Thorstein Veblen

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pages: 330 words: 77,729

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

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

It was time to take a second look, and it fell upon the shoulders of two social economists (today they would be known as sociologists) to examine in detail the meaning of the new structure. 2. Oddly enough, while Henry George was largely an advocate of laissez-faire, his land tax scheme encouraged many of his listeners, including George Bernard Shaw and Sydney Webb, to become socialists. See Skousen (2001, 229-30). They are the American Thorstein Veblen (1857-1929) and the German Max Weber (1864-1920). Thorstein Veblen: The Voice of Dissent Veblen was the principal faultfinder and censor of the new theoretical capitalism. Having taught at ten institutions, including the University of Chicago and Stanford, he had little use for the rational-abstract-deduc-tive approach of the neoclassical model. Above all, he was a critic, not a creator of a new worldview. In his best-known work, The Theory of the Leisure Class, Veblen applied a Darwinian view to modern economics.

No wonder Veblen left this life in a depressed state—his gloomy view of capitalism transpired during the Roaring Twenties, when American consumers were making tremendous advances. Max Weber: A Spirited Defense of "Rational" Capitalism Fortunately, Thorstein Veblen was not the only social commentator on capitalism at the turn of the century. His chief antagonist came from across the Atlantic—the German sociologist and economist Max Weber, author of the famous book The Protestant Ethic and the Spirit of Capitalism. Weber's views on capitalism were more in the spirit of Adam Smith than Veblen. As John Patrick Diggins states, "No two social theorists could be more intellectually and temperamentally opposed than Thorstein Veblen and Max Weber" (1999, 111). Both Veblen and Weber were obsessed with the meaning of contemporary industrial society—the issues of power, management, and surplus wealth.

Denby, David. 1996. Great Books. New York: Simon and Schuster. Desai, Maghnad. 2004. Marx's Revenge. New York: Verso. Dewey, Donald. 1987. "John Bates Clark." In The New Palgrave: A Dictionary of Economics. Vol. 1, 428-31. London: Macmillan. Diggins, John Patrick. 1996. Max Weber: Politics and the Spirit of Tragedy. New York: Basic Books. . 1999. Thorstein Veblen, Theorist of the Leisure Class. Princeton, NJ: Princeton University Press. Dorfman, Joseph. 1934. Thorstein Veblen and His America. New York: Augustus M. Kelley. Downs, Robert B. 1983. Books That Changed the World. 2d ed. New York: Penguin. D'Souza, Dinesh. 2005. "How Capitalism Civilizes Greed." www.dineshdsouza. com/articles/civilizinggreed.html. Dobbs, Zygmund. 1962. Keynes at Harvard. New York: Probe. Eaton, John. 1951. Marx Against Keynes.


pages: 104 words: 34,784

The Trouble With Brunch: Work, Class and the Pursuit of Leisure by Shawn Micallef

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big-box store, call centre, cognitive dissonance, David Brooks, deindustrialization, ghettoisation, Jane Jacobs, knowledge worker, Mason jar, McMansion, new economy, post scarcity, Richard Florida, Ronald Reagan, Thorstein Veblen, urban sprawl, World Values Survey

But what does its popularity say about shifting attitudes towards social status and leisure? In some ways, brunch and other forms of conspicuous consumption have blinded us to ever-more-precarious employment conditions. For award-winning writer and urbanist Shawn Micallef, brunch is a way to look more closely at the nature of work itself and a catalyst for solidarity among the so-called creative class. Drawing on theories from Thorstein Veblen to Richard Florida, Micallef traces his own journey from the rust belt to a cosmopolitan city where the evolving middle class he joined was oblivious to its own instability and insularity. The Trouble with Brunch is a provocative analysis of foodie obsession and status anxiety, but it’s also a call to reset our class consciousness. The real trouble with brunch isn’t so much bad service and outsized portions of bacon, it’s that brunch could be so much more.

The strange part is, because there’s no hierarchy, and creative economies run in multiple directions, the victims are also the victimizers, and we keep doing it to each other. We need to start talking about this to figure out a way to install some kind of order or system – a true hierarchy might be antithetical in a truly egalitarian creative economy – that prevents us from giving away our time and work so easily. The notion of a middle class that incorporated leisure into its identity was first coined as such by Thorstein Veblen, a curious sociologist and economist who put out his most well-known work, The Theory of the Leisure Class, in 1899. Taking nearly a decade of his life to produce, Veblen’s critique of social and economic behaviour describes the evolution of what he called ‘conspicuous leisure’ and ‘conspicuous consumption,’ two behaviours that had permeated modern life as he saw it. Large parts of his theory are also uncanny descriptions of contemporary brunch scenes and its participants, but his book has remained just on the outside of mainstream thought.

They lend an experience that’s highly performative, artificial and under a utilitarian sheen of authenticity. They say, This is a real experience, connected and rooted, not concocted. Physicality is important; it provides connections to people who did things and to actual objects that age and alter. It’s a strange kind of ju-jitsu – a rejection of the trappings of middle-class life in favour of a more expensive and cleaner simulation of working-class life. Thorstein Veblen goes into detail about the desirability of a hand-wrought spoon, just as serviceable as one made by the machines of his day, but the effort put into it makes the spoon beautiful and ‘some one-hundred times more valuable’ than a more common spoon. ‘The case of the spoon is typical,’ he writes. ‘The superior gratification derived from the use and contemplation of costly and supposed beautiful products is, commonly, in great measure a gratification of our sense of costliness masquerading under the name of beauty.


pages: 461 words: 128,421

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

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Albert Einstein, Andrei Shleifer, asset allocation, asset-backed security, bank run, Benoit Mandelbrot, Black-Scholes formula, Bretton Woods, Brownian motion, capital asset pricing model, card file, Cass Sunstein, collateralized debt obligation, complexity theory, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, discovery of the americas, diversification, diversified portfolio, Edward Glaeser, endowment effect, Eugene Fama: efficient market hypothesis, experimental economics, financial innovation, Financial Instability Hypothesis, floating exchange rates, George Akerlof, Henri Poincaré, Hyman Minsky, implied volatility, impulse control, index arbitrage, index card, index fund, invisible hand, Isaac Newton, John Nash: game theory, John von Neumann, joint-stock company, Joseph Schumpeter, libertarian paternalism, linear programming, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, market bubble, market design, New Journalism, Nikolai Kondratiev, Paul Lévy, pension reform, performance metric, Ponzi scheme, prediction markets, pushing on a string, quantitative trading / quantitative finance, Ralph Nader, RAND corporation, random walk, Richard Thaler, risk/return, road to serfdom, Robert Shiller, Robert Shiller, rolodex, Ronald Reagan, shareholder value, Sharpe ratio, short selling, side project, Silicon Valley, South Sea Bubble, statistical model, 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, value at risk, Vanguard fund, volatility smile, Yogi Berra

To assert that it will continue to repeat implies subscribing to some theory of why.7 Ever since then, most sciences have been swinging back and forth between the poles of deduction and induction. At the turn of the twentieth century, economics in the United States appeared due for a turn in the latter direction, the direction of the institutionalists. The institutionalist of most durable fame was Thorstein Veblen, author of acid critiques of capitalism that are still in print and coiner of such durable terms as “conspicuous consumption” and “technocracy.” Veblen had studied with William Graham Sumner at Yale just as Irving Fisher had, but he seems to have taken different lecture notes. He excoriated neoclassical economics as abstract noodling with no connection to reality. Of The Nature of Capital and Income, the book that Fisher lost and rewrote in 1906, Veblen wrote that “what it lacks is the breath of life.”8 Veblen was a crotchety philanderer with a habit of getting himself fired, meaning that he wasn’t cut out to be the operational leader of an intellectual movement.

They too struggled, often battling each other. Most of the lasting economic innovations of the early Roosevelt years—from the founding of the Securities and Exchange Commission to the revamping of the Federal Reserve System—were the work of lawyers, bankers, and other practical sorts, not economists. The institutional economists envisioned themselves as technocrats, the business engineers that Thorstein Veblen argued would steer the economy more rationally than profit-driven “absentee owners” could.14 It’s hard to run a technocracy without a technology, though. While united by skepticism of the grand theories of neoclassical economics, the institutionalists had no grand theory of their own to explain economic behavior. So a remarkable thing happened. In the broader intellectual environment of the 1930s, what had been discredited by the great crash and the Depression was the laissez-faire, promarket ethos that had preceded them.

And so, almost in spite of themselves, the smart young things who entered the discipline in the 1930s began to create an economics that owed more to Irving Fisher than to Wesley Mitchell. Not that many of them would have called themselves Fisherites. Instead they went by the name “Keynesians,” after John Maynard Keynes, the English speculator, political polemicist, art collector, and all-around bon vivant who would become the most famous economist of the twentieth century. What was this Keynesianism? In part, it was a critique of free market verities that surpassed even Thorstein Veblen’s in its stinging mockery. “Professional investment,” Keynes wrote in a famous passage of his 1936 classic, The General Theory of Employment, Interest, and Money, may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that each competitor has to pick, not those faces which he himself finds prettiest, but those which he thinks likely to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view.


pages: 147 words: 45,890

Aftershock: The Next Economy and America's Future by Robert B. Reich

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Berlin Wall, declining real wages, delayed gratification, Doha Development Round, endowment effect, full employment, George Akerlof, Home mortgage interest deduction, Hyman Minsky, illegal immigration, income inequality, invisible hand, job automation, labor-force participation, Long Term Capital Management, loss aversion, mortgage debt, new economy, offshore financial centre, Ralph Nader, Ronald Reagan, school vouchers, sovereign wealth fund, Thorstein Veblen, too big to fail, World Values Survey

ADDING INSULT TO INJURY 1 The median pay of CEOs: See American Federation of Labor and Congress of Industrial Organizations, Executive Paywatch Database, “CEO Pay Rates,” 2008. 2 According to The New York Times: See Graham Bowley, “Strong Year for Goldman as It Trims Bonus Pool,” New York Times, January 21, 2010. 3 “In a poor society a man proves”: See R. Layard, “Human Satisfactions and Public Policy,” Economic Journal 90, no. 360 (December 1980): 737–50. 4 Adam Smith defined necessities: See Adam Smith, An Enquiry into the Nature and Causes of Wealth and Nations (London: Methuen, 1776), Book 5, Chapter 2. 5 In 1899, the economist-sociologist Thorstein Veblen: Thorstein Veblen, The Theory of the Leisure Class (New York: Macmillan, 1899). See Ken McCormick, “Veblen and Duesenberry: The Demonstration Effect Revisited,” Journal of Economic Issues 17, no. 4 (December 1983): 1125–29. 6 More than a half century later: James Duesenberry, Income, Saving and the Theory of Consumer Behavior, Harvard Economic Studies, 1967. For a highly pertinent and thoughtful treatment of this subject, see Robert H.

In most of eighteenth-century Europe, a linen shirt was not strictly speaking a necessity, but Smith noted that a common laborer would be ashamed to appear in public without one, “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.” Leather shoes were a “necessity” in England for both men and women, he wrote, but only for men in Scotland, and for neither in France. In 1899, the economist-sociologist Thorstein Veblen noted that people take their cues from those above them and seek to match their living standards with the “conspicuous consumption” of the very rich. More than a half century later, economist James Duesenberry recognized that the demand for many products has more to do with the social standing they give their purchasers than with any intrinsic value. He called it the “demonstration effect,” which signals to others that the possessor of an item is wealthy enough to afford it, and thereby establishes his or her position in a social pecking order.


pages: 384 words: 89,250

Made to Break: Technology and Obsolescence in America by Giles Slade

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Albert Einstein, Alexey Pajitnov wrote Tetris, Apple's 1984 Super Bowl advert, Buckminster Fuller, Cass Sunstein, Douglas Engelbart, global village, housing crisis, indoor plumbing, invention of radio, Joseph Schumpeter, Marshall McLuhan, Mikhail Gorbachev, more computing power than Apollo, mutually assured destruction, Ralph Nader, rent control, Ronald Reagan, Silicon Valley, Steve Jobs, the market place, the medium is the message, Thorstein Veblen, unemployed young men, upwardly mobile, Vladimir Vetrov: Farewell Dossier, women in the workforce

Gilfi lan, and Abbott Payton Usher, developed theories of technological progress that rested heavily on Darwinian thought.3 The advertising cliché “New and improved” dates from the earliest years of the new century and captures the idea that products advance in response to changing market competition, much as species evolve in response to changing habitats. With a frequency that was alarming to old-fashioned inventors like Henry Ford, machines, like species, were becoming suddenly extinct. After Thorstein Veblen published his Theory of the Leisure Class in 1899, this technological extinction became popularly known as “obsolescence,” a word that Veblen particularly liked to use.4 Beginning with General Electric, manufacturers invested in research and development departments whose express mission was to produce “the next best thing,” and in the process—inevitably—hasten product extinction. Wooed away from universities with finan cial incentives and promises of freedom to experiment, scientifi researchers in these companies sometimes described their inventions as first second, or third generation, according to the history of their innovation and how recently they had become obsolete.

The other side of this pride and self-presentation equation is shame, or more precisely the anxiety about feeling shamed that creates a state of watchfulness in American consumers for whatever is new. The basic idea in shame-based advertising is that the desire not to lose face can be manipulated to produce conspicuous consumption. This idea is as old as the sumptuary laws that became the basis for the emergent seventeenth-century fashion industry. Thorstein Veblen firs formulated what would become known as conspicuous consumption in 1899. It is important to remember, however, that Veblen’s formula concerned the “vicarious” consumption of the leisure class. In Veblen’s model, aristocratic men created wealth, which their wives consumed and displayed. In a society based on vicarious consumption, the wealth producer is distanced from the shame the consumer (his wife) experiences whenever she appears unfashionable in society.30 But by 1920 Americans were confronted with such an abundance of goods that conspicuous consumption could not remain vicarious.

And like the criticisms of the technocrats, MacLeish’s acute criticisms of the industrial system were unaccompanied by specifi recommendations about what to do (though he did commend “the share-the-work movement for rationing the residuum of employment among the employed and the unemployed by the introduction of the fi e-day week”).29 In the fall of 1932 when MacLeish’s Fortune article appeared, the technocracy movement’s short-lived popularity was at its peak. Although its earliest origins were in a group called the Technical Alliance led by Thorstein Veblen’s protégé, Howard Scott,tech- nocracy really began in May of 1932 when an ad hoc group, the Industrial Experimenters Association, met briefl at the invitation of Walter Rautenstrauch, a professor of engineering at Columbia University.30 Rautenstrauch was convinced that the ultimate cause of the Depression was the profi motive—the inability of businessmen to curb their quest for profi in the interest of social harmony.


pages: 299 words: 19,560

Utopias: A Brief History From Ancient Writings to Virtual Communities by Howard P. Segal

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1960s counterculture, British Empire, Buckminster Fuller, complexity theory, David Brooks, death of newspapers, dematerialisation, deskilling, energy security, European colonialism, Francis Fukuyama: the end of history, full employment, future of journalism, garden city movement, germ theory of disease, Golden Gate Park, invention of the printing press, Isaac Newton, Jeff Bezos, John von Neumann, knowledge economy, Louis Pasteur, Mark Zuckerberg, means of production, Nicholas Carr, Nikolai Kondratiev, out of africa, Ralph Waldo Emerson, Ray Kurzweil, Ronald Reagan, Silicon Valley, Skype, stem cell, Stephen Hawking, Steve Jobs, Steve Wozniak, Stewart Brand, technoutopianism, Thomas Malthus, Thorstein Veblen, transcontinental railway, traveling salesman, union organizing, urban planning, War on Poverty, Whole Earth Catalog

Their technical jargon and complex charts invariably simultaneously impressed and perplexed their growing audiences. The great expectations thus raised were never met, and the present-day equation of a “technocracy” with a distinctly unutopian society reflects the movement’s dismal legacy. The origins of Technocracy are shrouded in controversy, but most of its future leaders were apparently inspired by their association between 1919 and 1921 with the social critic Thorstein Veblen, then teaching at New York City’s New School for Social Research. Veblen offered a strategy, spelled out in The Engineers and the Price System (1921), for ridding American society of the waste Growing Expectations of Realizing Utopia 97 and extravagance that he and other reformers had long condemned. Under Scott’s leadership, the Technocracy movement used some of Veblen’s analysis, but they ignored his social criticism, his passionate desire to do more than operate a more efficient America.

(Syracuse, NY: Syracuse University Press, 2005 [1985]), 209 n. 58. For elaboration of the discussion about Technocracy in this and the following paragraphs, see my new introduction to the reprint of Harold Loeb, Life in a Technocracy: What It Might Be Like (Syracuse, NY: Syracuse University Press, 1996 [1933]). “Technocracy—Bloom, Blight, or Bunk?” Literary Digest, 114 (December 31, 1932), 5. Thorstein Veblen, The Engineers and the Price System (New York: Viking, 1933), 135. Anna-K. Mayer, “Reluctant Technocrats: Science Promotion in the Neglect-of-Science Debate of 1916–1918,” History of Science, 43 (2005), 139–159. See Frederic Cople Jaher, Doubters and Dissenters: Cataclysmic Thought in America, 1885–1918 (New York: Free Press, 1964). Vannevar Bush, Science—The Endless Frontier: A Report to the President on a Program for Postwar Scientific Research (Washington, DC: National Science Foundation, 1990 [1945]), 12.

The motto of such The Resurgence of Utopianism 215 institutions might well be that of New York area clothes discounter Sy Syms: “An Educated Consumer is Our Best Customer.” What may be a utopia to many administrators and students is a dystopia to most faculty. The steady loss of faculty autonomy in curriculum development that stems from embracing a student-centered consumer culture is matched by an equally intense desire to please business and industry and to promote that marriage as made in heaven— or a secular utopia. This development recalls Thorstein Veblen’s The Higher Learning in America (1918), the pioneering and, by now, classic critique “of business control in practically every aspect of the modern university.”58 (Veblen, as noted, was the intellectual mentor of the Technocracy movement.) As in Veblen’s day, so here: such pandering to business and industry goes far beyond wishing to cultivate the financial and political support of the private sector amid the declining financial and political assistance offered by most states and national governments in recent decades.

Who Rules the World? by Noam Chomsky

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Albert Einstein, anti-communist, Ayatollah Khomeini, Berlin Wall, Bretton Woods, British Empire, capital controls, 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, Howard Zinn, illegal immigration, invisible hand, Malacca Straits, Martin Wolf, Mikhail Gorbachev, Monroe Doctrine, nuclear winter, Occupy movement, oil shale / tar sands, Plutonomy: Buying Luxury, Explaining Global Imbalances, precariat, Ralph Waldo Emerson, Ronald Reagan, South China Sea, Stanislav Petrov, structural adjustment programs, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, trade route, union organizing, uranium enrichment, wage slave, WikiLeaks, working-age population

But there is little reason to expect that the advice will be heeded, as the Pentagon’s planned trillion-dollar enhancement of nuclear weapons systems proceeds apace, while lesser powers take their own steps towards Armageddon.5 The foregoing remarks seem to me to sketch a fair approximation to the cast of primary characters. The chapters that follow seek to explore the question of who rules the world, how they proceed in their efforts, and where these lead—and how the “underlying populations,” to borrow Thorstein Veblen’s useful phrase, may hope to overcome the power of business and nationalist doctrine and become, in his words, “alive and fit to live.” There is not much time. 1 The Responsibility of Intellectuals, Redux Before thinking about the responsibility of intellectuals, it is worth clarifying to whom we are referring. The concept of “intellectuals” in the modern sense gained prominence with the 1898 “Manifesto of the Intellectuals” produced by the Dreyfusards, who, inspired by Émile Zola’s open letter of protest to France’s president, condemned both the framing of French artillery officer Alfred Dreyfus for treason and the subsequent military cover-up.

Notable figures such as Bertrand Russell, Eugene Debs, Rosa Luxemburg, and Karl Liebknecht were, like Zola, sentenced to prison. Debs was punished with particular severity—a ten-year prison term for raising questions about President Wilson’s “war for democracy and human rights.” Wilson refused him amnesty after the war ended, though President Harding finally relented. Some dissidents, such as Thorstein Veblen, were chastised but treated less harshly; Veblen was fired from his position in the Food Administration after preparing a report showing that the shortage of farm labor could be overcome by ending Wilson’s brutal persecution of unions, specifically the Industrial Workers of the World. Randolph Bourne was dropped by the progressive journals after criticizing the “league of benevolently imperialistic nations” and their exalted endeavors.6 The pattern of praise and punishment is a familiar one throughout history: those who line up in the service of the state are typically praised by the general intellectual community, and those who refuse to line up in service of the state are punished.

That stand was considered so natural that it became a slogan of the Republican Party, and a banner under which northern workers carried arms during the American Civil War.13 CONTROLLING THE DESIRE FOR DEMOCRACY That was 150 years ago—in England, earlier. Huge efforts have been devoted since to inculcating the New Spirit of the Age. Major industries are devoted to the task: public relations, advertising, and marketing generally, all of which add up to a very large component of the gross domestic product. They are dedicated to what the great political economist Thorstein Veblen called “fabricating wants.”14 In the words of business leaders themselves, the task is to direct people to “the superficial things” of life, like “fashionable consumption.” That way people can be atomized, separated from one another, seeking personal gain alone, diverted from dangerous efforts to think for themselves and challenge authority. The process of shaping opinions, attitudes, and perceptions was termed the “engineering of consent” by one of the founders of the modern public relations industry, Edward Bernays.


pages: 151 words: 38,153

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

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

You paid, say, $30,000 of your own money and borrowed the rest. Then, over the years, you paid down the mortgage to, say, $200,000. When you sold the house for $400,000, you paid off the mortgage and kept $200,000. So, for an initial investment of $30,000, you walked away with a net gain of $170,000. That’s a 467 percent return for buying and selling a piece of property. A century ago, the American economist Thorstein Veblen called it “something for nothing.”1 A similar sort of leverage kicks in when founders of a private company go public. This might be called equity leverage (as opposed to debt leverage), and its effect can be even more spectacular. Equity leverage works by incorporating anticipated future earnings into present asset prices, thereby enabling stock sellers to get a lump sum now for a potential stream of future profits that may or may not materialize.

Social insurance as a percentage of the US economy: Social Security and Medicare Boards of Trustees, A Summary of the 2013 Annual Reports, http://www.ssa.gov/oact/trsum/; US Department of Labor, Employment and Training Administration, Financial Data Handbook for 2012, http://workforcesecurity.doleta.gov/un-employ/hb394/hndbkrpt.asp. 8. FDR quote on payroll taxes: History site of the Social Security Administration, http://www.ssa.gov/history/Gulick.html. 9. Report of the Committee on Economic Security, Social Security Administration, Washington, DC, 1934, http://www.ssa.gov/history/reports/ces5.html. Chapter 4: Extracted Rent 1. Thorstein Veblen, Absentee Ownership (New York: B. W. Huebsch, 1923). Citation is from Beacon Paperback edition (Boston, 1967), 13. 2. “The Richest People in America, 2013,”Forbes, http://www.forbes.com/forbes-400/list/. 3. 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.


pages: 281 words: 95,852

The Googlization of Everything: by Siva Vaidhyanathan

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1960s counterculture, AltaVista, barriers to entry, Berlin Wall, borderless world, Burning Man, Cass Sunstein, choice architecture, cloud computing, computer age, corporate social responsibility, correlation does not imply causation, data acquisition, death of newspapers, don't be evil, Firefox, Francis Fukuyama: the end of history, full text search, global village, Google Earth, Howard Rheingold, informal economy, information retrieval, Joseph Schumpeter, Kevin Kelly, knowledge worker, libertarian paternalism, market fundamentalism, Marshall McLuhan, means of production, Mikhail Gorbachev, Naomi Klein, Network effects, new economy, Nicholas Carr, PageRank, pirate software, Ray Kurzweil, Richard Thaler, Ronald Reagan, side project, Silicon Valley, Silicon Valley ideology, single-payer health, Skype, social web, Steven Levy, Stewart Brand, technoutopianism, The Nature of the Firm, The Structural Transformation of the Public Sphere, Thorstein Veblen, urban decay, web application

It has always been the sort of place where those devoted to solving some of the biggest challenges in logic, mathematics, and linguistics can find a supportive yet challenging environment.41 It’s the paradigm of the sort of practice that has emerged quickly over the past twenty years and that now dominates the scientific agenda in many fields: entrepreneurial science—the intersection of academic “pure” science and industrial technoscience.42 This technocratic mode of organization is anything but new. In The Engineers and the Price System, a book published in 1921 that fell into 68 G O OG LE’S WAYS AND MEA NS immediate obscurity, the iconoclastic economist Thorstein Veblen identified a new class of what we now call knowledge workers. In the late years of the American Industrial Revolution, Veblen saw that the increase in efficiency of the production and distribution of goods was creating tremendous wealth for the class that owned the means of production yet who were unable to do the mathematics necessary to understand the systems that enriched them. This situation would not stand for long, Veblen surmised.

Meanwhile, Google is developing more powerful tools to help us shop, without considering that shopping and learning don’t always rely on the same standards and practices. Now we must demand more. We must build systems that can serve us better, regardless of which companies and technologies thrive in the next decade. Most important, we should learn to beware of false idols and empty promises. The future of knowledge—and thus the future of the species—depends on getting this right. ACKNOWLEDGMENTS The words of Thorstein Veblen sounded in my head as I researched and composed this book. Believe me: that was daunting and weird. I kept saying to myself as I wrote, “What would Veblen think of this?” The summer before I proposed doing a book on Google, I tried to read everything Veblen ever published. In a strange way, this whole project emerged from that experiment. I am convinced that we ignore Veblen at our peril. So this book is an exercise in trying to revive his critical spirit and demonstrate that it can do us much good here at the dawn of the twenty-first century.

John Paczkowski, “Google and the Evolution of Search, I: Human Evaluators,” Digital Daily, June 3, 2009, http://digitaldaily.allthingsd.com. 41. Randall E. Stross, Planet Google: One Company’s Audacious Plan to Organize Everything We Know (New York: Free Press, 2008). 42. Steven Shapin, The Scientific Life: A Moral History of a Late Modern Vocation (Chicago: University of Chicago Press, 2008). 43. Thorstein Veblen, The Engineers and the Price System (New Brunswick, NJ: Transaction Books, 1983). 44. Walter Kirn, “Life, Liberty and the Pursuit of Aptitude,” New York Times Magazine, July 5, 2009. 232 NOTES TO PAGES 69–77 45. Kevin J. Delaney, “Google Adjusts Hiring Process as Needs Grow,” Wall Street Journal, October 23, 2006. 46. Nicholas Lemann, The Big Test: The Secret History of the American Meritocracy (New York: Farrar Straus and Giroux, 1999). 47.

Because We Say So by Noam Chomsky

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Affordable Care Act / Obamacare, Chelsea Manning, cuban missile crisis, David Brooks, Edward Snowden, Julian Assange, Malacca Straits, Martin Wolf, means of production, Monroe Doctrine, Occupy movement, oil shale / tar sands, Ralph Waldo Emerson, RAND corporation, Slavoj Žižek, Stanislav Petrov, Thorstein Veblen, too big to fail, uranium enrichment, WikiLeaks

For Chomsky, ignorance is a political weapon that benefits the powerful, not a general condition rooted in some inexplicable human condition. In one of his many examples throughtout the book, he points to the efforts of the financial elite and their marketing machines to atomize people so they will be complicit in the destruction of the commons. Drawing on his expansive understanding of history, Chomsky cites the political economist Thorstein Veblen’s emphasis on “fabricating wants” in order to not only manufacture ignorance but also define consumption as the major force in shaping their needs. For Chomsky, historical memory and individual and social agency are under attack, and this is as much a pedagogical as a political issue. One of Chomsky’s most insistent themes focuses on how state power functions in various forms as a mode of terrorism inflicting violence, misery and hardship, often as a function of class warfare and American global imperialism, and how people are often complicit with such acts of barbarism.

But the doctrine has force if we accept its unstated premise: that humans are blindly driven by what American workers, at the dawn of the industrial revolution, called “the New Spirit of the Age, Gain Wealth forgetting all but Self”—a doctrine they bitterly condemned as demeaning and destructive, an assault on the very nature of free people. Huge efforts have been devoted since to inculcating the New Spirit of the Age. Major industries are dedicated to what political economist Thorstein Veblen called “fabricating wants”—directing people to “the superficial things” of life, like “fashionable consumption,” in the words of Columbia University marketing professor Paul Nystrom. That way people can be atomized, seeking personal gain alone and diverted from dangerous efforts to think for themselves, act in concert and challenge authority. It’s unnecessary to dwell on the extreme dangers posed by one central element of the destruction of the commons: the reliance on fossil fuels, which courts global disaster.


pages: 411 words: 80,925

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

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Airbnb, barriers to entry, Bernie Madoff, bike sharing scheme, Buckminster Fuller, carbon footprint, Cass Sunstein, collaborative consumption, collaborative economy, Community Supported Agriculture, credit crunch, crowdsourcing, dematerialisation, disintermediation, en.wikipedia.org, experimental economics, George Akerlof, global village, Hugh Fearnley-Whittingstall, information retrieval, iterative process, Kevin Kelly, Kickstarter, late fees, Mark Zuckerberg, market design, Menlo Park, Network effects, new economy, new new economy, out of africa, Parkinson's law, peer-to-peer lending, Ponzi scheme, pre–internet, recommendation engine, RFID, Richard Stallman, ride hailing / ride sharing, Robert Shiller, Robert Shiller, Ronald Coase, Search for Extraterrestrial Intelligence, SETI@home, Simon Kuznets, Skype, slashdot, smart grid, South of Market, San Francisco, Stewart Brand, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thorstein Veblen, Torches of Freedom, transaction costs, traveling salesman, ultimatum game, Victor Gruen, web of trust, women in the workforce, Zipcar

Law enforcers have not yet concluded the Damour manslaughter case, but reports indicate that there were “so many contributing causes to this tragedy” that it will be difficult to assign individual blame. No matter who is to blame for the incident, Damour’s terrible end is a sad and chilling metaphor for our culture at large—a crowd of exhausted consumers knocking down the doors and plowing down people simply to buy more stuff. Hyper-Consumption Thorstein Veblen, a Norwegian economist and sociologist, first coined the term “conspicuous consumption” in 1899.1 He used the term to describe the nouveau riche, a class emerging during the nineteenth century made up of people eager to display their wealth and social power. They spent lavishly on visible goods such as jewelry and clothing to show they were prosperous and to differentiate themselves from the masses.

Mishan, The Costs of Economic Growth (Staples Press, 1967), 112. 45. The notion of “having driving up the wanting” is discussed in Clive Hamilton, Growth Fetish (Allen & Unwin, 2003). 46. Susan Fournier and Michael Guiry, “An Emerald Green Jaguar, a House on Nantucket and an African Safari: Wish Lists and Consumption Dreams in Materialist Society,” Advances in Consumer Research 20 (1993), 352–358. 1. Thorstein Veblen, The Theory of the Leisure Class (The Macmillan Company, 1899). 2. Robert Lane, The Loss of Happiness in Market Democracies (Yale University Press, 2000), 176. 3. Clive Hamilton, “The Social Roots of the Environmental Crisis,” www.uri.edu/artsci/ecn/starkey/ECN398%20-Ecology,%20Economy,%20Society/Starkey_Micro_2e_c10.pdf 4. Margaret Atwood, Payback: Debt and the Shadow Side of Wealth (Bloomsbury, 2008), 11. 5.


pages: 206 words: 67,030

Cows, Pigs, Wars, and Witches: The Riddles of Culture by Marvin Harris

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colonial exploitation, land tenure, Louis Pasteur, stakhanovite, the market place, Thorstein Veblen, trade route

Many Americans seem to spend their entire lives trying to climb further up the social pyramid simply in order to impress each other. We seem to be more interested in working in order to get people to admire us for our wealth than in the actual wealth itself, which often enough consists of chromium baubles and burdensome or useless objects. It is amazing how much effort people are willing to spend to obtain what Thorstein Veblen described as the vicarious thrill of being mistaken for members of a class that doesn’t have to work. Veblen’s mordant phrases “conspicuous consumption” and “conspicuous waste” aptly convey a sense of the peculiarly intense desire for “keeping up with the Joneses” that lies behind the ceaseless cosmetic alterations in the automotive, appliance, and clothing industries. Early in the present century, anthropologists were surprised to discover that certain primitive tribes engaged in conspicuous consumption and conspicuous waste to a degree unmatched by even the most wasteful of modern consumer economies.

. • Judith Shapiro, Sex Roles and Social Structure Among the Yanomamo Indians in North Brazil. Columbia University Ph.D. dissertation (1971). • Betty J. Meggers, Amazonia: Man and Culture in a Counterfeit Paradise. Chicago: Aldine (1971). • Jane Boss and Eric Ross, unpublished papers and personal communications. • Some of the ideas in this chapter were first published in my column in Natural History magazine in May 1972. POTLATCH Thorstein Veblen, The Theory of the Leisure Class. New York: Modern Library (1934). • Franz Boas, “The Social Organization of the Kwakiutl.” American Anthropologist 22 (1920), pp. 111–126. • Ruth Benedict, Patterns of Culture. New York: Mentor (1946). • Douglas Oliver. A Solomon Islands Society. Cambridge: Harvard University Press (1955). • Ian Hogbin, A Guadalcanal Society: The Kaoka Speakers. New York: Holt, Rinehart, and Winston (1964); “Social Advancement in Guadalcanal,” Oceania 8 (1938). • Marshall Sahlins.


pages: 268 words: 112,708

Culture works: the political economy of culture by Richard Maxwell

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1960s counterculture, AltaVista, Apple's 1984 Super Bowl advert, barriers to entry, Berlin Wall, big-box store, business process, corporate governance, cuban missile crisis, deindustrialization, Fall of the Berlin Wall, Francis Fukuyama: the end of history, global village, Howard Rheingold, income inequality, informal economy, intermodal, late capitalism, Marshall McLuhan, medical malpractice, Network effects, profit maximization, Ralph Nader, refrigerator car, Ronald Reagan, Silicon Valley, structural adjustment programs, talking drums, telemarketer, the built environment, Thorstein Veblen, Unsafe at Any Speed, urban renewal, Victor Gruen, Whole Earth Catalog, women in the workforce

Tedlow, New and Improved: The Story of Mass Marketing in America (New York: Basic Books, 1990); and Daniel Pope, The Making of Modern Advertising (New York: Basic Books, 1983). 6. For a discussion on the rise of corporations in America, see, for example, William G. Roy, Socializing Capital: The Rise of the Large Industrial Corporation in America (Princeton, N.J.: Princeton University Press, 1997). 7. The classic statement remains Thorstein Veblen, The Engineers and the Price System (New York: Viking Press, 1938), first published in 1921, and Thorstein Veblen, Absentee Ownership and Business Enterprise in Recent Times: The Case of America (New York: Viking Press, 1954), first published in 1923. See also Paul A. Baran and Paul M. Sweezy, Monopoly Capital (New York: Monthly Review Press, 1966), and Merle Curti, “The Changing Concept of Human Nature in the Literature of American Advertising,” Business History Review 41:4 (winter 1967): 346; Matthew P.


pages: 269 words: 104,430

Carjacked: The Culture of the Automobile and Its Effect on Our Lives by Catherine Lutz, Anne Lutz Fernandez

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barriers to entry, car-free, carbon footprint, collateralized debt obligation, failed state, feminist movement, fudge factor, Gordon Gekko, housing crisis, illegal immigration, income inequality, inventory management, market design, market fundamentalism, mortgage tax deduction, Naomi Klein, Nate Silver, New Urbanism, oil shock, peak oil, Ralph Nader, Ralph Waldo Emerson, ride hailing / ride sharing, Thorstein Veblen, traffic fines, Unsafe at Any Speed, urban planning, white flight, women in the workforce, working poor, Zipcar

Just ask a group of American males whether they would willingly drive a Subaru wagon, widely known as a “Lesbaru” based on its reputation for being popular with gay women, to their weekly pickup basketball game. In their quick and vehement answers, you will hear the power of what has come to be called identity shopping. SIGNALING SUCCESS While few car buyers like to admit that status motivates their purchases, consumer experts like marketing executive Wendy Wahl agree that “conspicuous consumption” is still alive and well in the twenty-first century. When this term was coined by social scientist Thorstein Veblen at the dawn of the twentieth century, he was describing how America’s then tiny 58 Carjacked upper class consumed “freely and of the best” products in order to telegraph their wealth and social superiority.23 But according to Wahl and other marketers, conspicuous consumption has become more pervasive in our current era of “mass affluence.” The very upper tier still exists, but now there is a second, larger layer of quite wealthy people.

Gerdes Antie, “Another Look at ‘Look-Alikes’: Can Judges Match Belongings with Their Owners?” Journal of Individual Differences, 2006, 27 (1): 38–41. Jennifer Aaker, “The Malleable Self: The Role of Self-Expression in Persuasion,” Journal of Marketing Research, 1999, 36 (1): 45–57. Ibid. Juliet B. Schor, The Overspent American: Upscaling, Downshifting, and the New Consumer (New York: Basic Books, 1998), p. 3. NOTES 22. 23. 24. 233 Ibid., p. 10. Thorstein Veblen, The Theory of the Leisure Class: An Economic Study of Institutions (New York: Penguin Classics, 1994 [1912]), p. 64. Income figures are from Emmanuel Saez, “Striking It Richer: The Evolution of Top Incomes in the United States (Update with 2007 Estimates),” August 5, 2009. http://elsa.berkeley.edu/~saez/TabFig2007.xls. Wealth figures are from The American Affluence Research Center, “Highlights of the Fall 2008 Affluent Market Tracking Study,” Number14, October 2008.


pages: 372 words: 107,587

The End of Growth: Adapting to Our New Economic Reality by Richard Heinberg

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3D printing, agricultural Revolution, back-to-the-land, banking crisis, banks create money, Bretton Woods, carbon footprint, Carmen Reinhart, clean water, cloud computing, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, David Graeber, David Ricardo: comparative advantage, 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, global village, happiness index / gross national happiness, I think there is a world market for maybe five computers, income inequality, invisible hand, Isaac Newton, Kenneth Rogoff, late fees, 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, post-oil, price stability, private military company, quantitative easing, reserve currency, ride hailing / ride sharing, Ronald Reagan, short selling, special drawing rights, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, trade liberalization, tulip mania, working poor

The movement has roots in the ethical beliefs of religious groups like the Amish, but also in the writings of philosopher Henry David Thoreau (1817–1862) and back-to-the-land pioneers Scott and Helen Nearing (1883–1983; 1904– 1995, authors of Living the Good Life).36 The books Voluntary Simplicity by Duane Elgin (1981), and Your Money or Your Life by Joe Dominguez and Vicki Robin (1992), and the documentary film “Affluenza” (1997) helped define this movement, which now also features magazines and newsletters to assist in the formation of local simple living networks.37 Many simplicity advocates promote Buy Nothing Day, which falls on the Friday following Thanksgiving Day in the United States, as an antidote to pre-Christmas shopping frenzy. The US has also spawned systematic critiques of standard economic theory. Henry George (1839–1897) has been called America’s most important home-grown economist; his writings explored the implications of the principle that each person should own what he or she creates, but that everything found in nature, most importantly land, should belong equally to all humanity.38 Economist Thorstein Veblen (1857–1929) criticized the wastefulness of consumption for status.39 More recently, the book Small Is Beautiful by German-British economist E. F. Schumacher (1911–1977) inspired Bob Swann (an American pioneer of land trusts) to found the E. F. Schumacher Society, which is now the New Economics Institute, one of several US organizations that promote a basic restructuring of the economy according to ecological principles.40 If growth is impossible to sustain, what alternative goal should economies pursue?

Henry David Thoreau, Walden (Boston, 1854); Scott Nearing and Helen Nearing, Living the Good Life (New York: Schocken Books, 1970). 37. Duane Elgin, Voluntary Simplicity (New York: HarperCollins, 1981); Joe Dominguez and Vicki Robin, Your Money or Your Life (New York: Viking Penguin, 1992). 38. Henry George, Progress and Poverty (New York: Doubleday, 1879); The Henry George Institute. 39. Thorstein Veblen, The Theory of the Leisure Class: An Economic Study of Institutions (New York: Macmillan, 1899). 40. Some other organizations and websites include the New Economics Institute, Capital Institute, New Economics Foundation, Third Millennium Economy, Real World Economics, paecon.net/PAEReview/, and ethicalmarkets.com. 41. Herman Daly, Steady-State Economics (Washington, DC: Island Press, 1991), p. 17. 42.


pages: 142 words: 18,753

Bobos in Paradise: The New Upper Class and How They Got There by David Brooks

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1960s counterculture, affirmative action, Community Supported Agriculture, David Brooks, Donald Trump, Francis Fukuyama: the end of history, George Gilder, haute couture, haute cuisine, income inequality, Jane Jacobs, Jeff Bezos, means of production, Mikhail Gorbachev, New Urbanism, place-making, Ralph Waldo Emerson, Silicon Valley, The Bell Curve by Richard Herrnstein and Charles Murray, The Death and Life of Great American Cities, Thorstein Veblen, Upton Sinclair, upwardly mobile, urban planning, War on Poverty, Yogi Berra

He picked up twelve men from the bottom ranks of business and forced them into an organization that conquered the world.” In 1926 bookstores sold more copies of The Man Nobody Knows than of any other nonfiction book. On the other hand, there was a literary assault on bourgeois values and a flourishing bohemian alternative in Greenwich Village and elsewhere. During this period such writers as Sinclair Lewis, Thorstein Veblen, John O’Hara, John Dos Passos, Ernest Hemingway, and Gertrude Stein rejected bourgeois values, going off to Paris or Moscow, engaging in radical politics, or otherwise railing against the rise of provincial Babbittry. Malcolm Cowley, a Greenwich Village habitué who was also a writer and editor, summarized the priorities of early-20th-century American bohemians in his 1934 book, Exile’s Return.

And slowly, slowly a new set of rules and sumptuary codes is emerging to replace the competing codes of the bohemians and the bourgeoisie. This new set of codes organizes the consumption patterns of the educated class, encouraging some kinds of spending, which are deemed virtuous, and discouraging others that seem vulgar or elitist. They redefine what it means to be a cultured person. Taken as a whole, this set of rules make it clear that the Thorstein Veblen era is over. Maybe off in Vegas there are still some rich peasants trying to conspicuously consume, buying big limousines, powerboats, and sports franchises and piling up possessions to demonstrate their net worth. But the Bobo renounces accumulation and embraces cultivation. He must show, in the way he spends his money, that he is conscientious and not crass. The emerging code of financial correctness allows Bobos to spend money without looking like one of the vulgar Yuppies they despise.


pages: 385 words: 111,807

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

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

They argued that we need to analyse the institutions, or social rules, that affect, and even shape, individuals. This group of economists are known as the Institutionalist school – or the Old Institutional Economics (OIE), in recognition of the emergence of the so-called New Institutional Economics (NIE) since the 1980s. Individuals are shaped by society: the rise of the Institutionalist school The emergence of the Institutionalist school can be traced back to Thorstein Veblen (1857–1929), who made his name for questioning the notion of the rational, self-seeking individual. He argued that humans have layers of motivations behind their behaviours – instinct, habit, belief and, only finally, reason. Veblen also emphasized that human rationality cannot be defined as a timeless thing but is shaped by the social environment, made up of institutions – formal rules (e.g., laws, internal rules of companies) and informal rules (e.g., social customs, conventions in business dealings) – that surround the particular individuals that we are observing.

Probably not – because you don’t really know those beings and cannot even imagine how they live. * Thereby reducing its Gini coefficient to o, as it will be a perfectly equal society – of one person. * Poverty rates were 6.4 per cent in Iceland, 7.2 per cent in Luxembourg and 7.3 per cent in Finland. They were 17.4 per cent in the US, 16.0 per cent in Japan and 15.4 per cent in Spain. * The term has become famous in economics thanks to The Theory of the Leisure Class by Thorstein Veblen (whom we met in Chapter 4), a savage critique of what he called conspicuous consumption (consumption to show off one’s wealth, rather than for the pleasure of it). * The ILO defines child labour as children under the age of fifteen (or twelve, for some jobs) doing jobs that hamper their physical development and education, thereby excluding cases such as children helping with domestic chores or doing paper rounds


pages: 370 words: 102,823

Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth by Michael Jacobs, Mariana Mazzucato

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3D printing, balance sheet recession, banking crisis, Bernie Sanders, Bretton Woods, business climate, Carmen Reinhart, central bank independence, collaborative economy, complexity theory, conceptual framework, corporate governance, corporate social responsibility, credit crunch, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, decarbonisation, deindustrialization, dematerialisation, Detroit bankruptcy, double entry bookkeeping, Elon Musk, energy security, eurozone crisis, factory automation, facts on the ground, fiat currency, Financial Instability Hypothesis, financial intermediation, forward guidance, full employment, Gini coefficient, Growth in a Time of Debt, Hyman Minsky, income inequality, Internet of things, investor state dispute settlement, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labour market flexibility, low skilled workers, Martin Wolf, Mont Pelerin Society, neoliberal agenda, Network effects, new economy, non-tariff barriers, paradox of thrift, price stability, private sector deleveraging, quantitative easing, QWERTY keyboard, railway mania, rent-seeking, road to serfdom, savings glut, Second Machine Age, secular stagnation, shareholder value, sharing economy, Silicon Valley, Steve Jobs, the built environment, The Great Moderation, The Spirit Level, Thorstein Veblen, too big to fail, total factor productivity, transaction costs, trickle-down economics, universal basic income, very high income

The reason: economists are trained to think of the capitalist economy as a ‘market economy’, and look to markets to effect the allocation of resources that can result in superior economic performance, measured in terms of stable and equitable economic growth.1 Indeed, I contend that the conventional economic perspective on how the capitalist economy functions and performs imbues the economist with a ‘trained incapacity’ (to borrow a phrase from Thorstein Veblen2) to comprehend the relation between resource allocation and economic performance in the actual economy. The problem is that adherence to the theory of the market economy prevents the economist from understanding the microeconomic sources of productivity growth in the economy. It is organisations—including household families, business enterprises and government agencies—and not markets that invest in the productive capabilities embodied in physical and human capital that generate productivity.

Economists require a methodology that brings history and theory into dynamic interaction with one another so that our theoretical deductions remain anchored in our understanding of historical reality. And when that historical reality is of an innovative economy, it will by definition be a reality that is always in the process of change. Notes 1 See W. Lazonick, ‘The theory of the market economy and the social foundations of innovative enterprise’, Economic and Industrial Democracy, vol. 24, no. 1, 2003, pp. 9–44. 2 E. Wais, ‘Trained incapacity: Thorstein Veblen and Kenneth Burke’, The Journal of the Kenneth Burke Society, vol. 2, no. 1, 2005, http://kbjournal.org/wais (accessed 28 March 2016). 3 On the methodologies of Marx and Schumpeter, see W. Lazonick, Competitive Advantage on the Shop Floor, Cambridge MA, Harvard University Press, 1990, chs. 1 and 2; ‘The integration of theory and history: methodology and ideology in Schumpeter’s economics’, in L.


pages: 298 words: 95,668

Milton Friedman: A Biography by Lanny Ebenstein

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affirmative action, banking crisis, Berlin Wall, Bretton Woods, 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, labour market flexibility, Lao Tzu, liquidity trap, means of production, Mont Pelerin Society, Ponzi scheme, price stability, rent control, road to serfdom, Ronald Coase, Ronald Reagan, school choice, school vouchers, secular stagnation, Simon Kuznets, stem cell, The Chicago School, The Wealth of Nations by Adam Smith, Thorstein Veblen

When Friedman enrolled in 1932, he was twenty years old and had not previously been west of Philadelphia. He must have felt that he had truly arrived. The original head of what was then the Department of Political Economy at Chicago (now the Department of Economics) was James Laurence Laughlin, a staunch economic conservative and follower of John Stuart Mill. Laughlin presided over a diverse and eclectic department. Thorstein Veblen—perhaps the most famous American economist (and possibly the most famous economist in the world) in the first quarter of the twentieth century—had been at Chicago first as a fellow and then as a member of the faculty. Wesley Mitchell, a student and then a young faculty member at Chicago, called its early Department of Political Economy “perhaps the most stimulating group of scholars in the country, certainly the group with the most varied traditions.”2 The transition of the name of the department at Chicago, which occurred early in the twentieth century and reflected a broader trend at other colleges and universities, indicates the changing conception that economists had of their discipline.

“In the history of economics,” John Kenneth Galbraith wrote, “the age of John Maynard Keynes gave way to the age of Milton Friedman.”1 It is an indication of the tendency of paradigms and views of the world to change and even to collapse that two economists who would have been considered in absolutely the first tier for half of the twentieth century (from about 1900 to 1930 and from 1950 to 1970), Thorstein Veblen and Galbraith, are now considered very differently. Though it is as certain as certain can be that the future will look on the present very differently than the present looks on itself, this is, for whatever reasons, among the most difficult of lessons to learn and to internalize. It is nonetheless among the most important. To live in an era is almost always to accept its unstated premises, assumptions, rationalizations, and beliefs.


pages: 96 words: 33,963

Decline of the English Murder by George Orwell

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British Empire, invisible hand, laissez-faire capitalism, Lao Tzu, Ralph Waldo Emerson, Thorstein Veblen

Seneca On the Shortness of Life Marcus Aurelius Meditations St Augustine Confessions of a Sinner Thomas à Kempis The Inner Life Niccolò Machiavelli The Prince Michel de Montaigne On Friendship Jonathan Swift A Tale of a Tub Jean-Jacques Rousseau The Social Contract Edward Gibbon The Christians and the Fall of Rome Thomas Paine Common Sense Mary Wollstonecraft A Vindication of the Rights of Woman William Hazlitt On the Pleasure of Hating Karl Marx & Friedrich Engels The Communist Manifesto Arthur Schopenhauer On the Suffering of the World John Ruskin On Art and Life Charles Darwin On Natural Selection Friedrich Nietzsche Why I am So Wise Virginia Woolf A Room of One’s Own Sigmund Freud Civilization and Its Discontents George Orwell Why I Write Confucius The First Ten Books Sun-tzu The Art of War Plato The Symposium Lucretius Sensation and Sex Cicero An Attack on an Enemy of Freedom The Revelation of St John the Divine and The Book of Job Marco Polo Travels in the Land of Kubilai Khan Christine de Pizan The City of Ladies Baldesar Castiglione How to Achieve True Greatness Francis Bacon Of Empire Thomas Hobbes Of Man Sir Thomas Browne Urne-Burial Voltaire Miracles and Idolatry David Hume On Suicide Carl von Clausewitz On the Nature of War Søren Kierkegaard Fear and Trembling Henry David Thoreau Where I Lived, and What I Lived For Thorstein Veblen Conspicuous Consumption Albert Camus The Myth of Sisyphus Hannah Arendt Eichmann and the Holocaust Plutarch In Consolation to his Wife Robert Burton Some Anatomies of Melancholy Blaise Pascal Human Happiness Adam Smith The Invisible Hand Edmund Burke The Evils of Revolution Ralph Waldo Emerson Nature Søren Kierkegaard The Sickness unto Death John Ruskin The Lamp of Memory Friedrich Nietzsche Man Alone with Himself Leo Tolstoy A Confession William Morris Useful Work v.


pages: 112 words: 30,160

The Gated City (Kindle Single) by Ryan Avent

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big-box store, carbon footprint, deindustrialization, edge city, Edward Glaeser, income inequality, labor-force participation, low skilled workers, manufacturing employment, offshore financial centre, profit maximization, rent-seeking, Silicon Valley, Thorstein Veblen, transit-oriented development, Tyler Cowen: Great Stagnation

Today, the condition of being around a lot of other people adds to metropolitan expense via congestion, and the cost of competition for scarce public and private resources (the parks are crowded, and the best shows sell out quickly). What could possibly make city life worth the expense? Maybe it’s all for show. It could be that cities are what economists call Veblen goods, after economist Thorstein Veblen. A Veblen good has an unusual property -- as its price rises, demand for it also rises. Why? Because it functions as a status symbol. Wealthy Americans could choose to pay high prices for city life because city life is like a Rolex watch or a $10,000 bottle of wine: it shows that you've got money. Young rich people might opt to live in cities because doing so signals certain things about them -- wealth or ambition, say -- to potential connections or mates.


pages: 741 words: 179,454

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

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affirmative action, Albert Einstein, algorithmic trading, Andy Kessler, Asian financial crisis, asset allocation, asset-backed security, bank run, banking crisis, banks create money, Basel III, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Bonfire of the Vanities, bonus culture, Bretton Woods, BRICs, British Empire, capital asset pricing model, Carmen Reinhart, carried interest, Celtic Tiger, clean water, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, debt deflation, Deng Xiaoping, deskilling, discrete time, diversification, diversified portfolio, Doomsday Clock, Emanuel Derman, en.wikipedia.org, Eugene Fama: efficient market hypothesis, eurozone crisis, Fall of the Berlin Wall, financial independence, financial innovation, fixed income, full employment, global reserve currency, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, happiness index / gross national happiness, haute cuisine, high net worth, Hyman Minsky, index fund, interest rate swap, invention of the wheel, invisible hand, Isaac Newton, job automation, Johann Wolfgang von Goethe, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, Kevin Kelly, labour market flexibility, laissez-faire capitalism, load shedding, locking in a profit, Long Term Capital Management, Louis Bachelier, margin call, market bubble, market fundamentalism, Marshall McLuhan, Martin Wolf, merger arbitrage, Mikhail Gorbachev, Milgram experiment, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, mutually assured destruction, Naomi Klein, Network effects, new economy, Nick Leeson, Nixon shock, Northern Rock, nuclear winter, oil shock, Own Your Own Home, pets.com, Plutocrats, plutocrats, Ponzi scheme, price anchoring, price stability, profit maximization, quantitative easing, quantitative trading / quantitative finance, Ralph Nader, RAND corporation, random walk, Ray Kurzweil, regulatory arbitrage, rent control, rent-seeking, reserve currency, Richard Feynman, Richard Feynman, Richard Thaler, risk-adjusted returns, risk/return, road to serfdom, Robert Shiller, Robert Shiller, Rod Stewart played at Stephen Schwarzman birthday party, rolodex, Ronald Reagan, Ronald Reagan: Tear down this wall, savings glut, shareholder value, Sharpe ratio, short selling, Silicon Valley, six sigma, Slavoj Žižek, South Sea Bubble, special economic zone, statistical model, Stephen Hawking, Steve Jobs, 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 Predators' Ball, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, trickle-down economics, Turing test, Upton Sinclair, value at risk, Yogi Berra, zero-coupon bond

It also provided financial independence and protection against uncertainty. For a small group, wealth provided social acceptance, power, and influence. It became a means for self-expression, a statement of status and selfhood. As F. Scott Fitzgerald observed: “Let me tell you about the very rich. They are different from you and me. They have more money.”2 In his 1899 book The Theory of the Leisure Class, Thorstein Veblen, a Norwegian-born American economist, created the term conspicuous consumption, meaning the waste of money or resources by people to establish higher status. Conspicuous leisure was the waste of time by people to achieve the same thing. By the late twentieth century, it was unnecessary even to spend money on useless things and wasteful pursuits. Control of large sums of money—a large bank balance, real estate or stock holdings, and investments in exclusive hedge funds—were proof of membership of the leisure classes.

At the end of the minister’s presentation, a frail, ancient Japanese woman stood up and spoke. In a quiet steady voice, she explained the hardships that the loss had caused. She wanted to know “whether there was any chance she would see any of her money before her life ended.” 3. Business of Business In 1922 U.S. President Calvin Coolidge famously observed: “The business of America is business.” The economist Thorstein Veblen saw a clear difference between industry, producing things, and business, making money from producing things. In the age of capital, business rapidly financialized. Originally, business people invested in factories and businesses that produced and sold things. Now, in the twentieth century, business people sought to make money in ways not necessarily directly linked to the making of things.

Many investors use FoFs (fund-of-funds) to screen and select portfolios of hedge funds. Where investing in hedge funds, diversification makes no sense, earning average or worse returns. The investor pays a fee to the FoF manager (1 percent of AUM and 10 percent of performance) as well as the hedge fund manager’s fee (2 percent and 20 percent). FoF might stand for “fee-of-fees.” Skewed payoffs for the manager encourage aggressive risk taking.18 The economist Thorstein Veblen identified this: “It is always sound business to take any obtainable net gain, at any cost and at any risk to the rest of the community.” In 2007, three hedge fund managers took home more than $1 billion. At the congressional inquiry into the industry, Maryland Democratic representative Elijah Cummings reported that his neighbor asked him: “How does it feel to be going before five folks that have gotten more money than God?”


pages: 224 words: 91,918

The Electric Kool-Aid Acid Test by Tom Wolfe

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Bonfire of the Vanities, Buckminster Fuller, edge city, Golden Gate Park, Haight Ashbury, haute couture, Menlo Park, Ronald Reagan, stakhanovite, Stewart Brand, strikebreaker, the scientific method, Thorstein Veblen

As bohemias go, Perry Lane was Arcadia, Arcadia just off the Stanford golf course. It was a cluster of two-room cottages with weathery wood shingles in an oak forest, only not just amid trees and greenery, but amid vines, honeysuckle tendrils, all buds and shoots and swooping tendrils and twitterings like the best of Arthur Rackham and Honey Bear. Not only that, it had true cultural cachet. Thorstein Veblen had lived there. So had two Nobel Prize winners everybody knew about though the names escaped them. The cottages rented for just $60 a month. Getting into Perry Lane was like getting into a club. Everybody who lived there had known somebody else who lived there, or they would never have gotten in, and naturally they got to know each other very closely too, and there was always something of an atmosphere of communal living.

., JULY 21, I963 — AND THEN ONE DAY THE end of an era, as the papers like to put it. A developer bought most of Perry Lane and was going to tear down the cottages and put up modern houses and the bulldozers were coming. The papers turned up to write about the last night on Perry Lane, noble old Perry Lane, and had the old cliché at the ready, End of an Era, expecting to find some deep-thinking latter-day Thorstein Veblen intellectuals on hand with sonorous bitter statements about this machine civilization devouring its own past. Instead, there were some kind of nuts out here. They were up in a tree lying on a mattress, all high as coons, and they kept offering everybody, all the reporters and photographers, some kind of venison chili, but there was something about the whole setup— and when it came time for the sentimental bitter statement, well, instead, this big guy Kesey dragged a piano out of his house and they all set about axing the hell out of it and burning it up, calling it "the oldest living thing on Perry Lane," only they were giggling and yahooing about it, high as coons, in some weird way, all of them, hard-grabbing off the stars, and it was hard as hell to make the End of an Era story come out right in the papers, with nothing but this kind of freaking Olsen & Johnson material to work with, but they managed to go back with the story they came with, End of an Era, the cliché intact, if they could only blot out the cries in their ears of Ve-ni-son Chi-li— —and none of them would have understood it, anyway, even if someone had told them what was happening.


pages: 479 words: 133,092

The Coke Machine by Michael Blanding

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carbon footprint, clean water, collective bargaining, corporate social responsibility, Exxon Valdez, Gordon Gekko, Internet Archive, laissez-faire capitalism, market design, Naomi Klein, New Journalism, Ponzi scheme, profit motive, Ralph Nader, rolodex, Ronald Reagan, shareholder value, The Wealth of Nations by Adam Smith, Thorstein Veblen, union organizing, Upton Sinclair

Coke certainly wasn’t the only company advertising with idealized upper-class images, but the sheer ubiquity of its ads set the tone for advertising nationally. Looking at them, you’d never know that the United States was going through convulsive demographic changes, with immigrants flooding the country, fueling a new manufacturing boom with long hours in the factory. If those rigid images of upper-class refinement seemed an odd choice for a mass-market product such as Coke, contemporary economist Thorstein Veblen offers a reason for their success in his 1899 book The Theory of the Leisure Class, in which he invented the term “conspicuous consumption” to describe the consumer pretenses of the upper classes. The high-Victorian style of top hats and walking sticks had nothing to do with functionality, but were rather “evidence of leisure,” he wrote, a message sent to onlookers that a person wasn’t involved in “any employment that is directly and immediately of any human use.”

Page 39 total of $29,500 . . . almost entirely removed: Allen, 43-45. Page 39 E. W. Kemble and especially Samuel Hopkins Adams: Young, 215-217. Page 40 procession of smiling, fancily dressed Victorian women: Dietz, 50; Goodrum, 90. Page 40 convulsive demographic changes: Mady Schutzman, The Real Thing: Performance, Hysteria, & Advertising (Hanover, NH, and London: Wesleyan University Press, 1999), 36. Page 40 “evidence of leisure”: Thorstein Veblen, The Theory of the Leisure Class (Amherst, NY: Prometheus, 1998 [orig. pub. 1899]), 265, 171; see also Rob Walker, Buying In: The Secret Dialogue Between What We Buy and Who We Are, (New York: Random House, 2008), 64-65. Page 40 “The President drinks Coke”: Paul Richard, “Andy Warhol, the Ghostly Icon: At the N.Y. Show, Summoning Images of the Pop Legend,” Washington Post, February 6, 1989.


pages: 471 words: 124,585

The Ascent of Money: A Financial History of the World by Niall Ferguson

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Admiral Zheng, Andrei Shleifer, Asian financial crisis, asset allocation, asset-backed security, Atahualpa, bank run, banking crisis, banks create money, Black Swan, Black-Scholes formula, Bonfire of the Vanities, Bretton Woods, BRICs, British Empire, capital asset pricing model, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, collateralized debt obligation, colonial exploitation, Corn Laws, corporate governance, 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, financial innovation, financial intermediation, fixed income, floating exchange rates, Fractional reserve banking, Francisco Pizarro, full employment, German hyperinflation, Hernando de Soto, high net worth, hindsight bias, Home mortgage interest deduction, Hyman Minsky, income inequality, interest rate swap, Isaac Newton, iterative process, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labour mobility, London Interbank Offered Rate, Long Term Capital Management, market bubble, market fundamentalism, means of production, Mikhail Gorbachev, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, mortgage tax deduction, Naomi Klein, Nick Leeson, Northern Rock, 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, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, seigniorage, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, spice trade, structural adjustment programs, technology bubble, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, too big to fail, transaction costs, value at risk, Washington Consensus, Yom Kippur War

Andrew Lo, director of the Massachusetts Institute of Technology’s Laboratory for Financial Engineering, is in the vanguard of an effort to re-conceptualize markets as adaptive systems.19 A long-run historical analysis of the development of financial services also suggests that evolutionary forces are present in the financial world as much as they are in the natural world.20 The notion that Darwinian processes may be at work in the economy is not new, of course. Evolutionary economics is in fact a well-established sub-discipline, which has had its own dedicated journal for the past sixteen years.21 Thorstein Veblen first posed the question ‘Why is Economics Not an Evolutionary Science?’ (implying that it really should be) as long ago as 1898.22 In a famous passage in his Capitalism, Socialism and Democracy, which could equally well apply to finance, Joseph Schumpeter characterized industrial capitalism as ‘an evolutionary process’: This evolutionary character . . . is not merely due to the fact that economic life goes on in a social and natural environment which changes and by its change alters the data of economic action; this fact is important and these changes (wars, revolutions and so on) often condition industrial change, but they are not its prime movers.

See also John Authers, ‘Quants Adapting to a Darwinian Analysis’, Financial Times, 19 May 2008. 20 The following is partly derived from Niall Ferguson and Oliver Wyman, The Evolution of Financial Services: Making Sense of the Past, Preparing for the Future (London / New York, 2007). 21 The Journal of Evolutionary Economics. Seminal works in the field are A. A. Alchian, ‘Uncertainty, Evolution and Economic Theory’, Journal of Political Economy, 58 (1950), pp. 211-22, and R. R. Nelson and S. G. Winter, An Evolutionary Theory of Economic Change (Cambridge, MA, 1982). 22 Thorstein Veblen, ‘Why is Economics Not an Evolutionary Science?’ Quarterly Journal of Economics, 12 (1898), pp. 373-97. 23 Joseph A. Schumpeter, Capitalism, Socialism and Democracy (London, 1987 [1943]), pp. 80-4. 24 Paul Ormerod, Why Most Things Fail: Evolution, Extinction and Economics (London, 2005), pp. 180ff. 25 Jonathan Guthrie, ‘How the Old Corporate Tortoise Wins the Race’, Financial Times, 15 February 2007. 26 Leslie Hannah, ‘Marshall’s “Trees” and the Global “Forest”: Were “Giant Redwoods” Different?’


pages: 429 words: 114,726

The Computer Boys Take Over: Computers, Programmers, and the Politics of Technical Expertise by Nathan L. Ensmenger

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barriers to entry, business process, Claude Shannon: information theory, computer age, deskilling, Firefox, Frederick Winslow Taylor, future of work, Grace Hopper, informal economy, information retrieval, interchangeable parts, Isaac Newton, Jacquard loom, Jacquard loom, job satisfaction, John von Neumann, knowledge worker, loose coupling, new economy, Norbert Wiener, pattern recognition, performance metric, post-industrial society, Productivity paradox, RAND corporation, Robert Gordon, sorting algorithm, Steve Jobs, Steven Levy, the market place, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, Turing machine, Von Neumann architecture, Y2K

The prospect of automation is plainly no menace to Kate.”6 But if the computer held no dangers for Hepburn, it did for many of the real-life office workers watching the film. Like Watson and her librarians, most would have greeted the arrival of a computer-toting efficiency expert with fear and trepidation. Although Tracy imbued the character of Sumner with his trademark gruff-but-likable persona, such experts were generally seen as the harbingers of reorganization, mechanization, and what the economist Thorstein Veblen described as the “degradation of labor.”7 And as Thomas Haigh has suggested, it was no coincidence that Sumner was both an efficiency expert and a computer designer; many of the “systems men” of the early electronic computer era were efficiency experts turned computer consultants. In any case, the specter of computer-driven unemployment looms large over Desk Set, if only as the source of initial conflict between Sumner and Watson.

“The Thinking Machine,” Time magazine, January 23, 1950, 54–60. 2. J. Lear, “Can a Mechanical Brain Replace You?” Colliers, no. 131 (1953), 58–63. 3. “Office Robots,” Fortune 45 (January 1952), 82–87, 112, 114, 116, 118. 4. Cheryl Knott Malone, “Imagining Information Retrieval in the Library: Desk Set in Historical Context,” IEEE Annals of the History of Computing 24, no. 3 (2002): 14–22. 5. Ibid. 6. Ibid. 7. Thorstein Veblen, The Theory of the Leisure Class (New York: McMillan, 1899). 8. Thomas Haigh, “The Chromium-Plated Tabulator: Institutionalizing an Electronic Revolution, 1954–1958,” IEEE Annals of the History of Computing 4, no. 23 (2001), 75–104. 9. James W. Cortada, Information Technology as Business History: Issues in the History and Management of Computers (Westport, CT: Greenwood Press, 1996). 10.


pages: 621 words: 157,263

How to Change the World: Reflections on Marx and Marxism by Eric Hobsbawm

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anti-communist, banking crisis, battle of ideas, Berlin Wall, British Empire, currency manipulation / currency intervention, deindustrialization, discovery of the americas, experimental subject, Fall of the Berlin Wall, full employment, labour market flexibility, market fundamentalism, means of production, new economy, Simon Kuznets, Thorstein Veblen, Upton Sinclair, upwardly mobile

Nor, especially in the USA, should we underestimate the importance of a mass of immigrants from Germany, tsarist Russia and elsewhere, who often brought Marxist-influenced ideologies with them to the new world as part of their intellectual baggage.11 And nor should we underestimate the movement of resistance to ‘big business’ during this period of acute social tension and ferment in the USA, which made a number of radical thinkers receptive to, or at least interested in socialist critiques of capitalism. One thinks not only of Thorstein Veblen but of progressive, centrally placed economists like Richard Ely (1854–1943) who ‘probably exerted a greater influence upon American economics during its vital formative period than any other individual’.12 For these reasons the USA, though developing little independent Marxist 220 The Influence of Marxism 1880–1914 thinking itself, became, rather surprisingly, a significant centre for the diffusion of Marxist writings and influence.

Pareto had already argued that its impracticability could not be theoretically proved, before Barone (1908) produced his fundamental paper on ‘Il ministro della produzione nello stato collettivo’, which was to make its impact on economic debate after our period. Some Marxist influence, or stimulus, may perhaps be detected in the ‘institutional’ school or current of American economics then popular in the USA where, as already mentioned, the strong sympathy of many economists for ‘progressivism’ and social reform inclined them to look favourably on economic theories critical of big business (R.T. Ely, the Wisconsin school; above all Thorstein Veblen). Economics as a discipline separate from the rest of the social sciences hardly existed in Germany, where the influence of the ‘historical school’ and the concept of the Staatswissenschaften (best translated as ‘policy sciences’) was dominant. The impact of Marxism, i.e. of the massive fact of German social democracy, on economics cannot be treated in isolation. It need hardly be said that the official social sciences of Wilhelmine Germany were strongly anti-Marxist, though the old liberals, who had engaged in polemics with Marx himself (Lujo Brentano, Schäffle)41 seem to have been more eager to plunge into controversy than the more Prussian-oriented school of Schmoller.


pages: 532 words: 155,470

One Less Car: Bicycling and the Politics of Automobility by Zack Furness, Zachary Mooradian Furness

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active transport: walking or cycling, affirmative action, American Society of Civil Engineers: Report Card, back-to-the-land, Build a better mousetrap, Burning Man, car-free, carbon footprint, clean water, colonial rule, conceptual framework, dumpster diving, Enrique Peñalosa, European colonialism, feminist movement, ghettoisation, Golden Gate Park, interchangeable parts, intermodal, Internet Archive, Jane Jacobs, market fundamentalism, means of production, Naomi Klein, New Urbanism, peak oil, place-making, post scarcity, race to the bottom, Ralph Nader, ride hailing / ride sharing, Ronald Reagan, Silicon Valley, sustainable-tourism, the built environment, The Death and Life of Great American Cities, Thomas L Friedman, Thorstein Veblen, urban planning, Whole Earth Catalog, Whole Earth Review, working poor, Yom Kippur War

For a more even handed assessment of fixed gears, see Gabe Meline, “pedal to the Mettle,” North Bay Bohemian, September 15–21, 2004. Theodor W. adorno, “veblen’s attack on Culture,” in Prisms (Cambridge, Ma: MiT press, 1983), 75–76 (originally published in Studies in Philosophy and Social Science 9, no. 3 [1941]: 389–413). John Cunningham Wood offers a slightly different translation of adorno’s phrase, calling it “indirect utility” instead of “mediated utility” in Thorstein Veblen: Critical Assessments (london: routledge, 1993), 4. Chambers raises a similar point about the cachet of (sub)cultural practices in “Symbolic Equipment and the Objects of leisure images.” For example, see Michael Martin and Gabe Morford, Mash SF (Mash Transit productions, 2007); David rowe, Fast Friday (infinite Quest productions, 2008). Dick Hebdige gives an analogous reading of italian scooters in “Travelling light,” 13.

Cambridge: Woodhead, 2003. Wolf, Winfried. Car Mania: A Critical History of Transport. 1st English ed. london: pluto press, 1996. Wollen, peter, and Joe Kerr, eds. Autopia: Cars and Culture. london: reaktion Books, 2002. “Women in the automotive industry.” Catalyst (March 2009). available at http://www. catalyst.org/publication/235/women-in-the-automotive-industry. Wood, John Cunningham. Thorstein Veblen: Critical Assessments. london: routledge, 1993. Work, George, and laurence Malone. “Bicycles, Development, and the Third World.” Environment 25, no. 1 (1983): 41. World Bank. “China Transport Sector Study.” Washington, DC, 1985. ———. “a Decade of action in Transport: an Evaluation of World Bank assistance to the Transport Sector, 1995–2005.” Washington DC: The international Bank for reconstruction and Development/World Bank, 2007.


pages: 464 words: 116,945

Seventeen Contradictions and the End of Capitalism by David Harvey

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

‘Economic rationality needed continually to raise the level of consumption without raising the rate of satisfaction; to push back the frontier of the sufficient, to maintain the impression that there could not be enough for everyone.’ The stratification of consumption, in which the consumerism of an affluent and parasitic leisure class called the shots and led the way, became crucial to ensuring the realisation of value. This is what Thorstein Veblen’s Theory of the Leisure Class, published back in 1899, so brilliantly exposed. But what we now know is that if such a class did not already exist it would have to be invented.8 An alienating consumerism is needed to solve the dilemma of a sagging effective demand produced by wage repressions and technologically induced unemployment for the mass of the workers. The latter, submerged and surrounded at every turn in a sea of increasingly conspicuous consumption, find themselves frantically seeking to maximise their incomes at all costs, working longer and longer hours in order to meet their artificially escalating needs as well as to keep up with the needs of the Joneses.

David Harvey, The Enigma of Capital, London, Profile Books, 2010, p. 260. 2. See the debate in Immanuel Wallerstein, Randall Collins, Michael Mann, Georgi Derluguian and Craig Calhoun, Does Capitalism Have a Future?, Oxford, Oxford University Press, 2013. 3. André Gorz, Critique of Economic Reason, London, Verso, 1989, p. 22. 4. Ibid., p. 86. 5. Ibid., pp. 87–8. 6. Ibid., p. 100. 7. Ibid., p. 114. 8. Thorstein Veblen, The Theory of the Leisure Class, New York, Oxford University Press, 2009 edition. 9. Gorz, Critique of Economic Reason, p. 116. 10. Ibid., pp. 45–6. 11. Pope Francis, ‘Apostolic Exhortation Evangelii Gaudium of the Holy Father Francis to the Bishops, Clergy, Consecrated Persons and the Lay Faithful on the Proclamation of the Gospel in Today’s World’, National Catholic Register, 15 December 2013, paragraph 192. 12.


pages: 538 words: 147,612

All the Money in the World by Peter W. Bernstein

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Albert Einstein, anti-communist, Berlin Wall, Bill Gates: Altair 8800, call centre, corporate governance, currency peg, David Brooks, Donald Trump, estate planning, family office, financial innovation, George Gilder, high net worth, invisible hand, Jeff Bezos, job automation, job-hopping, Long Term Capital Management, Martin Wolf, Maui Hawaii, means of production, Menlo Park, Mikhail Gorbachev, new economy, PageRank, Peter Singer: altruism, pez dispenser, popular electronics, Renaissance Technologies, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Sand Hill Road, school vouchers, Search for Extraterrestrial Intelligence, shareholder value, Silicon Valley, Silicon Valley startup, stem cell, Stephen Hawking, Steve Ballmer, Steve Jobs, Steve Wozniak, Thorstein Veblen, too big to fail, traveling salesman, urban planning, William Shockley: the traitorous eight, women in the workforce

So these days the 400 are spending a much smaller percentage of their wealth living extremely well than a quarter of a century ago. * * * As Ira Rennert’s villa by the sea signals, the past two decades have been an era of extravagant spending by certain members of America’s superrich, a period that mimics earlier epochs of flamboyant wealth in American history. The economist and sociologist Thorstein Veblen coined the phrase conspicuous consumption to describe this type of spending. As he wrote in his 1899 book, The Theory of the Leisure Class, “To gain and to hold the esteem11 of men it is not sufficient merely to hold wealth and power. The wealth and power must be put into evidence.” Then, as now, houses were one common extravagance. Evidence of vast wealth might also be a mega-yacht, a private jet, a string of beautiful wives, parties, art, or anything else that strikes the fancy

The estate is valued at $185 million: Mary Williams Walsh, “Pension Battle May Entangle Mogul’s Home,” New York Times, Feb. 3, 2006. 8. In 1998 Rennert tried: Munk, “Greenwich’s Outrageous Fortunes.” 9. Neighbors have called the house “arrogant”: Julia C. Mead, “At Home in Versailles on the Atlantic,” New York Times, July 4, 2004. 10. The writer Kurt Vonnegut: Ibid. Vonnegut stayed put. He died on April 11, 2007. 11. “To gain and to hold the esteem”: Thorstein Veblen, quoted in James W. Michaels, “The Mass-Market Rich,” Forbes, Oct. 9, 2000. 12. In Veblen’s day: See Arthur T. Vanderbilt II, Fortune’s Children: The Fall of the House of Vanderbilt (New York: William Morrow, 1989), for more details on the period. 13. In 2007 timber baron Tim Blixseth: Forbes.com. 14. Media mogul John Kluge: Information on the mansions in this section comes mostly from Forbes.com. 15.


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Framing Class: Media Representations of Wealth and Poverty in America by Diana Elizabeth Kendall

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Bernie Madoff, blue-collar work, Bonfire of the Vanities, call centre, David Brooks, declining real wages, Donald Trump, employer provided health coverage, ending welfare as we know it, framing effect, Georg Cantor, Gordon Gekko, greed is good, haute couture, housing crisis, illegal immigration, income inequality, lump of labour, mortgage tax deduction, new economy, payday loans, Ponzi scheme, Ray Oldenburg, Richard Florida, Ronald Reagan, Saturday Night Live, telemarketer, The Great Good Place, Thorstein Veblen, trickle-down economics, union organizing, upwardly mobile, urban planning, working poor

According to one journalist’s account of power lunches in New York’s finest restaurants, “[Prices] can act as a kind of velvet rope to keep out tourists and people paying their own way, allowing a big hitter to tuck in a napkin secure in the belief that no one who works for him can afford to walk in the door.”81 Price-tag framing provides “outsiders” with information about what luxury items cost, but it also establishes the notion that people in other classes are categorically excluded from many elite settings by their inability or unwillingness to pay such prices. Journalists employing price-tag framing in their stories typically use the concept of conspicuous consumption,82 formulated by economist Thorstein Veblen (who wrote at the turn of the twentieth century), to describe the excessive and extravagant purchases of the wealthy. According to Veblen, conspicuous consumption is one of many signs of the superfluous lifestyle of the rich. Although some contemporary media reports condemn them, others glorify the excessive spending and “gracious lifestyles” of the wealthy in order to gain media audiences and advertising revenue.

Power Lunch Menu,” The Huffington Post, November 30, 2009, http://www.huffingtonpost.com/2009/11/30/ no-recession-special-on-t_n_373681.html (accessed June 27, 2010). 80. Jared Paventi, “Expensive New York Restaurants,” GolfLink, http://www .golflink.com/list_28775_expensive-new-york-restaurants.html (accessed June 27, 2010). 81. David Carr, “The Powering Up of the Power Lunch,” New York Times, December 10, 2003, D4. 82. Thorstein Veblen, The Theory of the Leisure Class, intro. Robert Lekachman (New York: Penguin, 1994 [1899]). 83. Jan Parr and Ted Shen, “The Richest Chicagoans: Who’s Up, Who’s Down?” Chicago (February 2002): 49. 84. “Most Expensive Gated Communities in America,” Forbes.com, 2006, http:// www.forbes.com/maserati/cx_bs_1114home.html (accessed June 10, 2010). 85. Andrea Truppin, “How Much Is That View in the Window?”


pages: 288 words: 16,556

Finance and the Good Society by Robert J. Shiller

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bank run, banking crisis, barriers to entry, Bernie Madoff, 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, Deng Xiaoping, diversification, diversified portfolio, Donald Trump, Edward Glaeser, eurozone crisis, experimental economics, financial innovation, full employment, fundamental attribution error, George Akerlof, income inequality, invisible hand, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, land reform, loss aversion, Louis Bachelier, Mahatma Gandhi, Mark Zuckerberg, market bubble, market design, means of production, microcredit, moral hazard, mortgage debt, Occupy movement, passive investing, Ponzi scheme, prediction markets, profit maximization, quantitative easing, random walk, regulatory arbitrage, Richard Thaler, road to serfdom, Robert Shiller, Robert Shiller, Ronald Reagan, self-driving car, shareholder value, Sharpe ratio, short selling, Simon Kuznets, Skype, Steven Pinker, telemarketer, The Market for Lemons, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, Vanguard fund, young professional, Zipcar

Some women in these polygamous marriages might be even more resentful. In much of western society, ever since ancient Greece and Rome, polygamy has been illegal or at least widely opposed. But even with those conventions, wealthy men nd it much easier to have a airs outside their marriages or to hire the most sought-after prostitutes. More concretely, the power that the rich obtain is the power to engage in what the economist Thorstein Veblen termed conspicuous consumption, which, when indulged in by men, is instinctively recognized by the general public as a possible ploy to attract the opposite sex—even if the plan is never consummated. Underlying the desire for wealth is a sexual and social-status impulse. This applies as well to women, whose desire for wealth may arise from somewhat different, though equally strong, motives.

As one eighteenth-century observer sized up these laws, “they are null, because luxury employs itself upon objects which the laws have not foreseen, and could not foresee.”9 The laws’ details were commonly ridiculed, and in modern times they are thought to be inconsistent with individual freedoms. They did, nevertheless, reappear again and again for thousands of years, re ecting the persistence of public disgust with the extravagance of the rich. There is an economic theory that would seem to justify something akin to sumptuary laws or taxes. The theory was described by Thorstein Veblen in his 1899 book The Theory of the Leisure Class and the economic part of the theory was expanded by George Akerlof and other economic theorists.10 Many people spend lavishly on consumption that they do not really even enjoy merely to signal to others their status—a practice called positional consumption because its value to the consumer depends on how it establishes his or her position relative to others.


pages: 426 words: 115,150

Your Money or Your Life: 9 Steps to Transforming Your Relationship With Money and Achieving Financial Independence: Revised and Updated for the 21st Century by Vicki Robin, Joe Dominguez, Monique Tilford

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asset allocation, Buckminster Fuller, buy low sell high, credit crunch, disintermediation, diversification, diversified portfolio, fiat currency, financial independence, fudge factor, full employment, Gordon Gekko, high net worth, index card, index fund, job satisfaction, Menlo Park, Parkinson's law, passive income, passive investing, profit motive, Ralph Waldo Emerson, Richard Bolles, risk tolerance, Ronald Reagan, Silicon Valley, software patent, strikebreaker, Thorstein Veblen, Vanguard fund, zero-coupon bond

It’s about your own inquiry as you shop, your “cash register consciousness,” about what a product means to you and if there might be another way—a way that feels better and costs less—to meet the need that product represents. Frugality is about enjoyment, not penny-pinching ! Happy saving—or should we say happy frugaling . . . ONE SURE WAY TO SAVE MONEY Stop Trying to Impress Other People Other people are probably so busy trying to impress you that they will, at best, not notice your efforts. At worst, they will resent you for one-upping them. When Thorstein Veblen published The Theory of the Leisure Class in 1899, it didn’t make a big splash. But the term he coined, “conspicuous consumption,” has made it into the heart of our culture. In the foreword to Veblen’s book, social commentator and writer Stuart Chase summarized his thesis this way: People above the line of base subsistence, in this age and all earlier ages, do not use the surplus, which society has given them, primarily for useful purposes.

THE AMERICAN DREAM—ON A SHOESTRING 1 Michael B. Farrell, “Fuel Costs Strain U.S. Mass Transit, Too. With ridership up, L.A.’s Metro raises fares and pushes for new tax revenue,” The Christian Science Monitor, July 18, 2008, http://www.csmonitor.com/2008/0718/p01s02-usgn.html. 2 Based on Ernest Callenbach, Living Cheaply with Style, 2nd edition (Berkeley, CA: Ronin Publishing Inc., 2000), page 167. 3 Thorstein Veblen, The Theory of the Leisure Class (NewYork: Modern Library, 1934), p. xiv. 4 “Big Spenders: As a Favored Pastime, Shopping Ranks High with Most Americans,” The Wall Street Journal, July 30, 1987. 5 Lewis H. Lapham, “An American Feast: You Are What You Buy,” The Wall Street Journal, May 13, 1988. 6 Avery Comarow, “Saving on Surgery by Going Abroad: Medical tourism or medical travel can produce discounts of 80 percent,” U.S.


pages: 159 words: 45,073

GDP: A Brief but Affectionate History by Diane Coyle

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

In the children’s book The Lion, the Witch and the Wardrobe, the White Witch uses enchanted Turkish Delight candy to ensnare Edmund. Once he has had one piece, he cannot resist more. Consumerism is an addiction too. Psychology offers insights into the rat race and consumerism. The experimental evidence is that most people care more about status and therefore their relative income than they do about the absolute level of income. The “conspicuous consumption” first named by Thorstein Veblen is a kind of arms race of status, and one that the excesses of corporate pay have let rip in the past quarter century. What’s more, the satisfaction we get from extra income and purchases wears off quickly, leaving us, like Edmund in the story, hungry for another fix. The evocative technical term for this is the hedonic treadmill. If money is an addiction, it’s not surprising that some people think society needs help being weaned off it.

Affluenza: When Too Much Is Never Enough by Clive Hamilton, Richard Denniss

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call centre, delayed gratification, experimental subject, full employment, impulse control, Mahatma Gandhi, McMansion, Naomi Klein, Own Your Own Home, Post-materialism, post-materialism, purchasing power parity, Thorstein Veblen, trickle-down economics, wage slave

Yet our desire for various commodities (larger houses, sophisticated home appliances, expensive personal items, and so on) is continually recreated—an illness that entered a particularly virulent phase in the 1990s with the trend described as ‘luxury fever’. Luxury fever Popular folklore has always held a fascination with the profligate lifestyles of the monied classes. Sociologists have analysed how extravagance serves as a device whereby the rich differentiate themselves from the mass of the population. One of the earliest commentators on this was Thorstein Veblen, who coined the phrase ‘conspicuous consumption’ in his 1899 book The Theory of the Leisure Class. For their part, the masses watch the behaviour of the rich with a mixture of awe, envy and scorn. This attraction is the reason for the continuing popularity of magazines, newspapers and, more recently, television shows that expose the lifestyles of the rich and famous. The sustained growth of the Australian economy in the postwar period elevated the bulk of the working class to income levels that were typical of the middle class of a previous generation.


pages: 187 words: 58,839

Status Anxiety by Alain de Botton

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

However natural such a status ideal may appear to be, it is, of course—as a well-considered political perspective must show—only the work of humans, a recent development dating from the middle of the eighteenth century, brought into being by a host of identifiable factors. Furthermore, the political perspective would add, as an ideal, it is occasionally simpleminded, at times unfair and always subject to change. No aspect of this peculiar modern ideal has come under greater scrutiny than the associations it constructs between, on the one hand, wealth and virtue and, on the other, poverty and moral dubiousness. In The Theory of the Leisure Class (1899), Thorstein Veblen considered the emergence of financial worth, in the early nineteenth century, as the central and often sole criterion employed in commercial societies’evaluation of their members:“[Wealth has become] the conventional basis of esteem. Its possession has become necessary in order to have any reputable standing in the community. It has become indispensable to acquire property in order to retain one’s good name … Those members of the community who fall short of [a relatively high standard of wealth] will suffer in the esteem of their fellow men; and consequently they will suffer also in their own esteem.”


pages: 196 words: 57,974

Company: A Short History of a Revolutionary Idea by John Micklethwait, Adrian Wooldridge

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affirmative action, barriers to entry, Bonfire of the Vanities, borderless world, business process, Corn Laws, corporate governance, corporate social responsibility, credit crunch, crony capitalism, double entry bookkeeping, Etonian, hiring and firing, invisible hand, James Watt: steam engine, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, knowledge worker, laissez-faire capitalism, manufacturing employment, market bubble, mittelstand, new economy, North Sea oil, race to the bottom, railway mania, Ronald Coase, 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, tulip mania, wage slave, William Shockley: the traitorous eight

It was their jobs that lured people from all over the world to America’s big cities; their abuses that hastened the development of labor unions and antitrust law; their indifference to the environment that meant that sunlight could hardly penetrate the smoky air of Pittsburgh and Chicago; and their capacity to produce wealth that posed questions about inequality and meritocracy. The robber barons excited awe and disgust in equal measure for their “conspicuous consumption” (a term that Thorstein Veblen first coined to describe their spending habits), in the form of mansions, parties, and art collections. Even the parsimonious Andrew Carnegie, whose writings included The Advantage of Poverty, owned a Scottish castle, Skibo, with a staff of eighty-two and a New York mansion with sixty-four rooms.5 FIRST CAME THE RAILROADS Why did these extraordinary organizations take off when they did?

Interventions by Noam Chomsky

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Albert Einstein, Ayatollah Khomeini, cuban missile crisis, energy security, facts on the ground, failed state, Monroe Doctrine, nuremberg principles, Ralph Nader, Thorstein Veblen, uranium enrichment, Washington Consensus, éminence grise

That system is immune, and will remain so even if it is causing tremendous financial problems (quite apart from the human cost), until some other sector of concentrated power, probably manufacturing industry, throws its weight into the fray on this issue—or better, until formal democratic institutions function sufficiently well for public opinion to become a factor in policy formation. A further reason is that Social Security is of little value for the rich though it is crucial for survival for working people, the poor, their dependents, and the disabled. And as a government program, it has such low administrative costs that it offers nothing to financial institutions. It benefits only the “underlying population,” not the “substantial citizens,” to borrow Thorstein Veblen’s acid terminology. The medical system, however, works very well for the people who matter. Health care is effectively rationed by wealth, and enormous profits flow to private power thanks to management practices geared to profit, not health care. The underlying population can be treated with lectures on responsibility. The U.S. Congress has recently enacted bankruptcy reform that tightens the stranglehold on the underlying population.


pages: 204 words: 67,922

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

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

With a few notable exceptions, the wealth of industrial-age captains of industry generally came from steel, railroads, automobiles. These robber barons of the Gilded Age conveyed a public image of heft—befitting their chosen sectors—as well as grumpiness. (J. P. Morgan would assault anyone who dared try to take his photo on account of suffering from the skin disease rosacea; and he claimed that he “owed the public nothing.”) The nineteenth-century economist Thorstein Veblen wrote that these businessmen were akin to barbarians who gained their riches by raping and pillaging rather than by producing it themselves. When it came time for them to leave their mark, their philanthropy became associated with colossal buildings such as Rockefeller Center, the New York Public Library, and Carnegie Hall. Contrast that to the efforts of Bill Gates, Warren Buffett, and Michael Bloomberg, who have dedicated their wealth—made from “soft” industries—to addressing such issues as malaria and education.


pages: 261 words: 64,977

Pity the Billionaire: The Unexpected Resurgence of the American Right by Thomas Frank

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Affordable Care Act / Obamacare, bank run, big-box store, bonus culture, collateralized debt obligation, collective bargaining, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Deng Xiaoping, financial innovation, housing crisis, invisible hand, Naomi Klein, obamacare, payday loans, profit maximization, profit motive, road to serfdom, Ronald Reagan, shareholder value, strikebreaker, The Chicago School, The Myth of the Rational Market, Thorstein Veblen, too big to fail, union organizing, Washington Consensus, white flight, Works Progress Administration

The Dens and the Dans: Hank Rearden, Ragnar Danneskjöld, Ken Danagger, Quentin Daniels, Francisco d’Anconia. 2. The Aggs, Oggs, and Acks: Dagny Taggart, Judge Narragansett, Owen Kellogg, Hugh Akston. 3. The Hard Aitches: Richard Halley, Lawrence Hammond, Dr. Hendricks. * At one point in the novel, Rand has John Galt, the leader of the strike, assert that capitalists “have never been on strike in human history.” But as the economist Thorstein Veblen pointed out in 1921, sabotage and malingering are in fact precisely how capitalism works in most industries. Were manufacturing plants simply to run all the time at full blast, for example, prices could not be maintained at profitable levels; overproduction would soon put the manufacturer in question out of business. “So it appears,” Veblen wrote, “that the continued prosperity of the country from day to day hangs on a ‘conscientious withdrawal of efficiency’ [the IWW’s definition of a strike] by the business men who control the country’s industrial output.”


pages: 296 words: 82,501

Stuffocation by James Wallman

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3D printing, Airbnb, back-to-the-land, Berlin Wall, big-box store, Black Swan, BRICs, carbon footprint, Cass Sunstein, clean water, collaborative consumption, crowdsourcing, David Brooks, Fall of the Berlin Wall, happiness index / gross national happiness, high net worth, income inequality, James Hargreaves, Joseph Schumpeter, Martin Wolf, McMansion, means of production, Nate Silver, Occupy movement, post-industrial society, Post-materialism, post-materialism, Richard Florida, Richard Thaler, sharing economy, Silicon Valley, Simon Kuznets, Skype, spinning jenny, The Signal and the Noise by Nate Silver, Thorstein Veblen, Tyler Cowen: Great Stagnation, World Values Survey, Zipcar

Visit www.wearehappytoserveyou.com to see, and perhaps buy, the cups. Join Escape the City today at www.escapethecity.com. Alice Marwick has now turned her PhD into a book: Alice Marwick, Status Update: Celebrity, Publicity, and Branding in the Social Media Age (Yale: Yale University Press, 2013). CHAPTER TEN Facebook Changed How We Keep up with the Joneses For the seminal work on consumption and status, read Thorstein Veblen, Theory of the Leisure Class (New York: Macmillan, 1899). If you haven’t already, watch a TED lecture at www.ted.com. “If you have high status, people laugh at your jokes more, you earn more, you get invited out to more parties. You are also more likely to live longer, feel more important and loved, and have a more attractive partner.” Various sources, including: Alain de Botton, Status Anxiety (London: Hamish Hamilton, 2004).


pages: 256 words: 15,765

The New Elite: Inside the Minds of the Truly Wealthy by Dr. Jim Taylor

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British Empire, call centre, dark matter, Donald Trump, estate planning, full employment, glass ceiling, income inequality, Jeff Bezos, Louis Pasteur, Maui Hawaii, McMansion, means of production, passive income, performance metric, Plutocrats, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, Ronald Reagan, stealth mode startup, Steve Jobs, Thorstein Veblen, trickle-down economics, women in the workforce

Today’s Wealth Explosion 3 We sought to understand how they came by their money, and how, if at all, it has changed them; whether money can buy happiness, or if it just brings a new set of challenges; whether they live loudly or quietly; whether the typical wealthy person is more like Donald Trump, Oprah Winfrey, Paris Hilton, or none of the above; indeed, whether or not there is such a thing as a ‘‘typical’’ wealthy person. As market researchers, we were, of course, particularly interested in how they save, invest, and spend their money. In where they shop, what brands they like, and what luxury means to them. And whether conspicuous consumption—a term coined by economist Thorstein Veblen over 100 years ago—is a fair characterization of how they buy and live today, or if it is an unfair generalization based on media stories about an unrepresentative few. We were, like many people, inherently curious about people who have achieved tremendous financial success, and we found their stories to be not only fascinating but also inspirational—and personally informative, as well. For example, we found that the vast majority of wealthy people today created their own wealth in their lifetimes; and we have at times used the principles that guided their success to shape our own life choices and business growth strategies.


pages: 221 words: 64,080

Different: Escaping the Competitive Herd by Youngme Moon

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AltaVista, Atul Gawande, Richard Feynman, Richard Feynman, Saturday Night Live, The Wisdom of Crowds, Thorstein Veblen, young professional

Hotels al ow guests to watch cable television for free, but retain the bizarrely archaic practice of charging a fee for local phone cal s. The soap in the bathroom is there for the taking, but the soda in the minibar is not. I’m not saying that this should be any other way; I’m merely saying that it is odd that it is precisely this way, with so little competitive deviation, down to this level of granularity. Thorstein Veblen was a turn-of-the-century economist whose legacy included the origination of the phrase “conspicuous consumption.” In his most wel -known book, The Theory of the Leisure Class, he contended that modern consumption was becoming an empty exercise in which al anyone ever cared about anymore was keeping up with the Joneses. Consumers were losing the point of it al , Veblen argued. Recently, it occurred to me that if Veblen were alive today, he might identify a corol ary phenomenon that could be referred to as conspicuous competition.


pages: 252 words: 73,131

The Inner Lives of Markets: How People Shape Them—And They Shape Us by Tim Sullivan

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Airbnb, airport security, Al Roth, Andrei Shleifer, attribution theory, autonomous vehicles, barriers to entry, Brownian motion, centralized clearinghouse, clean water, conceptual framework, constrained optimization, continuous double auction, deferred acceptance, Donald Trump, Edward Glaeser, experimental subject, first-price auction, framing effect, frictionless, fundamental attribution error, George Akerlof, Goldman Sachs: Vampire Squid, helicopter parent, Internet of things, invisible hand, Isaac Newton, iterative process, Jean Tirole, Jeff Bezos, Johann Wolfgang von Goethe, John Nash: game theory, John von Neumann, Joseph Schumpeter, late fees, linear programming, Lyft, market clearing, market design, market friction, medical residency, multi-sided market, mutually assured destruction, Nash equilibrium, Occupy movement, Peter Thiel, pets.com, pez dispenser, pre–internet, price mechanism, price stability, prisoner's dilemma, profit motive, proxy bid, RAND corporation, ride hailing / ride sharing, Robert Shiller, Robert Shiller, Ronald Coase, school choice, school vouchers, sealed-bid auction, second-price auction, second-price sealed-bid, sharing economy, Silicon Valley, spectrum auction, Steve Jobs, Tacoma Narrows Bridge, technoutopianism, telemarketer, The Market for Lemons, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, transaction costs, two-sided market, uranium enrichment, Vickrey auction, winner-take-all economy

These early economists aimed to tackle big questions about how the economy worked (and whether it could be made to work better), weighing in on such important matters as market function (and dysfunction), the origin of value, business cycles, and unemployment. It was set in motion by Smith and carried on for one hundred years thereafter by the classical economists—David Ricardo, Thomas Malthus, Karl Marx, Vilfredo Pareto, among others. It was continued for nearly one hundred years more by neoclassical economists like Thorstein Veblen, John Maynard Keynes, and an enduring hero of free-market proponents, Joseph Schumpeter. Pareto, who lived from 1848 until 1923, is emblematic of both the worldliness and precision of these towering figures in the history of economic thought. He was well experienced in matters of business but also well schooled in the language of math that was already deployed to describe economics and commerce.


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

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

As it happens, pollsters have already asked us this question. Our answer: Yes, very much please. We’re even willing to trade in precious purchasing power for more free time.49 It is worth noting, however, that the line between work and leisure has blurred in recent times. Work is now often perceived as a kind of hobby, or even as the very crux of our identity. In his classic book The Theory of the Leisure Class (1899), the sociologist Thorstein Veblen still described leisure as the badge of the elite. But things that used to be categorized as leisure (art, sports, science, care, philanthropy) are now classed as work. Clearly, our modern Land of Plenty still features plenty of badly paid, crummy jobs. And the jobs that do pay well are often viewed as not being particularly useful. Yet the objective here is not to plead for an end to the workweek.


pages: 998 words: 211,235

A Beautiful Mind by Sylvia Nasar

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Al Roth, Albert Einstein, Andrew Wiles, Brownian motion, cognitive dissonance, Columbine, experimental economics, fear of failure, Henri Poincaré, invisible hand, Isaac Newton, John Conway, John Nash: game theory, John von Neumann, Kenneth Rogoff, linear programming, lone genius, market design, medical residency, Nash equilibrium, Norbert Wiener, Paul Erdős, prisoner's dilemma, RAND corporation, Ronald Coase, second-price auction, Silicon Valley, Simon Singh, spectrum auction, The Wealth of Nations by Adam Smith, Thorstein Veblen, upwardly mobile

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. His genius also won him love. He had married a beautiful young physics student who adored him, and fathered a child. It was a brilliant strategy, this genius, this life. A seemingly perfect adaptation. Many great scientists and philosophers, among them René Descartes, Ludwig Wittgenstein, Immanuel Kant, Thorstein Veblen, Isaac Newton, and Albert Einstein, have had similarly strange and solitary personalities.20 An emotionally detached, inward-looking temperament can be especially conducive to scientific creativity, psychiatrists and biographers have long observed, just as fiery fluctuations in mood may sometimes be linked to artistic expression. In The Dynamics of Creation, Anthony Storr, the British psychiatrist, contends that an individual who “fears love almost as much as he fears hatred” may turn to creative activity not only out of an impulse to experience aesthetic pleasure, or the delight of exercising an active mind, but also to defend himself against anxiety stimulated by conflicting demands for detachment and human contact.21 In the same vein, Jean-Paul Sartre, the French philosopher and writer, called genius “the brilliant invention of someone who is looking for a way out.”

“Fine Hall is, I believe, the most luxurious building ever devoted to mathematics,” one European émigré wrote enviously.7 It was a gabled, Neo-Gothic red brick and slate fortress, built in a style reminiscent of the College de France in Paris and Oxford University. Its cornerstone contains a lead box with copies of works by Princeton mathematicians and the tools of the trade — two pencils, one piece of chalk, and, of course, an eraser. Designed by Oswald Veblen, a nephew of the great sociologist Thorstein Veblen, it was meant to be a sanctuary that mathematicians would be “loath to leave.”8 The dim stone corridors that circled the structure were perfect for both solitary pacing and mathematical socializing. The nine “studies” — not offices!— for senior professors had carved paneling, hidden file cabinets, blackboards that opened like altars, oriental carpets, and massive, overstuffed furniture. In a gesture to the urgency of the rapidly advancing mathematical enterprise each office was equipped with a telephone and each lavatory with a reading light.


pages: 662 words: 180,546

Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown by Philip Mirowski

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Andrei Shleifer, asset-backed security, bank run, barriers to entry, Basel III, Berlin Wall, Bernie Madoff, Bernie Sanders, Black Swan, blue-collar work, Bretton Woods, Brownian motion, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, constrained optimization, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, dark matter, David Brooks, David Graeber, debt deflation, deindustrialization, Edward Glaeser, Eugene Fama: efficient market hypothesis, experimental economics, facts on the ground, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, full employment, George Akerlof, Goldman Sachs: Vampire Squid, Hernando de Soto, housing crisis, Hyman Minsky, illegal immigration, income inequality, incomplete markets, invisible hand, Jean Tirole, joint-stock company, Kenneth Rogoff, knowledge economy, l'esprit de l'escalier, labor-force participation, liquidity trap, loose coupling, manufacturing employment, market clearing, market design, market fundamentalism, Martin Wolf, Mont Pelerin Society, moral hazard, mortgage debt, Naomi Klein, Nash equilibrium, night-watchman state, Northern Rock, Occupy movement, offshore financial centre, oil shock, payday loans, Ponzi scheme, precariat, prediction markets, price mechanism, profit motive, quantitative easing, race to the bottom, random walk, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, school choice, sealed-bid auction, Silicon Valley, South Sea Bubble, Steven Levy, technoutopianism, The Chicago School, The Great Moderation, the map is not the territory, The Myth of the Rational Market, the scientific method, The Wisdom of Crowds, theory of mind, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, Tobin tax, too big to fail, transaction costs, War on Poverty, Washington Consensus, We are the 99%, working poor

Those wretched souls subsist at our munificence, it is hinted; therefore it is the indigent who owe us, it is implied; hence we qualify as the righteous and willing audience at the theater of cruelty. Through this guilty pleasure, people of modest means are ushered into the vicarious experience of what it feels like to be extravagantly rich in an era of decline. For a brief moment, the working class can empathize with the imperious creditor, even though they lack the assets to maintain the charade. In a sense, one might approach this phenomenon as an elaboration of Thorstein Veblen’s basic insight in his Theory of the Leisure Class: “An invidious comparison is a process of valuation of persons in respect to worth.”68 The theater of cruelty becomes an emporium of conspicuous consumption. But beyond a little virtual reality, the normalization of everyday sadism fulfills deeper functions as well. The “double truths” of neoliberalism outlined in the last chapter cannot be permanently confined within the ambit of the NTC, but tend to leak out as barely repressed contradictions in quotidian life—between populism and plutarchy, between freedom and control, between smug ignorance and fervent conviction, between Christian theology and norms of efficiency, between kosmos and taxis, between the enjoyment of pleasure and the deployment of pain.

Latter-day followers of Galbraith bring various counterexamples to the table, such as the recent policy to suppress cigarette advertising in the United States, but to no avail.86 Curiously enough, given that it bulks so large in everyday life, the average person still ardently believes that all that expenditure and all that effort to manage their desires is essentially impotent, and by implication, wasted. Neoliberals, as one might expect, have come to concoct a much more plausible justification of the phenomenon. They have carefully read and absorbed their leftist critics, from Thorstein Veblen to Naomi Klein, and far from rejecting them outright, they openly use their ideas to render the process of persuasion both more unconscious and more effective.87 Neoliberals have pioneered the signal innovation of importing the double-truth character of their project into the everyday lives of the common man. The modern hidden persuaders have gladly nurtured the conviction of the average person that he is more clever than those who seek to manipulate him in order to render him all the more open to that manipulation; the set of techniques predicated on this inversion has been dubbed “murketing.”


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In Pursuit of Privilege: A History of New York City's Upper Class and the Making of a Metropolis by Clifton Hood

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affirmative action, British Empire, David Brooks, death of newspapers, deindustrialization, family office, Golden Gate Park, Google Earth, jitney, new economy, New Urbanism, Plutocrats, plutocrats, Ray Oldenburg, ride hailing / ride sharing, Scientific racism, Steven Levy, The Great Good Place, Thorstein Veblen, trade route, urban planning, We are the 99%, white flight

Their legacy is no less valuable for being conflicted. ECHOES While an upper class has been in existence in New York City for more than three centuries, it is the Gilded Age upper class that has captivated the scholarly community and the general public alike. For many people, the Gilded Age upper class is the upper class. One sign of this enduring interest are the landmark studies that have been made of it, starting with Thorstein Veblen’s famous The Theory of the Leisure Class (1899). In portraying earlier leisure classes as arising from “barbarism” and in criticizing their “predatory habits,” Veblen gave voice to the awe and revulsion with which he and many of his contemporaries reacted to the lavish expenditures and economic muscle of the nouveaux riches of their day.108 The Theory of the Leisure Class is a sweeping work that begins in the feudal period and investigates the development of conspicuous consumption and conspicuous leisure on a national and even a global scale, but there was significant overlap between his American leisure class and the New York City upper class of this period.

.: Polity, 1991), 1–4; and Pierre Bourdieu, with Luc Boltanski, Photography: A Middle-Brow Art, trans. Shaun Whiteside (Stanford, Calif.: Stanford University Press, 1990), 1–10. 106. Di Cesnola to Dodge, October 17, 1892, MMA; Metropolitan Museum of Art, Twenty-Second Annual Report, 500–02; and New York Times, December 12, 1882 and June 8, 1895. 107. “Report Re Consequences of Sunday opening,” MMA. 108. Thorstein Veblen, The Theory of the Leisure Class (New York: Macmillan, 1899; repr., New York: New American Library, 1953), 21, 28. 109. Gustavus Myers, History of the Great American Fortunes (Chicago: Kerr, 1909; repr., New York: Modern Library, 1936), 696–712; and Matthew Josephson, The Robber Barons: The Great American Capitalists, 1861–1901 (New York: Harcourt, Brace, 1934; repr., New York: Harcourt, Brace & World, 1962), 3–31. 110.


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Debunking Economics - Revised, Expanded and Integrated Edition: The Naked Emperor Dethroned? by Steve Keen

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accounting loophole / creative accounting, banking crisis, banks create money, barriers to entry, Benoit Mandelbrot, Big bang: deregulation of the City of London, Black Swan, Bonfire of the Vanities, butterfly effect, capital asset pricing model, cellular automata, central bank independence, citizen journalism, clockwork universe, collective bargaining, complexity theory, correlation coefficient, credit crunch, David Ricardo: comparative advantage, debt deflation, diversification, double entry bookkeeping, en.wikipedia.org, Eugene Fama: efficient market hypothesis, experimental subject, Financial Instability Hypothesis, Fractional reserve banking, full employment, Henri Poincaré, housing crisis, Hyman Minsky, income inequality, invisible hand, iterative process, John von Neumann, laissez-faire capitalism, liquidity trap, Long Term Capital Management, mandelbrot fractal, margin call, market bubble, market clearing, market microstructure, means of production, minimum wage unemployment, open economy, place-making, Ponzi scheme, profit maximization, quantitative easing, RAND corporation, random walk, risk tolerance, risk/return, Robert Shiller, Robert Shiller, Ronald Coase, 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

A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data available eISBN 9781780322209 CONTENTS Tables, figures and boxes Preface to the second edition Preface to the first edition 1 Predicting the ‘unpredictable’ 2 No more Mr Nice Guy Part 1 Foundations: the logical flaws in the key concepts of conventional economics 3 The calculus of hedonism 4 Size does matter 5 The price of everything and the value of nothing 6 To each according to his contribution Part 2 Complexities: issues omitted from standard courses that should be part of an education in economics 7 The holy war over capital 8 There is madness in their method 9 Let’s do the Time Warp again 10 Why they didn’t see it coming 11 The price is not right 12 Misunderstanding the Great Depression and the Great Recession Part 3 Alternatives: different ways to think about economics 13 Why I did see ‘It’ coming 14 A monetary model of capitalism 15 Why stock markets crash 16 Don’t shoot me, I’m only the piano 17 Nothing to lose but their minds 18 There are alternatives Bibliography Index TABLES, FIGURES AND BOXES Tables 2.1 Anticipations of the housing crisis and recession 3.1 ‘Utils’ and change in utils from consuming bananas 3.2 Utils arising from the consumption of two commodities 3.3 The commodities in Sippel’s ‘Revealed Preference’ experiment 4.1 Demand schedule for a hypothetical monopoly 4.2 Costs for a hypothetical monopoly 4.3 Sales and costs determine the level of output that maximizes profit 4.4 Cost and revenue for a ‘perfectly competitive’ industry identical in scale to hypothetical monopoly 5.1 Input and output data for a hypothetical firm 5.2 Cost drawings for the survey by Eiteman and Guthrie 5.3 Empirical research on the nature of cost curves 7.1 Sraffa’s hypothetical subsistence economy 7.2 Production with a surplus 7.3 Relationship between maximum and actual rate of profit and the wage share of surplus 7.4 The impact of the rate of profit on the measurement of capital 10.1 Anderson’s ranking of sciences 12.1 The alleged Money Multiplier process 13.1 A hypothetical example of the impact of decelerating debt on aggregate demand 13.2 The actual impact of decelerating debt on aggregate demand 14.1 A pure credit economy with paper money 14.2 The dynamics of a pure credit economy with no growth 14.3 Net incomes 14.4 A growing pure credit economy with electronic money 15.1 Von Neumann’s procedure for working out a numerical value for utility 15.2 The Allais ‘Paradox’ 15.3 The Allais ‘Paradox’ Part 2 16.1 The solvability of mathematical models 17.1 Marx’s unadjusted value creation table, with the rate of profit dependent upon the variable-to-constant ratio in each sector 17.2 Marx’s profit distribution table, with the rate of profit now uniform across sectors 17.3 Steedman’s hypothetical economy 17.4 Steedman’s physical table in Marx’s value terms 17.5 Steedman’s prices table in Marx’s terms 17.6 Profit rate and prices calculated directly from output/wage data 17.7 Marx’s example where the use-value of machinery exceeds its depreciation Figures 2.1 US inflation and unemployment from 1955 2.2 Bernanke doubles base money in five months 2.3 Private debt peaked at 1.7 times the 1930 level in 2009 3.1 Rising total utils and falling marginal utils from consuming one commodity 3.2 Total utils from the consumption of two commodities; 3.3 Total ‘utils’ represented as a ‘utility hill’ 3.4 The contours of the ‘utility hill’ 3.5 Indifference curves: the contours of the ‘utility hill’ shown in two dimensions 3.6 A rational consumer’s indifference map 3.7 Indifference curves, the budget constraint, and consumption 3.8 Deriving the demand curve 3.9 Upward-sloping demand curve 3.10 Separating out the substitution effect from the income effect 3.11 Engel curves show how spending patterns change with increases in income 3.12 A valid market demand curve 3.13 Straight-line Engel ‘curves’ 3.14 Economic theory cannot rule out the possibility that a market demand curve may have a shape like this, rather than a smooth, downward-sloping curve 4.1 Leijonhufvud’s ‘Totems’ of the Econ tribe 4.2 Stigler’s proof that the horizontal firm demand curve is a fallacy 4.3 Profit maximization for a monopolist: marginal cost equals marginal revenue, while price exceeds marginal cost 4.4 Profit maximization for a perfectly competitive firm: marginal cost equals marginal revenue, which also equals price 4.5 A supply curve can be derived for a competitive firm, but not for a monopoly 4.6 A competitive industry produces a higher output at a lower cost than a monopoly 4.7 The standard ‘supply and demand’ explanation for price determination is valid only in perfect competition 4.8 Double the size, double the costs, but four times the output 4.9 Predictions of the models and results at the market level 4.10 Output behavior of three randomly selected firms 4.11 Profit outcomes for three randomly selected firms 4.12 Output levels for between 1- and 100-firm industries 5.1 Product per additional worker falls as the number of workers hired rises 5.2 Swap the axes to graph labor input against quantity 5.3 Multiply labor input by the wage to convert Y-axis into monetary terms, and add the sales revenue 5.4 Maximum profit occurs where the gap between total cost and total revenue is at a maximum 5.5 Deriving marginal cost from total cost 5.6 The whole caboodle: average and marginal costs, and marginal revenue 5.7 The upward-sloping supply curve is derived by aggregating the marginal cost curves of numerous competitive firms 5.8 Economic theory doesn’t work if Sraffa is right 5.9 Multiple demand curves with a broad definition of an industry 5.10 A farmer who behaved as economists advise would forgo the output shown in the gap between the two curves 5.11 Capacity utilization over time in the USA 5.12 Capacity utilization and employment move together 5.13 Costs determine price and demand determines quantity 5.14 A graphical representation of Sraffa’s (1926) preferred model of the normal firm 5.15 The economic theory of income distribution argues that the wage equals the marginal product of labor 5.16 Economics has no explanation of wage determination or anything else with constant returns 5.17 Varian’s drawing of cost curves in his ‘advanced’ microeconomics textbook 6.1 The demand for labor curve is the marginal revenue product of labor 6.2 The individual’s income–leisure trade-off determines how many hours of labor he supplies 6.3 An upward-sloping individual labor supply curve 6.4 Supply and demand determine the equilibrium wage in the labor market 6.5 Minimum wage laws cause unemployment 6.6 Demand management policies can’t shift the supply of or demand for labor 6.7 Indifference curves that result in less work as the wage rises 6.8 Labor supply falls as the wage rises 6.9 An individual labor supply curve derived from extreme and midrange wage levels 6.10 An unstable labor market stabilized by minimum wage legislation 6.11 Interdependence of labor supply and demand via the income distributional effects of wage changes 7.1 The standard economic ‘circular flow’ diagram 7.2 The rate of profit equals the marginal product of capital 7.3 Supply and demand determine the rate of profit 7.4 The wage/profit frontier measured using the standard commodity 9.1 Standard neoclassical comparative statics 9.2 The time path of one variable in the Lorenz model 9.3 Structure behind the chaos 9.4 Sensitive dependence on initial conditions 9.5 Unstable equilibria 9.6 Cycles in employment and income shares 9.7 A closed loop in employment and wages share of output 9.8 Phillips’s functional flow block diagram model of the economy 9.9 The component of Phillips’s Figure 12 including the role of expectations in price setting 9.10 Phillips’s hand drawing of the output–price-change relationship 9.11 A modern flow-chart simulation program generating cycles, not equilibrium 9.12 Phillips’s empirically derived unemployment–money-wage-change relation 10.1 Hicks’s model of Keynes 10.2 Derivation of the downward-sloping IS curve 10.3 Derivation of the upward-sloping LM curve 10.4 ‘Reconciling’ Keynes with ‘the Classics’ 10.5 Unemployment–inflation data in the USA, 1960–70 10.6 Unemployment–inflation data in the USA, 1950–72 10.7 Unemployment–inflation data in the USA, 1960–80 10.8 The hog cycle 11.1 Supply and demand in the market for money 11.2 The capital market line 11.3 Investor preferences and the investment opportunity cloud 11.4 Multiple investors (with identical expectations) 11.5 Flattening the IOC 11.6 How the EMH imagines that investors behave 11.7 How speculators actually behave 12.1 Inflation and base money in the 1920s 12.2 Inflation and base money in the post-war period 12.3 Bernanke’s massive injection of base money in QE1 12.4 Change in M0 and unemployment, 1920–40 12.5 Change in M1 and unemployment, 1920–40 12.6 Change in M0 and M1, 1920–40 12.7 M0–M1 correlation during the Roaring Twenties 12.8 M0–M1 correlation during the Great Depression 12.9 Bernanke’s ‘quantitative easing’ in historical perspective 12.10 The volume of base money in Bernanke’s ‘quantitative easing’ in historical perspective 12.11 Change in M1 and inflation before and during the Great Recession 12.12 The money supply goes haywire 12.13 Lindsey, Orphanides, Rasche 2005, p. 213 12.14 The empirical ‘Money Multiplier’, 1920–40 12.15 The empirical ‘Money Multiplier’, 1960–2012 12.16 The disconnect between private and fiat money during the Great Recession 13.1 Goodwin’s growth cycle model 13.2 My 1995 Minsky model 13.3 The vortex of debt in my 1995 Minsky model 13.4 Cyclical stability with a counter-cyclical government sector 13.5 Australia’s private debt-to-GDP ratio, 1975–2005 13.6 US private debt to GDP, 1955–2005 13.7 Aggregate demand in the USA, 1965–2015 13.8 US private debt 13.9 The change in debt collapses as the Great Recession begins 13.10 The Dow Jones nosedives 13.11 The correlation of debt-financed demand and unemployment 13.12 The housing bubble bursts 13.13 The Credit Impulse and change in employment 13.14 Correlation of Credit Impulse and change in employment and GDP 13.15 Relatively constant growth in debt 13.16 The biggest collapse in the Credit Impulse ever recorded 13.17 Growing level of debt-financed demand as debt grew faster than GDP 13.18 The two great debt bubbles 13.19 Change in nominal GDP growth then and now 13.20 Real GDP growth then and now 13.21 Inflation then and now 13.22 Unemployment then and now 13.23 Nominal private debt then and now 13.24 Real debt then and now 13.25 Debt to GDP then and now 13.26 Real debt growth then and now 13.27 The collapse of debt-financed demand then and now 13.28 Debt by sector – business debt then, household debt now 13.29 The Credit Impulse then and now 13.30 Debt-financed demand and unemployment, 1920–40 13.31 Debt-financed demand and unemployment, 1990–2011 13.32 Credit Impulse and change in unemployment, 1920–40 13.33 Credit Impulse and change in unemployment, 1990–2010 13.34 The Credit Impulse leads change in unemployment 14.1 The neoclassical model of exchange as barter 14.2 The nature of exchange in the real world 14.3 A nineteenth-century private banknote 14.4 Bank accounts 14.5 A credit crunch causes a fall in deposits and a rise in reserves in the bank’s vault 14.6 A bank bailout’s impact on loans 14.7 A bank bailout’s impact on incomes 14.8 A bank bailout’s impact on bank income 14.9 Bank income grows if debt grows more rapidly 14.10 Unemployment is better with a debtor bailout 14.11 Loans grow more with a debtor bailout 14.12 Profits do better with a debtor bailout 14.13 Bank income does better with a bank bailout 14.14 Modeling the Great Moderation and the Great Recession – inflation, unemployment and debt 14.15 The Great Moderation and the Great Recession – actual inflation, unemployment and debt 14.16 Modeling the Great Moderation and the Great Recession – output 14.17 Income distribution – workers pay for the debt 14.18 Actual income distribution matches the model 14.19 Debt and GDP in the model 14.20 Debt and GDP during the Great Depression 15.1 Lemming population as a constant subject to exogenous shocks 15.2 Lemming population as a variable with unstable dynamics 17.1 A graphical representation of Marx’s dialectics Boxes 10.1 The Taylor Rule 13.1 Definitions of unemployment PREFACE TO THE SECOND EDITION Debunking Economics was far from the first book to argue that neoclassical economics was fundamentally unsound. If cogent criticism alone could have brought this pseudo-science down, it would have fallen as long ago as 1898, when Thorstein Veblen penned ‘Why is economics not an evolutionary science?’ (Veblen 1898). Yet in 1999, when I began writing Debunking Economics, neoclassical economics was more dominant than it had ever been. My reason for adding to this litany of thus far unsuccessful attempts to cause a long-overdue scientific revolution in economics was the belief that a prerequisite for success was just around the corner.

The economic equivalents of diversity are the heterogeneity of consumers, and the variety of commodities; the equivalents of adaptation are new product development, and the consequent endogenous alteration of consumer tastes; the equivalent of the environment is the economy itself, which is endogenously created by the actions of myriad individuals, social groups and corporations. Strengths It is undeniable that the economy is an evolutionary system – with the one embellishment that change in economics is often purposeful, as opposed to the random nature of variation in the environment (though of course, purposive change can fail to achieve its intended ends).3 This self-evident fact was the basis for Thorstein Veblen’s query, over a century ago, of ‘Why is economics not an evolutionary science?’ Manifestly it should be, and this alone should be a major factor in the rise of evolutionary thinking in economics. Weaknesses One problem with evolutionary systems is that, effectively, everything can change. Economists, on the other hand, have been wedded to the notion of ‘ceteris paribus’ (‘all other things remaining equal’) as a way of being able to impose some order on the apparent chaos of the market.


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Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown by Detlev S. Schlichter

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bank run, banks create money, British Empire, capital controls, Carmen Reinhart, central bank independence, currency peg, Fractional reserve banking, German hyperinflation, global reserve currency, inflation targeting, Kenneth Rogoff, Long Term Capital Management, market clearing, Martin Wolf, means of production, 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, Y2K

It has intuitive appeal to the broader public, who perceive the recession in the form of a drop in the quantity of goods and services sold and the accumulation of excess inventories. They therefore believe that these symptoms of the crisis are also the root causes of the crisis. If everybody simply went back to previous levels of spending, would the economy not be in better shape? Many economists over the past 250 years have proposed various “underconsumption” theories to explain business cycles, among them Robert Malthus, James Mill, Thorstein Veblen, Waddill Catchings, and William Trufant Foster.16 Marxism has at its core its own underconsumption theory. Karl Marx’s projection of the inevitable death of capitalism was based on his conclusion that an impoverished class of workers would be unable to purchase the growing output of the efficient capitalist economy. Despite their intuitive appeal to the public and their appeal to politicians as excuses for running budget deficits, these theories did not stand up to scientific scrutiny.


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

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

Contemporary examples might include obscure underground bands, cult films and exotic restaurants. Snob and bandwagon goods are not of course mutually exclusive: many snob goods mutate into bandwagon goods, leading to their abandonment by true snobs. This perpetual circle is familiar from the worlds of art and fashion. Overlapping with both snob and bandwagon goods are “Veblen goods,” so called in honor of the great American theorist of conspicuous consumption, Thorstein Veblen. Veblen goods are desired insofar as they are expensive and known to be expensive; they function, in effect, as advertisements of wealth. In the still hierarchical world of business, whether one travels first, business or economy class signals one’s rank in the company. Another Veblenesque phenomenon is the “bling effect.” The brand labels favored by celebrities are widely known to be expensive, and that is a large part (perhaps the whole part) of their appeal: the higher the price, the more exclusive the brand.


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All Your Base Are Belong to Us: How Fifty Years of Video Games Conquered Pop Culture by Harold Goldberg

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Alexey Pajitnov wrote Tetris, Apple II, cellular automata, Columbine, Conway's Game of Life, game design, In Cold Blood by Truman Capote, Mars Rover, Mikhail Gorbachev, Ralph Waldo Emerson, Ray Oldenburg, Saturday Night Live, Silicon Valley, Steve Jobs, Steve Wozniak, The Great Good Place, Thorstein Veblen, urban planning

In the coming years, Hawkins had everyone from racing ace Richard Petty to baseball coaching legend Earl Weaver appear in sports games. Yet Madden was the franchise that made history, earning more than $3 billion since it was first released. Much of that success was due to a new marketing plan for games, a kind of preplanned obsolescence and keep-up-with-the-Joneses business ethic that would have given social economist Thorstein Veblen pause: If you didn’t have the new Madden, packed with this year’s players, this year’s stats, and this year’s plays, you weren’t up to date. You weren’t as cool as your game-playing neighbor who procured the newest version. Fans bought the hype of videogame-style conspicuous consumption then, and they buy it to this day. Still, Hawkins never achieved one of his goals: He never released a game that had the emotion and drama to make people cry.


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The Spirit Level: Why Greater Equality Makes Societies Stronger by Richard Wilkinson; Kate Pickett

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Berlin Wall, clean water, Diane Coyle, epigenetics, experimental economics, experimental subject, Fall of the Berlin Wall, full employment, germ theory of disease, Gini coefficient, impulse control, income inequality, knowledge economy, labor-force participation, land reform, Louis Pasteur, meta analysis, meta-analysis, Milgram experiment, offshore financial centre, phenotype, Plutocrats, 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

Fifty per cent of the participants thought they would trade as much as half their real income if they could live in a society in which they would be better off than others.355 This shows how much we value status and explains why (as we saw in Chapter 2) the income differences within rich societies matter so much more than the income differences between them. Once we have enough of the necessities of life, it is the relativities which matter. When Bowles and Park first demonstrated the relationship between inequality and working hours (Figure 15.3), they quoted Thorstein Veblen, who said: ‘The only practicable means of impressing one’s pecuniary ability on the unsympathetic observers of one’s everyday life is an unremitting demonstration of the ability to pay.’ Veblen’s Theory of the Leisure Class, published in 1899, was the first major work on the relationship between consumption and social stratification. It was he who introduced the term ‘conspicuous consumption’ and emphasized the importance of ‘pecuniary emulation’ and ‘invidious comparisons’.356 Because the advertising industry plays on insecurities about how we are seen, it has made us more aware of the psychology of consumption.


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

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

This world could not easily be fit into the mathematical model that they thought was necessary to claim their discipline as a science. Moreover, understanding it required tools beyond the economists’ training: engineering, psychology, politics, management, marketing, labor relations, law, and, most of all, the study of how complex institutions behave and change over time. This broader, more eclectic “institutionalist” approach to economics has a distinguished U.S. intellectual tradition reaching back to figures such as Thorstein Veblen, John R. Commons, and Adolph Berle. But by the late 1970s, their work was largely swept outside the economic policy mainstream—as were prominent contemporary economists who pushed at the narrow boundaries of the profession. These included John Kenneth Galbraith, whose widely read books dissecting the behavior of the modern corporation were deemed by the synthesis majority as insufficiently mathematical; Nobel Prize winner Wassily Leontief, whose very mathematical “input output” methodology analyzing the flow of resources to and from economic sectors made him seem too friendly toward planning; and the younger Lester Thurow of the Massachusetts Institute of Technology, who seemed too interested in studying the way businesspeople actually behaved and the effect of their behavior on the distribution of income and wealth.


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The Price of Everything: And the Hidden Logic of Value by Eduardo Porter

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Asian financial crisis, Ayatollah Khomeini, banking crisis, barriers to entry, Berlin Wall, British Empire, capital controls, Carmen Reinhart, Cass Sunstein, clean water, Credit Default Swap, Deng Xiaoping, Edward Glaeser, European colonialism, Fall of the Berlin Wall, financial deregulation, Ford paid five dollars a day, full employment, George Akerlof, Gordon Gekko, guest worker program, happiness index / gross national happiness, housing crisis, illegal immigration, immigration reform, income inequality, income per capita, informal economy, invisible hand, Jean Tirole, John Maynard Keynes: technological unemployment, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, loss aversion, low skilled workers, Martin Wolf, means of production, Menlo Park, Mexican peso crisis / tequila crisis, new economy, New Urbanism, pension reform, Peter Singer: altruism, pets.com, placebo effect, price discrimination, price stability, rent-seeking, Richard Thaler, rising living standards, risk tolerance, Robert Shiller, Robert Shiller, Ronald Reagan, Silicon Valley, stem cell, Steve Jobs, Stewart Brand, superstar cities, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade route, transatlantic slave trade, transatlantic slave trade, ultimatum game, unpaid internship, urban planning, women in the workforce, World Values Survey, Yom Kippur War, young professional

The number one is, to be sure, a nice digit to have stamped on a piece of plastic attached to the front and back of a car. But it is hard to argue that the number alone merits a premium of $13,999,905 over the standard fee for a regular license plate. This behavior is surprisingly common, however. Paying high prices for pointless trinkets is just an expensive way to show off. In his famous Theory of the Leisure Class, the nineteenth-century American social theorist Thorstein Veblen argued that the rich engaged in what he dubbed “conspicuous consumption” to signal their power and superiority to those around them. In the 1970s, the French sociologist Pierre Bourdieu wrote that aesthetic choices served as social markers for those in power to signal their superiority and set themselves apart from inferior groups. Anybody can buy stocks. Oligarchs, emirs, and hedge-fund managers can pay $106.5 million for Picasso’s Nu au Plateau de Sculpteur, which sold in only eight minutes and six seconds at an auction in New York in May of 2010.


pages: 364 words: 104,697

Were You Born on the Wrong Continent? by Thomas Geoghegan

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

They need not pay big tuitions—like $50,000 per year now at NYU—to send their kids to first-rate schools. That’s the first thing that could explain it: the rich can’t blow the same amount of money as our rich do on what they get back as public goods. That’s the whole point of the chapter about Barbara and Isabel. The second big reason is the chilling effect that even an unequal social democracy has on “flaunting it,” because at least people pay lip service to equality. After all, Thorstein Veblen wrote The Theory of the Leisure Class in what was the Gilded Age, not in the more egalitarian post–New Deal 1950s, when our savings rate was high. (While Galbraith may have scoffed at our private consumption, people were not drowning in private consumer debt.) It’s not just equality but the spirit of equality that has held down Veblen-like conspicuous consumption: perhaps an uneasiness around working people who have real political power at the firms where they work.


pages: 349 words: 27,507

E=mc2: A Biography of the World's Most Famous Equation by David Bodanis

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Albert Einstein, Arthur Eddington, Berlin Wall, British Empire, dark matter, Ernest Rutherford, Erwin Freundlich, Fellow of the Royal Society, Henri Poincaré, Isaac Newton, John von Neumann, Mercator projection, pre–internet, Richard Feynman, Richard Feynman, Silicon Valley, Silicon Valley startup, Stephen Hawking, Thorstein Veblen, V2 rocket

Poincaré got closer than almost anyone else, but when it came to breaking our usual assumptions about time’s flow or the nature of simultaneity, he backed off, unable to consider the consequences of such a new view. Why was Einstein so much more successful? It’s tempting to say it was just a matter of being brighter than everyone else. But several of Einstein’s Bern friends were highly intelligent, while someone like Poincaré would have been off the scale on any IQ test. Thorstein Veblen once wrote a curious little essay that I think gets at a deeper reason. Suppose, Veblen began, a young boy learns that everything in the Bible is true. He then goes to a secular high school, or university, and is told that’s wrong. “What you learned at your mother’s knee is entirely false. What we teach you here, however, will 85 the early years be entirely true.” Some students would say, Oh, fine, I’ll accept that.


pages: 262 words: 83,548

The End of Growth by Jeff Rubin

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Ayatollah Khomeini, Bakken shale, banking crisis, Berlin Wall, British Empire, call centre, carbon footprint, collateralized debt obligation, collective bargaining, Credit Default Swap, credit default swaps / collateralized debt obligations, decarbonisation, deglobalization, energy security, eurozone crisis, Exxon Valdez, Fall of the Berlin Wall, fiat currency, flex fuel, full employment, ghettoisation, global supply chain, Hans Island, happiness index / gross national happiness, housing crisis, hydraulic fracturing, illegal immigration, income per capita, Jane Jacobs, labour mobility, McMansion, Monroe Doctrine, moral hazard, new economy, Occupy movement, oil shale / tar sands, oil shock, peak oil, Ponzi scheme, quantitative easing, race to the bottom, reserve currency, Ronald Reagan, South China Sea, sovereign wealth fund, The Chicago School, The Death and Life of Great American Cities, Thomas Malthus, Thorstein Veblen, too big to fail, uranium enrichment, urban planning, urban sprawl, women in the workforce, working poor, Yom Kippur War

An international study on life satisfaction conducted by Gallup ranked the United States 19th, a disproportionately low standing in relation to its per capita income and consumption. A similar trend is evident in Canada. According to the University of Waterloo’s Canadian Index of Wellbeing, increases in GDP haven’t resulted in commensurate gains in life satisfaction. Since 1994, the sense of well-being among Canadians has only improved at about a third of the rate of the country’s economic growth. Part of the explanation for the discrepancy may be found in what Thorstein Veblen, a 19th-century economist, termed conspicuous consumption. This type of spending is driven by a need to demonstrate social status. Instead of buying stuff you really want, you buy to keep up with the Joneses. Veblen theorized that conspicuous consumption sparked by the need to bolster status doesn’t necessarily lead to increased personal satisfaction or enjoyment. In the postwar era, conspicuous consumption has meant buying bigger houses, faster cars and more expensive suits.


pages: 369 words: 94,588

The Enigma of Capital: And the Crises of Capitalism by David Harvey

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accounting loophole / creative accounting, 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, 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, global reserve currency, Google Earth, Guggenheim Bilbao, 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, moral hazard, mortgage debt, new economy, New Urbanism, Northern Rock, oil shale / tar sands, peak oil, place-making, Ponzi scheme, precariat, reserve currency, Ronald Reagan, sharing economy, Silicon Valley, special drawing rights, special economic zone, statistical arbitrage, structural adjustment programs, the built environment, the market place, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, Thorstein Veblen, too big to fail, trickle-down economics, urban renewal, urban sprawl, white flight, women in the workforce

Overextension was always possible, of course. Look at the course of Japanese land prices since they peaked around 1990. A greased slope can result in downward slippage just as easily as it can facilitate upward momentum. The money that can be made (and sometimes lost) out of creating new geographies and new space relations is too often ignored as a fundamental aspect of the reproduction of capitalism. The social critic Thorstein Veblen, writing in the early years of the twentieth century, surmised that the wealth of the ‘leisure class’ (as he called them) in the United States derived as much from speculations associated with land and urban development as it did from the more frequently touted sphere of industrial production. The same may have long been true even in Britain, since the rising land values and rents around London from the seventeenth century onwards appear to have contributed far more to augmenting the wealth of the upper classes than did the rise of the factory system.


pages: 274 words: 93,758

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

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

Federal Election Comm’n (No. 08-205),” accessed June 10, 2015, https://www.law.cornell.edu/supct/html/ 08-205.ZX.html. 37. Ibid. 38. Lawrence Lessig, Republic Lost: How Money Corrupts Congress—And a Plan to Stop It (New York: Hachette Book Group, 2011), p. 266. 39. Ibid., p. 268. Epilogue: What Is New in Phishing for Phools? 1. Of course there are also quite a few who have not accepted this “conventional wisdom.” In this regard, two great classics are Thorstein Veblen, The Theory of the Leisure Class: An Economic Study of the Evolution of Institu­ tions (New York: Macmillan, 1899), and John Kenneth Galbraith, The Afflu­ ent Society (Boston: Houghton Mifflin, 1958). Much more recently, in two companion articles, Jon Hanson and Douglas Kysar have documented how departures from economic rationality (especially as depicted in behavioral economics) are an invitation to “manipulation.”


pages: 394 words: 108,215

What the Dormouse Said: How the Sixties Counterculture Shaped the Personal Computer Industry by John Markoff

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Any sufficiently advanced technology is indistinguishable from magic, Apple II, back-to-the-land, Bill Duvall, Bill Gates: Altair 8800, Buckminster Fuller, California gold rush, card file, computer age, computer vision, conceptual framework, cuban missile crisis, Douglas Engelbart, Dynabook, El Camino Real, general-purpose programming language, Golden Gate Park, Hacker Ethic, hypertext link, informal economy, information retrieval, invention of the printing press, Jeff Rulifson, John Nash: game theory, John von Neumann, Kevin Kelly, knowledge worker, Mahatma Gandhi, Menlo Park, Mother of all demos, Norbert Wiener, packet switching, Paul Terrell, popular electronics, QWERTY keyboard, RAND corporation, RFC: Request For Comment, Richard Stallman, Robert X Cringely, Sand Hill Road, Silicon Valley, Silicon Valley startup, South of Market, San Francisco, speech recognition, Steve Crocker, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, Ted Nelson, Thorstein Veblen, Turing test, union organizing, Vannevar Bush, Whole Earth Catalog, William Shockley: the traitorous eight

Although it was partially torn down in 1963 by developers, it was for many years the center of the Midpeninsula intellectual underground in the fifties, home to an eclectic group of artists, authors, communists, and other ne’er-do-wells. The Lane and the surrounding neighborhood had once been known as “Sin Hollow,” and the community traced its roots all the way back to the early days of Stanford itself.22 Perry Lane’s alumni included Thorstein Veblen, a radical economist and author of The Theory of the Leisure Class, a biting indictment of the upper crust of American society. Veblen taught at Stanford for only three years at the turn of the century, but he left a lasting impression. The economist arrived at one faculty tea with a young woman who was warily introduced by his host as Professor Veblen’s “daughter.” Veblen interjected tersely, “Madam, she is not my daughter!”


pages: 355 words: 92,571

Capitalism: Money, Morals and Markets by John Plender

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

Duveen’s phenomenal business success was built on selling the idea that art could confer social status on upstart entrepreneurs such as John D. Rockefeller, Henry Clay Frick and Andrew Mellon. No doubt the same logic applies to today’s hedge fund managers, who pay vast sums for the work of Jeff Koons, Damien Hirst or, in the case of Steven Cohen of SAC Capital, an astonishing $155 million for Picasso’s painting of his mistress, Le Rêve. In a caustic but perceptive jibe, the Norwegian-born economist Thorstein Veblen, best known for his critique of conspicuous consumption, remarked that ‘beauty is commonly a gratification of our sense of costliness masquerading under the name of beauty’. Hence, the coinage in economics of the term ‘Veblen goods’, which refers to commodities of which people will buy more when the price goes up because this confers increased status, whereas higher prices more normally choke off demand.


pages: 416 words: 106,582

This Will Make You Smarter: 150 New Scientific Concepts to Improve Your Thinking by John Brockman

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23andMe, Albert Einstein, Alfred Russel Wallace, banking crisis, Barry Marshall: ulcers, Benoit Mandelbrot, Berlin Wall, biofilm, Black Swan, butterfly effect, Cass Sunstein, cloud computing, congestion charging, correlation does not imply causation, Daniel Kahneman / Amos Tversky, dark matter, data acquisition, David Brooks, delayed gratification, Emanuel Derman, epigenetics, Exxon Valdez, Flash crash, Flynn Effect, hive mind, impulse control, information retrieval, Isaac Newton, Jaron Lanier, John von Neumann, Kevin Kelly, mandelbrot fractal, market design, Mars Rover, Marshall McLuhan, microbiome, Murray Gell-Mann, Nicholas Carr, open economy, place-making, placebo effect, pre–internet, QWERTY keyboard, random walk, randomized controlled trial, rent control, Richard Feynman, Richard Feynman, Richard Feynman: Challenger O-ring, Richard Thaler, Schrödinger's Cat, security theater, Silicon Valley, stem cell, Steve Jobs, Steven Pinker, Stewart Brand, the scientific method, Thorstein Veblen, Turing complete, Turing machine, Walter Mischel, Whole Earth Catalog

The handicap principle of sexual selection is about a way to prove that your signal has depth: If a peacock has long, spectacular feathers, it proves that it can survive its predators despite its fancy plumage, which represents a disadvantage, a handicap. Hence, the peahen can know that the individual displaying the huge tail is a strong one or else it could not have survived with that extreme tail. Among humans, you have what economists call costly signals, ways to show that you have something of value. The phenomenon of conspicuous consumption was observed by sociologist Thorstein Veblen in 1899: If you want to prove you have a lot of money, you have to waste it—that is, use it in a way that is absurd and idiotic, because only the rich can do so. But do it conspicuously, so that other people will know. Waste is a costly signal of the depth of a pile of money. Handicaps, costly signals, intense eye contact, and rhetorical gestures are all about proving that what seems so simple really has a lot of depth.


pages: 324 words: 92,805

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

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2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, accounting loophole / creative accounting, Affordable Care Act / Obamacare, American Society of Civil Engineers: Report Card, asset allocation, business process, Cass Sunstein, centre right, choice architecture, collateralized debt obligation, collective bargaining, corporate governance, corporate social responsibility, crony capitalism, David Brooks, delayed gratification, double helix, factory automation, financial deregulation, financial innovation, full employment, game design, greed is good, If something cannot go on forever, it will stop, impulse control, income inequality, inflation targeting, invisible hand, job automation, Joseph Schumpeter, knowledge worker, late fees, Long Term Capital Management, loss aversion, low skilled workers, 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, Robert Shiller, Rodney Brooks, Ronald Reagan, shareholder value, Silicon Valley, speech recognition, Steve Jobs, technoutopianism, the built environment, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, Tyler Cowen: Great Stagnation, Walter Mischel, winner-take-all economy

But most were cosmetic or stylistic and intended to provide an emotional reward—the pleasure of owning the newest car on the block, say, or the thrill of a more powerful engine or some clever new gadget or convenience. (As Harley Earl, Sloan’s chief car “stylist,” told an interviewer, “I try to design a car so that every time you get in it, it’s a relief—you have a little vacation for a while.”6) Sloan was hardly the first to target these softer appetites. For centuries, the wealthy had been purchasing status and other preferred emotional states via “conspicuous consumption,” in Thorstein Veblen’s famous term. But with mass production, annual design changes, and easy financing, Sloan gave the average consumer the same capacity for self-gratification. Now nearly anyone could upgrade to a higher level of emotional fulfillment—and do so more quickly and efficiently than had been possible under the old producer economy, when moments of intense satisfaction were less frequent and more likely to require some serious effort or discipline.


pages: 452 words: 110,488

The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead by David Callahan

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1960s counterculture, affirmative action, corporate governance, David Brooks, deindustrialization, East Village, forensic accounting, full employment, game design, greed is good, high batting average, housing crisis, illegal immigration, income inequality, job satisfaction, market fundamentalism, McMansion, microcredit, moral hazard, new economy, New Urbanism, offshore financial centre, oil shock, Plutocrats, plutocrats, postindustrial economy, profit maximization, profit motive, RAND corporation, Ray Oldenburg, rolodex, Ronald Reagan, shareholder value, Silicon Valley, Steve Jobs, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, Thorstein Veblen, War on Poverty, winner-take-all economy, World Values Survey, young professional

Unfortunately, when he compares himself to other people, he's not thinking about the guys he played ball with in high school who are now auto mechanics and accountants. He's more likely to look up than down—comparing himself to the multimillionaire celebrities he works with every day. As he does, he may not feel so lucky. He might even feel poor. The reason for this is that most human beings think about their well-being in terms relative to those who share their immediate community, as Thorstein Veblen pointed out a century ago in The Theory of the Leisure Class and as Robert Frank has discussed in some detail in his book Luxury Fever. Absolute well-being doesn't matter as much as it should. Most of us would rather earn $100,000 a year in an organization where nobody makes more than $90,000 than make $110,000 at a job where all our colleagues are paid $200,000. We'd feel better about ourselves if we owned a '97 Toyota Camry in a neighborhood where everyone else drives '88 Honda Civics and '90 Mazda Protégés, than if we owned a brand-new Camry in a neighborhood filled with Jaguars and Mercedes.32 The notion that people worry more about their place in the economic pecking order rather than the size of their paycheck has found support in research exploring the interplay of money, hierarchy, and happiness.


pages: 306 words: 85,836

When to Rob a Bank: ...And 131 More Warped Suggestions and Well-Intended Rants by Steven D. Levitt, Stephen J. Dubner

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Affordable Care Act / Obamacare, airport security, augmented reality, barriers to entry, Bernie Madoff, Black Swan, Broken windows theory, Captain Sullenberger Hudson, Daniel Kahneman / Amos Tversky, deliberate practice, feminist movement, food miles, George Akerlof, invisible hand, loss aversion, mental accounting, Netflix Prize, obamacare, oil shale / tar sands, peak oil, pre–internet, price anchoring, price discrimination, principal–agent problem, profit maximization, Richard Thaler, security theater, Ted Kaczynski, the built environment, The Chicago School, the High Line, Thorstein Veblen, transaction costs

But given that the documented power of veganism to directly confront global warming, and given the fact that emissions have only intensified alongside all efforts to lower them, I’d suggest McKibben, 350.org, and the environmental movement as a whole trade up their carnivorous agnosticism for a fire-and brimstone dose of vegan fundamentalism. Hey Baby, Is That a Prius You’re Driving? (SJD) Remember when keeping up with the Joneses meant buying a diamond-encrusted cigarette case? Such ostentatious displays of wealth during the Gilded Age prompted Thorstein Veblen to coin the term conspicuous consumption. Conspicuous consumption has hardly gone away—what do you think bling is?—but now it’s got a right-minded cousin: conspicuous conservation. Whereas conspicuous consumption is meant to signal how much green you’ve got, conspicuous conservation signals how green you are. Like carrying that “I’m not a plastic bag” bag, or installing solar panels on the side of your house facing the street—even if that happens to be the shady side.


words: 49,604

The Weightless World: Strategies for Managing the Digital Economy by Diane Coyle

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barriers to entry, Berlin Wall, Big bang: deregulation of the City of London, blue-collar work, Bretton Woods, clean water, computer age, Corn Laws, cross-subsidies, David Ricardo: comparative advantage, dematerialisation, Diane Coyle, Edward Glaeser, everywhere but in the productivity statistics, financial deregulation, full employment, global village, hiring and firing, Howard Rheingold, income inequality, informal economy, invisible hand, Jane Jacobs, Joseph Schumpeter, knowledge economy, labour market flexibility, laissez-faire capitalism, lump of labour, Marshall McLuhan, McJob, microcredit, Network effects, new economy, Nick Leeson, night-watchman state, North Sea oil, offshore financial centre, pension reform, pensions crisis, Ronald Reagan, Silicon Valley, spinning jenny, The Death and Life of Great American Cities, the market place, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tobin tax, two tier labour market, very high income, War on Poverty, winner-take-all economy, working-age population

Thompson (1967) Time, Work Discipline and Industrial Capitalism, Past and Present. Nicholas Timmins (1995) The Five Giants, HarperCollins, London. Gillian Tindall (1995) Celestine, Sinclair-Stevenson, London. Robert Tressell (1986; first published 1955) The Ragged Trousered Philanthropists, Grafton Books, London. William Turner (1992) Riot! The Story of the East Lancashire Loom Breakers in 1826, Lancashire The Weightless World 242 County Books, Preston. Thorstein Veblen (first published 1899) The Theory of the Leisure Class. Sallie Westwood & John Williams (1997) Imagining Cities, Routledge, London. Jeffrey Williamson (March 1996) ‘Globalization and inequality then and now’, National Bureau of Economic and Social Research Working Paper no. 5491, National Bureau of Economic and Social Research, Cambridge, MA. Wired (1996) ‘The WIRED Manifesto’, Wired magazine, San Francisco, CA.


pages: 407 words: 103,501

The Digital Divide: Arguments for and Against Facebook, Google, Texting, and the Age of Social Netwo Rking by Mark Bauerlein

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Amazon Mechanical Turk, Andrew Keen, centre right, citizen journalism, collaborative editing, computer age, computer vision, corporate governance, crowdsourcing, David Brooks, disintermediation, Frederick Winslow Taylor, Howard Rheingold, invention of movable type, invention of the steam engine, invention of the telephone, Jaron Lanier, Jeff Bezos, jimmy wales, Kevin Kelly, knowledge worker, late fees, Mark Zuckerberg, Marshall McLuhan, means of production, meta analysis, meta-analysis, Network effects, new economy, Nicholas Carr, PageRank, pets.com, Results Only Work Environment, Saturday Night Live, search engine result page, semantic web, Silicon Valley, slashdot, social graph, social web, software as a service, speech recognition, Steve Jobs, Stewart Brand, technology bubble, Ted Nelson, The Wisdom of Crowds, Thorstein Veblen, web application

Like Toffler and Gladwell, Battelle is all for bringing leisure time into the marketplace:On the Internet, it can be argued, all intent is commercial in one way or another, for your very attention is valuable to someone, even if you’re simply researching your grandmother’s genealogy, or reading up on a rare species of dolphin. Chances are you’ll see plenty of advertisements along the way, and those links are the gold from which search companies spin their fabled profits. Battelle wants to press home the importance of multiple searches to advertisers. He uses the following quotation to make his point:Thorstein Veblen, the early-twentieth-century thinker who coined the term “conspicuous consumption,” once quipped, “The outcome of any serious research can only be to make two questions grow where only one grew before” . . . In fact, Pew research shows that the average number of searches per visit to an engine [that is, a search engine, like Google] is nearly five . . . This copious diversity drives not only the complexity of the search itself, but also the robustness of the advertising model that supports it.


pages: 339 words: 95,988

Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt, Stephen J. Dubner

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airport security, Broken windows theory, crack epidemic, desegregation, Exxon Valdez, feminist movement, George Akerlof, Joseph Schumpeter, mental accounting, moral hazard, More Guns, Less Crime, oil shale / tar sands, peak oil, pets.com, profit maximization, Richard Thaler, school choice, sensible shoes, Steven Pinker, Ted Kaczynski, The Chicago School, The Market for Lemons, Thorstein Veblen, War on Poverty

Wall Street Journal, March 16, 2004, which cites an Institute of Medicine report concluding that “there is no scientific basis for the recommendation [of eight glasses of water a day] and that most people get enough water through normal consumption of foods and beverages.” ADAM SMITH is still well worth reading, of course (especially if you have infinite patience); so too is Robert Heilbroner’s The Worldly Philosophers (New York: Simon & Schuster, 1953), which contains memorable profiles of Smith, Karl Marx, Thorstein Veblen, John Maynard Keynes, Joseph Schumpeter, and other giants of economics. 1. WHAT DO SCHOOLTEACHERS AND SUMO WRESTLERS HAVE IN COMMON? THE ISRAELI DAY-CARE STUDY: See Uri Gneezy and Aldo Rustichini, “A Fine Is a Price,” Journal of Legal Studies 29, no. 1 (January 2000), pp. 1–17; and Uri Gneezy, “The ‘W’ Effect of Incentives,” University of Chicago working paper. MURDER THROUGH THE AGES: See Manuel Eisner, “Secular Trends of Violence, Evidence, and Theoretical Interpretations,” Crime and Justice: A Review of Research 3 (2003); also presented in Manuel Eisner, “Violence and the Rise of Modern Society,” Criminology in Cambridge, October 2003, pp. 3–7.


pages: 146 words: 43,446

The New New Thing: A Silicon Valley Story by Michael Lewis

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Albert Einstein, Andy Kessler, business climate, Chance favours the prepared mind, data acquisition, family office, high net worth, invention of the steam engine, invisible hand, Jeff Bezos, Menlo Park, pre–internet, risk tolerance, Sand Hill Road, Silicon Valley, Silicon Valley startup, Thorstein Veblen, Y2K

Something always happened on them that wasn't supposed to happen. An hour after Clark phoned, he picked me up in one of his designer sports cars. He wore dark sunglasses and the pained expression of a man enduring the aftershocks of two bottles of fine Burgundy. I lobbed into the haze a series of conversation starters before he took a swing at one of them: a book I had first mentioned a few weeks before, Thorstein Veblen's The Engineers and the Price System. Veblen was a quixotic social theorist with an unfortunate taste for the wives of his colleagues in the Stanford economics department. Between trysts he coined many poignant phrases, among them "leisure class" and "conspicuous con- Page 30 sumption." Back in 1921 Veblen had predicted that engineers would one day rule the U.S. economy. He argued that since the economy was premised on technology and the engineers were the only ones who actually understood how the technology worked, they would inevitably use their superior knowledge to seize power from the financiers and captains of industry who wound up on top at the end of the first round of the Industrial Revolution.


pages: 473 words: 154,182

Moby-Duck: The True Story of 28,800 Bath Toys Lost at Sea and of the Beachcombers, Oceanographers, Environmentalists, and Fools, Including the Author, Who Went in Search of Them by Donovan Hohn

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carbon footprint, clean water, collective bargaining, dark matter, Deng Xiaoping, Exxon Valdez, Filipino sailors, Google Earth, illegal immigration, indoor plumbing, intermodal, Isaac Newton, means of production, microbiome, Panamax, post-Panamax, profit motive, Skype, statistical model, Thorstein Veblen, traveling salesman

He speaks in a gravelly, almost inflectionless yet hortatory drone, as if reading a prepared speech badly from a teleprompter. When he laughs he opens his mouth just a little, once again bringing to mind a tortoise, and makes a coughing sound, as if trying to clear his throat: heh. Giving me a tour of the Alguita, he delivered a kind of extemporaneous sermon that ranged widely, from the chemistry of polybrominated diphenyl ethers to the social critic Thorstein Veblen to Rell Sunn, the deceased Hawaiian high priestess of surfing. Moore sounded at times brilliant, a font of facts and expertise (“our research indicates that 2.3 billion pieces of plastic go down the L.A. Basin in three days”), and at times like a half-cocked conspiracy theorist (“in our economy a series of short-lived and sickly generations is more profitable than a series of long-lived and healthy ones”).


pages: 385 words: 133,839

The Coke Machine: The Dirty Truth Behind the World's Favorite Soft Drink by Michael Blanding

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carbon footprint, clean water, collective bargaining, corporate social responsibility, Exxon Valdez, Gordon Gekko, Internet Archive, laissez-faire capitalism, market design, Naomi Klein, New Journalism, Ponzi scheme, profit motive, Ralph Nader, rolodex, Ronald Reagan, shareholder value, The Wealth of Nations by Adam Smith, Thorstein Veblen, union organizing, Upton Sinclair

Page 39 total of $29,500 . . . almost entirely removed: Allen, 43–45. Page 39 E. W. Kemble and especially Samuel Hopkins Adams: Young, 215–217. Page 40 procession of smiling, fancily dressed Victorian women: Dietz, 50; Goodrum, 90. Page 40 convulsive demographic changes: Mady Schutzman, The Real Thing: Performance, Hysteria, & Advertising (Hanover, NH, and London: Wesleyan University Press, 1999), 36. Page 40 “evidence of leisure”: Thorstein Veblen, The Theory of the Leisure Class (Amherst, NY: Prometheus, 1998 [orig. pub. 1899]), 265, 171; see also Rob Walker, Buying In: The Secret NOTES 303 Dialogue Between What We Buy and Who We Are, (New York: Random House, 2008), 64–65. Page 40 “The President drinks Coke”: Paul Richard, “Andy Warhol, the Ghostly Icon: At the N.Y. Show, Summoning Images of the Pop Legend,” Washington Post, February 6, 1989.


pages: 490 words: 150,172

The Pencil: A History of Design and Circumstance by Henry Petroski

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business climate, Douglas Hofstadter, Gödel, Escher, Bach, Isaac Newton, James Watt: steam engine, Khartoum Gordon, Menlo Park, On the Economy of Machinery and Manufactures, Ralph Waldo Emerson, Richard Feynman, the scientific method, The Wealth of Nations by Adam Smith, Thorstein Veblen

Engineering, far from being applied science, is scientific business. Edwin Layton has put it succinctly: The engineer is both a scientist and a businessman. Engineering is a scientific profession, yet the test of the engineer’s work lies not in the laboratory, but in the marketplace. The claims of science and business have pulled the engineer, at times, in opposing directions. Indeed, one observer, Thorstein Veblen, assumed that an irrepressible conflict between science and business would thrust the engineer into the role of social revolutionary. While Henry David Thoreau seems never to have aspired to being for very long a professional anything, let alone a professional engineer, he does seem to have had a social conscience that asserted individual rights above all. And this trait seems to have dominated his thinking.


pages: 637 words: 128,673

Democracy Incorporated by Sheldon S. Wolin

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affirmative action, Berlin Wall, British Empire, centre right, collective bargaining, colonial rule, corporate governance, cuban missile crisis, David Ricardo: comparative advantage, dematerialisation, Donald Trump, Fall of the Berlin Wall, full employment, illegal immigration, invisible hand, mutually assured destruction, new economy, offshore financial centre, 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 Eric Nordlinger, On the Democratic State (Cambridge: Harvard University Press, 1982), for a defense of the neoliberal state. 17. Among the influential studies are James Burnham, The Managerial Revolution (New York: John Day, 1941); Peter Drucker, The Practice of Management (London: Heinemann, 1956); and Chandler and Daems, Managerial Hierarchies; and, more critically, Herman, Corporate Control, Corporate Power. The great forerunner of these studies was Thorstein Veblen. See his The Theory of Business Enterprise (New York: Mentor, 1904, 1932) and The Engineers and the Price System (New York: Harcourt, 1921), 1963. 18. On the opposition between reason and passion, see The Federalist, No. 49, p. 343; No. 50, p. 346; No. 58, p. 396. On passion and interest, see No. 10, p. 61; on passion as strong, irregular, and selfish, see No. 6, p. 29; No. 20, p. 128; No. 41, pp. 264, 275; No. 42, p. 283; No. 63, pp. 423, 425. 19.


pages: 790 words: 150,875

Civilization: The West and the Rest by Niall Ferguson

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Admiral Zheng, agricultural Revolution, Albert Einstein, Andrei Shleifer, Atahualpa, Ayatollah Khomeini, Berlin Wall, BRICs, British Empire, clean water, collective bargaining, colonial rule, conceptual framework, Copley Medal, corporate governance, credit crunch, David Ricardo: comparative advantage, Dean Kamen, delayed gratification, Deng Xiaoping, discovery of the americas, Dissolution of the Soviet Union, European colonialism, Fall of the Berlin Wall, Francisco Pizarro, full employment, 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, land reform, land tenure, Louis Pasteur, Mahatma Gandhi, market bubble, Martin Wolf, means of production, megacity, Mikhail Gorbachev, new economy, probability theory / Blaise Pascal / Pierre de Fermat, profit maximization, purchasing power parity, quantitative easing, rent-seeking, reserve currency, 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, 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, transatlantic slave trade, upwardly mobile, uranium enrichment, wage slave, Washington Consensus, women in the workforce, World Values Survey

Much of Darwin’s account of natural selection could have applied equally well to the economic world of the mid-nineteenth-century textile business: All organic beings are exposed to severe competition … As more individuals are produced than can possibly survive, there must in every case be a struggle for existence, either one individual with another of the same species, or with the individuals of distinct species, or with the physical conditions of life. Each organic being … has to struggle for life … As natural selection acts solely by accumulating slight, successive, favourable variations, it can produce no great or sudden modification … 26 In that sense, it might make more sense for historians to talk about an Industrial Evolution, in Darwin’s sense of the word. As the economists Thorstein Veblen and Joseph Schumpeter would later remark, nineteenth-century capitalism was an authentically Darwinian system, characterized by seemingly random mutation, occasional speciation and differential survival or, to use Schumpeter’s memorable phrase, ‘creative destruction’.27 Yet precisely the volatility of the more or less unregulated markets created by the Industrial Revolution caused consternation among many contemporaries.


pages: 487 words: 151,810

The Social Animal: The Hidden Sources of Love, Character, and Achievement by David Brooks

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Albert Einstein, asset allocation, Atul Gawande, Bernie Madoff, business process, Cass Sunstein, choice architecture, clean water, Daniel Kahneman / Amos Tversky, David Brooks, delayed gratification, deliberate practice, disintermediation, Donald Trump, Douglas Hofstadter, Emanuel Derman, en.wikipedia.org, fear of failure, financial deregulation, financial independence, Flynn Effect, George Akerlof, Henri Poincaré, hiring and firing, impulse control, invisible hand, Joseph Schumpeter, labor-force participation, loss aversion, medical residency, meta analysis, meta-analysis, Monroe Doctrine, Richard Thaler, risk tolerance, Robert Shiller, Robert Shiller, school vouchers, six sigma, Steve Jobs, Steven Pinker, the scientific method, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, Walter Mischel, young professional

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. Actions are guided by imagination as well as reason. People can experience discontinuous paradigm shifts, suddenly seeing the same situation in radically different ways. John Maynard Keynes argued that economics is a moral science and reality could not be captured in universal laws calculable by mathematics.


pages: 462 words: 150,129

The Rational Optimist: How Prosperity Evolves by Matt Ridley

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23andMe, agricultural Revolution, air freight, back-to-the-land, banking crisis, barriers to entry, Bernie Madoff, British Empire, call centre, carbon footprint, charter city, clean water, cloud computing, cognitive dissonance, collateralized debt obligation, colonial exploitation, colonial rule, Corn Laws, credit crunch, David Ricardo: comparative advantage, decarbonisation, dematerialisation, demographic dividend, demographic transition, double entry bookkeeping, Edward Glaeser, en.wikipedia.org, everywhere but in the productivity statistics, falling living standards, feminist movement, financial innovation, Flynn Effect, food miles, Gordon Gekko, greed is good, Hans Rosling, happiness index / gross national happiness, haute cuisine, Hernando de Soto, income inequality, income per capita, Indoor air pollution, informal economy, invention of agriculture, invisible hand, James Hargreaves, James Watt: steam engine, Jane Jacobs, John Nash: game theory, joint-stock limited liability company, Joseph Schumpeter, Kevin Kelly, knowledge worker, Kula ring, Mark Zuckerberg, meta analysis, meta-analysis, mutually assured destruction, Naomi Klein, Northern Rock, nuclear winter, oil shale / tar sands, out of africa, packet switching, patent troll, Pax Mongolica, Peter Thiel, phenotype, Plutocrats, plutocrats, Ponzi scheme, Productivity paradox, profit motive, purchasing power parity, race to the bottom, Ray Kurzweil, rent-seeking, rising living standards, Silicon Valley, spice trade, spinning jenny, stem cell, Steve Jobs, Steven Pinker, Stewart Brand, supervolcano, technological singularity, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, ultimatum game, upwardly mobile, urban sprawl, Vernor Vinge, wage slave, working poor, working-age population, Y2K, Yogi Berra

Homer and Isaiah despised traders. St Paul, St Thomas Aquinas and Martin Luther all considered usury a sin. Shakespeare could not bring himself to make the persecuted Shylock a hero. Of 1900, Brink Lindsey writes: ‘Many of the brightest minds of the age mistook the engine of eventual mass deliverance – the competitive market system – for the chief bulwark of domination and oppression.’ Economists like Thorstein Veblen longed to replace the profit motive with a combination of public-spiritedness and centralised government decision-taking. In the 1880s Arnold Toynbee, lecturing working men on the English industrial revolution which had so enriched them, castigated free enterprise capitalism as a ‘world of gold-seeking animals, stripped of every human affection’ and ‘less real than the island of Lilliput’.


pages: 372 words: 152

The End of Work by Jeremy Rifkin

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banking crisis, Bertrand Russell: In Praise of Idleness, blue-collar work, cashless society, collective bargaining, computer age, deskilling, Dissolution of the Soviet Union, employer provided health coverage, Erik Brynjolfsson, full employment, future of work, general-purpose programming language, George Gilder, global village, hiring and firing, informal economy, interchangeable parts, invention of the telegraph, Jacques de Vaucanson, job automation, John Maynard Keynes: technological unemployment, knowledge economy, knowledge worker, land reform, low skilled workers, means of production, new economy, New Urbanism, pink-collar, post-industrial society, Productivity paradox, Richard Florida, Ronald Reagan, Silicon Valley, speech recognition, strikebreaker, technoutopianism, Thorstein Veblen, Toyota Production System, trade route, trickle-down economics, women in the workforce, working poor, working-age population, Works Progress Administration

So effective was the mass conversion to the new engineering values that even when the depression hit in 1929, Americans continued to defend the technological vision. They chose instead to vent their anger and fear against greedy businessmen who, in their mind, had undermined and thwarted the lofty aims and goals of the nation's new heroes-the engineers. Quite a few Americans agreed with the earlier criticism of economist and social theorist Thorstein Veblen, who, in 1921, penned a caustic frontal attack on the nation's businessmen. Veblen contended that commercial avarice and the irrationality of the marketplace were undermining the technological imperative and creating waste and inefficiencies on a monumental scale. He argued that only by entrusting the nation's economy to the professional engineers-whose noble standards stood above pecuniary and parochial concerns-could the economy be saved and the country transformed into a new Eden.


pages: 481 words: 125,946

What to Think About Machines That Think: Today's Leading Thinkers on the Age of Machine Intelligence by John Brockman

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3D printing, agricultural Revolution, AI winter, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, algorithmic trading, artificial general intelligence, augmented reality, autonomous vehicles, bitcoin, blockchain, clean water, cognitive dissonance, Colonization of Mars, complexity theory, computer age, computer vision, constrained optimization, corporate personhood, cosmological principle, cryptocurrency, cuban missile crisis, Danny Hillis, dark matter, discrete time, Elon Musk, Emanuel Derman, endowment effect, epigenetics, Ernest Rutherford, experimental economics, Flash crash, friendly AI, Google Glasses, hive mind, income inequality, information trail, Internet of things, invention of writing, iterative process, Jaron Lanier, job automation, John von Neumann, Kevin Kelly, knowledge worker, loose coupling, microbiome, Moneyball by Michael Lewis explains big data, natural language processing, Network effects, Norbert Wiener, pattern recognition, Peter Singer: altruism, phenotype, planetary scale, Ray Kurzweil, recommendation engine, Republic of Letters, RFID, Richard Thaler, Rory Sutherland, Search for Extraterrestrial Intelligence, self-driving car, sharing economy, Silicon Valley, Skype, smart contracts, speech recognition, statistical model, stem cell, Stephen Hawking, Steve Jobs, Steven Pinker, Stewart Brand, strong AI, Stuxnet, superintelligent machines, supervolcano, the scientific method, The Wisdom of Crowds, theory of mind, Thorstein Veblen, too big to fail, Turing machine, Turing test, Von Neumann architecture, Watson beat the top human players on Jeopardy!, Y2K

These might be little things, like what’s the best nearby place for Korean barbecue, based on the Internet’s increasingly complete understanding of your individual wants and needs, or big things, like an Internet service arranging your marriage. Not just the food, gifts, and flowers but your partner too. The lesson is that the software engineers, AI researchers, roboticists, and hackers who design these future systems have the power to reshape society. Nearly a century ago, Thorstein Veblen wrote an influential critique of the early twentieth-century industrial world, The Engineers and the Price System. Because of the power and influence of industrial technology, he believed that political power would flow to engineers, whose deep knowledge of technology would be transformed into control of the emerging industrial economy. It certainly didn’t work out that way. Veblen was speaking to the Progressive Era, looking for a middle ground between Marxism and capitalism.


pages: 413 words: 119,587

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

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

That lesson carries forward in the differing approaches of the software engineers, AI researchers, roboticists, and hackers who are the designers of these future systems. It should be obvious that Bill Joy’s warning that “the future doesn’t need us” is just one possible outcome. It is equally apparent that the world transformed by these technologies doesn’t have to play out catastrophically. A little over a century ago, Thorstein Veblen wrote an influential critique of the turn-of-the-century industrial world, The Engineers and the Price System. He argued that, because of the power and influence of industrial technology, political power would flow to engineers, who could parlay their deep knowledge of technology into control of the emerging industrial economy. It certainly didn’t work out that way. Veblen was speaking to the Progressive Era, looking for a middle ground between Marxism and capitalism.


pages: 504 words: 143,303

Why We Can't Afford the Rich by Andrew Sayer

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accounting loophole / creative accounting, Albert Einstein, asset-backed security, banking crisis, banks create money, Bretton Woods, British Empire, call centre, capital controls, carbon footprint, collective bargaining, corporate social responsibility, credit crunch, Credit Default Swap, crony capitalism, David Graeber, David Ricardo: comparative advantage, debt deflation, decarbonisation, declining real wages, deglobalization, deindustrialization, delayed gratification, demand response, don't be evil, Double Irish / Dutch Sandwich, en.wikipedia.org, Etonian, financial innovation, financial intermediation, Fractional reserve banking, full employment, Goldman Sachs: Vampire Squid, high net worth, income inequality, investor state dispute settlement, Isaac Newton, James Dyson, job automation, Julian Assange, labour market flexibility, laissez-faire capitalism, low skilled workers, Mark Zuckerberg, market fundamentalism, Martin Wolf, means of production, moral hazard, mortgage debt, neoliberal agenda, new economy, New Urbanism, Northern Rock, Occupy movement, offshore financial centre, oil shale / tar sands, patent troll, payday loans, Plutocrats, plutocrats, predatory finance, price stability, pushing on a string, quantitative easing, race to the bottom, rent-seeking, Ronald Reagan, shareholder value, short selling, sovereign wealth fund, Steve Jobs, The Nature of the Firm, The Spirit Level, 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, Winter of Discontent, working poor, Yom Kippur War

Emulation, envy and vanity In capitalist culture, money is widely taken as a measure of personal worth: the size of your salary, your budget, the price of your house, car, clothes, mobile phone or watch signal your status to others. A 5-year-old second-hand car may be half the price of a new one, but, if well maintained, the difference in its performance, comfort and reliability is minimal. Yet many are willing to pay the extra for a new one just for the recognition it brings among others for whom such things matter. In his celebrated book, The Theory of the Leisure Class, Thorstein Veblen claimed that the rich consume not merely to meet their needs but to make a statement – a ‘provocative distinction’ that sets them apart from others.11 Hence the childish competition over who has the biggest yacht, the most expensive watches, the most palatial houses, the biggest private jet(s) – or, at the bottom of the hierarchy, the most expensive trainers. At every level, owning such objects is a way of saying ‘we’re as good as you – or better’.


pages: 409 words: 145,128

Fighting Traffic: The Dawn of the Motor Age in the American City by Peter D. Norton

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clean water, Frederick Winslow Taylor, garden city movement, invisible hand, jitney, new economy, New Urbanism, Ralph Nader, Silicon Valley, smart transportation, Thorstein Veblen, Unsafe at Any Speed, urban planning, urban renewal

Yet when Charles Francis Adams took charge of Massachusetts’ railroad commission in 1869, he had already developed a thesis that in railroading competition cannot succeed, and ought not to be attempted, since on the rails “competition and the cheapest possible transportation are wholly incompatible.”87 Popular intellectuals in America, including Henry Demarest Lloyd, Henry George, and Edward Bellamy, offered explanations of and prescriptions for the spread of monopolies. But these widely influential amateurs could not shape opinion in professional circles. Though Lloyd and others criticized public utilities, popular writers failed to confront the problem of the natural monopoly. Yet at least two writers, Thorstein Veblen and Richard Ely, united professional authority and popular influence in economics, and of these it was Ely who brought the idea of natural monopoly to the notice of the American public. Ely’s Problems of To-day, first published in 1888, soon became a standard textbook in economics.88 Ely was less a developer of the natural monopoly theory than a publicist for it, both to professional economists and to a more general educated audience.


pages: 478 words: 142,608

The God Delusion by Richard Dawkins

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Albert Einstein, anthropic principle, Any sufficiently advanced technology is indistinguishable from magic, Ayatollah Khomeini, Brownian motion, cosmological principle, David Attenborough, Desert Island Discs, double helix, en.wikipedia.org, experimental subject, Fellow of the Royal Society, gravity well, invisible hand, John von Neumann, luminiferous ether, Menlo Park, meta analysis, meta-analysis, Murray Gell-Mann, Necker cube, Peter Singer: altruism, phenotype, placebo effect, planetary scale, Ralph Waldo Emerson, Richard Feynman, Richard Feynman, Schrödinger's Cat, Search for Extraterrestrial Intelligence, stem cell, Stephen Hawking, Steven Pinker, the scientific method, theory of mind, Thorstein Veblen, trickle-down economics, unbiased observer

You hear ‘on the grapevine’ that X is a tightwad, or – to add an ironic complication to the example – that Y is a terrible gossip. Reputation is important, and biologists can acknowledge a Darwinian survival value in not just being a good reciprocator but fostering a reputation as a good reciprocator too. Matt Ridley’s The Origins of Virtue, as well as being a lucid account of the whole field of Darwinian morality, is especially good on reputation.* The Norwegian-American economist Thorstein Veblen and, in a rather different way, the Israeli zoologist Amotz Zahavi have added a further fascinating idea. Altruistic giving may be an advertisement of dominance or superiority. Anthropologists know it as the Potlatch Effect, named after the custom whereby rival chieftains of Pacific north-west tribes vie with each other in duels of ruinously generous feasts. In extreme cases, bouts of retaliatory entertaining continue until one side is reduced to penury, leaving the winner not much better off.


pages: 424 words: 115,035

How Will Capitalism End? by Wolfgang Streeck

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

That the building of authoritative regulatory institutions under capitalism tends to lag behind the dynamic growth of voluntary trading relations should not come as a surprise to students of contemporary capitalism or regulatory policy and should in fact be assumed to be in the nature of the beast. 20Polanyi, The Great Transformation. 21Hall and Soskice, ‘An Introduction to Varieties of Capitalism’. 22Polanyi, The Great Transformation, pp. 68–77. 23This was different before sociology and economics parted company. See, for example, Thorstein Veblen (The Theory of the Leisure Class, New York: Penguin 1994 [1899]) and his theory of conspicuous consumption. 24The present section is inspired by a number of recent papers by Jens Beckert. 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’.


pages: 505 words: 127,542

If You're So Smart, Why Aren't You Happy? by Raj Raghunathan

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Broken windows theory, business process, cognitive dissonance, deliberate practice, en.wikipedia.org, epigenetics, fundamental attribution error, job satisfaction, Mahatma Gandhi, market clearing, meta analysis, meta-analysis, new economy, Phillip Zimbardo, placebo effect, science of happiness, Skype, The Fortune at the Bottom of the Pyramid, Thorstein Veblen, Tony Hsieh, working poor, Zipcar

Findings from studies that my coauthors (Sean Jang and Robin Soster) and I have conducted suggest that people think they are better than average in terms of positive traits (like kindness) while, at the same time, harboring negative thoughts and feelings (such as anxiety and stress) about the ability to deal and cope with everyday problems and challenges. proxy measures for . . . wealth, power, and fame: The idea that consumption behavior could be used to signal status has been around for a while and was perhaps first systematically studied by Thorstein Veblen. More recently, Robert Frank, the economist from Cornell, and others (e.g., Berger and Ward) have also explored the phenomenon. Sources: J. Berger and M. Ward, “Subtle Signals of Inconspicuous Consumption,” Journal of Consumer Research 37(4) (2010): 555–69; Frank, Luxury Fever; T. Veblen, The Theory of the Leisure Class (Oxford, UK: Oxford University Press, 2007). materialistic focus . . . is one of the biggest happiness killers: There are numerous studies showing the negative effect that materialism has on happiness, including T.


pages: 1,205 words: 308,891

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

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Admiral Zheng, agricultural Revolution, Albert Einstein, BRICs, British Empire, butterfly effect, Carmen Reinhart, clockwork universe, computer age, Corn Laws, dark matter, David Ricardo: comparative advantage, Donald Trump, Edward Lorenz: Chaos theory, European colonialism, experimental economics, financial innovation, Fractional reserve banking, full employment, George Akerlof, germ theory of disease, Gini coefficient, greed is good, Howard Zinn, income per capita, interchangeable parts, invention of agriculture, invention of air conditioning, invention of writing, invisible hand, Isaac Newton, James Watt: steam engine, John Maynard Keynes: technological unemployment, John Snow's cholera map, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, means of production, Naomi Klein, New Economic Geography, New Urbanism, purchasing power parity, rent-seeking, road to serfdom, Robert Gordon, Ronald Coase, Ronald Reagan, Scientific racism, Scramble for Africa, Shenzhen was a fishing village, Simon Kuznets, Slavoj Žižek, spinning jenny, Steven Pinker, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, transaction costs, tulip mania, union organizing, Upton Sinclair, urban renewal, V2 rocket, very high income, working poor, World Values Survey, Yogi Berra

Easterlin argues, against the “freedom-from-want” claims of scholars like Abraham Maslow and Ronald Inglehart (believing that the hierarchy of needs can in fact be satisfied), that “economic growth is a carrier of a material culture of its own that ensures that humankind is forever ensnared in the pursuit of more and more economic goods.”27The “happiness” literature, you can see, is predisposed to find modern levels of consumption vulgar and corrupting. The field has become one of the scientific legs of the century-old campaign by the clerisy against the “consumerism” to which the non-clerisy are so wretchedly enslaved, as described in the writings of the economist Robert Frank or the sociologist Juliet Schor or indeed the sociological economist of a century ago, the great Thorstein Veblen.28 Admittedly, we are “ensnared,” even “enslaved.” But social science since Veblen has discovered a reply: any level of income a “carrier of a material culture,” $3 a day as much as $137 a day. The anthropologists point out that any meal-taking or shelter-building or tale-telling “ensnares” its people, the Bushmen of the Kalihari no less than the Floor Traders of Wall Street. “Consumerism” characterizes all human cultures—which rather reduces the scientific usefulness of the term.


pages: 675 words: 141,667

Open Standards and the Digital Age: History, Ideology, and Networks (Cambridge Studies in the Emergence of Global Enterprise) by Andrew L. Russell

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barriers to entry, borderless world, Chelsea Manning, computer age, Edward Snowden, Frederick Winslow Taylor, Hacker Ethic, Howard Rheingold, Hush-A-Phone, interchangeable parts, invisible hand, Joseph Schumpeter, means of production, Menlo Park, Network effects, new economy, Norbert Wiener, open economy, packet switching, pre–internet, RAND corporation, RFC: Request For Comment, Richard Stallman, Ronald Coase, Ronald Reagan, Silicon Valley, Steve Crocker, Steven Levy, Stewart Brand, technoutopianism, Ted Nelson, The Nature of the Firm, Thomas L Friedman, Thorstein Veblen, transaction costs, web of trust

Hoover, who earned international fame as the “Great Humanitarian” by guiding relief efforts during World War I, turned his talents and energies toward the American economy when he was named secretary of commerce by Warren Harding in 1921. Hoover was, in the pre-Depression era, a living and breathing icon of the triumph of rationality, organization, and the progressive spirit of the engineering profession – the “engineering method personified” in the words of one admiring colleague.2 Several of Hoover’s contemporaries – such as the social theorist Thorstein Veblen and the radical engineers Howard Scott and Morris Cooke – believed that technical expertise could reform society and engineer a new age of efficiency and abundance. But the meeting at the Department of Commerce was not some sort of revolutionary “Soviet of Technicians.” Instead, it was a meeting of the leaders of the American Engineering Standards Committee (AESC), a private group of engineers who had a more modest and pragmatic goal: to order the inconsistent patchwork of codes, tests, and standards used in American industrial practice.

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

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Albert Einstein, Asian financial crisis, Barry Marshall: ulcers, Berlin Wall, Big bang: deregulation of the City of London, California gold rush, 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, Edward Lloyd's coffeehouse, equity premium, Ernest Rutherford, European colonialism, experimental economics, Exxon Valdez, failed state, financial innovation, Francis Fukuyama: the end of history, George Akerlof, George Gilder, greed is good, haute couture, illegal immigration, income inequality, invention of the telephone, invention of the wheel, invisible hand, John Nash: game theory, John von Neumann, Kevin Kelly, knowledge economy, labour market flexibility, late capitalism, Long Term Capital Management, loss aversion, Mahatma Gandhi, market bubble, market clearing, market fundamentalism, means of production, Menlo Park, Mikhail Gorbachev, money: store of value / unit of account / medium of exchange, moral hazard, Naomi Klein, Nash equilibrium, new economy, oil shale / tar sands, oil shock, pets.com, popular electronics, price discrimination, price mechanism, prisoner's dilemma, profit maximization, purchasing power parity, QWERTY keyboard, Ralph Nader, RAND corporation, random walk, rent-seeking, risk tolerance, road to serfdom, Ronald Coase, Ronald Reagan, second-price auction, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, Steve Jobs, telemarketer, The Chicago School, The Death and Life of Great American Cities, The Market for Lemons, The Nature of the Firm, The Predators' Ball, The Wealth of Nations by Adam Smith, Thorstein Veblen, total factor productivity, transaction costs, tulip mania, urban decay, Washington Consensus, women in the workforce, yield curve, yield management

These features make the label attractive to many DIY economists: see, for example, the reading lists on economics offered on the Amazon.com Web site. A discussion of the various meanings of Austrian economics, with a judicious summary-"economists (and other intellectuals in Austria today) are cognizant of-and proud of-the earlier Austrian school ... but see themselves today simply as a part of the general community of professional economists" (p. 149)-is found in Kirzner's essay in the New Palgrave. 7. Although Thorstein Veblen, whose trenchant criticism of the consumption of the rich is still readable today (Veblen [1899]), was a faculty member. However, Veblen's personal habits were as uncongenial as his views and he was asked to leave. 8. There is a-possibly intentional-trap in this quotation. At a quick reading, it seems to describe self-interested behavior. On a more careful reading, it does not: the behavior is not relentless and unflinching, but the economist who studies it.


pages: 425 words: 122,223

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

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Albert Einstein, asset allocation, backtesting, Benoit Mandelbrot, Black-Scholes formula, Bonfire of the Vanities, Brownian motion, buy low sell high, capital asset pricing model, debt deflation, diversified portfolio, Eugene Fama: efficient market hypothesis, financial innovation, financial intermediation, fixed income, full employment, implied volatility, index arbitrage, index fund, interest rate swap, invisible hand, John von Neumann, Joseph Schumpeter, law of one price, linear programming, Louis Bachelier, mandelbrot fractal, martingale, means of production, new economy, New Journalism, profit maximization, Ralph Nader, RAND corporation, random walk, Richard Thaler, risk/return, Robert Shiller, Robert Shiller, Ronald Reagan, stochastic process, 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

He had earned his doctorate at the New School for Social Research in New York in 1941, supporting himself by selling Italian books for his father-in-law, who had been a distributor of books and newspapers in prewar Italy and was now living in the United States. Modigliani spent his days selling books, his evenings taking courses at the New School, and his nights studying. Modigliani speaks enthusiastically about the education he received at the New School. The New School had been founded in 1919 by the economists Thorstein Veblen and Wesley Mitchell and the historians Charles Beard and James Harvey Robinson as a free-form institution of higher learning for adults; over the years it had attracted many outstanding and controversial teachers. In 1933, shortly after Hitler seized power, Alvin Johnson, then president of the New School, saw a unique opportunity to bring some of Europe’s most distinguished scholars to the school.


pages: 475 words: 149,310

Multitude: War and Democracy in the Age of Empire by Michael Hardt, Antonio Negri

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affirmative action, Berlin Wall, Bretton Woods, British Empire, conceptual framework, David Graeber, Defenestration of Prague, deskilling, Fall of the Berlin Wall, feminist movement, Francis Fukuyama: the end of history, friendly fire, global village, Howard Rheingold, Howard Zinn, illegal immigration, Joseph Schumpeter, labour mobility, land reform, land tenure, late capitalism, means of production, Naomi Klein, new economy, private military company, race to the bottom, RAND corporation, reserve currency, Richard Stallman, Slavoj Žižek, The Chicago School, The Structural Transformation of the Public Sphere, Thomas Malthus, Thorstein Veblen, Tobin tax, transaction costs, union organizing, War on Poverty, Washington Consensus

Immeasurable quantities, imperfections and distortions of information, cruel and barbaric forms of exploitation, legislative and institutional changes, in addition to social and political revolutions—in short, all that catastrophic phenomena that can be grouped under the title of crisis—demonstrate that the theory of equilibrium cannot serve as the general schema of economics, but rather it is a matter of ruling over disequilibria. Revolutionaries have proclaimed this fact. In the academic context, Thorstein Veblen suspected it. The doubt, which became a certainty, was that measure and equilibrium does not exist in nature at all! In the twentieth century, along with tragic wars and other cataclysms, came the era of reconstruction, the glory years of political economy. With the recognition of the collapse of natural measures, reconstruction involved political tactics of adjustment aimed at restoring the traditional equilibria of economics.


pages: 540 words: 168,921

The Relentless Revolution: A History of Capitalism by Joyce Appleby

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1919 Motor Transport Corps convoy, agricultural Revolution, anti-communist, Asian financial crisis, asset-backed security, Bartolomé de las Casas, Bernie Madoff, Bretton Woods, BRICs, British Empire, call centre, collateralized debt obligation, collective bargaining, Columbian Exchange, corporate governance, 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, Ford paid five dollars a day, Francisco Pizarro, Frederick Winslow Taylor, full employment, Gordon Gekko, 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, 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, joint-stock company, Joseph Schumpeter, knowledge economy, land reform, Livingstone, I presume, Long Term Capital Management, Mahatma Gandhi, Martin Wolf, moral hazard, Ponzi scheme, profit maximization, profit motive, race to the bottom, Ralph Nader, refrigerator car, Ronald Reagan, Scramble for Africa, Silicon Valley, Silicon Valley startup, South China Sea, South Sea Bubble, special economic zone, spice trade, spinning jenny, strikebreaker, the built environment, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thorstein Veblen, total factor productivity, trade route, transatlantic slave trade, transatlantic slave trade, transcontinental railway, union organizing, Unsafe at Any Speed, Upton Sinclair, urban renewal, War on Poverty, working poor, Works Progress Administration, Yogi Berra, Yom Kippur War

., The History of Corporate Finance: Development of Anglo-American Securities Markets, Financial Practices, Theories and Laws, 4 vols. (London, 2003), iv. 33. Timor Kuran, “Explaining the Economic Trajectories of Civilizations: The Systemic Approach,” Journal of Economic Behavior and Organization (2009). 34. Caroline Fohlin, Finance Capitalism and Germany’s Rise to Industrial Power (New York, 2007), 65–69. 35. Charles P. Kindleberger, A Financial History of Western Europe, 2nd ed. (Oxford, 1993 [1984]), 102–10. 36. Thorstein Veblen, Capitalism, Socialism and Democracy, 3rd ed. (New York, 1950), 83. 37. Trebilcock, Industrialization of Continental Powers, 40; Fohlin, Finance Capitalism and Germany’s Rise to Industrial Power, 220–21. 38. Margaret C. Jacob, Strangers Nowhere in the World: The Rise of Cosmopolitanism in Early Modern Europe (Philadelphia, 2006), 76–77; Thomas K. McGraw, “American Capitalism” in Thomas K.


pages: 836 words: 158,284

The 4-Hour Body: An Uncommon Guide to Rapid Fat-Loss, Incredible Sex, and Becoming Superhuman by Timothy Ferriss

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23andMe, airport security, Albert Einstein, Black Swan, Buckminster Fuller, carbon footprint, cognitive dissonance, Columbine, correlation does not imply causation, Dean Kamen, game design, Gary Taubes, index card, Kevin Kelly, knowledge economy, life extension, Mahatma Gandhi, microbiome, p-value, Parkinson's law, Paul Buchheit, placebo effect, Productivity paradox, publish or perish, Ralph Waldo Emerson, Ray Kurzweil, Richard Feynman, Richard Feynman, Silicon Valley, Silicon Valley startup, Skype, stem cell, Steve Jobs, Thorstein Veblen, wage slave, William of Occam

Another set of prison bars involves status. Professional scientists derive most of their status from their job. When they have a choice, they try to enhance or protect their status. Some sorts of research have more status than others. Large grants have more status than small grants, so professional scientists prefer expensive research to cheap research. High-tech has more status than low-tech, so they prefer high-tech. As Thorstein Veblen emphasized in The Theory of the Leisure Class (1899), useless research has higher status than useful research. Doing useless work, Veblen said, shows that you are higher-status than those who must do useful work. So researchers prefer useless research, thus the term “ivory tower.” Fear of loss of job, grant, or status also makes it hard for professional scientists to propose radical new ideas.


pages: 756 words: 228,797

Ayn Rand and the World She Made by Anne C. Heller

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affirmative action, Albert Einstein, anti-communist, Bolshevik threat, conceptual framework, greed is good, laissez-faire capitalism, Milgram experiment, Mont Pelerin Society, New Journalism, open borders, price stability, profit motive, rent control, rolodex, Ronald Reagan, Silicon Valley, the scientific method, theory of mind, Thorstein Veblen, transcontinental railway, upwardly mobile, wage slave, War on Poverty, Works Progress Administration, young professional

“In my campaign for the House [of Representatives in 1960],” he grumbled, “she was the one writer people knew and talked about.” The Wall Street Journal echoed the alarm, warning upper-crust parents and corporate executives that their sons and daughters were sitting around “in booths in college-town snack shops” arguing about her work with the same seriousness that earlier generations had brought to discussions of Thorstein Veblen and Karl Marx. Unfortunately, Rand did read Sidney Hook’s review of For the New Intellectual in The New York Times Book Review on April 9, 1961, and for a number of reasons it provoked a weeks-long fit of rage. One was Professor Hook’s allegation that she had misread Aristotle. The distinguished philosopher and historian at NYU was making a point that Isabel Paterson had tried to make years earlier: “A is A” implies nothing, he wrote, other than a logical method to test the consistency of philosophical observations and ideas and cannot be used as the basis for a code of ethics.

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

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air freight, airline deregulation, Albert Einstein, asset-backed security, bank run, Berlin Wall, Bretton Woods, business process, call centre, capital controls, central bank independence, collateralized debt obligation, collective bargaining, conceptual framework, Corn Laws, corporate governance, correlation coefficient, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cuban missile crisis, currency peg, 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, Hernando de Soto, income inequality, income per capita, invisible hand, Joseph Schumpeter, labor-force participation, labour market flexibility, laissez-faire capitalism, land reform, Long Term Capital Management, Mahatma Gandhi, manufacturing employment, market bubble, means of production, Mikhail Gorbachev, moral hazard, mortgage debt, new economy, North Sea oil, oil shock, open economy, pets.com, Potemkin village, price mechanism, price stability, Productivity paradox, profit maximization, purchasing power parity, random walk, reserve currency, risk tolerance, Ronald Reagan, shareholder value, short selling, Silicon Valley, special economic zone, the payments system, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, trade liberalization, trade route, transaction costs, transcontinental railway, urban renewal, working-age population, Y2K

The data made clear that how much people spent or saved was determined not by the level of their real purchasing power, but by their pecking order on the income scale, their income relative to that of others. + What is all the more remarkable about this finding is that it held even in the latter part of the nineteenth century, when households spent much more of their income on food than they did in 2004.* None of this would have surprised Thorstein Veblen, the American economist who in his book The Theory of the Leisure Class, written in 1899, famously gave the world the expression "conspicuous consumption." He noted that an individual's purchase of goods and services is tied to what used to be called "keeping up with the Joneses." If Katie had an iPod, Lisa had to have one too. I always thought Veblen carried his analysis to an extreme, but there is little doubt that he identified a very important element of the way people behave.


pages: 551 words: 174,280

The Beginning of Infinity: Explanations That Transform the World by David Deutsch

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agricultural Revolution, Albert Michelson, anthropic principle, artificial general intelligence, Bonfire of the Vanities, conceptual framework, cosmological principle, dark matter, David Attenborough, discovery of DNA, Douglas Hofstadter, Eratosthenes, Ernest Rutherford, first-past-the-post, Georg Cantor, Gödel, Escher, Bach, illegal immigration, invention of movable type, Isaac Newton, Islamic Golden Age, Jacquard loom, Jacquard loom, John Conway, John von Neumann, Joseph-Marie Jacquard, Loebner Prize, Louis Pasteur, pattern recognition, Richard Feynman, Richard Feynman, Search for Extraterrestrial Intelligence, Stephen Hawking, supervolcano, technological singularity, The Coming Technological Singularity, the scientific method, Thomas Malthus, Thorstein Veblen, Turing test, Vernor Vinge, Whole Earth Review, William of Occam

A few years later, a graduate student in the then new subject of environmental science explained to me that colour television was a sign of the imminent collapse of our ‘consumer society’. Why? Because, first of all, he said, it served no useful purpose. All the useful functions of television could be performed just as well in monochrome. Adding colour, at several times the cost, was merely ‘conspicuous consumption’. That term had been coined by the economist Thorstein Veblen in 1902, a couple of decades before even monochrome television was invented; it meant wanting new possessions in order to show off to the neighbours. That we had now reached the physical limit of conspicuous consumption could be proved, said my colleague, by analysing the resource constraints scientifically. The cathode-ray tubes in colour televisions depended on the element europium to make the red phosphors on the screen.


pages: 935 words: 267,358

Capital in the Twenty-First Century by Thomas Piketty

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accounting loophole / creative accounting, Asian financial crisis, banking crisis, banks create money, Berlin Wall, Branko Milanovic, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, central bank independence, 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, German hyperinflation, Gini coefficient, 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, market bubble, means of production, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, open economy, pension reform, purchasing power parity, race to the bottom, randomized controlled trial, refrigerator car, regulatory arbitrage, rent control, rent-seeking, Robert Gordon, Ronald Reagan, Simon Kuznets, sovereign wealth fund, Steve Jobs, The Nature of the Firm, the payments system, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade liberalization, very high income, We are the 99%

The fact that the highest US civil servants at the time were paid much less than in France was also noted by Tocqueville, who saw it as a sure sign that the democratic spirit prevailed in the United States. Despite many ups and downs, this handful of very high salaries persisted in France until World War I (and thus to the fall of the rentier). On these evolutions, see the online technical appendix. 47. See Piketty, Les hauts revenus en France, 530. 48. This argument sets aside the logic of need in favor of a logic of disproportion and conspicuous consumption. Thorstein Veblen said much the same thing in The Theory of the Leisure Class (New York: Macmillan, 1899): the egalitarian US dream was already a distant memory. 49. Michèle Lamont, Money, Morals and Manners: The Culture of the French and the American Upper-Middle Class (Chicago: University of Chicago Press, 1992). The individuals Lamont interviewed were no doubt closer to the ninetieth or ninety-fifth percentile of the income hierarchy (or in some cases the ninety-eighth or ninety-ninth percentile) than to the sixtieth or seventieth percentile.