kirkyard that contains the graves of several famous people, including economist Adam Smith, author of The Wealth of Nations; Agnes Maclehose (the ‘Clarinda’ of Robert Burns’ love poems); and poet Robert Fergusson (1750–74; there’s a statue of him on the street outside the church). An information board just inside the gate lists notable graves and their locations. Fergusson was much admired by Robert Burns, who paid for his gravestone and penned the epitaph – take a look at the inscription on the back. 1Holyrood & Arthur’s Seat oScottish Parliament BuildingNOTABLE BUILDING (map Google map; %0131-348 5200; www.parliament.scot; Horse Wynd; h9am-6.30pm Tue-Thu, 10am-5pm Mon, Fri & Sat in session, 10am-5pm Tue-Thu in recess; c; g6, 300) F The Scottish Parliament Building, on the site of a former brewery and designed by Catalan architect Enric Miralles (1955–2000), was opened by the Queen in October 2004.

The Act of Union in 1707 further reduced Edinburgh’s importance, but its cultural and intellectual life flourished. In the second half of the 18th century a planned new town was created across the valley to the north of the Old Town. During the Scottish Enlightenment (c 1740–1830), Edinburgh became known as ‘a hotbed of genius’, inhabited by leading scientists and philosophers such as David Hume and Adam Smith. In the 19th century the population quadrupled to 400,000, not much less than today’s population, and the Old Town’s tenements were taken over by refugees from the Highland Clearances and the Irish famines. A new ring of crescents and circuses was built to the north of New Town, and grey Victorian terraces spread south of the Old Town.

John Prebble’s wonderfully written book The Highland Clearances (1963) tells the terrible story of how the Highlanders were driven out of their homes and forced into emigration. The Scottish Enlightenment During the period known as the Scottish Enlightenment (roughly 1740–1830) Edinburgh became known as ‘a hotbed of genius’. Philosophers David Hume and Adam Smith and sociologist Adam Ferguson emerged as influential thinkers, nourished on generations of theological debate. Medic William Cullen produced the first modern pharmacopoeia, chemist Joseph Black advanced the science of thermodynamics, and geologist James Hutton challenged long-held beliefs about the age of the Earth.


pages: 709 words: 191,147

White Trash: The 400-Year Untold History of Class in America by Nancy Isenberg

A. Roger Ekirch, back-to-the-land, British Empire, California gold rush, colonial rule, Copley Medal, desegregation, Donald Trump, feminist movement, full employment, gentleman farmer, indoor plumbing, invisible hand, joint-stock company, land reform, land tenure, Lewis Mumford, low interest rates, mass immigration, New Urbanism, Norman Mailer, off-the-grid, plutocrats, prosperity theology / prosperity gospel / gospel of success, Republic of Letters, Ronald Reagan, Scientific racism, The Wealth of Nations by Adam Smith, theory of mind, trade route, transcontinental railway, trickle-down economics, upwardly mobile, urban renewal, W. E. B. Du Bois, War on Poverty, working poor, Works Progress Administration

On his theory of commerce and nations, he wrote, “It is the commerce and not the conquest of America, by which England is to be benefited, and that would in a great measure continue, were the countries independent of each other as France and Spain; because many articles, neither can go to a better market”; see Slaughter, ed., Common Sense, 89–90, 110. 38. Slaughter, Common Sense, 86, 89, 100, 113. Adam Smith offered a similar rebuke of the English financial system, highlighting its enormous debts and repeated engagement in costly wars in The Wealth of Nations (1776). 39. See Slaughter, Common Sense, 89, 100, 102–4. On Pennsylvania selling wheat and flour to southern Europe, see T. H. Breen, “An Empire of Goods: The Anglicization of Colonial America, 1760–1776,” Journal of British Studies 25, no. 4 (October 1986): 467–99, esp. 487.

Wilson, Wallace, and Corbin all agreed that the old laissez-faire doctrines could no longer be sustained, and that the frontier thesis—which presumed that western migration had alleviated poverty—no longer worked. For Wilson, the “great disorganizing force of the depression” was “a great, magic dark hand.” Unlike Adam Smith’s invisible hand of the free market, Wilson’s dark hand represented the dangers of an unregulated economy: downward mobility and the ruin of countless lives.26 If for poor rural tenants and sharecroppers class was an inescapable cage or a prison, it was equally a source of what Henry Wallace labeled “human erosion.”


pages: 777 words: 186,993

Imagining India by Nandan Nilekani

"World Economic Forum" Davos, addicted to oil, affirmative action, Airbus A320, BRICs, British Empire, business process, business process outsourcing, call centre, carbon credits, carbon tax, clean water, colonial rule, corporate governance, cuban missile crisis, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, digital map, distributed generation, electricity market, farmers can use mobile phones to check market prices, flag carrier, full employment, ghettoisation, glass ceiling, global supply chain, Hernando de Soto, income inequality, informal economy, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), joint-stock company, knowledge economy, land reform, light touch regulation, LNG terminal, load shedding, low cost airline, Mahatma Gandhi, market fragmentation, mass immigration, Mikhail Gorbachev, Network effects, new economy, New Urbanism, open economy, Parag Khanna, pension reform, Potemkin village, price mechanism, public intellectual, race to the bottom, rent control, rolodex, Ronald Reagan, school vouchers, Silicon Valley, smart grid, special economic zone, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, Tragedy of the Commons, transaction costs, trickle-down economics, unemployed young men, upwardly mobile, urban planning, urban renewal, women in the workforce, working poor, working-age population

FROM REJECTION TO OPEN ARMS: THE ENTREPRENEUR IN INDIA 1 B. Zachariah, Nehru, Routledge Historical Biographies, Routledge, 2004. 2 David C. Engerman, “Modernization from the Other Shore: American Observers and the Costs of Soviet Economic Development,” The American Historical Review, April 2000. 3 Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Random House, 2003. 4 Tariq Ali, The Nehrus and the Gandhis, Pan Books, 1985. 5 Vivek Chibber, Locked in Place: State-Building and Late Industrialization in India, Princeton University Press, 1965. 6 Ibid. 7 Ibid. 8 Ibid. 9 Ramachandra Guha, India after Gandhi, Picador India, 2007. 10 Baldev Raj Nayar, India’s Mixed Economy: The Role of Ideology and Interest in Its Development, Popular Prakashan Books, 1989. 11 Ibid. 12 Ibid. 13 Ibid. 14 Sudipta Kaviraj, “A Critique of the Passive Revolution,” Economic and Political Weekly, November 1988. 15 Baldev Raj Nayar, India’s Mixed Economy:The Role of Ideology and Interest in Its Development, Popular Prakashan Books, 1989. 16 Rahul Mukherji, “India’s Aborted Liberation,” Pacific Affairs 73, 2000. 17 Ramachandra Guha, India after Gandhi, Picador India, 2007. 18 Balraj Puri, “A Fuller View of the Emergency,” Economic and Political Weekly, July 1995. 19 “Clamor against Liberalisation,” Economic and Political Weekly, July 1982. 20 Madhu Kishwar, “Extortion Rackets Find Easy Prey among Street Vendors,” India Together, 2001.

As a nation that is now the world’s fastest-growing democracy, a child of the global networked economy and possessed with a large share of human capital, India should be an emerging hub today for provocative and innovative new ideas. After all it is usually the countries that lead the curve on growth that take the lead in shaping the ideas of the era. Most of our early ideas around markets, wealth creation and citizen welfare, for instance, came from thinkers such as Adam Smith and John Stuart Mill, who helped shape Britain’s policies during its growth in the seventeenth and eighteenth centuries. The United States similarly shaped its most dynamic and enduring ideas on growth as industrialization peaked through the mid-twentieth century. These ideas drove up productivity and created massive new wealth for these economies by expanding their workforce and by creating a new, surging middle class on a scale never seen before.


How to Hide an Empire: A History of the Greater United States by Daniel Immerwahr

Albert Einstein, book scanning, British Empire, Buckminster Fuller, call centre, citizen journalism, City Beautiful movement, clean water, colonial rule, company town, deindustrialization, Deng Xiaoping, desegregation, Donald Trump, drone strike, European colonialism, fake news, friendly fire, gravity well, Haber-Bosch Process, Howard Zinn, immigration reform, land reform, Mercator projection, military-industrial complex, Neal Stephenson, Neil Armstrong, offshore financial centre, oil shale / tar sands, oil shock, pneumatic tube, QWERTY keyboard, Ralph Waldo Emerson, Richard Feynman, Suez canal 1869, Suez crisis 1956, the built environment, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, transcontinental railway, urban planning, W. E. B. Du Bois, wikimedia commons

Mahan’s lengthy 1890 treatise, The Influence of Sea Power upon History, was hardly a page-turner, but it contained a powerful suggestion. If, according to Turner, the land was closed, Mahan noted that the seas were open. Mahan didn’t care about democracy or individualism, as Turner did. His concern was trade. The wealth of nations, he argued, came from maritime commerce. Yet ships could not simply cast off for distant lands. They needed ports, coaling stations, warehouses, and other way stations along their paths. They also needed naval protection, which required still more overseas bases. Technically, a country needn’t have its own bases.

Franklin is best remembered for his experiments with electricity and his many inventions (bifocals, the lightning rod, the circulating stove, the urinary catheter), but his demographic research was a large part of his legacy, too. His numbers quickly made the rounds in Europe, only sometimes with his name attached, and entered the thought of such philosophers as Adam Smith and David Hume. The grim prediction by the economist Thomas Malthus that food supply could never keep pace with population growth was largely based on Franklin’s North American calculations (which, Malthus gasped, indicated “a rapidity of increase probably without parallel in history”). Malthus, in turn, was an important influence on Charles Darwin, both of whose grandfathers knew Franklin well.

.; Foreign Relations Committee; Indian Affairs Committee; Intelligence Committee Senecas Senegal September 11 attacks, see 9/11 terrorist attacks Sequoyah (person) Sequoyah (proposed state) settlers, see westward expansion Seward, William Henry sex work, see prostitution Shaw, George Bernard Shawnees Sherman tanks Shimla (India) Siemens-Schuckert planes Silliman University Simon and Garfunkel Singapore Sinhala Sioux Sirota, Beate Skyfall (movie) slavery; westward expansion of Slim, Carlos Slipchenko, Vladimir Sloan, Alfred P. Sloan Kettering Institute Slossen, Edwin E. smallpox Smith, Adam Smith, Gen. Jacob Smith, Larry Smith, Samuel F. Smuts, Jan Snipes, Wesley Solidarity movement Solomon Islands Somalia Somewhere I’ll Find You (movie) Sondheim, Stephen Sony (formerly Totsuko, Tokyo Tsushin Kogyo) Soong, T. V. So Proudly We Hail (movie) South Africa South America; see also specific colonies and nations South Carolina Southeast Asia South Korea Soviet Union; Afghanistan incursion of; dismantling of; English language banned in; German occupation zones controlled by; in International Organization for Standardization; nuclear arms race with; U.S. radio broadcasts into; in World War II Spain Spanish-American War, see war with Spain Spanish Empire, fall of; see also war with Spain Spanish flu pandemic Spanish language; Filipino nursing codes in; worldwide native speakers of Sparrow, James T.


pages: 1,336 words: 415,037

The Snowball: Warren Buffett and the Business of Life by Alice Schroeder

affirmative action, Alan Greenspan, Albert Einstein, anti-communist, AOL-Time Warner, Ayatollah Khomeini, barriers to entry, Bear Stearns, Black Monday: stock market crash in 1987, Bob Noyce, Bonfire of the Vanities, book value, Brownian motion, capital asset pricing model, card file, centralized clearinghouse, Charles Lindbergh, collateralized debt obligation, computerized trading, Cornelius Vanderbilt, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, desegregation, do what you love, Donald Trump, Eugene Fama: efficient market hypothesis, Everybody Ought to Be Rich, Fairchild Semiconductor, Fillmore Auditorium, San Francisco, financial engineering, Ford Model T, Garrett Hardin, Glass-Steagall Act, global village, Golden Gate Park, Greenspan put, Haight Ashbury, haute cuisine, Honoré de Balzac, If something cannot go on forever, it will stop - Herbert Stein's Law, In Cold Blood by Truman Capote, index fund, indoor plumbing, intangible asset, interest rate swap, invisible hand, Isaac Newton, it's over 9,000, Jeff Bezos, John Bogle, John Meriwether, joint-stock company, joint-stock limited liability company, junk bonds, Larry Ellison, Long Term Capital Management, Louis Bachelier, low interest rates, margin call, market bubble, Marshall McLuhan, medical malpractice, merger arbitrage, Michael Milken, Mikhail Gorbachev, military-industrial complex, money market fund, moral hazard, NetJets, new economy, New Journalism, North Sea oil, paper trading, passive investing, Paul Samuelson, pets.com, Plato's cave, plutocrats, Ponzi scheme, proprietary trading, Ralph Nader, random walk, Ronald Reagan, Salesforce, Scientific racism, shareholder value, short selling, side project, Silicon Valley, Steve Ballmer, Steve Jobs, supply-chain management, telemarketer, The Predators' Ball, The Wealth of Nations by Adam Smith, Thomas Malthus, tontine, too big to fail, Tragedy of the Commons, transcontinental railway, two and twenty, Upton Sinclair, War on Poverty, Works Progress Administration, Y2K, yellow journalism, zero-coupon bond

Only rarely did he take the risk of associating with anyone who could blow up on him. 48. Warren Buffett letter to Rose Blumkin, September 30, 1983. 49. From a retired Berkshire employee (not Verne McKenzie, the star of this anecdote). 50. Interview with Verne McKenzie. 51. Several Buffett Group members swear to the exact number. 52. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Book IV, 1776. 53. Interview with Stan Lipsey. 54. “A Tribute to Mrs. B,” Omaha World-Herald, May 20, 1984; John Brademas, President, New York University, letter to Rose Blumkin, April 12, 1984. 55. Interview with Louis Blumkin. 56. Joyce Wadler, “Blumkin: Sofa, So Good: The First Lady of Furniture, Flourishing at 90.” 57.

In 1973, Boys Town actually raised more money than in 1972 (over $6 million), according to the Omaha World-Herald (March 21, 1973). The main result of the exposé and reforms was increased transparency and accountability over how the money was spent. 53. George Jerome Goodman (writing as “Adam Smith”), Supermoney. New York: Random House, 1972. Goodman (known as Jerry) chose his pen name after Adam Smith, the father of market economics. 54. John Brooks, “A Wealth of Notions,” Washington Post, October 22, 1972. Chapter 36 1. Interview with Stan Lipsey. Scripps Howard owned 60% of the paper but had been ordered by the Department of Justice in 1968 to divest it on antitrust grounds because it also owned the Cincinnati Post & Times-Star, a competing paper.

In a sense, the Sun was one of his cigar butts, from which he had been able to enjoy one huge personal puff. In another sense, the temporary boost of fame he had gotten from the Sun was a sidebar compared to something else. Buffett had recently exploded in investors’ minds for a different reason. Under the pen name Adam Smith, a writer named George Goodman had published Supermoney, a fire-and-brimstone critique of the 1960s stock-market bubble, which sold more than a million copies.53 It demonized the fund managers who had ascended to the stratosphere almost overnight and then crashed, in a parabola as dramatic as if their engines had suddenly run out of rocket fuel.


pages: 1,242 words: 317,903

The Man Who Knew: The Life and Times of Alan Greenspan by Sebastian Mallaby

airline deregulation, airport security, Alan Greenspan, Alvin Toffler, Andrei Shleifer, anti-communist, Asian financial crisis, balance sheet recession, bank run, barriers to entry, Bear Stearns, behavioural economics, Benoit Mandelbrot, Black Monday: stock market crash in 1987, bond market vigilante , book value, Bretton Woods, business cycle, central bank independence, centralized clearinghouse, classic study, collateralized debt obligation, conceptual framework, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, Dr. Strangelove, energy security, equity premium, fiat currency, financial deregulation, financial engineering, financial innovation, fixed income, Flash crash, forward guidance, full employment, Future Shock, Glass-Steagall Act, Greenspan put, Hyman Minsky, inflation targeting, information asymmetry, interest rate swap, inventory management, invisible hand, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", junk bonds, Kenneth Rogoff, Kickstarter, Kitchen Debate, laissez-faire capitalism, Lewis Mumford, Long Term Capital Management, low interest rates, low skilled workers, market bubble, market clearing, Martin Wolf, Money creation, money market fund, moral hazard, mortgage debt, Myron Scholes, Neil Armstrong, new economy, Nixon shock, Nixon triggered the end of the Bretton Woods system, Northern Rock, paper trading, paradox of thrift, Paul Samuelson, Phillips curve, plutocrats, popular capitalism, price stability, RAND corporation, Reminiscences of a Stock Operator, rent-seeking, Robert Shiller, Robert Solow, rolodex, Ronald Reagan, Saturday Night Live, Savings and loan crisis, savings glut, secular stagnation, short selling, stock buybacks, subprime mortgage crisis, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, Tipper Gore, too big to fail, trade liberalization, unorthodox policies, upwardly mobile, We are all Keynesians now, WikiLeaks, women in the workforce, Y2K, yield curve, zero-sum game

He was not the man who acted. • • • Comfortable in his pattern of measured quarter-point rate hikes, Greenspan was savoring his last months as Fed chairman. He had recently visited Scotland to deliver a lecture in Adam Smith’s birthplace, Kirkcaldy; his friend, the brainy British finance minister, Gordon Brown, had shown him around the seaside town and presented him with an early edition of Smith’s The Wealth of Nations. In Washington, Greenspan kept up a full social schedule, courting the press and lunching with cabinet officials; he still played tennis and golf regularly at the Chevy Chase Club. In May 2005, the press speculated briefly that Greenspan’s Fed tenure might be extended beyond its scheduled expiration, on January 31, 2006; if he could hang on into May, he would become the longest-serving Fed chairman, overtaking William McChesney Martin.62 But the speculation did not last.

., 115, 346, 531 bipartisan spirit in, 276–77, 471, 478 Federal Reserve in, 232, 282, 327–28, 516 Greenspan advances in, 126–27, 159, 177, 673 Greenspan master of, 177, 677–78 Greenspan’s apartment in, 180, 336–37, 367–68 Greenspan’s dislike of, 418–19 Greenspan’s offices in, 38, 343 Greenspan’s social life in, 173–74, 201–5, 238, 368–69, 388, 392, 499, 645 Greenspan’s speeches in, 503–5 Kemp’s retirement party in, 375–77 Thatcher’s visit to, 179–80 top economic jobs in, 156 Washington Heights, Manhattan, 13–14, 20, 28, 36, 293, 672 Washington Post, 96, 123, 125, 174, 179, 241, 267, 316, 371, 386–88, 403, 407, 447, 461, 508, 570 Washington Redskins, 458–59 Washington Times, 286, 289 Watergate complex, 162–63, 180, 336–37, 367–68 scandal, 153, 156, 163, 165, 182 Waxman, Henry, 664–68, 670 wealth, 52, 92, 149, 163, 178, 218, 349, 393, 529, 545, 552, 654 “wealth effect,” 51, 213 The Wealth of Nations (Smith), 645 Webster, Bill, 459–60 Weidenbaum, Murray, 259–61, 266–67 Weill, Sanford, 522–26, 530, 541, 559–60 Weinberger, Caspar, 225 welfare, 92–94, 106–7, 119, 123, 125, 154, 255, 273 Wells Fargo, 616–17 Wessel, David, 500–501, 504, 512–13 Westmoreland, William, 132 Whalen, Richard, 121 wheat, 54, 184 white-collar workers, 60, 63 White House, 200–201, 214, 401 budget bureau/office of, 143, 156, 184 chief of staff, 307–10, 315, 340 correspondent dinners at, 306 draft bill signed in, 133 fetes Greenspan, 649 Greenspan’s allies in, 167, 287, 360, 419 Greenspan’s frequent visits to, 171, 180, 185, 577–78, 602, 608–9 Greenspan’s meetings at, 137–38, 149, 163, 196 and Medal of Freedom, 648 state dinners at, 204, 238, 340–42, 360, 369, 511 Whitehead, John, 315 Why Globalization Works (Wolf), 657 Wien, Byron, 502–5 Will, George, 167, 338–39 Wolfensohn, Elaine, 454, 499, 515 Wolfensohn, James, 454–55, 510, 515 Woodruff, Judy, 422, 471, 507 World Bank, 228, 231, 454, 499, 510, 514–15 World Trade Center, 584–87, 590–92 World War I, 91, 615–16 World War II, 20–24, 26–28, 40, 83, 87, 165, 183, 234, 530 Wu, Lucille, 84, 318 Wyoming, 282.

Over the intervening period, Greenspan had served as a no-holds-barred campaign adviser, as an interim budget director, as a consultant on everything from deregulation to the draft—and then finally as a go-between in the Fed’s subjugation. But now, by announcing wage and price controls, Nixon had crossed a line. He had ignored Adam Smith’s most basic insight about the preciousness of price signals: without them, producers cannot know what consumers want, and consumers cannot distinguish between scarcity and abundance. Right up until the eve of the Camp David announcement, most administration economists had shared Greenspan’s anti–price control convictions.


pages: 397 words: 109,631

Mindware: Tools for Smart Thinking by Richard E. Nisbett

affirmative action, Albert Einstein, availability heuristic, behavioural economics, big-box store, Cass Sunstein, choice architecture, cognitive dissonance, confounding variable, correlation coefficient, correlation does not imply causation, cosmological constant, Daniel Kahneman / Amos Tversky, dark matter, do well by doing good, Edward Jenner, endowment effect, experimental subject, feminist movement, fixed income, fundamental attribution error, Garrett Hardin, glass ceiling, Henri Poincaré, if you see hoof prints, think horses—not zebras, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, job satisfaction, Kickstarter, lake wobegon effect, libertarian paternalism, longitudinal study, loss aversion, low skilled workers, Menlo Park, meta-analysis, Neil Armstrong, quantitative easing, Richard Thaler, Ronald Reagan, selection bias, Shai Danziger, Socratic dialogue, Steve Jobs, Steven Levy, tacit knowledge, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Tragedy of the Commons, William of Occam, Yitang Zhang, Zipcar

I feel more comfortable knowing that a given relationship exists in the wild and not just in the laboratory or in a possibly atypical ecological environment. Moreover, there are often clever things that one can do to make us pretty sure that we’ve learned something about causality. Take the correlation between the wealth of nations and the IQ of nations. What’s going on causally there? The correlation taken by itself is hugely problematic. Lots of things are correlated with both wealth and IQ—physical health, for example. “Healthy, wealthy, and wise” is not just an expression; the three go together in a bundle of correlations that include many other potential causal variables as well.

Theories developed by psychologists to describe how rats learn to run mazes guided computer scientists in their effort to teach machines how to learn. Darwin’s theory of natural selection owes a great deal to eighteenth-century Scottish philosophers’ theories about social systems, in particular Adam Smith’s theory that societal wealth is created by rational actors pursuing their own selfish interests.1 Economists are now making major contributions to the understanding of human intelligence and self-control. Economists’ views about how people make choices were transformed by cognitive psychologists, and economists’ scientific tools were greatly expanded by adopting the experimental techniques used by social psychologists.


pages: 311 words: 17,232

Living in a Material World: The Commodity Connection by Kevin Morrison

addicted to oil, Alan Greenspan, An Inconvenient Truth, barriers to entry, Berlin Wall, biodiversity loss, carbon credits, carbon footprint, carbon tax, clean water, commoditize, commodity trading advisor, computerized trading, diversified portfolio, Doha Development Round, Elon Musk, energy security, European colonialism, flex fuel, food miles, Ford Model T, Great Grain Robbery, Gregor Mendel, Hernando de Soto, Hugh Fearnley-Whittingstall, hydrogen economy, Intergovernmental Panel on Climate Change (IPCC), junk bonds, Kickstarter, Long Term Capital Management, managed futures, Market Wizards by Jack D. Schwager, Michael Milken, new economy, North Sea oil, oil rush, oil shale / tar sands, oil shock, out of africa, Paul Samuelson, peak oil, planned obsolescence, price mechanism, Ronald Coase, Ronald Reagan, Silicon Valley, sovereign wealth fund, the payments system, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, uranium enrichment, vertical integration, young professional

Simmons, M. (2005) Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, John Wiley & Sons, Inc., Hoboken. Simon, J.L. (1996) The Ultimate Resource 2, Princeton University Press. Singer, J.W. (2006) Commentary on Crop Rotation, Pioneer Growing Point, January, p. 21. Smith, A. (1776) The Wealth of Nations, Books I–III. Smith, C.W., Betran, J. and Runge, E.C.A. (Eds) (2004) Corn: Origin, History, Technology and Production, John Wiley & Sons, Inc., Hoboken. Smith, M. (2006) DRC – Challenging Opportunities, Mines & Money Conference, London, November 21. Spilimbergo, A. (1999) Copper and the Chilean Economy, 1960–1998, International Monetary Fund, research department, April.

Or they would burn it as fuel, and the silks (the skin) would be smoked.4 The term ‘corn’ is confusing for many Europeans, who generally refer to the plant as maize, and use the word ‘corn’ to refer to a field crop such as wheat or barley. My father used to tell me he grew corn as a teenager, but he was actually referring to wheat, barley and oats. At the time of Adam Smith, reference to corn was meant as a generic term for the dominant grains, but in the United States today the word corn is now only used for maize, (Indian) corn being by far the most dominant crop on the US agricultural landscape. Fill Her Up with Corn The concept of ethanol as a fuel is not new, but previous attempts to promote the industry have never received anything like the widespread political and business support it received this decade.


pages: 368 words: 32,950

How the City Really Works: The Definitive Guide to Money and Investing in London's Square Mile by Alexander Davidson

accounting loophole / creative accounting, algorithmic trading, asset allocation, asset-backed security, bank run, banking crisis, barriers to entry, Bear Stearns, Big bang: deregulation of the City of London, buy and hold, capital asset pricing model, central bank independence, corporate governance, Credit Default Swap, currency risk, dematerialisation, discounted cash flows, diversified portfolio, double entry bookkeeping, Edward Lloyd's coffeehouse, Elliott wave, equity risk premium, Exxon Valdez, foreign exchange controls, forensic accounting, Glass-Steagall Act, global reserve currency, high net worth, index fund, inflation targeting, information security, intangible asset, interest rate derivative, interest rate swap, inverted yield curve, John Meriwether, junk bonds, London Interbank Offered Rate, Long Term Capital Management, low interest rates, margin call, market fundamentalism, Nick Leeson, North Sea oil, Northern Rock, pension reform, Piper Alpha, price stability, proprietary trading, purchasing power parity, Real Time Gross Settlement, reserve currency, Right to Buy, risk free rate, shareholder value, short selling, The Wealth of Nations by Adam Smith, transaction costs, value at risk, yield curve, zero-coupon bond

Read this with Chapter 26, which focuses on governance in relation to accounting. The concept Corporate governance is about how a company conducts its corporate affairs and responds to stakeholders, employees and society. It covers ethical, legislative and other rules specifying how a company should act. The issues are not new. In 1776, Adam Smith said in his book Inquiry into the Nature and Cause of the Wealth of Nations that managers could not be expected to manage other people’s money with ‘the same anxious vigilance with which the partners in a private copartnery frequently watch over their own’, and that ‘negligence and profusion, therefore, must always prevail’. The corporate governance framework in the UK and elsewhere has, at least since the early 1990s, been a mixture of regulation and best practice.


pages: 430 words: 111,038

Empireland: How Imperialism Has Shaped Modern Britain by Sathnam Sanghera

Black Lives Matter, Boris Johnson, British Empire, Cape to Cairo, cognitive dissonance, Corn Laws, coronavirus, COVID-19, Donald Trump, Downton Abbey, Etonian, European colonialism, food miles, ghettoisation, global pandemic, Jeremy Corbyn, Khartoum Gordon, lockdown, Mahatma Gandhi, mass immigration, Neil Armstrong, period drama, phenotype, Rishi Sunak, school choice, Scientific racism, Scramble for Africa, Shamima Begum, social distancing, South Sea Bubble, spice trade, Suez canal 1869, Suez crisis 1956, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, women in the workforce

., National Income of India in the Twentieth Century, Oxford University Press, 2001 ‘Slave trade and the British economy’, BBC Bitesize, 2020, https://www.bbc.co.uk/bitesize/guides/zc92xnb/revision/1 ‘Slave trade shameful, Blair says’, BBC News, 25/03/2007, http://news.bbc.co.uk/1/hi/uk/6493507.stm Smith, Adam, The Wealth of Nations: Books I–III, Penguin Classics, 1982 Smith, Alison, Brown, David, and Jacobi, Carol (eds.), Artist and Empire: Facing Britain’s Imperial Past, Tate Publishing, 2015 Smith, Anna Marie, The New Right Discourse on Race and Sexuality: Britain, 1968–1990, Cambridge University Press, 1994 Sohal, Jay Singh, ‘The battle of Saragarhi: when 21 Sikh soldiers stood against 10,000 men’, History Extra, 19/08/2019, https://www.historyextra.com/period/victorian/when-21-sikh-soldiers-stood-against-10000-men-the-battle-of-saragarhi/ Solow, Barbara L., and Engerman, Stanley L., British Capitalism and Caribbean Slavery: The Legacy of Eric Williams, Cambridge University Press, 2010 Spilsbury, Julian, The Indian Mutiny, Weidenfeld & Nicolson, 2008 Springhall, J.

Places like Wolverhampton, Clydebank, Tyneside and South Wales unarguably generated enormous wealth building the ships the empire needed to run, mining coal to power them, making guns to protect and expand imperial territory, the irons to keep slaves and producing goods for newly opened markets – but how much of what they did can be attributed to empire specifically? It is impossible to know, for example, how many of Wolverhampton’s locks and chains were used in slavery, and how many were used in regular industry. It is an ambiguity that Matthew Lesh, Research Director at the Adam Smith Institute, seized upon recently when talking to the FT about the economic legacies of slavery, claiming that ‘most of our prosperity is independent of slavery’ and arguing that innovation drove the Industrial Revolution more than investment by former slave owners. One way that historians have tried to measure the benefits of empire to Britain is by comparing the returns on investments in colonies with investment in the rest of the world.


pages: 1,351 words: 385,579

The Better Angels of Our Nature: Why Violence Has Declined by Steven Pinker

1960s counterculture, affirmative action, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Albert Einstein, availability heuristic, behavioural economics, Berlin Wall, Boeing 747, Bonfire of the Vanities, book value, bread and circuses, British Empire, Broken windows theory, business cycle, California gold rush, Cass Sunstein, citation needed, classic study, clean water, cognitive dissonance, colonial rule, Columbine, computer age, Computing Machinery and Intelligence, conceptual framework, confounding variable, correlation coefficient, correlation does not imply causation, crack epidemic, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Brooks, delayed gratification, demographic transition, desegregation, Doomsday Clock, Douglas Hofstadter, Dr. Strangelove, Edward Glaeser, en.wikipedia.org, European colonialism, experimental subject, facts on the ground, failed state, first-past-the-post, Flynn Effect, food miles, Francis Fukuyama: the end of history, fudge factor, full employment, Garrett Hardin, George Santayana, ghettoisation, Gini coefficient, global village, Golden arches theory, Great Leap Forward, Henri Poincaré, Herbert Marcuse, Herman Kahn, high-speed rail, Hobbesian trap, humanitarian revolution, impulse control, income inequality, informal economy, Intergovernmental Panel on Climate Change (IPCC), invention of the printing press, Isaac Newton, lake wobegon effect, libertarian paternalism, long peace, longitudinal study, loss aversion, Marshall McLuhan, mass incarceration, McMansion, means of production, mental accounting, meta-analysis, Mikhail Gorbachev, mirror neurons, moral panic, mutually assured destruction, Nelson Mandela, nuclear taboo, Oklahoma City bombing, open economy, Peace of Westphalia, Peter Singer: altruism, power law, QWERTY keyboard, race to the bottom, Ralph Waldo Emerson, random walk, Republic of Letters, Richard Thaler, Ronald Reagan, Rosa Parks, Saturday Night Live, security theater, Skinner box, Skype, Slavoj Žižek, South China Sea, Stanford marshmallow experiment, Stanford prison experiment, statistical model, stem cell, Steven Levy, Steven Pinker, sunk-cost fallacy, technological determinism, The Bell Curve by Richard Herrnstein and Charles Murray, the long tail, The Wealth of Nations by Adam Smith, theory of mind, Timothy McVeigh, Tragedy of the Commons, transatlantic slave trade, trolley problem, Turing machine, twin studies, ultimatum game, uranium enrichment, Vilfredo Pareto, Walter Mischel, WarGames: Global Thermonuclear War, WikiLeaks, women in the workforce, zero-sum game

., & Martin, N. G. 1997. Modeling genetic and environmental influences in the etiology of conduct disorder: A study of 2,682 adult twin pairs. Journal of Abnormal Psychology, 106, 266–79. Smith, A. 1759/1976. The theory of moral sentiments. Indianapolis: Liberty Classics. Smith, A. 1776/2009. The wealth of nations. New York: Classic House Books. Smith, H. 1952. Man and his gods. Boston: Little, Brown. Sokal, A. D. 2000. The Sokal hoax: The sham that shook the academy. Lincoln: University of Nebraska Press. Solomon, R. L. 1980. The opponent-process theory of acquired motivation. American Psychologist, 35, 69 1–71 2 .

But a mass movement against chattel slavery as an institution arose for the first time in the 18th century and rapidly pushed it to near extinction. Why did people eventually forswear the ultimate labor-saving device? Historians have long debated the extent to which the abolition of slavery was driven by economics or by humanitarian concerns. At one time the economic explanation seemed compelling. In 1776 Adam Smith reasoned that slavery must be less efficient than paid employment because only the latter was a positive-sum game: The work done by slaves, though it appears to cost only their maintenance, is in the end the dearest of any. A person who can acquire no property, can have no other interest but to eat as much, and to labour as little as possible.

One of the foremost was gentle commerce, the theory that the positive-sum payoff of trade should be more appealing than the zero-sum or negative-sum payoff of war.114 Though the mathematics of game theory would not be available for another two hundred years, the key idea could be stated easily enough in words: Why spend money and blood to invade a country and plunder its treasure when you can just buy it from them at less expense and sell them some of your own? The Abbé de Saint Pierre (1713), Montesquieu (1748), Adam Smith (1776), George Washington (1788), and Immanuel Kant (1795) were some of the writers who extolled free trade because it yoked the material interests of nations and thus encouraged them to value one another’s well-being. As Kant put it, “The spirit of commerce sooner or later takes hold of every people, and it cannot exist side by side with war. . . .


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The Great Leveler: Violence and the History of Inequality From the Stone Age to the Twenty-First Century by Walter Scheidel

agricultural Revolution, assortative mating, basic income, Berlin Wall, Bernie Sanders, Branko Milanovic, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, classic study, collective bargaining, colonial rule, Columbian Exchange, conceptual framework, confounding variable, corporate governance, cosmological principle, CRISPR, crony capitalism, dark matter, declining real wages, democratizing finance, demographic transition, Dissolution of the Soviet Union, Downton Abbey, Edward Glaeser, failed state, Fall of the Berlin Wall, financial deregulation, fixed income, Francisco Pizarro, full employment, Gini coefficient, global pandemic, Great Leap Forward, guns versus butter model, hiring and firing, income inequality, John Markoff, knowledge worker, land reform, land tenure, low skilled workers, means of production, mega-rich, Network effects, nuclear winter, offshore financial centre, plutocrats, race to the bottom, recommendation engine, rent control, rent-seeking, road to serfdom, Robert Gordon, Ronald Reagan, Second Machine Age, Simon Kuznets, synthetic biology, The Future of Employment, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, transatlantic slave trade, universal basic income, very high income, working-age population, zero-sum game

Most importantly, he notes that these adjustments alter the relative inequality ranking of these societies only rarely (238). See Atkinson 2014b for the mixed effects of decolonization on income inequality as proxied by top income shares. 5 Fig. A.3 from Milanovic, Lindert, and Williamson 2011: 268 fig. 4. 6 Adam Smith, An inquiry into the nature and causes of the wealth of nations V.ii.k. Fig. A.4 from Milanovic 2013: 9 fig. 3. 7 Milanovic 2013: 12 table 1, 13 fig. 4 (UK and United States). For high inequality up to 1914, see herein, chapter 3, pp. 104–105, 108–110. 8 I exclude petrostates because they could, and de facto do, combine high income inequality with high per capita GDP.

Only in the poorest countries today do official poverty lines coincide with conventional minimum subsistence levels. More generous limits elsewhere are a function of higher per capita GDP. Subjective assessments of what constitutes socially acceptable minimum subsistence also show some sensitivity to overall living standards. Adam Smith’s definition of minimum requirements in his own day is a famous example. In his opinion, they include “not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without,” such as—in England—a linen shirt and leather shoes.


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Human Diversity: The Biology of Gender, Race, and Class by Charles Murray

23andMe, affirmative action, Albert Einstein, Alfred Russel Wallace, Asperger Syndrome, assortative mating, autism spectrum disorder, basic income, behavioural economics, bioinformatics, Cass Sunstein, correlation coefficient, CRISPR, Daniel Kahneman / Amos Tversky, dark triade / dark tetrad, domesticated silver fox, double helix, Drosophila, emotional labour, epigenetics, equal pay for equal work, European colonialism, feminist movement, glass ceiling, Gregor Mendel, Gunnar Myrdal, income inequality, Kenneth Arrow, labor-force participation, longitudinal study, meritocracy, meta-analysis, nudge theory, out of africa, p-value, phenotype, public intellectual, publication bias, quantitative hedge fund, randomized controlled trial, Recombinant DNA, replication crisis, Richard Thaler, risk tolerance, school vouchers, Scientific racism, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, Skinner box, social intelligence, Social Justice Warrior, statistical model, Steven Pinker, The Bell Curve by Richard Herrnstein and Charles Murray, the scientific method, The Wealth of Nations by Adam Smith, theory of mind, Thomas Kuhn: the structure of scientific revolutions, twin studies, universal basic income, working-age population

“To What Extent and Under Which Circumstances Are Growth Mind-Sets Important to Academic Achievement? Two Meta-analyses.” Psychological Science 29 (4): 549–71. Skinner, B. F. 1938. The Behavior of Organisms: An Experimental Analysis. New York: Appleton-Century-Crofts. Smith, Adam. 1776. An Inquiry in the Nature and Causes of the Wealth of Nations. London: W. Strahan. . 1979. The Theory of Moral Sentiments. Oxford: Oxford University Press. Original edition 1759. Smith, Kerri. 2017. “The Brain Circuit Challenge.” Nature 548: 150–52. Smouse, Peter E., Richard S. Spielman, and Myoung H. Park. 1982. “Multiple-Locus Allocation of Individuals to Groups as a Function of the Genetic Variation Within and Differences Among Human Populations.”

Of the 39 articles that presented either survey data or quantitative experimental results, 33 were on topics for which polygenic scores would be directly relevant. In almost half (18 of the 39), the major topic of the article directly involved sex, ethnicity, or class.[31] Economics and political science. The role of psychological factors in economics goes back to Adam Smith’s Theory of Moral Sentiments. The work of Daniel Kahneman, Amos Tversky, and Paul Slovic on decision making under conditions of uncertainty and, more recently, the work of Cass Sunstein and Richard Thaler on “nudge” theory, are both rich fields of study that will be informed by genomic data.32 They are only part of the growing field of behavioral economics.

It soon spread to the assumption that human beings are malleable, molded by events and capable of being molded by design. In the eighteenth century, this position was most flamboyantly proclaimed by the Enlightenment’s rock star, Jean-Jacques Rousseau, who was romantically optimistic about education’s potential to do the molding by design. Even unromantic Adam Smith believed in a partially blank slate: “The difference between the most dissimilar characters, between a philosopher and a common street porter, for example, seems to arise not so much from nature, as from habit, custom, and education.”4 But Smith also had a fully realized conception of an inborn human nature (see The Theory of Moral Sentiments), and thereby represents a competing stream of eighteenth-century thought in which he was joined by others in the Scottish Enlightenment and by the American founders.


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The Silk Roads: A New History of the World by Peter Frankopan

access to a mobile phone, Admiral Zheng, anti-communist, Ayatollah Khomeini, banking crisis, Bartolomé de las Casas, Berlin Wall, bread and circuses, British Empire, clean water, Columbian Exchange, credit crunch, cuban missile crisis, Deng Xiaoping, discovery of the americas, disinformation, drone strike, dual-use technology, energy security, European colonialism, failed state, financial innovation, Isaac Newton, land reform, Mahatma Gandhi, Malacca Straits, mass immigration, Mikhail Gorbachev, Murano, Venice glass, New Urbanism, no-fly zone, Ronald Reagan, sexual politics, South China Sea, spice trade, statistical model, Stuxnet, Suez crisis 1956, the built environment, the market place, The Wealth of Nations by Adam Smith, too big to fail, trade route, transcontinental railway, uranium enrichment, wealth creators, WikiLeaks, yield management, Yom Kippur War

Unlike India, where the impact of the opening up of the world produced new wonders of the world, in China it was to lead to a serious economic and political crisis in the seventeenth century.91 Globalisation was no less problematic five centuries ago than it is today. As Adam Smith later noted in his famous book on the wealth of nations, ‘the discovery of America and that of a passage to the East Indies by the Cape of Good Hope, are the greatest and most important events recorded in the history of mankind’.92 The world was indeed transformed by the roads of gold and silver that opened up following Columbus’ first expedition and Vasco da Gama’s successful journey home from India. What Adam Smith did not say in 1776, however, is how England fitted into the equation. For if the century that followed the discoveries of the 1490s belonged to Spain and Portugal, with the fruits showered on the empires of the east, then the next 200 years would belong to countries in the north of Europe.

Batchelor, ‘The Selden Map Rediscovered: A Chinese Map of East Asian Shipping Routes, c. 1619’, Imago Mundi: The International Journal for the History of Cartography 65.1 (2013), 37–63. 92W. Atwell, ‘Ming Observations of Ming Decline: Some Chinese Views on the “Seventeenth Century Crisis” in Comparative Perspective’, Journal of the Royal Asiatic Society 2 (1988), 316–48. 93A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 4.7, ed. R. Campbell and A. Skinner, 2 vols (Oxford, 1976), 2, p. 626. Chapter 13 – The Road to Northern Europe 1José de Acosta, Historia natural y moral de las Indias, tr. E. Mangan, Natural and Moral History of the Indies (Durham, NC, 2002), p. 179. 2Regnans in excelsis, in R. Miola (ed.), Early Modern Catholicism: An Anthology of Primary Sources (Oxford, 2007), pp. 486–8; see P.


Trading Risk: Enhanced Profitability Through Risk Control by Kenneth L. Grant

backtesting, business cycle, buy and hold, commodity trading advisor, correlation coefficient, correlation does not imply causation, delta neutral, diversification, diversified portfolio, financial engineering, fixed income, frictionless, frictionless market, George Santayana, global macro, implied volatility, interest rate swap, invisible hand, Isaac Newton, John Meriwether, Long Term Capital Management, managed futures, market design, Myron Scholes, performance metric, price mechanism, price stability, proprietary trading, risk free rate, risk tolerance, risk-adjusted returns, Sharpe ratio, short selling, South Sea Bubble, Stephen Hawking, the scientific method, The Wealth of Nations by Adam Smith, transaction costs, two-sided market, uptick rule, value at risk, volatility arbitrage, yield curve, zero-coupon bond

This helps him manage his risk, keep creditors at bay, and maintain the schedule flexibility he needs to be able to drop everything when he receives word (and the phone call is expected at any time) that Dreamworks has decided to provide funding for his bold but underdeveloped concept for a musical adaptation of Adam Smith’s The Wealth of Nations, featuring his selfpenned (soon to be) smash hit, “I Wanna Hold Your (Invisible) Hand.” In addition, I have a relative in this game, who I also consider a friend. Her name is Barbara. She’s raised a whole passel of kids and grandkids and is the chief financial officer of the family business.


pages: 390 words: 119,527

Armed Humanitarians by Nathan Hodge

Andrei Shleifer, anti-communist, Berlin Wall, British Empire, clean water, colonial rule, European colonialism, failed state, friendly fire, Golden arches theory, IFF: identification friend or foe, jobless men, Khyber Pass, kremlinology, land reform, Mikhail Gorbachev, no-fly zone, off-the-grid, old-boy network, operational security, Potemkin village, private military company, profit motive, RAND corporation, Ronald Reagan, satellite internet, Silicon Valley, South China Sea, Suez crisis 1956, The Wealth of Nations by Adam Smith, too big to fail, walking around money

The book should be read as “a primer for how to win in Iraq.”2 Hailer decided to reprint the Galula book, as it seemed to fill the most urgent need. “Guys came back [from Iraq] and said, ‘What are we doing?’ ” Hailer later told me. “That’s what frustrated me: We are fighting a unconventional war, and all these books are out of print. It’s like taking an economics course and Adam Smith’s The Wealth of Nations is out of print.” He found a copy in the University of South Florida library and tracked down the company that had acquired the book’s original publisher, and offered to pay royalties for reprint rights. The publisher agreed. Hailer then found a Florida firm that could make a high-quality scan of the original book and located a printer in Minnesota that could handle the job.


pages: 369 words: 121,161

Alistair Cooke's America by Alistair Cooke

Albert Einstein, Alistair Cooke, British Empire, Charles Lindbergh, company town, Cornelius Vanderbilt, cotton gin, double entry bookkeeping, Ford Model T, full employment, Gunnar Myrdal, Hernando de Soto, imperial preference, interchangeable parts, joint-stock company, Maui Hawaii, Ralph Nader, Ralph Waldo Emerson, Spread Networks laid a new fibre optics cable between New York and Chicago, strikebreaker, The Wealth of Nations by Adam Smith, transcontinental railway, Triangle Shirtwaist Factory, urban sprawl, wage slave, Works Progress Administration

Carnegie was odd in having a whole philosophy about the need, even the duty, to scatter his wealth. He didn’t even come to count his millions until he began to disperse them. He wrote a best-selling sermon called ‘The Gospel of Wealth,’ which as a piece of dialectic will hardly compare with The Wealth of Nations or Das Kapital, but it deeply impressed some rather impressive people, including William Ewart Gladstone, and the chief rabbi of the United Hebrew Congregations of Britain, and the Archbishop of Westminster. ‘The problem of our age,’ it said, ‘is the proper administration of wealth.’ Carnegie went on to list, in descending order of importance, the proper beneficiaries of ‘the wise trustee of surplus wealth.’

In colonial times the only military establishment was a rifle by the fireside. Whenever there was a secessionist uprising, a trade or tax riot, or an Indian raid, it was the duty of the citizen to grab his rifle when the militia was mustered. Every farmer and mechanic knew in his bones, if not by heart, Adam Smith’s precept: ‘Every man must in some measure join the trade of soldier to whatever other trade or profession he happens to carry on.’ When the trouble was over the rifle went back where it belonged, by the fireplace. At the end of the Revolutionary War – we noticed earlier – the Continental Army, Navy and Marine Corps were dissolved; and the militias went home to their own states and disbanded.


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Money Changes Everything: How Finance Made Civilization Possible by William N. Goetzmann

Albert Einstein, Andrei Shleifer, asset allocation, asset-backed security, banking crisis, Benoit Mandelbrot, Black Swan, Black-Scholes formula, book value, Bretton Woods, Brownian motion, business cycle, capital asset pricing model, Cass Sunstein, classic study, collective bargaining, colonial exploitation, compound rate of return, conceptual framework, Cornelius Vanderbilt, corporate governance, Credit Default Swap, David Ricardo: comparative advantage, debt deflation, delayed gratification, Detroit bankruptcy, disintermediation, diversified portfolio, double entry bookkeeping, Edmond Halley, en.wikipedia.org, equity premium, equity risk premium, financial engineering, financial independence, financial innovation, financial intermediation, fixed income, frictionless, frictionless market, full employment, high net worth, income inequality, index fund, invention of the steam engine, invention of writing, invisible hand, James Watt: steam engine, joint-stock company, joint-stock limited liability company, laissez-faire capitalism, land bank, Louis Bachelier, low interest rates, mandelbrot fractal, market bubble, means of production, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, new economy, passive investing, Paul Lévy, Ponzi scheme, price stability, principal–agent problem, profit maximization, profit motive, public intellectual, quantitative trading / quantitative finance, random walk, Richard Thaler, Robert Shiller, shareholder value, short selling, South Sea Bubble, sovereign wealth fund, spice trade, stochastic process, subprime mortgage crisis, Suez canal 1869, Suez crisis 1956, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, time value of money, tontine, too big to fail, trade liberalization, trade route, transatlantic slave trade, tulip mania, wage slave

In addition, the paper money could circulate as reliable tender, because it represented a promise from an organization with considerable assets: promises of payment in goods from borrowers, and in the event they failed to pay, with land they held title to. Adam Smith, writing a generation later, faulted American paper money in The Wealth of Nations because it bore no interest. Smith could not understand why a zero-interest rate note was accepted as legal tender, although he admitted that the currency of Pennsylvania was well managed and traded above its par value in British sterling.3 In contrast, the Massachusetts currency dropped to 20% of British currency value.4 Some of this discount may have had to do with self-dealing and fraud.

“The land-bank system in the American colonies.” Journal of Economic History 13(2): 145–159. 2. Sumner, William G. 1896. A History of Banking in All the Leading Nations: The United States, vol. 1. New York: Journal of Commerce and Commercial Bulletin, p. 10. 3. Smith, Adam. 1921. An Inquiry into the Nature and Causes of the Wealth of Nations, vol. 2. London: J. M. Dent & Sons, p. 423. 4. Thayer (1953). 5. Rasmussen, Barbara. 1994. Absentee Landowning and Exploitation in West Vrginia: 1760–1920. Lexington: University Press of Kentucky, p. 28. 6. Spieth, Darius A. 2006. “The Corsets Assignat in David’s ‘Death of Marat.’” Source: Notes in the History of Art 30: 22–28. 7.

. ———. 2011. “Finding the Roman Empire’s disappeared deposit bankers.” Historia 60(3): 301–327. Slotsky, Alice Louise. 1997. The Bourse of Babylon: Market Quotations in the Astronomical Diaries of Babylonia. Bethesda, MD: CDL Press. Smith, Adam. 1921. An Inquiry into the Nature and Causes of the Wealth of Nations, vol. 2. London: J. M. Dent & Sons. Smith, Paul J. 1991. Taxing Heaven’s Storehouse: Horses, Bureaucrats, and the Destruction of the Sichuan Tea Industry, 1074–1224. Harvard-Yenching Institute Monograph Series, vol. 32. Cambridge, MA: Council on East Asian Studies and Harvard University Press.


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The Rise of the Network Society by Manuel Castells

air traffic controllers' union, Alan Greenspan, Apple II, Asian financial crisis, barriers to entry, Big bang: deregulation of the City of London, Bob Noyce, borderless world, British Empire, business cycle, capital controls, classic study, complexity theory, computer age, Computer Lib, computerized trading, content marketing, creative destruction, Credit Default Swap, declining real wages, deindustrialization, delayed gratification, dematerialisation, deskilling, digital capitalism, digital divide, disintermediation, double helix, Douglas Engelbart, Douglas Engelbart, edge city, experimental subject, export processing zone, Fairchild Semiconductor, financial deregulation, financial independence, floating exchange rates, future of work, gentrification, global village, Gunnar Myrdal, Hacker Ethic, hiring and firing, Howard Rheingold, illegal immigration, income inequality, independent contractor, Induced demand, industrial robot, informal economy, information retrieval, intermodal, invention of the steam engine, invention of the telephone, inventory management, Ivan Sutherland, James Watt: steam engine, job automation, job-hopping, John Markoff, John Perry Barlow, Kanban, knowledge economy, knowledge worker, labor-force participation, laissez-faire capitalism, Leonard Kleinrock, longitudinal study, low skilled workers, manufacturing employment, Marc Andreessen, Marshall McLuhan, means of production, megacity, Menlo Park, military-industrial complex, moral panic, new economy, New Urbanism, offshore financial centre, oil shock, open economy, packet switching, Pearl River Delta, peer-to-peer, planetary scale, popular capitalism, popular electronics, post-Fordism, post-industrial society, Post-Keynesian economics, postindustrial economy, prediction markets, Productivity paradox, profit maximization, purchasing power parity, RAND corporation, Recombinant DNA, Robert Gordon, Robert Metcalfe, Robert Solow, seminal paper, Shenzhen special economic zone , Shoshana Zuboff, Silicon Valley, Silicon Valley startup, social software, South China Sea, South of Market, San Francisco, special economic zone, spinning jenny, statistical model, Steve Jobs, Steve Wozniak, Strategic Defense Initiative, tacit knowledge, technological determinism, Ted Nelson, the built environment, the medium is the message, the new new thing, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, total factor productivity, trade liberalization, transaction costs, urban renewal, urban sprawl, vertical integration, work culture , zero-sum game

Figure 2.2 Estimate of evolution of productivity in the United States, 1972–1999 (output per hour) Source: US Bureau of Labor Statistics as elaborated by Gordon (1999) Table 2.5 Evolution of US productivity by industrial sectors and periods Source: US Bureau of Labor Statistics as elaborated by Gordon (1999) Informationalism and capitalism, productivity and profitability Yes, in the long term productivity is the source of the wealth of nations. And technology, including organizational and managerial technology, is the major productivity-inducing factor. But, from the perspective of economic agents, productivity is not a goal in itself. Neither is investing in technology for the sake of technological innovation. This is why Richard Nelson, in an insightful paper on the matter, considers that the agenda for formal growth theorizing should be built around the relationships between technical change, firm capabilities, and national institutions.35 Firms and nations (or political entities of different levels, such as regions or the European Union) are the actual agents of economic growth.

In the early 1990s it came to constitute what Ignacio Ramonet labeled as “la pensée unique” (“the only thinking”). While the actual ideological debate was considerably richer, on the surface it did appear as if political establishments around the world had adopted a common intellectual ground: an intellectual current not necessarily inspired by Von Hayek and Fukuyama, but certainly tributary of Adam Smith and Stuart Mill. In this context, free markets were expected to operate economic and institutional miracles, particularly when coupled with the new technological wonders promised by futurologists. The political interest of new leaders coming to government in the late 1980s and early 1990s favored the globalization option.

Yet the most important argument against a simplistic version of post-industrialism is the critique of the assumption according to which the three features we have examined coalesce in historical evolution, and that this evolution leads to a single model of the informational society. This analytical construct is in fact similar to the formulation of the concept of capitalism by classical political economists (from Adam Smith to Marx), exclusively based on the experience of English industrialization, only to find continuous “exceptions” to the pattern throughout the diversity of economic and social experience in the world. Only if we start from the analytical separation between the structural logic of the production system of the informational society and its social structure can we observe empirically if a specific techno-economic paradigm induces a specific social structure and to what extent.


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Swindled: the dark history of food fraud, from poisoned candy to counterfeit coffee by Bee Wilson

air freight, Corn Laws, food miles, James Watt: steam engine, Kickstarter, Louis Pasteur, new economy, Ralph Nader, Ronald Reagan, The Wealth of Nations by Adam Smith, Unsafe at Any Speed, Upton Sinclair

Even when pure, gin was a kind of poison, “Mother’s Ruin” as the anti-gin campaigners insisted—a drug that got into the milk of babies through their drunken nurses, or turned women to depravity and men to disorder.34 By the Gin Act of 1736, the British state even attempted—unsuccessfully—to ban gin. By contrast with this juniper-sodden firewater, wine seemed a moderate drink. In The Wealth of Nations, Adam Smith looked enviously to the wine-drinking nations of Europe as being soberer than Britain. Many wise voices over the ages told the English that they would be better off drinking fruit wines made from native British fruits than fancy—and often faked—foreign wines. Sir Hugh Platt, an Elizabethan courtier, beseeched his contemporaries to take an “English and naturall drinke” made from Royston grapes instead of poisoning themselves with imported “concocted” wines.35 “Native” fruit wines were one of Accum’s passions, too.


pages: 421 words: 125,417

Common Wealth: Economics for a Crowded Planet by Jeffrey Sachs

agricultural Revolution, air freight, Anthropocene, back-to-the-land, biodiversity loss, British Empire, business process, carbon credits, carbon footprint, carbon tax, clean water, colonial rule, corporate social responsibility, correlation does not imply causation, creative destruction, demographic transition, Diane Coyle, digital divide, Edward Glaeser, energy security, failed state, Garrett Hardin, Gini coefficient, global pandemic, Global Witness, Haber-Bosch Process, impact investing, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), intermodal, invention of agriculture, invention of the steam engine, invisible hand, Joseph Schumpeter, knowledge worker, labor-force participation, low skilled workers, mass immigration, microcredit, ocean acidification, oil shale / tar sands, old age dependency ratio, peak oil, profit maximization, profit motive, purchasing power parity, road to serfdom, Ronald Reagan, Simon Kuznets, Skype, statistical model, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, Tragedy of the Commons, transaction costs, unemployed young men, War on Poverty, women in the workforce, working-age population, zoonotic diseases

Enriching the Earth: Fritz Haber, Carl Bosch, and the Transformation of World Food Production. Cambridge, Mass.: MIT Press, 2001. _____. Feeding the World: A Challenge for the Twenty-First Century. Boston, Mass.: MIT Press, 2000. _____. “Improving Efficiency and Reducing Waste in Our Food System,” Environmental Sciences 1(2004):17–26. Smith, Adam. The Wealth of Nations. Edwin Cannan, ed. London: Methuen and Co., Ltd., 1904. Originally published in 1776. Smith, Rupert. The Utility of Force: The Art of War in the Modern World. London and New York: Allen Lane, 2005. Stern, Nicholas. The Economics of Climate Change: The Stern Review. Cambridge: Cambridge University Press, 2006.

Markets are wonderful because they coordinate the actions of a vast number of suppliers and customers who can remain largely anonymous to one another. No great ethics or acts of courage, or virtues of coordination are needed, only the decentralized self-interest of each business and each consumer. Adam Smith memorably noted, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” This has led some economists into the erroneous and simplistic viewpoint that markets can be relied on to solve all problems. William Easterly, for example, attacked the notion that large-scale plans and coordination are needed to get medicines to the poor by noting that millions of copies of Harry Potter books have gotten into the hands of readers without any such grand plans.


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The Levelling: What’s Next After Globalization by Michael O’sullivan

"World Economic Forum" Davos, 3D printing, Airbnb, Alan Greenspan, algorithmic trading, Alvin Toffler, bank run, banking crisis, barriers to entry, Bernie Sanders, Big Tech, bitcoin, Black Swan, blockchain, bond market vigilante , Boris Johnson, Branko Milanovic, Bretton Woods, Brexit referendum, British Empire, business cycle, business process, capital controls, carbon tax, Celtic Tiger, central bank independence, classic study, cloud computing, continuation of politics by other means, corporate governance, credit crunch, CRISPR, cryptocurrency, data science, deglobalization, deindustrialization, disinformation, disruptive innovation, distributed ledger, Donald Trump, driverless car, eurozone crisis, fake news, financial engineering, financial innovation, first-past-the-post, fixed income, gentrification, Geoffrey West, Santa Fe Institute, Gini coefficient, Glass-Steagall Act, global value chain, housing crisis, impact investing, income inequality, Intergovernmental Panel on Climate Change (IPCC), It's morning again in America, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", junk bonds, knowledge economy, liberal world order, Long Term Capital Management, longitudinal study, low interest rates, market bubble, minimum wage unemployment, new economy, Northern Rock, offshore financial centre, open economy, opioid epidemic / opioid crisis, Paris climate accords, pattern recognition, Peace of Westphalia, performance metric, Phillips curve, private military company, quantitative easing, race to the bottom, reserve currency, Robert Gordon, Robert Shiller, Robert Solow, Ronald Reagan, Scramble for Africa, secular stagnation, Silicon Valley, Sinatra Doctrine, South China Sea, South Sea Bubble, special drawing rights, Steve Bannon, Suez canal 1869, supply-chain management, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, total factor productivity, trade liberalization, tulip mania, Valery Gerasimov, Washington Consensus

The economic toll of the trade dispute is relatively small in the grand scheme of things, but the cost of climate change can be enormous. It can potentially, for the first time in centuries, render whole cities uninhabitable (if sea levels rise), destroy vast tracts of agricultural land (as is already happening across Africa and the United States), alter the wealth of nations permanently, and exacerbate diseases (such as cancer and malnutrition) within countries. The approach to climate change lies in the same process as that behind world trade negotiations and, potentially, as that described in chapter 7 for international debt restructuring. Individual nations will have to recognize the toll that climate change will take on their economies and societies and militate for broader political pressure.

As a result, most of the facets of globalization have a strong Anglo-Saxon flavor, especially if we think of globalization as a legal, political, economic, and perhaps cultural network. The original free-market philosophy that spawned globalization was propagated by thinkers like David Ricardo and Adam Smith and was spread by US and British policy makers. The notion that free markets are the most efficient mode of economic activity is one of the intellectual pillars of the proglobalization camp. This spirit lives on in academia, in that many of the world’s leading economists have trained or worked in the large universities of the US East Coast, which supply many of the staff members of organizations like the World Bank and IMF.


pages: 494 words: 132,975

Keynes Hayek: The Clash That Defined Modern Economics by Nicholas Wapshott

airport security, Alan Greenspan, banking crisis, Bear Stearns, Bretton Woods, British Empire, business cycle, collective bargaining, complexity theory, creative destruction, cuban missile crisis, Francis Fukuyama: the end of history, full employment, Gordon Gekko, greed is good, Gunnar Myrdal, if you build it, they will come, Isaac Newton, Joseph Schumpeter, Kickstarter, liquidationism / Banker’s doctrine / the Treasury view, means of production, military-industrial complex, Mont Pelerin Society, mortgage debt, New Journalism, Nixon triggered the end of the Bretton Woods system, Northern Rock, Paul Samuelson, Philip Mirowski, Phillips curve, price mechanism, public intellectual, pushing on a string, road to serfdom, Robert Bork, Robert Solow, Ronald Reagan, Simon Kuznets, The Chicago School, The Great Moderation, The Wealth of Nations by Adam Smith, Thomas Malthus, trickle-down economics, Tyler Cowen, War on Poverty, We are all Keynesians now, Yom Kippur War

It was all right to have him at Chicago so long as he was not associated with the economists.”42 In the fall of 1950, at the suggestion of Nef, Hayek became professor of social and moral science in the Committee on Social Thought, a chair funded in part by the Volcker fund. Despite the rebuff, Hayek accepted the post. Hayek wanted to kick-start his counterrevolution by writing a work that would be as popularly received as The Road to Serfdom. As his biographer Alan Ebenstein explained, “He hoped The Constitution of Liberty would be [Adam Smith’s] The Wealth of Nations of the twentieth century.”43 Over the next nine years he worked on and off on a work that would explain why the rule of law is the best way to safeguard individual liberties from governments. He began with a brief history of the notion of liberty and an elaboration on the concept of the rule of law first expressed two hundred years earlier by “the father of liberalism,” the English philosopher John Locke, whose work inspired both the French Revolution and America’s Founding Fathers.


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Actionable Gamification: Beyond Points, Badges and Leaderboards by Yu-Kai Chou

Apple's 1984 Super Bowl advert, barriers to entry, behavioural economics, bitcoin, Burning Man, Cass Sunstein, crowdsourcing, Daniel Kahneman / Amos Tversky, delayed gratification, Do you want to sell sugared water for the rest of your life?, don't be evil, en.wikipedia.org, endowment effect, Firefox, functional fixedness, game design, gamification, growth hacking, IKEA effect, Internet of things, Kickstarter, late fees, lifelogging, loss aversion, Maui Hawaii, Minecraft, pattern recognition, peer-to-peer, performance metric, QR code, recommendation engine, Richard Thaler, Silicon Valley, Skinner box, Skype, software as a service, Stanford prison experiment, Steve Jobs, TED Talk, The Wealth of Nations by Adam Smith, transaction costs

.↩ Chapter 7: The Third Core Drive - Empowerment of Creativity & Feedback “The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become.” - Adam Smith, The Wealth Of Nations The third Core Drive of Octalysis Gamification is Empowerment of Creativity & Feedback, which really emphasizes on what most people refer to as “Play.” Some of my fondest memories growing up are of when I got to play with Legos and engage in assembling, dismantling, and rebuilding basic structures in a practically infinite number of combinations.


pages: 588 words: 131,025

The Patient Will See You Now: The Future of Medicine Is in Your Hands by Eric Topol

23andMe, 3D printing, Affordable Care Act / Obamacare, Anne Wojcicki, Atul Gawande, augmented reality, Big Tech, bioinformatics, call centre, Clayton Christensen, clean water, cloud computing, commoditize, computer vision, conceptual framework, connected car, correlation does not imply causation, creative destruction, crowdsourcing, dark matter, data acquisition, data science, deep learning, digital divide, disintermediation, disruptive innovation, don't be evil, driverless car, Edward Snowden, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Firefox, gamification, global village, Google Glasses, Google X / Alphabet X, Ignaz Semmelweis: hand washing, information asymmetry, interchangeable parts, Internet of things, Isaac Newton, it's over 9,000, job automation, Julian Assange, Kevin Kelly, license plate recognition, lifelogging, Lyft, Mark Zuckerberg, Marshall McLuhan, meta-analysis, microbiome, Nate Silver, natural language processing, Network effects, Nicholas Carr, obamacare, pattern recognition, personalized medicine, phenotype, placebo effect, quantum cryptography, RAND corporation, randomized controlled trial, Salesforce, Second Machine Age, self-driving car, Silicon Valley, Skype, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, Snapchat, social graph, speech recognition, stealth mode startup, Steve Jobs, synthetic biology, the scientific method, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, traumatic brain injury, Turing test, Uber for X, uber lyft, Watson beat the top human players on Jeopardy!, WikiLeaks, X Prize

A coffeehouse argument accounted for Isaac Newton’s canonical book Principia Mathematica, published in 1687, which laid the foundation for classical mechanics, the laws of motion and gravity, and much more.21 We’ll come back to Newton shortly. Later in the 1700s, the preeminent economist Adam Smith actually wrote The Wealth of Nations in a coffeehouse, after having repeatedly circulated drafts for input among the regulars there. Beyond this physical confluence and interaction based on printed materials, Eisenstein pointed out: “That identical images, maps and diagrams could be viewed simultaneously by scattered readers constituted a kind of communications revolution in itself.”22 In parallel, we have seen a social media revolution the likes of which no one could have anticipated.


America in the World by Robert B. Zoellick

Albert Einstein, anti-communist, banking crisis, battle of ideas, Berlin Wall, Bretton Woods, British Empire, classic study, Corn Laws, coronavirus, cuban missile crisis, defense in depth, Deng Xiaoping, Donald Trump, Douglas Engelbart, Douglas Engelbart, energy security, European colonialism, facts on the ground, Fall of the Berlin Wall, foreign exchange controls, Great Leap Forward, guns versus butter model, hypertext link, Ida Tarbell, illegal immigration, immigration reform, imperial preference, Isaac Newton, Joseph Schumpeter, land reform, linear model of innovation, Mikhail Gorbachev, MITM: man-in-the-middle, Monroe Doctrine, mutually assured destruction, Nixon triggered the end of the Bretton Woods system, Norbert Wiener, Paul Samuelson, public intellectual, RAND corporation, reserve currency, Ronald Reagan, Ronald Reagan: Tear down this wall, scientific management, Scramble for Africa, Silicon Valley, Strategic Defense Initiative, The Wealth of Nations by Adam Smith, trade liberalization, transcontinental railway, undersea cable, Vannevar Bush, War on Poverty

With national treatment, “U.S. merchants and ships [if not goods] would receive the same standing in foreign countries as their own domestic merchants and ships.”6 In 1778, Franklin employed the model agreement in the negotiation with France, establishing one of the United States’ first two treaties. The Americans moved with the vanguard of new thinking about political economy. They were influenced by Adam Smith’s The Wealth of Nations, published in 1776. Smith argued that all parties would gain from trade; commerce was not a zero-sum transaction. Ben Franklin stated in 1781 that “I find myself rather inclined to adopt that modern [opinion], which supposes it is best for every Country to leave its Trade entirely free from Encumbrances.”

Adams was willing to use force to press the matter, but Monroe’s patience prevailed.22 Adams followed in the footsteps of the Founding Fathers by emphasizing the importance of trade. He sought to lower tariffs with Britain and France and urged “a still more expansive liberality” that allowed the foreigner to trade on the exact same footing as the citizen.23 This was Adam Smith’s idea of free trade. The American commitment to individual liberty envisaged a world very different from the old mercantilism dictated by governments. As Adams explained, “It is the nature of commerce, when unobstructed by the interference of authority, to find its own channels and to make its own way.


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The Organized Mind: Thinking Straight in the Age of Information Overload by Daniel J. Levitin

Abraham Maslow, airport security, Albert Einstein, Amazon Mechanical Turk, Anton Chekhov, autism spectrum disorder, Bayesian statistics, behavioural economics, big-box store, business process, call centre, Claude Shannon: information theory, cloud computing, cognitive bias, cognitive load, complexity theory, computer vision, conceptual framework, correlation does not imply causation, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, data science, deep learning, delayed gratification, Donald Trump, en.wikipedia.org, epigenetics, Eratosthenes, Exxon Valdez, framing effect, friendly fire, fundamental attribution error, Golden Gate Park, Google Glasses, GPS: selective availability, haute cuisine, How many piano tuners are there in Chicago?, human-factors engineering, if you see hoof prints, think horses—not zebras, impulse control, index card, indoor plumbing, information retrieval, information security, invention of writing, iterative process, jimmy wales, job satisfaction, Kickstarter, language acquisition, Lewis Mumford, life extension, longitudinal study, meta-analysis, more computing power than Apollo, Network effects, new economy, Nicholas Carr, optical character recognition, Pareto efficiency, pattern recognition, phenotype, placebo effect, pre–internet, profit motive, randomized controlled trial, Rubik’s Cube, Salesforce, shared worldview, Sheryl Sandberg, Skype, Snapchat, social intelligence, statistical model, Steve Jobs, supply-chain management, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Bayes, traumatic brain injury, Turing test, Twitter Arab Spring, ultimatum game, Wayback Machine, zero-sum game

These different aspects of information gathering and decision-making are typically distributed throughout an organization and may be assigned to different managers who then report to their higher-ups, who in turn balance the various factors to achieve the city’s long-term goals, to satisfice this particular decision. As Adam Smith wrote in The Wealth of Nations in 1776, one of the greatest advances in work productivity was the division of labor. Dividing up tasks in any large human enterprise has proved extremely influential and useful. Up until the mid 1800s, businesses were primarily small and family-run, serving only a local market.

National Weather Service, 225 Utah Construction (Utah International), 33–34, 301 Valins, Stuart, 149–50 Vallone, Robert, 339–40 value maximization, 269 Vance, Walter, 157 Venhuizen, John, 78–79 vigilance, 17, 47, 406n45 vision, 17–18, 21, 21–23 vitamin supplements, 253–55, 260 Wales, Jimmy, 331 Walker, Matthew, 184 Walls, Jeannette, 207 warfare, 172–73, 281–82 Watson, James, 375 The Wayback Machine, 474n341 The Wealth of Nations (Smith), 269 Wegner, Dan, 49 Wehr, Thomas, 189–90 Weisbord, Marvin, 286 Welch, Jack, 282, 464n283 Where’s Waldo? (children’s books), 17–18, 115 White House, 302–3 Whole Foods, 337–38 Wikipedia, 116, 120, 133, 330–36, 342, 378 willpower, 17, 37, 195–96 Wilson, Glenn, 97 Wisconsin Card Sorting Test, 176–77 witness testimony, 55–56 Wittgenstein, Ludwig, 65 Wonder, Stevie, 174, 208 Wooton Desk, 294 Wordsworth, William, 12, 375 work flow, 214–15, 319, 319 World War II, 155–56, 173, 250 World Wide Web, 114, 341–43, 474n341 writing, xiii–xv, 13–15 Wynn, Steve, 107, 219–20, 226–27, 279–80, 395 Yates, JoAnne, 295 Young, Neil, 207–8 Your Medical Mind (Groopman and Hartzband), 260–61 Zander, Benjamin, 365 Zen and the Art of Motorcycle Maintenance (Pirsig), 69–70 ILLUSTRATION CREDITS 1: © 2014 Daniel J.


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The Problem of Political Authority: An Examination of the Right to Coerce and the Duty to Obey by Michael Huemer

Cass Sunstein, Chelsea Manning, cognitive dissonance, cuban missile crisis, Daniel Kahneman / Amos Tversky, en.wikipedia.org, Eratosthenes, experimental subject, framing effect, Garrett Hardin, Gini coefficient, illegal immigration, impulse control, Isaac Newton, Julian Assange, laissez-faire capitalism, land bank, Machinery of Freedom by David Friedman, Milgram experiment, moral hazard, Phillip Zimbardo, profit maximization, profit motive, Ralph Nader, RAND corporation, rent-seeking, Ronald Coase, Stanford prison experiment, systematic bias, The Wealth of Nations by Adam Smith, Tyler Cowen, unbiased observer, uranium enrichment, WikiLeaks

Justification and Legitimacy: Essays on Rights and Obligations. Cambridge: Cambridge University Press. Singer, Peter. 1993. Practical Ethics, second edition. Cambridge: Cambridge University Press. ——. 2005. ‘Ethics and Intuitions’, Journal of Ethics 9: 331–52. Smith, Adam. 1979. An Inquiry into the Nature and Causes of the Wealth of Nations, vol. 1, ed. R. H. Campbell, A. S. Skinner, and W. B. Todd. Oxford: Clarendon. Originally published 1776. Smith, John. 1986. The Complete Works of Captain John Smith (1580–1631), vol. 2, ed. Philip L. Barbour. Chapel Hill: University of North Carolina Press. Sobek, David. 2009. The Causes of War.

Almost everyone accepts this in the case of nongovernmental monopolies; nothing essential changes when the label ‘government’ is applied to a monopolistic protection agency. 10.11 Collusion and cartelization Apart from monopoly, there is a second anticompetitive practice that may increase the profits of firms in a given industry. This is the practice of forming a cartel, an association of firms that agree among themselves to hold prices at an artificially high level or otherwise cooperate to promote their mutual interests. As Adam Smith warned, ‘People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.’34 Some critics argue that the protection industry would fall under the dominance of a consortium of this kind, leading to results similar to those of an industry monopoly.


pages: 573 words: 157,767

From Bacteria to Bach and Back: The Evolution of Minds by Daniel C. Dennett

Ada Lovelace, adjacent possible, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, AlphaGo, Andrew Wiles, Bayesian statistics, bioinformatics, bitcoin, Bletchley Park, Build a better mousetrap, Claude Shannon: information theory, computer age, computer vision, Computing Machinery and Intelligence, CRISPR, deep learning, disinformation, double entry bookkeeping, double helix, Douglas Hofstadter, Elon Musk, epigenetics, experimental subject, Fermat's Last Theorem, Gödel, Escher, Bach, Higgs boson, information asymmetry, information retrieval, invention of writing, Isaac Newton, iterative process, John von Neumann, language acquisition, megaproject, Menlo Park, Murray Gell-Mann, Necker cube, Norbert Wiener, pattern recognition, phenotype, Richard Feynman, Rodney Brooks, self-driving car, social intelligence, sorting algorithm, speech recognition, Stephen Hawking, Steven Pinker, strong AI, Stuart Kauffman, TED Talk, The Wealth of Nations by Adam Smith, theory of mind, Thomas Bayes, trickle-down economics, Turing machine, Turing test, Watson beat the top human players on Jeopardy!, Y2K

The ubiquity of ADCs in our lives, now taken for granted in almost all informational transmissions, probably plays a big role in entangling Shannon’s mathematical concept of information with our everyday concept of semantic information in spite of numerous alerts issued. A high-resolution color photograph of confetti on a sidewalk, broken down into eight million pixels, might fill a file ten times larger than a text file of, say, Adam Smith’s The Wealth of Nations, which can be squeezed into two megabytes. Depending on the coding systems you use (GIF or JPEG or … Word or PDF or …) a picture can be “worth a thousand words,” measured in bits, but there is a better sense in which a picture can be worth a thousand words or more. Can that sense be formalized?


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Wasps: The Splendors and Miseries of an American Aristocracy by Michael Knox Beran

anti-communist, British Empire, Charles Lindbergh, company town, Corn Laws, Cornelius Vanderbilt, creative destruction, cuban missile crisis, Etonian, fulfillment center, George Santayana, Isaac Newton, Jane Jacobs, Joseph Schumpeter, Lao Tzu, Lewis Mumford, old-boy network, phenotype, plutocrats, Ralph Waldo Emerson, Republic of Letters, Steven Pinker, The Wealth of Nations by Adam Smith, W. E. B. Du Bois, éminence grise

The more prosperous, safe, and free we become under our modern stars, the more anxious, dejected, and miserably alone we seem to Tocqueville to be; there are aspects of our nature that are not being done justice to.VI High WASPs wanted to repair this fragmented manner of living without sacrificing its material blessings: they wanted to reconcile Adam Smith’s The Wealth of Nations with Plato’s Laws, to introduce, into a technically advanced commercial Republic, with all its chaotic sprawl and empty noise, little oases of order of the kind Bernard Berenson envisioned, in which “poetry, music, ritual, the visual arts, the theater” would recreate the Dantesque sheepfold.

., 46–47, 50–51, 53 Washington dinner parties, 351–352 Washington National Cathedral, 320 WASP ideal, 2 WASPs: anti-Semitism and, 336–338; backlash against, 358–359; decadence of, 3, 7; decline of, 6, 15–16, 20, 26–29, 383–384; disillusionment of, 365–368; eutrapelian ideal and, 402–417; exclusion by, 338–342; God and, 418–421; insecurity of, 338–339; Kennedys and, 17–18, 360–365; manners of, 433; prejudice of, 336–338, 342–345; reinvention of, 9; women, 184–195 The Waste Land (Eliot), 256–259, 270 Watson, Edwin, 328 Waugh, Evelyn, 11, 17, 405–406, 414 The Wealth of Nations (Smith), 413–414 Webb, Beatrice, 176, 177 Webb, Sidney, 111, 114 Weber, Max, 268 Weld, Bill, 26 welfare state, 294, 359, 433 Welles, Sumner, 298, 303, 322–323 Wells, H.G., 170 Wendell Holmes, Oliver, 35, 69, 81, 151, 199 Wendell Holmes, Oliver, Jr., 137–138 West, Rebecca, 200 Westenholz, Baron von, 95 Western Front, 206–210 Wharton, Edith, 6, 27, 35, 101, 151, 153, 154, 156, 182, 196–198, 201–202, 220–221, 233, 237, 336, 339 White, Henry, 223 White, Peter, 371 White, Stanford, 30 White, Teddy, 375–376 White House, 47, 88 Whitman, Sarah, 115 Whitman, Walt, 15, 120, 127, 232, 269, 430 Whitney, Betsey, 3 Whitney, Dorothy, 115, 162–165, 167 Whitney, Edith, 135, 163 Whitney, Flora Payne, 163, 208, 209, 230 Whitney, Gertrude, 186–189, 202–203, 235, 278 Whitney, Harry Payne, 71–72, 135, 186–188, 216, 235 Whitney, Jock, 375 Whitney, John Hay, 3, 286–287 Whitney, Richard, 283 Whitney, William Payne, 144 Whitney, Williams Collins, 71–72, 134–136, 163–164, 285 Whitney Museum of American Art, 190 Whitridge, Arnold, 127, 203–204 Whitridge, Frederick, 201 Whittaker, Laha, 299–300 Who Killed Society?


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Escape From Rome: The Failure of Empire and the Road to Prosperity by Walter Scheidel

agricultural Revolution, barriers to entry, British Empire, classic study, colonial rule, conceptual framework, creative destruction, currency manipulation / currency intervention, dark matter, disruptive innovation, Easter island, Eratosthenes, European colonialism, financial innovation, financial intermediation, flying shuttle, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Johann Wolfgang von Goethe, Johannes Kepler, joint-stock company, Joseph Schumpeter, knowledge economy, low interest rates, mandelbrot fractal, means of production, Multics, Network effects, out of africa, Peace of Westphalia, peer-to-peer lending, plutocrats, principal–agent problem, purchasing power parity, rent-seeking, Republic of Letters, secular stagnation, South China Sea, spinning jenny, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, trade route, transaction costs, vertical integration, zero-sum game

“The uses of comparative history in macrosocial inquiry.” Comparative Studies in Society and History 22: 174–97. Slack, Paul. 2015. The invention of improvement: Information and material progress in seventeenth-century England. Oxford: Oxford University Press. Smith, Adam. 1776. An inquiry into the nature and causes of the wealth of nations, vol. 2. London: Strahan. Smith, Christopher. 1996. Early Rome and Latium: Economy and society c. 1000–500 B.C. Oxford: Oxford University Press. Smith, Michael E. 2000. “Aztec city-states.” In Hansen 2000a, 581–95. Sng, Tuan-Hwee. 2014. “Size and dynastic decline: The principal-agent problem in late imperial China, 1700–1850.”

L’histoire de l’impôt. 2 vols. Paris: Fayard. Armstrong, Jeremy. 2016. War and society in early Rome: From warlords to generals. Cambridge: Cambridge University Press. Arnold, Benjamin. 1991. Princes and territory in medieval Germany. Cambridge: Cambridge University Press. Arrighi, Giovanni. 2007. Adam Smith in Beijing: Lineages of the twenty-first century. London: Verso. Artzrouni, Marc and Komlos, John. 1996. “The formation of the European state system: A spatial ‘predatory’ model.” Historical Methods 29: 126–34. Asher, Catherine B. and Talbot, Cynthia. 2006. India before Europe. Cambridge: Cambridge University Press.


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This Sceptred Isle by Christopher Lee

agricultural Revolution, Berlin Wall, British Empire, colonial rule, Corn Laws, cuban missile crisis, Easter island, Edward Lloyd's coffeehouse, failed state, financial independence, flying shuttle, glass ceiling, half of the world's population has never made a phone call, James Hargreaves, James Watt: steam engine, Johannes Kepler, Khartoum Gordon, Khyber Pass, mass immigration, Mikhail Gorbachev, Monroe Doctrine, Nelson Mandela, new economy, Northern Rock, Ronald Reagan, sceptred isle, spice trade, spinning jenny, Suez canal 1869, Suez crisis 1956, The Wealth of Nations by Adam Smith, trade route, urban decay

From 1770 until 1782 he was Tory Prime Minister and so ended the Whig domination which had existed since the death of Queen Anne in 1714. Although the Tories had gone along with the 1688 Rebellion, which eventually got rid of James II, they had been seen as supporters of the Catholic Jacobite Pretenders to the throne. During Lord North’s twelve years, attempts were made to reform Parliament; Adam Smith published his great work, The Wealth of Nations; Jeremy Bentham published his Fragment on Government; and Joseph Priestley discovered and isolated oxygen. The actress Sarah Siddons appeared with David Garrick at Drury Lane and became the darling of theatregoers, and Gainsborough painted her. The Sunday School movement started; Britain lost the American War of Independence; and the first Derby was run at Epsom Racecourse.


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Blue Mars by Kim Stanley Robinson

anthropic principle, cognitive dissonance, Colonization of Mars, dark matter, different worldview, epigenetics, gravity well, heat death of the universe, ITER tokamak, James Watt: steam engine, Kim Stanley Robinson, land tenure, new economy, phenotype, quantum entanglement, stem cell, the scientific method, The Wealth of Nations by Adam Smith, three-masted sailing ship

Discussions in the warehouse were just as wide-ranging as in the mail. A Chinese delegate approached Art and spoke in Mandarin to him, and when he paused for a while, his AI began to speak, in a lovely Scottish accent. “To tell the truth I’ve begun to doubt that you’ve sufficiently consulted Adam Smith’s important book Inquiry into the Nature and Causes of the Wealth of Nations.” “You may be right,” Art said, and referred the man to Charlotte. Many people in the warehouse were speaking languages other than English, and relying on translation AIs to communicate with the rest. At any given moment there were conversations in a dozen different languages, and AI translators were heavily used.


pages: 1,042 words: 266,547

Security Analysis by Benjamin Graham, David Dodd

activist fund / activist shareholder / activist investor, asset-backed security, backtesting, barriers to entry, Bear Stearns, behavioural economics, book value, business cycle, buy and hold, capital asset pricing model, Carl Icahn, carried interest, collateralized debt obligation, collective bargaining, corporate governance, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, diversification, diversified portfolio, fear of failure, financial engineering, financial innovation, fixed income, flag carrier, full employment, Greenspan put, index fund, intangible asset, invisible hand, Joseph Schumpeter, junk bonds, land bank, locking in a profit, Long Term Capital Management, low cost airline, low interest rates, Michael Milken, moral hazard, mortgage debt, Myron Scholes, prudent man rule, Right to Buy, risk free rate, risk-adjusted returns, risk/return, secular stagnation, shareholder value, stock buybacks, The Chicago School, the market place, the scientific method, The Wealth of Nations by Adam Smith, transaction costs, two and twenty, zero-coupon bond

There are four books in my overflowing library that I particularly treasure, each of them written more than 50 years ago. All, though, would still be of enormous value to me if I were to read them today for the first time; their wisdom endures though their pages fade. Two of those books are first editions of The Wealth of Nations (1776), by Adam Smith, and The Intelligent Investor (1949), by Benjamin Graham. A third is an original copy of the book you hold in your hands, Graham and Dodd’s Security Analysis. I studied from Security Analysis while I was at Columbia University in 1950 and 1951, when I had the extraordinary good luck to have Ben Graham and Dave Dodd as teachers.


Into the Silence: The Great War, Mallory, and the Conquest of Everest by Wade Davis

British Empire, Columbine, Etonian, Fellow of the Royal Society, Khartoum Gordon, Khyber Pass, Mahatma Gandhi, The Wealth of Nations by Adam Smith, trade route

At the outbreak a man had to stand five foot eight to join up; by November 1914, those as short as five-three were eagerly recruited. Lord Kitchener, British minister for war, alone among British leaders had from the start of the conflict predicted a long, impossibly brutal industrial war that would consume the wealth of nations. He placed little faith in the Territorial units, dismissing them as a “town clerk’s army.” His mission was to forge from the two million volunteers who flocked to the colors during the first eighteen months of the war a “New Army” in his own image, prepared to win victory and enforce the peace.

The Everest expeditions momentarily returned meaning and virility to words such as “honor” and “sacrifice” and in doing so offered a promise of regeneration. For a fascinating discussion, see also: Peter Bayers, Imperial Ascent: Mountaineering, Masculinity, and Empire (Boulder: University Press of Colorado, 2003). For more on Buchan, see: Janet Adam Smith, John Buchan (London: Rupert Hart-Davis, 1965). For Rawling’s expedition to the source of the Brahmaputra, see: Charles C. Rawling, The Great Plateau (London: Edward Arnold, 1905). Freshfield’s most significant books were: The Exploration of the Caucasus (2 vols.; London: Edward Arnold, 1902) and Round Kangchenjunga: A Narrative of Mountain Travel and Exploration (London: Edward Arnold, 1903).


pages: 913 words: 299,770

A People's History of the United States by Howard Zinn

active measures, affirmative action, agricultural Revolution, Alan Greenspan, Albert Einstein, American ideology, anti-communist, Bartolomé de las Casas, Bernie Sanders, British Empire, classic study, clean water, colonial rule, company town, Cornelius Vanderbilt, cotton gin, death from overwork, death of newspapers, desegregation, equal pay for equal work, feminist movement, friendly fire, full employment, God and Mammon, Herman Kahn, Howard Zinn, Ida Tarbell, illegal immigration, jobless men, land reform, Lewis Mumford, Mercator projection, Mikhail Gorbachev, military-industrial complex, minimum wage unemployment, Monroe Doctrine, new economy, New Urbanism, Norman Mailer, offshore financial centre, plutocrats, profit motive, Ralph Nader, Ralph Waldo Emerson, RAND corporation, Ronald Reagan, Rosa Parks, Savings and loan crisis, scientific management, Seymour Hersh, Silicon Valley, strikebreaker, Telecommunications Act of 1996, The Wealth of Nations by Adam Smith, Timothy McVeigh, transcontinental railway, Triangle Shirtwaist Factory, union organizing, Upton Sinclair, very high income, W. E. B. Du Bois, War on Poverty, work culture , Works Progress Administration

“The people” who were, supposedly, at the heart of Locke’s theory of people’s sovereignty were defined by a British member of Parliament: “I don’t mean the mob. . . . I mean the middling people of England, the manufacturer, the yeoman, the merchant, the country gentleman. . . .” In America, too, the reality behind the words of the Declaration of Independence (issued in the same year as Adam Smith’s capitalist manifesto, The Wealth of Nations) was that a rising class of important people needed to enlist on their side enough Americans to defeat England, without disturbing too much the relations of wealth and power that had developed over 150 years of colonial history. Indeed, 69 percent of the signers of the Declaration of Independence had held colonial office under England.