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The Sum of Small Things: A Theory of the Aspirational Class by Elizabeth Currid-Halkett
assortative mating, back-to-the-land, barriers to entry, Bernie Sanders, BRICs, Capital in the Twenty-First Century by Thomas Piketty, clean water, cognitive dissonance, David Brooks, deindustrialization, Deng Xiaoping, discrete time, disruptive innovation, Downton Abbey, East Village, Edward Glaeser, en.wikipedia.org, Etonian, Geoffrey West, Santa Fe Institute, income inequality, iterative process, knowledge economy, longitudinal study, Mason jar, means of production, NetJets, new economy, New Urbanism, plutocrats, Plutocrats, post scarcity, post-industrial society, profit maximization, Richard Florida, selection bias, Silicon Valley, The Design of Experiments, the High Line, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the market place, Thorstein Veblen, Tony Hsieh, Tyler Cowen: Great Stagnation, upwardly mobile, Veblen good, women in the workforce
Those who can afford it devote more to their pensions and insurance, have a better retirement (and in fact, can retire), better medical care, and better quality of life. These types of investments offer meaningfully different outcomes for those able to spend compared to everyone else. CONSPICUOUS CONSUMPTION AND “VEBLEN GOODS” The late Princeton economist Harvey Leibenstein coined the term “Veblen goods” or “Veblen effects” to describe the goods that are used for conspicuous consumption. Examining consumption patterns by income also shows differences across society in how we conspicuously consume those classic Veblen goods. Let’s look at the first emerging trend I mentioned at the beginning of this chapter: The rich are spending less on goods that demonstrate wealth. In 1996,6 the top 1% spent almost four times more than everyone else on conspicuous consumption—apparel, watches, jewelry, cars, and other socially visible goods.
As the economist Robert Frank observes, with the outcry over inequality in full swing, public hedonism and overt luxury spending have become flashpoints in the debate (which is not to say they aren’t spending money), and thus those in top income groups find new channels for their money that are known only to those in their circles (whether it’s a live-in housekeeper or, for the very rich, NetJets to Art Basel Miami).26 Conversely, the middle class, those in the 40th to 60th percentile income bracket making on average $47,000 a year, are returning to their pre-Recession conspicuous consumption behavior while reducing their spending on inconspicuous consumption in the post-Recession period. Historically, they have always spent significantly more on conspicuous expenditures than inconspicuous consumption, and at the height of the financial crisis barely reduced their spending on clothes, watches, cars, and other Veblen goods (see fig. 3.1). In fact, in absolute dollars, only the top three income brackets are spending more today on inconspicuous consumption than they did in 1996—the middle class and lower income groups are spending less during the same time period. Overall, the upper income brackets are spending 5–10% more on these goods than they did in 1996. For the average American household, inconspicuous consumption accounts for about 10% of all expenditures.
Review of Changing rhythms of American family life, by Suzanne M. Bianchi, John P. Robinson, and Melissa A. Milkie. Gender and Society 22(4): 524–526. doi:10.1177/0891243208315383. Currid, E. (2006). New York as a global creative hub: A competitive analysis of four theories on world cities. Economic Development Quarterly 20(4): 330–350. doi:10.1177/0891242406292708. Currid-Halkett, E., Lee, H., & Painter, G. (2016). Veblen goods and metropolitan distinction: An economic geography of conspicuous consumption. Working paper, University of Southern California. Dale, S., Krueger, A. B., & National Bureau of Economic Research. (2011). Estimating the return to college selectivity over the career using administrative earnings data. National Bureau of Economic Research. Dana, R. (2005, March 7). Battle of the butts. Observer.
More From Less: The Surprising Story of How We Learned to Prosper Using Fewer Resources – and What Happens Next by Andrew McAfee
back-to-the-land, Bartolomé de las Casas, Berlin Wall, bitcoin, Branko Milanovic, British Empire, Buckminster Fuller, call centre, carbon footprint, clean water, cleantech, cloud computing, Corn Laws, creative destruction, crony capitalism, David Ricardo: comparative advantage, decarbonisation, dematerialisation, Deng Xiaoping, Donald Trump, Edward Glaeser, en.wikipedia.org, energy transition, Erik Brynjolfsson, failed state, Fall of the Berlin Wall, Haber-Bosch Process, Hans Rosling, humanitarian revolution, hydraulic fracturing, income inequality, indoor plumbing, intangible asset, James Watt: steam engine, Jeff Bezos, job automation, John Snow's cholera map, joint-stock company, Joseph Schumpeter, Khan Academy, Landlord’s Game, Louis Pasteur, Lyft, Marc Andreessen, market fundamentalism, means of production, Mikhail Gorbachev, oil shale / tar sands, Paul Samuelson, peak oil, precision agriculture, profit maximization, profit motive, risk tolerance, road to serfdom, Ronald Coase, Ronald Reagan, Scramble for Africa, Second Machine Age, Silicon Valley, Steve Jobs, Steven Pinker, Stewart Brand, telepresence, The Wealth of Nations by Adam Smith, Thomas Davenport, Thomas Malthus, Thorstein Veblen, total factor productivity, Uber and Lyft, uber lyft, Veblen good, War on Poverty, Whole Earth Catalog, World Values Survey
With most products, demand goes down when prices go up, all other things being equal. But with “Veblen goods,” something very different happens: higher prices cause demand to go up. Such products are named for Thorstein Veblen, the American economist and sociologist who coined the phrase conspicuous consumption. Veblen goods such as luxury cars, designer clothes, and fine art are valued in large part because they’re expensive. They signal the affluence and high status of their owners. Some animal products are Veblen goods, which is bad news for the animals. As we saw in chapter 3, sea otters became so scarce in the late nineteenth century that prices for their pelts rose tenfold. But this didn’t cause a search for replacements because people didn’t want a replacement; they wanted the otter pelt more than ever. The inverted economics of Veblen goods would probably have doomed the species if not for the international moratorium on sea otter hunting signed in 1911.
Seebohm, 24 Royal Crown Cola, 101 Russia, 185 Safe Drinking Water Act (1974), 66 Salemi, Jason, 216 Salesforce, 256–57 Samasource, 255–56 sanitation, 22–23, 194 Saudi Arabia, 104 Save the Elephants, 154 Schmidt, Christian, 148 Schnakenberg, Keith, 175 Schumpeter, Joseph, 122 Scientific American, 59–60 Scotland, 38 Scramble for Africa, 39 sea otters, 43, 96, 152 Second Enlightenment, 123, 141, 238–39, 265 Second Machine Age, 112–13, 114–15, 122–23, 141, 162, 168, 177, 200, 206, 213, 231 Second Machine Age, The (Brynjolfsson), 112 self-employment, 138–39 self-healing cities, 21–23 self-interest, 127 Sen, Amartya, 68–69, 94 service industry, 88, 200–201 Shapiro, David, 190 Shell Oil, 103, 104–05 Shellenberger, Michael, 251 Sherman, Brad, 107 Sheskin, Mark, 210 Short Account of the Destruction of the Indies (las Casas), 39–40 Sidgwick, Henry, 142n silver, 120 Simon, Julian, 69–70, 71–72, 75, 151, 179, 244–45 Singapore, 148 Singh, Manmohan, 171–72 Skeptical Environmentalist (Lomborg), 179, 181 slash-and-burn agriculture, 148 slavery, 35, 36, 37–38, 181 Sloman, Steven, 226 smartphones, 102, 111, 113, 168–69, 205, 235, 236 Smil, Vaclav, 31, 101 Smith, Adam, 125–39, 128–29 Smith, Noah, 191 smog, 42, 55, 186 Snow, John, 22–23 social capital, 212–13, 216–17, 228–29, 247, 254, 255, 270 social democracy, 133–34 social development, 24–25, 26 social development index, 60n social safety nets, 131–32 socialism, 132–38, 192 sodium nitrate, 17 solar power, 111, 240, 250, 269 Song, Jian, 93 Sørlle, Petter, 47 Soros, George, 132 South Korea, 117–18, 174 Soviet Union, 133, 163–64, 170–71 “Spaceship Earth”, 64–65 Staggers Act (1980), 109 Starmans, Christina, 210 steam engine, 16, 17, 27, 30, 36, 44, 48–49, 205, 206, 237 steamships, 17–18, 26 steel, 80 Steller, Georg Wilhelm, 273 Steller’s sea cow, 273 Stenner, Karen, 217 Sterba, Jim, 43–44 Stigler, George, 126 Strangers in Their Own Land (Hochschild), 221 Suicide (Durkheim), 215–16, 219 sulfur dioxide, 54–55, 95, 186, 249 Sullivan, Andrew, 219 Summers, Larry, 254 sustainability, 64 taxation, 5, 130, 250 tech progress, 2–3, 4, 36, 67, 99–123, 113, 141, 151, 158–59, 167–68, 169–70 defining of, 114–15 Tesla, Nikola, 27 Texas, Hill Country of, 29, 205 Thatcher, Margaret, 132, 138 Theory of Moral Sentiments (Smith), 129 Thomas, Chris, 182–83 3-D printing, 239 tin, 72 tin cans, 101 Tocqueville, Alexis de, 89–90, 212–13 Toxic Substances Control Act (1976), 66 tragedy of the commons, 183 transportation, 241–42 Trump, Donald, 158, 201 trust, 212, 213, 217 Truth About Soviet Whaling, The (Berzin), 164 Ulam, Stanislaw, 19n Ultimate Resource, The (Simon), 69, 179 unfairness, 210, 220–24 Union Oil, 54 United Airlines, 257 United Kingdom, 76, 85 United Nations, 40, 58, 199 United States, 117–18 agriculture in, 81–82, 100 coal consumption in, 102–03 cropland acreage in, 201–02 dematerialization in, 76–85 industrial production in, 88–89 mortality rates in, 213–14 slavery in, 37–38 suicide rate in, 214–16 water pollution in, 189–90 urbanization, 91–92, 199–200 Utopia or Oblivion (Fuller), 70 vaccination, 227 Van Reenen, John, 203, 204, 207 Varian, Hal, 236 Veblen goods, 152–53 Veblen, Thorstein, 152 Venezuela, 118, 134–38, 172 voluntary exchange, 117 wages, 20–21 Waggoner, Paul, 76 Wagner, Stephan, 148 Wald, George, 61 water, drinking, 194 water pollution, 189–90 Watt, James, 15–16, 20, 121, 206, 237 Watt, Kenneth, 58 Wealth of Nations (Smith), 127, 131 Weeks-McLean Law Act (1913), 96 Welzel, Christian, 176, 177 Wernick, Iddo, 76 whales, 44, 46–47, 163–65 wheat, 31–32 Wheelwright, William, 17–18 Whole Earth Catalog, 68 Why Nations Fail (Acemoglu and Robinson), 159 Wilson, James, 19n wind power, 111, 240, 250 Winship, Scott, 215 Wolff, Edward, 206 Woodbury, N.J., 65 wooly mammoth, 180 World Bank, 118, 168, 169, 192 World Values Survey, 176 Yao Ming, 154, 161 Yellowstone National Park, 46, 153 YouTube, 236 Zoorob, Michael, 216 First published in the United States by Scribner, an imprint of Simon & Schuster, Inc., 2019 First published in Great Britain by Simon & Schuster UK, Ltd, 2019 A CBS COMPANY Copyright © 2019 by Andrew McAfee The right of Andrew McAfee to be identified as the author of this work has been asserted in accordance with the Copyright, Designs and Patents Act, 1988.
Adam Smith: Father of Economics by Jesse Norman
"Robert Solow", active measures, Andrei Shleifer, balance sheet recession, bank run, banking crisis, Basel III, Berlin Wall, Black Swan, Branko Milanovic, Bretton Woods, British Empire, Broken windows theory, business cycle, business process, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, centre right, cognitive dissonance, collateralized debt obligation, colonial exploitation, Corn Laws, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, David Ricardo: comparative advantage, deindustrialization, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, Fellow of the Royal Society, financial intermediation, frictionless, frictionless market, future of work, George Akerlof, Hyman Minsky, income inequality, incomplete markets, information asymmetry, intangible asset, invention of the telescope, invisible hand, Isaac Newton, Jean Tirole, John Nash: game theory, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, lateral thinking, loss aversion, market bubble, market fundamentalism, Martin Wolf, means of production, money market fund, Mont Pelerin Society, moral hazard, moral panic, Naomi Klein, negative equity, Network effects, new economy, non-tariff barriers, Northern Rock, Pareto efficiency, Paul Samuelson, Peter Thiel, Philip Mirowski, price mechanism, principal–agent problem, profit maximization, purchasing power parity, random walk, rent-seeking, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, scientific worldview, seigniorage, Socratic dialogue, South Sea Bubble, special economic zone, speech recognition, Steven Pinker, The Chicago School, The Myth of the Rational Market, The Nature of the Firm, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Malthus, Thorstein Veblen, time value of money, transaction costs, transfer pricing, Veblen good, Vilfredo Pareto, Washington Consensus, working poor, zero-sum game
This he recognizes as a core driver of competitive behaviour, of the desire of people to get on; but he also sees wealth and greatness as deceptive, as a snare and delusion that can never truly yield human happiness. In identifying the man who misses what matters in life by questing after ‘trinkets of frivolous utility’, Smith shows his awareness that markets can be driven by human passions as well as by human calculation. Today we might describe some such items as ‘Veblen goods’. Named after the great Norwegian-American economist Thorstein Veblen, Veblen goods are those of ‘conspicuous consumption’, for which demand does not lessen when the price rises, as the standard theory would predict. Instead, demand for the good increases, as consumers see the price rise as a signal of relative scarcity or status, making the good still more desirable. Often the result is orderly, as in everyday markets for jewellery and luxury cars.
Their public incentives are typically asymmetrical, in that while there is some glory in making above-average gains, making above-average losses can quickly be terminal. The result is that, notwithstanding a handful of mavericks, few wish to be seen as unusual or apart from the others. The behaviour of these markets is often dominated by ‘momentum’ investors, who trade based not on any estimate of fundamental or intrinsic value, but on the rate of rise or fall in the asset’s price. As with Veblen goods, high share prices come to be seen as a mark of underlying value, and rapid or extended price rises as signals of lack of supply, stimulating demand and causing investors to crowd in. Conversely, price falls are read as signals of over-supply, causing investors to sell heavily in turn. But these rises and falls can also occur in apparently autonomous ways, as investors simply cue their behaviour off each other, rather than for any more fundamental reasons.
In other words, market failure is endemic, and can never be the sole justification for policy interventions; and there can be no escape through economic theory from the need for political economy. I am very grateful to Tim Besley for this point; see especially his ‘The New Political Economy’, Economic Journal, 117.524, 2007. See also Roman Frydman and Michael D. Goldberg, Imperfect Knowledge Economics, Princeton University Press 2007 Wisdom of crowds: cf. James Surowiecki, The Wisdom of Crowds, Doubleday Books 2004 Veblen goods: see Thorstein Veblen, The Theory of the Leisure Class: An Economic Study in the Evolution of Institutions, Macmillan 1899. In his essay on the imitative arts (in EPS) Smith memorably analyses the phenomenon of topiary in Veblenian terms: ‘It was some years ago the fashion to ornament a garden with yew and holly trees, clipped into the artificial shapes of pyramids, and columns, and vases, and obelisks.
The Gated City (Kindle Single) by Ryan Avent
big-box store, carbon footprint, deindustrialization, edge city, Edward Glaeser, income inequality, industrial cluster, 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, Veblen good, white picket fence, zero-sum game
In the old days this increased the cost of urban life by making cities deadlier. 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.
Overdressed: The Shockingly High Cost of Cheap Fashion by Elizabeth L. Cline
big-box store, business cycle, clean water, East Village, feminist movement, income inequality, informal economy, invention of the sewing machine, Maui Hawaii, McMansion, megacity, race to the bottom, Skype, special economic zone, trade liberalization, Triangle Shirtwaist Factory, upwardly mobile, Veblen good
One would think that as stores like H&M, Forever 21, and Target offer increasingly sophisticated designs that consumers would demand lower prices at the higher end of the clothing market as well. Cheap fashion seems to have had the opposite effect on upmarket clothing buyers. Women’s Wear Daily also reported that cheap-fashion prices are not pulling down designer price tags but driving them up: Consumers are shopping at the high-end specifically to “max out their Visas.”21 They are using clothes as a type of competitive consumption. In economics, there is a principal known as “Veblen goods.” These are the products we desire more the higher their prices go because we hope this will show other people that we have wealth and status. Clothing is very sensitive to this effect since it deals directly with personal expression and ego. We see it as an extension of ourselves, and it is the most visible way we can strut our stuff. “Fashion is the most unique product in this sense because it deals with presenting yourself to the outside world,” says Park.
., 129–30, 133 Trebay, Guy, 110 Triangle Shirtwaist Factory, 44, 142–43 Trovata, 109 Tucker, 114 Ullman, Myron, 95–96 Umbro, 40, 148, 181 Uniform Project, 191 unions, 38, 44, 48, 51, 140–44, 154, 155, 163 UNIQLO, 2, 33, 70 UNIS, 60 UNITE HERE, 48 Universal Studios, 40 Urban Outfitters, 13, 43, 60–61, 73, 204, 205 USA Today, 202 Usigan, Ysolt, 71 Valentino, 62, 63 Van Meter, Jonathan, 17, 19 Variety, 31 Varsity, 148 Veblen goods, 77 Versace, 6 Very Sweet Life, 187–88 Very Sweet Life, 190 VF, 181 Victoria’s Secret, 189 videos, YouTube, 12, 13–15, 122 Vietnam, 165, 180 vintage clothing, 133–34, 135, 201–2, 204 designs copied from, 112–13, 120 refashioning of, 134, 200–202, 206 Vogue, 17, 22, 30, 31, 34, 64, 65, 114, 171 Vogue.com, 113 von Furstenberg, Diane, 62, 110, 171 Wagner, Robert, 143 Wagner, Stacy, 158 Wall Street Journal, 43, 92, 93, 95 Walmart, 2, 12, 13, 15, 18, 23, 24, 26–27, 30, 31, 70, 95, 96, 100, 131, 144, 181 factories and, 144–48, 151, 159 Walton, Sam, 95 Wanamaker’s, 1 Ward, Andy, 36–38, 41, 43, 45, 52, 53, 142, 214 Warner Brothers, 148 Washington Monthly, 53, 148 Washington Post, 132, 185 well-spent.com, 60 What’s in a Dress?
How Much Is Enough?: Money and the Good Life by Robert Skidelsky, Edward Skidelsky
"Robert Solow", banking crisis, basic income, Bertrand Russell: In Praise of Idleness, Bonfire of the Vanities, call centre, creative destruction, 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, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, market clearing, market fundamentalism, Paul Samuelson, 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, Veblen good, wage slave, wealth creators, World Values Survey, zero-sum game
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.
Capitalism: Money, Morals and Markets by John Plender
activist fund / activist shareholder / activist investor, 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, business cycle, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collapse of Lehman Brothers, collective bargaining, computer age, Corn Laws, corporate governance, creative destruction, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, discovery of the americas, diversification, Eugene Fama: efficient market hypothesis, eurozone crisis, failed state, Fall of the Berlin Wall, fiat currency, financial innovation, financial intermediation, Fractional reserve banking, full employment, God and Mammon, Gordon Gekko, greed is good, Hyman Minsky, income inequality, inflation targeting, information asymmetry, invention of the wheel, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, joint-stock company, Joseph Schumpeter, labour market flexibility, liberal capitalism, light touch regulation, London Interbank Offered Rate, London Whale, Long Term Capital Management, manufacturing employment, Mark Zuckerberg, market bubble, market fundamentalism, mass immigration, means of production, Menlo Park, money market fund, moral hazard, moveable type in China, Myron Scholes, Nick Leeson, Northern Rock, Occupy movement, offshore financial centre, paradox of thrift, Paul Samuelson, plutocrats, 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, Veblen good, We are the 99%, Wolfgang Streeck, zero-sum game
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. Or, in the language of the thought-provoking British economist Fred Hirsch, many works of art such as Old Masters are ‘positional’ goods. These are goods that are inherently scarce, so acquiring them can only benefit one person at the expense of others.
P. 1 Times/Sotheby Art Indices 1 Timon of Athens (Shakespeare) 1 Titian 1 toads (see Madame Nui’s toad) Tocqueville, Alexis de 1 ‘too big/interconnected to fail’ syndrome 1 Toyoda, Sakichi 1 transmutation of base metal into gold 1 Trichet, Jean-Claude 1 trickledown theory 1, 2 Trollope, Anthony 1, 2, 3 tulip mania 1, 2, 3 Turner, Adair 1 two-tier capital structures 1 UBS 1 UK debt 1 entrepreneurs 1, 2 financial services 1 gold standard 1, 2 inequality 1, 2, 3 manufacturing 1, 2, 3, 4, 5 regulation 1, 2 speculation 1 taxation 1 Unto This Last (John Ruskin) 1 US 1 banks 1, 2, 3, 4, 5 Bretton Woods Conference 1 debt 1, 2, 3, 4 dependence on China 1, 2 financial services 1 gold standard 1 inequality 1, 2, 3 literature 1 manufacturing 1, 2, 3 regulation 1 robber barons 1 speculation 1, 2, 3 taxation 1, 2, 3, 4, 5 trade 1 usury laws 1, 2 Utopia (Thomas More) 1, 2 Vanderbilt, Cornelius 1 Vasari 1 Vayanos, Dimitri 1 Veblen goods 1 Venttsel, Elena 1 Vermeer, Jan 1 Vickers Commission (UK) 1 Vico, Gianbattista 1 Victoria, UK Queen 1 Vinik, Jeffrey 1 Volcker, Paul 1, 2, 3 Volcker rule 1 Voltaire 1, 2, 3, 4, 5 Wagner, Richard 1, 2, 3 Wall Street (film) 1 Wall Street Crash (see crash of 1929) war 1 Warhol, Andy 1, 2, 3, 4 Watt, James 1 Way We Live Now, The (Anthony Trollope) 1, 2 Wealth of Nations (Adam Smith) 1, 2, 3 Webb, Beatrice 1 Weber, Max 1 Wedgwood, Josiah 1 Weinstock, Arnold 1 Westinghouse, George 1 Wheatcroft, Geoffrey 1 Wheen, Francis 1 White, Harry Dexter 1 Whitney, Richard 1, 2, 3 Wilde, Oscar 1 Wilson, A.
The Second Curve: Thoughts on Reinventing Society by Charles Handy
"Robert Solow", Airbnb, basic income, Bernie Madoff, bitcoin, bonus culture, British Empire, call centre, Clayton Christensen, corporate governance, delayed gratification, Diane Coyle, disruptive innovation, Edward Snowden, falling living standards, future of work, G4S, greed is good, informal economy, Internet of things, invisible hand, joint-stock company, joint-stock limited liability company, Kickstarter, Kodak vs Instagram, late capitalism, mass immigration, megacity, mittelstand, Occupy movement, payday loans, peer-to-peer lending, plutocrats, Plutocrats, Ponzi scheme, Ronald Coase, shareholder value, sharing economy, Skype, Social Responsibility of Business Is to Increase Its Profits, Stanford marshmallow experiment, Steve Jobs, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transaction costs, Veblen good, Walter Mischel
I am ashamed now to think that I had no idea of how I was going to earn that money or how I wanted to live, other than driving around in an absurd car, but I was no different from some of the young people I come across today – money as the presumed answer to life. The trouble is that money remains the one thing of which, it seems, you can never have enough, as the escalating (and surely unnecessary) rewards of senior executives seem to prove. Even when you have met all your needs and wants there are always the Veblen goods, so called after Thorstein Veblen’s theory of comparative goods, those aspects of conspicuous expenditure that are effectively rationed, like the membership of elite clubs, the ownership of property in an exclusive zone, or being in the top ten of some league table of corporate pay. Money is also, for some, a scorecard, unrelated to anything it can buy except a place on the Forbes List of billionaires.
The Social Life of Money by Nigel Dodd
accounting loophole / creative accounting, bank run, banking crisis, banks create money, Bernie Madoff, bitcoin, blockchain, borderless world, Bretton Woods, BRICs, business cycle, capital controls, cashless society, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computer age, conceptual framework, credit crunch, cross-subsidies, David Graeber, debt deflation, dematerialisation, disintermediation, eurozone crisis, fiat currency, financial exclusion, financial innovation, Financial Instability Hypothesis, financial repression, floating exchange rates, Fractional reserve banking, German hyperinflation, Goldman Sachs: Vampire Squid, Hyman Minsky, illegal immigration, informal economy, interest rate swap, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, Kickstarter, Kula ring, laissez-faire capitalism, land reform, late capitalism, liberal capitalism, liquidity trap, litecoin, London Interbank Offered Rate, M-Pesa, Marshall McLuhan, means of production, mental accounting, microcredit, mobile money, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, negative equity, new economy, Nixon shock, Occupy movement, offshore financial centre, paradox of thrift, payday loans, Peace of Westphalia, peer-to-peer, peer-to-peer lending, Ponzi scheme, post scarcity, postnationalism / post nation state, predatory finance, price mechanism, price stability, quantitative easing, quantitative trading / quantitative ﬁnance, remote working, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Shiller, Satoshi Nakamoto, Scientific racism, seigniorage, Skype, Slavoj Žižek, South Sea Bubble, sovereign wealth fund, special drawing rights, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, Veblen good, Wave and Pay, Westphalian system, WikiLeaks, Wolfgang Streeck, yield curve, zero-coupon bond
I am not giving general introductions to these figures but focusing specifically on what they had to say about (and how they used) notions of waste and general economy, and more narrowly, what they said about the nature of money in relation to these notions. By addressing money from the perspective of waste, I am inverting its more customary textbook treatment as a function of utility. This is a familiar theme in the study of consumption: luxury objects express the capacity of their owners to waste what they have, and the “Veblen good” is more coveted the higher its price goes. As Veblen describes it in The Theory of the Leisure Class (1899), the capacity to indulge in wasteful expenditure—and to make others use up their productive time catering to one’s luxurious tastes—is a key marker of distinction (Veblen 2009). Waste is a cultural symbol, in Veblen’s theory; indeed, one might refer to wasteful rather than conspicuous consumption (Varul 2006: 104–105).
See also conceptual utopia; realistic utopia; technical utopia; techno-utopia valorization, 73, 231n25, 242 valuation, 28–29, 40, 160, 215, 272, 295, 305, 302, 325, 326; and morality, 292; in Nietzsche, 137 value, 36; in Baudrillard, 189; in linguistics, 38–39; of money, 37, 41, 48; in Nietzsche, 137; versus price, 29; in Simmel, 27–29, 318, 325–26. See also nonpecuniary values valuns, 360 Vatican, 166 Veblen, Thorsten, 151; The Theory of the Leisure Class, 164 Veblen good, 164 Vedove Bianche (White Widows), 92 Velthius, Olav, 16–17, 293 Ven, 316 Vercellone, Carlo, 243 Vietnam War, 99, 298 violence, 47, 68; and debt, 91n, 100, 101; in de Sade, 169; and economics, 64; in the Eurozone, 261; and the financial crisis, 77n; generalized forms of, 225n16; and honor, 97; and mimesis, 43–45; and money, 43–46, 96, 250; and the sacred, 173; and the state, 96. See also war Virno, Paolo, 72, 77, 246, 248 Visa, 377, 379, 380n von Chamisso, Adelbert, Peter Schlemihls wundersame Geschichte (Peter Schlemihl’s Miraculous Story), 55n14, 186, 201n31 von Mises, Ludwig, 318 Vorontsov, Vasily, 65 Wade, Robert, 127 wages, 70, 73, 74–75, 78, 96, 139, 234, 242, 244, 249, 260, 289, 343, 345, 356, 361, 370n42; of sin, 231.
The Wisdom of Frugality: Why Less Is More - More or Less by Emrys Westacott
Airbnb, back-to-the-land, Bertrand Russell: In Praise of Idleness, Bonfire of the Vanities, carbon footprint, clean water, Community Supported Agriculture, corporate raider, Daniel Kahneman / Amos Tversky, dark matter, Diane Coyle, discovery of DNA, Downton Abbey, dumpster diving, financial independence, full employment, greed is good, happiness index / gross national happiness, haute cuisine, hedonic treadmill, income inequality, invisible hand, Isaac Newton, loss aversion, McMansion, means of production, move fast and break things, move fast and break things, negative equity, New Urbanism, paradox of thrift, Ralph Waldo Emerson, Thales and the olive presses, Thales of Miletus, the market place, The Spirit Level, Thorstein Veblen, Upton Sinclair, Veblen good, Zipcar
In some cases, it just seems fantastically self-indulgent, as when Marie Antoinette had an entire village built purely in order for her to play at being a milkmaid, or when Michael Jackson had a private amusement park constructed on his estate. In others the extravagance seems to be motivated by a desire to flaunt one’s wealth: that, presumably, is the point of wearing a Rolex watch with diamond inlays and other such items known as “Veblen goods” (named after Thorstein Veblen, the economist who introduced the term “conspicuous consumption”), the main purpose of which is to demonstrate superior status. Sometimes the spending itself can be part of the display, as when some billionaires outbid all comers to secure an artwork they know little about or a star player for the soccer team they own. In such cases we readily infer something negative about the personality behind the purchase.
Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business, and Life by Rory Sutherland
3D printing, Alfred Russel Wallace, barriers to entry, basic income, Black Swan, butterfly effect, California gold rush, call centre, Captain Sullenberger Hudson, Cass Sunstein, cognitive dissonance, Daniel Kahneman / Amos Tversky, Dava Sobel, delayed gratification, Donald Trump, double helix, Downton Abbey, Elon Musk, Firefox, George Akerlof, gig economy, Google Chrome, Google X / Alphabet X, Grace Hopper, Hyperloop, Ignaz Semmelweis: hand washing, IKEA effect, information asymmetry, James Dyson, John Harrison: Longitude, loss aversion, low cost airline, Mason jar, Murray Gell-Mann, Peter Thiel, placebo effect, race to the bottom, Richard Feynman, Richard Thaler, Rory Sutherland, shareholder value, Silicon Valley, social intelligence, Steve Jobs, supply-chain management, the map is not the territory, The Market for Lemons, The Wealth of Nations by Adam Smith, ultimatum game, universal basic income, Upton Sinclair, US Airways Flight 1549, Veblen good
However, the theory of sexual selection was a truly extraordinary, outside-the-box idea, and it still is; once you understand it, a whole host of behaviours that were previously baffling or seemingly irrational suddenly make perfect sense. The ideas that emerge from sexual selection theory explain not only natural anomalies such as the peacock’s tail, but also the popularity of many seemingly insane human behaviours and tastes, from the existence of Veblen goods* such as caviar, to more mundane absurdities such as the typewriter. For almost a century in which few men knew how to type, the typewriter must surely have damaged business productivity to an astounding degree, because it meant that every single communication in business or government had to be written twice: once in longhand by the originator and then again by the typist or typing pool. A series of simple amendments could delay a letter or memo by a week, but the ownership and use of a typewriter was a signal that you were a serious business – any provincial solicitor who persisted in writing letters by hand became a tailless peacock.
The Price of Everything: And the Hidden Logic of Value by Eduardo Porter
Alvin Roth, 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, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jean Tirole, John Maynard Keynes: technological unemployment, Joshua Gans and Andrew Leigh, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, longitudinal study, loss aversion, low skilled workers, Martin Wolf, means of production, Menlo Park, Mexican peso crisis / tequila crisis, Monkeys Reject Unequal Pay, new economy, New Urbanism, peer-to-peer, 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, ultimatum game, unpaid internship, urban planning, Veblen good, women in the workforce, World Values Survey, Yom Kippur War, young professional, zero-sum game
And they took out ads in elite magazines depicting paintings by Picasso, Derain, or Dalí to indicate that diamonds were in the same luxury class. “The substantial diamond gift can be made a more widely sought symbol of personal and family success—an expression of socio-economic achievement,” said an N. W. Ayer report from the 1950s. Today 84 percent of American brides get a diamond engagement ring, at an average cost of $3,100. In 2008 Armin Heinrich, a software developer in Germany, created the ultimate Veblen good: he designed an application for the iPhone called I Am Rich. It did nothing but flash a glowing red gem on the screen. Its point was its expense: $999. Maybe stung by criticism over its banality, Apple removed it the day after its release. But before it could pull it, six people had bought it to prove that, indeed, they were. A HISTORY OF PRICES Value—what confers it, what it means—has captivated thinkers at least since ancient Greece.
More: The 10,000-Year Rise of the World Economy by Philip Coggan
"Robert Solow", accounting loophole / creative accounting, Ada Lovelace, agricultural Revolution, Airbnb, airline deregulation, Andrei Shleifer, anti-communist, assortative mating, autonomous vehicles, bank run, banking crisis, banks create money, basic income, Berlin Wall, Bob Noyce, Branko Milanovic, Bretton Woods, British Empire, business cycle, call centre, capital controls, carbon footprint, Carmen Reinhart, Celtic Tiger, central bank independence, Charles Lindbergh, clean water, collective bargaining, Columbian Exchange, Columbine, Corn Laws, credit crunch, Credit Default Swap, crony capitalism, currency peg, debt deflation, Deng Xiaoping, discovery of the americas, Donald Trump, Erik Brynjolfsson, European colonialism, eurozone crisis, falling living standards, financial innovation, financial intermediation, floating exchange rates, Fractional reserve banking, Frederick Winslow Taylor, full employment, germ theory of disease, German hyperinflation, gig economy, Gini coefficient, global supply chain, global value chain, Gordon Gekko, greed is good, Haber-Bosch Process, Hans Rosling, Hernando de Soto, hydraulic fracturing, Ignaz Semmelweis: hand washing, income inequality, income per capita, indoor plumbing, industrial robot, inflation targeting, Isaac Newton, James Watt: steam engine, job automation, John Snow's cholera map, joint-stock company, joint-stock limited liability company, Kenneth Arrow, Kula ring, labour market flexibility, land reform, land tenure, Lao Tzu, large denomination, liquidity trap, Long Term Capital Management, Louis Blériot, low cost airline, low skilled workers, lump of labour, M-Pesa, Malcom McLean invented shipping containers, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Martin Wolf, McJob, means of production, Mikhail Gorbachev, mittelstand, moral hazard, Murano, Venice glass, Myron Scholes, Nelson Mandela, Network effects, Northern Rock, oil shale / tar sands, oil shock, Paul Samuelson, popular capitalism, popular electronics, price stability, principal–agent problem, profit maximization, purchasing power parity, quantitative easing, railway mania, Ralph Nader, regulatory arbitrage, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, Scramble for Africa, Second Machine Age, secular stagnation, Silicon Valley, Simon Kuznets, South China Sea, South Sea Bubble, special drawing rights, spice trade, spinning jenny, Steven Pinker, TaskRabbit, Thales and the olive presses, Thales of Miletus, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, transaction costs, transatlantic slave trade, transcontinental railway, Triangle Shirtwaist Factory, universal basic income, Unsafe at Any Speed, Upton Sinclair, V2 rocket, Veblen good, War on Poverty, Washington Consensus, Watson beat the top human players on Jeopardy!, women in the workforce, Yom Kippur War, zero-sum game
Adam Smith had argued that consumption was the “sole end and purpose of all production” and, as noted before, the idea that people were motivated to work longer in order to afford new goods like tea or crockery was a perceived driver of the “industrious revolution” in the 17th and 18th centuries. But not everyone approved of this materialism. In 1899 Thorstein Veblen published The Theory of the Leisure Class, in which he coined the term “conspicuous consumption”.110 Consumers bought goods to demonstrate their wealth and status, rather as a bower bird decorates its nest to attract a mate. The result is that some products are only worth having because of their exclusiveness. So-called Veblen goods are those where an increase in price will push up demand. There was always something snooty about the attitude of some commentators towards mass consumption. How dare the common people take pleasure from buying stuff? Indeed, it brings to mind the medieval sumptuary laws against buying clothes, which tried to prevent poorer people from wearing fabrics and colours that were favoured by the aristocracy.