invisible hand

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

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

On a general scale, the voluntary self-interest of millions of individuals would create a stable, prosperous society without the need for central direction by the state. His doctrine of enlightened self-interest is often called "the invisible hand," based on a famous passage (paraphrased) from The Wealth of Nations: "By pursuing his own self interest, every individual is led by an invisible hand to promote the public interest" (423). Adam Smith's invisible hand doctrine has become a popular metaphor for unfettered market capitalism. Although Smith uses the term only once in The Wealth of Nations, and sparingly elsewhere, the phrase "invisible hand" has come to symbolize the workings of the market economy as well as the workings of natural science (Ylikoski 1995).

Despite its imperfections, "the invisible hand has an astonishing capacity to handle a coordination problem of truly enormous proportions," declare William Baumol and Alan Blinder (2001, 214). Frank Hahn honors the invisible hand theory as "astonishing" and an appropriate metaphor. "Whatever criticisms I shall level at the theory later, I should like to record that it is a major intellectual achievement. . . . The invisible hand works in harmony [that] leads to the growth in the output of goods which people desire" (Hahn 1982, 1, 4, 8). The First Fundamental Theorem of Welfare Economics The invisible hand theory of the marketplace has become known as the "first fundamental theorem of welfare economics."8 George Stigler calls it the "crown jewel" of The Wealth of Nations and "the most important substantive proposition in all of economics."

Pareto's optimality, Edgeworth's box) confirm mathematically and graphically the validity of Adam Smith's principal thesis, but it shows how, in most cases, government-induced monopolies, subsidies, and other forms of noncompetitive behavior lead inevitably to inefficiency and waste (Ingrao and Israel 1990). Smith's References to the Invisible Hand Surprisingly, Adam Smith uses the expression "invisible hand" only three times in his writings. The references are so sparse that economists and political commentators seldom mentioned the invisible hand idea by name in the nineteenth century. No references were made to it during the celebrations of the centenary of The Wealth of Nations in 1876. In fact, in the famed edited volume by Edwin Cannan, published in 1904, the index does not include a separate entry for "invisible hand." The term only became a popular symbol in the twentieth century (Rothschild 2001, 117-18).


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

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

For instance, the same wedge that separates individual and group interests in Darwinian arms races also helps explain why the invisible hand might not automatically lead to the best possible levels of safety in the workplace. The traditional invisible-hand account begins with the observation that, all other factors the same, riskier jobs tend to pay more, for two reasons. Because of the money employers save by not installing additional safety equipment, they can pay more; and because workers like safety, they will choose safer jobs unless riskier jobs do, in fact, pay more. According to the standard invisible-hand narrative, the fact that a 10 CHAPTER ONE worker is willing to accept lower safety for higher wages implies that the extra income was sufficient compensation for the decrement in safety.

His observations persuaded him that the interests of individual animals were often profoundly in conflict with the broader interests of their own species. In time, I predict, the invisible hand will come to be seen as a special case of Darwin’s more general theory. Many of the libertarians’ most cherished beliefs, which are perfectly plausible within Smith’s framework, don’t survive at all in Darwin’s. Giving the Invisible Hand Its Due Even so, the invisible-hand theory remains a genuinely revolutionary insight, all the more so because in hindsight it seems so obvious. Why does a business owner go to the trouble of designing a new product that consumers are likely to find appealing?

People with less extreme preferences on these two dimensions do best by choosing jobs with intermediate values of wages and safety. According to the traditional invisible-hand account, then, workers get as much safety on the job as they’re willing to pay for. Since making jobs safer requires real resources that could be used for other things we value, that’s as it should be. If a worker doesn’t get the extra safety he claims he wanted, that must mean he didn’t value it enough to be willing to pay its cost. Why Skepticism about the Invisible Hand Persists Market skeptics often respond, tellingly, by citing behavior by employers that seems transparently at odds with the invisible hand’s rosy portrayal of market outcomes.


pages: 483 words: 134,377

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

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

This system has nobody in charge, yet finds the best solutions for your problems and helps you find your own best role as a problem-solver for others. This is the Invisible Hand. Again, the wonder of Adam Smith’s breakthrough is often lost under a thick layer of ideological abuse of the Invisible Hand by both its proponents and opponents. The Invisible Hand is not utopia; it is not perfect; it is always a work in progress. There are genuine concerns about income distribution, in which the rich get their needs met so much more than the poor. There are still so many things wrong with the private suppliers of our needs that we could also describe the Invisible Hand in reverse: it is the process of driving out of business the incompetent in favor of the mediocre, the mediocre in favor of the good, and the good in favor of the excellent.

The top three six-digit specialties in Lesotho generated only $87 for each and every person in Lesotho. The Invisible Hand helps with scaling up success as well as with finding success in the first place. Once workers get into a virtuous circle of learning by doing and increasing production on your chosen specialty, they still need the Invisible Hand to keep scaling up. They need it to efficiently get them the scale of the inputs, both domestic and imported, that go into producing the increasing scale of specialized output at which they are becoming so good. To free up those inputs, the Invisible Hand has to shut down many other specialties at which they are not so good.

Herbert, 98–100, 101 “Free China” image, 70–71 Free cities, during the Middle Ages, 129–130, 131–133 Free development, 7. See also Authoritarian/technocratic development versus free development debate Free market, 244 versus government debate, 11–12 See also Invisible hand; Market versus government debate; Markets Free trade, and invisible hand concept, 243–245. See also Invisible hand Freedom, 137–139, 150–151, 297–299, 344 versus autocracy, 11, 24–25, 152 See also Economic freedom; Political freedom Freedom House, 344–345, 346 Freschi, Laura, 176 Friedman, Thomas, 313 Fujian Province, China, 79, 226–229. See also China Fukuyama, Francis, 313 Gains from specialization, 245, 246–247, 247–248, 266–269, 271.


pages: 524 words: 146,798

Anarchy State and Utopia by Robert Nozick

distributed generation, Herbert Marcuse, invisible hand, Jane Jacobs, Kenneth Arrow, laissez-faire capitalism, Machinery of Freedom by David Friedman, means of production, Menlo Park, moral hazard, night-watchman state, Norman Mailer, Pareto efficiency, price discrimination, prisoner's dilemma, rent control, risk tolerance, Ronald Coase, school vouchers, The Death and Life of Great American Cities, The Nature of the Firm, transaction costs, Yogi Berra

However, to remind the reader of our slight weakening of the Weberian condition, we occasionally shall refer to the dominant protective agency as “a statelike entity,” instead of simply as “a state.” THE INVISIBLE-HAND EXPLANATION OF THE STATE Have we provided an invisible-hand explanation (see Chapter 2) of the state’s arising within a state of nature; have we given an invisible-hand explanation of the state? The rights possessed by the state are already possessed by each individual in a state of nature. These rights, since they are already contained whole in the explanatory parts, are not provided an invisible-hand explanation. Nor have we provided an invisible-hand explanation of how the state acquires rights unique to it. This is fortunate; for since the state has no special rights, there is nothing of that sort to be explained.

Our explanation of this de facto monopoly is an invisible-hand explanation. If the state is an institution (I) that has the right to enforce rights, prohibit dangerous private enforcement of justice, pass upon such private procedures, and so forth, and (2) that effectively is the sole wielder within a geographical territory of the right in (I), then by offering an invisible-hand explanation of (2), though not of (I), we have partially explained in invisible-hand fashion the existence of the state. More precisely, we have partially explained in invisible-hand fashion the existence of the ultraminimal state.

independent enforcing justice private enforcement of justice indexical expressions, and moral principles inequality, Rawls on innocent shield innocent threat invisible-hand explanations examples of of marketplace of money satisfying quality of of the state See also invisible-hand process invisible-hand process de facto monopoly and coordination games and macro states as social compact See also invisible-hand explanation Jacobs, J justice in holdings See also entitlement theory Kalven, H Kant Katz. J J Kessell, R Kim, J Kimura, M Kirzner Krader Krantz Kristol Krystofiak, T labor theory of value Lancaster, K Laslett, P Leary, T legitimacy of state Levene,H Lewis.


Adam Smith: Father of Economics by Jesse Norman

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

In this case, the invisible hand is being invoked as an external force within a putatively pre-scientific and personalized explanation for individual, often adverse, events. The contrast with modern views of the invisible hand as a scientific, law-like, iterated and collective explanation for benign market phenomena is evident, and reinforces the suggestion that Smith has no overall theory of the invisible hand. See Eugene Heath, ‘Metaphor Made Manifest: Taking Seriously Smith’s “Invisible Hand”’, in David F. Hardwick and Leslie Marsh (eds.), Propriety and Prosperity: New Studies on the Philosophy of Adam Smith, Palgrave Macmillan 2014, pp. 169 ff. Corn laws: see Avner Offer, ‘Self-Interest, Sympathy and the Invisible Hand: From Adam Smith to Market Liberalism’, Economic Thought, 1.2, 2012.

By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. The idea of the invisible hand has been celebrated or denounced for many decades. For some, it is nothing less than the fundamental idea that the market is an equilibrating mechanism that transforms individual greed via competition into general welfare. For others, the invisible hand is the symbol of a winner-takes-all economic system that uses an appeal to impersonal market forces to legitimize coercion of those without economic power.

For the former, government is at best an impediment to efficient markets and general welfare; for the latter, it is an essential safeguard against unfairness and inequality. And there have been many other interpretations of the invisible hand, from the ironic to the providential. It is, therefore, vital to be clear about what the invisible hand is and is not for Smith, and whether and why it matters. First of all, it is important to note that there are only three mentions of the phrase in the entire corpus of his writings. Far from being the centrepiece of The Wealth of Nations, the metaphor of the invisible hand appears exactly once there, and receives no specific elaboration or development. Nor, even there, is it the paean to unfettered markets and the beneficent effects of self-interest claimed by some.


pages: 545 words: 137,789

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

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

In introducing the concept of social cost, Pigou pinpointed a central problem with the invisible hand that many free market economists had deliberately obscured or ignored. He also proposed some simple ways of correcting the market’s shortcomings, sometimes through the tax system, but also by the provision of public services and the introduction of regulations. Moreover, he accomplished all this using the same tools of “marginal analysis” that Walras, Pareto, and others had used to extol the virtues of the invisible hand. The defenders of free market orthodoxy could hardly dismiss Pigou’s conclusions as the product of an inappropriate methodology: his method was theirs!

Between the collapse of communism and the outbreak of the subprime crisis, an understandable and justified respect for market forces mutated into a rigid and unquestioning devotion to a particular, and blatantly unrealistic, adaptation of Adam Smith’s invisible hand. Milton Friedman, who died in 2006, said the test of an economic theory is that it should explain a lot with a little. But the modern theory of the invisible hand that Friedman and others promoted explains too much with too little. At its core, it says simply: self-interest plus competition equals nirvana. There is no mention in this equation of the institutions of modern capitalism, such as multinational corporations, derivatives markets, universal banks, and mutual funds.

Monetary policy. 4. Banks and banking. I. Title. HB3722.C37 2009 381—dc22 2009029529 www.fsgbooks.com To Lucinda, Beatrice, and Cornelia CONTENTS Copyright Dedication Introduction PART ONE: UTOPIAN ECONOMICS 1. Warnings Ignored and the Conventional Wisdom 2. Adam Smith’s Invisible Hand 3. Friedrich Hayek’s Telecommunications System 4. The Perfect Markets of Lausanne 5. The Mathematics of Bliss 6. The Evangelist 7. The Coin-Tossing View of Finance 8. The Triumph of Utopian Economics PART TWO: REALITY-BASED ECONOMICS 9. The Prof and the Polar Bears 10. A Taxonomy of Failure 11.


pages: 356 words: 116,083

For Profit: A History of Corporations by William Magnuson

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

In The Wealth of Nations, Smith famously argued that an “invisible hand” oversaw the market. The invisible hand ensured that selfish individuals, looking out solely for themselves, ended up promoting the greater good of society as a whole. Precisely how the invisible hand did its work was unclear, but it generally involved some combination of supply and demand: by competing with one another in responding to the demands of consumers, corporations supplied the goods and services that society needed with high quality and at a reasonable price. The idea of the invisible hand of capitalism has since captured the imagination of economists, politicians, and executives around the world.

Adam Smith, the father of capitalism, understood this. In the seldom-read passage of The Wealth of Nations in which he articulated his vision of the invisible hand, he was careful to provide an important caveat about capitalism as a cure-all. The invisible hand is not infallible. “By directing [his] industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention,” Smith wrote. “Nor is it always the worse for the society that it was no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it.”

ADAM SMITH, THE FOUNDING PHILOSOPHER OF CAPITALISM, BELIEVED that an invisible hand guides our markets. It nudges, pulls, and sometimes shoves profit seekers toward the greater good. It leads corporations to invent, innovate, and grow. It makes them sensitive to scarcity, consumer demand, and the welfare of workers. These incentives are often good. They align the interests of corporations and society. But Adam Smith was no Pangloss. He understood that the invisible hand falters. It grows weary. It sometimes drops the ball. For the good of everyone, we need to learn when the invisible hand is most likely to fail us and when it will lead us down dangerous or harmful paths.


pages: 187 words: 62,861

The Penguin and the Leviathan: How Cooperation Triumphs Over Self-Interest by Yochai Benkler

Abraham Maslow, Alan Greenspan, behavioural economics, business process, California gold rush, citizen journalism, classic study, Daniel Kahneman / Amos Tversky, do well by doing good, East Village, Everything should be made as simple as possible, experimental economics, experimental subject, framing effect, Garrett Hardin, informal economy, invisible hand, jimmy wales, job satisfaction, Joseph Schumpeter, Kaizen: continuous improvement, Kenneth Arrow, knowledge economy, laissez-faire capitalism, loss aversion, Murray Gell-Mann, Nicholas Carr, peer-to-peer, prediction markets, Richard Stallman, scientific management, Scientific racism, Silicon Valley, social contagion, Steven Pinker, telemarketer, Toyota Production System, Tragedy of the Commons, twin studies, ultimatum game, Washington Consensus, Yochai Benkler, zero-sum game, Zipcar

This does not claim us to be saints; it merely says that we are capable of virtue, and that we need not be robotic slaves to the government’s Leviathan, automatons guided by the Invisible Hand of the market, or parts of the collectivist Hive of fascism to serve the common weal. In honor of Tux, the symbol of Linux, I’ll call this alternative the Penguin. Cycles of Leviathan and the Invisible Hand Modern European and North American history has cycled between social, political, and economic systems that tended toward the Leviathan, and those that were based on the Invisible Hand. Throughout the seventeenth and eighteenth centuries, Europe’s absolute monarchies were more or less inefficient versions of Leviathan (just substitute “monarchy” for “government”).

Throughout the seventeenth and eighteenth centuries, Europe’s absolute monarchies were more or less inefficient versions of Leviathan (just substitute “monarchy” for “government”). The inefficiency in exercising control provided substantial breathing room for Invisible Hand and the social action, the Penguin, to flourish underneath the Leviathan, more or less informally. By the nineteenth century the decline of the monarchy, the Industrial Revolution, and the subsequent rise of commerce swept the Invisible Hand into power (nowhere with more painful effects than in Britain, as Friedrich Engels and Charles Dickens portrayed with such excruciating detail). This long reign of the Invisible Hand in both Europe and America was punctuated by panics and crashes throughout the nineteenth century, then, in 1929, came to a swift and abrupt end as the markets crashed, ushering in the Great Depression.

The second assumption was Adam Smith’s alternative solution to our assumed selfishness—the Invisible Hand. Smith’s Wealth of Nations argued that because humans are inherently self-interested and human decision making is driven by the rational weighing of costs and benefits, our action in a free market would tend to serve the common good. In other words, in our pursuit of self-interest we would work to fulfill one another’s needs, not because we care about one another’s well-being, but because it is mutually advantageous to do so. Though their prescriptions are quite different, both Leviathan and the Invisible Hand have the same fundamental starting point: a belief in the selfishness of mankind.


pages: 416 words: 112,159

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

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

Although we have seen a substantial body of evidence consistent with the claim that our current consumption patterns are profoundly wasteful, we are unlikely to reach consensus on ways of changing these patterns until we can agree on why they are wasteful. What is it, exactly, that makes the invisible hand go awry? THE INVISIBLE HAND RECONSIDERED I hasten to emphasize that, in posing the question in these terms, I do not mean to suggest that Adam Smith’s invisible hand idea has had a negative impact on the course of human history. On the contrary, free-market economies all over the globe, whose institutions were inspired by it, have prospered to a degree that even Smith himself would have found difficult to imagine.

Our conflict is rooted in the fact that human nature is simply not what economic orthodoxy assumes it to be. The orthodox models that underlie Adam Smith’s invisible hand take the primary economic determinant of a person’s sense of well-being to be his absolute standard of living. But as virtually everyone else has long been aware, it is relative living standards that often prove far more important. And as we shall see, when satisfaction depends importantly on relative living standards, all bets regarding the efficacy of the invisible hand are off. CONCERNS ABOUT RELATIVE POSITION Having been raised as an only child, I have always observed the sibling rivalries among my own children with great interest.

Smith’s view was by far the more optimistic, but Darwin’s more hard-edged analysis holds the key to understanding our current situation. SMITH AND DARWIN ON COMPETITION Writing more than two centuries ago, Adam Smith introduced his concept of the invisible hand, which went on to become one of the most celebrated and influential ideas of all time. His insight was that individuals seeking to promote only their own interests in the marketplace would be driven, “as if by an invisible hand,” to promote the greatest good for all. Thus producers seeking to steal market share from their rivals would develop cost-reducing innovations, which would be mimicked by others, and which in time would lead to lower prices for all.


pages: 105 words: 18,832

The Collapse of Western Civilization: A View From the Future by Naomi Oreskes, Erik M. Conway

Anthropocene, anti-communist, correlation does not imply causation, creative destruction, en.wikipedia.org, energy transition, Great Leap Forward, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Kim Stanley Robinson, laissez-faire capitalism, Lewis Mumford, market fundamentalism, mass immigration, means of production, military-industrial complex, oil shale / tar sands, Pierre-Simon Laplace, precautionary principle, road to serfdom, Ronald Reagan, stochastic process, the built environment, the market place

Belief in geoengineering as a climate “solution” was a sub-set of HAO. (2) The capacity of humans to remain optimistic and adapt to changed circumstances, even in the face of daunting difficulties, and even if the form of “adaptation” required is suffering. L e x i c o n o f A r c h A i c T e r m s 59 invisible hand A form of magical thinking, popularized in the eighteenth century, that economic markets in a capitalist system were “balanced” by the actions of an unseen, immaterial power, which both ensured that markets functioned efficiently and that they would address human needs. Belief in the invisible hand (sometimes also called the invisible hand of the marketplace) formed a kind of quasi-religious foundation for capitalism (see capitalism; external costs; market failure; market fundamentalism).

market failure The social, personal, and environmental costs that market economies imposed on individuals and societies were referred to as “market failures.” The concept of market failure was an early recognition of the limits of capitalist theory (see external costs; invisible hand ). market fundamentalism A quasi-religious dogma (see invisible hand) promoting unregulated markets over all other forms of human socioeconomic organization. During the Penumbra, market fundamentalists tended to deny the existence of market failure, thus playing a key role in the denial of the changes that were already under way and therefore in the catastrophes that ensued.

Even at the time, some recognized this system as a quasi-religious faith, hence the label market fundamentalism. 38 M a r k e t F a i l u r e Market fundamentalism—and its various strands and interpretations known as free market fundamentalism, neoliberalism, laissez-faire economics, and laissez-faire capitalism—was a two-pronged ideological system. The first prong held that societal needs were served most efficiently in a free market economic system. Guided by the “invisible hand” of the marketplace, individuals would freely respond to each other’s needs, establishing a net balance between solutions (“supply”) and needs (“demand”). The second prong of the philosophy maintained that free markets were not merely a good or even the best manner of satisfying material wants: they were the only manner of doing so that did not threaten personal freedom.


Virtual Competition by Ariel Ezrachi, Maurice E. Stucke

"World Economic Forum" Davos, Airbnb, Alan Greenspan, Albert Einstein, algorithmic management, algorithmic trading, Arthur D. Levinson, barriers to entry, behavioural economics, cloud computing, collaborative economy, commoditize, confounding variable, corporate governance, crony capitalism, crowdsourcing, Daniel Kahneman / Amos Tversky, David Graeber, deep learning, demand response, Didi Chuxing, digital capitalism, disintermediation, disruptive innovation, double helix, Downton Abbey, driverless car, electricity market, Erik Brynjolfsson, Evgeny Morozov, experimental economics, Firefox, framing effect, Google Chrome, independent contractor, index arbitrage, information asymmetry, interest rate derivative, Internet of things, invisible hand, Jean Tirole, John Markoff, Joseph Schumpeter, Kenneth Arrow, light touch regulation, linked data, loss aversion, Lyft, Mark Zuckerberg, market clearing, market friction, Milgram experiment, multi-sided market, natural language processing, Network effects, new economy, nowcasting, offshore financial centre, pattern recognition, power law, prediction markets, price discrimination, price elasticity of demand, price stability, profit maximization, profit motive, race to the bottom, rent-seeking, Richard Thaler, ride hailing / ride sharing, road to serfdom, Robert Bork, Ronald Reagan, search costs, self-driving car, sharing economy, Silicon Valley, Skype, smart cities, smart meter, Snapchat, social graph, Steve Jobs, sunk-cost fallacy, supply-chain management, telemarketer, The Chicago School, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, Travis Kalanick, turn-by-turn navigation, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, Watson beat the top human players on Jeopardy!, women in the workforce, yield management

With the rise of pricing algorithms in an increasingly digitalized market universe, in which web-aggregators, algorithms, and data pools provide the foundation for possible unilateral, coordinated, and Frenemy behav ior, is the invisible hand still a viable concept? After all, in a market that is in reality controlled by bots and algorithms, what power does the invisible hand possess? One may argue that the invisible hand remains a power ful force. Humans, after all, program and nominally control the algorithms. We still trust the invisible hand in many markets where robots manufacture products or provide ser vices, or where computers help facilitate trade. Moreover, we have seen how computers can enhance competition and our welfare.

Also, suppose the payoff would depend on how frequently the phrase appears in English-language books. If you could invest in one of these phrases—price regulation or invisible hand—which one would you pick? Google’s Ngram Viewer shows how often a phrase has occurred in a corpus of Englishlanguage books. As Figure 5 reflects, an investor in price regulation would have profited in the 1940s (see the gray line in Figure 5), but the overall winners are those who picked invisible hand (the dotted line in Figure 5). The result parallels the shift in emphasis in modern times, from regulation to free market philosophy. Price regulation has taken a beating, especially, as Chapter 3 explores, with the rise of neoclassical economic theories associated with the University of Chicago.

Surge areas were on and off, sometimes by the second, and being in the surge area did not guarantee requests from within the surge area.17 To Regulate or Not to Regulate 211 Even if surge pricing did not have its intended effect of quickly attracting additional drivers to the road, the invisible hand could still be at work. Arguably, Uber has to price competitively. Other wise users will turn to other ride-sharing apps, taxis, public transportation, or other modes of travel. Thus, in markets with a competitive alternative, the invisible hand ultimately checks Uber. If Uber’s surge price is too frequent, too high, or for too long, its app users would opt for other modes of travel (or simply walk). But as we saw in Chapter 6, as Uber’s platform increases in popularity outside options are limited and switching costs become high.


pages: 182 words: 53,802

The Production of Money: How to Break the Power of Banks by Ann Pettifor

Alan Greenspan, Ben Bernanke: helicopter money, Bernie Madoff, Bernie Sanders, bitcoin, blockchain, bond market vigilante , borderless world, Bretton Woods, capital controls, Carmen Reinhart, central bank independence, clean water, credit crunch, Credit Default Swap, cryptocurrency, David Graeber, David Ricardo: comparative advantage, debt deflation, decarbonisation, distributed ledger, Donald Trump, eurozone crisis, fiat currency, financial deregulation, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, Fractional reserve banking, full employment, Glass-Steagall Act, green new deal, Hyman Minsky, inflation targeting, interest rate derivative, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, land bank, Leo Hollis, light touch regulation, London Interbank Offered Rate, low interest rates, market fundamentalism, Martin Wolf, mobile money, Money creation, Naomi Klein, neoliberal agenda, offshore financial centre, Paul Samuelson, Ponzi scheme, Post-Keynesian economics, pushing on a string, quantitative easing, rent-seeking, Satyajit Das, savings glut, secular stagnation, The Chicago School, the market place, Thomas Malthus, Tobin tax, too big to fail

Shadow banking was only named and identified by the economist Paul McCulley as late as 2007, in a speech at the annual financial symposium hosted by the Kansas City Federal Reserve Bank in Jackson Hole, Wyoming.9 Members of the shadow banking ‘blind-eye brigade’ include Alan Greenspan, who in 2004 said that under the deregulated system of credit creation, ‘Not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient.’10 Credit creation and Goethe’s ‘Sorcerer’s Apprentice’ As argued above, to ensure that the monetary system addresses society’s varied needs, credit (debt) creation must be managed to ensure it is offered at low real rates of interest, and used productively and sustainably to create employment, and with it savings, income and other revenues, part of which can be used to repay the debt. If the system is to remain stable and useful to society as a whole, then publicly accountable authorities must manage and regulate not just the creation of credit, but also the ‘price’ of that credit: the rate of interest. If, instead, the power of credit creation is left to the ‘invisible hand’ of the market, the consequences will be similar to those faced by Goethe’s ‘Sorcerer’s Apprentice’. Readers will recollect that, in the absence of the Sorcerer, the Apprentice misused his master’s magic to conjure up water, brushes and pails that would magically undertake, without supervision, the work of cleaning up his master’s studio.

Economists reckoned that an excess supply of money (‘the global savings glut’) had, thanks to market forces, lowered the ‘price’ (interest rate) of money. Because of their conviction that bankers as dealers in money were like other intermediaries, simply acting as agents between buyers and sellers, economists thought banking activities could safely be guided by the ‘invisible hand’ of the market. Private commercial bankers could hardly believe their luck. The Sorcerer – in the form of a financial regulator – had vacated a vast amount of monetary space and left them in charge of the magic of credit creation, not just in their own country, but globally; not just within the retail banking system, but outside the purview of regulators, in the ‘shadow’ banking system.

Both inflation and deflation pose real threats to the wider economy and to social and political stability. Deflation, if it becomes entrenched, is particularly difficult to reverse (witness Japan’s deflated economy since 1990) as the public authorities have few tools with which to address deflationary pressures. That is why it is vital that credit creation is not left to the ‘invisible hand’ – to players in financial markets. In a democracy, it is the responsibility of ‘the guardians of the nation’s finances’ – central bankers, finance ministers and treasury civil servants – to manage the almost effortless process of both credit creation and the rate of interest – for the benefit of the economy as a whole.


pages: 190 words: 56,531

Where We Are: The State of Britain Now by Roger Scruton

bitcoin, blockchain, Brexit referendum, business cycle, Corn Laws, Donald Trump, Downton Abbey, Fellow of the Royal Society, fixed income, garden city movement, George Akerlof, housing crisis, invention of the printing press, invisible hand, Jeremy Corbyn, Khartoum Gordon, mass immigration, Naomi Klein, New Journalism, old-boy network, open borders, payday loans, Peace of Westphalia, sceptred isle, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, Tragedy of the Commons, web of trust

When it is said that nations are artificial communities, however, it should be remembered that there are two kinds of social artefact: those that result from a decision, as when two people form a partnership, and those that arise ‘by an invisible hand’, from decisions that in no way intend them, such as folk songs and folk religions. Institutions that arise by an invisible hand have a spontaneity and naturalness that may be lacking from institutions that are explicitly designed. Nations are spontaneous by-products of social interaction. Even when there is a conscious nation-building decision, the result will depend on the invisible hand: it is the affection, not the decision, that shapes the national identity. This is even true of the United States of America, which is by no means the entity today that the Founding Fathers intended.

There you have a brief summary of American history: people settling together, solving their conflicts by law, making that law for themselves, and in the course of this process defining themselves as a ‘we’, whose shared assets are the land and its law. The ‘invisible hand’ process, which was so illuminatingly discussed by Adam Smith, depends upon, and is secretly guided by, a legal and institutional framework.9 Under a rule of law, for example, the free interaction of individuals will result in a market economy. In the legal vacuum of post-communist Russia, by contrast, this free interaction of individuals has produced a command economy in the hands of gangsters. Likewise the invisible hand that gave rise to the nation was guided at every point by the territorial law. This ‘law of the land’ has been an important shaping force in English history, as F.

Lawrence, London, 1907. 8Ernest Gellner, Nations and Nationalism, Oxford, 1983; Benedict Anderson, Imagined Communities, 2nd edn, London, 1991; Eric Hobsbawm, Nations and Nationalism since 1780, Cambridge, 1990; Elie Kedourie, Nationalism, London, 1960; Kenneth Minogue, Nationalism, London, 1967. 9See Adam Smith, Inquiry into the Nature and the Causes of the Wealth of Nations, 1776, and the discussion of ‘invisible hand’ explanations in Robert Nozick, Anarchy, State and Utopia, Oxford, 1974. The invisible-hand theory was generalized by F. A. Hayek to produce a comprehensive account of legal and institutional development, in Law, Legislation and Liberty, 2 vols, London, 1976. 10F. W. Maitland, The Constitutional History of England, London, 1908. 11A few classic instances: George Eliot, Middlemarch; Adalbert Stifter, Nachsommer; Marcel Proust, À la recherche du temps perdu; Ingmar Bergman, Wild Strawberries; James Joyce, Dubliners.


pages: 272 words: 83,798

A Little History of Economics by Niall Kishtainy

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

When Akerlof and Stiglitz began their new field of information economics, many economists thought that markets worked pretty well most of the time. They believed in the ‘invisible hand’, Adam Smith’s idea that buying and selling in markets leads to the best use of society’s resources. Breakdowns in the market because of information problems don’t necessarily mean that people are being stupid or irrational. It’s perfectly rational for people to stop buying horses because they suspect that they’re being offered old nags. But the breakdowns mean that the invisible hand no longer works. On receiving his Nobel Prize, Stiglitz suggested that the reason that the hand is invisible is that it’s not there – and if it is, it’s paralysed.

This is important because how we think about the economy can influence how it actually treats different people. In a sense, the economic theories that we’ve looked at in this book – perfect competition, the law of demand and so on – are stories that economists tell over and over again. A famous one is Adam Smith’s invisible hand. Of course there isn’t really an invisible hand, just lots of people buying and selling things in an ordered way. It’s a story, although a useful one. Diana Strassmann (b. 1955), a pioneer of feminist economics, points out that most of the economic stories were first told by men, often in the nineteenth century. Many of the male economists who told them shared their society’s misgivings about women having an active role in the economy.

Classification: LCC HB71 .K527 2017 | DDC 330.09—dc23 LC record available at https://lccn.loc.gov/2016042806 A catalogue record for this book is available from the British Library. 10 9 8 7 6 5 4 3 2 1 Contents 1Cool Heads and Warm Hearts 2The Soaring Swans 3God’s Economy 4Going for Gold 5Nature’s Bounty 6The Invisible Hand 7Corn Meets Iron 8An Ideal World 9Too Many Mouths 10Workers of the World 11A Perfect Balance 12Shut Out the Sun 13The Profits of War 14The Noisy Trumpeter 15Coke or Pepsi? 16The Man With a Plan 17Flashing your Cash 18Down the Plughole 19Creative Destruction 20The Prisoners’ Dilemma 21The Tyranny of Government 22The Big Push 23The Economics of Everything 24Growing Up 25Sweet Harmony 26A World in Two 27Fill Up the Bath 28Ruled by Clowns 29Money Illusion 30Future Gazing 31Speculators on the Attack 32Saving the Underdog 33Knowing Me, Knowing You 34Broken Promises 35Missing Women 36Minds in Fog 37Economics in the Real World 38Bankers Go Wild 39Giants in the Sky 40Why Be an Economist?


pages: 453 words: 117,893

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

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

Smith was, naturally, a product of his times, which witnessed the advent of industrialization that led to an unprecedented increase in incomes and living standards. His 1776 The Wealth of Nations is the seminal work on the subject. Smith’s legacy is evident in nearly every aspect of economics. We still view the economy through the lens he fashioned. So, Adam Smith is the first Great Economist in the book. His idea of the ‘invisible hand’ of market forces – meaning the innate effects of supply and demand, rather than direct intervention by governments or other institutions – is the foundation of economic theory. As I explored in that Radio 4 programme, the British government is trying to rebalance the economy towards making things once again, after the 2008 crisis revealed the downsides of relying too much on financial services.

America, China and other major economies are also seeking to rebalance their economies so that they can grow in a more sustainable fashion. What would Adam Smith say about these attempts? How would he reconcile his affinity for manufacturing with an aversion to governments intervening in the workings of the ‘invisible hand’? An economist inspired by Adam Smith later became the father of international trade. In 1817 David Ricardo formalized the theory of comparative advantage that shows how every country benefits from free trade. This is true even if that country is worse than every other country in the world at producing everything.

Still, China is undergoing perhaps the most challenging part of its marketization process. How would Marx judge the trail that the Chinese economy is blazing? On the opposite side of the planning – market spectrum from Karl Marx was his near contemporary Alfred Marshall. Instead of the government running the economy, Marshall formalized how Smith’s ‘invisible hand’ achieves an equilibrium for the economy through market forces. He showed how supply and demand determine the price and quantity of a good. Marshall’s belief in a self-correcting market that moves towards an equilibrium means that we only need a laissez-faire state. There is no imperative for the government to intervene a great deal in the workings of the market economy, for instance, in the ups and downs of a business cycle.


The Armchair Economist: Economics and Everyday Life by Steven E. Landsburg

Albert Einstein, Arthur Eddington, business cycle, diversified portfolio, Dutch auction, first-price auction, German hyperinflation, Golden Gate Park, information asymmetry, invisible hand, junk bonds, Kenneth Arrow, low interest rates, means of production, price discrimination, profit maximization, Ralph Nader, random walk, Ronald Coase, Sam Peltzman, Savings and loan crisis, sealed-bid auction, second-price auction, second-price sealed-bid, statistical model, the scientific method, Unsafe at Any Speed

His topic was the analogy between Darwinian evolution, advancing the species biologically by allowing only the fittest to survive, and the Invisible Hand of the marketplace, advancing our species economically by eliminating all but the most efficient producers. I suspect that he didn't know much about biology. I'm sure that he didn't know much about economics. And his analogy, though familiar, was profoundly wrong. In biology, there is no equivalent of the Invisible Hand. Survival of the fittest is a different thing altogether. Nothing in evolutionary theory either promises or delivers the spectacular efficiency of the competitive marketplace.

Under quite general conditions, when goods are produced and exchanged in competitive free markets in which people trade at market prices, economic activity leads to efficient outcomes. This fact is what economists have in mind when they talk about the Invisible Hand. In the eighteenth century, Adam Smith described the economic actor who "intends only his own gain" but is nevertheless led "by an invisible hand to promote an end which was no part of his intention," that end being the welfare of society, which economists call efficiency. The metaphor endures, having survived countless misinterpretations. It has been said that Smith was expressing a religious sentiment, a faith that Providence oversees our affairs.

This is so even though individual rationality and competition without prices rarely leads to such desirable outcomes. The Invisible Hand Theorem is not at all obvious, but it is true. In the 1950s, the economists Gerard Debreu and Lionel Why Prices Are Good 77 McKenzie, working separately, successfully translated the Theorem into a statement about pure mathematics and rigorously proved that statement. Their accomplishment is one of the triumphs of modern economics. Along with its modern formulation, the Invisible Hand Theorem has acquired a modern name. It is now called the First Fundamental Theorem of Welfare Economics, and it can be stated succinctly: Competitive markets allocate resources efficiently.


pages: 316 words: 117,228

The Code of Capital: How the Law Creates Wealth and Inequality by Katharina Pistor

Andrei Shleifer, Asian financial crisis, asset-backed security, barriers to entry, Bear Stearns, Bernie Madoff, Big Tech, bilateral investment treaty, bitcoin, blockchain, Bretton Woods, business cycle, business process, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collateralized debt obligation, colonial rule, conceptual framework, Corn Laws, corporate governance, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, digital rights, Donald Trump, double helix, driverless car, Edward Glaeser, Ethereum, ethereum blockchain, facts on the ground, financial innovation, financial intermediation, fixed income, Francis Fukuyama: the end of history, full employment, global reserve currency, Gregor Mendel, Hernando de Soto, income inequality, initial coin offering, intangible asset, investor state dispute settlement, invisible hand, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Rogoff, land reform, land tenure, London Interbank Offered Rate, Long Term Capital Management, means of production, money market fund, moral hazard, offshore financial centre, phenotype, Ponzi scheme, power law, price mechanism, price stability, profit maximization, railway mania, regulatory arbitrage, reserve currency, Robert Solow, Ronald Coase, Satoshi Nakamoto, secular stagnation, self-driving car, seminal paper, shareholder value, Silicon Valley, smart contracts, software patent, sovereign wealth fund, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, too big to fail, trade route, Tragedy of the Commons, transaction costs, Wolfgang Streeck

Law’s Guiding Hand The legal code of capital may be invisible to the casual observer, but that does not make it less real. Some may find it easier to believe in the market’s “invisible hand” immortalized by Adam Smith, than to spend their time decoding capital’s legal structures.16 And yet, changes in the legal structure have fundamentally altered the conditions for Smith’s invisible hand to do its work. As is well known, Smith argued that the pursuit of individual self-interest will inevitably benefit society. Often ignored is the mechanism that powers the invisible hand. “Every individual,” Smith explained, “endeavours to employ his capital as near home as he can, and consequently as much as he can in the support of domestic industry; provided always that he can thereby obtain the ordinary, or not a great deal less than the ordinary profits of stock.”17 Why so?

Because “he can know better the character and situation of the persons whom he trusts, and if he e m P i r e o f L aw 7 should happen to be deceived, he knows better the laws of the country from which he must seek redress.”18 Whereas conventional wisdom attributes the operation of the invisible hand to the market, it might just as well be read as a reference to the quality of the rules of the game where business is conducted. The invisible hand does its job under weak institutions; it becomes superfluous once institutions are in place that allow economic agents to enforce their rights and interests anywhere. Today’s entrepreneurs no longer need to seek redress at home, and the fate of their wealth is no longer tied to the communities they left behind.

Recall that in Adam Smith’s account, the lack of institutional certainty in foreign places was the invisible hand that drove merchants back home, where they would invariably share some of their spoils with their community. For the merchants, this presented itself as a massive institutional failure, which greatly increased their costs of doing business and reduced their private gains. If institutions could be streamlined around the globe, business would become more predictable and the merchants could simply dispense with the invisible hand and keep their spoils for themselves. Building the legal infrastructure for global commerce has taken, for the most part, one of two forms: the harmonization of laws in different states, and the recognition and enforcement of foreign law.


Exploring Everyday Things with R and Ruby by Sau Sheong Chang

Alfred Russel Wallace, bioinformatics, business process, butterfly effect, cloud computing, Craig Reynolds: boids flock, data science, Debian, duck typing, Edward Lorenz: Chaos theory, Gini coefficient, income inequality, invisible hand, p-value, price stability, Ruby on Rails, Skype, statistical model, stem cell, Stephen Hawking, text mining, The Wealth of Nations by Adam Smith, We are the 99%, web application, wikimedia commons

This means the producer with the higher prices will have unsold goods, which in turn forces the prices to go down. The end results are that the average price goes down until it nears the cost of producing the goods. Finally, we see the invisible hand! The invisible hand of Adam Smith has weighed in on our simulation and pushed the prices down. Now that we have witnessed the invisible hand and charted its effects, let’s get slightly more complicated. Resource Allocation by Price In the previous simulation, every producer creates only one type of goods, which we imaginatively called goods. This, of course, is not realistic (nothing modeled in economics is realistic, but that’s a different point).

His book An Inquiry into the Nature and Causes of the Wealth of Nations (excerpted here) is considered the first modern work of economics, while he himself is often regarded as the father of economics: It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Smith coined the metaphor of the “invisible hand” to label this natural inclination, effectively describing what we know today as the market economy. In this chapter, we will simulate a market economy to see if we can observe the invisible hand in action. A Simple Market Economy First, let’s take stock of the different roles and features of an ideal market economy (which are what we want to simulate). Producers The people who produce the goods.

: (question mark, colon), in Ruby ternary conditional expression, if and unless > (right angle bracket), The R Console, Variables and Functions -> assignment operator, R, Variables and Functions > R console prompt, The R Console ' ' (single quotes), enclosing Ruby strings, Strings [ ] (square brackets), Vectors, Matrices, Data frames accessing subset of R data frame, Data frames enclosing R matrix indexes, Matrices enclosing R vector indexes, Vectors [[ ]] (square brackets, double), enclosing single R vector index, Vectors A aes() function, R, Aesthetics An Inquiry into the Nature and Causes of the Wealth of Nations (University of Chicago Press), The Invisible Hand apply() function, R, Interpreting the Data Armchair Economist (Free Press), How to Be an Armchair Economist array() function, R, Arrays arrays, R, Arrays–Arrays arrays, Ruby, Arrays and hashes–Arrays and hashes, Arrays and hashes artificial society, Money (see Utopia example) as.Date() function, R, Number of Messages by Day of the Month ascultation, Auscultation assignment operators, R, Variables and Functions at sign, double (@@), preceding Ruby class variables, Class methods and variables attr keyword, Ruby, Classes and objects Audacity audio editor, Homemade Digital Stethoscope average, Interpreting the Data (see mean() function, R) Axtell, Robert (researcher), It’s a Good Life Growing Artificial Societies: Social Science from the Bottom Up (Brookings Institution Press/MIT Press), It’s a Good Life B backticks (` `), enclosing R operators as functions, Variables and Functions bar charts, Plotting charts, Interpreting the Data–Interpreting the Data, The Second Simulation–The Second Simulation, The Third Simulation–The Third Simulation, The Final Simulation–The Final Simulation barplot() function, R, Plotting charts batch mode, R, Sourcing Files and the Command Line Bioconductor repository, Packages birds flocking, Schooling Fish and Flocking Birds (see flocking example) bmp() function, R, Basic Graphs Boids algorithm, Schooling Fish and Flocking Birds–The Origin of Boids Box, George Edward Pelham (statistician), regarding usefulness of models, The Simple Scenario break keyword, R, Conditionals and Loops brew command, Installing Ruby using your platform’s package management tool butterfly effect, The Changes C c() function, R, Vectors CALO Project, The Emailing Habits of Enron Executives camera, pulse oximeter using, Homemade Pulse Oximeter case expression, Ruby, case expression chaos theory, The Changes charts, Charting–Adjustments, Plotting charts, Statistical transformation, Geometric object, Interpreting the Data–Interpreting the Data, Interpreting the Data–Interpreting the Data, Interpreting the Data–Interpreting the Data, The Second Simulation, The Second Simulation–The Second Simulation, The Third Simulation–The Third Simulation, The Third Simulation–The Third Simulation, The Final Simulation–The Final Simulation, The Final Simulation–The Final Simulation, Analyzing the Simulation–Analyzing the Simulation, Analyzing the Second Simulation–Analyzing the Second Simulation, Number of Messages by Day of the Month–Number of Messages by Hour of the Day, Generating the Heart Sounds Waveform–Generating the Heart Sounds Waveform, Generating the Heartbeat Waveform and Calculating the Heart Rate–Generating the Heartbeat Waveform and Calculating the Heart Rate, Money–Money, Money–Money, Implementation bar charts, Plotting charts, Interpreting the Data–Interpreting the Data, The Second Simulation–The Second Simulation, The Third Simulation–The Third Simulation, The Final Simulation–The Final Simulation histograms, Statistical transformation, Geometric object, Money–Money line charts, Interpreting the Data–Interpreting the Data, Analyzing the Simulation–Analyzing the Simulation, Analyzing the Second Simulation–Analyzing the Second Simulation Lorenz curves, Money–Money scatterplots, Interpreting the Data–Interpreting the Data, The Second Simulation, The Third Simulation–The Third Simulation, The Final Simulation–The Final Simulation, Number of Messages by Day of the Month–Number of Messages by Hour of the Day, Implementation waveforms, Generating the Heart Sounds Waveform–Generating the Heart Sounds Waveform, Generating the Heartbeat Waveform and Calculating the Heart Rate–Generating the Heartbeat Waveform and Calculating the Heart Rate class methods, Ruby, Class methods and variables class variables, Ruby, Class methods and variables–Class methods and variables classes, R, Programming R classes, Ruby, Classes and objects–Classes and objects code examples, Using Code Examples (see example applications) colon (:), Symbols, Vectors creating R vectors, Vectors preceding Ruby symbols, Symbols comma-separated value (CSV) files, Importing data from text files (see CSV files) Comprehensive R Archive Network (CRAN), Packages conditionals, R, Conditionals and Loops conditionals, Ruby, Conditionals and loops–case expression contact information for this book, How to Contact Us conventions used in this book, Conventions Used in This Book cor() function, R, The R Console Core library, Ruby, Requiring External Libraries corpus, Text Mining correlation, R, The R Console CRAN (Comprehensive R Archive Network), Packages CSV (comma-separated value) files, Importing data from text files, The First Simulation–The First Simulation, The First Simulation, Interpreting the Data, The Simulation, Extracting Data from Sound–Extracting Data from Sound, Extracting Data from Video extracting video data to, Extracting Data from Video extracting WAV data to, Extracting Data from Sound–Extracting Data from Sound reading data from, Interpreting the Data writing data to, The First Simulation–The First Simulation, The Simulation csv library, Ruby, The First Simulation, The Simulation, Grab and Parse curl utility, Ruby Version Manager (RVM) D data, Data, Data, Everywhere–Data, Data, Everywhere, Bringing the World to Us, Importing Data–Importing data from a database, Importing data from text files, The First Simulation–The First Simulation, Interpreting the Data, How to Be an Armchair Economist, The Simulation, Grab and Parse–Grab and Parse, The Emailing Habits of Enron Executives–The Emailing Habits of Enron Executives, Homemade Digital Stethoscope–Extracting Data from Sound, Extracting Data from Sound–Extracting Data from Sound, Homemade Pulse Oximeter–Extracting Data from Video, Extracting Data from Video analyzing, Data, Data, Everywhere–Data, Data, Everywhere, Bringing the World to Us, How to Be an Armchair Economist charts for, How to Be an Armchair Economist (see charts) obstacles to, Data, Data, Everywhere–Data, Data, Everywhere simulations for, Bringing the World to Us (see simulations) audio, from stethoscope, Homemade Digital Stethoscope–Extracting Data from Sound CSV files for, Importing data from text files, The First Simulation–The First Simulation, Interpreting the Data, The Simulation, Extracting Data from Sound–Extracting Data from Sound, Extracting Data from Video from Enron, The Emailing Habits of Enron Executives–The Emailing Habits of Enron Executives from Gmail, Grab and Parse–Grab and Parse importing, R, Importing Data–Importing data from a database video, from pulse oximeter, Homemade Pulse Oximeter–Extracting Data from Video data frames, R, Data frames–Data frames data mining, The Idea data.frame() function, R, Data frames database, importing data from, Importing data from a database–Importing data from a database dbConnect() function, R, Importing data from a database dbGet() function, R, Importing data from a database DBI packages, R, Importing data from a database–Importing data from a database Debian system, installing Ruby on, Installing Ruby using your platform’s package management tool def keyword, Ruby, Classes and objects dimnames() function, R, Matrices distribution, normal, Money dollar sign ($), preceding R list item names, Lists doodling example, Shoes doodler–Shoes doodler double quotes (" "), enclosing Ruby strings, Strings duck typing, Ruby, Code like a duck–Code like a duck dynamic typing, Ruby, Code like a duck–Code like a duck E economics example, A Simple Market Economy–A Simple Market Economy, The Producer–The Producer, The Consumer–The Consumer, Some Convenience Methods–Some Convenience Methods, The Simulation–The Simulation, Analyzing the Simulation–Analyzing the Simulation, The Producer–The Producer, The Consumer–The Consumer, Market–Market, The Simulation–The Simulation, Analyzing the Second Simulation–Analyzing the Second Simulation, Price Controls–Price Controls charts for, Analyzing the Simulation–Analyzing the Simulation, Analyzing the Second Simulation–Analyzing the Second Simulation Consumer class for, The Consumer–The Consumer, The Consumer–The Consumer Market class for, Some Convenience Methods–Some Convenience Methods, Market–Market modeling, A Simple Market Economy–A Simple Market Economy price controls analysis, Price Controls–Price Controls Producer class for, The Producer–The Producer, The Producer–The Producer simulations for, The Simulation–The Simulation, The Simulation–The Simulation email example, Grab and Parse–Grab and Parse, The Emailing Habits of Enron Executives–The Emailing Habits of Enron Executives, Number of Messages by Day of the Month–Number of Messages by Day of the Month, Number of Messages by Day of the Month–Number of Messages by Hour of the Day, MailMiner–MailMiner, Number of Messages by Day of Week–Number of Messages by Hour of the Day, Interactions–Comparative Interactions, Text Mining–Text Mining charts for, Number of Messages by Day of the Month–Number of Messages by Hour of the Day content of messages, analyzing, Text Mining–Text Mining data for, Grab and Parse–Grab and Parse Enron data for, The Emailing Habits of Enron Executives–The Emailing Habits of Enron Executives interactions in email, analyzing, Interactions–Comparative Interactions number of messages, analyzing, Number of Messages by Day of the Month–Number of Messages by Day of the Month, Number of Messages by Day of Week–Number of Messages by Hour of the Day R package for, creating, MailMiner–MailMiner emergent behavior, The Origin of Boids (see also flocking example) Enron Corporation scandal, The Emailing Habits of Enron Executives Epstein, Joshua (researcher), It’s a Good Life Growing Artificial Societies: Social Science from the Bottom Up (Brookings Institution Press/MIT Press), It’s a Good Life equal sign (=), assignment operator, R, Variables and Functions Euclidean distance, Roids evolution, Evolution example applications, Using Code Examples, Shoes stopwatch–Shoes stopwatch, Shoes doodler–Shoes doodler, The R Console–Sourcing Files and the Command Line, Data frames–Introducing ggplot2, qplot–qplot, Statistical transformation–Geometric object, Adjustments–Adjustments, Offices and Restrooms, A Simple Market Economy, Grab and Parse, My Beating Heart, Schooling Fish and Flocking Birds, Money artificial utopian society, Money (see Utopia example) birds flocking, Schooling Fish and Flocking Birds (see flocking example) doodling, Shoes doodler–Shoes doodler economics, A Simple Market Economy (see economics example) email, Grab and Parse (see email example) fuel economy, qplot–qplot, Adjustments–Adjustments heartbeat, My Beating Heart (see heartbeat example) height and weight, The R Console–Sourcing Files and the Command Line league table, Data frames–Introducing ggplot2 movie database, Statistical transformation–Geometric object permission to use, Using Code Examples restrooms, Offices and Restrooms (see restrooms example) stopwatch, Shoes stopwatch–Shoes stopwatch expressions, R, Programming R external libraries, Ruby, Requiring External Libraries–Requiring External Libraries F factor() function, R, Factors, Text Mining factors, R, Factors–Factors FFmpeg library, Extracting Data from Video, Extracting Data from Video field of vision (FOV), Roids fish, schools of, Schooling Fish and Flocking Birds (see flocking example) flocking example, Schooling Fish and Flocking Birds–The Origin of Boids, The Origin of Boids, Simulation–Simulation, Roids–Roids, The Boid Flocking Rules–Putting in Obstacles, The Boid Flocking Rules–The Boid Flocking Rules, A Variation on the Rules–A Variation on the Rules, Going Round and Round–Going Round and Round, Putting in Obstacles–Putting in Obstacles Boids algorithm for, Schooling Fish and Flocking Birds–The Origin of Boids centering path for, Going Round and Round–Going Round and Round obstacles in path for, Putting in Obstacles–Putting in Obstacles research regarding, A Variation on the Rules–A Variation on the Rules Roid class for, Roids–Roids rules for, The Origin of Boids, The Boid Flocking Rules–The Boid Flocking Rules simulations for, Simulation–Simulation, The Boid Flocking Rules–Putting in Obstacles flows, Shoes, Shoes stopwatch fonts used in this book, Conventions Used in This Book–Conventions Used in This Book for loop, R, Conditionals and Loops format() function, R, Number of Messages by Day of the Month FOV (field of vision), Roids fuel economy example, qplot–qplot, Adjustments–Adjustments function class, R, Programming R functions, R, Variables and Functions–Variables and Functions G GAM (generalized addictive model), The Changes gem command, Ruby, Requiring External Libraries .gem file extension, Requiring External Libraries generalized addictive model (GAM), The Changes Gentleman, Robert (creator of R), Introducing R geom_bar() function, R, Interpreting the Data, The Second Simulation, The Final Simulation geom_histogram() function, R, Geometric object geom_line() function, R, Analyzing the Simulation geom_point() function, R, Plot, Interpreting the Data, Generating the Heart Sounds Waveform geom_smooth() function, R, Interpreting the Data ggplot() function, R, Plot ggplot2 package, R, Introducing ggplot2–Adjustments Gini coefficient, Money Git utility, Ruby Version Manager (RVM) Gmail, retrieving message data from, Grab and Parse–Grab and Parse graphics device, opening, Basic Graphs graphics package, R, Basic Graphs graphs, Charting (see charts) Growing Artificial Societies: Social Science from the Bottom Up (Brookings Institution Press/MIT Press), It’s a Good Life H hash mark, curly brackets (#{ }), enclosing Ruby string escape sequences, Strings hashes, Ruby, Arrays and hashes–Arrays and hashes heart, diagram of, Generating the Heart Sounds Waveform heartbeat example, My Beating Heart, My Beating Heart, My Beating Heart, Homemade Digital Stethoscope, Homemade Digital Stethoscope, Homemade Digital Stethoscope–Extracting Data from Sound, Generating the Heart Sounds Waveform–Generating the Heart Sounds Waveform, Generating the Heart Sounds Waveform, Finding the Heart Rate–Finding the Heart Rate, Homemade Pulse Oximeter–Homemade Pulse Oximeter, Homemade Pulse Oximeter–Extracting Data from Video, Generating the Heartbeat Waveform and Calculating the Heart Rate–Generating the Heartbeat Waveform and Calculating the Heart Rate, Generating the Heartbeat Waveform and Calculating the Heart Rate–Generating the Heartbeat Waveform and Calculating the Heart Rate charts for, Generating the Heart Sounds Waveform–Generating the Heart Sounds Waveform, Generating the Heartbeat Waveform and Calculating the Heart Rate–Generating the Heartbeat Waveform and Calculating the Heart Rate data for, Homemade Digital Stethoscope–Extracting Data from Sound, Homemade Pulse Oximeter–Extracting Data from Video audio from stethoscope, Homemade Digital Stethoscope–Extracting Data from Sound video from pulse oximeter, Homemade Pulse Oximeter–Extracting Data from Video heart rate, My Beating Heart, Finding the Heart Rate–Finding the Heart Rate, Generating the Heartbeat Waveform and Calculating the Heart Rate–Generating the Heartbeat Waveform and Calculating the Heart Rate finding from video file, Generating the Heartbeat Waveform and Calculating the Heart Rate–Generating the Heartbeat Waveform and Calculating the Heart Rate finding from WAV file, Finding the Heart Rate–Finding the Heart Rate health parameters for, My Beating Heart heart sounds, My Beating Heart, My Beating Heart, Homemade Digital Stethoscope, Generating the Heart Sounds Waveform health parameters for, My Beating Heart recording, Homemade Digital Stethoscope types of, My Beating Heart, Generating the Heart Sounds Waveform homemade pulse oximeter for, Homemade Pulse Oximeter–Homemade Pulse Oximeter homemade stethoscope for, Homemade Digital Stethoscope height and weight example, The R Console–Sourcing Files and the Command Line here-documents, Ruby, Strings hex editor, Extracting Data from Sound histograms, Statistical transformation, Geometric object, Money–Money Homebrew tool, Installing Ruby using your platform’s package management tool hyphen (-), Variables and Functions, Variables and Functions -> assignment operator, R, Variables and Functions <- assignment operator, R, Variables and Functions I icons used in this book, Conventions Used in This Book if expression, R, Conditionals and Loops if expression, Ruby, if and unless–if and unless Ihaka, Ross (creator of R), Introducing R ImageMagick library, Extracting Data from Video IMAP (Internet Message Access Protocol), Grab and Parse importing data, R, Importing Data–Importing data from a database inheritance, Ruby, Inheritance–Inheritance initialize method, Ruby, Classes and objects inner product, Roids–Roids installation, Installing Ruby–Installing Ruby using your platform’s package management tool, Installing Shoes–Installing Shoes, Introducing R, Installing packages–Installing packages R, Introducing R R packages, Installing packages–Installing packages Ruby, Installing Ruby–Installing Ruby using your platform’s package management tool Shoes, Installing Shoes–Installing Shoes Internet Message Access Protocol (IMAP), Grab and Parse Internet Message Format, The Emailing Habits of Enron Executives invisible hand metaphor, The Invisible Hand irb application, Running Ruby–Running Ruby J jittering, Adjustments jpeg() function, R, Basic Graphs L Landsburg, Stephen E. (author), How to Be an Armchair Economist Armchair Economist (Free Press), How to Be an Armchair Economist layer() function, R, Plot league table example, Data frames–Introducing ggplot2 left angle bracket (<), Strings, Variables and Functions <- assignment operator, R, Variables and Functions << preceding Ruby string here-document delimiter, Strings length() function, R, Vectors libraries, Requiring External Libraries, Requiring External Libraries–Requiring External Libraries, The First Simulation (see also specific libraries) for Ruby, The First Simulation for Ruby, Requiring External Libraries–Requiring External Libraries library() function, R, Importing Data line charts, Interpreting the Data–Interpreting the Data, Analyzing the Simulation–Analyzing the Simulation, Analyzing the Second Simulation–Analyzing the Second Simulation linear PCM (pulse-code modulation) format, Extracting Data from Sound Linux, Installing Ruby using third-party tools, Installing Shoes, Introducing R, Using R, Basic Graphs installing R on, Introducing R installing Ruby on, Installing Ruby using third-party tools installing Shoes on, Installing Shoes opening graphics device, Basic Graphs R user interface for, Using R list() function, R, Lists lists, R, Lists–Lists Loess algorithm, The Changes loops, R, Conditionals and Loops–Conditionals and Loops loops, Ruby, Loops Lorenz curve, Money, Money–Money Lorenz, Edward (coined "butterfly effect"), The Changes M Mac, Installing Ruby using third-party tools, Installing Ruby using your platform’s package management tool, Installing Shoes, Using R, Basic Graphs installing Ruby on, Installing Ruby using third-party tools, Installing Ruby using your platform’s package management tool installing Shoes on, Installing Shoes opening graphics device, Basic Graphs R user interface for, Using R mail library, Ruby, Grab and Parse Manhattan Project, The Simple Scenario matrices, R, Matrices–Matrices matrix library, Ruby, Roids matrix() function, R, Matrices Matsumoto, Yukihiro (creator of Ruby), Why Ruby max() function, R, Interpreting the Data mean() function, R, The R Console, Interpreting the Data–Interpreting the Data median() function, R, Interpreting the Data–Interpreting the Data merge() function, R, Data frames methods, Ruby, Methods mgcv library, The Changes mixin mechanism, Ruby, Inheritance modules, Ruby, Inheritance Monte Carlo simulation method, The Simple Scenario–The First Simulation movie database example, Statistical transformation–Geometric object N natural selection, Evolution normal distribution, Money O objects, R, Programming R objects, Ruby, Classes and objects–Classes and objects "Occupy Wall Street" movement, Money open classes, Ruby, Roids order() function, R, Data frames output formats, R, Basic Graphs overplotting, Adjustments oximetry, Oximetry–Homemade Pulse Oximeter P package management tool, Installing Ruby using your platform’s package management tool packages, R, Packages–Using packages, MailMiner–MailMiner par() function, R, Plotting charts pdf() function, R, Basic Graphs peppered moth, natural selection of, Evolution plot characters, Interpreting the Data plot() function, R, The R Console, Plotting charts–Plotting charts png() function, R, Basic Graphs Poisson process, The Simple Scenario pulse oximeter, Homemade Pulse Oximeter–Homemade Pulse Oximeter puts statement, Ruby, Running Ruby Pythagoras's theorem, Roids Q %q, preceding Ruby strings, Strings %Q, preceding Ruby strings, Strings qplot() function, R, qplot–qplot quartz() function, R, Basic Graphs question mark (?)


pages: 226 words: 59,080

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

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

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

.Ӡ Even though the Arrow and Debreu articles are foundational, having earned each economist a Nobel Prize, they are rarely read. (I confess I looked at them for the first time as I was writing this.) Economists study them instead from textbooks and other secondhand treatments. The First Fundamental Theorem is a big deal because it actually proves the Invisible Hand hypothesis. That is, it shows that under certain assumptions, the efficiency of a market economy is not just conjecture or possibility; it follows logically from the premises. The payoff from all the mathematics is that we actually have a precise statement. The model shows us exactly how the result is produced.

Information has to be complete—meaning, for example, that consumers are knowledgeable about all attributes of a good even before purchasing and experiencing it. We need to rule out monopolistic behavior on the part of producers, increasing returns to scale, and “externalities” (such as pollution or learning spillovers from R&D). Economists from Adam Smith on knew, of course, that such complications might interfere with the invisible hand. But Arrow and Debreu put it all together and made it all explicit and precise. The First Fundamental Theorem is about a purely hypothetical world; it does not claim to describe any actual markets. Taking it to the real world requires judgment, evidence, and further theorizing. How one interprets its relevance for economic policy is a Rorschach test of sorts.


pages: 436 words: 76

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

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

For example, for James Tobinn the invisible hand is "one of the great ideas of history and one of the most influential." Tobin (1992), 117. 2. Yergin and Stanislaw (1998), 398. More or less the same phrase is found at the beginning of the book, page 24. 3. Leacock (1936). These are not Leacock's own views. 4. Smith (1759), 184-85 For a discussion of the role of the "invisible hand" metaphor in Smith's work, see Rothschild (2001), chapter 5. The original "invisible hand" seems to be found in Shakespeare: { 378} Notes Come seeling night Scarf up the tender eye of pitiful day And with thy bloody and invisible hand Cancel and tear to pieces that great bond Which keeps me pale.

No one who has fully understood it ever thinks the same way again. Coordination in Market Economies Adam Smith was the great economist of the Scottish Enlightenment. And his metaphor of the invisible hand is the most famous expression of order without design. Smith had described how the division of labor had fueled economic growth, "the natural progress of opulence." But how was that division of labor organized and coordinated? The answer was the invisible hand. As I shall discuss in chapter 17, I am not sure this interpretation of Smith is right. But whether or not it was Smith's answer, it is a good question. We can imagine Khrushchev in the supermarket posing his own version: "Who is in charge of the supply of groceries to California?"

The widely quoted passage is: "By directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was not part of his intention." Yet on careful reading Smith does not say that selfish behavior is praiseworthy, is bound to pay, or necessarily promotes the best interests of society. When we join the shortest queue at the supermarket, we intend only our own gain and promote an end that is not part of our intention. It does not follow that our behavior is governed by self-regarding materialism, or that such behavior leads, cumulatively or otherwise, to the overall betterment of society. The passage containing the invisible hand metaphor is not about general equilibrium theory: its purpose is to explain why merchants would continue to buy British products even if tariffs were removed.


Stacy Mitchell by Big-Box Swindle The True Cost of Mega-Retailers, the Fight for America's Independent Businesses (2006)

accelerated depreciation, big-box store, business climate, business cycle, clean water, collective bargaining, corporate personhood, drop ship, European colonialism, Haight Ashbury, income inequality, independent contractor, inventory management, invisible hand, Jane Jacobs, low skilled workers, Maui Hawaii, Menlo Park, new economy, New Urbanism, price discrimination, race to the bottom, Ray Oldenburg, RFID, Ronald Reagan, The Chicago School, The Death and Life of Great American Cities, The Great Good Place, the long tail, union organizing, urban planning, women in the workforce, zero-sum game

HF5468.M58 2006 381.120973—dc22 2006013818 For Jacob CONTENTS PART ONE PART TWO INTRODUCTION ix ONE CHAIN STORE WORLD 3 TWO FADING PROSPERITY 33 THREE COMMUNITY LIFE 73 FOUR BLIGHTED LANDSCAPE 101 FIVE SOMETIMES LOW PRICES 127 SIX MONOPOLIZED CONSUMERS 138 SEVEN UNCLE SAM’S INVISIBLE HAND 163 EIGHT COMMUNITIES UNCHAINED 192 NINE DECLARATION OF INDEPENDENTS 223 ACKNOWLEDGMENTS 259 NOTES 260 INDEX 299 INTRODUCTION Kepler’s, a fifty-year-old independent bookstore in Menlo Park, California, abruptly shut down. Owner Clark Kepler explained that bookstore chains and Amazon.com had displaced so much of the store’s sales that he could no longer pay the bills.

This enthusiasm influences their decisions about what products to stock and the quality standards they expect from manufacturers. It means they often possess a valuable level of expertise and provide a variety of extras—from family game nights to lessons on managing diabetes—that cannot be found at the chains. PART TWO SEVEN UNCLE SAM’S INVISIBLE HAND IT WAS EARLY 2005 WHEN KEVIN OHM, who owns the thirty-three-year-old Ohm’s Appliance store in Brookings, South Dakota, first learned that city o‰cials were planning to grant Lowe’s nearly $3 million in public subsidies to build a superstore in town. “Surprise would be an understatement,” he recalled.

GOVERNMENT HANDOUTS Many of the big-box stores and shopping centers that open each year are built with the help of public subsidies. These giveaways take many forms: free or reduced-price land (as in Brookings); property tax breaks; sales tax rebates; free infrastructure and other site improvements; low-interest, tax- UNCLE SAM’S INVISIBLE HAND 165 free loans; and job training credits, to name a few. Most of these subsidies are provided locally by cities and towns, and occasionally counties, though state and even federal tax dollars may be involved. Together they constitute one of the most substantial, and certainly the most overt, means by which government policy fuels corporate retail expansion.


pages: 252 words: 73,131

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

Abraham Wald, Airbnb, airport security, Al Roth, Alvin Roth, Andrei Shleifer, attribution theory, autonomous vehicles, barriers to entry, behavioural economics, Brownian motion, business cycle, buy and hold, centralized clearinghouse, Chuck Templeton: OpenTable:, classic study, clean water, conceptual framework, congestion pricing, constrained optimization, continuous double auction, creative destruction, data science, deferred acceptance, Donald Trump, Dutch auction, Edward Glaeser, experimental subject, first-price auction, framing effect, frictionless, fundamental attribution error, George Akerlof, Goldman Sachs: Vampire Squid, Gunnar Myrdal, helicopter parent, information asymmetry, 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, Kenneth Arrow, late fees, linear programming, Lyft, market clearing, market design, market friction, medical residency, multi-sided market, mutually assured destruction, Nash equilibrium, Occupy movement, opioid epidemic / opioid crisis, Pareto efficiency, Paul Samuelson, Peter Thiel, pets.com, pez dispenser, power law, pre–internet, price mechanism, price stability, prisoner's dilemma, profit motive, proxy bid, RAND corporation, ride hailing / ride sharing, Robert Shiller, Robert Solow, Ronald Coase, school choice, school vouchers, scientific management, sealed-bid auction, second-price auction, second-price sealed-bid, sharing economy, Silicon Valley, spectrum auction, Steve Jobs, Tacoma Narrows Bridge, techno-determinism, technoutopianism, telemarketer, The Market for Lemons, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, transaction costs, two-sided market, uber lyft, uranium enrichment, Vickrey auction, Vilfredo Pareto, WarGames: Global Thermonuclear War, winner-take-all economy

“For much of the post–World War II period,” Fourcade writes, “flexing one’s mathematical and statistical muscles and stripping down one’s argument to a formal and parsimonious set of equations was indeed the main path to establishing scientific purity in economics.”3 Radford, writing after the war, found himself in deep conversation with the classical economists of the nineteenth and earlier centuries—even as the profession was on the cusp of its mathematical transformation. Radford’s larger message about the efficiency of markets was, after all, one of the main points of Adam Smith’s metaphor of the invisible hand, an idea that first appeared in Book IV of his epic Wealth of Nations in 1776. To Smith, the power of the market was clear, requiring no formal proof of its veracity or elucidation of the precise circumstances where it would be truer than others. Smith largely asserted that individuals can pursue their own self-interest and make society as a whole better off.4 It was a revelation.

Building from his calculation that the richest 20 percent of Italians owned 80 percent of the country’s land, Pareto posited that incomes in an economy tend to be distributed according to a “power law.” (Power law distributions will often generate extreme inequality, making Pareto an unlikely hero of the Occupy movement.) Most memorably, though, he used his mathematical skills to extend Smith’s invisible hand arguments, introducing a particular criterion by which economists could assess social well-being.5 This welfare principle, named Pareto efficiency by British economist I. M. D. Little, suggests that we may judge an economic system by whether it’s possible, through some series of trades or exchanges, to make at least one individual better off without making anyone worse off.

In a sense, Arrow and Debreu’s model was a stress test of the market, an attempt to understand the conditions that would guarantee that a market would arrive at that happy state where society’s means and wants exactly coincide. This may seem an esoteric point. And in a way it is. But think back to Smith’s timeless description of the magic of the invisible hand: in a well-functioning market, each individual acts only in self-interest but nonetheless ends up promoting the public good. He’s describing, essentially, the glories of market equilibrium: there’s no way that the economy’s resources could be put to use so that any one individual is better off without making someone else worse off (that is, market equilibrium is a Pareto optimum).


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

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

The recent global financial meltdown (discussed in the postscript to this book) illustrates – among other things – the importance of the legal and regulatory framework within which markets operate. Imperfect and asymmetric information creates possible conflicts of interest that allow some people to profit at the expense of others. The invisible hand isn’t supposed to work like that; it is supposed to transform everyone’s selfishness into the greater good. Prasch (ibid.) explains that the invisible hand only works to produce an effi­ cient allocation of resources if the economy consists of certain special kinds of markets. There must be no externalities, but additionally the quality of the product must be known, and exchanges must be instantaneously completed in ‘spot’ markets.

We agree that the typical text offers a view that ‘idolizes markets’ – usually not in a crude way, but in a subtle way through its choice of themes, and through its emphasis on demand and supply (also called the model of perfect competition) as the central theoretical structure. Most of the standard textbook is spent developing and applying that structure. It describes a world of perfect markets in which given resources are allocated as if by an invisible hand in a way that maximizes the value of total production. The belief that this model approximates how markets operate in the real world is often referred to as ‘market fundamentalism’.3 4 Minimum wage laws, usury laws, truth-in-advertising laws, laws to regulate fraud, health-and-safety codes, anti-discrimination laws, building inspection codes, environmental laws, investor protection rules, and many other rules and regulations have each and severally been breezily, even haughtily, dismissed by market fundamentalists and the many columnists and politicians who invoke their arguments.

Even when people make their decisions with perfect information, they can still choose not to take into account the effects of their actions on others. Every kind of pollution, from the local to the global, is an example of this. We show in Chapter 7 that externalities are not the afterthought that the textbooks suggest, but are a pervasive problem that render the invisible hand story irrelevant as a description of the world we live in. Questions of power are absent from the texts. Yet in reality sellers try to shape and to influence the preferences of consumers, while consumers may try to exert their power to get producers to produce products in more ethical or environmentally sustainable ways.


pages: 393 words: 115,217

Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries by Safi Bahcall

accounting loophole / creative accounting, Alan Greenspan, Albert Einstein, AOL-Time Warner, Apollo 11, Apollo 13, Apple II, Apple's 1984 Super Bowl advert, Astronomia nova, behavioural economics, Boeing 747, British Empire, Cass Sunstein, Charles Lindbergh, Clayton Christensen, cognitive bias, creative destruction, disruptive innovation, diversified portfolio, double helix, Douglas Engelbart, Douglas Engelbart, Dunbar number, Edmond Halley, Gary Taubes, Higgs boson, hypertext link, industrial research laboratory, invisible hand, Isaac Newton, Ivan Sutherland, Johannes Kepler, Jony Ive, knowledge economy, lone genius, Louis Pasteur, Mark Zuckerberg, Menlo Park, Mother of all demos, Murray Gell-Mann, PageRank, Peter Thiel, Philip Mirowski, Pierre-Simon Laplace, power law, prediction markets, pre–internet, Ralph Waldo Emerson, RAND corporation, random walk, reality distortion field, Richard Feynman, Richard Thaler, Sheryl Sandberg, side project, Silicon Valley, six sigma, stem cell, Steve Jobs, Steve Wozniak, synthetic biology, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tim Cook: Apple, tulip mania, Wall-E, wikimedia commons, yield management

Yet some rules that describe what happens when many people come together to accomplish tasks seem to work pretty well. The rules of efficient markets, invisible hands, and so on. Those have been established and tested beyond any doubt, right? Well, sort of. This is Alan Greenspan, the economist who chaired the US Federal Reserve for nineteen years, writing in the Financial Times in 2011: Today’s competitive markets, whether we seek to recognise it or not, are driven by an international version of Adam Smith’s “invisible hand” that is unredeemably opaque. With notably rare exceptions (2008, for example), the global “invisible hand” has created relatively stable exchange rates, interest rates, prices, and wage rates.

One extended his logic to the analysis of diplomacy: “With notably rare exceptions, Germany remained largely at peace with its neighbors during the 20th century.” Greenspan’s view, however, that efficient markets and invisible hands are fundamental laws that are rarely, if ever, violated is widespread. But it’s a fallacy. That fallacy is a common cause of policy disasters (or investment opportunities, if you are a trader). Neither efficient markets nor invisible hands are fundamental laws. They are both emergent properties. Emergent properties are collective behaviors: dynamics of the whole that don’t depend on the details of the parts, the macro that rises above the micro.

The terrific thing about the science of emergence is that once we understand a phase transition, we can begin to manage it. We can design stronger materials, build better highways, create safer forests—and engineer more innovative teams and companies. * * * So what does all of this tell us about Mr. Greenspan and the widespread belief in the almighty invisible hand? The confidence in the infallibility of the invisible hand is a consequence, to come back to our Newton-Jobs theme from the prior chapter, of false idolatry. For two hundred years we have been bowing down to the wrong seventeenth-century physicist. To see what I mean, let’s travel back to a summer day in Britain two centuries ago.


pages: 374 words: 113,126

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

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

Smith was, naturally, a product of his times, which witnessed the advent of industrialization that led to an unprecedented increase in incomes and living standards. His 1776 The Wealth of Nations is the seminal work on the subject. Smith’s legacy is evident in nearly every aspect of economics. We still view the economy through the lens he fashioned. So, Adam Smith is the first Great Economist in the book. His idea of the ‘invisible hand’ of market forces – meaning the innate effects of supply and demand, rather than direct intervention by governments or other institutions – is the foundation of economic theory. As I explored in that Radio 4 programme, the British government is trying to rebalance the economy towards making things once again, after the 2008 crisis revealed the downsides of relying too much on financial services.

America, China and other major economies are also seeking to rebalance their economies so that they can grow in a more sustainable fashion. What would Adam Smith say about these attempts? How would he reconcile his affinity for manufacturing with an aversion to governments intervening in the workings of the ‘invisible hand’? An economist inspired by Adam Smith later became the father of international trade. In 1817 David Ricardo formalized the theory of comparative advantage that shows how every country benefits from free trade. This is true even if that country is worse than every other country in the world at producing everything.

Still, China is undergoing perhaps the most challenging part of its marketization process. How would Marx judge the trail that the Chinese economy is blazing? On the opposite side of the planning – market spectrum from Karl Marx was his near contemporary Alfred Marshall. Instead of the government running the economy, Marshall formalized how Smith’s ‘invisible hand’ achieves an equilibrium for the economy through market forces. He showed how supply and demand determine the price and quantity of a good. Marshall’s belief in a self-correcting market that moves towards an equilibrium means that we only need a laissez-faire state. There is no imperative for the government to intervene a great deal in the workings of the market economy, for instance, in the ups and downs of a business cycle.


pages: 290 words: 83,248

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

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

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

Attempts by groups of firms to fix prices by agreement – forming a cartel – would fail as long as it was possible for new firms to enter the market and undercut them. The invisible hand is the market, and through its operation the best possible or optimum outcome is achieved.’18 Adam Smith’s theories are very popular with the investment banks. They support non-intervention and deregulation, the policies that create the best possible climate for them and justify their prices, profits and place in society. After all, if prices and profits were too high, the market would force them down and if output was poor, the market would drive it up. Supporters have been quick to claim victory for the invisible hand, arguing that the bear market had fundamentally weakened the investment bank’s position.19 This may yet prove to be so, but, given the investment banks’ power and resourcefulness, it would be as well to keep an eye on how they fare compared to other market participants.

The Trusted Adviser Takes a Fall 2. The Age of Deception PART 2: Is There a Cartel? 3. The Blessing of the Leviathans 4. Heads We Win 5. Tails You Lose 6. The Sound of Silence PART 3: What Really Goes On 7. The Edge 8. Voodoo Management 9. The Big Squeeze PART 4: Whatever Happened to the Invisible Hand? 10. Does It Matter? 11. The Greed Merchants 12. Here’s to the Next Time Notes Index Acknowledgements This book originated in a paper I delivered at a seminar organized by the London School of Economics Financial Markets Group in September 2001. I am grateful to Sir Geoffrey Owen and John Plender for inviting me to speak there, thus getting the ball rolling.


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

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

Certainly the core concepts he set out regarding the division of labour and the invisible hand and the idea that economic wealth is generated by trade and activity rather than by hoarding money are so embedded in western economic systems that it is easy to forget they originated with Smith. His contempt for monopolies is similarly well entrenched in today’s business environment. However, it is clear that an economy that embraced all of Smith’s tenets without dilution would look very different from the UK or any other European country. While accepting the principle of the free market, many people are keen that governments intervene to check the invisible hand. The use of taxes and regulations to alter the way that markets operate in areas such as domestic energy supply, air and rail travel, polluting industries and housing finances show how far we have moved from Smith.

The fourth volume criticises the agricultural and mercantile systems and the last one looks at how governments should raise revenue through taxation and what they should spend it on. Out of this long and detailed work there are perhaps six key concepts that have stood the test of time and for which Smith is best remembered and has had the greatest influence. We’ll look at these key ideas now. The invisible hand Wealth of Nations marshals the theories of self-interest first written about in The Theory of Moral Sentiments into a way of looking at how societies prosper. Smith aimed to overthrow the prevailing notion at the time, known as mercantilism. This stated that the only way to prosper was to hoard wealth, which 8 The Great Economists was seen as finite.

Just as capital will head towards the industry that produces the greatest value, so each worker aims for the job that will make him or her the most money. In each case, as Smith put it, this worker ‘neither intends to promote the public interest, nor knows how much he is promoting it. He intends only his own gain, and he is in this led by an invisible hand to promote an end which was no part of his intention.’ Smith is laying out the basis for the free-market mechanism of supply and demand. Smith is in effect laying out the basis for the free-market mechanism of supply and demand. Over time this will become the general equilibrium theory, set out a century later and formalised in greater detail by Paul Samuelson, whom we will meet later (see Chapter 8), and other eminent economists.


pages: 270 words: 73,485

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

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

The complex voluntary cooperation which exists beneath the surface of our daily economic life was called the invisible hand by Adam Smith. It is the interdependence of people far-flung and unknown to each other which is the most difficult thing to grasp about economics. It is wondrous that the myriad separate decisions made by millions of individuals about what to buy and what to sell, what to produce, which job to take and where to study ultimately hang together to ensure that when you go to the shops there are things to buy that you want, that there are jobs to go to for most of us and that the same will be the case tomorrow. It is as if, as Adam Smith said, an invisible hand is guiding us.

It is as if, as Adam Smith said, an invisible hand is guiding us. The invisible hand is not always benevolent. It may also work adversely. Why else would the bankruptcy of a New York firm, Lehman’s, cause unemployment in Lancashire? Why would we debate the prospect of the eurozone or worry about Chinese growth causing petrol prices to rise? The complex interconnectedness threaded together by myriad independent decisions is central to an understanding of why economics is such a difficult and uncertain subject. Each individual deciding to buy or postpone a purchase, or to take up a job or wait for a better one, acts on their own impulses and it is hoped uses their powers of reasoning as well.

The subject matter of economics consists of individuals with volition. unlike the subjects of natural science. The economist’s hope is that while individual agents may have their own reasons for behaving any way they like, as a group their behavior will show some regularity and predictability. Devices such as the invisible hand are ways of coping with this complexity so that we can grasp its working. Adam Smith’s other powerful idea was that in order to generate and guarantee prosperity, there should be minimal restrictions on people’s choices. Governments should stick to providing law and order, guarantee secure property rights, create fair and broad-based taxes, spend prudently on matters such as education and infrastructure, and keep the budget in balance.


pages: 25 words: 7,179

Why Government Is the Problem by Milton Friedman

affirmative action, Bretton Woods, floating exchange rates, invisible hand, rent control, Savings and loan crisis, urban renewal

The self-interest of people in government leads them to behave in a way that is against the self-interest of the rest of us. You remember Adam Smith's famous law of the invisible hand: People who intend only to seek their own benefit are "led by an invisible hand to serve a public interest which was no part of" their intention. I say that there is a reverse invisible hand: People who intend to serve only the public interest are led by an invisible hand to serve private interests which was no part of their intention. I believe our present predicament exists because we have gradually developed governmental institutions in which the people effectively have no voice.


pages: 288 words: 89,781

The Classical School by Callum Williams

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

When push comes to shove, we recognise “that we are but one of the multitude, in no respect better than any other in it”. People are not inherently selfish, according to Smith, but inherently social. Thy bloody and invisible hand The true meaning of that famous phrase, “invisible hand”, is also interesting. Many pundits use the phrase to encapsulate a supposed “greed is good” philosophy. That argument rests on a number of profound misunderstandings. First things first: Smith mentions the phrase “invisible hand” just three times in his entire published output. On each occasion the phrase is used in a completely different context–and never to mean what it means in the popular understanding.

Bear in mind the original source of the image–Macbeth, where the protagonist talks about “thy bloody and invisible hand”. Many of those reading Smith would have known that Macbeth utters the phrase when he is planning to murder Banquo, whom he sees as a rival to be King of Scotland. It is hard to believe that Smith would choose such a metaphor to describe something he viewed favourably. So what does Smith mean when he uses the term? Emma Rothschild provides the best analysis of the multiple meanings of “invisible hand”. In Smith’s History of Astronomy he uses “invisible hand” to refer mockingly to the naivety of people in polytheistic societies.

But none of that matters a jot. If someone can make it seem as though their argument, no matter how arcane, was or would have been supported by one of these thinkers, it carries that bit more weight. Which makes it essential to get a better sense of what these economists really meant. What did Adam Smith mean by the term “invisible hand”? Did Karl Marx predict the end of capitalism? Was John Stuart Mill a utilitarian? Did Thomas Malthus believe that famines were desirable? This book will talk about what the founders of economics actually thought. That involves debunking some popular myths. I will also explain the significance of their ideas in simple language.


pages: 471 words: 97,152

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

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

These stories, embellished by oft told vignettes of newly successful people, and in their mostly justified enthusiasm for expanded free markets, led to too much economic tolerance. Underlying this revolution is the powerful principle of the “invisible hand”—that market forces should be the fundamental framework of resource allocation. Recognition of this principle has produced the surge of economic growth that has defined our age. And yet, today, with the recent economic crisis, unregulated free markets are being questioned. We believe that the unvarnished invisible hand story, although right in a fundamental way, is wrong at the level of detail and approximation that is necessary to explain what we need to know about macroeconomies.

Nor are they likely to disagree with us about the most recent such shift, coinciding with the election of Ronald Reagan. At that time the explanation of how the economy worked turned to the conservative image with which we began this book, the “invisible hand.” This shift was, of course, not just an American phenomenon. Britain had elected Margaret Thatcher eighteen months earlier. Other countries, from India to China to Canada, would follow, sometimes zealously so. The story of the “invisible hand” and its consequences gives surprisingly detailed prescriptions regarding the role of government, even pertaining to questions of great specificity. But now people are asking these questions anew.

Private enterprise needs to be watched quite closely, especially where it is hard to know if toxic waste is being disposed of safely. Indeed, there was so little regulation of financial markets that even today there are no good standard statistics that summarize the volumes of complicated securities traded and, more importantly, still outstanding. People had taken the “invisible hand” too seriously, and enshrined it with a mythology, like that embodied in The Apprentice, that made it central to our culture. To continue the metaphor of the referee at the sports event, they took the good advice that they should not be stopping the game constantly for minor infractions. The game has to go on.


pages: 276 words: 59,165

Impact: Reshaping Capitalism to Drive Real Change by Ronald Cohen

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

The economist Adam Smith famously introduced the ‘invisible hand of markets’ in The Wealth of Nations at the end of the eighteenth century, to describe how everyone’s striving for profit results in everyone’s best interests. His first book, The Theory of Moral Sentiments, was about the ability of humans to act out of empathy and altruism. Had he known that we would be measuring impact in the twenty-first century, he might well have combined his two books into one, and written about impact as the invisible heart of markets that guides their invisible hand. Chapter 1 THE IMPACT REVOLUTION: RISK–RETURN–IMPACT We must shift impact to the center of our consciousness We cannot change the world by throwing more money at old concepts that no longer work – we need new concepts and approaches.

Danone has announced that it is linking its impact goals to the SDGs:60 it has committed to be carbon neutral by 2050 and has set intermediate targets for 2030, building on a 50 per cent reduction in emissions from its operations, packaging and logistics between 2008 and 2016.61 Faber has said in an interview that setting ambitious goals with long-term horizons has been essential to the company’s progress: ‘We would never have made as much progress with our carbon dioxide reduction program in 2008 if we had just gone for a 2 per cent reduction per year rather than 30 per cent over five years, which we set ourselves.’62 At a conference in 2014, the year that he became CEO, Faber summarized his philosophy: ‘The economy without the social side is barbarism; the social side without the economy is utopia.’63 As Faber himself put it in his speech at the Consumer Goods Forum in Berlin, ‘Unlike what Wall Street is trying to tell us, there is no invisible hand. In particular, there is no invisible hand when it comes to [doing] the right or the wrong thing.’64 A much younger American yoghurt company, Chobani, is approaching the creation of positive impact by starting to deliver it through its employment. Accountability, Community, Gratitude At the end of 2012, two refugee sisters arrived in the US from the Middle East, seeking a new life.65 Nisa and Amna’s long and arduous journey began with threats of acid attacks and death and included being stowed in the windowless compartment of a truck without air enough to breathe – in fact, one child packed in tight with them died in transit.66 Smugglers had separated the girls from their mother during their journey.

Under the new social contract that was established, democracy came to protect the rights of the individual in the political realm. Our own generation’s challenge is to protect the rights of the individual in the social and economic realm. As Rousseau was launching his political ideas on the world, Adam Smith introduced the theory of the ‘invisible hand of markets’ in The Wealth of Nations. In his view, ‘the invisible hand’– a metaphor for individuals acting in their own self-interest within a free market economy – created an equilibrium between the supply and demand for goods, which was in everyone’s best interest. His thinking has dominated the economic narrative ever since.


pages: 376 words: 118,542

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

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

These developments have been produced by good intentions with a major assist from self-interest. Even the strongest supporters of the welfare and paternal state agree that the results have been disappointing. In the government sphere, as in the market, there seems to be an invisible hand, but it operates in precisely the opposite direction from Adam Smith's: an individual who intends only to serve the public interest by fostering government intervention is "led by an invisible hand to promote" private interests, "which was no part of his intention." That conclusion is driven home again and again as we examine, in the chapters that follow, the several areas in which government power has been exercised—whether to achieve security (Chapter 4) or equality (Chapter 5), to promote education (Chapter 6), to protect the consumer (Chapter 7) or the worker (Chapter 8), or to avoid inflation and promote employment (Chapter 9).

So far, in Adam Smith's words, "the uniform, constant, and uninterrupted effort of every man to better his condition, the principle from which public and national, as well as private opulence is originally derived," has been "powerful enough to maintain the natural progress of things toward improvement, in spite both of the extravagance of governments and of the greatest errors of administration. Like the unknown principle of animal life, it frequently restores health and vigour to the constitution, in spite, not only of the disease, but of the absurd prescriptions of the doctor."3 So far, that is, Adam Smith's invisible hand has been powerful enough to overcome the deadening effects of the invisible hand that operates in the political sphere. The experience of recent years—slowing growth and declining productivity—raises a doubt whether private ingenuity can continue to overcome the deadening effects of government control if we continue to grant ever more power to government, to authorize a "new class" of civil servants to spend ever larger fractions of our income supposedly on our behalf.

At a conference of economists from East and West, we once heard a brilliant talk by a Hungarian Marxist economist. He had rediscovered for himself Adam Smith's invisible hand—a remarkable if somewhat redundant intellectual achievement. He tried, however, to improve on it in order to use the price system to transmit information and organize production efficiently but not to distribute income. Needless to say, he failed in theory, as the communist countries have failed in practice. A BROADER VIEW Adam Smith's "invisible hand" is generally regarded as referring to purchases or sales of goods or services for money. But economic activity is by no means the only area of human life in which a complex and sophisticated structure arises as an unintended consequence of a large number of individuals cooperating while each pursues his own interests.


pages: 565 words: 151,129

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

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

For those who were long skeptical of the operating assumptions of the invisible hand of supply and demand, the approach of a near zero marginal cost society—the optimum efficient state—is “visible” proof that the system first described by Smith did indeed work, in part, although I would add four caveats. First, the invisible hand was often slowed or blocked altogether for long periods of time by the inevitable concentration of monopoly power that continually thwarted innovation in virtually every commercial sector. Second, the invisible hand did little to ensure that the increase in productivity and profits was shared with the workforce that jointly created the largesse.

Third, while capitalism dramatically improved the lives of everyone inside the system, its track record at the margins of the system, where human resources were, more often than not, ruthlessly exploited to benefit those cocooned inside, was horrendous by any reasonable standard. And fourth, the operating logic of the invisible hand of supply and demand never extended beyond the confines of the market mechanism itself and was, therefore, never able to account for the damage that the capitalist system inflicted on the larger environment from which it drew its raw materials and where it dumped its wastes. Still, Smith’s invisible hand proved to be a formidable social force, but not for the philosophical reasons he put forth. Smith’s theory revolves around the notion that in a market economy each individual pursues his or her own self-interest in the acquisition and exchange of property, without any intention of promoting the public interest, and by doing so, “inadvertently” advances the general well-being of society as a whole.

The new spirit is less autonomous and more interactive; less concerned with the pursuit of pecuniary interests and more committed to promoting quality of life; less consumed with accumulating market capital and more with accumulating social capital; less preoccupied with owning and having and more desirous of accessing and sharing; less exploitive of nature and more dedicated to sustainability and stewardship of the Earth’s ecology. The new social entrepreneurs are less driven by the invisible hand and more by the helping hand. They are far less utilitarian and far more empathically engaged. While the inherent logic of the invisible hand and the market mechanism helped get us to this critical crossroad of a near zero marginal cost society and the possibility of transforming the human journey from an economy of scarcity to an economy of sustainable abundance, it needs to be said that the entrepreneurs didn’t do it alone.


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

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

Charles Darwin, On the Origin of Species, 1859 These descriptors – invisible hand and natural selection – are so powerful, and so deeply annealed into our thought and culture, that it is difficult not to think of them as forces of nature, such as gravity and electromagnetism, or as mechanical systems, such as gears and pulleys. But they are not forces or mechanisms, because there is nothing acting on the agents in the system in such a causal manner. Instead, Smith’s invisible hand and Darwin’s natural selection are descriptions of processes that naturally occur in the economies of nature and society. The causal mechanisms behind the invisible hand and natural selection lie elsewhere in the system – within the agents themselves – which is why Smith invested so much work on understanding the natural sympathies of people, and Darwin advanced so much effort toward comprehending the natural tendencies of organisms.

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

Browne, Janet. 2000. Voyaging: Charles Darwin. A Biography. New York: Knopf, 36, 366. 11. Carey, Toni Vogel. 1998. “The Invisible Hand of Natural Selection, and Vice Versa.” Biology & Philosophy, 13:3, 427–442. Ghiselin, Michael T. 1974. The Economy of Nature and the Evolution of Sex. Berkeley: University of California Press. Gould, Stephen Jay. 1980. “Darwin’s Middle Road.” In The Panda’s Thumb. New York: W.W. Norton, 59–68. Gould, Stephen Jay. 1993. “Darwin and Paley Meet the Invisible Hand.” In Eight Little Piggies. New York: W.W. Norton, 138–152. Khalil, Elias L. 1997. “Evolutionary Biology and Evolutionary Economics.”


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10% Less Democracy: Why You Should Trust Elites a Little More and the Masses a Little Less by Garett Jones

Andrei Shleifer, Asian financial crisis, Brexit referendum, business cycle, central bank independence, clean water, corporate governance, correlation does not imply causation, creative destruction, Edward Glaeser, fake news, financial independence, game design, German hyperinflation, hive mind, invisible hand, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Jean Tirole, Kenneth Rogoff, low interest rates, Mark Zuckerberg, mass incarceration, military-industrial complex, minimum wage unemployment, Mohammed Bouazizi, Neil Armstrong, open economy, Pareto efficiency, Paul Samuelson, price stability, rent control, Robert Solow, The Wealth of Nations by Adam Smith, trade liberalization, Tyler Cowen

A world of ill-informed voters who have a strong desire to filter reality through their chosen lenses is close to a world where Keynes’s law is true: demand creates its own supply. If people want to see certain types of news stories—perhaps where my team is suffering unjustly and the other team isn’t playing fair—then an invisible hand, an act of entrepreneurship, will create such news stories. And when the invisible hand creates—or just reframes—news events, it never feels like fake news; it feels like a truth deeper than mere news, better than mere history. As the Batman says at the end of Christopher Nolan’s The Dark Knight, “Sometimes the truth isn’t good enough.

And if there’s one great and wise lesson of economic thinking, it’s French economist Frédéric Bastiat’s from 1848: “There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.”² So better economic policy choices are possible if there’s some social mechanism, some invisible hand, that spurs politicians to give real attention to invisible effects, effects that are unseen today but potentially foreseen. This chapter points toward such a mechanism—and it relies on voter forgetfulness. Backloading the Pork: A Sign of Voter Amnesia The theory that voters want to see visible results while, simultaneously, politicians try to provide voters with those visible results has been tested more formally and less anthropologically.

Regardless of how the questions have been phrased in the past decade, both the global IGM panel and the European IGM panel have overwhelmingly agreed that reducing trade barriers is good for the nation that lowers them. Letting foreigners compete in your markets is good for you, partly because you get cheaper goods and partly because the invisible hand will move your nation’s workers over to more productive uses. Here’s a statement from 2016 that the IGM’s economists were asked to disagree or agree with: “Freer movement of goods and services across borders within Europe has made the average western European citizen better off since the 1980s.”⁶ Of the European economists surveyed, 68% strongly agreed and another 24% agreed—just about everybody.


pages: 286 words: 79,305

99%: Mass Impoverishment and How We Can End It by Mark Thomas

"there is no alternative" (TINA), "World Economic Forum" Davos, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, additive manufacturing, Alan Greenspan, Albert Einstein, anti-communist, autonomous vehicles, bank run, banks create money, behavioural economics, bitcoin, business cycle, call centre, Cambridge Analytica, central bank independence, circular economy, complexity theory, conceptual framework, creative destruction, credit crunch, CRISPR, declining real wages, distributed ledger, Donald Trump, driverless car, Erik Brynjolfsson, eurozone crisis, fake news, fiat currency, Filter Bubble, full employment, future of work, Gini coefficient, gravity well, income inequality, inflation targeting, Internet of things, invisible hand, ITER tokamak, Jeff Bezos, jimmy wales, job automation, Kickstarter, labour market flexibility, laissez-faire capitalism, Larry Ellison, light touch regulation, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, Modern Monetary Theory, Money creation, money: store of value / unit of account / medium of exchange, Nelson Mandela, Nick Bostrom, North Sea oil, Occupy movement, offshore financial centre, Own Your Own Home, Peter Thiel, Piper Alpha, plutocrats, post-truth, profit maximization, quantitative easing, rent-seeking, Robert Solow, Ronald Reagan, Second Machine Age, self-driving car, Silicon Valley, smart cities, Steve Jobs, The Great Moderation, The Wealth of Nations by Adam Smith, Tyler Cowen, warehouse automation, wealth creators, working-age population

Familiarity with these metaphors can mean, however, that we fail to see that they are metaphors. Subconsciously, we feel as if they are describing reality – or at least a desirable future reality. Three widely used metaphors, with particular power to shape our thinking, are: the concept of the invisible hand of market forces; the notion of free markets; and the idea of economic laws. METAPHOR #1: THE INVISIBLE HAND OF MARKET FORCES We owe the concept of the invisible hand of market forces to Adam Smith and his book, An Enquiry into the Nature and Causes of the Wealth of Nations.18 In a much-cited passage, Smith says: As every individual, therefore, endeavours as much as he can, both to employ his capital in support of domestic industry, and so to direct that industry that its produce may be of greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can.

By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of greatest value he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it. The invisible hand of market forces is self-evidently a metaphor – nobody, not even the members of the Adam Smith Society, believes that there is a literal ‘invisible hand’ guiding our economy. Nevertheless, there is a problem: the phrase is so widely used, and so much taken for granted, that it is tempting to assume that the economy does indeed behave as though there were an invisible hand guiding every transaction in such a way as to produce the best possible outcome.

Nevertheless, there is a problem: the phrase is so widely used, and so much taken for granted, that it is tempting to assume that the economy does indeed behave as though there were an invisible hand guiding every transaction in such a way as to produce the best possible outcome. Specifically, the final sentence suggests that more good is done for society by pursuing self-interest than could be done by actually attempting to do good. This is an extremely convenient line of thought for anybody who is concerned more with self-interest than the interests of society. Not only does it absolve them from guilt, it enables them to claim enormous merit from their actions.


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

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

—LORD CHRISTOPHER MONCKTON, 20101 HOUSTON, WE HAVE A PROBLEM “Whenever the people are well informed,” Thomas Jefferson wrote, “they can be trusted with their own government.”2 This sentiment lies at the heart of the American-style democracy that has for more than two centuries inspired the world. Much like the “invisible hand”3 that guides Adam Smith’s economic marketplace,* so too does the invisible hand of the people’s will guide the affairs of men and women through the democratic process. But today the invisible hand seems confused and indecisive. Congress seems paralyzed, unable to act on many key issues that increasingly threaten the economic and environmental vitality of the nation and the planet. Ideology and rhetoric increasingly guide policy discussion, often bearing little relationship to factual reality.

In 1776 Smith argued in The Wealth of Nations that in a shared economy, an individual, who “intends only his own gain,” was in effect “led by an invisible hand” to promote the greater public interest, since willing buyers and willing sellers will always arrive at a natural price for things, and the highest value and efficiency will be obtained. “Nor is it always the worse for the society that [the individual’s intention to do social good] was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.”2 The argument of the invisible hand was so well made that it has become an axiom of economics: Just get out of the way and let the market work.

But we may also slip into decline, sliding day by day, almost without notice, into an environmental and economic morass, resentful and angry with each other over what we are losing, not realizing it is because of our own actions. For health and prosperity to continue, science can no longer be separated from policy making, religion, and economics. In this new age of connectivity, these four great houses of power must learn to work more closely together. But can they? THE SILENCE OF THE INVISIBLE HAND Science provides us with increasingly clear pictures of how to solve our great challenges, but policy makers are increasingly unwilling to pursue many of the remedies science presents. Instead, they take one of two routes: Deny the science, or pretend the problems don’t exist. In fact, political and religious institutions the world over are experiencing a reactionary pull-back from science and reason that is threatening planetary stability and long-term viability at the very time we need science the most, and nowhere in the world is this pullback more pronounced than in the United States.


pages: 695 words: 194,693

Money Changes Everything: How Finance Made Civilization Possible by William N. Goetzmann

Albert Einstein, Andrei Shleifer, asset allocation, asset-backed security, banking crisis, Benoit Mandelbrot, Black Swan, Black-Scholes formula, book value, Bretton Woods, Brownian motion, business cycle, capital asset pricing model, Cass Sunstein, classic study, collective bargaining, colonial exploitation, compound rate of return, conceptual framework, Cornelius Vanderbilt, corporate governance, Credit Default Swap, David Ricardo: comparative advantage, debt deflation, delayed gratification, Detroit bankruptcy, disintermediation, diversified portfolio, double entry bookkeeping, Edmond Halley, en.wikipedia.org, equity premium, equity risk premium, financial engineering, financial independence, financial innovation, financial intermediation, fixed income, frictionless, frictionless market, full employment, high net worth, income inequality, index fund, invention of the steam engine, invention of writing, invisible hand, James Watt: steam engine, joint-stock company, joint-stock limited liability company, laissez-faire capitalism, land bank, Louis Bachelier, low interest rates, mandelbrot fractal, market bubble, means of production, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, new economy, passive investing, Paul Lévy, Ponzi scheme, price stability, principal–agent problem, profit maximization, profit motive, public intellectual, quantitative trading / quantitative finance, random walk, Richard Thaler, Robert Shiller, shareholder value, short selling, South Sea Bubble, sovereign wealth fund, spice trade, stochastic process, subprime mortgage crisis, Suez canal 1869, Suez crisis 1956, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, time value of money, tontine, too big to fail, trade liberalization, trade route, transatlantic slave trade, tulip mania, wage slave

The two big factors that distinguished Athens from most prior ancient societies were the reliance on maritime trade and the development of a unique governance system. Athens in classical antiquity was quite different from the early Sumerian city-states. Despite its magnificent Acropolis, it was not centered on a temple-based, local, agricultural redistribution system. The overseas grain trade relied in part on the invisible hand to attract risk capital—both wealth and human-risk capital. The invisible hand played an important role in creating an incentive structure to pull grain toward the city to replace the grain it could not produce on its own. That said, Athens was not simply a laissez-faire society. Strict regulatory constraints prevented grain re-exports and the financing of non-Athenian grain trade.

The economy had to motivate farmers overseas to grow grain for export, to motivate sailors and captains to risk their lives to bring the grain, to motivate investment in ships and trade goods, and to create a system of payment that was robust to uncertainties of international commerce. The solutions involved the invisible hand of the market, financial technologies for dealing with the unpredictability of the sea, and a monetary economy that relied on universally accepted measures of value. Much of what we know about the ancient Athenian financial system comes from surviving judicial orations. The courts themselves were key elements in the financial system.

Merchants would no longer ship grain to Athens if they could not obtain a fair market price. As the Greek orator Lysias, the author of the prosecutor’s closing argument, put it: If you condemn them you will do what is just and make corn cheaper; if you acquit them you make it dearer.4 His argument was that the crucial flow of grain would shift elsewhere in response to the invisible hand of the market, making corn (i.e., grain) dearer. Investors in the grain trade would no longer make loans on grain voyages if prices at the dock were too low. Captains would have little incentive to brave the risks of sea if they could not sell their cargo at a profit. The text of the trial is incomplete.


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

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

And that’s true enough, but you have no influence over whether those other nineteen people bring chips or casseroles, so why not do what’s best for yourself: chips it is. This is one example of the famous “prisoner’s dilemma,” in which individual greed leads to an awful group outcome. Prisoner’s dilemmas are everywhere, and they’re the precise opposite of Adam Smith’s famous “invisible hand,” in which individual greed leads to a positive group outcome. Invisible hands and prisoner’s dilemmas are both at work in the world: sometimes, as Gordon Gekko said in the movie Wall Street, “Greed is good,” and sometimes greed creates misery. In this and the next chapter, we’ll see how greed can create misery, and we’ll see how higher-IQ groups are just a bit more likely to find a way to cooperate, a bit more likely to avoid the prisoner’s dilemma.

Indeed, human society in every nation today is a form of collective intelligence, in which the accumulated knowledge of the past makes its members richer today, and in which the many small, daily cognitive contributions of millions of their neighbors—in offices, in factories, in the halls of government, and elsewhere—help to make their lives better as if by Adam Smith’s invisible hand. Those millions of small cognitive contributions are what create each nation’s collective intelligence, each nation’s hive mind. Members of society all draw on that collective intelligence, they all get benefits from the hive mind that they never pay for, benefits that, by my lights at least, they don’t deserve.

Kremer notes that a lot of the modern economy works like this vase company: computer chips with tiny errors are worthless and get thrown out; clothes with small mistakes in stitching get sent to discount stores and sell for a fraction of full price. In an O-ring economy, the clichés are true: a chain is only as strong as its weakest link; for want of a nail a battle can be lost. But Kremer goes beyond these obvious points to draw some surprising conclusions. Perhaps the most important one is that business owners will naturally—by an invisible hand—put highly skilled workers together on the most valuable projects and put lower-skilled workers together on the less valuable projects. The lower-skilled workers will earn lower wages, since they are less productive, but they won’t be just a little less productive: they’ll be a lot less productive.


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Reinventing the Bazaar: A Natural History of Markets by John McMillan

accounting loophole / creative accounting, Albert Einstein, Alvin Roth, Andrei Shleifer, Anton Chekhov, Asian financial crisis, classic study, congestion charging, corporate governance, corporate raider, crony capitalism, Dava Sobel, decentralized internet, Deng Xiaoping, Dutch auction, electricity market, experimental economics, experimental subject, fear of failure, first-price auction, frictionless, frictionless market, George Akerlof, George Gilder, global village, Great Leap Forward, Hacker News, Hernando de Soto, I think there is a world market for maybe five computers, income inequality, income per capita, independent contractor, informal economy, information asymmetry, invisible hand, Isaac Newton, job-hopping, John Harrison: Longitude, John Perry Barlow, John von Neumann, Kenneth Arrow, land reform, lone genius, manufacturing employment, market clearing, market design, market friction, market microstructure, means of production, Network effects, new economy, offshore financial centre, ought to be enough for anybody, pez dispenser, pre–internet, price mechanism, profit maximization, profit motive, proxy bid, purchasing power parity, Robert Solow, Ronald Coase, Ronald Reagan, sealed-bid auction, search costs, second-price auction, Silicon Valley, spectrum auction, Stewart Brand, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, War on Poverty, world market for maybe five computers, Xiaogang Anhui farmers, yield management

Goods get produced and delivered to the people who want and can pay for them. Self-interest is harnessed to the greater good. Intending only his own gain, a producer or a buyer is “led by an invisible hand,” Smith famously concluded, “to promote an end which was no part of his intention.”10 The metaphor of the invisible hand Smith formulated in 1776 is the classic account of what drives a market economy. It was nearly two centuries before Adam Smith’s insight was taken beyond the metaphor of the invisible hand and given a rigorous theoretical foundation. Are competitive markets able to harmonize the actions of millions? Léon Walras took the first big step toward answering this question in the late nineteenth century, formulating a mathematical model of an economy in which, for each good or service in the economy, there was an equation representing the balance of supply and demand.

Goldman, Eitan, and Gorton, Gary. 2000. “The Visible Hand, the Invisible Hand, and Efficiency.” Working paper 7587, National Bureau of Economic Research, Washington, D.C. Grafton, R. Quentin, Squires, Dale, and Fox, Kevin J. 2000. “Private Property and Economic Efficiency: A Study of a Common-Pool Resource.” Journal of Law and Economics 43, 679–714. Grafton, R. Quentin, Squires, Dale, and Kirkley, James E. 1996. “Private Property Rights and Crises in World Fisheries.” Contemporary Economic Policy 14, 89–99. Grampp, William D. 2000. “What Did Smith Really Mean by the Invisible Hand?” Journal of Political Economy 108, 441–465.

The essence of life is infinitely and mysteriously multiform, and therefore it cannot be contained or planned for, in its fullness and variability, by any central intelligence.”6 Some have invoked the supernatural to explain what they find extraordinary: that markets can work with no one in charge. The Reverend Richard Whately, a professor of political economy at Oxford University in the eighteenth century, believed the coherence of the market to be proof that God exists. If no human planner is guiding the market to the optimal outcome, God must be. The invisible hand is the hand of God. A religious fervor characterizes some of today’s fans of the free market. “The true spirit capital of the current capitalist economy is not material. It is moral, intellectual, and spiritual,” declared George Gilder, an evangelist for libertarianism. He also said that entrepreneurship “most deeply springs from religious faith and culture” and that entrepreneurs “embody and fulfill the sweet and mysterious consolations of the Sermon on the Mount.”


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Competition Overdose: How Free Market Mythology Transformed Us From Citizen Kings to Market Servants by Maurice E. Stucke, Ariel Ezrachi

"Friedman doctrine" OR "shareholder theory", affirmative action, Airbnb, Alan Greenspan, Albert Einstein, Andrei Shleifer, behavioural economics, Bernie Sanders, Boeing 737 MAX, Cambridge Analytica, Cass Sunstein, choice architecture, cloud computing, commoditize, corporate governance, Corrections Corporation of America, Credit Default Swap, crony capitalism, delayed gratification, disinformation, Donald Trump, en.wikipedia.org, fake news, Garrett Hardin, George Akerlof, gig economy, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Google Chrome, greed is good, hedonic treadmill, incognito mode, income inequality, income per capita, independent contractor, information asymmetry, invisible hand, job satisfaction, labor-force participation, late fees, loss aversion, low skilled workers, Lyft, mandatory minimum, Mark Zuckerberg, market fundamentalism, mass incarceration, Menlo Park, meta-analysis, Milgram experiment, military-industrial complex, mortgage debt, Network effects, out of africa, Paradox of Choice, payday loans, Ponzi scheme, precariat, price anchoring, price discrimination, profit maximization, profit motive, race to the bottom, Richard Thaler, ride hailing / ride sharing, Robert Bork, Robert Shiller, Ronald Reagan, search costs, shareholder value, Sheryl Sandberg, Shoshana Zuboff, Silicon Valley, Snapchat, Social Responsibility of Business Is to Increase Its Profits, Stanford prison experiment, Stephen Hawking, sunk-cost fallacy, surveillance capitalism, techlash, The Chicago School, The Market for Lemons, The Myth of the Rational Market, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Davenport, Thorstein Veblen, Tim Cook: Apple, too big to fail, Tragedy of the Commons, transaction costs, Uber and Lyft, uber lyft, ultimatum game, Vanguard fund, vertical integration, winner-take-all economy, Yochai Benkler

A canny, competitive retailer knows when the line has been crossed and doesn’t go there. So, in competitive markets we can expect the invisible hand to deliver the optimal level of choices—whether for gin, tonic, retirement plans, or jams. Not too few, not too many. So far so good. We crave choice, competition delivers the right amount of variety, and we pick what best suits our needs. So, where’s the overdose? Well, here it comes . . . Turns out that the invisible hand—and the retailers it presumably guides in their decisions—doesn’t always know when the line has been crossed. Choice Overload—Too Much of a Good Thing . . .

(speech, Cambridge University, Cambridge, England, May 1, 2014), Vital Speeches of the Day, 80, no. 7: 243–246. 16.Sheila Bair, Bull by the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself (New York: Free Press, 2012); Associated Press, “Greenspan Admits ‘Mistake’ That Helped Crisis,” NBC News, October 23, 2008, http://www.nbcnews.com/id/27335454/ns/business-stocks_and_economy/t/greenspan-admits-mistake-helped-crisis/. 17.Paul Krugman, “Hiding behind the Invisible Hand,” The Conscience of a Liberal (blog), New York Times, March 22, 2008, https://krugman.blogs.nytimes.com/2008/03/22/hiding-behind-the-invisible-hand/. 18.Paul Krugman, “Blindly into the Bubble,” New York Times, December 21, 2007, https://nyti.ms/2N4F1sv. 19.Financial Crisis Inquiry Report, xvii. 20.Associated Press, “Greenspan Admits ‘Mistake.’” 21.Administration of Barack Obama, Weekly Address: Ensuring Our Free Market Works for Everyone, 2016 Daily Comp.

Let’s start with the famous Scottish economist Adam Smith, known as the patron saint of competition, and the hockey player Craig MacTavish. Part I When Is Competition Toxic? Chapter 1 First Overdose The Race to the Bottom Two centuries after his death, the Scottish economist Adam Smith might still be the most powerful man in the world. Although he only used the term a few times in his writing, Smith’s “invisible hand” became one of social science’s most well-known metaphors, and the foundational principle of a lot of complex economic systems. Everything from the price you pay for an apple at your local bodega to the machinations of multilateral international trade wars is influenced by a key assumption underlying Smith’s theory.


pages: 75 words: 22,220

Occupy by Noam Chomsky

Alan Greenspan, corporate governance, corporate personhood, deindustrialization, high-speed rail, Howard Zinn, income inequality, invisible hand, Martin Wolf, Nate Silver, Occupy movement, Plutonomy: Buying Luxury, Explaining Global Imbalances, precariat, Ralph Nader, Ronald Reagan, too big to fail, union organizing

However, he went on to say that the merchants and manufacturers would prefer to operate in their own country—what’s sometimes called a “home bias.” So, as if by “an invisible hand,” England would be saved from the ravages of what is now called neoliberal globalization. That’s a pretty hard passage to miss. In his classic Wealth of Nations, that’s the only occurrence of the phrase, “invisible hand.” Maybe England would be saved from neoliberal globalization by an “invisible hand.” The other great classical economist, David Ricardo, recognized the same thing and hoped that it wouldn’t happen—kind of a sentimental hope—and it didn’t for a long time.

It doesn’t mean that it doesn’t have representatives—it can have, but they should be recallable and under the influence and control of participants. Who’s in favor of a society like that? You can say Adam Smith, for example, who believed—you can question whether his beliefs were accurate, but he believed—that market systems and the “invisible hand” of individual choices would lead to egalitarian societies of common participation. You can question the logic of the argument, but the goals are understandable and they go far back. You can find them in the first serious book of politics that was ever written, Aristotle’s Politics. When Aristotle evaluated various kinds of systems, he felt that democracy was the least bad of them.


pages: 561 words: 157,589

WTF?: What's the Future and Why It's Up to Us by Tim O'Reilly

"Friedman doctrine" OR "shareholder theory", 4chan, Affordable Care Act / Obamacare, Airbnb, AlphaGo, Alvin Roth, Amazon Mechanical Turk, Amazon Robotics, Amazon Web Services, AOL-Time Warner, artificial general intelligence, augmented reality, autonomous vehicles, barriers to entry, basic income, behavioural economics, benefit corporation, Bernie Madoff, Bernie Sanders, Bill Joy: nanobots, bitcoin, Blitzscaling, blockchain, book value, Bretton Woods, Brewster Kahle, British Empire, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, Captain Sullenberger Hudson, carbon tax, Carl Icahn, Chuck Templeton: OpenTable:, Clayton Christensen, clean water, cloud computing, cognitive dissonance, collateralized debt obligation, commoditize, computer vision, congestion pricing, corporate governance, corporate raider, creative destruction, CRISPR, crowdsourcing, Danny Hillis, data acquisition, data science, deep learning, DeepMind, Demis Hassabis, Dennis Ritchie, deskilling, DevOps, Didi Chuxing, digital capitalism, disinformation, do well by doing good, Donald Davies, Donald Trump, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, fake news, Filter Bubble, Firefox, Flash crash, Free Software Foundation, fulfillment center, full employment, future of work, George Akerlof, gig economy, glass ceiling, Glass-Steagall Act, Goodhart's law, Google Glasses, Gordon Gekko, gravity well, greed is good, Greyball, Guido van Rossum, High speed trading, hiring and firing, Home mortgage interest deduction, Hyperloop, income inequality, independent contractor, index fund, informal economy, information asymmetry, Internet Archive, Internet of things, invention of movable type, invisible hand, iterative process, Jaron Lanier, Jeff Bezos, jitney, job automation, job satisfaction, John Bogle, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John Zimmer (Lyft cofounder), Kaizen: continuous improvement, Ken Thompson, Kevin Kelly, Khan Academy, Kickstarter, Kim Stanley Robinson, knowledge worker, Kodak vs Instagram, Lao Tzu, Larry Ellison, Larry Wall, Lean Startup, Leonard Kleinrock, Lyft, machine readable, machine translation, Marc Andreessen, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, McMansion, microbiome, microservices, minimum viable product, mortgage tax deduction, move fast and break things, Network effects, new economy, Nicholas Carr, Nick Bostrom, obamacare, Oculus Rift, OpenAI, OSI model, Overton Window, packet switching, PageRank, pattern recognition, Paul Buchheit, peer-to-peer, peer-to-peer model, Ponzi scheme, post-truth, race to the bottom, Ralph Nader, randomized controlled trial, RFC: Request For Comment, Richard Feynman, Richard Stallman, ride hailing / ride sharing, Robert Gordon, Robert Metcalfe, Ronald Coase, Rutger Bregman, Salesforce, Sam Altman, school choice, Second Machine Age, secular stagnation, self-driving car, SETI@home, shareholder value, Silicon Valley, Silicon Valley startup, skunkworks, Skype, smart contracts, Snapchat, Social Responsibility of Business Is to Increase Its Profits, social web, software as a service, software patent, spectrum auction, speech recognition, Stephen Hawking, Steve Ballmer, Steve Jobs, Steven Levy, Stewart Brand, stock buybacks, strong AI, synthetic biology, TaskRabbit, telepresence, the built environment, the Cathedral and the Bazaar, The future is already here, The Future of Employment, the map is not the territory, The Nature of the Firm, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Davenport, Tony Fadell, Tragedy of the Commons, transaction costs, transcontinental railway, transportation-network company, Travis Kalanick, trickle-down economics, two-pizza team, Uber and Lyft, Uber for X, uber lyft, ubercab, universal basic income, US Airways Flight 1549, VA Linux, warehouse automation, warehouse robotics, Watson beat the top human players on Jeopardy!, We are the 99%, web application, Whole Earth Catalog, winner-take-all economy, women in the workforce, Y Combinator, yellow journalism, zero-sum game, Zipcar

Uber’s aggressive tactics have earned them many enemies, and they have ignored one of the key rules of the modern connected company: as O’Reilly Media President and Chief Operating Officer Laura Baldwin is fond of saying, “Your customers are your conscience.” THE INVISIBLE HAND Many simplistic apologists for the capitalist system celebrate disruption and assume that while messy, everything will work out for the best if we just let “the invisible hand” of competition do its work. This is true, if we correctly understand the invisible hand. The law of supply and demand is not describing some magical force, but the way that players of the game fight for competitive advantage. As Adam Smith put it, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.

And that, of course, is also the classical conception of “the market”—the system by which, without any central coordination, prices of goods and labor are set, buyers and sellers are found for all of the fruits of the earth and the products of human ingenuity, guided as if, as Adam Smith famously noted, “by an invisible hand.” But is the invisible hand of a market of self-interested human merchants and human consumers the same as a market in which computer algorithms guide and shape those interests? COLLECTIVE INTELLIGENCE GONE WRONG Algorithms not only aggregate the intelligence and decisions of humans; they also influence and amplify them.

To be clear, government as a platform most emphatically doesn’t mean outsourcing government programs to the private sector. It does mean strategically identifying what building blocks are essential for government to provide, and providing those services, but not so many that they crowd out opportunity for the marketplace participants. I had read a remarkable paper called “Government Data and the Invisible Hand,” published in the January 2009 issue of the Yale Journal of Law & Technology by David Robinson, Harlan Yu, William P. Zeller, and Edward W. Felten. The paper argues that the government should get out of the business of building websites for citizens. If that call sounds familiar, you’ve probably heard it in the context of critics charging that government is not competent at building technology and would be much better off outsourcing everything to government contractors.


pages: 131 words: 41,052

Why Europe Will Run the 21st Century by Mark Leonard

Berlin Wall, Celtic Tiger, continuous integration, cuban missile crisis, different worldview, European colonialism, facts on the ground, failed state, global reserve currency, Global Witness, invisible hand, knowledge economy, mass immigration, non-tariff barriers, North Sea oil, one-China policy, Panopticon Jeremy Bentham, pension reform, reserve currency, Robert Gordon, shareholder value, South China Sea, The Wealth of Nations by Adam Smith, Thomas Malthus, trade liberalization, Washington Consensus

For France, German containment was the key goal, backed up by the prospects for economic growth which access to German markets and productive capacity offered – what Jacques Delors described as the marriage contract on which the EEC was founded.5 All of these were calculations of national interest, and yet the outcome of their filtering through Monnet’s European institutions was a solution to the problem of European conflict.6 In Europe today, war is not simply undesirable – it is inconceivable. The founder of liberal economics, Adam Smith, developed the evocative idea of the ‘invisible hand’ of the market to explain how a system of perfect liberty, operating under the drives and constraint of human nature and intelligently designed institutions, would give rise to an orderly society rather than a ‘war of all against all’.7 In many ways, Monnet’s genius was to develop a ‘European invisible hand’ that allows an orderly European society to emerge from each country’s national interest. 8 And that is possibly the most powerful element of Monnet’s vision: he did not try to abolish the nation-state or nationalism – simply to change its nature by pooling sovereignty.

Why Europe Will Run the 21st Century Mark Leonard For Dick, Irène, Miriam and Gabrielle Table of Contents Cover Page Title Page INTRODUCTION The Power of Weakness and the Weakness of Power: Why Europe Will Run the Twenty-First Century CHAPTER 1 Europe’s Invisible Hand CHAPTER 2 ‘Divided We Stand, United We Fall’ CHAPTER 3 Europe’s Weapon is the Law CHAPTER 4 The Revolutionary Power of Passive Aggression CHAPTER 5 The European Way of War CHAPTER 6 The Stockholm Consensus CHAPTER 7 The European Rescue of National Democracy CHAPTER 8 Europe at 50 CHAPTER 9 Brussels and the Beijing Consensus CHAPTER 10 The End of the American World Order CHAPTER 11 The Regional Domino Effect APPENDIX The 109 Countries of the Eurosphere NOTES Acknowledgements About the Author Copyright About the Publisher INTRODUCTION The Power of Weakness and the Weakness of Power: Why Europe Will Run the Twenty-First Century In the middle of Pennsylvania Avenue in Washington a middle-aged woman with a weather-beaten face and a brown wig sits on a milk crate.

Europe’s power is a ‘transformative power’.7 And when we stop looking at the world through American eyes, we can see that each element of European ‘weakness’ is in fact a facet of its extraordinary ‘transformative power’. Europe doesn’t flaunt its strength or talk about a ‘single sustainable model of progress’. Instead, like an ‘invisible hand’, it operates through the shell of traditional political structures. The British House of Commons, British law courts, and British civil servants are still there, but they have all become agents of the European Union. This is no accident. By creating common standards that are implemented through national institutions, Europe can spread its influence without becoming a target for hostility.


pages: 278 words: 74,880

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

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

Many of us have been taught that an “invisible hand” ensures competition in the economy, contributing to equilibrium in the markets and generating social benefits that are automatically shared by everyone. Free markets dedicated solely to profit are supposed to produce improved living standards for all. Capitalism has indeed stimulated innovation and economic growth. But in a world of skyrocketing inequality, more and more people are asking, “Does the invisible hand produce its benefits for everybody in the society?” The answer seems obvious. Somehow the invisible hand must be heavily biased toward the richest—otherwise, how could today’s enormous wealth concentration continue to grow?

We cannot just sit and watch a whole generation of young people fall through the cracks of economic theory because we are too timid to question the wisdom of our theoreticians. We have to redesign our theory by recognizing the limitless capacity of a human being, instead of relying on the “invisible hand of the market” to solve all our problems. We have to wake up to the fact that the “invisible hand” is invisible because it does not exist—or, if it does exist, it is dedicated to serving the rich, invisibly. In the current economic system, theoreticians have never offered us any better solutions for unemployment than promoting economic growth through investments in infrastructure building or make-work government programs, along with state charity designed to alleviate the suffering of those in need.

And although my proposal may be viewed as a significant change in the structure of capitalism, I see no option but to address these basic flaws in the structure. In my view, the theoretical framework of capitalism that is widely accepted today is a half-built structure—one that turns Adam Smith’s “invisible hand” into a heavily biased hand that pushes the activities of the market in favor of the richest. One might almost suspect that the “invisible hand” actually belongs to the richest! As I’ve discussed, the present theory of capitalism holds that the marketplace is reserved for those who are interested in profit only—an interpretation that treats people as one-dimensional beings.


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

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

So we know that capitalism is stronger than ever, but we do not know if this represents its overall peak, or if it is only a local peak, with further expansion of capitalist relations in the future. APPENDIX B HYPERCOMMERCIALIZATION AND ADAM SMITH’S “INVISIBLE HAND” I discussed in Chapter 5 the interaction between hypercommercialized globalization and our values and behaviors. Here I look at how the same type of issue was addressed, at the time of early capitalism, by Adam Smith, and the place of the “invisible hand” in Smith’s argument. The invisible hand type of argument relies on accepting what were thought, in the pre-Enlightenment, to be the destructive and insatiable passions of power, pleasure, and profit (to use David Wootton’s [2018] classification) as long as, when controlled, they are able to result in a social good.

The Contours of the Post–Cold War World 2. Liberal Meritocratic Capitalism 3. Political Capitalism 4. The Interaction of Capitalism and Globalization 5. The Future of Global Capitalism Appendix A. The Place of Communism in Global History Appendix B. Hypercommercialization and Adam Smith’s “Invisible Hand” Appendix C. Some Methodological Issues and Definitions Notes References Acknowledgments Index CHAPTER 1 THE CONTOURS OF THE POST–COLD WAR WORLD [The bourgeoisie] compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilization into their midst, i.e., to become bourgeois themselves.

That decision meant that left-wing and communist movements in the Third World could legitimately combine social revolution and national liberation in a unique way that was, as I have argued, the key factor that allowed them to gain power. Where the cunning of history was, it was in not “revealing” to them that they were, as if “led by an invisible hand,” bringing in the conditions for the rise of their national capitalisms rather than, as they thought they were doing, ushering in a classless and internationalist communist society. In this context one can see that Lenin’s and the Comintern’s turn toward the “toilers of the East,” along with the division of the world into the two camps of imperialist and colonized countries that it implied, was absolutely decisive for what happened next: not for bringing about communism, but for bringing about capitalism.4 This interpretation allows us to claim—paradoxically, at first sight—that Lenin was probably the most important “capitalist roader” in history, since his idea to connect the proletarian struggle in the West to the movement for national liberation in Africa and Asia both departed from orthodox Western Marxism and unleashed the forces that some fifty or sixty years later would bring indigenous capitalism to countries as diverse as Vietnam, China, Angola, and Algeria.


pages: 604 words: 161,455

The Moral Animal: Evolutionary Psychology and Everyday Life by Robert Wright

agricultural Revolution, Andrei Shleifer, Apollo 13, Asian financial crisis, British Empire, centre right, cognitive dissonance, cotton gin, double entry bookkeeping, double helix, Easter island, fault tolerance, Francis Fukuyama: the end of history, Garrett Hardin, George Gilder, global village, Great Leap Forward, invention of gunpowder, invention of movable type, invention of the telegraph, invention of writing, invisible hand, John Nash: game theory, John von Neumann, Marshall McLuhan, Multics, Norbert Wiener, planetary scale, planned obsolescence, pre–internet, profit motive, Ralph Waldo Emerson, random walk, Richard Thaler, rising living standards, Robert Solow, Silicon Valley, social intelligence, social web, Steven Pinker, talking drums, technological determinism, the medium is the message, The Wealth of Nations by Adam Smith, trade route, Tragedy of the Commons, your tax dollars at work, zero-sum game

War, as we saw in chapter 5, works against social structures that lack certain properties. One property is economic vigor—enough wealth to make weapons and canoes, enough food to let large numbers of men live close together, in formidable density. Thus does war encourage chiefs to do a good job of imitating the invisible hand. And one key to the invisible hand’s success is rewarding people for their labor. That is: return non-zero-sum gains to the workers who produced them, as an incentive to produce more; resist the parasitic temptation. But why worry about the commoners’ incentives? Why not just command them to work harder—since you are, after all, a demigod?

The costs of finding out what buyer want—and the cost to buyers of finding out what’s available, and at what price—have to be bearable for transaction to ensue. Note that the costs of transport and communication apply not just to the final “purchase” of the robe—at the “retail” level—but to the links in its creation, such as getting cedar bark from the south and copper from the north. At all levels, the movement of Smith’s “invisible hand” gets smoother as information and transportation costs drop. The lower these costs, the more highly non-zero-sum the relationship among the players—the more each can gain via interaction, the more productive, per capita, the web of exchange. How to keep these costs low if your communications and transportation technologies are primitive?

The difference had been that the Amazonians weren’t getting paid to work overtime. Neither were the Shoshone. The arid Great Basin was even less conducive to thick population than were South American jungles. ADAM SMITH AMENDED Maybe we should amend Adam Smith’s trademark metaphor of the invisible hand. Smith’s point, of course, was that a bunch of far-flung people pursuing individual gain can, without really trying, collectively orchestrate a large-scale social process. The ingredients of a beautiful robe just seem to magically congregate, assemble themselves, and then find a buyer, as if guided from above.


pages: 479 words: 113,510

Fed Up: An Insider's Take on Why the Federal Reserve Is Bad for America by Danielle Dimartino Booth

Affordable Care Act / Obamacare, Alan Greenspan, asset-backed security, bank run, barriers to entry, Basel III, Bear Stearns, Bernie Sanders, Black Monday: stock market crash in 1987, break the buck, Bretton Woods, business cycle, central bank independence, collateralized debt obligation, corporate raider, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, financial deregulation, financial engineering, financial innovation, fixed income, Flash crash, forward guidance, full employment, George Akerlof, Glass-Steagall Act, greed is good, Greenspan put, high net worth, housing crisis, income inequality, index fund, inflation targeting, interest rate swap, invisible hand, John Meriwether, Joseph Schumpeter, junk bonds, liquidity trap, London Whale, Long Term Capital Management, low interest rates, margin call, market bubble, Mexican peso crisis / tequila crisis, money market fund, moral hazard, Myron Scholes, natural language processing, Navinder Sarao, negative equity, new economy, Northern Rock, obamacare, Phillips curve, price stability, proprietary trading, pushing on a string, quantitative easing, regulatory arbitrage, Robert Shiller, Ronald Reagan, selection bias, short selling, side project, Silicon Valley, stock buybacks, tail risk, The Great Moderation, The Wealth of Nations by Adam Smith, too big to fail, trickle-down economics, yield curve

However, the financial system had undergone deep and treacherous structural changes, negating the fundamental assumptions held by economists about the way the economy worked. “Economists view the world as being the outcome of the ‘invisible hand,’ that is, a world where private decisions are unknowingly guided by prices to allocate resources efficiently,” Gorton said. He’d described the first thing I had ever learned from my father about laissez-faire—the philosophy cherished by all Fed economists—as first described in Adam Smith’s The Wealth of Nations. “The credit crisis raises the question of how it is that we could get slapped in the face by the invisible hand,” Gorton said. (Gorton’s quotes are taken from an updated paper that developed his ideas more fully.)

I was surprised to learn that he never uses the term “laissez-faire” in the book. “The credit crisis raises”: Gorton, “Slapped in the Face by the Invisible Hand,” 2. “Instead,” Gorton said: Ibid., 10. “A dealer or other holder”: “Money Market: Repos,” Investopedia.com, www.investopedia.com/terms/r/repurchaseagreement.asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186. A year later, the price shot up: Gorton, “Slapped in the Face by the Invisible Hand,” 33. And the Fed didn’t have: FRBNY: “About the New York Fed, Purchase and Reverse Purchase Transactions,” 2007, www.newyorkfed.org/aboutthefed/fedpoint/fed04.html.

CONTENTS TITLE PAGE COPYRIGHT DEDICATION CHAPTER 1: “Groupstink” CHAPTER 2: Who Would Buy That Crap? CHAPTER 3: Saint Greenspan CHAPTER 4: Inside the Black Box CHAPTER 5: The First Tremors CHAPTER 6: Front-running the Fed CHAPTER 7: The Maverick CHAPTER 8: The Inner Sanctum CHAPTER 9: “Luddite!” CHAPTER 10: Helpless CHAPTER 11: Slapped in the Face by the Invisible Hand CHAPTER 12: Heads Must Roll CHAPTER 13: Breaking the Buck CHAPTER 14: Breaching the Zero Bound CHAPTER 15: The Walking Dead CHAPTER 16: Dr. Ben Pulls a Bait and Switch CHAPTER 17: A Turning Point CHAPTER 18: Insider Trading? CHAPTER 19: Spinning Fedwire CHAPTER 20: The Taper Tantrum CHAPTER 21: The New Sheriff in Town CHAPTER 22: Culture Shock ACKNOWLEDGMENTS NOTES INDEX CHAPTER 1 “Groupstink” Never in the field of monetary policy was so much gained by so few at the expense of so many.


pages: 417 words: 97,577

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

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

Markets have shifted to monopolies and oligopolies when it comes to selling goods, but it is just as bad when you look at the power of companies as buyers. When workers have fewer employers to choose from in their line of work, their bargaining power disappears. Corporate giants can squeeze their suppliers, but the main things companies buy is labor, and they have been squeezing workers. If Adam Smith's invisible hand required many buyers and sellers to find the right price, then the invisible hand has gone missing as we have moved toward oligopolies. Many markets are monopsonies. Monopolies are rare, and so are monopsonies. However, oligopolies are very common across almost all US industries. Consumers can choose from only a very few companies when it comes to buying, and likewise when it comes to finding a job.

It should be no surprise that a Marketplace and Edison Research poll that found that 70.9 percent of Americans think “the economic system in the U.S. is rigged in favor of certain groups.”80 Given the explosion of spending on lobbying and the vast rewards for doing so, most Americans are entirely right. It is worth remembering that when Adam Smith wrote of “the invisible hand” in The Wealth of Nations, he was not simply praising the free market, but condemning the government acting on the behalf of large merchants who were furthering their own interests. Until lobbying is reformed, there is little hope for reducing barriers to entry for smaller firms to fight it out in the marketplace. There is little chance the invisible hand can work. In the final days of the 2016 election, Donald Trump ran an advertisement showing the face of Goldman Sachs CEO Lloyd Blankfein.

It is an active participant, granting favors to the wealthy and powerful, looking after the interests of the well connected. It has distorted society towards inequality. Rather than encourage competition and innovation, it has stifled growth. The increase in inequality comes not from Adam Smith's invisible hand, but from the hands of government. It is worth remembering the words of Theodore Roosevelt, who opposed monopolies and trusts: “There can be no effective control of corporations while their political activity remains. To put an end to it will be neither a short nor an easy task, but it can be done …”92 While he said these words over 100 years ago, not much has changed.


pages: 561 words: 87,892

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

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

The price mechanism, in turn, is a remarkably efficient way of allowing us to make informed choices about scarcity. If something is expensive, its opportunity cost may be high. If something is cheap, its opportunity cost might be correspondingly low. Adam Smith (1723–1790), one of the economic greats and now deservedly immortalized on the Bank of England £20 note, called the price mechanism the ‘invisible hand’.8 Many people have been seduced by Smith’s ideas, sufficiently so as to claim that free markets are the sole reason behind the West’s ongoing prosperity. Yet markets do not always work very well. They are not very good at identifying the environmental consequences of our actions. They do not cope well when there is a lack of well-established property rights.

But if inflation moves away from the target by more than 1 percentage point … I shall expect you to send an open letter to me … setting out … the reasons why inflation has moved away from target … the policy action which you are taking to deal with it … [and] the period within which you expect inflation to return to the target.8 In other words, price stability is, like the UK prime minister, first among equals. Even for those central banks with more than one economic objective, price stability is typically the most important. The central bank’s job is thus to safeguard the value of the currency. Price stability matters because Adam Smith’s invisible hand works best free of distortions. But in both the American and British mandates, there is no explicit recognition that inflation is determined not just by domestic policies but also by developments elsewhere in the world, other than by reference to ‘shocks and disturbances’. The rise of the emerging economies appears to be of no significant consequence.

*This is unashamedly a paraphrase: the actual language used is not fit to print. CHAPTER SEVEN WHO CONTROLS WHAT? THE RISE OF STATE CAPITALISM OVERRULING THE MARKET Globalization creates winners and losers. The benefits and costs of globalization are randomly distributed by the market’s invisible hand across and within sovereign states. State capitalism, arguably, can be seen as an attempt to overrule this process. It offers a chance to exert government control over resources that might otherwise be lost through market forces to higher bidders elsewhere. State capitalism can be used to ensure resources are either retained for domestic consumption or used as bargaining chips in the exertion of global economic and political power.


The Techno-Human Condition by Braden R. Allenby, Daniel R. Sarewitz

"World Economic Forum" Davos, Abraham Maslow, airport security, Anthropocene, augmented reality, carbon credits, carbon footprint, clean water, cognitive dissonance, cognitive load, coherent worldview, conceptual framework, creative destruction, Credit Default Swap, decarbonisation, different worldview, Edward Jenner, facts on the ground, friendly fire, Hans Moravec, industrial cluster, information security, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Jane Jacobs, land tenure, Lewis Mumford, life extension, Long Term Capital Management, market fundamentalism, mutually assured destruction, Nick Bostrom, nuclear winter, Peter Singer: altruism, planetary scale, precautionary principle, prediction markets, radical life extension, Ralph Waldo Emerson, Ray Kurzweil, Silicon Valley, smart grid, source of truth, stem cell, Stewart Brand, synthetic biology, technoutopianism, the built environment, The Wealth of Nations by Adam Smith, transcontinental railway, We are as Gods, Whole Earth Catalog

So let us dispose here of a tempting analogy between transhumanist claims (rooted as they are in defense of individual liberty) and Adam Smith's famous "invisible hand." Just as innovation and productivity are optimized as individuals, driven by self-interest, strive for economic benefit, won't society be made better by individuals striving after various enhancements? The analogy would be false. The "invisible hand" is just a recognition of an information-processing mechanism; it integrates decisions made on the basis of individual preference into supply and demand curves that describe the efficient distribution of scarce resources. Unlike central planning, the "invisible hand" is effective with complex adaptive systems (i.e., the economy), in part because it decentralizes decision making across active agents and in part because the only outcome it aims to deliver is efficient allocation of information, prices, and stuff.

A more socially stable and, yes, advanced (if 98 Chapter 5 still highly imperfect) capitalism evolved only when dampers on rampant market freedom, such as unions, anti-monopolistic policies, and unemployment insurance, were adopted-almost always after bruising political battles and occasional paroxysms of civil unrest. There is no invisible hand to guide society toward more justice and tolerance, with or without radical enhancement of human capabilities. But now there is another possible complication to this story. The invisible hand of the economic market works because we can assume that humans generally behave as they always have: selfishly. Might human-enhancement technologies threaten even that fundamental assumption? (Put another way, could we design "selfishness" out of the human?)

., 93, 94 "Human," as cultural construct, 103 Humanity+, 6, 7 Hutchins, Eo, 95, 96 Hydrologic cycle, 10 IBM, 89, 146 IEEE Spectrum, 82 Immortality, 82, 83 India, 99, 129, 139 Industrial ecology, 168 Industrial time, 71 Infant mortality,S 8, 60 Influenza, 68 Information and communication technology (ICT), 8, 80, 179 Institute of Electrical and Electronics Engineers (IEEE), 179 219 Institutional review boards (IRBs),l77 Integrated Vector Management (IVM), 48ff, 53 Integration of human and machine, 20 Intercollegiate Genetically Engineered Machine competition,68 Intergovernmental Panel on Climate Change, l11ff, 122, 124 Internet, 112, 118, 139, 166 Inuit, 183, 186, 187 "Invisible hand," 97, 98 iPhone,l iPod,l Iraq war, 3, 24, 76, 91ff, 94, 127,135,150-153 Jacobs,]., 168 James, W, 81 Japan, 131,133, 150 Jenner, Eo, 16 John Paul II, 101 Joy, W, 68 Kass, L., 21 Kepler,]., 101, 173 Kondratieff waves, 79ff, 192 Koniggriitz, Battle of, 75, 76 Krishna, 119 Kurzweil, Ro, 8, 18,68 Kyoto Protocol, 67, 109, 111, 193 Land mines, 150 Las Vegas, 152 Lawrence Livermore National Laboratory, 89 Leopold, Ao, 181 Libertarian approach to human enhancement,21ff 220 Index Lindblom, c., 93 Long-Term Capital Management,92 "Long waves" of innovation, 79££ Maginot Line, 135 Malaria, 47££, 53 Malaysia, 139 Maoism, 31, 121 Marlboro Man, 135 Marne, Battle of, 76 Marxism, 110, 114, 121, 172 Marx, K., 64, 70, 173 Maslow, A., 33 McKibben,~.,21, 101 McKinsey & Company, 49 McNeill, ].


pages: 247 words: 68,918

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

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

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

During their conversation, Wen provided what amounts to a precisely worded definition of Chinese state capitalism: “The complete formulation of our economic policy is to give full play to the basic role of market forces in allocating resources under the macroeconomic guidance and regulation of the government. We have one important piece of experience of the past thirty years, that is to ensure that both the visible hand and invisible hand are given full play in regulating the market forces.”11 Three decades ago, the invisible hand was truly invisible in China. When Mao Zedong died in 1976, he left behind a society in turmoil, an economy in ruins, and a ruling party in real danger of irrelevance. Within two years, paramount leader Deng Xiaoping and his premier, Zhao Ziyang, overcame considerable resistance from senior Communist Party officials to launch a slow but deliberate plan to experiment with capitalism.

South Africa’s ruling party has much less domestic political power and many more checks on its ability to direct investment and growth than China’s Communist Party, and South Africa’s relatively unskilled and poorly educated workforce is a long way from competing with its Chinese counterpart. But these factors haven’t kept some within the ANC from charting a more state-capitalist course. In June 2007, delegates to the ANC national policy conference publicly embraced the idea that the state, not the invisible hand, should play the primary guiding role in the economy. The ANC government, it said, should stimulate economic development, by “directly investing in underdeveloped areas and directing private sector investment.” The resolution also called for construction of an “effective, democratic, and developmental state,” which will “intervene in the interest of the people as a whole.”


pages: 480 words: 123,979

Dawn of the New Everything: Encounters With Reality and Virtual Reality by Jaron Lanier

4chan, air gap, augmented reality, back-to-the-land, Big Tech, Bill Atkinson, Buckminster Fuller, Burning Man, carbon footprint, cloud computing, collaborative editing, commoditize, Computer Lib, cosmological constant, creative destruction, crowdsourcing, deep learning, Donald Trump, Douglas Engelbart, Douglas Hofstadter, El Camino Real, Elon Musk, fake news, Firefox, game design, general-purpose programming language, gig economy, Google Glasses, Grace Hopper, Gödel, Escher, Bach, Hacker Ethic, Hans Moravec, Howard Rheingold, hype cycle, impulse control, information asymmetry, intentional community, invisible hand, Ivan Sutherland, Jaron Lanier, John Gilmore, John Perry Barlow, John von Neumann, Kevin Kelly, Kickstarter, Kuiper Belt, lifelogging, mandelbrot fractal, Mark Zuckerberg, Marshall McLuhan, Menlo Park, military-industrial complex, Minecraft, Mitch Kapor, Mondo 2000, Mother of all demos, Murray Gell-Mann, Neal Stephenson, Netflix Prize, Network effects, new economy, Nick Bostrom, Norbert Wiener, Oculus Rift, pattern recognition, Paul Erdős, peak TV, Plato's cave, profit motive, Project Xanadu, quantum cryptography, Ray Kurzweil, reality distortion field, recommendation engine, Richard Feynman, Richard Stallman, Ronald Reagan, self-driving car, Silicon Valley, Silicon Valley startup, Skinner box, Skype, Snapchat, stem cell, Stephen Hawking, Steve Bannon, Steve Jobs, Steven Levy, Stewart Brand, systems thinking, technoutopianism, Ted Nelson, telemarketer, telepresence, telepresence robot, Thorstein Veblen, Turing test, Vernor Vinge, Whole Earth Catalog, Whole Earth Review, WikiLeaks, wikimedia commons

Are we choosing a new kind of government by another name, but one that represents us less? The Invisible Hand on a Multitouch Screen There is an even deeper question to consider. The attempts by the tech companies to battle shitposting comprise a fascinating confrontation between the new order of algorithms and the old order of financial incentives. Old and new have a lot in common. The most enthralled proponents perceive each not merely as technologies invented by people, but as superhuman living things. In the case of financial incentives, the elevation occurred in the eighteenth century, when Adam Smith celebrated the “invisible hand.” In the case of algorithms, something similar occurred in the late 1950s, when the term “artificial intelligence” was coined.

There is nothing intrinsic to computing that makes it sloppy or unserious. The system for online transactions between banks is reliable, for instance, and nobody has ever hacked or leaked the all-important algorithms that run companies like Google and Facebook. But we chose an unserious network. The Invisible Hand Improves When It Is Made Visible as an Avatar Hand The appeal of weightlessness arose out of a desire to make digital networks into an instant permanent solution to an eternally unsolvable problem. Finally, it would be possible for people to connect without the tedium and annoyance that always must attend cooperation between genuinely free, distinct individuals.

In the case of algorithms, something similar occurred in the late 1950s, when the term “artificial intelligence” was coined. The prevalence of shitposting and other degradations is fueled by the invisible hand, while the antidote is to be divined by artificial intelligence. So we will witness a new kind of professional wrestling match between the old made-up god and the new one. Let’s first examine how the old demigod, the one with the hand, influences behavior in the online world. The business model that sustains companies like Google, Facebook, and Twitter is called advertising, but it’s really something different.


Nuclear War and Environmental Catastrophe by Noam Chomsky, Laray Polk

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

They were sort of aware of this—they didn’t put it in precisely these terms—but if you take a look at Adam Smith’s The Wealth of Nations, the famous phrase “invisible hand” appears once. It appears essentially in a critique of what’s going on right now. What he pretty much says is that, in England, if merchants and manufacturers preferred to import from abroad and sell abroad, they might make profit, but it would be bad for England. He says they’re going to have what sometimes is called a home bias—they’ll prefer to do business at home, so as if by an invisible hand, England will be saved the ravages of a global market.82 David Ricardo was even stronger.

QH545.N83C56 2013 363.325’5--dc23 2012046137 Printed in the United States 9 8 7 6 5 4 3 2 1 Contents Preface Abbreviations 1. Environmental Catastrophe 2. Protest and Universities 3. Toxicity of War 4. Nuclear Threats 5. China and the Green Revolution 6. Research and Religion (or, The Invisible Hand) 7. Extraordinary Lives 8. MAD (Mutually Assured Dependence) Appendix 1: Conversation between Gen. Groves and Lt. Col. Rea, August 25, 1945 Appendix 2: Flyer for UCPV Event, October 10, 1967 Appendix 3: Scientists Condemn the Destruction of Crops in Vietnam, January 21, 1966 Appendix 4: Nelson Anjain’s Open Letter to Robert Conard, April 9, 1975 Appendix 5: Marshallese Medical Records in Hands of Gensuikin, July 27, 1976 Appendix 6: Memorandum on Iraqi Use of Chemical Weapons, November 1, 1983 Appendix 7: Open Letter to Africa, December 12, 2011 Appendix 8: Anjali Appadurai’s Speech in Durban, December 9, 2011 Appendix 9: Point Hope Protest Letter to JFK, March 3, 1961 Appendix Acknowledgments About the Authors About Seven Stories Press Preface If humans choose to work to minimize the existential threats of our time, perhaps the most improbable aspect of remedy is that we will accept modalities based on collaboration and creative adaptation, rather than perpetual combat and domination.1 It is a stark fact that present and future economies are predicated on a finite energy resource: carbon-based fuels.2 Consensual science on climate change presents another fact: we may only have a few years to make adjustments in the collective carbon load before we are faced with irreversible consequences.

President’s Council of Advisors on Science and Technology, “Sustaining the Nation’s Innovation Ecosystems,” January 2004. The Bureau of Labor Statistics projects US employment in manufacturing will continue to trend as an area of rapid decline. Richard Henderson, “Industry Employment and Output Projections to 2020,” Monthly Labor Review, January 2012. 6. Research and Religion (or, The Invisible Hand) Laray Polk: Forty percent of the electorate in most states identify as evangelical. Pew Research indicates evangelical Christians largely reject anthropogenic climate change and are skeptical there is even solid evidence that the earth is warming.74 So I think the extreme beliefs of the religious right benefit business interests and vice versa.


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

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

See Public institutions Intangible property, 94–95, 308 Intellectual property overview, 341 athletes, 204–5, 351–53 attempts to extend protection of, 355–56, 359–60 attorneys and, 366 basic needs and, 351 in China, 347, 358 composers, 203, 349 discovery, effect on, 365 entertainment industry, 345, 348, 353 in EU, 347 executive compensation and, 348, 363–64 fashion industry, 345 forms of, 347–48 government protection of, 94–95, 193–94, 203–4, 308, 356, 358–60, 366 historical background, 355 “idea factories,” 344–45 “image rights,” 347–49 incentives and, 362–63, 365 income inequality, effect on, 343–45 income redistribution and, 193–94, 203–4 Industrial Revolution compared, 346, 357 inventors, 203 in Japan, 347, 358 laissez faire and, 359 marginal tax rates and, 353–54, 357 monopolies and, 345–47, 356, 365 patents, 347, 359, 361 in pharmaceutical industry, 365–66 piracy and, 360 rents and, 353 role of government, 354 social value of, 361–62 in South Korea, 347 technology and, 356–57 theft of, 357–58 trade agreements and, 354 traditional societies compared, 360–61 in UK, 357–58 in US, 176, 193, 204, 347, 357–58, 362 wealth creation and, 349–51 436 Index Intergovernmental Panel on Climate Change, 316 Inter-institutional externalities, 290 International Monetary Fund, 7, 8, 109, 113–14, 296–97, 315–16 Internet, 325–26 Inventors, 203 Investment activity, income redistribution and, 194 “Invisible hand of government,” 199 “Invisible hand of market,” 66, 312–13 Iran hostages, 100–1 Ireland bubbles in, 331 challenges to welfare policies in, 60 contingent liabilities in, 138, 140 famine in, 218 influence of conservatives in, 395 marginal tax rates in, 376 public spending in, 121–22, 162 supply-side economics in, 77 Irrationality consumer protection and, 148–49 effect on market, 79, 83 Friedman on, 141–42 nudges and, 141–42 recessions and, 236 Islam, 218 Italian School, 5–6, 63, 65, 178 Italy allocation of resources in, 188 authoritarian government in, 23 bureaucracy in, 234 Communist Party, 1–2 Constitution, 248–50, 266–71 Constitutional Commission of Eighteen, 267–68 corporatism in, 231 corruption in, 120 Corte dei Conti, 161, 234, 290, 381 economic planning in, 27 fascism in, 23, 231, 266–67 financial accountability in, 291 incentives in, 381 influence of conservatives in, 395 “Keynesian Revolution” in, 269 Labor Charter of 1927, 248 marginal tax rates in, 376 privatization in, 33–34 public ownership in, 135 public spending in, 23 regulations in, 279 sovereign debt in, 241 unions in, 23, 231 welfare policies in, 214 women’s suffrage in, 20 Japan economic planning in, 27 executive compensation in, 364 “fake goods” in, 149 intellectual property in, 347, 358 marginal tax rates in, 376, 377 sovereign debt in, 241 Jefferson, Thomas, 249–50 Jensen, Michael, 363 Johnson, Lyndon B., 43, 56, 58, 229 Journal of Financial Economics, 363 Jouvenel, Bertrand de, 45 Judges, legal rules and, 251 Justice systems, 295–96 Kahneman, Daniel, 79 Keen, Andrew, 325–26 “Keepers of the gate,” 336 Kennedy, John F., 2–3, 55–58, 239 Keynes, John Maynard generally, 7–8 on capitalism, 28–30 on corporatism, 231 countercyclical policy, 61–62 decline in influence of, 86–87 Galbraith and, 46–47 on income inequality, 320 on laissez faire, 31–32 on market, 37, 38 on “new wisdom,” 399–400 pessimism of, 28–30 on public works, 241 on Soviet Union, 27–30, 78 on stabilization policies, 70–71, 189, 237 on taxation, 245 on unions, 230–31 on US, 47 on welfare states, 383 on workers’ rights, 19 “Keynesian Revolution,” 2, 41, 42, 56, 269, 383 King, Melvyn, 113–14, 156, 338 Klein, Lawrence, 42 Klein, Naomi, 29 Kornai, Janos, 26 KPMG International, 376 Krugman, Paul, 240–41, 342–43 Kuznets, Simon, 3 Lady Gaga, 351–52 Laffer Curve, 74–76, 363, 373–74, 377, 379, 394–95, 397 Laissez faire, 15–21 abandonment of, 43 criticism of, 3 in Eastern Europe, 35 Index energy and, 17 entrepreneurs and, 307–8 in Germany, 18 government and, 65 Industrial Revolution and, 16–17 intellectual property and, 359 Keynes on, 31–32 in Latin America, 33 resurgence of, 33–35 role of state, 15–16, 19–20 trade and, 17 in UK, 31 in US, 17–19, 30, 31 workers’ rights and, 18, 19 Landis, James, 57–58 Lange, Oskar, 26 La Porta, Rafael, 263–64 Larosiere, Jacques de, 64 Latin America constitutions in, 250, 271 laissez faire in, 33 public institutions in, 290 Laudato Si' (Francis), 28, 81 Law and Economics, 183–85 Law of public expenditure growth, 51, 87 Laws.

The paternalistic view would have more in common with what could be called a tutorial role of the state, which is a role now pushed by various economists associated with experimental or behavioral economics that uses nudges to help individuals make better decisions (see Thaler and Sunstein, 2008). All of those categories, to some extent, rejected the laissez-faire view of the government role that, in some not always correct interpretations, implied that the government should minimize its role in the economy and just let the “invisible hand” do its miraculous work. According to some historians, the concept of laissez-faire, which had come to play such a large role in classical economics and which, in modern versions, would return to play a growing role in the 1980s and 1990s, had been promoted in the nineteenth century not so much as an ideology that espoused the ability and the innate virtue of the free market to achieve desirable outcomes, as many economists had come to believe, but more as a view that reflected the lack of trust that people had at that time in the ability of governments to solve problems with their interventions.

According to some historians, the concept of laissez-faire, which had come to play such a large role in classical economics and which, in modern versions, would return to play a growing role in the 1980s and 1990s, had been promoted in the nineteenth century not so much as an ideology that espoused the ability and the innate virtue of the free market to achieve desirable outcomes, as many economists had come to believe, but more as a view that reflected the lack of trust that people had at that time in the ability of governments to solve problems with their interventions. If the government was not able to solve problems, it was better if it did not even try to. 66 Termites of the State The view that a free and unregulated market economy can perform economic miracles is a relatively recent one, in spite of the frequent references to Adam Smith’s invisible hand over the years. On this important but rarely acknowledged point, it may be worthwhile to cite from an important historical book that discussed in great detail various reforms introduced in the nineteenth century in the United Kingdom. As the author of that book put it: A great deal of the talk about laissez faire [in the nineteenth century] must be discounted, or at least put into its proper context.


pages: 384 words: 93,754

Green Swans: The Coming Boom in Regenerative Capitalism by John Elkington

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, agricultural Revolution, Anthropocene, anti-fragile, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, Berlin Wall, bitcoin, Black Swan, blockchain, Boeing 737 MAX, Boeing 747, Buckminster Fuller, business cycle, Cambridge Analytica, carbon footprint, carbon tax, circular economy, Clayton Christensen, clean water, cloud computing, corporate governance, corporate social responsibility, correlation does not imply causation, creative destruction, CRISPR, crowdsourcing, David Attenborough, deglobalization, degrowth, discounted cash flows, distributed ledger, do well by doing good, Donald Trump, double entry bookkeeping, drone strike, Elon Musk, en.wikipedia.org, energy transition, Extinction Rebellion, Future Shock, Gail Bradbrook, Geoffrey West, Santa Fe Institute, George Akerlof, global supply chain, Google X / Alphabet X, green new deal, green transition, Greta Thunberg, Hans Rosling, hype cycle, impact investing, intangible asset, Internet of things, invention of the wheel, invisible hand, Iridium satellite, Jeff Bezos, John Elkington, Jony Ive, Joseph Schumpeter, junk bonds, Kevin Kelly, Kickstarter, M-Pesa, Marc Benioff, Mark Zuckerberg, Martin Wolf, microplastics / micro fibres, more computing power than Apollo, move fast and break things, Naomi Klein, Nelson Mandela, new economy, Nikolai Kondratiev, ocean acidification, oil shale / tar sands, oil shock, opioid epidemic / opioid crisis, placebo effect, Planet Labs, planetary scale, plant based meat, plutocrats, Ponzi scheme, radical decentralization, Ralph Nader, reality distortion field, Recombinant DNA, Rubik’s Cube, Salesforce, self-driving car, shareholder value, sharing economy, Sheryl Sandberg, Silicon Valley, smart cities, smart grid, sovereign wealth fund, space junk, Steven Pinker, Stewart Brand, supply-chain management, synthetic biology, systems thinking, The future is already here, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Tim Cook: Apple, urban planning, Whole Earth Catalog

It’s an ideology whose credibility is fatally compromised because of the perverse outcomes it has engineered: runaway climate change, the biggest inter-generational crime ever committed, and gross inequality—a scar on the conscience of humanity. Capitalism needs to be reinvented for the 21st century. This means discarding the tired reflex that has driven economic development since Adam Smith first proclaimed its utility over two hundred years ago—self-interest—in favor of working for the common good. The famous “invisible hand” has reached its limitations and instead inclusive capitalism is needed to establish a new social contract that truly leaves no one behind. It also requires supercharging inventive models of cooperation, which recognize that you can only deliver real transformational change—at speed, at scale, and with maximum impact—provided you join forces in deep and purposeful collaboration with others.

As blind both to Black and Gray Swan futures some of those crazy people are warning about as they are to possible Green Swan opportunities. We will explore how new forms of wealth are being created tomorrow by people previously seen as marginal, irrelevant even. Ultimately, the genius of capitalism links to Adam Smith’s “invisible hand,” with the individual self-interest of businesspeople driving the innovation and production that potentially serve the interests of the many. Ideas that start on the margins can push—or be sucked—into the mainstream. Failed experiments are allowed to die, with the most productive capitalist economies allowing for a certain amount of failure.

Interestingly, the tenth and final theme that O’Reilly flagged was the need to reinvent the discipline of economics, the master discipline of capitalism. Among the books he had been reading were Kate Raworth’s Doughnut Economics, Mariana Mazzucato’s The Value of Everything, and Russ Roberts’s How Adam Smith Can Change Your Life. Just in case his readers thought that the last book was another hymnal to Smith’s “invisible hand,” O’Reilly underscored the fact that the main point of reference in the book was not Smith’s 1776 book, The Wealth of Nations, but The Theory of Moral Sentiments, which Smith had published seventeen years earlier. The key argument in that work was that social norms play a crucial role in reining in self-interest.


Globalists: The End of Empire and the Birth of Neoliberalism by Quinn Slobodian

"World Economic Forum" Davos, Alan Greenspan, Asian financial crisis, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, business cycle, capital controls, central bank independence, classic study, collective bargaining, David Ricardo: comparative advantage, Deng Xiaoping, desegregation, Dissolution of the Soviet Union, Doha Development Round, eurozone crisis, Fall of the Berlin Wall, floating exchange rates, full employment, Garrett Hardin, Greenspan put, Gunnar Myrdal, Hernando de Soto, invisible hand, liberal capitalism, liberal world order, Mahbub ul Haq, market fundamentalism, Martin Wolf, Mercator projection, Mont Pelerin Society, Norbert Wiener, offshore financial centre, oil shock, open economy, pattern recognition, Paul Samuelson, Pearl River Delta, Philip Mirowski, power law, price mechanism, public intellectual, quantitative easing, random walk, rent control, rent-seeking, road to serfdom, Ronald Reagan, special economic zone, statistical model, Suez crisis 1956, systems thinking, tacit knowledge, The Chicago School, the market place, The Wealth of Nations by Adam Smith, theory of mind, Thomas L Friedman, trade liberalization, urban renewal, Washington Consensus, Wolfgang Streeck, zero-sum game

Kabaser­v ice, Rule and Ruin: The Downfall of Moderation and the Destruction of the Republican Party, from Eisenhower to the Tea Party (New York: Oxford University Press, 2012), 55. 91. Kim Phillips-­Fein, Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan (New York: W. W. Norton, 2009), 56–58. 92. Rick Perlstein, Before the Storm: Barry Goldwater and the Unmaking of the American Consensus (New York: Hill and Wang, 2001), 33. 93. Röpke to Paul Wilhelm Wenger, August 5, 1964, RA, file 89, p. 568. 94. Phillips-­Fein, Invisible Hands, 57, 59. Kim Phillips-­Fein, “Business Conservatives and the Mont Pèlerin Society,” in Mirowski and Plehwe, The Road from Mont Pèlerin, 292. 95.

Markets buttress the repository of cultural values that are a necessary but not sufficient condition for markets’ continued existence. GENEVA SCHOOL, NOT CHICAGO SCHOOL In 1983 one of Hayek’s students, the leading international economic ­lawyer Ernst-­Ulrich Petersmann, wrote, “The common starting point of the neoliberal economic theory is the insight that in any well-­functioning market economy the ‘invisible hand’ of market competition must by necessity be complemented by the ‘vis­i­ble hand’ of the law.” He listed the well-­k nown neoliberal schools of thought: the Freiburg School, birthplace of German ordoliberalism, and home to Walter Eucken and Franz Böhm; the Chicago School, identified with Milton Friedman, Aaron Director, Richard Posner, and ­others; and the Cologne School of Ludwig Müller-­Armack.

By observing recurrent lags between ­these three indicators, barometer readers believed they could forecast the change in business conditions over time.21 The meta­phor of the barometer implied that the economy was like the weather, a sphere outside of direct ­human control. One could adapt Adam Smith’s famous meta­phor of the invisible hand to speak of the invisible wind of the market, captured in charts and graphs. The 62 GLOBALISTS The three lines of the Harvard Economic Ser­v ice Barometer. Warren M. Persons, Interpretation of the Index of General Business Conditions (Cambridge, MA: Harvard Economic Ser­v ice, 1922). economic conditions portrayed in three lines ­were experienced as a unity but w ­ ere actually composed of innumerable tiny organic pro­ cesses, of which we could perceive only the effects in the aggregate.


The State and the Stork: The Population Debate and Policy Making in US History by Derek S. Hoff

affirmative action, Alan Greenspan, Alfred Russel Wallace, back-to-the-land, British Empire, business cycle, classic study, clean water, creative destruction, David Ricardo: comparative advantage, demographic transition, desegregation, Edward Glaeser, feminist movement, full employment, garden city movement, Garrett Hardin, George Gilder, Gregor Mendel, Gunnar Myrdal, guns versus butter model, Herman Kahn, immigration reform, income inequality, income per capita, invisible hand, It's morning again in America, Jane Jacobs, John Maynard Keynes: technological unemployment, Joseph Schumpeter, labor-force participation, Lewis Mumford, manufacturing employment, mass immigration, New Economic Geography, new economy, old age dependency ratio, open immigration, Paul Samuelson, peak oil, pensions crisis, profit motive, public intellectual, Ralph Waldo Emerson, road to serfdom, Robert Solow, Ronald Reagan, scientific management, Scientific racism, secular stagnation, Simon Kuznets, The Chicago School, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, Thorstein Veblen, Tragedy of the Commons, trickle-down economics, urban planning, urban sprawl, W. E. B. Du Bois, wage slave, War on Poverty, white flight, zero-sum game

I encountered the phrase “market-knows-best demography” in Marc Linder, The Dilemmas of Laissez-Faire Population Policy in Capitalist Societies: When the Invisible Hand Controls Reproduction (Westport, Conn.: Greenwood Press, 1997), 16. Linder uses it to refer specifically to the new household microeconomics, which treats children as consumer durables. I apply it more broadly to a whole constellation of overlapping pro-market and pro–population growth positions. A crucial discussion—and rejection—of these ideas was Paul Demeny’s 1986 Population Association of America presidential address (Paul Demeny, “Population and the Invisible Hand,” Demography 23 [November 1986]: 473–87). 70. Demeny, “Population and the Invisible Hand,” 479. 71. See Albert O.

The fusion between older concerns about limited resources and newer themes of ecological fragility and finiteness reflected a consensus among natural scientists that population growth was harmful.52 It was the economists, however, who first constructed a more formal new theory of the “limits to growth,” launching a heretical “environmental economics,” followed by its offshoot, “ecological economics,” which rejected the cult of “growthism” and identified limits to the economy and number of inhabitants in a finite and fragile world.53 In its moderate guise, environmental economics implied efforts to integrate environmental concerns into orthodox economic thought and public policy, for example by taxing negative externalities (spillover effects) like pollution so that consumer prices reflect true environmental costs. It also reserved room for beauty and other intangibles. In the memorable phrase of Herman Daly, a leading environmental economist, the trampling “invisible foot” of market activity was as important as the more famous and benign “invisible hand.”54 En- the new environmental state and the zero growth movement 175 vironmental economics quickly gained acceptance in mainstream circles. In a 1967 essay that critiqued but ultimately defended the “aesthetically concerned minority,” political scientist Aaron Wildavsky suggested that the takeoff of the environmental movement was closely associated with a “new economics” of the natural environment in which intangibles were assigned large if imprecise values.55 Environmental economics offered not merely an insistence on market failure but also a powerful attack on core assumptions of neoclassical economics, including the rationality of the consumer and the desirability of letting the market reduce all goods and human activity to commodities.56 The more radical ecological economics offered a fundamental rejection of the compatibility of economic progress—as traditionally defined—and ecological sustainability.

Fourth, even if a healthy economy amid a stable population is theoretically possible (as SPK insists), the state cannot be relied upon to make the necessary adjustments. Fifth, population growth advances human liberty. The ascendancy of MKBD was in step with the overall withering of Keynesianism during the 1960s and 1970s, but, at the time, it was not the exclusive domain of conservatives. Guided by the central laissez-faire premise that the invisible hand produces socially optimal results, however, the doctrine was constitutive of the political “New Right” and the new classical economics that swept American politics in the 1970s. MKBD articulated many themes amenable to the New Right’s worldview: faith in the market, the importance of innovation, entrepreneurship, and liberty, and unabashed celebration of economic growth.


pages: 655 words: 156,367

The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era by Gary Gerstle

2021 United States Capitol attack, A Declaration of the Independence of Cyberspace, affirmative action, Affordable Care Act / Obamacare, air traffic controllers' union, Airbnb, Alan Greenspan, Alvin Toffler, anti-communist, AOL-Time Warner, Bear Stearns, behavioural economics, Bernie Sanders, Big Tech, Black Lives Matter, blue-collar work, borderless world, Boris Johnson, Brexit referendum, British Empire, Broken windows theory, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, collective bargaining, Cornelius Vanderbilt, coronavirus, COVID-19, creative destruction, crony capitalism, cuban missile crisis, David Brooks, David Graeber, death from overwork, defund the police, deindustrialization, democratizing finance, Deng Xiaoping, desegregation, Dissolution of the Soviet Union, Donald Trump, Electric Kool-Aid Acid Test, European colonialism, Ferguson, Missouri, financial deregulation, financial engineering, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, future of work, Future Shock, George Floyd, George Gilder, gig economy, Glass-Steagall Act, global supply chain, green new deal, Greenspan put, guns versus butter model, Haight Ashbury, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Ida Tarbell, immigration reform, informal economy, invention of the printing press, invisible hand, It's morning again in America, Jeff Bezos, John Perry Barlow, Kevin Kelly, Kitchen Debate, low interest rates, Lyft, manufacturing employment, market fundamentalism, Martin Wolf, mass incarceration, Menlo Park, microaggression, Mikhail Gorbachev, military-industrial complex, millennium bug, Modern Monetary Theory, money market fund, Mont Pelerin Society, mortgage debt, mutually assured destruction, Naomi Klein, neoliberal agenda, new economy, New Journalism, Northern Rock, obamacare, Occupy movement, oil shock, open borders, Peter Thiel, Philip Mirowski, Powell Memorandum, precariat, price stability, public intellectual, Ralph Nader, Robert Bork, Ronald Reagan, scientific management, Seymour Hersh, sharing economy, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, social distancing, Steve Bannon, Steve Jobs, Stewart Brand, Strategic Defense Initiative, super pumped, technoutopianism, Telecommunications Act of 1996, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, Uber and Lyft, uber lyft, union organizing, urban decay, urban renewal, War on Poverty, Washington Consensus, We are all Keynesians now, We are the 99%, white flight, Whole Earth Catalog, WikiLeaks, women in the workforce, Works Progress Administration, Y2K, Yom Kippur War

., US Chamber of Commerce]: Attack on American Free Enterprise System,” August 23, 1971, https://law2.wlu.edu/deptimages/Powell%20Archives/PowellMemorandumTypescript.pdf, accessed September 14, 2021; Kim Phillips-Fein, Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan (New York: W. W. Norton, 2009). 2.Quoted in Phillips-Fein, Invisible Hands, 162. 3.Phillips-Fein, Invisible Hands, 169 4.Phillips-Fein, Invisible Hands, 169–173. 5.Jane Mayer, Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (New York: Anchor Books, 2016) 6.Sidney Blumenthal, The Rise of the Counter-Establishment: The Conservative Ascent to Political Power (New York: Times Books, 1986). 7.Jefferson Cowie, Stayin’ Alive: The 1970s and the Last Days of the Working Class (New York: New Press, 2010), 261–312; Benjamin C.

Waterhouse, Lobbying America: The Politics of Business from Nixon to NAFTA (Princeton, NJ: Princeton University Press, 2014), 76–139. 8.From 89 to 821, to be exact. Phillips-Fein, Invisible Hands, 185–188. On the history of PACs, see Emily J. Charnock, The Rise of Political Action Committees: Interest Group Electioneering and the Transformation of American Politics (New York: Oxford University Press, 2020). 9.Phillips-Fein, Invisible Hands, 185–188; see also Alice O’Connor, “Financing the Counter-Revolution,” in Bruce Schulman and Julian E. Zelizer, eds., Rightward Bound: Making America Conservative in the 1970s (Cambridge, MA: Harvard University Press, 2008), 148–168. 10.Phillips-Fein, Invisible Hands, 245–246; William E. Simon, A Time for Truth (New York: Reader’s Digest Press, 1978), xi, xv. 11.Phillips-Fein, Invisible Hands, 245–246.

An economic dimension of liberalism drew on the thought of Adam Smith, the Scottish political economist and philosopher who had published his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in the same year that the Americans had declared their independence from Britain. In Wealth of Nations, Smith stressed the imperative of creating an economy in which people would be free to pursue their economic interests and advantage. Smith believed that individuals so blessed with freedom would work hard and inject into the economy commercial and creative energy. The invisible hand of the market would coordinate the myriad individual pursuits and channel the economic energy generated, thus ensuring that the pursuit of individual well-being would contribute to the common good. Producers would be inventive and innovative, applying the principle that Smith labeled the “division of labor” to break down production processes into their simplest parts, each to be performed by one group of workers performing a single task.


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Platform Scale: How an Emerging Business Model Helps Startups Build Large Empires With Minimum Investment by Sangeet Paul Choudary

3D printing, Airbnb, Amazon Web Services, barriers to entry, bitcoin, blockchain, business logic, business process, Chuck Templeton: OpenTable:, Clayton Christensen, collaborative economy, commoditize, crowdsourcing, cryptocurrency, data acquisition, data science, fake it until you make it, frictionless, game design, gamification, growth hacking, Hacker News, hive mind, hockey-stick growth, Internet of things, invisible hand, Kickstarter, Lean Startup, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, means of production, multi-sided market, Network effects, new economy, Paul Graham, recommendation engine, ride hailing / ride sharing, Salesforce, search costs, shareholder value, sharing economy, Silicon Valley, Skype, Snapchat, social bookmarking, social graph, social software, software as a service, software is eating the world, Spread Networks laid a new fibre optics cable between New York and Chicago, TaskRabbit, the long tail, the payments system, too big to fail, transport as a service, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, Wave and Pay

Increasingly, many industries that have traditionally been considered non-tech, including retail, transportation, and consumer goods, are opening up APIs to encourage innovation by coalescing an external ecosystem of developer-partners. THE INVISIBLE HAND IS THE NEW IRON FIST The business processes that enabled pipe scale have historically been managed via hierarchies. As value creation in a platformed world moves to networks, we need a new form of management and culture, both inside and outside the organization. Hierarchies are based on rules and compliance, which require a unidirectional flow of information from the top down. This iron fist is giving way to the invisible hand. This is most evident in the rise of on-demand labor platforms where the invisible hand of algorithms and APIs dispatches supply to meet demand.

This is most evident in the rise of on-demand labor platforms where the invisible hand of algorithms and APIs dispatches supply to meet demand. The invisible hand – typically taking the form of algorithmic decisions – nudges producers to continue creating value on the platform. In a networked age, we are moving from a world of command and control to a self-serve world where user participation is encouraged through an invisible hand powered by data, APIs, and algorithms. PLATFORM SCALE IMPERATIVE A world of pipes creates value through linear processes managed through command-and-control mechanisms, contractual integration, and internal labor and resource allocation. Platforms move away from closed, controlled processes to open, enabled interactions.

Behavior design is the new loyalty program 11. Data science is the new business process optimization 12. Social feedback is the new sales commission 13. Algorithms are the new decision makers 14. Real-time customization is the new market research 15. Plug-and-play is the new business development 16. The invisible hand is the new iron fist 1.3 THE RISE OF THE INTERACTION-FIRST BUSINESS A Fundamental Redesign Of Business Logic Platforms compete with each other on the basis of their ability to enable interactions sustainably. Platforms do not compete merely on the strength of better features or larger user bases.


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

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

And the greater the productivity, the greater the prosperity This led Smith to his most famous turn of phrase: individuals who compete for private gain, he wrote, act as if "led by an invisible hand" to promote the public good. The metaphor of the invisible hand, of course, captured the world's imagination—possibly because it seems to impute a godlike benevolence and omniscience to the market, whose workings are in reality as impersonal as natural selection, which Darwin came along and described more than half a century later. The expression "invisible hand" does not seem to have been very important to Smith; in all his writings, he used it only three times. The effect it describes, however, is something he discerns at every level of society, from the great flows of goods and commodities between nations to everyday neighborhood transactions: "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest."

The resulting advance of global financial markets has markedly improved the efficiency with which the world's savings are invested, a vital indirect contributor to world productivity growth.* As I saw it, from 1995 forward, the largely unregulated global markets, with some notable exceptions, appeared to be moving smoothly from one state of equilibrium to another. Adam Smith's invisible hand was at work on a global scale. But what does that invisible hand do? Why do we experience extended periods of stable or rising employment and output and only gradually changing exchange rates, prices, wages, and interest rates? Are we fools to trust such stability when we see it in the markets? Or, as a newly anointed finance minister once asked, "How can we control the inherent chaos of unregulated international trade and finance without significant governmental intervention?"

The spreading of a commercial rule of law and especially the protection of the rights to property has fostered a worldwide entrepreneurial stirring. This in turn has led to the creation of institutions that now anonymously guide an ever-increasing share of human activity—an international version of Adam Smith's "invisible hand." As a consequence, the control of governments over the daily lives of their citizens has lessened; the forces of the marketplace have gradually displaced some significant powers of the state. Much regulation promulgating limits to commercial life has been dismantled. Throughout the early post-World War II years, international capital flows were controlled and exchange rates were in the grip of finance ministers' discretion.


pages: 662 words: 180,546

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

"there is no alternative" (TINA), Adam Curtis, Alan Greenspan, Alvin Roth, An Inconvenient Truth, Andrei Shleifer, asset-backed security, bank run, barriers to entry, Basel III, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, Bernie Sanders, Black Swan, blue-collar work, bond market vigilante , bread and circuses, Bretton Woods, Brownian motion, business cycle, capital controls, carbon credits, Carmen Reinhart, Cass Sunstein, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, constrained optimization, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, dark matter, David Brooks, David Graeber, debt deflation, deindustrialization, democratizing finance, disinformation, do-ocracy, Edward Glaeser, Eugene Fama: efficient market hypothesis, experimental economics, facts on the ground, Fall of the Berlin Wall, financial deregulation, financial engineering, financial innovation, Flash crash, full employment, George Akerlof, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Greenspan put, Hernando de Soto, housing crisis, Hyman Minsky, illegal immigration, income inequality, incomplete markets, information asymmetry, invisible hand, Jean Tirole, joint-stock company, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kickstarter, knowledge economy, l'esprit de l'escalier, labor-force participation, liberal capitalism, liquidity trap, loose coupling, manufacturing employment, market clearing, market design, market fundamentalism, Martin Wolf, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Naomi Klein, Nash equilibrium, night-watchman state, Northern Rock, Occupy movement, offshore financial centre, oil shock, Pareto efficiency, Paul Samuelson, payday loans, Philip Mirowski, Phillips curve, Ponzi scheme, Post-Keynesian economics, precariat, prediction markets, price mechanism, profit motive, public intellectual, quantitative easing, race to the bottom, random walk, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, savings glut, school choice, sealed-bid auction, search costs, Silicon Valley, South Sea Bubble, Steven Levy, subprime mortgage crisis, tail risk, technoutopianism, The Chicago School, The Great Moderation, the map is not the territory, The Myth of the Rational Market, the scientific method, The Theory of the Leisure Class by Thorstein Veblen, The Wisdom of Crowds, theory of mind, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, Tobin tax, tontine, too big to fail, transaction costs, Tyler Cowen, vertical integration, Vilfredo Pareto, War on Poverty, Washington Consensus, We are the 99%, working poor

The cynic might say: Leave it to academics to turn a pervasive human disaster into another unsustainable growth industry. What could be the purpose of yet another jokey variation on the metaphor of the “Invisible Hand” on the cover of some text that purports to convince us that a very few select events or principles (usually a prime number) constitute the Rosetta Stone for decoding recent events? The distance from self-help books (Six Things Momma Taught Me to Succeed When Good People Do Bad Things) to crisis prescription books (Dunk That Invisible Hand in Talcum Powder and Snap on the Handcuffs) and get-rich-quick books (Who’s Afraid of the Big Black Swan?) narrows precipitously in the modern marketplace of ideas.

As usual, reality outpaced satire when the former CEO of AIG, Hank Greenberg, brought suit against the U.S. government for not bailing out AIG at a sufficiently munificent rate.13 Bitter comic mordancy can be ripping fun; but a nagging voice whispers: isn’t it just too easy to make fun of the Invisible Hand? Isn’t there something lazy about Stephen Colbert and Jon Stewart? Is the right response to the nightmare of crisis fatigue to laugh it off? What if the people who helped bring on the crisis were quite literally laughing all the way to the bank as the financial system approached the precipice?

Paul Krugman, feeling secure in his status, has conveniently confessed to the derangement: The brand of economics I use in my daily work—the brand that I still consider by far the most reasonable approach out there—was largely established by Paul Samuelson back in 1948, when he published the first edition of his classic textbook. It’s an approach that combines the grand tradition of microeconomics, with its emphasis on how the invisible hand leads to generally desirable outcomes, with Keynesian macroeconomics, which emphasizes the way the economy can develop magneto trouble, requiring policy intervention. In the Samuelsonian synthesis, one must count on the government to ensure more or less full employment; only once that can be taken as given do the usual virtues of free markets come to the fore.


pages: 202 words: 62,901

The People's Republic of Walmart: How the World's Biggest Corporations Are Laying the Foundation for Socialism by Leigh Phillips, Michal Rozworski

Alan Greenspan, Anthropocene, Berlin Wall, Bernie Sanders, biodiversity loss, call centre, capitalist realism, carbon footprint, carbon tax, central bank independence, Colonization of Mars, combinatorial explosion, company town, complexity theory, computer age, corporate raider, crewed spaceflight, data science, decarbonisation, digital rights, discovery of penicillin, Elon Musk, financial engineering, fulfillment center, G4S, Garrett Hardin, Georg Cantor, germ theory of disease, Gordon Gekko, Great Leap Forward, greed is good, hiring and firing, independent contractor, index fund, Intergovernmental Panel on Climate Change (IPCC), Internet of things, inventory management, invisible hand, Jeff Bezos, Jeremy Corbyn, Joseph Schumpeter, Kanban, Kiva Systems, linear programming, liquidity trap, mass immigration, Mont Pelerin Society, Neal Stephenson, new economy, Norbert Wiener, oil shock, passive investing, Paul Samuelson, post scarcity, profit maximization, profit motive, purchasing power parity, recommendation engine, Ronald Coase, Ronald Reagan, sharing economy, Silicon Valley, Skype, sovereign wealth fund, strikebreaker, supply-chain management, surveillance capitalism, technoutopianism, TED Talk, The Nature of the Firm, The Wealth of Nations by Adam Smith, theory of mind, Tragedy of the Commons, transaction costs, Turing machine, union organizing, warehouse automation, warehouse robotics, We are all Keynesians now

Or sufficiently embarrassing. Willful disregard for the reality of planning is common enough. Adam Smith, the eighteenth-century Scot now considered the father of economics, is famous for introducing the “invisible hand” of the market. By this he meant no mystical force, but the idea that while individuals are making decisions whether to sell or to buy in the pursuit of self-interest, they are “led by an invisible hand to promote an end which was no part of [their] intention”—the welfare of society realized through a market system. Smith’s hand often appears in economics textbooks as proof that markets produce, without any kind of plan, the best possible outcomes.

While the real world is often one of messy disequilibrium, of prices created by fiat rather than emerging from the competitive ether—and, as we’ll see, one configured by capitalists who plan—it remains one where markets determine much of our economic, and thereby social, life. In general, criticisms of the current way of doing things propose that the market be replaced, or at least reined in. But if allocation does not proceed via the market, then it will occur via economic planning, also known as “direct allocation”—made not by the “invisible hand” but by very visible humans. Indeed, this form of planned allocation already takes place widely in our current system, on the part of elected and unelected individuals alike, by both states and private enterprises, and in centralized and decentralized forms. Even arch-capitalist America is home not only to Walmart and Amazon, but also to the Pentagon: in spite of being incredibly destructive, the US Department of Defense is the single-largest employer in the world, and a centrally planned public sector operation.

At first, the familiar strategy of merciless, life-destroying post-acquisition cost cutting and layoffs did manage to turn around the fortunes of the merged Kmart-Sears, now operating as Sears Holdings. But Lampert’s big wheeze went well beyond the usual corporate raider tales of asset stripping, consolidation and chopping-block use of operations as a vehicle to generate cash for investments elsewhere. Lampert intended to use Sears as a grand free market experiment to show that the invisible hand would outperform the central planning typical of any firm. He radically restructured operations, splitting the company into thirty, and later forty, different units that were to compete against each other. Instead of cooperating, as in a normal firm, divisions such as apparel, tools, appliances, human resources, IT and branding were now in essence to operate as autonomous businesses, each with their own president, board of directors, chief marketing officer and statement of profit or loss.


pages: 791 words: 85,159

Social Life of Information by John Seely Brown, Paul Duguid

Alvin Toffler, business process, Charles Babbage, Claude Shannon: information theory, computer age, Computing Machinery and Intelligence, cross-subsidies, disintermediation, double entry bookkeeping, Frank Gehry, frictionless, frictionless market, future of work, George Gilder, George Santayana, global village, Goodhart's law, Howard Rheingold, informal economy, information retrieval, invisible hand, Isaac Newton, John Markoff, John Perry Barlow, junk bonds, Just-in-time delivery, Kenneth Arrow, Kevin Kelly, knowledge economy, knowledge worker, lateral thinking, loose coupling, Marshall McLuhan, medical malpractice, Michael Milken, moral hazard, Network effects, new economy, Productivity paradox, Robert Metcalfe, rolodex, Ronald Coase, scientific management, shareholder value, Shoshana Zuboff, Silicon Valley, Steve Jobs, Superbowl ad, tacit knowledge, Ted Nelson, telepresence, the medium is the message, The Nature of the Firm, the strength of weak ties, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, Turing test, Vannevar Bush, Y2K

Social friction and "inertia" may usefully dampen volatility and increase stability. De Long and Froomkin even suggest that such frictionlessness might disable the "Invisible Hand." The great classical economist Adam Smith used the image of the invisible hand to describe forces that reconcile the pursuit of private interests through markets with the public good and with what we have called the social fabric. If not actually producing good, at least the invisible hand prevents the pursuit of private interests from doing harm. "Assumptions which underlie the microeconomics of the Invisible Hand," de Long and Froomkin conclude, "fray badly when transported to the information economy."26 Better bots, then, will require a better understanding of human negotiation, the contribution of the social fabric, and the role of human restraint in the functioning of the invisible hand.

"Assumptions which underlie the microeconomics of the Invisible Hand," de Long and Froomkin conclude, "fray badly when transported to the information economy."26 Better bots, then, will require a better understanding of human negotiation, the contribution of the social fabric, and the role of human restraint in the functioning of the invisible hand. Development will be ill served by people who merely redefine elaborate social processes in terms of the things that bots do well. Page 53 How Autonomous? If human negotiation is a delicate and complex art, it is inevitably more delicate and more complicated when conducted by proxies. And bots are proxies. They act not on their own behalf, but on behalf of others. As such, they also lead us to questions about delegation and representation, which will take us once more to the issue of transparency.

More significantly, they lack necessary peer support. Consequently, with Page 78 current technology, money-losing futzing, late at night and early in the morning, is endemic to the home office. Lacking the boundaries and structures provided by office life, work spills relentlessly over into private and family life. Invisible Hands Within organizations, this stealth spending is readily hidden from those at the top. Unfortunately, so is the need for such spending. Life at Xerox brought us face to face with this issue, too, this time over the matter of copier design. Xerox has long made usability a critical issue for the design and marketing of its photocopiers.


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

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

Adam Smith put it best in his book The Wealth of Nations when he wrote of an “invisible hand” that guided individual economic self-interest to a greater good. As Smith put it: “Every individual . . . neither intends to promote the public interest, nor knows how much he is promoting it . . . he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”5 This “invisible hand” requires two things: freedom and the rule of law.

Michael, 48 Coyne, Chris, 135 Crisis and Leviathan (Higgs), 136 Cristal (beer), 35 Cuba effects of central planning in, 34–41, 45 health care in, 16, 52–53 import restrictions, 49–50 private businesses in, 42–43, 45–47 travel restrictions, 33 Cuban Revolution, 131 Cúcuta, 17, 25, 30 Cultural Revolution, 75–76, 79 Current Affairs, 137 D Dandong, 61–62, 66 Dean, Andrea, 56 deBoer, Fredrik, 138 demilitarized zone (DMZ), 65, 69 Democratic Party, 9–10, 144 Democratic People’s Republic of Korea, 59 democratic socialism, 2, 9, 16, 32, 126–27, 138–39, 146 Deng Xiaoping, 76, 79 Denmark, 10 Dikötter, Frank, 73–75, 150 Duranty, Walter, 92–95 Duvel Café, 5, 10–11 E Eastern Bloc, 85, 126 economic freedom index, 6, 10–11, 20, 63, 79, 99–100, 110, 136 Economic Freedom Network (EFN), 99, 102 Economic Freedom of the World report, 99, 151 economic freedom, 4, 11, 13, 20, 30, 56, 78–80, 105, 108, 110, 112–14, 117, 150 Ecuador, 17 Egypt, 15 El Guajirito, 45–47 Empresas Polar, 26 Erekle (king), 104 Expert Failure (Koppl), 136 F Federal Reserve, 2–3 Fisher, Michelle, 9 Florida State University, 6 Forbidden City, 72 Foreign Policy, 27 foreign-market prices, 37 Fortune Global 500, 64 Fox News, 134 Fraser Institute, 6 Free Market Institute, 7 free markets, 7, 21, 78, 116, 133, 136 Free the People, 141 free-market prices, 21, 37, 48, 88 FreedomWorks, 142 Friedman, Milton, 6–7, 30, 82, 148 G George Mason University, 7 Georgetown University, 137 Georgia (country) Law on Economic Freedom, 114 liberal reforms in, 99, 106–110, 113 ranking on economic freedom index, 110 Ukrainian government in, 101–102 winemaking in, 111–12 Georgian Soviet Socialist Republic, 105 Ghodsee, Kristen, 96 Gini coefficient, 124 Glover, Danny, 1 Gohmann, Steve, 64 grassroots movements, 141–43 Gray, Francine du Plessix, 96–98 Great Britain, 73 Great Leap Forward, 13, 73–76 Grier, Kevin, 28 gross domestic product (GDP), 2, 12–13, 49, 63, 114, 134 Guardian, The, 94 Guevara, Che, 9, 54 Guiadó, Juan, 31 Gwartney, James, 6 H Hall, Joshua, 11 Han River, 65 Harvard, 8 Harvest of Sorrow, The (Conquest), 95 Haverhill, 6 Hayek, Friedrich, 7, 30, 150 Hierta, Lars Johan, 11–12 Higgs, Robert, 136 Hobbs, Brad, 12 Hotel Caribbean, 44, 47 Hotel Ibis, 77 Hotel Metropol, 92 Hotel Nacional, 34, 71 Hotel Neptuno Tritón, 34 Huangpu River, 77 HuffPost, 53 Human Action (von Mises), 100 Hyundai-Kia, 64 I immigration, 122, 134–35, 146 In Order to Live (Yeonmi Park), 60 Incheon International Airport, 63 Independence Square, 101 International Black Sea University, 112 International Monetary Fund, 109 International Socialist Organization (ISO), 123, 125–26 Intourist Hotel, 107 invisible hand, 21 J Jandieri, Gia, 105, 116 Jones, Gareth, 94 K KGB, 89 khachapuri, 116 Khevsureti, 110 khinkali, 116 Khomassuridze, Archil, 97–98 Khrushchev, Nikita, 73 Kibbe, Matt, 141–48 Kiev, 98–102, 117 Kim Il-Sung, 125 Koppl, Roger, 136 Korean War, 63, 65 Kremlin, 89 L La Cabaña prison, 54 La Habana Vieja (Old Havana), 38, 40 Lada, 38, 50 Le Cabernet, 72 Leeson, Peter, 56 Lenin, Vladimir, 9, 16, 89–91, 114–15, 125, 128, 131 Leningrad, 98 LG, 64 libertarianism, 59, 106, 123, 144–47 Lipovskaya, Olga, 97 Little Havana, 56 Little Red Book, 73 Lujiazui Finance and Trade Zone, 80 Luxemburg, Rosa, 125 M Ma Junjie, 81 Macasa, Diana, 123 Maduro, Nicolás, 30–32, 127 Major, John, 120 Maldonado, Víctor, 25 Malecón, 43, 53 Mao Yushi, 82 Mao Zedong, 9, 73–76, 81, 95, 115, 125 Mao’s Great Famine (Dikötter), 73, 150 Marginal Revolution, 86 market prices, 18, 21, 37, 88 Martin, Sabrina, 24–25 Marx, Karl, 86–88, 122, 125, 131, 139 Marxism alienation, 87 labor theory of value, 86–87 theory of history, 88 means of production, 13, 37, 87–88, 90, 121, 124, 126, 128–29, 137–39, 147 Mediterranean, 103 Mendoza, Lorenzo, 26 Mi Amigo Hugo, 27 Miami, 33, 52, 56–57, 134, 155 millennials, 8–10, 120, 138 Milton Friedman Prize for Advancing Liberty, 82 Mises, Ludwig von, 37, 100, 150 Mont Pelerin Society, 7, 64 Mont Pelerin, 7 Moore, Michael, 1, 13, 27 Moscow, 85, 92, 100, 111, 154 Moskvitch, 50 Muggeridge, Malcolm, 94 N Nation, The, 121 National Assembly (Venezeula), 31 National Bank of Cuba, 55 Nazi Germany, 37 New Economic Policy (NEP), 91, 93 New Economic School, 104–105, 116 New Hampshire, 15 New York Times, 9–10, 30, 92, 94–96 Nobel Prize, 6–7 Norberg, Johan, 11 North American Free Trade Agreement (NAFTA), 133 North Korea border with South Korea, 65 contrast between China and, 59, 69 contrast between South Korea and, 62–63, 69, 124 poverty in, 68 refugees from, 60–61 socialism in, 13, 16, 31, 63, 67, 125 Norway, 10–11 Novotel Beijing Peace Hotel, 72 O O’Neil Center for Global Markets and Freedom, 6 Obama, Barack, 33, 55 Ocasio-Cortez, Alexandria (AOC), 143–44, 147 OECD, 13 Oriental Pearl Tower, 77 Orwell, George, 102 P PanAm Post, 18 Parajanov, Sergei, 111 Park, Yeonmi, 60, 68 Patriots, 7 Paul, Rand, 145 Paul, Ron, 142–47 Peng, Dean, 59, 72 Penn, Sean, 1, 27, 128 People’s Republic of China, 59, 73 Pessin, Haley, 121 Petroleos de Venezuela SA, 31 Peugeot, 51–52 Plaza de la Revolución, 54 Plaza Mayor, 43 private property, 10, 13, 21, 37, 45, 78–79, 87, 108–110, 121, 128, 130, 138–39 proletariat, 88, 92 Pudong, 77–78, 80 Puerto Esperanza, 50, 52 Putin, Vladimir, 102 Pyongyang, 65, 69, 85 R Rand, Ayn, 81 Reagan, Ronald, 120 Red Army, 104 Red Century column, 9, 92, 95 Red Guard, 76 Red Spots, 31 Red Square, 89 Red Terror, 89 Republican Party, 142–44 Reuters, 23, 31 Revolution Brewing, 130 Revolutionary Committee of the Don, 90 Río Táchira, 17 Road to Serfdom, The (Hayek), 30, 150 Robinson, Nathan, 137–38 Romanchuk, Jaroslav, 99 Romero, Denise, 121, 132, 135 Rose Revolution, 105, 113 Russia agricultural collectivization in, 93–95 life for women in Soviet, 96–98 Russian Civil War, 89 Russian famine, 90, 93–95 S Saakashvili, Mikheil (Misha), 101–102, 105–106, 114–15, 117 Salon, 1, 17 Salt Lake City, 7 Samsung, 64 San Jose State University, 7 Sanders, Bernie, 9–10, 17, 28, 137, 143–44, 147 Santander Bridge, 18, 22 Schoolland, Li, 60, 75 Scientific Research Mises Center, 99 Seoul, 62–65, 69 Serralde, Daniel, 120, 131 Shanghai Tower, 77 Shanghai World Financial Center, 77 Shawnee State University, 6 Shcheglov, Lev, 98 Sheng Hong, 83 Sheshelidze, Paata, Simón Bolívar Bridge, 23, Sino-Korean Friendship Bridge, 104–105 Sinuiju, 59, 61, 66 Sirota, David, 1 Smith, Adam, 21, 86, 133 Sobel, Russell, 56 Socialism Conference, 120–22, 125, 128–31, 136–39, 146 Socialist International, 32 South America, 17, 135 South China Morning Post, 82 South Korea, 62–64, 68–69, 123–24 South Ossetia, 113 Southern Methodist University (SMU), 6, 48, 77–79 Soviet Ministry of Health, 97 Soviet Women (Gray), 96 special economic zone (SEZ), 80 St.


pages: 500 words: 145,005

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

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

When most people think about Adam Smith, they think of his most famous work, The Wealth of Nations. This remarkable book—the first edition was published in 1776—created the foundation for modern economic thinking. Oddly, the most well-known phrase in the book, the vaunted “invisible hand,” mentioned earlier, appears only once, treated with a mere flick by Smith. He notes that by pursuing personal profits, the typical businessman is “led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it.” Note the guarded language of the second sentence, which is rarely included (or remembered) by those who make use of the famous phrase, or invoke some version of the invisible handwave.

Firms may not have an incentive to debias consumers since under some circumstances, firm profits are increasing in the degree of naiveté: credit card late payment fees (Heidhues and Kszegi, 2010); gym memberships (DellaVigna and Malmendier, 2006); printer cartridges and hotel room shrouded fees (Gabaix and Laibson, 2006). 51 Adam Smith’s invisible hand: For a thoughtful take on how to think about the concept of the invisible hand, see Ullmann-Margalit (1997). 52 transform people into rational agents: The study of how profit-maximizing firms interact with Human consumers is the subject of the exciting field of behavioral industrial organization. For a textbook treatment see Spiegler (2011).

“Suppose there were people doing silly things like the subjects in your experiments, and those people had to interact in competitive markets, then . . .” I call this argument the invisible handwave because, in my experience, no one has ever finished that sentence with both hands remaining still, and it is thought to be somehow related to Adam Smith’s invisible hand, the workings of which are both overstated and mysterious. The vague argument is that markets somehow discipline people who are misbehaving. Handwaving is a must because there is no logical way to arrive at a conclusion that markets transform people into rational agents. Suppose you pay attention to sunk costs, and finish a rich dessert after a big dinner just because you paid for the dessert.


pages: 537 words: 144,318

The Invisible Hands: Top Hedge Fund Traders on Bubbles, Crashes, and Real Money by Steven Drobny

Albert Einstein, AOL-Time Warner, Asian financial crisis, asset allocation, asset-backed security, backtesting, banking crisis, Bear Stearns, Bernie Madoff, Black Swan, bond market vigilante , book value, Bretton Woods, BRICs, British Empire, business cycle, business process, buy and hold, capital asset pricing model, capital controls, central bank independence, collateralized debt obligation, commoditize, commodity super cycle, commodity trading advisor, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, debt deflation, diversification, diversified portfolio, equity premium, equity risk premium, family office, fiat currency, fixed income, follow your passion, full employment, George Santayana, global macro, Greenspan put, Hyman Minsky, implied volatility, index fund, inflation targeting, interest rate swap, inventory management, inverted yield curve, invisible hand, junk bonds, Kickstarter, London Interbank Offered Rate, Long Term Capital Management, low interest rates, market bubble, market fundamentalism, market microstructure, Minsky moment, moral hazard, Myron Scholes, North Sea oil, open economy, peak oil, pension reform, Ponzi scheme, prediction markets, price discovery process, price stability, private sector deleveraging, profit motive, proprietary trading, purchasing power parity, quantitative easing, random walk, Reminiscences of a Stock Operator, reserve currency, risk free rate, risk tolerance, risk-adjusted returns, risk/return, savings glut, selection bias, Sharpe ratio, short selling, SoftBank, sovereign wealth fund, special drawing rights, statistical arbitrage, stochastic volatility, stocks for the long run, stocks for the long term, survivorship bias, tail risk, The Great Moderation, Thomas Bayes, time value of money, too big to fail, Tragedy of the Commons, transaction costs, two and twenty, unbiased observer, value at risk, Vanguard fund, yield curve, zero-sum game

Through another series of interviews, this time with top global hedge fund traders who managed risk well through 2008 and into 2009, the book highlights certain valuable elements of the global macro approach that could be applied to other mandates within money management. The Invisible Hands begins by defining and discussing the importance of real money management. It then discusses the evolution of real money management and raises some important questions about how real money portfolios are constructed. Next, the experts speak for themselves. First, my business partner Dr. Andres Drobny, “The Researcher,” discusses where the global economy is headed. Then, “The Family Office Manager,” Jim Leitner, addresses the lessons he learned in 2008 and offers his own thoughts on rethinking real money. Next, the “Invisible Hands”—10 anonymous global macro hedge fund managers, the Philosopher, the House, the Professor, et al—discuss how they approach money management, how they managed to make money or avoid large losses in the crisis, and how they would address some of the challenges faced by real money managers.

Focusing on 2007-2008 brings into stark focus the possibility of buying cheap insurance when the market is willing to sell it, before the horse has left the barn. Part Two The Invisible Hands [E]every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.

Table of Contents Title Page Copyright Page Dedication Praise Foreword Preface Part One - REAL MONEY AND THE CRASH OF ‘08 Chapter 1 - Rethinking Real Money I. Why Real Money? II. The Evolution of Real Money III. RETHINKING REAL MONEY—MACRO PRINCIPLES Chapter 2 - The Researcher Chapter 3 - The Family Office Manager Part Two - The Invisible Hands Chapter 4 - The House Chapter 5 - The Philosopher Chapter 6 - The Bond Trader Chapter 7 - The Professor Chapter 8 - The Commodity Trader Chapter 9 - The Commodity Investor Chapter 10 - The Commodity Hedger Chapter 11 - The Equity Trader Chapter 12 - The Predator Chapter 13 - The Plasticine Macro Trader Part Three - FINAL WORD Chapter 14 - The Pensioner Conclusion Acknowledgements Bibliography About the Author Index Copyright © 2010 by Steven Drobny.


pages: 461 words: 128,421

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

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

“They do not understand that all parts of society hold together,” he wrote in 1883 in one of a series of Harper’s articles later bundled into the classic tract What the Social Classes Owe to Each Other, “and that forces which are set into action act and react throughout the whole organism, until an equilibrium is produced by a readjustment of all interests and rights.”10 The concept of equilibrium, in which competing influences balance each other out, lends itself naturally to mathematical treatment (all it takes is an equal sign) and was crucial to the early development of chemistry and physics. Hints of it had already appeared in economics—Scotsman Adam Smith’s notion of an “invisible hand” steering selfish individuals toward societally beneficial results was the most famous example11—but attempts to build a unified theory of economics around it had foundered upon the imprecision of the field. Economists were long stuck, for example, on the crucial question of what gave a product value.

The abstract high point of the economic theorizing enabled by such simplifying assumptions came from two young scholars who had worked at the Cowles Commission, Kenneth Arrow and Gerard Debreu.9 In one paper written together and in several separate works in the 1950s, the two men rebuilt economic equilibrium theory from the ground up. What has since come to be known as “Arrow-Debreu equilibrium” (or the “Arrow-Debreu framework,” the “Arrow-Debreu paradigm,” or just plain “Arrow-Debreu”) amounted to a mathematical proof of the existence of Adam Smith’s invisible hand. This version was far more logically consistent and mathematically sophisticated than its predecessors. Crucially, it made room for economic actors who couldn’t see perfectly into the future. What was needed to achieve equilibrium under uncertainty was what Arrow termed a “complete” securities market, in which one could bet on or insure against every possible future state of the world.

“It changed our view of the entire world.”18 Many of Director’s students went on to make his economics teachings the focal point of their careers. An academic movement had been launched. Director’s main message was that things happened in the business world for a reason, and that when one looked hard enough one would usually find Adam Smith’s invisible hand at work—even at General Motors. “In each of the various practices he has analyzed (tie-in sales, patents, resale price maintenance, etc.) he has sought the profit-seeking reason that led businessmen to adopt the practice,” wrote Chicago economist and kindred spirit George Stigler. “Sometimes the reason was the exercise of monopoly power, but other times an important efficiency was achieved by the practice.”19 As a result, Director argued, there was far less need for antitrust laws, or consumer protection regulations, than was commonly believed.


pages: 340 words: 91,387

Stealth of Nations by Robert Neuwirth

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

A century later, here’s what Adam Smith had to say about inequality in The Theory of Moral Sentiments, his first book, which he published in 1759: The rich … consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same division of necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants; and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species. This was Smith’s first use of “invisible hand,” the phrase that would become his most captivating, most enduring, and most controversial literary creation. It’s a great economic fantasy: the master unwittingly shares everything equally with his slaves; lords and ladies with their servants; royalty with the plebes; bosses with their workers; and capitalism is really communism.

Even in his time, the rich didn’t restrict their consumption to little more than the poor (King George II received an annual allotment of almost £900,000 from the national treasury to support his retinue, while the average clerk at a joint stock company earned perhaps £200 a year and the average laborer more likely on the order of £50) and, left to their own devices, didn’t ensure that the necessities of life were apportioned equally among all (otherwise there would have been no need for the aristocracy to pass the Poor Laws, which treated unemployment and poverty as crimes rather than as consequences of other people’s economic decisions). Perhaps this was why Smith lowered the profile of the invisible hand the single time he mentioned it in The Wealth of Nations. Sixty years after Smith died, the French journalist and utopian thinker Pierre-Joseph Proudhon articulated a revolutionary plan to spur growth and reduce inequality based on superabundant credit (Proudhon proposed forcing interest rates down to between one-fourth and one-half of 1 percent), and increasing local control (his plan called for the creation of a massive number of cooperative associations to manage the economy based on reciprocity, voluntary contract, and buying and selling at a just price).

It encourages illegal migrants—like the recycler from Henan province—to build a future in a place they are not allowed to live (and, perhaps, over time, to emerge as a constituency that can organize against restrictive rules like the five-decade-old houkou system). There’s no doubt that it’s hard to reconsider or reformulate cherished notions like Adam Smith’s invisible hand. But, as Kuznets pointed out in his Nobel speech, if those notions simply don’t fit reality, and if the things the market has tried so far have not ameliorated the problem—if they had, lack of employment and income inequality would not continue to plague the world—then it’s not too much to suggest that we at least should ask why the dominant economic theories and conventional market institutions are not working.


pages: 1,205 words: 308,891

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

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

This: Smith had two invisible hands, two outcomes of (in his uncharacteristically clumsy phrase) “the obvious and simple system of natural liberty.”14 One was the invisible hand of the marketplace, whose effects are occasionally noted in The Wealth of Nations. For example, to mention Smith’s most original economic contribution, the marketplace in labor equalizes the wage-plus-conditions in Scotland with those in England, within social and legal limits, because people move from one place to the other until it is so, as though directed by an invisible hand. Likewise the invisible hand gently pushes people out of their solipsistic cocoons to consider what is valued in trade by other people.

He concludes that the private person “is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention,” namely, the nation’s modest prosperity—and, though it was no part of Smith’s intention, accidentally promoting something entirely new, the Great Enrichment. The passage is not (as imagined by recent economists, having read one or two excerpts from The Wealth of Nations, and back-projecting from later theorizing) merely a poor approximation to our modern understanding of the pretentiously named First and Second Theorems of Welfare Economics.18 And especially Smith’s invisible hand does not mean, as Mandeville had asserted in 1705, that “Thus every part was full of vice, / Yet the whole mass a paradise.”

But aside from overlawyered definitions of so-called intellectual property, for the most part it has been.10 The mechanism that raised up the poor is not a trickle down of expenditures from rich people. One hears such an argument from the right—even, alas, from Adam Smith on a rare bad day, in one of merely two uses in his published writings of the phrase “invisible hand.”11 One hears too a Keynesian form of trickle up from the left, as from the well-meaning Robert Reich in the Nation magazine: “If consumers don’t have adequate purchasing power, businesses have no incentive to expand or hire additional workers [note Reich’s desideratum: jobs]. Because the rich spend a smaller proportion of their incomes than the middle class and the poor, it stands to reason that as a larger and larger share of the nation’s total income goes to the top, consumer demand is dampened.”12 Reich’s reasoning supposes that the point of an economy is jobs, jobs, jobs, and that spending assures jobs.


pages: 558 words: 168,179

Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right by Jane Mayer

Adam Curtis, affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, American Legislative Exchange Council, An Inconvenient Truth, anti-communist, Bakken shale, bank run, battle of ideas, Berlin Wall, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, carried interest, centre right, clean water, Climategate, Climatic Research Unit, collective bargaining, company town, corporate raider, crony capitalism, David Brooks, desegregation, disinformation, diversified portfolio, Donald Trump, energy security, estate planning, Fall of the Berlin Wall, financial engineering, George Gilder, high-speed rail, housing crisis, hydraulic fracturing, income inequality, independent contractor, Intergovernmental Panel on Climate Change (IPCC), invisible hand, job automation, low skilled workers, mandatory minimum, market fundamentalism, mass incarceration, military-industrial complex, Mont Pelerin Society, More Guns, Less Crime, multilevel marketing, Nate Silver, Neil Armstrong, New Journalism, obamacare, Occupy movement, offshore financial centre, oil shale / tar sands, oil shock, plutocrats, Powell Memorandum, Ralph Nader, Renaissance Technologies, road to serfdom, Robert Mercer, Ronald Reagan, school choice, school vouchers, Solyndra, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, the scientific method, University of East Anglia, Unsafe at Any Speed, War on Poverty, working poor

Carrying out this attack: In The Rise of the Counter-establishment: From Conservative Ideology to Political Power (Times Books, 1986), Sidney Blumenthal made the term “counter-establishment” famous and for the first time told much of the early intellectual history of the movement. “Attack on American Free Enterprise System”: For more on the origins and impact of Lewis Powell’s memorandum, see Phillips-Fein, Invisible Hands, 156–65. “We didn’t have anything”: Piereson’s comments were made in a panel discussion with Gara LaMarche at an Open Society Institute forum, Sept. 21, 2006. “lay siege to corporations”: Staughton Lind, quoted in Phillips-Fein, Invisible Hands, 151. Powell’s defense of the tobacco companies: See Jeffrey Clements, Corporations Are Not People (Berrett-Koehler, 2012), 19–21. Income in America: Isaac William Martin, Rich People’s Movements, 155.

Hayek’s ideas arrived in America during the post-Depression years, when conservative businessmen were scrambling to salvage the credibility of the laissez-faire ideology that had been popular before the 1929 market crash. Since then, Keynesian economics had taken its place. Hayek’s genius was to recast the discredited ideology in an appealing new way. As Kim Phillips-Fein writes in her book Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan, rather than describing the free market as just an economic model, Hayek touted it as the key to all human freedom. He vilified government as coercive, and glorified capitalists as standard-bearers for liberty. Naturally, his ideas appealed to American businessmen like Charles Koch and the other backers of the Freedom School, whose self-interest Hayek now cast as beneficial to all of society.

In August, Powell delivered a seething memo that was nothing less than a counterrevolutionary call to arms for corporate America, warning the business community that its very survival was at stake if it didn’t get politically organized and fight back. The five-thousand-word memo was marked “confidential” and titled “Attack on American Free Enterprise System.” A virtual anti–Communist Manifesto, it laid out a blueprint for a conservative takeover. As Kim Phillips-Fein describes it in her history, Invisible Hands, Powell’s memo transformed corporate America into a “vanguard.” Also heeding the battle cry were the heirs to some of America’s greatest corporate fortunes, including Scaife, who were poised to enlist their private foundations as the conservative movement’s banks. Foundations had several advantages for both the donors and the recipients of this largesse.


pages: 255 words: 75,172

Sleeping Giant: How the New Working Class Will Transform America by Tamara Draut

affirmative action, Affordable Care Act / Obamacare, always be closing, American ideology, antiwork, battle of ideas, big-box store, Black Lives Matter, blue-collar work, collective bargaining, creative destruction, David Brooks, declining real wages, deindustrialization, desegregation, Detroit bankruptcy, Donald Trump, Edward Glaeser, ending welfare as we know it, Ferguson, Missouri, financial deregulation, full employment, gentrification, immigration reform, income inequality, independent contractor, invisible hand, job satisfaction, knowledge economy, knowledge worker, low skilled workers, machine readable, mass incarceration, minimum wage unemployment, mortgage tax deduction, new economy, obamacare, occupational segregation, payday loans, pink-collar, plutocrats, Powell Memorandum, profit motive, public intellectual, race to the bottom, Ralph Nader, rent-seeking, rising living standards, Ronald Reagan, shared worldview, stock buybacks, TED Talk, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, trickle-down economics, union organizing, upwardly mobile, War on Poverty, white flight, women in the workforce, young professional

.: Princeton University Press, 2012), p. 361. 26. Kim Phillips-Fein, Invisible Hands: The Businessmen’s Crusade Against the New Deal (New York: W. W. Norton & Company, 2010), p. 153. 27. Ibid., pp. 151–56. 28. Lewis Powell, “Attack on American Free Enterprise System,” August 23, 1971. The Washington and Lee University School of Law, which Lewis Powell attended, maintains an archive of his writing and work. The complete text of the Powell Memorandum is available on the website http://law2.​wlu.​edu/​powell​archives/​page.​asp?​pageid=​1251, and from many other sources on the Internet. 29. Phillips-Fein, Invisible Hands, p. 154. 30. Jacob S.

Hacker and Paul Pierson, Winner-Take-All-Politics: How Washington Made the Rich Richer and Turned Its Back on the Middle Class (New York: Simon and Schuster, 2010), p. 116. 31. Powell, “Attack on American Free Enterprise System.” 32. Phillips-Fein, Invisible Hands, pp. 166–70. 33. Ibid., p. 188. 34. Hacker and Pierson, Winner-Take-All-Politics, p. 117. 35. Ibid., p. 119. 36. Ibid. 37. Ibid., p. 121. 38. Phillips-Fein, Invisible Hands, p. 187. 39. Alyssa Katz, The Influence Machine: The U.S. Chamber of Commerce and the Corporate Capture of American Life (New York: Spiegel & Grau, 2015), p. 15. 40. Lee Drutman, The Business of America Is Lobbying: How Corporations Became Politicized and Politics Became More Corporate (New York: Oxford University Press, 2015), pp. 8–9. 41.

CEOs passed the memo along to each other, and in short order several rich capitalists stepped up to respond to the call, establishing and generously funding what are now the dominant conservative think tanks in America: the Heritage Foundation, the American Enterprise Institute, the Manhattan Institute, and the Cato Institute.32 It didn’t take long for Powell’s call to arms to be realized. Kim Phillips-Fein catalogs in Invisible Hands the growing army that was assembled to advance the free enterprise idea. The number of corporate PACs grew from 89 in 1974 to 821 in 1978. These PACs quickly became a giant tributary of political campaign funding, rapidly outpacing the number of union PACs, which stabilized at 250.33 The business lobbying brigade was also formed during the 1970s, mushrooming from only 175 companies employing lobbyists in 1971 to over 2,500 by 1982.34 Meanwhile, the Chamber of Commerce grew exponentially, doubling in membership and tripling its budget between 1974 and 1980, while the National Federation of Independent Businesses doubled its membership over the same time.35 The membership of these two groups covered a wide range of American small and midsized businesses.


pages: 290 words: 76,216

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

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

Sociology is partly responsible for economists’ neglect of it. The demand for sociology as a science of society may have weakened, but there is also a problem with the supply. Contemporary sociologists have, by and large, left the economy to the economists, even though the economists’ image of a world in which the ‘invisible hand’ of the market guarantees social stability is profoundly opposed to the sociological standpoint. Sociology, writes Wolfgang Streeck, must rediscover political economy.9 The choice between the individual and the social is not straightforward. One strong defence can be offered for methodological individualism: it guards against treating individuals simply as members of groups, deprived of agency.

Since scarcity of time can never be overcome, the day when efficiency will no longer be needed will never arrive. To give the devil her due, economic reasoning is a useful antidote to politicians who promise today what they know cannot be paid for tomorrow. Economists have typically believed that the most efficient mechanism for achieving coordination of production and consumption decisions is the ‘invisible hand’ of the market. To this day, this insight remains the single most important contribution of economics to the economy. Although economic choices are hard, economic life need not be a zero-sum – winner take all – game. This is because economics assumes that no voluntary trade will occur unless both sides see an advantage in doing so.

The two contrasting methods of modelling economic life reflect different views of reality. Both can be criticised for ignoring important aspects of that reality. Structuralists were alert to the distribution of power in the world economy, but blind to the absence of a competent state to deliver the results promised by their ‘big push’ policies. Globalisers put their faith in the ‘invisible hand’ of the market, but paid far too little attention to the fact that successful marketisation requires entrepreneurs. Both approaches thus neglected two vital institutional requisites for economic growth: a strong, relatively uncorrupt state and a commercial middle class. Most of East Asia had these; most of Latin America and Africa did not; hence the different results.


pages: 400 words: 94,847

Reinventing Discovery: The New Era of Networked Science by Michael Nielsen

Albert Einstein, augmented reality, barriers to entry, bioinformatics, Cass Sunstein, Climategate, Climatic Research Unit, conceptual framework, dark matter, discovery of DNA, Donald Knuth, double helix, Douglas Engelbart, Douglas Engelbart, Easter island, en.wikipedia.org, Erik Brynjolfsson, fault tolerance, Fellow of the Royal Society, Firefox, Free Software Foundation, Freestyle chess, Galaxy Zoo, Higgs boson, Internet Archive, invisible hand, Jane Jacobs, Jaron Lanier, Johannes Kepler, Kevin Kelly, Large Hadron Collider, machine readable, machine translation, Magellanic Cloud, means of production, medical residency, Nicholas Carr, P = NP, P vs NP, publish or perish, Richard Feynman, Richard Stallman, selection bias, semantic web, Silicon Valley, Silicon Valley startup, Simon Singh, Skype, slashdot, social intelligence, social web, statistical model, Stephen Hawking, Stewart Brand, subscription business, tacit knowledge, Ted Nelson, the Cathedral and the Bazaar, The Death and Life of Great American Cities, The Nature of the Firm, The Wisdom of Crowds, University of East Anglia, Vannevar Bush, Vernor Vinge, Wayback Machine, Yochai Benkler

It’s a type of property rights in ideas, leading to an economy based on reputation, and establishing an invisible hand for science that strongly motivates scientists to share their results. The foundation for this reputation economy is a set of very strong social norms: scientists must credit other people’s work; they cannot plagiarize; and scientists judge other scientists’ work by their record of publishpapers. But these norms focus on just one way of sharing scientific knowledge: the scientific paper. If we could establish similar norms and a reputation economy that encourages broader sharing of scientific knowledge, then the invisible hand of science would become stronger, and the process of science would be greatly accelerated.

I agree with Polanyi’s concerns—indeed, it’s tempting to write a follow-up essay on “The Oligarchy of Science”—but the point of the current discussion is, of course, to find best actions in the world we find ourselves in, not in some idealized world. p 193: On property rights in ideas and the invisible hand in science, see [172,48]; an interesting general article on invisible hand explanations is [230]. I don’t know where the term “reputation economy” originates; it has been in wide use since the 1990s (and perhaps earlier), but the idea is much older. p 194: SPIRES is at http://www.slac.stanford.edu/spires/. The physics preprint arXiv is, as previously noted, at http://arxiv.org.

Jon Udell’s Radio blog, March 4, 2002. http://radio-weblogs.com/0100887/2002/03/04.html. [229] UK Medical Research Council policy on data sharing and preservation. http://www.mrc.ac.uk/Ourresearch/Ethicsresearchguidance/ Datasharinginitiative/Policy/index.htm. [230] Edna Ullmann-Margalit. Invisible-hand explanations. Synthese, 39(2): 263–291, 1978. [231] Vernor Vinge. Rainbows End. New York: Tor, 2007. [232] Steven S. Vogt, R. Paul Butler, Eugenio J. Rivera, Nader Haghighipour, Gregory W. Henry, and Michael H. Williamson. The Lick-Carnegie Exoplanet Survey: A 3.1 M_Earth planet in the habitable zone of the nearby M3V star Gliese 581. eprint arXiv:1009.5733, 2010


The Winner-Take-All Society: Why the Few at the Top Get So Much More Than the Rest of Us by Robert H. Frank, Philip J. Cook

accounting loophole / creative accounting, air freight, Alvin Roth, Apple's 1984 Super Bowl advert, business cycle, compensation consultant, Daniel Kahneman / Amos Tversky, delayed gratification, Garrett Hardin, global village, haute couture, income inequality, independent contractor, invisible hand, junk bonds, labor-force participation, longitudinal study, Marshall McLuhan, medical malpractice, Network effects, positional goods, prisoner's dilemma, rent-seeking, rising living standards, Ronald Reagan, school choice, Shoshana Zuboff, Stephen Hawking, stock buybacks, Tragedy of the Commons, transaction costs, trickle-down economics, winner-take-all economy

Wall Street money manager George Soros is not quite a celebrity, yet there is no denying the power of his $ 1 . 1 billion 1993 income to capture the imaginations of ambitious col­ lege students. 15 It is easy to think of examples of the relative handful who have made it big, but much harder to summon individual exam­ ples from the multitudes of anonymous individuals who have not; and hence, in part, the biased perception in favor of success. The invisible-hand theory says that we get socially optimal career choices when people make well-informed, self-serving decisions on the basis of market incentives. But it also says, by implication at least, that if people generally overestimate their prospects in winner-take-all markets, the resulting career choices will not be socially (or even indi­ vidually ) optimal.

If our goal, as before, is to maximize society's total income, we should keep investing in performance enhancement as long as the last dollar invested yields at least a dollar's worth of extra performance. (If the last dollar invested had yielded less than an extra dollar's worth, it would have been better to invest less. ) Does an invisible hand lead contestants to invest in accordance with this criterion? Unfortunately, the answer seems to be no. The dif­ ficulty is that whereas from society's point of view we want invest­ ments to be driven by their effect on the value of the final product, the primary concern from each contestant's point of view is their effect on who will be the winner.

TIlls cost­ benefit test presumes that the value of what can be bought with extra income is independent of what others buy, which implies that the pri­ vate and social incentives regarding work are one and the same. But when satisfaction-or the likelihood of promotion-depends not only on absolute but also on relative effort, the invisible hand breaks down. At the individual level, for example, each worker's goal may be to en­ hance her odds of promotion by working a little longer. The logic of this strategy, economist Lotte Bailyn explains, follows from the fact that it is much easier for the employer to measure and reward a work­ er's hours than to measure the amount she actually produces.36 But if all workers pursue this strategy, they are destined to be frustrated, for no matter how much they work, there are only so many slots for pro­ motion.


Animal Spirits by Jackson Lears

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

It is no accident that this quotation from Wealth of Nations appears prominently on the Web page of the Liberty Fund, a libertarian think tank: By preferring the support of domestick to that of foreign industry, [the individual] intends only his own security; and by directing that industry in such a matter as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. By the time Smith published these words in 1776, the invocation of an invisible hand or its equivalent was a familiar rhetorical move in natural history as well as social, economic, and political thought. Enlightenment thinkers were keenly aware of the foundational (or anti-foundational) role of chance in the cosmos—the capacity of fortune to undermine rational order and systems.

The last stage of the process, the transformation of private into public wealth, was left largely unarticulated—except by passages like this one from Smith’s Theory of Moral Sentiments, which revealed a kind of invincible innocence: The rich … divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessities of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interests of the society, and afford means to the multiplication of the species. While Smith’s invisible hand was one of many instruments of self-organization imagined by eighteenth-century thinkers, his particular version of the trope met a peculiarly urgent ideological need, at least for moral philosophers like himself—the need to provide moral legitimacy for the life of trade, to make commerce seem like more than an amoral scramble.

“extremely small bodies”: René Descartes, cited in John Sutton, Philosophy and Memory Traces: Descartes to Connectionism (1998), 103. “always include a force”: Pierre Gassendi, cited in Jonathan Sheehan and Dror Wahrman, Invisible Hands: Self-Organization and the Eighteenth Century (2015), 28. “moving animal spirits”: Thomas Willis, The Practice of Physick (1684), 36. “Magically and Sympathetically”: Ralph Cudworth, The True Intellectual System of the Universe (1678), 162. “there must be something more”: Sheehan and Wahrman, Invisible Hands, 168. declared the only legitimate prayer to be spontaneous: Lori Branch, Rituals of Spontaneity: Sentiment and Secularism from Free Prayer to Wordsworth (2006), chap. 1.


pages: 308 words: 85,880

How to Fix the Future: Staying Human in the Digital Age by Andrew Keen

"World Economic Forum" Davos, 23andMe, Ada Lovelace, Affordable Care Act / Obamacare, Airbnb, Albert Einstein, AlphaGo, Andrew Keen, Apple's 1984 Super Bowl advert, augmented reality, autonomous vehicles, basic income, Bernie Sanders, Big Tech, bitcoin, Black Swan, blockchain, Brewster Kahle, British Empire, carbon tax, Charles Babbage, computer age, Cornelius Vanderbilt, creative destruction, crowdsourcing, data is the new oil, death from overwork, DeepMind, Demis Hassabis, Didi Chuxing, digital capitalism, digital map, digital rights, disinformation, don't be evil, Donald Trump, driverless car, Edward Snowden, Elon Musk, Erik Brynjolfsson, European colonialism, fake news, Filter Bubble, Firefox, fulfillment center, full employment, future of work, gig economy, global village, income inequality, independent contractor, informal economy, Internet Archive, Internet of things, invisible hand, Isaac Newton, James Watt: steam engine, Jane Jacobs, Jaron Lanier, Jeff Bezos, jimmy wales, job automation, Joi Ito, Kevin Kelly, knowledge economy, Lyft, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Marshall McLuhan, Menlo Park, Mitch Kapor, move fast and break things, Network effects, new economy, Nicholas Carr, Norbert Wiener, OpenAI, Parag Khanna, peer-to-peer, Peter Thiel, plutocrats, post-truth, postindustrial economy, precariat, Ralph Nader, Ray Kurzweil, Recombinant DNA, rent-seeking, ride hailing / ride sharing, Rutger Bregman, Salesforce, Sam Altman, Sand Hill Road, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, Silicon Valley startup, Skype, smart cities, Snapchat, social graph, software is eating the world, Stephen Hawking, Steve Jobs, Steve Wozniak, subscription business, surveillance capitalism, Susan Wojcicki, tech baron, tech billionaire, tech worker, technological determinism, technoutopianism, The Future of Employment, the High Line, the new new thing, Thomas L Friedman, Tim Cook: Apple, Travis Kalanick, Triangle Shirtwaist Factory, Uber and Lyft, Uber for X, uber lyft, universal basic income, Unsafe at Any Speed, Upton Sinclair, urban planning, WikiLeaks, winner-take-all economy, Y Combinator, Yogi Berra, Zipcar

That can only be good news for those of us, like Steve Case or Margrethe Vestager, who want to flatten the winner-take-all landscape and build a fairer world. Not everyone, I’m guessing, will agree that the best way to fix the future is through legislation. There will be those who say that rather than Case’s visible hand, it’s actually what Adam Smith called the “invisible hand” of the free market that remains the best guarantor of innovation. Perhaps. To test this theory, let’s return to where we began this journey—to the Alte Teppichfabrik, that industrial relic in Berlin, where some of Germany’s most innovative free market digital entrepreneurs are attending the “Encrypted and Decentralized” conference.

Those “values,” however, aren’t just ethical—they are also the values of the free market. As the event’s keynote speaker, Brad Burnham—the cofounder and managing partner at the New York City–based venture capital firm Union Square Ventures—tells the Berlin audience, “The great thing about capitalism is that it’s the only choice.” And so, according to Burnham at least, it’s the invisible hand of the market rather than the visible hand of Vestager’s EU that can now reinvent the digital economy. “We are now living in a world resembling 1995,” Burnham explains. “It’s a world of smaller companies, a new age of innovation from below.” As I’ve already suggested, there really aren’t any original ideas in tech.

Moreover, the online advertising industry—with its myriad layers of brokers and agencies and its byzantine systems for the automated buying and selling of ads—is, according to the Financial Times’ business columnist John Gapper, “bafflingly complex.” It’s so complex, in fact, he says, that even “regulators are failing to block fraudulent ads.”10 So, rather than with the visible hand, the solution may lie in the invisible hand of the market, in the consumer demand for digital cleaning services such as Adblock Plus that, at the click of a mouse, banish the trash from our screens. Schumacher is perfectly serious when he claims that Adblock Plus is establishing a healthy new publishing ecosystem for the internet. Many publishers, however, completely disagree—arguing that this ad-blocking product is actually destroying their advertising-supported businesses.


The Ages of Globalization by Jeffrey D. Sachs

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

While greed by itself might be unappetizing and seem to be antisocial, the unleashing of greed could in fact lead to the common good. Thus was born the idea that Adam Smith would crystalize as the “invisible hand”—the idea that the pursuit of self-interest by each person promotes the common interest of society as a whole as if by an invisible hand. Smith himself was a moralist and a believer in personal virtues, self-restraint, and justice. Yet Smith’s concept of the invisible hand quickly became an argument to let market forces play out as they might, no matter the distributional consequences. The first statement of this counterintuitive idea came not from Smith but from a London-based pamphleteer and poet at the start of the eighteenth century, Bernard Mandeville, in an ingenious poem called “The Fable of the Bees.”

See information and communications technologies Ieyasu, Tokugawa, 150 illiteracy, of countries, 164, 164–65 impartial spectator, 124 imperialism, 107 India, 148–49 Indian Ocean, 97, 102–4 indigenous people, 102, 116–20 Indo-European language, 50, 64–65 Industrial Age, 2, 4, 7, 11, 195; Britain entering, 133; globalization in, 129; lessons from, 167–68; steam engine in, 16–17, 131–34, 132 industrialization, 5, 7–9; of Britain, 135–38, 142–43, 155; coal in, 27–28, 145; colonial era ending and, 163–64; economic divergence in, 144, 144; Europe’s diffusion of, 141–43; global patterns of, 145–46; of Japan, 150; self-sustaining, 137–38; stages of, 141 industrial production, 14 Industrial Revolution, 17, 138 inequalities, 196–97; challenges from, 185–86; economic, 184; gender, 199; technological changes for, 30 Influence of Sea Power Upon History, 1660–1783, The (Mahan), 112 information, 169 information and communications technologies (ICTs), 141 information technologies, 4–5 infrastructure development, 161 innovative designs, 138–41 In Praise of Folly (Erasmus), 105 input layer, 174 inquiry, age of, 104–6 institutions, 1, 17, 18, 19–20 integrated circuits, 171–72 intelligent technologies, 141 internal combustion engines, 4 International Monetary Fund, 161, 178 investments, 183 invisible hand, 114 iron, 61–62 irrigation, 47 Isabella (queen), 99, 108 Islam, 78, 85–88 Iwakura Mission, 151 James II (king of Britain), 122 Japan: China invaded by, 147; feudal structure of, 151; geography of, 150; industrialization of, 150; as military powerhouse, 146; population of, 150; Russo-Japanese War and, 151; Sino-Japan War and, 151 Jaspers, Karl, 70–71 Jeopardy (game show), 175 Jesuit Order of the Catholic Church, 106 Jin Dynasty, 90 job losses, 185 Judaism, 67 Jurchen horsemen, 90 Kant, Immanuel, 207, 212 Kasparov, Garry, 175–76 Kelekna, Pita, 62, 81 Kennedy, John F., 30–31, 200, 211, 213–14 Kenya-Somalia border, 190, 191 Keynes, John Maynard, 155–56, 158 Kievan Rus, 92 Kilby, Jack, 171 kingdoms, of Egypt, 66 King William’s War, 122 knowledge, advancements in, 105–6 Koch, Alexander, 102 Kondratiev, Nikolai, 139 Kondratiev waves, 139–41, 140 Köppen-Geiger climate system, 22–23, 23, 218 Köppen-Geiger Mediterranean climate zone, 79 Kuhn, Dieter, 90 Kurki, Sofi, 139, 141 land areas, 228n10 land-based empires, 3–4, 73–76 land grants (encomiendas), 117 land power (tellurocracy), 72 land use, 103, 188, 222–23 language, 38, 167; book writings with, 71; in China, 72; from Europe, 50, 64–65; Indo-European, 50, 64–65.

See Sustainable Development Goals sea level rise, 192, 192 sea power (thalassocracy), 72–73 secondary sectors, 14–16 Second Opium War, 147 Security Council, 209, 210 sedentism, 41, 43–45 Sedol, Lee, 176 Seleucid Empire, 77 self-driving trucks, 186 Seljuk group, 65 semiconductors, 171 Seven Years’ War, 122, 148 Shandong, China, 191 Shang Dynasty, 48 Shannon, Claude, 171 shared reality, 214 ships, cannon-laden, 104 Silk Road, 24, 84, 85, 98 Sino-Japan War, 151 skilled workers, 186 slavery: from Africa, 118, 118–19; indigenous people and, 116–20; North America plantations with, 119; Saint-Domingue rebellion of, 121; for sugar plantations, 120; in temperate zone, 119 smallpox, 102 smart machines, 202 Smith, Adam, 98; global empires summation by, 124–26; invisible hand from, 114; Wealth of Nations by, 26, 124, 131, 196 Social Conquest of Earth, The (Wilson, E.), 170 social democracy, 202 social-democratic ethos, 201–3 social institutions, 19–20 societies: Eurasia with horse-based, 62–63, 65; Greek, 76–79; hierarchical structure of, 39; horse-based, 59; human, 38–40 soil nutrients, 19 Song Dynasty, 88–91, 89, 104 Soviet Union, 30, 161–62, 207 Spain, 97, 108–11, 110 state law, 71 steam engine, 4; global trading of, 137; in Industrial Age, 16–17, 131–34, 132; Watt patenting, 17 steel, 139 steppes: of Asia, 53; climate zones of, 53; Eurasian, 24, 54; horse domestication in, 59; migration from, 64 subsidiarity doctrine, 196, 203–4 sugar, 119–20 sugar plantations, 120 Summa Theologica (Aquinas), 78 Sun Yat-Sen, 147 sustainable agriculture, 13 sustainable development, 31, 183–85, 196–200; economic growth from, 187; governance of, 200; public goods for, 204–5; religious leaders on, 211–12; U.N. goals of, 198, 201–2 Sustainable Development Goals (SDG), 178, 198, 202 syphilis, 102 tabula rasa (blank-slate learning), 176 Taiping Rebellion, 147 tea infusion, 152 technologies, 1–2, 11, 18, 70; digital, 181; digital revolution and, 166; economic development from, 21; environmental impact of, 188–90; Eurasian advances in, 49; of farm villages, 45; geography and, 18; of Han Empire, 82; horses distributing, 64; inequalities and changes in, 30; information, 4–5; innovative designs for, 138–41; institutions and, 17; intelligent, 141; lucky latitudes innovations in, 50–51; military, 29–30; naval, 96; North America cut off from, 51–52; Old World, 21; for poverty reduction, 177; upheavals from, 130; U.S. advances in, 160; wireless, 181 tellurocracy (land power), 72 temperate zones: advantages to, 22–25; empires, 51; of Eurasia, 48; slavery in, 119 territorial competition, 28 tertiary sectors, 14–16 textile industry, 134; of Britain, 121; of India, 149; robots in, 186 thalassocracy (sea power), 72–73 theileria parva (equine piroplasmosis), 55 Thirty Years’ War, 156–57 Thucydides, 75 Timurid Empire, 83, 93, 93–94 tin mines, 61 tobacco, 119–20 Tokugawa Shogunate, 150 trade, 67 Trajan (emperor), 79 transistors, 171, 172 transnational cooperation, 205 transoceanic empires, 4 transportation vehicle, 54 transport systems, 203 Treaty of Tordesillas (1494), 109–10 Treaty of Versailles, 157 Treaty of Zaragoza (1529), 109–10 triangular trade, 119 tropical vector-borne diseases, 49, 117 tropical zones, 22–23 trucks, self-driving, 186 trypanosomiasis disease, 50 tsetse flies, 56, 152 Turing, Alan, 170, 173 Turing machine, 170 Turkish tribes, 88 Turse, Nick, 162 U.K.


Capital Ideas Evolving by Peter L. Bernstein

Albert Einstein, algorithmic trading, Andrei Shleifer, asset allocation, behavioural economics, Black Monday: stock market crash in 1987, Bob Litterman, book value, business cycle, buy and hold, buy low sell high, capital asset pricing model, commodity trading advisor, computerized trading, creative destruction, currency risk, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, diversification, diversified portfolio, endowment effect, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, fixed income, high net worth, hiring and firing, index fund, invisible hand, Isaac Newton, John Meriwether, John von Neumann, Joseph Schumpeter, Kenneth Arrow, London Interbank Offered Rate, Long Term Capital Management, loss aversion, Louis Bachelier, market bubble, mental accounting, money market fund, Myron Scholes, paper trading, passive investing, Paul Samuelson, Performance of Mutual Funds in the Period, price anchoring, price stability, random walk, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, seminal paper, Sharpe ratio, short selling, short squeeze, Silicon Valley, South Sea Bubble, statistical model, survivorship bias, systematic trading, tail risk, technology bubble, The Wealth of Nations by Adam Smith, transaction costs, yield curve, Yogi Berra, zero-sum game

Barclays Global Investors: “It Was an Evangelical Undertaking” 11. The Yale Endowment Fund: Uninstitutional Behavior 12. CAPM II: The Great Alpha Dream Machine: We Don’t See Expected Returns 13. Making Alpha Portable: “That’s Become the New Mantra” 14. Martin Leibowitz: CAPM in a New Suit of Clothes 15. Goldman Sachs Asset Management: “I Know the Invisible Hand Is Still There” 127 148 165 179 196 214 PART IV: CAPITAL IDEAS TOMORROW 16. Nothing Stands Still 237 Notes Bibliography Acknowledgments Index 247 252 261 263 bern_a03fpref.qxd 3/23/07 8:43 AM Page ix Preface Theorists can always resist facts; for facts are hard to establish and are always changing anyway, and ceteris paribus can be made to absorb a good deal of punishment.

If he had only given us thirty-three articles in the Financial Analysts Journal and nineteen in The Journal of Portfolio Management— Dayenu! If he had only given us all the wonders I have omitted—Dayenu! If he had only been the nicest, the most generous, the most entertaining friend all of us are honored to have—Dayenu! bern_c15.qxd 3/23/07 9:11 AM Page 214 15 Goldman Sachs Asset Management “I Know the Invisible Hand Is Still There” ischer Black moved from MIT to Goldman Sachs in 1984. Shortly after his arrival in New York, Black expressed one of his most enduring observations: “The market appears a lot more efficient on the banks of the Charles River than it does on the banks of the Hudson.” Black’s quip was welcome news to his associates at Goldman.

“We do not shun risk, because, along with Fischer, we are convinced that expected returns vary directly with risk—that is what Fischer meant and what I mean when I refer to ‘equilibrium.’ This belief is at the core of all our strategies. Equilibrium, and the notion of the world moving toward equilibrium, is at the heart of the way we think about the world. I know the Invisible Hand is still there.” Day-to-day portfolio management has to go forward, and Litterman recognizes you cannot just sit back and let the forces of equilibrium run the show: “We are determined to keep volatility under tight control so that it does not exceed the clients’ specifications as to how much benchmark risk and tracking error they can tolerate.


pages: 375 words: 105,586

A Small Farm Future: Making the Case for a Society Built Around Local Economies, Self-Provisioning, Agricultural Diversity and a Shared Earth by Chris Smaje

agricultural Revolution, Airbnb, Alfred Russel Wallace, back-to-the-land, barriers to entry, biodiversity loss, Black Lives Matter, Boris Johnson, carbon footprint, circular economy, clean water, climate change refugee, collaborative consumption, Corn Laws, COVID-19, David Ricardo: comparative advantage, decarbonisation, degrowth, deindustrialization, dematerialisation, demographic transition, Deng Xiaoping, Donald Trump, energy transition, European colonialism, Extinction Rebellion, failed state, fake news, financial deregulation, financial independence, Food sovereignty, Ford Model T, future of work, Gail Bradbrook, garden city movement, Garrett Hardin, gentrification, global pandemic, Great Leap Forward, green new deal, Hans Rosling, hive mind, intentional community, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jevons paradox, land reform, mass immigration, megacity, middle-income trap, Murray Bookchin, Naomi Klein, Peace of Westphalia, peak oil, post-industrial society, precariat, profit maximization, profit motive, rent-seeking, rewilding, Rutger Bregman, Silicon Valley, Silicon Valley billionaire, Steven Pinker, Stewart Brand, Ted Nordhaus, the scientific method, The Wealth of Nations by Adam Smith, Tragedy of the Commons, transaction costs, vertical integration, Washington Consensus, Wolfgang Streeck, zero-sum game

Though farming and food production has never been as industrialisable as manufacturing, much the same occurred: corporate plantation agriculture in tropical colonised countries and agribusiness models of the kind pioneered in Chicago, where cowboys and small-scale prairie farmers were the initial feedstock for an increasingly mechanised global distribution system of meat and grain that ultimately dispensed with them in the Global North.116 A common image we still have of capitalism is the innovative entrepreneur opening up a new and lucrative market niche (the alternative farming sector has its own versions of this) with the invisible hand of the market delivering public benefit (supply matching demand) out of private vice (profit-motivated self-interest).117 The idea is still routinely invoked as a justification of modern capitalism, but it’s out of date. A more apposite image nowadays for financialised, corporate capital is the visible – though sometimes velveted – fist, aimed at anyone who contests its logic, and many of those who don’t.

This lesson is written into our concept of utopia – an improved or perfected society of ideal well-being, which we correctly view as an impossibility (a ‘no-place’ in its Greek etymology). And yet we’ve come to think that the pursuit of private, individual self-interest creates ever-compounding public benefit through mystical concepts like Adam Smith’s invisible hand of the market.149 In service of such concepts we restrict the ability of our political communities to limit private accumulation through markets, instead combusting ever more fossil fuels that imperil the ability of Earth to sustain its current complement of life in order to produce mass consumer goods and possibilities for endless travel that we think will improve our happiness.

If there’s no place in your utopia for providing these for yourself, you’ll have to consider what you can offer people who are willing to provide them for you, and weigh the implications of your extreme dependence on their goodwill. Against that background, I’d suggest that Nozick’s framework implicitly generates something like a small farm future of widespread material self-provision. This is especially so once we’ve jettisoned, as I think we must, all the fanciful metaphors – the downward trickles, rising tides and invisible hands – by which the global wealthy convince themselves that the pursuit of the wealth accruing mostly to themselves is actually a help to the poor. Of course, in the real world nobody gets to sit down and choose their individual utopia. Small farm utopias have been thin on the ground historically because control of land and its agricultural potential has been monopolised by centralising elite power.


pages: 484 words: 136,735

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

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

Hoping that “something will turn up” may sound like deluded wishful thinking, but it is really just an extension into politics and macroeconomics of Adam Smith’s arguments about the self-organizing dynamics of the capitalist economy. Smith showed how the “invisible hand” of competitive markets automatically coordinates the actions of millions of individuals pursuing their own self-interest so that they satisfy each other’s needs, despite the fact that no one is thinking consciously about the common good. This same invisible hand steers individual initiative and creativity toward solutions of society’s collective problems, provided two conditions are satisfied. First, the process of spontaneous self-organization must be given enough time to produce new adaptations after each of capitalism’s periodic crises.

Smith observed that a market economy, although it involves millions of unconnected individuals who work at highly specialized and narrow tasks, is a naturally self-organizing mechanism provided a few simple rules of commerce and mutual trust are generally obeyed and enforced. This self-organizing system produces mutually satisfactory outcomes as if it were guided by an “invisible hand,” but without the need for supernatural or divine intervention. And individuals, as long as they act predictably within this mutually agreed social framework, can satisfy each other’s material needs simply by pursuing their own self-interest. To provide useful services to other people, we do not need to know them, love them, or anticipate their desires.

What set off this dynamic megatrend was the interaction between three historic events described in the last chapter—the breakup of the Soviet bloc, the opening up of China, and the end of proxy wars between communism and capitalism in the developing world. The result was that almost the entire world’s population found their lives guided for the first time by the invisible hand of market forces, instead of being ruled by the iron fists of communism and feudalism or the clumsy robotic grip of central planning. Two, globalization transformed almost every economic activity in every country, as the principles of market competition, private enterprise, and free trade won universal acceptance after the breakdown of central planning and state ownership.


pages: 470 words: 130,269

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

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

On unemployment, see 148–49. His discussion of “security against privation” defends the ideas of a universal minimum income and minimum provisions of food, shelter, and clothing in developed countries. 42. Ibid., 238. 43. Ibid., 20–23. 44. Phillips-Fein, Invisible Hands, 15–19, 41–42. The Hayek quotation appears in Road, 20. 45. Phillips-Fein, Invisible Hands, 27–34, 42–43; Nik-Khah and Van Horn, “Inland Empire.” 46. Morgenstern, Diaries, October 25, 1943, Box 13, OMP; Morgenstern, Diaries, April 19, 1945, Box 14, OMP. 47. Morgenstern, Diaries, July 12, 1941, Box 13, OMP, also quoted in Leonard, Von Neumann, 225.

Friedman and Friedman, Two Lucky People, 161. 33. Quoted in Hülsmann, Mises, 799, 802. For Mises’s financial status, see Bilo, “Mises in NYC.” 34. Quoted in Hülsmann, Mises, 823. On NAM, see Phillips-Fein, Invisible Hands, 56–60. 35. On California conservatism, see Olmsted, California; McGirr, Suburban Warriors. See also Nash, Conservative, especially 13; and Phillips-Fein, Invisible Hands, 34–51. 36. Hazlitt, “Capitalism,” 70. On Human Action, see Hülsmann, Mises, 884–87, 893–95. On Rand and Mises, see Burns, Goddess, 141–43. 37. Mises, Human Action, 3. 38. Ibid., 32. On Hayek-Mises, see Caldwell, Hayek’s Challenge, 119–26, 193–96.

On the MPS and the World Economic Forum, see Carroll and Sapinski, “Neoliberalism.” 3. On the MPS, see Walpen, Die offenen Feinde; Mirowski and Plehwe, Mont Pèlerin; Burgin, Great Persuasion. The official history of MPS is also helpful: Hartwell, History. For a list of the first participants, see Walpen, Die offenen Feinde, 391–92. Phillips-Fein, in Invisible Hands, 41–51, details the involvement of anti–New Deal businessmen. 4. On economics imperialism, see Lazear, “Economic Imperialism”; Nik-Khah and Van Horn, “Inland Empire.” 5. Lionel Robbins drafted the preamble. On US social science, see Cohen-Cole, Open Mind. On the transition of the Austrian civilizational project, see Dekker, Viennese Students, 141–50, 176–80.


pages: 395 words: 116,675

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

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

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

Gradually, by trial and error, a child discovers what behaviour leads to mutual sympathy of sentiments, and therefore can make him or her happy by making others happy. It is through everybody accommodating their desires to those of others that a system of shared morality arises, according to Smith. An invisible hand (the phrase first appears in Smith’s lectures on astronomy, then here in Moral Sentiments and once more in The Wealth of Nations) guides us towards a common moral code. Otteson explains that the hand is invisible, because people are not setting out to create a shared system of morality; they aim only to achieve mutual sympathy now with the people they are dealing with.

And that, churchmen aside, is where all the disagreement about markets comes from. Fine in theory, useless in practice – so goes the verdict of most right-thinking people on the topic of markets. The question then becomes whether commerce only works if it is perfect. Are semi-free markets better than none? The economist William Easterly is in no doubt that the invisible hand is not Utopia: ‘It is the process of driving out of business the incompetent in favour of the mediocre, the mediocre in favour of the good, and the good in favour of the excellent.’ A glance at economic history makes clear that countries run by and in the interests of merchants have not been perfect, but they have always been more prosperous, peaceful and cultured than countries run by despots.


pages: 573 words: 115,489

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

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

‘It is not from the benevolence of the butcher, the brewer and the baker that we expect our dinner, but from their regard to their own self-interest’, Smith famously wrote in An Inquiry into the Nature and Causes of the Wealth of Nations. Everyone is continually exerting himself in his own self-interest, said Smith. ‘It is his own advantage, indeed and not that of the society, which he has in view’, but ‘he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention’.31 The metaphor of the invisible hand turned out to be an extraordinarily powerful one and it has been central to modern economics. Even though Smith himself wrote passionately about the dangers of corporate interests and the indispensable role for government in curbing these, this one single metaphor has motivated a ferocious defence of the virtues of an unbridled ‘free market’ in which self-interest is given full rein.

If selection takes place at the level of the individual, it should, in the long run, favour the evolution of individuals who exhibit only selfish (i.e., self-preserving) behaviour. Selfishness attained not just a legendary but an evolutionary status. It is interesting to note the parallels between early economics and nineteenth-century evolutionary thought. Just as the self-interest of economic agents is supposed to lead ‘as if by an invisible hand’ to the most favourable outcome for society, so the self-interest of individuals is supposed to lead through ‘the survival of the fittest’ to the most favourable outcome for species. Economics has continued to ‘borrow’ credibility for the centrality of self-interest from the theory of evolution ever since.

The collapse of communism in the 1990s did nothing to persuade ordinary people that an active, interventionist state can be a good thing. The historical weaknesses of communism – the corruption of power, the erosion of autonomy, the destructive nature of its economic model – appear to underline the same message. Big government is bad for prosperity. Quite often justification for this position is sought in the metaphor of the ‘invisible hand’ and the writings of Adam Smith. But it’s useful to recall (Chapter 7) that Smith himself was intensely aware of the distorting power of corporate interests, and argued specifically that government was essential to keep these in check. The bigger the interests, the greater the power needed by government, to protect society against corruption and capture, according to Smith.2 By the middle of the twentieth century, two almost diametrically opposed conceptions of governance lay at the heart of debates about economics.


pages: 382 words: 92,138

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

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

‘me too’ 64–7; see also pharmaceutical companies (‘pharma’); specific drugs Duhigg, Charles 173–4 DuPont 178–9 economic crisis: boosting clean technologies 142–3; causes of 12, 182; public sector blamed for 15, 17; varied impact of in EU 41 Economist, view on State and enterprise 16 ‘ecosystems’: see innovation ecosystems electric cars/vehicles 108, 123, 124, 133 Electric Power Research Institute (EPRI) 151 Elias, John 102–3 email 104 End of Laissez Faire, The (Keynes) 4, 194 endogenous growth theory: see ‘new growth’ theory energy crisis 137, 144–5; see also green industrial revolution Energy Frontier Research Centers (EFRCs) 133 Enron 148 ‘enterprise zones’ 54 ‘entrepreneurial’ State: building of 54, 196–7; growth and inequality in 183; risk assumption and vision of 24; role of 6, 10, 21, 23; see also State Entrepreneurial State, The (report) 2, 3 entrepreneurs: DARPA’s brokering role with 77; financing of 57; investment choices of 136; myth of in Silicon Valley 63; risk types and 58–9; SBIR funding to 80, 188 EPA (Environmental Protection Agency) 150 equitable growth 13, 177, 185 European Organization for Nuclear Research (CERN) 101 ‘European Paradox’ 53 European Union: approach to green initiatives 124; ‘Big State’ behind innovation in 166; feed-in tariffs in 153; ‘fiscal compact’ of 42, 197; green transition targets in 115n2; gross R&D spending as percentage of GDP 43; growth producing spending in 196; investment in renewable energy 120, 121; public sectors in 17–18; R&D targets of 41; weaknesses of countries in 52–3 Evans, Peter 4 Evergreen Solar 151–2, 162 Evolutionary Theory of Economic Change, An (Nelson and Winter) 34–5 ‘evolutionary theory’ of production 34–5 ‘exogenous growth theory’ 34 externalities 4, 7, 21, 168; see also Apple Fadell, Tony 100n8; see also Apple Fairchild Semiconductor 76 fast Fourier transform (FDT) algorithm 109 feed-in tariffs: in energy technology 114; in European markets 153; German 122, 138, 149, 156; policy changes in 125n7; UK 124 Fert, Albert 96 Fiegerman, Seth 171n3 finance firms 182 financialization 25–8 FingerWorks 103 Finland 120n4, 121, 190 First Solar (formerly Solar Cells Inc.) 128–9, 151, 159–60; see also green industrial revolution Fiscal Investment Loan Program (Japan) 40 flat panel display (FPD) industry 106 Florida, Richard 107 Forbes on WuxiSuntech 153 ‘Fordist’ model of production in 38–9 Foxconn 170–71 France 61, 120, 120n4, 121 Freeman, Chris 193 Fuchs, Erica 133 Funding a Revolution: Government Support for Computing Research 63 G4S, security company 16 game theory 36 GDP, balance in categories of 30 Gedser turbine 145 Genentech Inc. 57, 69, 81 General Electric (GE) 125, 137, 147–8, 160–61, 174n5 general purpose technologies (GPTs) 62, 83 Genzyme 81, 181 Germany: feed-in tariffs 122, 138, 149, 156; government energy R&D spending 121; green revolution in 115n2, 116, 120, 122; long-term support provided by 158; public R&D spending in 61, 144–6; solar resources of 144; State investment bank 190; systems of innovation in 37; wind energy and R&D projects in 144–6, 149, 156 Ghosh, Shikhar 127 giant magnetoresistance (GMR) 96–7 GlaxoSmithKline 66–7, 82 Global Wind Energy Council (GWEC) 138–9 Goldwind 149 Goodenough, John B. 108 Google 20, 174–5 government energy R&D spending 121, 121 GPS (global positioning system) 105, 105n12 Great Transformation, The (Polanyi) 194–5 Greece, R&D/GDP 52 Green, Martin 152 green industrial revolution: ARPA-E 133–5; ‘carbon lock-in’ 117; China’s ‘green’ 5 year plan 122–4; climate change 117, 123, 135; development banks funding of 139–40, 139n14; DoE role in 132–3; Economist on 16; financial commitment for 116; funding of 116–19; global new investment in renewable energy 120; government energy R&D spending 121; government support to 114–15, 119, 129, 141–2; hurdles to 138, 156, 160; leaders in 11–12, 126; national approaches to 119–22; ‘No More Solyndras Act’ 130–31n12; patient capital 138–40; policies impacting 113–15, 119; pushing green development 136–7; renewable energy credits (RECs) 115n1; smart grid technology in 115, 118; sustainability 117, 119, 123; UK’s approach to 124–6; US approach to 126–35; venture capital in 127–9, 128n9; venture capital subsectors in 128; see also clean technology; solar power; wind power Green Investment Bank 125n7 Gronet, Chris 151 growth: economy-wide 62; effect of venture capital on 49; of firms and R&D benefit 44; firm size relationship to 45–6; ‘inclusive’ 167, 183, 195; inequality and 31, 54, 177; innovation as key source of 9, 177; measures of 33; myths about innovation and 10; national debt relationship to 18; ‘smart’ 167, 183; and technology 33–4; theories of 33–4; variables important for 18; see also equitable growth Grünberg, Peter 96, 97 Grunwald, Michael 113, 136 Haltiwanger, J 45 Hamilton, Alexander 73 Hanwha Group 157 hard disk drives (HDD) 96–7, 109 Harrison, Brian 154 Harrod, Roy F. 33 Haslam, Karen 171n3 Heymann, Matthias 145 Hoffman Electronics 150, 150n4 Hopkins, Matt 129n10, 160 House of Commons Energy and Climate Change Committee 125 Hsieh, Chang-Tai 46 HTTP/HTML 103–5, 109 Hughes, Alan 45 Hurst, Samuel 101 IBM 50, 97, 104, 107 ‘iGesture Numpad’ 103 Ill Fares the Land (Judt) 1 Immelt, Jeffrey 126 income-contingent loans and equity 189–90 income distribution 30n1 India 45–6, 120 industrial policy: challenges to 13; decentralized 78; in ‘rebalancing’ of economies 27; recent US history of 10, 21; redistributive tools needed in 167; State led 40; see also ‘picking winners’ inequality: as debilitating economic issue 177; growth impacted by 31; reducing 166, 186; shareholders as source of 183; tax cut impact on 54 information and communications technology (ICT) 50, 118 Information Processing Techniques Office (DARPA’s) 76 Innovalight 158 innovation: collective character of 183–7, 193; ‘culture’ of 87; as cumulative 167, 187; Death Valley stage of 47, 48, 122; development banks fostering 139–40; development of 3, 41–2; and distribution 186; economic growth driven by 9; firms resisting pressure for 77; global process of 155; government support for 31; in Japan 37–8; macro models on 44; myths about 10, 22; myths of R&D being about 44; ‘open innovation’ model of 25, 27; patent increase relationship to 50–51; process in energy technology 114; Schumpeterian innovation economics 5; State as a force in 5, 166; State leading in risky 62–4; stock market speculation and 49–50; tax policy impact on 51; threatened in US 24; undermining of in US 53, 183, 187; US 24; see also ‘systems of innovation’ approach innovation ecosystems: cumulative innovation curve in 167–8; open systems 193; socioeconomic prosperity dependence on 179; symbiotic vs. parasitic 23–5, 155, 162–3, 179; types of 2; see also actors ‘innovation fund’ 189 innovation networks 36, 40 innovation policy 22–3, 44, 46, 54, 167 Inquiry into the Nature and Causes of the Wealth of Nations, An (Smith) 1; see also ‘Invisible Hand’ Institute for Fiscal Studies (IFS) 51–2 institutional change, assessment of 36 integrated circuits 98, 98n6 Intel 130n11 intellectual property protection 110 intellectual property rights 174 International Bank for Reconstruction and Development (IBRD) 5 Internet: Apple’s use of 109; commercialization of 22; DARPA’s role in 76; and HTTP/HTML 103–5, 109; origin of 63; public funding behind 105 interventionist policy 83 investment returns, social vs. private 3–4 ‘Invisible Hand’ 30 iOS mobile operating system 89–90 iPad 102, 105, 109, 111n14 iPhone 101–3, 105–6, 109 iPlayer 16 iPod 95–6, 100–102, 105, 109, 110 Ireland 120n4, 121, 121 IRS 529 plans 111, 111n15 Italy 17, 39, 41, 52, 121 Jacobs 149 Janeway, William H. 49–50 Japan: Apple entering market of 110; computer electronics competition by 97, 98, 98n7, 106–7; economic growth of 37–8; finance system coordination by 40; flat panel display (FPD) industry of 106; government energy R&D spending 121; lithium-ion battery perfection by 108; MITI 37–8, 40; public R&D spending in 61; systems of innovation in vs.

(Lent and Lockwood 2010, 7) This is the view that asks little of government other than correcting market failures – such as through investment in basic science, education and infrastructure. The ‘appropriate’ role of the State is not a new debate, but it is one that benefits from a broader understanding of the academic literature on the role of innovation in creating economic growth. Over two hundred and fifty years ago, when discussing his notion of the ‘Invisible Hand’, Adam Smith argued that capitalist markets left on their own would self-regulate, with the State’s role being limited to that of creating basic infrastructure (schools, hospitals, motorways) and making sure that private property, and ‘trust’ (a moral code) between actors, were nurtured and protected (Smith 1904 [1776]).

‘Information Management: A Proposal’. CERN. Available online at http://info.cern.ch/Proposal.html (accessed 22 January 2013). Block, F. L. 2008. ‘Swimming against the Current: The Rise of a Hidden Developmental State in the United States’. Politics and Society 36, no. 2 (June): 169–206. _____. 2011. ‘Innovation and the Invisible Hand of Government’. In State of Innovation: The U.S. Government’s Role in Technology Development, edited by F. L. Block and M. R. Keller. Boulder, CO: Paradigm Publishers. Block, F. L. and M. R. Keller, eds. 2011a. State of Innovation: The U.S. Government’s Role in Technology Development. Boulder, CO: Paradigm Publishers. _____. 2011b.


pages: 288 words: 64,771

The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality by Brink Lindsey

Airbnb, Asian financial crisis, bank run, barriers to entry, Bernie Sanders, Build a better mousetrap, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Carmen Reinhart, Cass Sunstein, collective bargaining, creative destruction, Credit Default Swap, crony capitalism, Daniel Kahneman / Amos Tversky, David Brooks, diversified portfolio, Donald Trump, Edward Glaeser, endogenous growth, experimental economics, experimental subject, facts on the ground, financial engineering, financial innovation, financial intermediation, financial repression, hiring and firing, Home mortgage interest deduction, housing crisis, income inequality, informal economy, information asymmetry, intangible asset, inventory management, invisible hand, Jones Act, Joseph Schumpeter, Kenneth Rogoff, Kevin Kelly, knowledge worker, labor-force participation, Long Term Capital Management, low skilled workers, Lyft, Mark Zuckerberg, market fundamentalism, mass immigration, mass incarceration, medical malpractice, Menlo Park, moral hazard, mortgage debt, Network effects, patent troll, plutocrats, principal–agent problem, regulatory arbitrage, rent control, rent-seeking, ride hailing / ride sharing, Robert Metcalfe, Robert Solow, Ronald Reagan, Savings and loan crisis, Silicon Valley, Silicon Valley ideology, smart cities, software patent, subscription business, tail risk, tech bro, too big to fail, total factor productivity, trade liberalization, tragedy of the anticommons, Tragedy of the Commons, transaction costs, tulip mania, Tyler Cowen, Uber and Lyft, uber lyft, Washington Consensus, white picket fence, winner-take-all economy, women in the workforce

The missing narrative is that government has contributed actively to inequality, not just by failing to restrain naturally inegalitarian market forces but by distorting market forces in an inegalitarian direction. The rise of inequality is, to a significant extent, a function of state action rather than the invisible hand. And this state action, by suppressing and misdirecting entrepreneurship and competition, has rendered our economy less innovative and dynamic as well as less fair. II BIPARTISAN BLIND SPOT Recognition of this possibility has been slow in coming because of an ideological blind spot shared by left and right alike.

In the ideal market economy, the rules of the game are set so that the desire for private gain is channeled into bettering the lives of others. In the ideal democracy, the mechanisms of government are devised so that the clash of contending opinions and interests is converted into policies that serve the common good. To the extent that rent-seeking holds sway, the invisible hand of capitalism degenerates into the grasping hand of crony capitalism, and the lofty pursuit of the public interest devolves into a feeding frenzy of special interests. Free markets depend, paradoxically for some, on the existence of a state strong enough to enforce the rules of the game in an impartial, public-spirited fashion.

See also copyright/patent law benefits of protecting, 64–65 concentrated benefits and, 131 costs of expansion of, 75–81 digital era and, 70–71 European views on, 65, 76, 195n32 information imbalance and, 139–40 institutional bias and, 149 market failure and, 68–69, 74 monopolies and, 85 morality of, 84–89, 195n32 policy image and, 141–45 rent-seeking and, 64 interest rates, 40, 51–54, 59 International Monetary Fund (IMF), 60 Internet. See digital era/information technology intolerance, 2–3 invisible hand, 6, 18 Islam, Roumeen, 61 Issa, Darrell, 176 IT. See digital era/information technology Jones Act, 33 judicial review, 170–75 Keating, Charles, 54 Kelo v. New London, 135 Kimball, David, 132 Kleiner, Morris, 94–95, 99, 105 “kludgeocracy”, 129 Krueger, Alan, 95 Kwak, James, 142 land-use regulations, 32–33, 109–26, 159, 208n14.


pages: 590 words: 153,208

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

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

By focusing on incentives rather than on information, free market economists have encouraged the idea that capitalism is based on greed. But greed, in fact, prompts capitalists to seek government guarantees and subsidies that denature and stultify the works of entrepreneurs. Greed, as I put it in Wealth & Poverty, leads as by an invisible hand to an ever-growing welfare state—to socialism. It is not the enlargement of incentives and rewards that generates growth and progress, profits for the entrepreneur and revenues for the government, but the expansion of information and knowledge. The competitive pursuit of knowledge is not a dog-eat-dog Darwinian struggle.

But Suzy Saintly, Barack Obama, and Dan Bricklin are neither improvident nor necessarily less brilliant than Mark. All these arguments are beside the point. The distributions of capitalism make sense, but not because of the virtue or greed of entrepreneurs, nor as inevitable byproducts of the invisible hand. The reason capitalism works is that the creators of wealth are granted the right and burden of reinvesting it. Warren Buffett worries that his average personal tax rate of 17 percent is “unfair” when his secretary pays more. The accuracy of his 17 percent calculation aside (it ignores the 39 percent corporate rate and 55 percent inheritance and other levies), the reason Buffett pays 17 percent has nothing to do with “fairness.”

The dilemma was resolved, however, at the very beginning of the industrial revolution by the leading philosopher of classical liberal economics. Adam Smith was at once an intellectual who shared all the typical prejudices against the business class and a libertarian conservative who knew the value of freedom and enterprise. His solution was to locate the source of wealth not in the creative activities of businessmen but in the “invisible hand” of the market. Smith believed that capitalism worked not because of the virtues of capitalists but because of the “great machine” of exchange that converted their apparent greed and vices into economic value. Businessmen may be vulgar and avaricious, full of “childish vanities” and selfish indulgences, said Smith, and “seldom do they gather but to conspire against the public.”


pages: 486 words: 150,849

Evil Geniuses: The Unmaking of America: A Recent History by Kurt Andersen

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, affirmative action, Affordable Care Act / Obamacare, air traffic controllers' union, airline deregulation, airport security, Alan Greenspan, always be closing, American ideology, American Legislative Exchange Council, An Inconvenient Truth, anti-communist, Apple's 1984 Super Bowl advert, artificial general intelligence, autonomous vehicles, basic income, Bear Stearns, Bernie Sanders, blue-collar work, Bonfire of the Vanities, bonus culture, Burning Man, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Cass Sunstein, centre right, computer age, contact tracing, coronavirus, corporate governance, corporate raider, cotton gin, COVID-19, creative destruction, Credit Default Swap, cryptocurrency, deep learning, DeepMind, deindustrialization, Donald Trump, Dr. Strangelove, Elon Musk, ending welfare as we know it, Erik Brynjolfsson, feminist movement, financial deregulation, financial innovation, Francis Fukuyama: the end of history, future of work, Future Shock, game design, General Motors Futurama, George Floyd, George Gilder, Gordon Gekko, greed is good, Herbert Marcuse, Herman Kahn, High speed trading, hive mind, income inequality, industrial robot, interchangeable parts, invisible hand, Isaac Newton, It's morning again in America, James Watt: steam engine, Jane Jacobs, Jaron Lanier, Jeff Bezos, jitney, Joan Didion, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, junk bonds, Kevin Roose, knowledge worker, lockdown, low skilled workers, Lyft, Mark Zuckerberg, market bubble, mass immigration, mass incarceration, Menlo Park, Naomi Klein, new economy, Norbert Wiener, Norman Mailer, obamacare, Overton Window, Peter Thiel, Picturephone, plutocrats, post-industrial society, Powell Memorandum, pre–internet, public intellectual, Ralph Nader, Right to Buy, road to serfdom, Robert Bork, Robert Gordon, Robert Mercer, Ronald Reagan, Saturday Night Live, Seaside, Florida, Second Machine Age, shareholder value, Silicon Valley, social distancing, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, Stewart Brand, stock buybacks, strikebreaker, tech billionaire, The Death and Life of Great American Cities, The Future of Employment, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Tim Cook: Apple, too big to fail, trickle-down economics, Tyler Cowen, Tyler Cowen: Great Stagnation, Uber and Lyft, uber lyft, union organizing, universal basic income, Unsafe at Any Speed, urban planning, urban renewal, very high income, wage slave, Wall-E, War on Poverty, We are all Keynesians now, Whole Earth Catalog, winner-take-all economy, women in the workforce, working poor, young professional, éminence grise

But in the real world, where humans operate businesses somewhere in the large range between break-even and maximum profitability, they always have leeway to be unnecessarily and uneconomically fair, trustworthy, decent, and responsible—that is, to take slightly smaller profit margins for the sake of good values and virtuous norms. Friedman, and fellow free-market purists ever since, constantly refer to Adam Smith, who came up with the “invisible hand” idea in the 1700s. But they distort him. Smith also argued in favor of sensible government intervention to improve and optimize free markets. Within a few years of the Friedman Doctrine, elite executives-in-training internalized and felt free to espouse it. Asked in a class in the late 1970s at Harvard Business School about a hypothetical CEO who discovers his product could kill customers, young Jeff Skilling said he “would keep making and selling the product.

See, if you pay less in taxes—and only if you pay less in taxes—America’s economic prosperity and stability will be restored. It’s not selfishness, it’s patriotism. It’s not sleight of hand, or what Reagan’s vice president had derided during his primary campaign against him as “voodoo economics.” It’s the miraculous invisible hand of the market. So what if millionaires would start paying a little less too? So what if big business was relieved of some of the government red tape everybody hates? And as for cutting government programs, people understood that Reagan was only going to get rid of the things that didn’t benefit them—all the waste and fraud, all the foreign aid, all the giveaways for all the lazy bums and welfare queens.

A problem with leveraged buyouts and other private equity takeovers, and with financialization in general, is that so often the main point isn’t to create enterprises of lasting value, enabling particular businesses (or American capitalism or American citizens) to prosper for the long term. It is to obtain those fees, the vigorish, and to score by making this deal, and then another deal, and another, because greed is good, kill them all, and let the invisible hand sort it out. As I was beginning this book in 2017, I noticed that big, familiar retail chains were all going under—Toys “R” Us, Payless, The Limited, Gymboree, and many more. Then I noticed that each of them had been subjected to a leveraged buyout, finally choked and smothered by debt piled on by temporary private equity owners.


Who Rules the World? by Noam Chomsky

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

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

Torture is hideous enough; the invasion of Iraq was a far worse crime. Quite commonly, selective atrocities have this function. Historical amnesia is a dangerous phenomenon not only because it undermines moral and intellectual integrity but also because it lays the groundwork for crimes that still lie ahead. 4 The Invisible Hand of Power The democratic uprising in the Arab world has been a spectacular display of courage, dedication, and commitment by popular forces—coinciding, fortuitously, with a remarkable uprising of tens of thousands in support of working people and democracy in Madison, Wisconsin, and other U.S. cities.

Patrick Cockburn, “Torture? It Probably Killed More Americans than 9/11,” Independent (London), 6 April 2009. 28. Rajiv Chandrasekaran, “From Captive to Suicide Bomber,” Washington Post, 22 February 2009. 29. Chomsky, Hopes and Prospects, 266. 30. Ibid., 267. 31. Ibid., 268. 4. THE INVISIBLE HAND OF POWER   1. Tareq Y. Ismael and Glenn E. Perry, The International Relations of the Contemporary Middle East: Subordination and Beyond (London: Routledge, 2014), 73; Noam Chomsky, Hegemony or Survival: America’s Quest for Global Dominance (New York: Metropolitan Books, 2003), 150; Daniel Yergin, The Prize: The Epic Quest for Oil, Money and Power (New York: Free Press, 1991).   2.


pages: 304 words: 22,886

Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler, Cass R. Sunstein

Al Roth, Albert Einstein, asset allocation, availability heuristic, behavioural economics, call centre, carbon tax, Cass Sunstein, choice architecture, continuous integration, currency risk, Daniel Kahneman / Amos Tversky, desegregation, diversification, diversified portfolio, do well by doing good, endowment effect, equity premium, feminist movement, financial engineering, fixed income, framing effect, full employment, George Akerlof, index fund, invisible hand, late fees, libertarian paternalism, loss aversion, low interest rates, machine readable, Mahatma Gandhi, Mason jar, medical malpractice, medical residency, mental accounting, meta-analysis, Milgram experiment, money market fund, pension reform, presumed consent, price discrimination, profit maximization, rent-seeking, Richard Thaler, Right to Buy, risk tolerance, Robert Shiller, Saturday Night Live, school choice, school vouchers, systems thinking, Tragedy of the Commons, transaction costs, Vanguard fund, Zipcar

Indeed, some of those who are most suspicious of governments think that the only responsibility of private managers is to maximize share prices. As we have emphasized, the invisible hand will, in some circumstances, lead those trying to maximize profits to maximize consumer welfare too. But when consumers are confused about the features of the products they are buying, it can be profit maximizing to exploit their confusion, especially in the short run but possibly in the long run too. The invisible hand works best when products are simple and purchased frequently. We worry very little about consumers being ripped off by their dry cleaners.

2 We agree that government officials, elected or otherwise, are often captured by private-sector interests whose representatives are seeking to nudge people in directions that will specifically promote their selfish goals. That is one reason that we want to maintain freedom of choice. But if private-sector interests are just following the invisible hand in furthering the interests of their customers, what’s the problem?3 The more serious point is that we should be worried about all choice architects, public and private alike. We should create rules of engagement that reduce fraud and other abuses, that promote healthy competition, that restrict interest-group power, and that create incentives to make it more likely that the architects will serve the public interest.

We would love to see similar principles used to monitor governments. Require government officials to put all their votes, earmarks, and contributions from lobbyists on their Web sites. Require those determining the future of energy policy (to cite a random example) to reveal which profit-maximizing firms were invited to lend their all-too-invisible hands to the process of designing the rules. Require those determining the future of educational policy to reveal which interest groups, and which unions, gave them money in the most recent campaign. Require government agencies, not merely the private sector, to disclose their contributions to air and water pollution, and their greenhouse gas emissions.


The Limits of the Market: The Pendulum Between Government and Market by Paul de Grauwe, Anna Asbury

Alan Greenspan, banking crisis, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, conceptual framework, crony capitalism, Easter island, Erik Brynjolfsson, eurozone crisis, Honoré de Balzac, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kitchen Debate, means of production, Money creation, moral hazard, Paul Samuelson, price discrimination, price mechanism, profit motive, Robert Gordon, Robert Solow, Ronald Coase, Simon Kuznets, The Nature of the Firm, The Rise and Fall of American Growth, too big to fail, transaction costs, trickle-down economics, ultimatum game, very high income

This mechanism explains why capitalism is a system in which there is constant technological progress, forming the basis for spectacular advances in material prosperity. The dynamics of the market system led the great eighteenth-century Scottish economist Adam Smith to the conclusion that there was effectively an ‘invisible hand’ ensuring that firms’ efforts to promote their own interests automatically lead to the promotion of general well-being. The baker who gets up at four in the morning to bake bread is not acting out of altruism; it is to increase profits. This individual calculation ensures that we have fresh bread each morning, in other words that the consumer’s well-being is served.

Yet he had an interesting theory about why capitalism was in trouble and would be overtaken by a new system of organizing the economy. Schumpeter’s idea, which was developed in his book Capitalism, Socialism and Democracy, stressed the hostility of the intellectuals vis-à-vis a decentralized market system. As Adam Smith made clear in his celebrated ‘invisible hand’ analysis, the market system works in a decentralized way to bring about equilibrium between demand and supply, and does so without a central intellect guiding this quest towards the equilibrium. The self-interest of producers and consumers in competitive markets is all you need. It is a system that does not need to be centrally guided.  OUP CORRECTED PROOF – FINAL, 27/10/2016, SPi R I S E A N D F A L L : LINEAR OR CYCLICAL ?

.  Gini coefficients b global capitalism b global financial crisis ()  immigration – imperialism  import protection  income, share of total going to top % f,   INDEX income distribution –b, , , –,  income equality and economic growth trade-off , f,  income inequality , f, , , ,  reformist scenario  United Kingdom and United States  income per capita , f income redistribution policies  income tax f, ,  on highest incomes , , –, , , – productivity, labour costs and public sector  in selected countries f India five-year plans  gross domestic product (GDP) per capita f individual rationality and collective rationality –, –, ,  environment (external limit)  external limits of governments  industrial production, worldwide  inequality –,  assets – reduction  and social and political instability , f wealth ,  world –b see also income inequality inflation and lender of last resort –b insolvency/bankruptcy , ,  interbank market  interest rates , –, – on Spanish and British ten-year government bonds f internal contradictions of capitalism –,  internal limits of capitalism – internal limits of free market system –, , ,  internal limits of government – winner-takes-all phenomenon – International Monetary Fund (IMF) ,  investment boom  in eurozone  projects (efficiency)  public  as share of GDP  ‘invisible hand’ ,  Ireland eurozone government bond spreads, ten-year f global financial crisis ()  labour costs, gross hourly f Italy eurozone government bond spreads, ten-year f gross domestic product (GDP) per capita f labour costs, gross hourly f social security spending as percentage of government spending f Jacobson Schwartz, A.


pages: 600 words: 72,502

When More Is Not Better: Overcoming America's Obsession With Economic Efficiency by Roger L. Martin

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, autism spectrum disorder, banking crisis, Black Monday: stock market crash in 1987, butterfly effect, call centre, cloud computing, complexity theory, coronavirus, COVID-19, David Ricardo: comparative advantage, do what you love, Edward Lorenz: Chaos theory, financial engineering, Frederick Winslow Taylor, Glass-Steagall Act, High speed trading, income inequality, industrial cluster, inflation targeting, Internet of things, invisible hand, Lean Startup, low interest rates, Lyft, Mark Zuckerberg, means of production, Network effects, new economy, obamacare, open economy, Phillips curve, Pluto: dwarf planet, power law, Renaissance Technologies, Richard Florida, Ronald Reagan, scientific management, shareholder value, Silicon Valley, Snapchat, Spread Networks laid a new fibre optics cable between New York and Chicago, Tax Reform Act of 1986, The future is already here, the map is not the territory, The Wealth of Nations by Adam Smith, Tobin tax, Toyota Production System, transaction costs, trickle-down economics, two-sided market, uber lyft, very high income, Vilfredo Pareto, zero-sum game

They have been encouraged in this endeavor—and, more generally, in their beliefs—by the contributions of a handful of influential thinkers. Adam Smith It is an interesting and important historical coincidence that Adam Smith’s The Wealth of Nations was published in 1776, the same year that America declared its independence from Britain. In it, Smith provides two important underpinnings for a model of efficiency. First is the “invisible hand” of an unfettered market of buyers and sellers that produces, without explicit organization, a price that generates efficient use of resources to provide the optimal quantity of goods. Second, he uses a pin factory to illustrate the technique for enhancing efficiency of production. The inefficient approach is to staff a factory with workers who independently fabricate entire pins.

A full 28 percent of American libraries from 1777 to 1790 held The Wealth of Nations.18 Hamilton made specific reference to the benefits of the division of labor in his 1791 Report on the Subject of Manufactures, lauding the “greater skill and dexterity naturally resulting from a constant and undivided application to a single object” and arguing that it “has the effect of augmenting the productive powers of labor, and with them, the total mass of the produce or revenue of a country.”19 Both Smith’s invisible hand and division of labor were embraced as the economic policy of the US was formulated in this seminal period. Markets were largely left free to establish efficient prices and quantities, and as US businesses grew, they used the division of labor to produce goods ever more efficiently for those unfettered markets.

David Ricardo Four decades after Smith, David Ricardo took the efficiency idea further with his theory of comparative advantage, arguing in On the Principles of Political Economy and Taxation that, since it is more efficient for Portuguese workers to make wine, thanks to their natural endowment of sunny weather, and English workers to make cloth, due to the cooler climate in which they operate, each would be better off were they to focus on their area of advantage and trade with the other.20 The insights of Smith and Ricardo both reflected and drove the Industrial Revolution, which was as much about innovations in processes that reduced waste and increased productivity as it was about the application of new technologies. While America immediately embraced Smith’s invisible hand and division of labor, especially as the country’s manufacturing sector grew in size and scale during the nineteenth century, the United States was much slower to embrace Ricardo’s push for the efficiency boost that comes from freer trade. During the nineteenth century, the southern states, which were big agricultural-product exporters, wanted freer trade to make sure they had markets for their exports, while the northern states wanted protection for their nascent manufacturing industries.


pages: 263 words: 77,786

Tomorrow's Capitalist: My Search for the Soul of Business by Alan Murray

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, Alvin Toffler, Berlin Wall, Bernie Sanders, Big Tech, Black Lives Matter, blockchain, Boris Johnson, call centre, carbon footprint, commoditize, coronavirus, corporate governance, corporate raider, corporate social responsibility, COVID-19, creative destruction, Credit Default Swap, decarbonisation, digital divide, disinformation, disruptive innovation, do well by doing good, don't be evil, Donald Trump, Ferguson, Missouri, financial innovation, Francis Fukuyama: the end of history, Frederick Winslow Taylor, future of work, gentrification, George Floyd, global pandemic, Greta Thunberg, gun show loophole, impact investing, income inequality, intangible asset, invisible hand, Jeff Bezos, job automation, knowledge worker, lockdown, London Whale, low interest rates, Marc Benioff, Mark Zuckerberg, market fundamentalism, means of production, minimum wage unemployment, natural language processing, new economy, old-boy network, price mechanism, profit maximization, remote working, risk-adjusted returns, Ronald Reagan, Salesforce, scientific management, shareholder value, side hustle, Silicon Valley, social distancing, Social Responsibility of Business Is to Increase Its Profits, The Future of Employment, the payments system, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Washington Consensus, women in the workforce, work culture , working poor, zero-sum game

He quoted his own book Capitalism and Freedom, where he wrote that in a free society “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”3 As a graduate student at the London School of Economics in the late 1970s, I had studied economic history and read the works of Adam Smith, who laid the foundation for Friedman’s view of a market economy. Smith wrote of an “invisible hand” that ensured the self-interested strivings of individuals combined for the greater good. “By pursuing his own interests, he frequently promotes that of the society more effectually than when he really intends to promote it,” Smith wrote. “I have never known much good done by those who affected to trade for the public good.”4 Friedman’s warnings—and Smith’s—about the consequences of companies pursuing social good particularly resonated in the 1970s, when the economy was stalling, and both inflation and unemployment were rising.

When I was in college, my father would clip articles out of Fortune magazine and send them to me, fearful I might be led astray by left-leaning professors (and never imagining I might one day run the company that produced his favorite magazine!). He once sent me a book called The Incredible Bread Machine, which put Smith’s invisible hand into simplistic, almost cartoonish language, to make sure I didn’t miss the point. But the truth is, he need not have worried. Any remaining sympathy I, or others, might have had for alternative economic systems pretty much evaporated in the final decades of the twentieth century. Inflation and slow growth took their toll in the 1970s and early 1980s, and the need for a market-based revival became more than apparent.

Wealth for the fortunate who kept their savings in the market soared. Wealth for the unfortunate whose only asset was their house plummeted. Trust in business, and in all institutions, also plummeted. And capitalism got a second look. People had experienced the painful effects of markets gone haywire. The invisible hand had developed serious arthritis. And as the economy recovered, everyone looked around and saw an enormous and widening gap between the very rich and the working poor, between the ample rewards going to the owners of capital and the stagnating wages being paid to labor, between the plight of the protected few and the vulnerable many.


pages: 383 words: 108,266

Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions by Dan Ariely

air freight, Al Roth, Alan Greenspan, Bear Stearns, behavioural economics, Bernie Madoff, Burning Man, butterfly effect, Cass Sunstein, collateralized debt obligation, compensation consultant, computer vision, corporate governance, credit crunch, Daniel Kahneman / Amos Tversky, David Brooks, delayed gratification, endowment effect, financial innovation, fudge factor, Gordon Gekko, greed is good, housing crisis, IKEA effect, invisible hand, John Perry Barlow, lake wobegon effect, late fees, loss aversion, market bubble, Murray Gell-Mann, payday loans, Pepsi Challenge, placebo effect, price anchoring, Richard Thaler, second-price auction, Silicon Valley, Skinner box, Skype, subprime mortgage crisis, The Wealth of Nations by Adam Smith, Upton Sinclair

., are fully rational, and that the so-called invisible hand works to create market efficiency). To rational economists, these assumptions seem so basic, logical, and self-evident that they do not need any empirical scrutiny. Building on these basic assumptions, rational economists make recommendations regarding the ideal way to design health insurance, retirement funds, and operating principles for financial institutions. This is, of course, the source of the basic belief in the wisdom of deregulation: if people always make the right decisions, and if the “invisible hand” and market forces always lead to efficiency, shouldn’t we just let go of any regulations and allow the financial markets to operate at their full potential?

I wish I could tell you that I would often persuade my conversational partner to accept my point of view, but in almost all cases it would become very clear that neither of us was going to be converted to the other’s viewpoint. Of course, I ran into the biggest difficulties when arguing for irrationality with card-carrying rational economists, whose disregard of my experimental data was almost as intense as their nearly religious belief in rationality (if Adam Smith’s “invisible hand” doesn’t sound like God, I don’t know what does). This basic sentiment was expressed succinctly by two fabulous Chicago economists, Steven Levitt and John List, suggesting that the practical usefulness of behavioral economics has been shown to be marginal at best: Perhaps the greatest challenge facing behavioral economics is demonstrating its applicability in the real world.

What is it about circumstances involving money and competition that might make people more rational? Do the defenders of rationality believe that we have different brain mechanisms for making small versus large decisions and yet another yet another for dealing with the stock market? Or do they simply have a bone-deep belief that the invisible hand and the wisdom of the markets guarantee optimal behavior under all conditions? As a social scientist, I’m not sure which model describing human behavior in markets—rational economics, behavioral economics, or something else—is best, and I wish we could set up a series of experiments to figure this out.


pages: 576 words: 105,655

Austerity: The History of a Dangerous Idea by Mark Blyth

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

Indeed, the new instruction sheet was designed to keep the state as far away from market processes as possible. Morality was present to be sure, but it was an upturned morality where the naked self-interest of financial market actors was taken to be the most positive virtue because its pursuit led to optimal outcomes despite moral intention. Smith’s invisible hand had just given the public the finger. These new ideas were indeed a kind of morality play, but of a very odd type. But what mattered fundamentally was the failure of a set of ideas that justified finance doing whatever it liked because whatever it did was by definition the most efficient thing that could be done.

He identifies both the problem and the solution. To solve the problem of debt we should embrace the principal of austerity—otherwise known as the parsimony of the Scots. Smith’s economics are a bit like Shakespeare—often quoted, seldom read. From his notes on the division of labor in the eponymous pin factory to the “invisible hand” guiding selfish actions to common purposes, Smith’s sound bites are well known. The details of what Smith said about the economy are far less well known and quite surprising. Smith brought together much of the scattered work of early economists on the nature of money, economic growth, the role of capital and labor, and a host of other issues, and then had the good sense to put it in one accessible place: The Wealth of Nations.25 As Albert Hirschman observed, this book was no academic project.

First, he showed that although any worker can accept a wage cut to price himself into employment, if all workers did this, it would in the aggregate lower consumption and prices, and thus increase the real wage (the wage-minus-price effects), leaving the worker who “adjusted” poorer and just as unemployed.106 Second, he showed that under conditions of uncertainty about the future, it is irrational for any investor to invest rather than sit on cash, with the result that if investors look to each other for signals about what to do, they all sit on cash and no one will invest.107 Thus we bring about, by our collective self-interested actions, the very depression we are individually trying to avoid. Smith’s invisible hand may well have arthritis, and austerity may make it worse. Keynes showed that decisions to save and invest were temporally separate, and that savings did not necessarily lead to investment. Saving could just as easily lead to hoarding and reduced consumption. The job of the state was, then, to alter the investors’ investment expectations by raising prices so that profits could be made, thereby making it rational to begin hiring workers again and, by doing so, to get out of the slump.


pages: 261 words: 81,802

The Trouble With Billionaires by Linda McQuaig

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

., p. 122. ‌24 Fisher quoted in ibid., pp. 123–4. ‌25 Quoted in ibid., p. 176. ‌26 Quoted in ibid., p. 174. ‌27 Ibid., p. 307. ‌28 Quoted in Kim Phillips-Fein, The Invisible Hand (New York: W. W. Norton & Company, 2009), p. 119. ‌29 Dwight D. Eisenhower, in L. Galambos & D. van Ee, ‘The Papers of Dwight David Eisenhower’, doc. 1147. ‌30 Phillips-Fein, The Invisible Hand, p. 165. ‌31 Lee Edwards, The Power of Ideas (Ottawa, IL: Jameson, 1997), p. 9. ‌32 Phillips-Fein, The Invisible Hand, pp. 169–72. ‌33 Yasha Levine & Mark Ames, ‘Charles Koch to Friedrich Hayek: Use Social Security!’, The Nation, 27 September 2011. ‌34 Harry G.

Rather than seeing depression and high rates of unemployment as an aberration, Keynes saw them as a natural and recurring state of affairs. Capitalism, left on its own, was far from self-correcting. On the contrary, said Keynes, it was inherently unstable. Something else was needed. When humans were nervous and uncertain, as they are during a recession, it wasn’t enough to rely on the unpredictable ‘invisible hand’ of supply-and-demand forces in the marketplace. A strong, highly visible hand was needed, one that would be seen injecting money directly into the economy, into the pockets of consumers and business owners. But whose hand would this be? Individual entrepreneurs were understandably obsessed with their own financial survival and were unlikely to be able to rise above their fears.


pages: 329 words: 85,471

The Locavore's Dilemma by Pierre Desrochers, Hiroko Shimizu

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

Monocultures Overspecialization and Food Security Locavorism and Military Security Peak Oil and Locavorism Climate Change, Locavorism, and Food Security Chapter 6 - Myth #5: Locavorism Offers Tastier, More Nutritious, and Safer Food The Changing Human Body Taste Nutrition Food Safety Chapter 7 - Well-Meaning Coercion, Unintended Consequences, and Bad Outcomes A Brief Historical Overview of Government Intervention in Food Markets Public Food Reserves Food Export Restrictions and Bans Price Floors Price Ceilings On Appointing “Good” Czars Unleashing the Invisible Hand CONCLUSION EPILOGUE NOTES INDEX Copyright Page To Ferenc (“Ferko”) Csillag (1955–2005), dear friend and mentor. You are sorely missed. [T]he time has arrived . . . when the various portions of the earth will each give forth their products for the use of each and of all; that the over-abundance of one country will make up for the deficiency of another; the superabundance of the year of plenty serving for the scant harvests of its successor . . .

Perhaps this is because, as Adam Smith observed more than two centuries ago, it is typically “the industry which is carried on for the benefit of the rich and powerful that is principally encouraged” by the political system “while that which is carried on for the benefit of the poor and the indigent is too often either neglected or oppressed.”43 In other words, the poor and middle-class can’t afford top lobbyists while the path of least resistance for politicians has always been the creation of new programs rather than the phasing out or redirecting of existing ones. If history is again any guide, however, beneficial change can sometimes happen in the wake of a crisis (although plenty of bad things can happen, too . . . ), as we will now discuss. Unleashing the Invisible Hand For nearly a century and a half, food activists and small producers of all kinds have argued that unbridled competition will destroy family farms and empower “monopolistic” corporations. True, in a free market inefficient firms are continuously being driven out of business while the most efficient ones are rewarded by consumers and growth as long as there are economies of scale to be realized—but only until the day they stop providing the best alternative available and are themselves driven out of business or absorbed by more efficient competitors.

Human body agribusiness and changing evolution of Human intellect Hundred Years War Hunger See also Famine; Food shortage Hunter, William Wilson Hurst, Blake Hybridization Imperfections Imports rice urbanization and India Initiatives, local food economic depression and history of support wartime(photo) Inner cities Innovation Integrated Regional Information Networks Intermediaries Invasive species Invisible hand Irish potato famine Jacks, Graham Vernon Jacobs, Jane Japan famine in World War II and Jefferson, Lorian P. Jeffrey, Clara Jensen Farms Johnson, Paul Juche The Jungle (Sinclair) Junk food Kautsky, Karl Kenyan exports King, Clyde Lyndon Kingsolver, Barbara Know Your Farmer, Know your Food program Ladies’ Home Journal (magazine) Land abandoned grabs management urban Land use debate over trade-off Landsburg, Steven Latitude LCA.


pages: 297 words: 84,009

Big Business: A Love Letter to an American Anti-Hero by Tyler Cowen

"Friedman doctrine" OR "shareholder theory", 23andMe, Affordable Care Act / Obamacare, augmented reality, barriers to entry, Bernie Sanders, Big Tech, bitcoin, blockchain, Bretton Woods, cloud computing, cognitive dissonance, company town, compensation consultant, corporate governance, corporate social responsibility, correlation coefficient, creative destruction, crony capitalism, cryptocurrency, dark matter, David Brooks, David Graeber, don't be evil, Donald Trump, driverless car, Elon Musk, employer provided health coverage, experimental economics, Fairchild Semiconductor, fake news, Filter Bubble, financial innovation, financial intermediation, gentrification, Glass-Steagall Act, global reserve currency, global supply chain, Google Glasses, income inequality, Internet of things, invisible hand, Jeff Bezos, junk bonds, late fees, Mark Zuckerberg, mobile money, money market fund, mortgage debt, Network effects, new economy, Nicholas Carr, obamacare, offshore financial centre, passive investing, payday loans, peer-to-peer lending, Peter Thiel, pre–internet, price discrimination, profit maximization, profit motive, RAND corporation, rent-seeking, reserve currency, ride hailing / ride sharing, risk tolerance, Ronald Coase, shareholder value, Silicon Valley, Silicon Valley startup, Skype, Snapchat, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, The Nature of the Firm, Tim Cook: Apple, too big to fail, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, ultimatum game, WikiLeaks, women in the workforce, World Values Survey, Y Combinator

Unfortunately, however, many of the virtues of business and markets are hard to show on the screen. Adam Smith wrote of “the invisible hand” as a core mechanism through which profit-seeking behavior can cause businesspeople to act in the greater interest of society, yet without their necessarily feeling any benevolence. A balancing of profit and loss goes on behind the scenes, and resources are removed from one set of uses and moved to another. The thing about the invisible hand is that it is, well, invisible. It also requires some level of conceptual understanding, and much of the American public doesn’t know enough economics to follow invisible-hand reasoning on the screen. Furthermore, in popular culture, viewers tend to judge individuals by their intentions, and intentions are often easier to show on the screen than the final results of actions.

Many employers go out of their way to make their companies sources of worker dignity and satisfaction, most of all because workers and potential workers, especially among the relatively young, value such things. The more a company is viewed positively, the easier it is to recruit talented workers. The desire to attract and keep talent is the single biggest reason companies try to create pleasant, tolerant, stimulating atmospheres. That is yet another example of how Adam Smith’s invisible hand leads greedy corporations to take costly actions in the social interest. ALL IS NOT PERFECT As I have been writing this book, sexual harassment in the workplace has emerged as one of the major issues in the public eye, and I am seeing an increasing number of appalling scandals being brought to light, including in the corporate arena.


pages: 279 words: 87,910

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

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

One is the famous passage in The Theory of Moral Sentiments describing how the vices of the wealthy redound to the benefit of society as a whole. (This, incidentally, is the first time Smith uses the metaphor of the “invisible hand.”) Though the rich, he writes, mean only their own conveniency, though the sole end which they propose … be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society.”18 Here Smith reverts openly to the old moral language of rapacity, vanity and insatiability.

His French contemporary Montesquieu talked of the douceur of commerce.14 Once money-making had been stripped of its ethical opprobrium, it became open to treatment in terms of cause and effect. Hume’s friend, the Scottish philosopher Adam Smith, took the lead. The Wealth of Nations, his masterpiece of 1776, presents humans as driven by a natural desire for self-improvement, which under conditions of free competition leads them “as if by an invisible hand” to promote the public well-being. Newton’s mechanical science of nature was thereby extended to economic relations, with self-interest in the role of gravity. This was a revolutionary invention. Traditional morality had conceived of society as an enterprise devoted to the common good. For Smith, by contrast, it is a purely causal nexus of self-regarding individuals.

Edmund Burke sounded the classic conservative lament: “But the age of chivalry is gone; that of sophisters, economists, and calculators has succeeded, and the glory of Europe is extinguished forever.”16 Resistance to commercialism also came from the American and French revolutionaries who harked back to the agrarian “Republican virtues” of pre-Caesarist Rome. Smith took himself to have refuted “the selfish system” of Mandeville, but he had not in fact left it all that far behind.17 Mandeville’s central mechanism—the utilization of vice for public benefit—lives on in his invisible hand, purged of its demonic flavor by the simple expedient of redefining “vice” as an innocuous natural quality. With a few exceptions, this has been the strategy of economics ever since. The value-neutral language of “utility” and “preferences” renders capitalism’s Faustian bargain necessarily invisible.


pages: 338 words: 85,566

Restarting the Future: How to Fix the Intangible Economy by Jonathan Haskel, Stian Westlake

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, Andrei Shleifer, Big Tech, Black Lives Matter, book value, Boris Johnson, Brexit referendum, business cycle, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, Charles Lindbergh, charter city, cloud computing, cognitive bias, cognitive load, congestion charging, coronavirus, corporate governance, COVID-19, creative destruction, cryptocurrency, David Graeber, decarbonisation, Diane Coyle, Dominic Cummings, Donald Shoup, Donald Trump, Douglas Engelbart, Douglas Engelbart, driverless car, Edward Glaeser, equity risk premium, Erik Brynjolfsson, Estimating the Reproducibility of Psychological Science, facts on the ground, financial innovation, Francis Fukuyama: the end of history, future of work, general purpose technology, gentrification, Goodhart's law, green new deal, housing crisis, income inequality, index fund, indoor plumbing, industrial cluster, inflation targeting, intangible asset, interchangeable parts, invisible hand, job-hopping, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, knowledge economy, knowledge worker, lockdown, low interest rates, low skilled workers, Marc Andreessen, market design, Martin Wolf, megacity, mittelstand, new economy, Occupy movement, oil shock, patent troll, Peter Thiel, Phillips curve, postindustrial economy, pre–internet, price discrimination, quantitative easing, QWERTY keyboard, remote working, rent-seeking, replication crisis, risk/return, Robert Gordon, Robert Metcalfe, Robert Shiller, Ronald Coase, Sam Peltzman, Second Machine Age, secular stagnation, shareholder value, Silicon Valley, six sigma, skeuomorphism, social distancing, superstar cities, the built environment, The Rise and Fall of American Growth, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, total factor productivity, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, Uber for X, urban planning, We wanted flying cars, instead we got 140 characters, work culture , X Prize, Y2K

But lobbying for an obscure deduction or loophole can be done more subtly, even if the net effect—to reduce the tax paid by the rich and increase the burden on everyone else—is the same. What’s more, those who benefit from existing institutions are likely to continue supporting them. The economic historian Bas van Bavel elaborates on this idea in The Invisible Hand, arguing that “holders of economic power consolidate their economic and later political domination and acquire formal, legal power as well, which they use to sustain the market institutions that benefit them or develop new institutions that consolidate their dominant position in markets.”46 Van Bavel provides a number of vivid case studies of economies that grew richer but failed to develop the institutions they needed to operate effectively at a higher economic level; as a result, they stagnated or declined.

A society that has the right institutions to thrive in the technological landscape of one time period may not be well positioned to thrive in the next technological era. Indeed, its historical success may render its institutions resistant to change. Bas van Bavel discusses this issue in his book The Invisible Hand.4 This analysis seems relevant to our current situation. In chapter 2 we showed that the five symptoms of our economic malaise have their origins in a large, gradual change in the capital stock of rich-world economies. Specifically, we have seen a shift from physical, tangible capital to intangible capital, consisting of knowledge, relationships, and expressive content, which behave differently from an economic point of view.

The Politics of Innovation: Why Some Countries Are Better than Others at Science and Technology. Oxford: Oxford University Press. Traina, James. 2018. “Is Aggregate Market Power Increasing? Production Trends Using Financial Statements.” Available at SSRN, https://doi.org/10.2139/ssrn.3120849. Van Bavel, Bas. 2016. The Invisible Hand? How Market Economies Have Emerged and Declined since AD 500. New York: Oxford University Press. Van Zandt, David E. 1993. “The Lessons of the Lighthouse: ‘Government’ vs. ‘Private’ Provision of Goods.” Journal of Legal Studies 22 (1): 47–72. Vollrath, Dietrich. 2020. Fully Grown: Why a Stagnant Economy Is a Sign of Success.


pages: 523 words: 111,615

The Economics of Enough: How to Run the Economy as if the Future Matters by Diane Coyle

accounting loophole / creative accounting, affirmative action, Alan Greenspan, An Inconvenient Truth, bank run, banking crisis, behavioural economics, Berlin Wall, bonus culture, Branko Milanovic, BRICs, business cycle, call centre, carbon tax, Cass Sunstein, central bank independence, classic study, collapse of Lehman Brothers, conceptual framework, corporate governance, correlation does not imply causation, Credit Default Swap, deindustrialization, demographic transition, Diane Coyle, different worldview, disintermediation, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, Financial Instability Hypothesis, Francis Fukuyama: the end of history, general purpose technology, George Akerlof, Gini coefficient, global supply chain, Gordon Gekko, greed is good, happiness index / gross national happiness, hedonic treadmill, Hyman Minsky, If something cannot go on forever, it will stop - Herbert Stein's Law, illegal immigration, income inequality, income per capita, industrial cluster, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jane Jacobs, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, light touch regulation, low skilled workers, market bubble, market design, market fundamentalism, megacity, Network effects, new economy, night-watchman state, Northern Rock, oil shock, Paradox of Choice, Pareto efficiency, principal–agent problem, profit motive, purchasing power parity, railway mania, rising living standards, Robert Solow, Ronald Reagan, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, social contagion, South Sea Bubble, Steven Pinker, tacit knowledge, The Design of Experiments, The Fortune at the Bottom of the Pyramid, The Market for Lemons, The Myth of the Rational Market, The Spirit Level, the strength of weak ties, Tragedy of the Commons, transaction costs, transfer pricing, tulip mania, ultimatum game, University of East Anglia, vertical integration, web application, web of trust, winner-take-all economy, World Values Survey, zero-sum game

One answer, the one many people would have given until recently, is that this challenge is best left to markets. Markets automatically reflect information widely dispersed through the economy and also the preferences of countless individuals, and aggregate all of that to match supply with demand, “as if by an invisible hand,” to use Adam Smith’s famous phrase. For a generation—certainly for the twenty years after the end of the Cold War and fall of communism—relying on market mechanisms seemed the obvious way to ensure the economy delivered for all. Questions of value and values fell out of fashion. For obvious reasons, the earlier big ideological questions of communism versus capitalism seemed to have been settled by history.

Galbraith, in one of his most famous works, The Affluent Society (1958), challenged the assumption that the continual increase in material production was a sign of economic and societal health. Because of this he is considered to be one of the first postmaterialists. Fred Hirsch, in The Social Limits to Growth, argued that Adam Smith’s invisible hand was no longer operative in developed economies. He argued that the luxuries of one generation became necessities for the next as if society were a column moving steadily forward with the rich tasting the fruits that would eventually be conveyed to the rest of humanity. He predicted a future of increasing personal competition in an ever more vicious rat race and that such a process would have a detrimental impact on the moral fabric of society.

New York: Oxford University Press. Corrado, Carol, Charles Hulten, and Daniel Sichel. 2006. “Intangible Capital and Economic Growth.” Working Paper No. 11948. Cambridge, MA: Na: National Bureau of Economic Research. Cosmides, Leda, and John Tooby. 1994. “ Better than Rational: Evolutionary Psychology and the Invisible Hand.” The American Economic Review 84:2, pp. 327–32. Coyle, Diane. 1996. The Weightless World. Oxford: Capstone. ———. 2001. Paradoxes of Prosperity. New York: Texere. ———. 2003. “Corporate Governance, Public Governance, and Global Governance: The Common Thread.” Manchester, UK: University of Manchester, Institute of Political and Economic Governance. ———. 2007.


Rummage: A History of the Things We Have Reused, Recycled and Refused To Let Go by Emily Cockayne

Cape to Cairo, carbon footprint, card file, Charles Babbage, Fellow of the Royal Society, full employment, invisible hand, Isaac Newton, joint-stock company, Kickstarter, Morris worm, New Journalism, off-the-grid, oil shale / tar sands, On the Economy of Machinery and Manufactures, paper trading, planned obsolescence, South Sea Bubble

William Crookes, ‘Chemical Products – the Application of Waste’, Popular Science Review, 2:5 (January 1863), p. 59. 69. The arguments that profits gained from by-products outweighed the costs of production were disputed at the same time: see Desrochers, ‘Does the Invisible Hand Have a Green Thumb?’ Geographic Journal, 175:1, 2009, pp. 7–12. 70. [Wynter], ‘The Use of Refuse’, p. 346. 71. Pierre Desrochers has detailed the interplay between legislative demands to clean up and the urge to find creative ways to maximise profit: ‘win-win outcomes’: ‘Does the Invisible Hand Have a Green Thumb?’, at pp. 12–13. See also Pierre Desrochers, ‘Promoting Corporate Environmental Sustainability in the Victorian Era’, V&A Online Journal, 3 (Spring 2011). 72.

[Edwin Chadwick], An Inquiry into the Sanitary Condition of the Labouring Population of Great Britain (London, 1842), p. 381. 49. Desrochers, ‘Does the Invisible Hand?’, pp. 8–11. 50. Simmonds, Waste Products, p. 460. 51. Bashley Britten, ‘Utilisation of Blast-Furnace Slag for the Manufacture of Glass’, British Architect & Northern Engineer, 6:13, 29 September 1876, p. 201. 52. Simmonds, Waste Products, pp. 2, 464–5; Greenwood, ‘The Utilisation of Waste IV’, p. 840; James Winter, Secure from Rash Assault (Berkeley, CA, 1999), pp. 146–7. 53. Britten, ‘Utilisation of Blast-Furnace Slag’, p. 201; Desrochers, ‘Does the Invisible Hand?’, pp. 9–11; Thomas Greenwood, ‘The Utilisation of Waste IV’, Leisure Hour, 35, December 1886, p. 840. 54.

John Haggard, Reports of Cases Argued and Determined in the Consistory Court of London, 2 vols (London, 1822), vol. 1, pp. 409–14. 16. ‘Much Excitement’, Evening Mail, 22 January 1836, p. 6; London Metropolitan Archives, MJ/SP/C/W/1730, Coroner’s report Henry Kirkman, Westminster district, St Pancras no. 33, 22 January 1836. 17. OB, t18250113–200, 13 January 1825. 18. Desrochers, ‘Does the Invisible Hand?’, pp. 5–6; Charles Slack, Noble Obsession (London, 2002), p. 61. 19. London Metropolitan Archives, CLC/W/JB/044/MS01018/001, St Dunstan in the West precinct: registers of presentments of the Wardmote Inquest, 2 vols, 1558–1870, vol. 1, fol. 200. Presentment of William Sturt, 1814. 20. Peter Thorsheim, ‘The Paradox of Smokeless Fuels: Gas, Coke and the Environment in Britain, 1813–1949’, Environment and History, 8:4 (2002), pp. 381–401. 21.


pages: 495 words: 144,101

Goddess of the Market: Ayn Rand and the American Right by Jennifer Burns

Abraham Maslow, Alan Greenspan, Alvin Toffler, anti-communist, Apollo 11, bank run, barriers to entry, centralized clearinghouse, collective bargaining, creative destruction, desegregation, feminist movement, financial independence, gentleman farmer, George Gilder, Herbert Marcuse, invisible hand, jimmy wales, Joan Didion, John Markoff, Joseph Schumpeter, knowledge worker, laissez-faire capitalism, Lewis Mumford, lone genius, Menlo Park, minimum wage unemployment, Mont Pelerin Society, new economy, Norman Mailer, offshore financial centre, Ponzi scheme, profit motive, public intellectual, RAND corporation, rent control, road to serfdom, Robert Bork, rolodex, Ronald Reagan, side project, Stewart Brand, The Chicago School, The Wisdom of Crowds, union organizing, urban renewal, We are as Gods, white flight, Whole Earth Catalog

Rand and libertarianism more generally are given a thorough, albeit brief, treatment by John Kelley in Bringing the Market Back In: The Political Revitalization of Market Liberalism (1997). As historians have begun to locate the origins of conservatism in reaction against the New Deal and thereby accord more weight to business libertarianism, Rand has emerged as a figure of greater consequence. In Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan (2009), Kimberly Phillips-Fein asserts the centrality of libertarian businessmen to the conservative renaissance, an important new line of interpretation that is being followed by a host of emerging scholars. Phillips-Fein notes Rand’s popularity among businessmen and describes her early political activism.

Recently historians have begun to trace the connections between this Old Right and the postwar conservative movement. See Gregory L. Schneider, The Conservative Century: From Reaction to Revolution (New York, Rowman and Littlefield, 2008); Donald Critchlow, The Conservative Ascendancy: How the GOP Right Made Political History (Cambridge, MA: Harvard University Press, 2007); Kimberly Phillips-Fein, Invisible Hands: The Making of the Conservative Movement from the New Deal to Ronald Reagan (New York: Norton, 2009); Joseph Lowndes, From the New Deal to the New Right (New Haven, CT: Yale University Press, 2008). 28. Although it did not become widely used until the 1950s, “libertarian” was in circulation prior to the New Deal.

Read’s influence and the libertarian climate of southern California more generally is described in Lisa McGirr, Suburban Warriors: The Origins of the New American Right (Princeton, NJ: Princeton University Press, 2001), 34. 6. The national business movement against the New Deal is described in Kimberly Phillips-Fein, Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan (New York: Norton, 2009). For state activities, see Elizabeth Tandy Shermer, “Counter-Organizing the Sunbelt: Right-to-work Campaigns and Anti-Union Conservatism, 1943–1958,” Pacific Historical Review 78, no. 1 (2009): 81–118.


pages: 462 words: 150,129

The Rational Optimist: How Prosperity Evolves by Matt Ridley

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

The more interdependent and well-off we all become, the more population will stabilise well within the resources of the planet. As Ron Bailey puts it, in complete contradiction of Garrett Hardin: ‘There is no need to impose coercive population control measures; economic freedom actually generates a benign invisible hand of population control.’ Most economists are now more worried about the effects of imploding populations than they are about exploding ones. Countries with very low birth rates have rapidly ageing workforces. This means more and more old people eating the savings and taxes of fewer and fewer people of working age.

Even John Stuart Mill, conceding that returns were showing no signs of diminishing in the 1840s, put it down to a miracle, innovation, he said, was an external factor, a cause but not an effect of economic growth, an inexplicable slice of luck. And Mill’s optimism was not shared by his successors. As discovery began to slow, so competition would drive the profits of enterprise out of the increasingly perfect market till all that was left was rent and monopoly. With Smith’s invisible hand guiding infinite market participants possessed of perfect information to profitless equilibria and vanishing returns, neo-classical economics gloomily forecast the end of growth. It was a description of an entirely fictional world. The concept of a steady final state, applied to a dynamic system like the economy, is as wrong as any philosophical abstraction can be.

Chapter Eleven The catallaxy: rational optimism about 2100 In this book I have tried to build on both Adam Smith and Charles Darwin: to interpret human society as the product of a long history of what the philosopher Dan Dennett calls ‘bubble-up’ evolution through natural selection among cultural rather than genetic variations, and as an emergent order generated by an invisible hand of individual transactions, not the product of a top-down determinism. I have tried to show that, just as sex made biological evolution cumulative, so exchange made cultural evolution cumulative and intelligence collective, and that there is therefore an inexorable tide in the affairs of men and women discernible beneath the chaos of their actions.


pages: 391 words: 22,799

To Serve God and Wal-Mart: The Making of Christian Free Enterprise by Bethany Moreton

affirmative action, American Legislative Exchange Council, anti-communist, Berlin Wall, big-box store, Bretton Woods, Buckminster Fuller, collective bargaining, company town, corporate personhood, creative destruction, deindustrialization, desegregation, Donald Trump, emotional labour, estate planning, eternal september, Fall of the Berlin Wall, Frederick Winslow Taylor, George Gilder, global village, Great Leap Forward, informal economy, invisible hand, liberation theology, longitudinal study, market fundamentalism, Mont Pelerin Society, mortgage tax deduction, Naomi Klein, new economy, post-industrial society, postindustrial economy, prediction markets, price anchoring, prosperity theology / prosperity gospel / gospel of success, Ralph Nader, RFID, road to serfdom, Ronald Reagan, scientific management, Silicon Valley, Stewart Brand, strikebreaker, The Wealth of Nations by Adam Smith, union organizing, walkable city, Washington Consensus, white flight, Whole Earth Catalog, work culture , Works Progress Administration

Individual academicians were sponsored by corporations like Bristol-Â�Meyers, Caterpillar, Dupont, and Westinghouse.7 Read wrote “I, Pencil: My Family Tree as Told to Leonard E. Read,” in 1958, laying out the theory of the invisible hand of the market in the first-Â�person voice of a humble pencil. The lesson I have to teach is this: Leave all creative energies uninhibited. Merely orÂ�gaÂ�nize society to act in harmony with this lesson. Let society’s legal apparatus remove all obstacles the best it can. Permit these creative know-Â�hows freely to flow. Have faith that free men and Â�women will respond to the Invisible Hand. This faith will be conÂ�firmed. I, Pencil, seemingly simple though I am, offer the miracle of my creation as testimony that this is a practical faith, as practical as the sun, the rain, a cedar tree, the good earth. 8 Friedman’s example on the nationally broadcast Free to Choose thus adapted the former public relations man’s homily aimed at schoolchildren.

Many sources contributed to the late-twentieth-century prestige of neoliberalism, or the belief that individual entrepreneurship, vigorous private property rights, and minimal barriers to trade best provide for personal freedom and well-being.2 The economists who coined the term in the years around World War II blended the free-market enthusiasm of some nineteenth-century political economists with Adam Smith’s classic image: the invisible hand of the market that mysteriously guided the most venal human concerns into the collective good. Thus neoliberalism envisions the economy as a sphere inÂ�deÂ�penÂ�dent of other social institutions and relationships. It understands the market to operate by natural laws that will, if left to their own devices, optimize the conditions of human existence.

The pencil arose from miners in Ceylon who dug up the graphite, and the people who made the string that tied the sacks in which the graphite was shipped, and those who loaded the sacks onto boats, and so forth, at exhaustive length. The miracle in this proÂ�cess was said to lie in the ab193 TO SERVE GOD AND WAL - Â�M ART sence of any central mastermind, or even any intent to make a pencil on the part of most of those implicated in the proÂ�cess. So what brought it all together? SIFE’s answer was clear: The invisible hand of the market. The Harding students who toured with their giant pencil referred to themselves as followers of Milton Friedman, the passionate laissez-Â�faire economist and 1976 Nobel Prize winner. Soon after retiring from his teaching duties at the University of Chicago in the late 1970s, Friedman and his wife, fellow economist Rose Friedman, were approached by the renegade CEO of a Public Broadcasting Service (PBS) affiliate in Erie, Pennsylvania.


pages: 823 words: 220,581

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

accounting loophole / creative accounting, Alan Greenspan, banking crisis, banks create money, barriers to entry, behavioural economics, Benoit Mandelbrot, Big bang: deregulation of the City of London, Black Swan, Bonfire of the Vanities, book value, business cycle, butterfly effect, capital asset pricing model, cellular automata, central bank independence, citizen journalism, clockwork universe, collective bargaining, complexity theory, correlation coefficient, creative destruction, credit crunch, David Ricardo: comparative advantage, debt deflation, diversification, double entry bookkeeping, en.wikipedia.org, equity risk premium, Eugene Fama: efficient market hypothesis, experimental subject, Financial Instability Hypothesis, fixed income, Fractional reserve banking, full employment, Glass-Steagall Act, Greenspan put, Henri Poincaré, housing crisis, Hyman Minsky, income inequality, information asymmetry, invisible hand, iterative process, John von Neumann, Kickstarter, laissez-faire capitalism, liquidity trap, Long Term Capital Management, low interest rates, mandelbrot fractal, margin call, market bubble, market clearing, market microstructure, means of production, minimum wage unemployment, Money creation, money market fund, open economy, Pareto efficiency, Paul Samuelson, Phillips curve, place-making, Ponzi scheme, Post-Keynesian economics, power law, profit maximization, quantitative easing, RAND corporation, random walk, risk free rate, risk tolerance, risk/return, Robert Shiller, Robert Solow, Ronald Coase, Savings and loan crisis, Schrödinger's Cat, scientific mainstream, seigniorage, six sigma, South Sea Bubble, stochastic process, The Great Moderation, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, total factor productivity, tulip mania, wage slave, zero-sum game

The critics were right: society is more than the sum of its individual members, and a society’s behavior cannot be modeled by simply adding up the behaviors of all the individuals in it. To see why the critics have been vindicated by economists, and yet economists still pretend that they won the argument, we have to take a trip down memory lane to late eighteenth-century England. The kernel Adam Smith’s famous metaphor that a self-motivated individual is led by an ‘invisible hand’ to promote society’s welfare asserts that self-centered behavior by individuals necessarily leads to the highest possible level of welfare for society as a whole. Modern economic theory has attempted, unsuccessfully, to prove this assertion. The attempted proof had several components, and in this chapter we check out the component which models how consumers decide which commodities to purchase.

The second amounts to assuming that there is only one commodity – since otherwise spending patterns would necessarily change as income rose. These ‘assumptions’ clearly contradict the case economists were trying to prove, since they are necessarily violated in the real world – in fact, they are really a ‘proof by contradiction’ that Adam Smith’s invisible hand doesn’t work. Sadly, however, this is not how most economists have interpreted these results. When conditions (a) and (b) are violated, as they must be in the real world, then several important concepts which are important to economists collapse. The key casualty here is the vision of demand for any product falling as its price rises.

TABLE 4.3 Sales and costs determine the level of output that maximizes profit It’s no wonder, then, that, despite all the criticisms leveled at it, neoclassical economists cling to the model of the ‘perfect’ competitive market. In a competitive market, since marginal revenue equals price, profit-maximizing behavior leads to an output level at which price equals marginal cost. This is the embodiment of Smith’s ‘invisible hand’ metaphor about the capacity of market economy to reconcile private interest and public virtue, and that is the real message of the ‘Totem of the Micro.’8 Perfect competition The main distinguishing feature of the perfectly competitive market is the number of firms in it. Whereas a monopoly has just one firm – which therefore has the entire market demand curve to itself – a perfectly competitive market has many little firms, each competing for a tiny slice of total demand.


The Toaster Project: Or a Heroic Attempt to Build a Simple Electric Appliance From Scratch by Thomas Thwaites

Anthropocene, carbon footprint, global supply chain, invisible hand, lateral thinking, supply-chain management, The Wealth of Nations by Adam Smith

Therefore, in theory, the manufacturers could save themselves a bit of money in the end if, in the first place, they designed their products so that they could easily dismantle them and sort all the components and materials into nice separate piles that could be reused or recycled. Thus while acting entirely in the interests of saving themselves some money, the invisible hand of the market would guide these companies to make products that were less environmentally harmful. This led to lots of interesting ideas about how you could design things to be easily and quickly (and therefore cheaply) disassembled. For example, Nokia made a mobile phone that would spring itself apart in the right conditions, and screws were developed that would actually unscrew themselves if heated to the right temperature.

I even have one of his iPhones, which at the moment I quite like (though strangely it does make me feel like a bit of an idiot when everyone else in the room has one too—like going to a party and everyone’s wearing the same “fashionable” top—but that’s the point of fashion right?). However, before we get too chummy with Adam Smith and his invisible hand, it seems that the need to buy more stuff to stimulate our economy, and the need to consume less to save our environment, are on a collision course. So while the £1187.54 price of my toaster doesn’t really include all that it cost to make it, £3.94 isn’t really what the Argos Value version cost either.


pages: 164 words: 57,068

The Second Curve: Thoughts on Reinventing Society by Charles Handy

"Friedman doctrine" OR "shareholder theory", Abraham Maslow, Airbnb, Alan Greenspan, basic income, Bernie Madoff, bitcoin, bonus culture, British Empire, call centre, Clayton Christensen, corporate governance, delayed gratification, Diane Coyle, disruptive innovation, Edward Snowden, falling living standards, future of work, G4S, greed is good, independent contractor, informal economy, Internet of things, invisible hand, joint-stock company, joint-stock limited liability company, Kickstarter, Kodak vs Instagram, late capitalism, mass immigration, megacity, mittelstand, Occupy movement, payday loans, peer-to-peer lending, plutocrats, Ponzi scheme, Robert Solow, Ronald Coase, shareholder value, sharing economy, Skype, Social Responsibility of Business Is to Increase Its Profits, Stanford marshmallow experiment, Steve Jobs, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transaction costs, Veblen good, Walter Mischel

Let us be clear from the start: Adam Smith did not say that the ‘invisible hand’ would allow self-interest to work for the good of all. He only mentioned that metaphor once in his book The Wealth of Nations, and that was to suggest that an invisible hand would incline a merchant to invest at home rather than in foreign lands. His exact words are: By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.


pages: 196 words: 57,974

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

affirmative action, AOL-Time Warner, barriers to entry, Bear Stearns, Bonfire of the Vanities, book value, borderless world, business process, Carl Icahn, Charles Lindbergh, classic study, company town, Corn Laws, Cornelius Vanderbilt, corporate governance, corporate raider, corporate social responsibility, creative destruction, credit crunch, crony capitalism, double entry bookkeeping, Etonian, Fairchild Semiconductor, financial engineering, Great Leap Forward, hiring and firing, Ida Tarbell, industrial cluster, invisible hand, James Watt: steam engine, John Perry Barlow, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, junk bonds, knowledge economy, knowledge worker, laissez-faire capitalism, manufacturing employment, market bubble, Michael Milken, military-industrial complex, mittelstand, new economy, North Sea oil, pneumatic tube, race to the bottom, railway mania, Ronald Coase, scientific management, Silicon Valley, six sigma, South Sea Bubble, Steve Jobs, Steve Wozniak, strikebreaker, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, Triangle Shirtwaist Factory, tulip mania, wage slave, William Shockley: the traitorous eight

In the nineteenth century, the gains to be had from integrating mass production with mass distribution were enormous—as Alfred Chandler, the doyen of business historians, puts it, the “visible hand of managerial direction” replaced “the invisible hand of market mechanisms.” In the twenty-first century, technology and globalization are helping to reduce barriers to entry—and thus helping to unbundle the corporate package. At the touch of a button, a mere journalist can get access to more information than a corporate giant could amass a decade ago. The fashion nowadays is for virtual companies—for airlines that do not own their own planes, for banks that do not have branches, for the invisible hand to claw back ground from the visible one. That should not imply that the company is beginning a slow, inevitable decline.

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? Alfred Chandler has provided the classic answer: “Modern business enterprise” became viable “only when the visible hand of management proved to be more efficient than the invisible hand of market forces.” For that to happen, a new system of transport and communication was necessary. The railroads were not just great enablers for modern business; they were also the first modern businesses.6 It took gigantic quantities of capital—much of it from Britain—to build 31,000 miles of railroad, as America had in 1860 (let alone the 240,000 miles it had by 1910).7 Railroads had equally little choice about being the first firms to employ large armies of full-time managers.


pages: 323 words: 92,135

Running Money by Andy Kessler

Alan Greenspan, Andy Kessler, Apple II, bioinformatics, Bob Noyce, British Empire, business intelligence, buy and hold, buy low sell high, call centre, Charles Babbage, Corn Laws, cotton gin, Douglas Engelbart, Fairchild Semiconductor, family office, flying shuttle, full employment, General Magic , George Gilder, happiness index / gross national happiness, interest rate swap, invisible hand, James Hargreaves, James Watt: steam engine, joint-stock company, joint-stock limited liability company, junk bonds, knowledge worker, Leonard Kleinrock, Long Term Capital Management, mail merge, Marc Andreessen, margin call, market bubble, Mary Meeker, Maui Hawaii, Menlo Park, Metcalfe’s law, Michael Milken, Mitch Kapor, Network effects, packet switching, pattern recognition, pets.com, railway mania, risk tolerance, Robert Metcalfe, Sand Hill Road, Silicon Valley, South China Sea, spinning jenny, Steve Jobs, Steve Wozniak, Suez canal 1869, Toyota Production System, TSMC, UUNET, zero-sum game

Wet hemp, Jamaica’s finest, was the sealant of the day. The professor in charge of Watt at Glasgow University, Dr. Joseph Black, was teaching courses, theorizing about a concept known as latent heat, starting back in 1761. Another professor at U of G around the same time was Adam Smith (of the invisible hand). In fact, Smith and Black were good friends. Latent heat is the reason a watched pot never boils or why you put ice cubes in soda. Latent heat means you can add heat to a pot of water, but it won’t boil and give off steam until the entire pot of water is at 212° Fahrenheit. And no matter how much heat is applied by the hot sun at a baseball game, all the ice has to melt before a soda increases in temperature, right before the kid behind you spills it on your shoes.

If I learned nothing else from running money, that is it. Running money is supposed to be unemotional. Get conviction Why It’s Imperative to Drive a Beemer 279 on things others don’t or can’t know about and find future returns. But the stock market is also a force of change. It is the embodiment of Adam Smith’s invisible hand. It funds growth and starves dying businesses and pushes progress. Not always, I suppose, but enough. With intellectual property and the margin surplus the U.S. is running, the stock market plays a key role in balancing payments and currencies and how the world now works. In an odd way, being a player in the stock market is a form of activism, albeit indirect and invisible activism, in pushing a model that increases living standards.

It’s about finding waterfalls that create massive growth and monster markets and change for the better to the status quo. One hundred thousand or more people running money all day, every day, most staring at their screens, doing trades, providing access to capital, sloshing capital around. Whether we realize it or not, we are all driving progress, not individually, but collectively. Adam Smith’s invisible hand? If you like. That’s what a stock market does. But in this postindustrial, intellectual property world, it’s more like Doug Engelbart’s visible hands, clasped together, rising up, scaling knowledge, augmenting humans. > > > Ghana a Goner This virtuous model of the margin surplus creating jobs and a middle class in the developing world at the same time it increases wealth in the U.S. and other intellectual property economies is pretty counterintuitive.


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Leading From the Emerging Future: From Ego-System to Eco-System Economies by Otto Scharmer, Katrin Kaufer

Affordable Care Act / Obamacare, agricultural Revolution, Albert Einstein, Asian financial crisis, Basel III, behavioural economics, Berlin Wall, Branko Milanovic, cloud computing, collaborative consumption, collapse of Lehman Brothers, colonial rule, Community Supported Agriculture, creative destruction, crowdsourcing, deep learning, dematerialisation, Deng Xiaoping, do what you love, en.wikipedia.org, European colonialism, Fractional reserve banking, Garrett Hardin, Glass-Steagall Act, global supply chain, happiness index / gross national happiness, high net worth, housing crisis, income inequality, income per capita, intentional community, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Johann Wolfgang von Goethe, Joseph Schumpeter, Kickstarter, market bubble, mass immigration, Mikhail Gorbachev, Mohammed Bouazizi, mutually assured destruction, Naomi Klein, new economy, offshore financial centre, Paradox of Choice, peak oil, ride hailing / ride sharing, Ronald Reagan, Silicon Valley, smart grid, Steve Jobs, systems thinking, technology bubble, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, Tragedy of the Commons, vertical integration, Washington Consensus, working poor, Zipcar

The evolution of economic coordination mechanisms began with 1.0, central planning (in the lower left quadrant). It moved from there to 2.0, markets and competition (in the lower right). Both the visible hand of central planning and the invisible hand of decentralized markets have one thing in common: They do not require the individual decision-maker to consider the well-being of the whole. If the individual or the organization meets the targets (of central planning) or pursues their own self-interest (in the market), then the visible or invisible hand will magically take care of the whole. TABLE 4 Four Economic Coordination Mechanisms: A Journey of Interiorizing the Whole That’s what the theory said!

The challenges we are dealing with as a society force us to rethink this mental model, and to include the impact of our actions on the environmental, social, and cultural context in which we are operating. The Death of Economic Monotheism Another important building block of contemporary economic thought concerns the bias toward an economic monotheism that puts the primacy of one coordination mechanism atop all economic activities: the invisible hand of the market.2 This mechanism is omnipotent in the sense that it isn’t limited by other coordination mechanisms, as we saw in the deregulated financial markets before the 2008 crisis. It is omnipresent through its ever-increasing penetration of all sectors and systems of society. And it is omniscient in its assumed access to all information.

See Income inequality Infrastructures for co-evolving, 188 to co-initiate, 187–188 to co-inspire, 188 for co-sensing, 188 for prototyping, 188 Ingerslev, Karen, 207 Innovation hubs, 244, 246 Institutional innovations, 76 Institutional inversion, 192–195 Institutional transformation, sectors of current, 196t, 197 Intention, 236 connecting to it as an instrument, 170 Interest groups, organizing around, 54–55 International Monetary Fund (IMF), 27 Internet, 120, 136 Inversion (Umstülpung), 192 institutional, 192–195 See also Conversation(s) Inversion journey, 240 Invisible hand of the market, 70, 122 Jacob, Gail, 156, 161–163, 168 Jandernoa, Beth, 179, 180, 190 Japan, 59–60 Jaworski, Joseph, 17–18 Jews. See Holocaust Jobless growth, 85 Jobs, Steve, 86, 114, 115, 170, 227 Johnson, Simon, 32, 71, 94, 100 Joy, Bill, 105, 106 Judgment, 172 suspension of old habits of, 146 Kabat-Zinn, Jon, 163–169 Kahane, Adam, 224 Kalungu-Banda, Martin, 180–182 Katjivena, Bertha, 206 Kegan, Robert, 214 Kelly, Dave, 114 Kimmitt, Robert, 93 Klatzky, Antoinette, 158, 161–163 Krugman, Paul, 71, 100 Kuhn, Thomas, 73 Kwak, James, 94 Labor, 75, 77, 241 division of, 57, 83 relinking jobs with purpose, 82–89 Labor theory of property, 130–131 Landshare project, 135 Lau, Lawrence, 5 Leaders in an organization, multiple, 112 Leadership, 75, 77, 241 is about creating and communicating a vision, 113 as a distributed or collective capacity in a system, 112 essence of, 110, 114–115 myths about, 112–113 the only real leadership issue, 111–112 origin of the term, 110 shifting the locus from the center to the periphery, 191–192 the tao of, 143–145 See also specific topics Leadership disconnect, 46 Leading from the emerging future, 19–20 Leal, Guilherme, 222, 227 Learning journeys, 224–225 individualized lifelong, 244–245 Legitimacy, 128 Lehman Brothers, bankruptcy of, 12, 27 Letting come, 29 Letting go, 29, 146, 148t going to the edge of, 162–163 Levine, Mark, 134 Lewin, Kurt, 253 Liberation myth, debunking the, 106–107 Lietaer, Bernard, 95 Life-centric technology, 104–106, 110.


pages: 329 words: 88,954

Emergence by Steven Johnson

A Pattern Language, agricultural Revolution, AOL-Time Warner, Brewster Kahle, British Empire, Claude Shannon: information theory, complexity theory, Danny Hillis, Douglas Hofstadter, edge city, epigenetics, game design, garden city movement, Gödel, Escher, Bach, hive mind, Howard Rheingold, hypertext link, invisible hand, Jane Jacobs, Kevin Kelly, late capitalism, Lewis Mumford, Marshall McLuhan, mass immigration, Menlo Park, mirror neurons, Mitch Kapor, Murano, Venice glass, Naomi Klein, new economy, New Urbanism, Norbert Wiener, PalmPilot, pattern recognition, pez dispenser, phenotype, Potemkin village, power law, price mechanism, profit motive, Ray Kurzweil, SimCity, slashdot, social intelligence, Socratic dialogue, stakhanovite, Steven Pinker, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, theory of mind, Thomas Kuhn: the structure of scientific revolutions, traveling salesman, trickle-down economics, Turing machine, Turing test, urban planning, urban renewal, Vannevar Bush

This is one reason why the destruction of rain forests is so wasteful: the soil left behind is largely sterile.” Ibid., 122. “This acceleration in”: Ibid., 29. Some critics, such: Wright sees “group brains” even in low-tech societies, even using the term as an alternative to “invisible hands.” “Hands aren’t very cerebral, after all; guiding any invisible hand there must be an ‘invisible brain.’ Its neurons are people. The more neurons there are in regular and easy contact, the better the brain works—the more finely it can divide economic labor, the more diverse the resulting products. And, not incidentally, the more rapidly technological innovations take shape and spread.

Thirty years after the two researchers first sketched out their theory on paper, slime mold aggregation is now recognized as a classic case study in bottom-up behavior. Keller’s colleague at MIT Mitch Resnick has even developed a computer simulation of slime mold cells aggregating, allowing students to explore the eerie, invisible hand of self-organization by altering the number of cells in the environment, and the levels of cyclic AMP distributed. First-time users of Resnick’s simulation invariably say that the on-screen images—brilliant clusters of red cells and green pheromone trails—remind them of video games, and in fact the comparison reveals a secret lineage.

* * * The pattern-seeking algorithms of emergent software are already on their way to becoming one of the primary mechanisms in the great Goldberg contraption of modern social life—as familiar to us as more traditional devices like supply and demand, representational democracy, snap polls. Intelligent software already scans the wires for constellations of book lovers or potential mates. In the future, our networks will be caressed by a million invisible hands, seeking patterns in the digital soup, looking for neighbors in a land where everyone is by definition a stranger. Perhaps this is only fitting. Our brains got to where they are today by bootstrapping out of a primitive form of pattern-matching. As the futurist Ray Kurzweil writes, “Humans are far more skilled at recognizing patterns than in thinking through logical combinations, so we rely on this aptitude for almost all of our mental processes.


pages: 338 words: 92,465

Reskilling America: Learning to Labor in the Twenty-First Century by Katherine S. Newman, Hella Winston

active measures, blue-collar work, business cycle, collective bargaining, Computer Numeric Control, deindustrialization, desegregation, factory automation, high-speed rail, information security, intentional community, interchangeable parts, invisible hand, job-hopping, knowledge economy, longitudinal study, low skilled workers, performance metric, proprietary trading, reshoring, Ronald Reagan, Silicon Valley, social intelligence, two tier labour market, union organizing, upwardly mobile, W. E. B. Du Bois, War on Poverty, Wolfgang Streeck, working poor

John Hildebrand, “Regents: High School Students Can Seek Waiver of One History Exam,” Newsday, January 12, 2015, http://www.newsday.com/long-island/regents-high-school-students-can-seek-waiver-of-one-history-exam-1.9800090. 4. What Industry Needs 1.   Joleen Kirschenman and Kathryn M Neckerman, “‘We’d Love to Hire Them, But…’: The Meaning of Race for Employers,” Urban Underclass 203 (Washington, DC: Brookings Institution, 1991), 203–32. 2.   Deirdre Royster, Race and the Invisible Hand: How White Networks Exclude Black Men from Blue-Collar Jobs (Berkeley: University of California Press, 2003). 3.   Rosenbaum, Beyond College for All, 136. 4.   Despite the bad name that standardized tests have garnered, especially for bias of various kinds, in employment it has been shown that firms making use of tests are fairer in their hiring decisions than those that rely on interviews.

Deirdre Royster’s work shows that even when black and white students are trained in the same vocational programs, the homegrown, kinship, and neighborhood-based networks of whites advantage them in job seeking. This is why institutions need to step in and cultivate employer connections. Royster, Race and the Invisible Hand. 6.   John H. Bishop and Ferran Mañe, “The Impact of School-Business Partnerships,” in The School-to-Work Movement: Origins and Destinations, ed. William J. Stull and Nicholas Sanders (Westport, CT: Praeger, 2003), 189–202. 7.   The report touted public-private partnerships as a way of creating new schools that would be better aligned with opportunities in the job market and set forth a list of broad and vague recommendations for improvement, including: defining core competencies all students need to succeed; expanding beyond core competencies to skills and knowledge needed for successful postsecondary transitions; empowering industry to define sector-specific skills; creating innovative courses and programs of study; and putting more students on a path to success.

National Assessment of Career and Technical Education: Interim Report (Washington, DC: US Department of Education, Office of Planning, Evaluation and Policy Development, Policy and Program Studies Service, 2013), https://www2.ed.gov/rschstat/eval/sectech/nacte/career-technical-education/interim-report.pdf. 8.   Royster, Race and the Invisible Hand. 9.   Sandra Susan Smith, Lone Pursuit: Distrust and Defensive Individualism Among the Black Poor (New York: Russell Sage Foundation, 2010). 10.    “Two Unamalgamated Worlds,” Economist (London), April 3, 2008, http://www.economist.com/node/10958534. 11.    Hermann Nehls, personal communication. 12.    


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

Alan Greenspan, Albert Einstein, Apollo 11, Asian financial crisis, asset-backed security, banking crisis, Basel III, Bear Stearns, Berlin Wall, Bernie Madoff, bond market vigilante , British Empire, business cycle, capital controls, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, congestion charging, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cross-subsidies, currency risk, debt deflation, Deng Xiaoping, Diane Coyle, endowment effect, eurozone crisis, Fall of the Berlin Wall, financial innovation, financial repression, fixed income, floating exchange rates, Ford Model T, full employment, George Akerlof, German hyperinflation, Glass-Steagall Act, Hyman Minsky, income inequality, income per capita, inflation targeting, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, junk bonds, Kickstarter, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, London Interbank Offered Rate, loss aversion, low interest rates, market clearing, mass immigration, Minsky moment, moral hazard, mortgage debt, Neil Armstrong, new economy, New Urbanism, Nick Leeson, Northern Rock, Occupy movement, oil shale / tar sands, oil shock, old age dependency ratio, price mechanism, price stability, quantitative easing, railway mania, rent-seeking, reserve currency, rising living standards, risk free rate, Savings and loan crisis, seminal paper, South Sea Bubble, sovereign wealth fund, technology bubble, The Market for Lemons, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, too big to fail, trade route, trickle-down economics, Washington Consensus, women in the workforce, working-age population

This was a reaction to the excess inflation of the 1970s, a period during which central banks were too often required to do the bidding of their political masters. For a while, inflation was endemic, leading to losses for those on fixed monetary incomes – most obviously pensioners – and huge distortions to the price mechanism – Adam Smith's ‘invisible hand’. By making central banks independent, and thus no longer subject to the temptations of the electoral cycle, the hope was that inflation would eventually be brought back under control, leaving the world a much happier place. The financial crisis has destroyed this separation of monetary church from state.

The first is for the central bank to buy a much wider range of assets – not just government paper but also asset backed-securities, corporate bonds, foreign currency or maybe even equities. Central banks have dabbled in all of these areas in the past and many continue to do so today.14 There is, however, an obvious drawback. A central bank simply doesn't have the resources to manage credit risk. Allocating capital is supposed to be the job of the invisible hand, not the long arm of the central banker. Widening the range of assets to be purchased turns a central bank slowly but surely into the financial equivalent of a state planner. It is not an edifying vision. The second option is to dig holes or to send for the helicopters. Quantitative easing is designed to bypass the banking system in a bid to put cash directly in people's pockets.

Collective undertakings of any kind, not merely governmental, become difficult or impossible not only because A may betray B but because even if A wants to trust B he knows that B is unlikely to trust him.11 The loss of trust witnessed in recent years – from within the financial system – has been nothing short of extraordinary. Pre-crisis, faith in the power of the market – and its invisible hand – was sky high. That faith, however, depended on the idea that the market could somehow be trusted to deliver not just outcomes better than under any alternative system of resource allocation but also outcomes that were genuinely good for all. Yet, slowly but surely, trust has been chipped away, so much so that financial markets are no longer capable of delivering the outcomes of old.


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

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

Indeed, one might say it’s the founding kernel of modern political economy, apparent at least since the writings of Bernard Mandeville, James Steuart, and Adam Smith, each of whom advanced the idea that individuals labouring to meet their own self-interested economic goals naturally contribute to the common good.26 Bishop and Green’s Philanthrocapitalism offers only two cursory references to Smith’s work, neither developed in depth. Perhaps attempting to underscore the originality of their own argument, they gloss over the similarities between their own notion and Smith’s concept of the invisible hand, the idea that ‘by pursuing his own interest [the individual] frequently promotes that of the society more effectively than when he really intends to promote it’.27 Felix Salmon, a former Reuters journalist, has queried this historical amnesia. Criticizing the purported novelty of the notion of philanthrocapitalism, Salmon points out that the ‘realization that business has the capacity to create as well as destroy social value is known as “economics”, and goes back at least as far as Adam Smith.

There’s nothing new about it, and nor is there anything new about economists using this insight to assuage the guilt of the rich’.28 The philosopher Slavoj Žižek has also noted the strange déjà vu that pervades the rhetoric of philanthrocapitalism enthusiasts, suggesting that their maxims are like a ‘postmodernized version of Adam Smith’s invisible hand: the market and social responsibility are not opposites, but can be reunited for mutual benefit … their goal is not to earn money, but to change the world (and as a by-product, make even more money)’.29 Both Salmon and Žižek make witty and persuasive points. But two things are new about philanthrocapitalism.

‘Generosity’, in Mauss’s words, ‘is an obligation’.12 ‘The Gift’ illuminates the economic usefulness of seemingly selfless acts of charity and friendship. Whether in isolated regions such as the Trobriand Islands or in the dense enclaves of today’s most cosmopolitan global cities, charity is a key source of both social and economic power. ‘The gift cycle’, the anthropologist Mary Douglas suggested, ‘echoes Adam Smith’s invisible hand: gift complements market in so far as it operates where the latter in absent. Like the market it supplies each individual with personal incentives for collaborating in the pattern of exchanges’.13 Work by Mauss, Douglas, and, more recently, the Oxford economic historian Avner Offer has underscored the economic usefulness of philanthropic gestures to the donors of gifts.


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Strangers in Their Own Land: Anger and Mourning on the American Right by Arlie Russell Hochschild

affirmative action, Affordable Care Act / Obamacare, Bernie Sanders, Black Lives Matter, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, clean water, collective bargaining, Deep Water Horizon, desegregation, Donald Trump, emotional labour, ending welfare as we know it, equal pay for equal work, Exxon Valdez, feminist movement, full employment, greed is good, guest worker program, invisible hand, knowledge economy, man camp, McMansion, minimum wage unemployment, new economy, obamacare, off-the-grid, oil shock, payday loans, precautionary principle, Richard Florida, Ronald Reagan, school vouchers, Silicon Valley, Solyndra, sovereign wealth fund, The Theory of the Leisure Class by Thorstein Veblen, Thorstein Veblen, urban sprawl, working poor, Yogi Berra

Also see Miriam Diemer, “Energy and Natural Resources: Industry Influence in the Climate Change Debate,” OpenSecrets.org, last updated January 29, 2015, https://www.opensecrets.org/news/issues/energy. 13to direct $889,000,000 to help right-wing candidates and causes in 2016 alone Fredreka Schouten, “Koch Brothers Set $889 Million Budget for 2016,” USA Today, January 27, 2015, http://www.usatoday.com/story/news/politics/2015/01/26/koch-brothers-network-announces-889-million-budget-for-next-two-years/22363809. In Invisible Hands, Kim Phillips-Fein traces contributions from David and Charles Koch and Rupert Murdoch to the Tea Party. See Kim Phillips-Fein, Invisible Hands: The Businessmen’s Crusade Against the New Deal (New York: W.W. Norton & Company, 2007). 13“from idea creation to policy development to education to grassroots organizations to lobbying to litigation to political action” Jane Mayer, “Covert Operations,” New Yorker, August 30, 2010.

Americans’ Responses to the Great Recession,” American Sociological Review 78, no. 5 (2013): 727–48. 93Blacks turn to black neighbors without them Nancy DiTomaso develops this thesis in The American Non-Dilemma: Racial Inequality Without Racism (New York: Russell Sage Foundation, 2013). Also see Deirdre Roysler, Race and the Invisible Hand: How White Networks Exclude Black Men from Blue Collar Jobs (Berkeley: University of California Press, 2003). Also see Appendix C. 93“Good idea,” Hardey says This came in the form of outright payments, tax write-offs, and publicly funded services. 93Louisiana was a poor state Richard Thompson, “Giving Away Louisiana: Industrial Tax Incentives,” The Advocate, December 11, 2014, http://blogs.theadvocate.com/specialreports/2014/12/03/giving-away-louisiana-industrial-tax-incentives. 95advised them not to put their hands in local water if they had open wounds The advisory reads: “The germs, bacteria and parasites in the State’s natural waterways, such as rivers, lakes, marshes and the Gulf of Mexico can make you sick and sometimes may be fatal.

Oilprice.com (September 4, 2014). http://oilprice.com/Energy/Natural-Gas/Sasol-Clears-Major-Hurdle-to-Build-Americas-First-GTL-Plant.html. Phillips, Justin. “Calcasieu, Cameron Areas ‘on Bubble’ with EPA for Air Quality.” American Press (July 11, 2014). http://www.americanpress.com/news/local/Air-quality. Phillips-Fein, Kim. Invisible Hands: The Businessmen’s Crusade Against the New Deal. New York: W.W. Norton & Company, 2007. Piketty, Thomas. Capital in the Twenty-First Century. Boston: Harvard University Press, 2014. Piketty, Thomas, and Emmanuel Saez. 2007 Average Incomes, U.S. 1980–2012 (in real 2014 dollars). The World Top Incomes Database. http://topincomes.g-mond.parisschoolofeconomics.edu.


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Who Owns the Future? by Jaron Lanier

3D printing, 4chan, Abraham Maslow, Affordable Care Act / Obamacare, Airbnb, augmented reality, automated trading system, barriers to entry, bitcoin, Black Monday: stock market crash in 1987, book scanning, book value, Burning Man, call centre, carbon credits, carbon footprint, cloud computing, commoditize, company town, computer age, Computer Lib, crowdsourcing, data science, David Brooks, David Graeber, delayed gratification, digital capitalism, digital Maoism, digital rights, Douglas Engelbart, en.wikipedia.org, Everything should be made as simple as possible, facts on the ground, Filter Bubble, financial deregulation, Fractional reserve banking, Francis Fukuyama: the end of history, Garrett Hardin, George Akerlof, global supply chain, global village, Haight Ashbury, hive mind, if you build it, they will come, income inequality, informal economy, information asymmetry, invisible hand, Ivan Sutherland, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Perry Barlow, Kevin Kelly, Khan Academy, Kickstarter, Kodak vs Instagram, life extension, Long Term Capital Management, machine translation, Marc Andreessen, Mark Zuckerberg, meta-analysis, Metcalfe’s law, moral hazard, mutually assured destruction, Neal Stephenson, Network effects, new economy, Norbert Wiener, obamacare, off-the-grid, packet switching, Panopticon Jeremy Bentham, Peter Thiel, place-making, plutocrats, Ponzi scheme, post-oil, pre–internet, Project Xanadu, race to the bottom, Ray Kurzweil, rent-seeking, reversible computing, Richard Feynman, Ronald Reagan, scientific worldview, self-driving car, side project, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, Skype, smart meter, stem cell, Steve Jobs, Steve Wozniak, Stewart Brand, synthetic biology, tech billionaire, technological determinism, Ted Nelson, The Market for Lemons, Thomas Malthus, too big to fail, Tragedy of the Commons, trickle-down economics, Turing test, Vannevar Bush, WikiLeaks, zero-sum game

As we approach abundance, we will overpopulate and overconsume, or otherwise screw up, until catastrophe strikes. The Malthusian humor suggests a fatal, deterministic ineptitude in politics. • Rousseau: Technology is the means to spiritual malaise. As we approach Abundance, we become inauthentic and absurd. • Invisible Hand: Information technology ought to subsume politics. Adam Smith sketched a character known as the “Invisible Hand,” who can serve as a figurehead for subsuming politics under information technology. Markets (or more recently, other, fundamentally similar algorithms) make decisions instead of human, political deliberations. This humor either ignores or rejects Abundance, for markets become absurd as supply approaches infinity

People might turn into information rather than be replaced by it. This is why Ray Kurzweil can await being uploaded into a virtual heaven. Turing brought metaphysics into the modern conversation about the natural future. Turing’s humor also provides a destination, or an eschatology that the Invisible Hand’s humor lacks. Turing’s algorithms could inherit the world in a way that the Hand could not. This is because we can imagine software, improperly, I’ll argue, operating without the need for human operators, and even in an era of Abundance depopulated of people. Abundance kills the hand, but not Turing’s ghosts

• Nelson: Information technology of a particular design could help people remain people without resorting to extreme politics when any of the other, creepily eschatological humors seem to be imminent. Ted Nelson, in 1960, came up with a brand-new, still-emerging humor, which suggests information as a way to avoid excesses of politics even as we approach an inevitably imperfect Abundance. It essentially proposes a consilience between the Invisible Hand and Abundance. This is the humor I am hoping to further with this book. Each humor captures a distinct hypothesis about how politics, what it means to be human, and technology are related. They all concern the role of politics and the human will, or intentionality, in ever higher-tech futures.


pages: 320 words: 87,853

The Black Box Society: The Secret Algorithms That Control Money and Information by Frank Pasquale

Adam Curtis, Affordable Care Act / Obamacare, Alan Greenspan, algorithmic trading, Amazon Mechanical Turk, American Legislative Exchange Council, asset-backed security, Atul Gawande, bank run, barriers to entry, basic income, Bear Stearns, Berlin Wall, Bernie Madoff, Black Swan, bonus culture, Brian Krebs, business cycle, business logic, call centre, Capital in the Twenty-First Century by Thomas Piketty, Chelsea Manning, Chuck Templeton: OpenTable:, cloud computing, collateralized debt obligation, computerized markets, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crowdsourcing, cryptocurrency, data science, Debian, digital rights, don't be evil, drone strike, Edward Snowden, en.wikipedia.org, Evgeny Morozov, Fall of the Berlin Wall, Filter Bubble, financial engineering, financial innovation, financial thriller, fixed income, Flash crash, folksonomy, full employment, Gabriella Coleman, Goldman Sachs: Vampire Squid, Google Earth, Hernando de Soto, High speed trading, hiring and firing, housing crisis, Ian Bogost, informal economy, information asymmetry, information retrieval, information security, interest rate swap, Internet of things, invisible hand, Jaron Lanier, Jeff Bezos, job automation, John Bogle, Julian Assange, Kevin Kelly, Kevin Roose, knowledge worker, Kodak vs Instagram, kremlinology, late fees, London Interbank Offered Rate, London Whale, machine readable, Marc Andreessen, Mark Zuckerberg, Michael Milken, mobile money, moral hazard, new economy, Nicholas Carr, offshore financial centre, PageRank, pattern recognition, Philip Mirowski, precariat, profit maximization, profit motive, public intellectual, quantitative easing, race to the bottom, reality distortion field, recommendation engine, regulatory arbitrage, risk-adjusted returns, Satyajit Das, Savings and loan crisis, search engine result page, shareholder value, Silicon Valley, Snapchat, social intelligence, Spread Networks laid a new fibre optics cable between New York and Chicago, statistical arbitrage, statistical model, Steven Levy, technological solutionism, the scientific method, too big to fail, transaction costs, two-sided market, universal basic income, Upton Sinclair, value at risk, vertical integration, WikiLeaks, Yochai Benkler, zero-sum game

Of course, as Richard Bronk observes, “Hayek’s analysis falls short by ignoring the role of dominant narratives, analytical monocultures, self-reinforcing emotions, feedback loops, information asymmetries and market power in distorting the wisdom of prices.” Richard Bronk, “Hayek on the Wisdom of Prices: A Reassessment,” Erasmus Journal for Philosophy and Economics 6, no. 1 (2013): 82–107. 6. Lee H. Fang, “The Invisible Hand of Business in the 2012 Election,” The Nation, November 19, 2003, http://www.thenation .com /article /177252 /invisible-hand-business-2012-election. 7. In philosophy, the term is also polysemic. For example, if enough people simply accept the outputs of a given process as valid, it is a quite useful black box. Some aspects of reality are simply assumed to be true, without need for further investigation.

“Unknown unknowns,” “black swans,” and “deep secrets” are popular catchphrases for our many areas of social blankness.3 There is even an emerging field of “agnotology” that studies the “structural production of ignorance, its diverse causes and conformations, whether brought about by neglect, forgetfulness, myopia, extinction, secrecy, or suppression.” 4 2 THE BLACK BOX SOCIETY Gaps in knowledge, putative and real, have powerful implications, as do the uses that are made of them. Alan Greenspan, once the most powerful central banker in the world, claimed that today’s markets are driven by an “unredeemably opaque” version of Adam Smith’s “invisible hand,” and that no one (including regulators) can ever get “more than a glimpse at the internal workings of the simplest of modern financial systems.” If this is true, libertarian policy would seem to be the only reasonable response. Friedrich von Hayek, a preeminent theorist of laissez-faire, called the “knowledge problem” an insuperable barrier to benevolent government interventions in the economy.5 But what if the “knowledge problem” is not an intrinsic aspect of the market, but rather is deliberately encouraged by certain businesses?

We can imagine a future in which the power of algorithmic authority is limited to environments where it can promote fairness, freedom, and rationality. We do not have to live in a world where hidden scores determine people’s fates, or human manipulations of the stock market remain as inscrutable as the “invisible hand.” We should not have to worry that the fates of individuals, businesses, and even our fi nancial systems are at the mercy of hidden databases, dubious scores, and shadowy bets. The same technological and legal revolutions that have so far eviscerated personal privacy can be used to protect it and to advance, rather than curtail, our freedoms and our understanding of the social world.


pages: 454 words: 139,350

Jihad vs. McWorld: Terrorism's Challenge to Democracy by Benjamin Barber

airport security, Alvin Toffler, anti-communist, Apple's 1984 Super Bowl advert, Ayatollah Khomeini, Berlin Wall, borderless world, Bretton Woods, British Empire, classic study, computer age, Corn Laws, Corrections Corporation of America, David Brooks, deindustrialization, Deng Xiaoping, digital map, export processing zone, Fall of the Berlin Wall, Francis Fukuyama: the end of history, full employment, George Gilder, global village, invisible hand, It's morning again in America, Joan Didion, Kevin Kelly, laissez-faire capitalism, late capitalism, Live Aid, market fundamentalism, Marshall McLuhan, minimum wage unemployment, new economy, Norbert Wiener, North Sea oil, off-the-grid, pirate software, Plato's cave, postnationalism / post nation state, profit motive, race to the bottom, Right to Buy, road to serfdom, Ronald Reagan, The Wealth of Nations by Adam Smith, Thomas L Friedman, undersea cable, vertical integration, young professional, zero-sum game

Their common thread is indifference to civil liberty. Jihad forges communities of blood rooted in exclusion and hatred, communities that slight democracy in favor of tyrannical paternalism or consensual tribalism. McWorld forges global markets rooted in consumption and profit, leaving to an untrustworthy, if not altogether fictitious, invisible hand issues of public interest and common good that once might have been nurtured by democratic citizenries and their watchful governments. Such governments, intimidated by market ideology, are actually pulling back at the very moment they ought to be aggressively intervening. What was once understood as protecting the public interest is now excoriated as heavy-handed regulatory browbeating.4 Justice yields to markets, even though, as Felix Rohatyn has bluntly confessed, “there is a brutal Darwinian logic to these markets.

The circuits—satellite links, undersea cables and land lines—are purchased from telecommunications carriers.16 The virtual corporation also exists in the labor market as an employer of “virtual” rather than actual laborers. The ideal virtual laborer is a robot: an interactive, “intelligent,” fully programmed worker capable of working twenty-four hours a day with no sustenance and minimal upkeep. What a poignant marriage: in McWorld’s chilly new cyberspace, yesterday’s invisible hand reaches out to grasp the invisible body of tomorrow’s newly born virtual corporation to guide its spasmodic newborn movements toward an eternity of profits, almost entirely without the intervention of a visible human hand. Many modern nation-states have generated national industrial policies aimed at strategic coordination of economic policy and domination of international markets by their business corporations on the theory that the nation’s citizens will somehow be benefited by supporting corporations even if corporations decline to return the favor.

For there is no international state and thus no guarantor or discoverer of an international good. The international dis-order remains a kind of state of nature among nations and it is marked by a “war of all against all”—the “quest for power after power that ceaseth only in death” portrayed by Thomas Hobbes in his Leviathan more than three hundred years ago. The invisible hand thus takes on new significance in the setting of invisible cyberspace, where virtual corporations defeat real nations. Now the space in which they operate is as invisible as the market’s phantom hands. I underscore the importance of these new market hyperrealities here for two reasons: because the free market ideology they rehabilitate is a battering ram against the walls of the nation-state, exposing McWorld’s antagonism to nationalisms of every kind; and because they challenge and ultimately rewrite the traditional account of markets in terms of free trade in raw materials, manufactured goods, and services.


pages: 462 words: 129,022

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

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

The first step to answering this question is to recognize that markets are not an end in themselves, but a means to an end: a more prosperous society. Thus, the central question is, when do markets deliver prosperity, not just for the top 1 percent but for society as a whole? Adam Smith’s invisible hand (the notion that the pursuit of self-interest leads as if by an invisible hand to the well-being of society) is perhaps the single most important idea in modern economics, and yet even Smith recognized the limited power of markets and the need for government action. Modern economic research—both theory and experience—has enhanced our understanding of government’s fundamental role in a market economy.

But the laws of economics are different from those of physics: markets are shaped by public policy, and most markets are far from competitive. Public policy shapes, in particular, who has how much market power. The advocates of free markets like to cite Adam Smith and his argument that in the pursuit of their own self-interest, individuals and firms are led as if by an invisible hand to the advancement of societal interest. They forget Smith’s admonishment that “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”11 It was the recognition of this ever-present danger that led Congress some 125 years ago to pass antitrust laws that forbade conspiracies to reduce competition and restricted anticompetitive practices.12 The national income pie can be thought of as being divided into labor income, the return to capital, and everything else.

Their high prices and excess profits, of course, mean that there is less money to fund research.87 Conclusions The idea that markets are a powerful way of organizing the production of goods and services has been deeply influential. It has provided the intellectual underpinnings of capitalism. But two centuries of research have now brought us to a better understanding of why Adam Smith’s invisible hand can’t be seen: because it’s not there.88 More often than not, firms’ incentives are to create market power, not just better products—and we’ve seen that American firms have excelled in doing so. They’ve used this market power to exploit their consumers, their workers, and the political system, in ways that have resulted in lower growth, even in a supposedly innovative economy.


pages: 257 words: 64,763

The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street by Robert Scheer

Alan Greenspan, banking crisis, Bear Stearns, Bernie Madoff, Bernie Sanders, business cycle, California energy crisis, collateralized debt obligation, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, do well by doing good, facts on the ground, financial deregulation, fixed income, Glass-Steagall Act, housing crisis, invisible hand, Long Term Capital Management, low interest rates, mega-rich, mortgage debt, new economy, old-boy network, Ponzi scheme, profit motive, Ralph Nader, rolling blackouts, Ronald Reagan, Savings and loan crisis, too big to fail, trickle-down economics

Early in the campaign, Obama had shown a sophisticated grasp of the causes of the crash, and one in line with the central thesis of this book. Speaking at Manhattan’s Cooper Union on March 27, 2008, the Democratic Primary candidate provided what still stands as one of the best analyses of the extent and causes of the economic crisis:The American experiment has worked in large part because we have guided the market’s invisible hand with a higher principle. Our free market was never meant to be a free license to take whatever you can get, however you can get it. That is why we have put in place rules of the road to make competition fair, and open, and honest. We have done this not to stifle—but rather to advance prosperity and liberty.

Companies like Enron and WorldCom took advantage of the new regulatory environment to push the envelope, pump up earnings, disguise losses, and otherwise engage in accounting fraud to make their profits look better—a practice that led investors to question the balance sheet of all companies, and severely damaged public trust in capital markets. This was not the invisible hand at work. Instead, it was the hand of industry lobbyists tilting the playing field in Washington, an accounting industry that had developed powerful conflicts of interest, and a financial sector that fueled over-investment. A decade later, we have deregulated the financial services sector, and we face another crisis . . .

Department of the Treasury, November 12, 1999, www.ustreas.gov/press/releases/ls241.htm. 56 “In the 1930s, at the trough of the Depression”: Ibid. 57 “a nation of whiners”: Patrice Hill, “McCain Adviser Talks of ‘Mental Recession,’” Washington Times, July 9, 2008. 57 “I think we will look back in ten”: David Leonhardt, “Washington’s Invisible Hand,” New York Times, September 26, 2008. 57 “Citigroup threatens no one”: “A Monster Merger.” 58 “Sandy suddenly suggested, ‘We should call Clinton’”: Monica Langley, Tearing Down the Walls: How Sandy Weill Fought His Way to the Top of the Financial World . . . and Then Nearly Lost It All (New York: Simon & Schuster, 2003), 5593-5598, Kindle2 2. 60 “I would compartmentalize the industry”: Bob Ivry, “Reed Says ‘I’m Sorry’ for Role in Creating Citigroup,” Bloomberg, November 6, 2009, www.bloomberg.com/apps/news?


pages: 225 words: 70,180

Humankind: Solidarity With Nonhuman People by Timothy Morton

a long time ago in a galaxy far, far away, Anthropocene, capitalist realism, David Brooks, Georg Cantor, gravity well, Ian Bogost, invisible hand, means of production, megacity, microbiome, mirror neurons, Oklahoma City bombing, phenotype, planetary scale, Plato's cave, Richard Feynman, self-driving car, Silicon Valley, Slavoj Žižek, trolley problem, Turing test, wage slave, zero-sum game

One very obvious instance of explosive holism is the concept of the invisible hand, developed in Adam Smith’s theory of capitalism and first promulgated by Bernard de Mandeville in The Fable of the Bees, the subtitle of which is Private Vices, Public Benefits. That difference between private and public is a metaphysical difference between parts and wholes that is also a difference between lesser and greater. The invisible hand has evident theistic overtones, conjuring up images of divine providence. Capitalist ideology has relied strongly on explosive holism. The invisible hand concept is emergent and teleological. A benevolent group telos is said to emerge from the selfish actions of individuals.


pages: 998 words: 211,235

A Beautiful Mind by Sylvia Nasar

Al Roth, Albert Einstein, Andrew Wiles, Bletchley Park, book value, Brownian motion, business cycle, cognitive dissonance, Columbine, Dr. Strangelove, experimental economics, fear of failure, Gunnar Myrdal, Henri Poincaré, Herman Kahn, invisible hand, Isaac Newton, John Conway, John Nash: game theory, John von Neumann, Kenneth Arrow, Kenneth Rogoff, linear programming, lone genius, longitudinal study, market design, medical residency, Nash equilibrium, Norbert Wiener, Paul Erdős, Paul Samuelson, prisoner's dilemma, RAND corporation, Robert Solow, Ronald Coase, second-price auction, seminal paper, Silicon Valley, Simon Singh, spectrum auction, Suez canal 1869, The Wealth of Nations by Adam Smith, Thorstein Veblen, upwardly mobile, zero-sum game

As his longtime friend Mäler put it, “Assar never controlled with commands.”18 In an article Lindbeck wrote on the economic prize in the mid-1980s, he bragged: “So far the proposals of the prize committee to the Academy have been unanimous. A consensus has in fact developed quite ’automatically’ within the committee, as if by some kind of invisible hand, after intensive discussions.”19 The invisible hand, of course, was his own. “You could put it that way,” said Lofgren, laughing. “You can say it’s unanimous… . But he’s a dominating person. We don’t vote officially. You agree.”20 Kerstin Fredga, the president of the Swedish Academy of Sciences, said at one point, “Very few people have ever dared say no to Assar.”21 Ironically, by December 1994, when Fredga made the remark, it was no longer true.

The Nash equilibrium, once it is explained, sounds obvious, but by formulating the problem of economic competition in the way that he did, Nash showed that a decentralized decision-making process could, in fact, be coherent — giving economics an updated, far more sophisticated version of Adam Smith’s great metaphor of the Invisible Hand. By his late twenties, Nash’s insights and discoveries had won him recognition, respect, and autonomy. He had carved out a brilliant career at the apex of the mathematics profession, traveled, lectured, taught, met the most famous mathematicians of his day, and become famous himself. His genius also won him love.

Since 1950, the Prisoner’s Dilemma has spawned an enormous psychology literature on determinants of cooperation and defection.23 On a conceptual level; the game highlights the fact that Nash equilibria — defined as each player’s following his best strategy assuming that the other players will follow their best strategy — aren’t necessarily the best solution from the vantage point of the group of players.24 Thus, the Prisoner’s Dilemma contradicts Adam Smith’s metaphor of the Invisible Hand in economics. When each person in the game pursues his private interest, he does not necessarily promote the best interest of the collective. The arms race between the Soviet Union and the United States could be thought of as a Prisoner’s Dilemma. Both nations might be better off if they cooperated and avoided the race.


Remix: Making Art and Commerce Thrive in the Hybrid Economy by Lawrence Lessig

Aaron Swartz, Amazon Web Services, Andrew Keen, Benjamin Mako Hill, Berlin Wall, Bernie Sanders, Brewster Kahle, carbon tax, Cass Sunstein, collaborative editing, commoditize, disintermediation, don't be evil, Erik Brynjolfsson, folksonomy, Free Software Foundation, Internet Archive, invisible hand, Jeff Bezos, jimmy wales, John Perry Barlow, Joi Ito, Kevin Kelly, Larry Wall, late fees, Mark Shuttleworth, Netflix Prize, Network effects, new economy, optical character recognition, PageRank, peer-to-peer, recommendation engine, revision control, Richard Stallman, Ronald Coase, Saturday Night Live, search costs, SETI@home, sharing economy, Silicon Valley, Skype, slashdot, Steve Jobs, the long tail, The Nature of the Firm, thinkpad, transaction costs, VA Linux, Wayback Machine, yellow journalism, Yochai Benkler

But the giants always fall to a better way of making money. And the RO culture that digital technologies will support will provide lots of new ways for content producers to make money. “As if by an invisible hand,” this market will radically change the nature of access to culture in the next ten years. As a result, our children will be unable to understand a world where Thursday at 10 p.m. was more significant in cultural terms than Friday at 5 a.m. By invoking Adam Smith’s “invisible hand,” I don’t mean to say that policy makers have nothing to worry about here. Smith’s 80706 i-xxiv 001-328 r4nk.indd 49 8/12/08 1:54:46 AM 50 REMI X Wealth of Nations teaches us about the phenomenal power of markets to adjust.

Policy makers must assure that rights are not allocated in a way that distorts or weakens competition. A costly overlay of spectrum rights, for example, or an inefficient market of copyrights, can stifle competition and drive markets to unnecessary concentration. These factors must be regulated by policy makers. They will not be “solved” by an invisible hand. But for my purposes here, the most important policy mistake is one that stifles the Sousarian instinct: a policy driven by the view that the only way to protect RO culture is to render RW culture illegal. That choice is a false choice. In the next chapter, I want to sketch a future for RW culture that might motivate us to see just why we should avoid this false choice. 80706 i-xxiv 001-328 r4nk.indd 50 8/12/08 1:54:46 AM FOUR RW, REVIVED O ne of my closest (if most complicated) friends at college was an English major.

., 260, 275 “Content Is Not King” (Odlyzko), 89 Convergence Culture (Jenkins), 28 copies, 98–102, 255, 276–77, 290–91 decriminalization of, 268–71, 279 copyright law, 96, 97, 244–45, 276–77, 289–94 Baker on, 89 clear title in, 260–65 commercial vs. noncommercial use and, 55, 254 competition and, 90, 270 decriminalizing copies and, 268–71, 279 decriminalizing file sharing and, 271–72 decriminalizing youth and, 248–49, 283, 293 de minimis exception to, 104 deregulating amateur creativity and, 254–59 destructive and self-defeating aspects of, 109–14 externalities and, 289, 291, 292–93 fair use and, 91, 99, 100, 103, 123, 255–56, 260, 266–67 8/12/08 1:56:30 AM IND E X history of, 100–101, 103, 262–63, 268–69 hybrid economies and, 248–49 importance of limits in, 31–33, 56 licenses and, see licenses as opt-in system, 262–63 as opt-out system, 263 proper function of, 85 property law and, 264–65 reforming, 253–73, 278, 279 registration and, 262–65 RO culture and, 97–100, 105 RW culture and, 97, 100–105, 108 simplification of, 266–68 Sousa and, 23–27, 31–33 work for hire and, 244 copyright wars, xv–xxii, 34, 39–40, 293–94 collateral damage in, 17–18 Corely, Eric, 2 “Cornucopia of the Commons, The” (Bricklin), 132–34, 173 corruption, 283, 293, 294 craigslist, 187–91, 195 Creative Commons (CC), 15–17, 172, 192, 226, 227, 228, 244, 277–79 creativity, 18, 19 amateur, see amateur creativity cultures of, see culture(s) Long Tail and, 130, 131 original, 91–92, 93, 95 Cult of the Amateur, The (Keen), 90–91 cultural literacy, 81, 107 cultural references, 74–75 culture(s), 18 access to, 43–49, 67, 106, 255, 261, 291 diversity of, 42 found, 75 RO, see RO culture RW, see RW culture Sousa’s view of, 24–29, 32–33, 35, 36, 50 standards in, 96–97 Currier, Frank Dunklee, 32 Cuse, Carlton, 213 Daily Prophet, 206 Daley, Elizabeth, 80 Danger Mouse, 255 80706 i-xxiv 001-328 r4nk.indd 321 321 Dash, Anil, 233 Dean, Howard, 62 defamation, 275 del.icio.us, 59, 60, 233 democracy, 27, 67, 142, 249, 282 democratization, 25, 52–53, 54–55, 90, 107, 140–41, 252 De Sola Pool, Ithiel, 96 Dickens, Charles, 94–95 Diebold, 62 Digg, 59 Digital Rights Management (DRM), 41, 42, 47–48, 67, 98, 99, 235, 290–91 Digital Sky Project, 170–71 Digital Storytelling project, 80–81, 261–62 digital technologies, 38–43, 69, 83, 84, 98–100, 103, 252, 253, 262 and access to media, 46–49 advertising and, 48 Disney, 55, 102, 122 distributed computing, 167–68 Distributed Proofreaders, 167 diversity, 185, 186, 231, 252 Dogster, 186–87, 213 doujinshi, 79, 80 Doyle, Michael, 11–12 Duffy, Kevin Thomas, 53–54 DVDs, 2, 30, 37, 38, 94, 124, 129, 144–45 DVRs, 44 economies, 116, 117–18, 225–49 commercial, see commercial economies crossovers in, 227–28 hybrid, see hybrid economies parallel, 225–26 sharing, see sharing economies spillovers and, 229–31 tools to signal types of, 226–27 value in, 88–90 education, 85–86, 274 legal, 86 remixes and, 80–82 Einstein@Home, 167–68 election of 2004, 62–63 Electronic Frontier Foundation (EFF), 3, 271 Ellis, Jim, 57 8/12/08 1:56:30 AM 322 eMusic, 12, 42 Everything Bad Is Good for You (Johnson), 93–94 Ewing, Marc, 181, 182 externalities, 289, 291, 292–93 eyeVio, 249 fair use, 91, 99, 100, 103, 123, 255–56, 260, 266–67 Fake, Caterina, 191–92, 233 fan cultures, 205–13, 245–48, 258–59, 276 Fight Censorship, 197 file sharing, see peer-to-peer file sharing films, see movies Fisher, William, 109, 271, 272 Flickr, 191–94, 233 found culture, 75 fourstones, 95 Fox, 71, 227 Franks, Charles, 167 “free” content, 47–48 Free Culture (Lessig), xvi–xvii, 80, 89, 113 Future of Ideas, The (Lessig), xvi Gansky, Lisa, 192 Geilhufe, David, 191 Ghosh, Rishab, 173 Gift, The (Hyde), 147–48, 149 gifts, 147–48 GigaOmniMedia, 232 Gil, Gilberto, 66–67, 256 Gillis, Gregg, 11–15 Girl Talk, 11–13, 17, 18, 69–70, 104 global warming, 292, 293, 294 GNU, 162, 163, 182, 184, 240–41 Goddard Space Flight Center, 180 Godwin, Mike, 156 Goethe Institute, 92 Gomes, Lee, 130 Google, 127–28, 141, 142, 190, 197, 224, 234, 241 books digitized by, 260–61 Little Brother and, 132, 136–37 mash-ups, 138 YouTube acquired by, 194 Google Application Programming Interfaces (APIs), 128, 137, 138 80706 i-xxiv 001-328 r4nk.indd 322 IND E X Gore, Al, 293 Gracenote, 134, 237–39 Green, Rich, 232 Grokster, xxi, 110 Guggenheim, Davis, 275 “Hard Working George” (Sadler), 72–73 Harry Potter, 206–12, 245, 246, 258–59 Hart, Michael, 166, 167 Hastings, Reed, 124 Hollywood, 205–13, 291, 292, 294; see also movies Hosler, Mark, 70, 71, 75, 76, 81, 107 Hurley, Chad, 194 Hurricane Katrina, 189–91 Hutchinson, Thomas, 147 hybrid economies, 34, 35, 116, 118, 119, 177–224, 225, 252, 253, 274, 294 collaboration spaces and, 196–213 communities and, 213–20 community spaces and, 186–96 decriminalizing youth and, 248–49 fairness in, 231–43 free software, 163–66, 172, 173–75, 179–85, 219, 220, 240–43, 291 incentives for commercial entities to become, 228–31 Internet, 116 sharecropping in, 243–48 Hyde, Lewis, 147–48, 149 IBM, 241–42 ideas, 290 innovation, 25, 221, 228–29 LEGO-ized, 137–41, 143 spillovers and, 229–31 Innovator’s Dilemma, The (Christensen), 143 integrity, 87, 92 International Federation of the Phonographic Industry, 39 Internet, 30, 34, 40, 58, 68, 69, 102–3, 116, 163, 230, 252 commercial economies and, 119, 121–43 hybrid economies and, 116, 177, 178; see also hybrid economies Keen on, 90–91 8/12/08 1:56:31 AM IND E X LEGO-ized innovation and, 137–41, 143 Little Brother and, 132–37, 143 sharing economies and, 119, 155–72 Internet Archive, 168, 175, 232, 236 Internet Movie Database (IMDb), 239–40 “invisible hand,” 49–50 iPod, 41, 46, 47, 88 Iraq, 281–82 Ito, Joi, 200, 218–19 Ito, Mimi, 78, 79, 80 iTunes, 41–42, 134 Girl Talk and, 12, 13 Jackson, Andrew, 275 Jackson, Michael, 5 Jarvis, Jeff, 233–34 Jay-Z, 255 Jefferson, Thomas, 27, 106, 131–32, 262, 290–91 Jenkins, Henry, 28, 78, 81, 94, 206–7, 212, 276 Jobs, Steve, 40 Johnson, Mark, xiv Johnson, Steven, 93–94 Jones, Scott, 238 Joyce, Don, 54, 70, 71, 272–73 Jupiter Research, 110 juries, 87 Kahle, Brewster, 58, 168, 232, 236–37, 239 Kan, Ti, 237–38 Karim, Jawed, 194 Kasem, Casey, 13, 75 Keen, Andrew, 90–91, 127 Kelly, Kevin, 59 Kerry, John, 72 Kind, Jonathan, 149 Kodak, 192 Kollock, Peter, 174 Lakoff, George, xiv, xv Lasica, J.


pages: 344 words: 104,077

Superminds: The Surprising Power of People and Computers Thinking Together by Thomas W. Malone

Abraham Maslow, agricultural Revolution, Airbnb, Albert Einstein, Alvin Toffler, Amazon Mechanical Turk, Apple's 1984 Super Bowl advert, Asperger Syndrome, Baxter: Rethink Robotics, bitcoin, blockchain, Boeing 747, business process, call centre, carbon tax, clean water, Computing Machinery and Intelligence, creative destruction, crowdsourcing, data science, deep learning, Donald Trump, Douglas Engelbart, Douglas Engelbart, driverless car, drone strike, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, experimental economics, Exxon Valdez, Ford Model T, future of work, Future Shock, Galaxy Zoo, Garrett Hardin, gig economy, happiness index / gross national happiness, independent contractor, industrial robot, Internet of things, invention of the telegraph, inventory management, invisible hand, Jeff Rulifson, jimmy wales, job automation, John Markoff, Joi Ito, Joseph Schumpeter, Kenneth Arrow, knowledge worker, longitudinal study, Lyft, machine translation, Marshall McLuhan, Nick Bostrom, Occupy movement, Pareto efficiency, pattern recognition, prediction markets, price mechanism, radical decentralization, Ray Kurzweil, Rodney Brooks, Ronald Coase, search costs, Second Machine Age, self-driving car, Silicon Valley, slashdot, social intelligence, Stephen Hawking, Steve Jobs, Steven Pinker, Stewart Brand, technological singularity, The Nature of the Firm, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Tim Cook: Apple, Tragedy of the Commons, transaction costs, Travis Kalanick, Uber for X, uber lyft, Vernor Vinge, Vilfredo Pareto, Watson beat the top human players on Jeopardy!

Even if you are just selling mustard ice cream to make more money for yourself, you are also—unwittingly—helping to use all the milk, sugar, human labor, and other resources of your whole society in a way that makes more people happy. Smith called this almost mystical property of markets their “invisible hand.” But markets don’t just have invisible hands; they are invisible minds. In fact, they’re superminds. Superminds are all around us all the time, but to see them, you have to know how to look. Some superminds, like companies, are usually pretty easy to see. Others, like ecosystems, are much harder. I sometimes play a little game with myself: How many superminds can I see while walking down the street?

And the book will conclude with some reflections on how we can use our global collective intelligence to make choices that are not just smart but also wise. Part I What Are Superminds? CHAPTER 1 Would You Recognize a Supermind If You Saw It on the Street? When Adam Smith wrote The Wealth of Nations, in 1776, he said that buyers and sellers in a market who do what’s best for themselves are often “led by [the] invisible hand” of the market to also do what’s best for society. For instance, if you can make more profit for yourself by selling mustard ice cream instead of mocha from your ice cream truck, then that’s also the way your business can contribute more economic value to society.1 Of course, there are certainly situations where maximizing your own profit isn’t what’s best for society.

But the real point is that, in a certain sense, we can let the market decide what kind of retailers are most effective. The companies that work well—whether they are fully automated, semiautomated, or not automated at all—will make money. Those that don’t work well will go broke. And over time, the invisible hand of the market will continually redirect resources to the places that are—at that moment—most effectively providing what customers want. Of course, it’s not quite this simple. There are many situations where markets don’t perform in practice the way they should in theory. But markets do have a very important ability to continually adapt to changing situations, including changes in what can and cannot be automated at any given time.


pages: 370 words: 107,983

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

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

In 1776, Adam Smith published An Inquiry into the Nature and Causes of the Wealth of Nations, in which he wrote: It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Thus, one of the founding principles of economics is self-love, and what we now call Smith’s ‘Invisible Hand’, the idea that societal good emerges not from attempts to control an economy, but from the actions of a population of self-interested individuals. Thus, individual action, self-improvement and self-love were seen as the motivating forces towards personal and social improvement in religion, politics, philosophy and economics.

As a result, over the last 250 years, we have conceived of and created an economy in the image of a giant factory or machine that runs on the classical economic model of self-regulating markets, governed by supposedly natural laws of production and exchange, where prices and profits tend to a general equilibrium, famously captured by Scottish economist and philosopher Adam Smith’s (1723–90) metaphor of the ‘invisible hand’. We talk of ‘market mechanisms’, ‘supply’ and ‘demand’, and the image we hold in our heads of what the economy looks like was captured by economist Paul Samuelson in his 1948 Circular Flow diagram, whereby labour and capital go in one end and goods and services come out the other. Engineer and economist Bill Phillips even built a hydraulic machine called MONIAC (the Monetary National Income Analogue Computer), complete with transparent water tanks and circular pipes, to demonstrate how money flowed around Samuelson’s system like fluids in a hydraulic mechanism.

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


pages: 409 words: 105,551

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

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

Emergence has been used as a paradigm for exploring everything from the crystalline beauty of a snowflake, to the explosive development of cities,* to the capricious behavior of economic markets. Adam Smith’s “invisible hand” of the market—the notion that order best arises not from centralized design but through the decentralized interactivity of buyers and sellers—is an example of “emergence” avant la lettre. It stands in direct contrast to what Alfred Chandler dubbed the “visible hand” of management—the reductive planning that has dominated most organizations for the past century. Smith’s invisible hand, like the leaderless ant colony, illustrates the core insight of emergence as it relates to our study of teams: in situations defined by high levels of interaction, ingenious solutions can emerge in the absence of any single designer; prices can settle without a central planner; complex operations can be executed without a detailed plan.

This is not to say that simply throwing more computers or Navy SEALs at a problem is the answer; the key lies not in the number of elements but in the nature of their integration—the wiring of trust and purpose. Parallel computing, joint cognition, and the oneness of a team all work toward the same goal: building a network that allows you to solve larger, more complex problems. The creation and maintenance of a team requires both the visible hand of management and the invisible hand of emergence, the former weaving the elements together and the latter guiding their work. Programs like BUD/S are designed to foster emergent intelligence that can thrive in the absence of a plan. This was exactly what the aviation industry had in mind when it set out to solve problems like the crash of United 173.

Years later, in what Chandler referred to as “the Managerial Revolution,” the specialized businesses were reunited when they merged into large, vertically integrated corporations with dozens of departments and hundreds of offices. Many functions were consolidated under centrally managed entities, instead of the sea of small actors responding independently to the forces of the market (Chandler dubbed this force “the visible hand” in contrast to Adam Smith’s description of market forces as “the invisible hand”). The number of people working in “professional services” rose from 750,000 in 1860 to 2.16 million in 1890, and to 4.42 million by 1910, but the number of firms that employed them dropped: 4,000 firms collapsed into 257 combinations between 1897 and 1904. But consolidation did not signal a return to the shared space and understanding of countinghouse culture.


pages: 479 words: 144,453

Homo Deus: A Brief History of Tomorrow by Yuval Noah Harari

23andMe, Aaron Swartz, agricultural Revolution, algorithmic trading, Anne Wojcicki, Anthropocene, anti-communist, Anton Chekhov, autonomous vehicles, behavioural economics, Berlin Wall, call centre, Chekhov's gun, Chris Urmson, cognitive dissonance, Columbian Exchange, computer age, DeepMind, Demis Hassabis, Deng Xiaoping, don't be evil, driverless car, drone strike, European colonialism, experimental subject, falling living standards, Flash crash, Frank Levy and Richard Murnane: The New Division of Labor, glass ceiling, global village, Great Leap Forward, Intergovernmental Panel on Climate Change (IPCC), invention of writing, invisible hand, Isaac Newton, job automation, John Markoff, Kevin Kelly, lifelogging, low interest rates, means of production, Mikhail Gorbachev, Minecraft, Moneyball by Michael Lewis explains big data, Monkeys Reject Unequal Pay, mutually assured destruction, new economy, Nick Bostrom, pattern recognition, peak-end rule, Peter Thiel, placebo effect, Ray Kurzweil, self-driving car, Silicon Valley, Silicon Valley ideology, stem cell, Steven Pinker, telemarketer, The future is already here, The Future of Employment, too big to fail, trade route, Turing machine, Turing test, ultimatum game, Watson beat the top human players on Jeopardy!, zero-sum game

This relentless flow of data sparks new inventions and disruptions that nobody plans, controls or comprehends. No one understands how the global economy functions or where global politics is heading. But no one needs to understand. All you need to do is answer your emails faster – and allow the system to read them. Just as free-market capitalists believe in the invisible hand of the market, so Dataists believe in the invisible hand of the data flow. As the global data-processing system becomes all-knowing and all-powerful, so connecting to the system becomes the source of all meaning. Humans want to merge into the data flow because when you are part of the data flow you are part of something much bigger than yourself.

Modernity accordingly inspired people to want more, and dismantled the age-old disciplines that curbed greed. The resulting anxieties were assuaged to a large extent by free-market capitalism, which is one reason why this particular ideology has become so popular. Capitalist thinkers repeatedly calm us: ‘Don’t worry, it will be okay. Provided the economy grows, the invisible hand of the market will take care of everything else.’ Capitalism has thus sanctified a voracious and chaotic system that grows by leaps and bounds, without anyone understanding what is happening and where we are rushing. (Communism, which also believed in growth, thought it could prevent chaos and orchestrate growth through state planning.

Yet the fact remains that humankind is today not only far more powerful than ever, it is also far more peaceful and cooperative. How did humans manage that? How did morality, beauty and even compassion survive and flourish in a world devoid of gods, of heaven and of hell? Capitalists are, again, quick to give all the credit to the invisible hand of the market. Yet the market’s hand is blind as well as invisible, and by itself could never have saved human society. Indeed, not even a country fair can maintain itself without the helping hand of some god, king or church. If everything is for sale, including the courts and the police, trust evaporates, credit vanishes and business withers.6 What, then, rescued modern society from collapse?


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

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

The profit motive encouraged cheaper production, driving down costs and maximising national output. Importantly, this was not achieved by planning. It flowed naturally from people’s self-interest. Each individual, Smith said, in the single most famous metaphor in all of economics, was ‘led by an invisible hand to promote an end which was no part of his intention.’ This system operated at peak efficiency when it was the natural product of people’s instinctive economic behaviour. Whenever officials tried to interfere with it, they simply ended up jamming unnecessary material into its cogs. The best thing for everyone was that it was left well alone.

In the wake of the French Revolution, this notion seemed more powerful than ever before. After all, the attacks on the individual rights of refractory priests had begun after the confiscation of church lands. The lunacy of the Terror had coincided with the introduction of the maximum. But Smith’s notion of the invisible hand introduced a second argument. By interfering with property rights, the state was undermining the efficiency of the market and reducing the wealth of everyone in society. Writing decades after The Wealth of Nations was published, Constant accepted that the state did have a right to interfere with property.

They were within the protective shield of individual life that no-one should interfere with. The state had limited powers to tax people or restrict their economic activity. Constant had taken this further and defended property rights on an instrumental level. In other words, they were valuable on the basis of what they accomplished. The invisible hand mechanism, which led from self-interest to competition in a free market, increased productivity and gave people more advantages than they would have were the state to intervene. Mill took this instrumental view of property and started asking searching questions of it. Was uncontrolled competition providing the goods?


pages: 511 words: 151,359

The Asian Financial Crisis 1995–98: Birth of the Age of Debt by Russell Napier

Alan Greenspan, Asian financial crisis, asset allocation, bank run, banking crisis, banks create money, Berlin Wall, book value, Bretton Woods, business cycle, Buy land – they’re not making it any more, capital controls, central bank independence, colonial rule, corporate governance, COVID-19, creative destruction, credit crunch, crony capitalism, currency manipulation / currency intervention, currency peg, currency risk, debt deflation, Deng Xiaoping, desegregation, discounted cash flows, diversification, Donald Trump, equity risk premium, financial engineering, financial innovation, floating exchange rates, Fractional reserve banking, full employment, Glass-Steagall Act, hindsight bias, Hyman Minsky, If something cannot go on forever, it will stop - Herbert Stein's Law, if you build it, they will come, impact investing, inflation targeting, interest rate swap, invisible hand, Japanese asset price bubble, Jeff Bezos, junk bonds, Kickstarter, laissez-faire capitalism, lateral thinking, Long Term Capital Management, low interest rates, market bubble, mass immigration, means of production, megaproject, Mexican peso crisis / tequila crisis, Michael Milken, Money creation, moral hazard, Myron Scholes, negative equity, offshore financial centre, open borders, open economy, Pearl River Delta, price mechanism, profit motive, quantitative easing, Ralph Waldo Emerson, regulatory arbitrage, rent-seeking, reserve currency, risk free rate, risk-adjusted returns, Ronald Reagan, Savings and loan crisis, savings glut, Scramble for Africa, short selling, social distancing, South China Sea, The Wealth of Nations by Adam Smith, too big to fail, yield curve

The price of commodities is headed lower and the collapse in demand in Asia is already impacting capacity utilisation rates from the dairy sheds of New Zealand to the paper mills of Alabama. Of course, such disruptions are perfectly normal and through the ‘invisible hand’ of price, such imbalances are corrected. Of course, as equity owners in Asia are finding out, that correction process which reads so quaintly in the textbook is actually a great rending destruction of capital when the current status is an oversupply of capital. Of course, the ability of the ‘invisible hand’ of the market to produce such equilibrium really depends upon whether the market is allowed to work properly. The history of the 20th century has been one of concerted efforts by governments to corral markets for political ends.

In a clear message to his shareholders, who value his equity capital at US$13bn, he has told them that his capital will be used for the service of ‘society’ rather than shareholders. The point of quoting Mr Aikawa is not to suggest that he is either wrong or right, but to point out the very dangerous dynamics for the world economy when the ‘capitalists’ of the world’s second-largest economy ignore the ‘invisible hand’ of the market in an overcapacity situation. So obviously when prices fall, the marginal producers see their cash flows squeezed and the viability of their business questioned. In due course, prices fall to a level where these producers have to close capacity or are bankrupted. Of course, if there are some players in the market who prefer to target other goals apart from returns on capital, then the road to equilibrium may be long and hard.

If Japanese capital views the world from this perspective, then the adjustments in supply dictated by price will all be forced upon the rest of the global economy, where returns on capital rather than full capacity utilisation are the key target. Of course, the inability or unwillingness of Japan’s capital to be triggered into adjustment by the mechanism of price is nothing new. However, we have reached a stage in the global economy when such intransigence to the ‘invisible hand’ of price is extremely dangerous. The death of communism has unleashed powerful new productive forces which at this stage are adding to the problems of oversupply. Theoretically, such lower prices will trigger rises in consumption. This mechanism still works even if Japan refuses to play by its rules.


pages: 264 words: 76,643

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

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

One author lists some of the activities that are not part of the economy as “giving birth to babies, raising children, cultivating a garden, cooking food for her siblings, milking the family cow, making clothes for her relatives or taking care of Adam Smith so he can write The Wealth of Nations.”13 Even the woman whose housework freed up time for the economist Adam Smith to write his most famous work contributed nothing to the economy, as we define it. Smith is known for his concept of the “invisible hand,” which describes the market forces and pricing signals that are supposed to make economies work smoothly without a central plan. He wrote less about the invisible sex.14 In Jonathan Franzen’s novel The Corrections Enid’s husband, Al, is irritated that she has not cleared up magazines and jars from the top of the stairs.

If markets are functioning properly, this benefits not only themselves but also society at large. This interpretation borrows heavily from the physical sciences. The victory of mechanism over moralism, it takes as a starting point the notion that markets function best when individuals are left alone. In this Bentham’s utility merges with Adam Smith’s invisible hand to form a view of the world in which rational actors produce the best possible outcome under given constraints. “It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner,” wrote Smith, “but from their regard to their own interest.” Bentham’s utility is the mechanism by which individual decisions add up to a greater whole.

You might call it a nanny state. You might call it Scandinavia. Layard does not blush at either suggestion. Indeed, he says, Scandinavia has done a much better job of promoting what he sees as healthier, happiness-enhancing values. These are not founded excessively on Darwin’s survival of the fittest or on Smith’s invisible hand, what Layard calls the two doctrines underpinning Anglo-Saxon societies. Rather they are based on a feeling of common purpose and shared endeavor. He cites a study in which 77 percent of Swedish children aged eleven to fifteen supported the assertion “Most of the students in my class are kind and helpful.”


pages: 300 words: 77,787

Investing Demystified: How to Invest Without Speculation and Sleepless Nights by Lars Kroijer

Andrei Shleifer, asset allocation, asset-backed security, Bernie Madoff, bitcoin, Black Swan, BRICs, Carmen Reinhart, clean tech, compound rate of return, credit crunch, currency risk, diversification, diversified portfolio, equity premium, equity risk premium, estate planning, fixed income, high net worth, implied volatility, index fund, intangible asset, invisible hand, John Bogle, Kenneth Rogoff, low interest rates, market bubble, money market fund, passive investing, pattern recognition, prediction markets, risk tolerance, risk/return, Robert Shiller, selection bias, sovereign wealth fund, too big to fail, transaction costs, Vanguard fund, yield curve, zero-coupon bond

It simply can’t be done. The beautiful shortcut – follow the crowd But here is the beautiful thing. If you generally believe in efficient markets, you don’t need to worry about the portfolio theory above or collecting millions of correlations and thousands of risk-return profiles. The market’s ‘invisible hand’ has already done all that for you. We don’t think we are able to reallocate between securities in such a way that we have a higher risk/return profile than what the aggregate knowledge of the market provides. Buying the entire market is essentially like buying the tangency point T. To some people it will seem like too bold an assumption that capital has seamlessly flowed between countries and industries in such a way that world markets are efficiently allocated.

If you invest in a combination of the minimal-risk asset and broad-listed equity markets in a cheap and tax efficient way, you are doing better than most. If you are willing to add a bit of complexity there’s a lot of merit in adding other government and corporate bonds to your portfolio (see later). Summary The ‘invisible hand’ of the markets has optimised the values of the investments available. We should celebrate this simplicity and buy the whole market. We don’t think we can reallocate between securities to get a better risk/return profile. Combine the world equity markets with investing in the minimal risk asset to get to the kind of risk profile you want.

Index accountants active managers compared with index trackers, 2nd performance over time active personal portfolio management adding up the costs of advisory charges age life stages of financial planning and risk profile AIG allocations see investment allocations alternative investments alternative weightings ‘angel’ investing, 2nd annuities IRR (internal rate of return), 2nd apocalypse investing avoiding fraud and financial disasters and gold as security assets asset classes to avoid concentration risk customisation and noninvestment growth of, and overpayment of fees and institutional investors intangible and liabilities and portfolio theory in the rational portfolio, assets split tangible see also minimal risk assets avoiding fraud banks bailouts cash deposits with and financial disaster and gold as security and property investment Barclays US High Yield index Bernstein, William The Intelligent Asset Allocator bid/offer spread black swan events, 2nd, 3rd Bogle, John bonds bond indices, 2nd dollar domination of ETFs, 2nd and financial planning income from coupon payments indices and the rational portfolio adding other bonds to risk preferences, 2nd rebalancing your portfolio ‘risky’ bonds and liquidity shortterm, 2nd see also corporate bonds; government bonds; minimal risk assets Brazil government bonds broad-based portfolios and liquidity world equities, 2nd, 3rd, 4th, 5th Buffett, Warren, 2nd fee structure capital gains tax (CGT), 2nd, 3rd and gifts car insurance Case-Shiller House Price index, 2nd cash deposits deposit insurance government guarantees risk of CGT see capital gains tax (CGT) civil unrest collectibles commercial property market commodities, 2nd returns form company shares comparison sites, 2nd enhanced independent Contagion (film) corporate bonds adding to minimal risk assets, 2nd, 3rd and financial planning and credit quality ETFs, 2nd and financial planning liquidity of and minimal risk assets and portfolio theory, 2nd and the rational portfolio, 2nd, 3rd adjusting allocations, 2nd risk preferences real return expectations world corporate debt yields, 2nd costs see fees and expenses CRB Commodity index CRB Total Return index, 2nd credit ratings government bonds, 2nd, 3rd, 4th adding to minimal risk assets currency and government bonds, 2nd, 3rd, 4th matching and world equities currency-hedged investment products custody charges customisation Cyprus defined benefits pension schemes defined contribution pension schemes diversification and assets benefits of and corporate bonds, 2nd and equity market risk geographical and government bonds, 2nd and the rational portfolio, 2nd and world equities, 2nd Dow Jones index Industrial Average recovery from losses drop dead allocation early savers edge over the markets see investment edge efficiency frontiers EIS (Enterprise Investment Schemes) Elton, Edwin Modern Portfolio Theory and Investment Analysis emerging market companies listed on Western exchanges Enterprise Investment Schemes (EIS) equities and government and corporate bonds performance and portfolio theory and property investment and the rational portfolio allocations risk preferences, 2nd rebalancing your portfolio risk of diversification and false sense of security recovering from large losses standard deviation, 2nd, 3rd view that markets will always bounce back see also world equities equity risk premium and financial planning ETFs (exchange traded funds), 2nd, 3rd, 4th advantages to owning buying bonds, 2nd, 3rd commodity trading customisation fees and expenses in global property and gold trading implementing and index funds leveraged maturities and minimal risk bonds, 2nd physical or synthetic rebalancing your portfolio and taxes total expense ratio (TER) tracking errors European Union bonds, 2nd expenses see fees and expenses fat tails fees and expenses, 2nd adding up costs alternative investments benefits of paying lower fees and comparison websites financial advisers index trackers compared with active managers and investment edge pension plans and performance impact over time mutual funds, 2nd and the rational investor and the rational portfolio, 2nd rebalancing your portfolio Ferri, Richard All About Asset Allocation financial advisers, 2nd and comparison websites financial crisis 2008–09 and commodities trading and currency matching and government bonds yields and high risk preferences and liquidity and longterm financial planning, 2nd and market risk, 2nd, 3rd, 4th financial planning building your savings and the financial crisis 2008–09, 2nd and investment allocations, 2nd, 3rd and life stages and risk, 2nd risk surveys rules of thumb to consider supercautious savers financial software packages France government bonds fraud, avoiding frequent trading FTSE All-Share index FTSE All-Share Tracker fund FTSE NAREIT Global index, 2nd, 3rd fund pickers future performance mutual funds GDP and corporate bonds and world equity market value, 2nd Germany government bonds gifts and capital gains tax gold, 2nd as security Goldman Sachs government bonds adding to minimal risk assets, 2nd and financial planning and bank deposits banks and government defaults buying in base currency, 2nd credit ratings, 2nd, 3rd, 4th and diversification earnings ETFs, 2nd and the financial crisis (2008) and financial planning inflationprotected liquidity of longerterm maturity minimal risk and world equities, 2nd, 3rd and portfolio theory, 2nd, 3rd and the rational portfolio, 2nd, 3rd adjusting, 2nd, 3rd allocations, 2nd risk preferences real return expectations time horizons yields Greece government debt and bond yields hedge funds, 2nd, 3rd, 4th Japanese government bonds and liquidity high risk preferences home markets overinvestment in Icelandic banks income tax index funds, 2nd and ETFs and government bonds implementing maturities and minimal risk bonds, 2nd total expense ratio (TER) tracking errors index-tracking products, 2nd and active managers adding bonds to a portfolio compared with active managers, 2nd comparison sites, 2nd enhanced independent costs of fund changes and taxes future product development implementing license fees for and liquidity and mutual funds and the rational portfolio, 2nd, 3rd different risk preferences total expense ratio (TER), 2nd versus mutual fund returns over time world equities, 2nd see also ETFs (exchange traded funds); index funds India government bonds inflation earnings from minimal risk bonds inflation-adjusted government bonds inflation-protected bonds returns on world equities information/research costs institutional investors insurance buying deposit insurance schemes intangible assets interest rates cash deposits in banks government bonds, 2nd international investment investment allocations adding other government and corporate bonds and financial planning, 2nd, 3rd flexibility of financial goals life stages rebalancing your portfolio, 2nd investment edge, 2nd absence of, 2nd adding up the costs asset classes to avoid and commodities trading, 2nd and the competition different ways of having and expenses and performance picking your moment and private investments and the rational portfolio reconsidering your edge and world equities ‘invisible hand’ of the market IOUs (promissory notes) IRR (internal rate of return) annuities, 2nd iShares, 2nd Ishikawa, Tets How I Caused the Credit Crunch Japan commodities trading government bonds Nikkei index jewellery leverage ETFs and mortgages portfolios liabilities and the rational portfolio life insurance, 2nd life stages and financial planning liquidity equity portfolio and ‘risky’ bonds and ETFs minimal risk and private investments and the rational portfolio, 2nd, 3rd returns on illiquid investments selling your investment, 2nd localised risks avoiding and noninvestment assets Madoff, Bernie market capitalisation and world equities, 2nd market efficiency and inefficiency Mexico government bonds Microsoft investors, 2nd, 3rd and liquidity, 2nd mid-life savers minimal risk assets, 2nd adding other bonds to corporate bonds, 2nd, 3rd government bonds, 2nd adjusting the risk profile asset classes to avoid buying and diversification and equity markets ETFs and financial planning 50/50 split with world equities, 2nd, 3rd allocations government bonds earnings inflation-protected time horizons of inflationprotected bonds and liquidity as optimal portfolio and portfolio theory, 2nd in the rational portfolio, 2nd, 3rd, 4th, 5th, 6th real return expectations and world equities, 2nd Morgan Stanley mortgages and currency matching and leverage MSCI World Index, 2nd, 3rd, 4th mutual funds fees and performance, 2nd and index trackers national economies and equity market risk OEICs (openended investment companies) oil trading, 2nd optimal portfolio theory minimal risk asset past performance and future performance Paulson, John pension funds, 2nd, 3rd benefits and charges defined benefits schemes underfunded performance and fees index trackers versus active managers versus mutual funds portfolio theory and government bonds optimal and the rational investor price impact private equity capital, 2nd private investments, 2nd and liquidity privatisations and world equities professional investment managers property market investments, 2nd avoiding and financial disasters institutional investors and liquidity and the rational portfolio US subprime housing markets, 2nd, 3rd rational investing, 2nd core of ongoing tasks of rational portfolio adding other bonds to adjusting allocations and equity risk return expectations asset classes to avoid assets and liabilities assets split checklist corporate bonds, 2nd diversification financial benefits of and financial disasters geographical diversification government bonds, 2nd, 3rd, 4th, 5th implementation incorporating other assets and investment edge key components of a and liquidity, 2nd, 3rd and pension plans and portfolio theory and risk preferences risk/return profile, 2nd, 3rd, 4th tailoring to specific needs and circumstances tax adjustments tax benefits of holding and tax efficiency, 2nd, 3rd, 4th world equities, 2nd, 3rd, 4th see also minimal risk assets rebalancing your portfolio ticket size REITs (Real Estate Investment Trusts) residential property market retirees investment allocation retirement annuities and financial planning risk cash deposits credit risk and corporate bonds of equity markets equity risk premium high risk preferences and longterm financial planning, 2nd and the optimised market and the rational portfolio, 2nd, 3rd asset split risk preferences risk expertise websites risk surveys risk/return profile equity markets and financial planning, 2nd, 3rd and long-term financial planning minimal risk assets adding government and corporate bonds to pension plans and portfolio theory and the rational portfolio, 2nd, 3rd, 4th, 5th rebalancing your portfolio world equities riskless investment choice, 2nd S&P 500 index and the CRB Commodity index Index Tracker Portfolio standard deviation stocks volatility savings ‘doing nothing’ with and long-term financial planning life stages SD see standard deviation (SD) selling investments and liquidity software packages Spain government bonds standard deviation (SD) building your savings and equity market risk, 2nd, 3rd synthetic ETFs Taleb, Nassim Nicholas The Black Swan, 2nd tangency points tangible assets tax efficient proxies tax wrappers, 2nd taxes, 2nd advisers or accountants questions to ask benefits of the rational portfolio capital gains tax (CGT), 2nd, 3rd, 4th creating trading lots and financial disaster and pension plans, 2nd rational portfolio adjustment realising losses against tax advice websites tax efficiency and the rational portfolio, 2nd, 3rd, 4th tax schemes tax-sheltered or optimised products transaction tax, 2nd technology-focused funds, 2nd TER (total expense ratio), 2nd This Time is Different: Eight Centuries of Financial Folly (Reinhart and Rogoff) total expense ratio (TER), 2nd transaction taxes, 2nd, 3rd transfer charges turnover costs unit trusts, 2nd United Kingdom bank deposits and credit guarantee equities government bonds credit rating earnings from sterling investors United States corporate bonds, 2nd Dow Jones index, 2nd equity market, 2nd risk, 2nd, 3rd and total expense ratio government bonds credit ratings dollar investors earnings from versus property investment sub-prime housing market, 2nd, 3rd Vanguard, 2nd, 3rd, 4th, 5th, 6th FTSE AllShare index venture capital, 2nd Virgin FTSE All-Share Tracker fund volatility and financial planning predicting future Waal, Edmund de The Hare with Amber Eyes world equities adjusting the rational portfolio alternative weightings defining diversification benefits, 2nd, 3rd ETFs expected returns and financial planning 50/50 split with minimal risk assets, 2nd, 3rd investment allocation and high risk preferences indices liquidity of market value and minimal risk assets, 2nd overweighing ‘home’ equities and portfolio theory and the rational portfolio, 2nd, 3rd, 4th allocations risk preferences real return expectations US market, 2nd ‘Investing Demystified delivers, with great clarity and lucidity, the best possible advice you can get when it comes to personal investments and financial planning.’


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

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

The Wealth of Nations describes how economic forces will produce the greatest common good under conditions of perfect liberty and competition, maximizing the efficient allocation of productive resources and bringing the economy into equilibrium — “the ideal balance between buyers and sellers, and firms and workers, such that rates of return to a resource in various uses will be equal.”1 The “invisible hand” makes only one 63 64 small change appearance in the 1,264 pages of my edition (it’s on page 572), perhaps because Smith didn’t believe that social welfare would be maximized through the uncoordinated (i.e., “invisible”) actions of self-interested individuals. It was later economists like Milton Friedman who claimed that the efficient operation of the market would always create more social value than would altering or redistributing the surplus it produced through philanthropy or government intervention.

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


pages: 524 words: 120,182

Complexity: A Guided Tour by Melanie Mitchell

Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Albert Einstein, Albert Michelson, Alfred Russel Wallace, algorithmic management, anti-communist, Arthur Eddington, Benoit Mandelbrot, bioinformatics, cellular automata, Claude Shannon: information theory, clockwork universe, complexity theory, computer age, conceptual framework, Conway's Game of Life, dark matter, discrete time, double helix, Douglas Hofstadter, Eddington experiment, en.wikipedia.org, epigenetics, From Mathematics to the Technologies of Life and Death, Garrett Hardin, Geoffrey West, Santa Fe Institute, Gregor Mendel, Gödel, Escher, Bach, Hacker News, Hans Moravec, Henri Poincaré, invisible hand, Isaac Newton, John Conway, John von Neumann, Long Term Capital Management, mandelbrot fractal, market bubble, Menlo Park, Murray Gell-Mann, Network effects, Norbert Wiener, Norman Macrae, Paul Erdős, peer-to-peer, phenotype, Pierre-Simon Laplace, power law, Ray Kurzweil, reversible computing, scientific worldview, stem cell, Stuart Kauffman, synthetic biology, The Wealth of Nations by Adam Smith, Thomas Malthus, Tragedy of the Commons, Turing machine

In terms of profitability or consumer satisfaction, if someone is made better off, someone else will be made worse off. The process by which markets obtain this equilibrium is called market efficiency. The eighteenth-century economist Adam Smith called this self-organizing behavior of markets the “invisible hand”: it arises from the myriad microscopic actions of individual buyers and sellers. Economists are interested in how markets become efficient, and conversely, what makes efficiency fail, as it does in real-world markets. More recently, economists involved in the field of complex systems have tried to explain market behavior in terms similar to those used previously in the descriptions of other complex systems: dynamic hard-to-predict patterns in global behavior, such as patterns of market bubbles and crashes; processing of signals and information, such as the decision-making processes of individual buyers and sellers, and the resulting “information processing” ability of the market as a whole to “calculate” efficient prices; and adaptation and learning, such as individual sellers adjusting their production to adapt to changes in buyers’ needs, and the market as a whole adjusting global prices.

We know that to decrease entropy, work must be done. Who or what is doing the work of creating and maintaining living systems and making them more complex? Some of the world’s religions propose that a deity is responsible, but in the mid-1800s, Charles Darwin proposed that instead, the history of life has resulted from the invisible hand of evolution via natural selection. No idea in science has been more threatening to humans’ conceptions about themselves than Darwin’s theory of evolution; it arguably has been the most controversial idea in the history of science. But it is also one of the best ideas. The philosopher Daniel Dennett strongly affirms this: If I were to give an award for the single best idea anyone has ever had, I’d give it to Darwin, ahead of Newton and Einstein and everyone else.

Malthus’s essay was about human population growth, but Darwin would adapt these ideas to explain the evolution of all living organisms via a continual “struggle for existence.” Darwin also read Adam Smith’s free-market manifesto, The Wealth of Nations (1776). This book exposed him to Smith’s notion of the invisible hand in economics, whereby a collection of individuals acting in their own self-interest produces maximum benefit for the entire community. From his own observations in South America and elsewhere, Darwin was acutely struck by the tremendous variation among living beings and by the apparent adaptation of different species to their environments.


pages: 443 words: 112,800

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

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

And here is where we are running up against a wrong-headed idea of how economic revolutions occur that borders on the delusional. HOW ECONOMIC REVOLUTIONS ARE REALLY MADE Many Americans have long harbored the notion that the great economic advances are always the result of the government getting out of the way and allowing the invisible hand of capitalism free reign in an unfettered market. Europeans, and other societies around the world, are far less convinced of the virtues of wide-open, libertarian capitalism and have historically shown a preference for proactive government involvement in the economic process in order to maintain a more balanced social market model.

Early on, every school-child is introduced to Newton’s three laws, which state that A body at rest remains at rest and a body in motion remains in uniform motion in a straight line unless acted upon by an external force; the acceleration of a body is directly proportional to the applied force and in the direction of the straight line in which the force acts; [and] for every force, there is an equal and opposite force in reaction.1 Anxious to ground their musings in the mathematical certainties of physics, Adam Smith and his contemporaries argued that just as the universe, once set in motion, acts automatically like a well-balanced mechanical clock, so too does the marketplace. While God is the prime mover of the universe, man’s innate competitive self-interest is the prime mover of the marketplace. Just as the laws of gravity govern the universe, an invisible hand rules over the affairs of the marketplace. Picking up on Newton’s observation that “for every action there is an equal and opposite reaction,” Smith and others argued that the self-regulating market operated in the same fashion, with supply and demand continually reacting and readjusting to one another.

Despite the incontrovertible fact that all economic activity creates only temporary value, at the expense of the degradation of the resource base on which it depends, most economists don’t look at the economic process from a thermodynamic perspective. Enlightenment philosophers, by and large, came to believe that the pursuit of economic activity is a linear process that invariably leads to unlimited material progress on Earth, if only the market mechanism is left uninhibited so that the “invisible hand” can regulate supply and demand. French Enlightenment philosopher and revolutionary Marquis de Condorcet captured the euphoria of the new age of progress when he proclaimed, No bounds have been fixed to the improvement of the human faculties . . . the perfectibility of man is absolutely indefinite; . . . the progress of this perfectibility, henceforth above the control of every power that would impede it, has no other limit than the duration of the globe upon which Nature has placed us.16 Giddy over the prospect of creating a material cornucopia on Earth, the classical economists, with the exception of Thomas Malthus, were united in their belief that human industriousness could create a utopian paradise.


pages: 265 words: 15,515

Nomad Citizenship: Free-Market Communism and the Slow-Motion General Strike by Eugene W. Holland

business cycle, capital controls, cognitive dissonance, Colonization of Mars, commons-based peer production, complexity theory, continuation of politics by other means, deskilling, Eben Moglen, Firefox, Frederick Winslow Taylor, Free Software Foundation, full employment, Herbert Marcuse, informal economy, invisible hand, it's over 9,000, Jane Jacobs, Kim Stanley Robinson, Lewis Mumford, means of production, microcredit, military-industrial complex, money: store of value / unit of account / medium of exchange, Naomi Klein, New Urbanism, peak oil, post-Fordism, price mechanism, Richard Stallman, Rochdale Principles, Ronald Coase, scientific management, slashdot, Stuart Kauffman, The Death and Life of Great American Cities, The Wisdom of Crowds, transaction costs, Upton Sinclair, urban renewal, wage slave, working poor, Yochai Benkler

For it turns out that spontaneous order is not the only thing that can emerge unplanned from complex systems: something like spontaneous collective intelligence or distributed decision making can emerge from free mar­ kets as an unplanned consequence of the interactions of multiple agents, in much the same way. Of course, communism must intervene here, in turn, and modify certain features of the so-called free market: after all, a kind of distributed intelligence has been attributed to markets at least since the notorious invisible hand of Adam Smith, with results that bear no resemblance whatsoever to communism.37 Construction of a viable concept of free-market communism will thus depend on spelling out the conditions—both positive and negative—under which truly free markets can be expected to generate an acceptable approximation of the Common Good immanently, from the bottom up.

But the main task for the concept of free-market communism will be to draw careful distinctions between markets and capitalism, for the potential benefits of market organization are almost completely offset by the command and control that private capital exercises over them. The suprahuman decision­ making abilities of the market as a paragon of collective or distributed intelligence have long been touted, from Adam Smith’s invisible hand to Friedrich von Hayek’s notion of catallaxy.1 But insufficient attention is paid by most such champions of the market to the dynamics and effects of capital accumulation, for specifically capitalist markets are not often vehicles for distributed decision making or collective intelligence but rather exercises in collective stupidity, as the effects of advertising, overconsump­ tion, and the looming environmental crisis make patently clear.

Yet despite all this, his analysis of the market as a mechanism for distributed decision making is too valuable to dismiss as mere right-wing cant (regardless of how much of this it may have inspired). Taking up a position made popular centuries earlier by Adam Smith with his image of the providential but invisible hand of the market, von Hayek both updates Smith’s notion for the information age and uses it to attack the centralized planning models typical of State socialism. Given the his­ torical context of emerging capitalist hegemony, Smith’s model had been aimed against traditional collective or corporatist values such as noblesse oblige: instead of respecting traditional obligations to act for the Com­ mon Good of the whole society, Smith’s market agents were to act strictly out of self-interest.


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

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

Don’t try to read the book, unless you enjoy spending five hours with Smith’s unhealthy fascination with how nails are made. The good news is that people have read the book over the last two centuries and distilled from it the essence of Smith’s economic theory. The bad news is that they overdid it and boiled it down to two words: invisible hand. For the ensuing 200-odd years, economic practitioners then reversed the process and expanded those two words into an economic dogma faithful to the original, they think. A lot of nuance was lost in the process. The Wealth of Nations was written at a time when government intervention in the markets didn’t mean pesky regulations here and paperwork there.

Implicit in the Efficient Market Theory is the assumption that regulation is superfluous. But, as I argue in the following chapters, we have reached the E1FPREF 06/16/2010 xx 11:31:42 n Page 20 Preface point where markets are too complex to absorb and process all of the relevant information. The market collapsed in 2008 in spite of all of its efficiency. The problem with invisible hands, then, is that they are invisible. If we simply assume that the markets are invisibly regulating themselves, we abdicate our responsibility to confirm that they are in fact doing so. That is the story of the last decade, and how the Great Recession began. REGULATION VERSUS JUSTICE A recurrent theme in this book, and indeed in the regulatory reform debate, is that the financial crisis has left us with a sense of failed justice as well as failed markets.

The consequence may be good or bad, intended or unintended, but people will follow the path of self-interest paved by incentive compensation. And so the same mechanism that drives behavior in the marketplace also drives behavior in the workplace. But there is a critical difference between the two. Smith’s ‘‘invisible hand’’ is the operation not just of self-interest, but of competing self-interests that act in the long run to balance each other out and move prices toward equilibrium. Office politics aside, interests within an organization are not so efficiently balanced. For every person incentivized to increase profits, there is often no countervailing person with an interest to restrain activities.


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

Affordable Care Act / Obamacare, Airbus A320, airport security, augmented reality, barriers to entry, Bear Stearns, behavioural economics, Bernie Madoff, Black Swan, Broken windows theory, Captain Sullenberger Hudson, carbon tax, creative destruction, Daniel Kahneman / Amos Tversky, deliberate practice, feminist movement, food miles, George Akerlof, global pandemic, information asymmetry, invisible hand, loss aversion, mental accounting, Netflix Prize, obamacare, oil shale / tar sands, Pareto efficiency, peak oil, pre–internet, price anchoring, price discrimination, principal–agent problem, profit maximization, Richard Thaler, Sam Peltzman, security theater, sugar pill, Ted Kaczynski, the built environment, The Chicago School, the High Line, Thorstein Veblen, transaction costs, Tyler Cowen, US Airways Flight 1549

Peter Leeson is an economist at George Mason University and author of The Invisible Hook: The Hidden Economics of Pirates. Leeson agreed to answer some important piratical questions for us: Q. The Invisible Hook is more than just a clever title. How is it different from Adam Smith’s invisible hand? A. In Adam Smith, the idea is that each individual pursuing his own self-interest is led, as if by an invisible hand, to promote the interest of society. The idea of the invisible hook is that pirates, though they’re criminals, are still driven by their self-interest. So they were driven to build systems of government and social structures that allowed them to better pursue their criminal ends.

., 96–99 rigged, 136 Twitter, 94–96 Cook, Phil, 246 Cope, Myron, 215, 216 corporate sponsorships, 81 cover-ups, 121, 157 Cowen, Tyler, 329, 331–33 Cowher, Bill, 218 Craig, Larry, 45 crime: and abortion, 288 bank robberies, 223–26 “broken windows” theory of, 163 burglary, 242 child abduction, 133 in China, 226–28 gun deaths, 245–51 and gun laws, 243–45 intruders, 241–43 priming criminals, 228–29 prison sentences, 128, 224, 242, 245, 248, 260 street gangs, 229–36, 246–47, 248–49 and The Wire, 229–33 volatile rates of, 244 Cuban, Mark, 329, 333 cyclists, Tour de France, 151–53 Cyrus, Miley, 306 Daily Show, The, 273–74 Dal Bó, Ernesto, 33–34 Daly, John, 277 dangerous activities: horseback riding, 101–3 obesity as result of, 116–19 walking drunk, 101 Daschle, Tom, 158, 160 Dawkins, Richard, 286 decision making, 120–21, 208–9 democracy, alternative to, 29–31 Dennett, Daniel, 286 dental wisdom, 275–76 diapers, cloth vs. disposable, 167 diminishing marginal returns, 203 disasters, and charitable giving, 324–28 discrimination, statistical, 321–22 divorce, statistics on, 345 Dohmen, Thomas, 212 Doleac, Jennifer, 320–21 Donohue, John, 288 doomsday prophets, 109–10 doping, in Tour de France, 151–53 driving: and the environment, 166–67 incivility in, 161–64 drugs, prescription, prices of, 51–54 Duke, Annie, 188 Duncan, Arne, 103–4 Duskiewicz, Bernie, 348–49 ecological invalidity, 335 economics: behavioral, 120, 122, 206, 308–9 invisible hand in, 315 morality vs., 288 visible hand in, 319–22 writing about, 287–88 Edlin, Aaron, 88 Ehrenreich, Barbara, 329, 333–34 Ehrlich, Paul, 109, 114 Eikenberry (funeral director), 46 Endangered Species Act, 165–66 Engelberger, Perfect, 40 environment: cloth vs. disposable diapers, 167 and conspicuous consumption, 184–85 and driving, 166–67 eating meat, 179–84 Endangered Species Act, 165–66 global warming, 87–89, 179–84 greenhouse gas (GHG) emissions, 171–72, 177, 180 locavores, 168–72 and packaging, 175–78 paper vs. plastic bags, 167 petroleum extraction, 109–16 Prius “green halo,” 185 and profitability, 172–74 saving the rain forest, 174–75 veganism, 179–84 Ericsson, Anders, 199, 201 escort (high-end call girl), 261–67 evaluation function (EV), 197 experts, ten thousand hours of practice, 199, 201–2 Fanning, Dakota, 305 fear of strangers, 130–33 Feinstein, Dianne, 53 Feldman, Paul, 69 feminist movement, 346–47 Ferraz, Claudio, 33 films, animated, 305–7 Finan, Frederico, 33 first-grade data hound, 219–20 fishing, 348–49 flight attendants, 19–20 food: chicken wings, 75–77 decayed, 177 deliciousness of, 170 kiwifruits, 77–80 locavores, 168–72 nutritional value of, 170 and obesity, 116–18 packaging of, 175–78 poor service, 272–73 rancid chicken, 307–11 shrimp, 341–44 transportation inefficiencies of, 170–72 wasting, 177–78 football: Immaculate Reception, 216 loss aversion, 206–9 Pittsburgh Steelers, 212–19 rookie symposium, 239–41 Fox, Kevin, 253 Frakes, Michael, 117 Frankfurt, Harry, 276 Freakonomics (Levitt & Dubner), 1–2, 37, 40, 54, 69, 101, 105, 135, 160, 223, 253–4, 261, 274, 277, 280, 297–98, 305, 322, 351 Freakonomics.com, 1–4, 8, 233 Freakonomics radio, 268–69 Frederick, Shane, 341–43 Freed, Pam, 342 Friedman, Milton, 23 Frost, Robert, 218 Fryar, Irving, 239–40 Fryer, Roland, 228, 288, 328–29, 337, 339 Fuller, Thomas, 194–95 Gacy, John Wayne Jr., 39 Gagné, Éric, 149 gambling: on athletes, 73 backgammon, 195–98 blackjack, 189–91 on horse racing, 191, 220–22 how not to cheat, 153–55 Internet poker, 127–30, 157 on newspaper circulation, 233 one card away from final table, 192–95 Rochambeau (Rock, Paper, Scissors), 188–89 on teams, 125–26 unbreakable record, 192 World Series of Poker, 187–88, 192–95 GAME (Gang Awareness Through Mentoring and Education), 248–49 gas, moratorium on, 311–14 gas prices, 86–90 Gates, Bill, 16 Geiger, Bernice, 224 Geithner, Tim, 158 gender identity, 228 Gladstone, Bernard, 258, 259 global warming, 88–89, 179–84 Gly-Oxide, 275–76 God, in book titles, 285–87 Goeree, Jacob, 31 Goldstein, Dan, 335 golf, 198–206 Goodall, Chris, 167 Good to Great (Collins), 283–84, 285 Goolsbee, Austan, 160 Gordon, Phil, 187–89, 192, 193 Goss, Pat, 200–201 government: and gambling income, 129 paying politicians, 32–36 voting mechanisms, 29–31 Greatest Good, 28, 300–301 Greene, Mean Joe, 216 greenhouse gas (GHG) emissions, 171–72, 177 Grossman, Michael, 116 Gruber, Jonathan, 117 Grzelak, Mandi, 268–69 guns: anonymous tips about, 247 athletes carrying concealed weapons, 240–41 concealed weapons laws, 242 D.C. ban on, 243–45 deaths from, 245–51 illegal use of, 245 ownership of, 245 shooting intruders with, 241–43 Hagen, Ryan, 314–19 happiness, 122–23, 344–47 Harold’s Chicken Shack, 75–77 Harris, Franco, 216 Hatcher, Teri, 305 hate mail, cost of, 49–51 health care: British National Health Service, 26–29 decisions in, 122 Hemenway, David, 249–50 Henderson, Kaya, 160 herd mentality, 143–46 Hitchens, Christopher, 286 hoaxes, 282–83 Holmes, Santonio, 214–16 home, building your own, 170 home field advantage, 209–12 homelessness, 330–31 horseback riding, 101–3 horse racing, 220–22 housing prices, 67–69 Hurricane Katrina, 42–43, 325–28 Hussein, Saddam, 58 identity, concept of, 162–63 Immaculate Reception, 216 impure altruism, 328 incentives, 17, 32–36, 65, 95–96, 110, 113, 122, 136, 166, 337–40 inefficiencies, transportation, 170–72 INS (Immigration and Naturalization Service), Form N-400, 237–38 In Search of Excellence (Peters and Waterman), 284 Internet poker, 127–30, 157 iPad, 124–25 Irfan, Atif, 130–32 irrational decisions, 120–21 IRS, 11–14, 159–60, 257 Jackson, Vincent, 215 Jacob, Brian, 160 Jagger, Mick, 74 Jarden Zinc, 63 J.F.K. airport, 21–22 Jines, Linda Levitt: brother’s eulogy for, 297–301 father’s interventions, 289–97 and Freakonomics, 277, 297–98 Jingjing Zhang, 31 Johnson, Larry, 207 Johnston, David Cay, 11–12 Kaczynski, Ted (Unabomber), 287 Kahneman, Daniel, 3, 119–24, 206 Katrina (popular name), 42–43 Kennedy, Bobby, 279 Kentucky Derby, 220–22 Keyes, Alan, 279 KFC, 272–73 Killefer, Nancy, 158 kiwifruits, 77–80 Kormendy, Amy, 169 Kranton, Rachel, 162 Kulkarni, Ganesh, 140–41 Laffer curve, 72 LaGuardia Airport, 21–23 LaHood, Ray, 21, 103–6 Lake George, boat accident on, 118–19 Lancaster, Barbara, 219 Landsburg, Steven, 259 Lane, Mary MacPherson, 173 Las Vegas: blackjack, 189–91 poker, 127–30, 153–58, 187–89, 192–95 risk aversion in, 126–27 Lee, Jennifer 8., 41 Lee Hsien Loong, 32 Leeson, Peter, 314–19 Levitt, Michael, “When a Daughter Dies,” 289–97 libraries, public, 14–16 lies of reputation, 137–40 Limberhand (masturbator), 45–46 List, John, 125, 165, 228, 327–28, 338 lobbyists, 62–63 locavores, 168–72 loss aversion, 206–9 Loveman, Gary, 127 ludicity (ludic fallacy), 335 Ludwig, Jens, 246–48 Maass, Peter, 109, 114 Madoff, Bernie, 133 Malthus, Rev.


Affluence Without Abundance: The Disappearing World of the Bushmen by James Suzman

access to a mobile phone, agricultural Revolution, Anthropocene, back-to-the-land, clean water, discovery of the americas, equal pay for equal work, European colonialism, full employment, invention of agriculture, invisible hand, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, means of production, Occupy movement, open borders, out of africa, post-work, quantitative easing, rewilding, The Chicago School, The Future of Employment, The Wealth of Nations by Adam Smith, trade route, trickle-down economics, unemployed young men, We are the 99%

This was because, among foraging Ju/’hoansi, self-interest was always policed by its shadow, jealousy, and jealousy in turn ensured that everyone got their fair share. Jealousy was the “invisible hand” of the Ju/’hoan social economy. Yet it exerted its influence very differently from the “invisible hand” famously imagined by Adam Smith in The Wealth of Nations. For Smith, man “intends only his own gain,” but in doing so he is guided by an invisible hand “to promote an end which was no part of his intention.” And this, according to Smith, is to promote the interests of society more effectively than man could, even if he had intended to.


Emotional Labor: The Invisible Work Shaping Our Lives and How to Claim Our Power by Rose Hackman

Affordable Care Act / Obamacare, basic income, behavioural economics, Black Lives Matter, cognitive load, collective bargaining, coronavirus, COVID-19, dark triade / dark tetrad, David Graeber, demand response, do what you love, Donald Trump, Downton Abbey, emotional labour, equal pay for equal work, European colonialism, Ferguson, Missouri, financial independence, game design, glass ceiling, immigration reform, invisible hand, job automation, lockdown, mass incarceration, medical bankruptcy, meta-analysis, Nelson Mandela, performance metric, Sheryl Sandberg, Silicon Valley, Snapchat, social distancing, TED Talk, The Great Resignation, TikTok, transatlantic slave trade, universal basic income, W. E. B. Du Bois, wages for housework, women in the workforce, working poor, zero-sum game

., Because She’s Powerful: The Political Isolation and Resistance of Women with Incarcerated Loved Ones (Los Angeles and Oakland, Calif.: Essie Justice Group, 2018), 95. 16.  Jamil Zaki, The War for Kindness: Building Empathy in a Fractured World (New York: Crown, 2019). 17.  F. Eugene Heath, “Invisible Hand,” Britannica, accessed March 27, 2022, https://www.britannica.com/topic/invisible-hand. 18.  Juliana Menasce Horowitz, Ruth Igielnik, and Rakesh Kochhar, 1. Trends in Income and Wealth Inequality, Pew Research Center, January 9, 2020, https://www.pewresearch.org/social-trends/2020/01/09/trends-in-income-and-wealth-inequality/. 19.  

But there are theoretical problems too. As a society, misconceptions based in conjectures have mistakenly become absorbed as fact, one of the biggest and most damaging of which is the idea, driven by mainstream economics, that people are naturally, inherently selfish, and that selfish people get ahead. The “invisible hand” theory in economics posits that left to their own devices, and fueled by the self-interested, competitive nature of man, financial markets will regulate themselves and create great prosperity.17 Such a philosophy justified, over the last forty years, government divestment from public goods and social safety nets, and has led to ever increasing income and wealth inequality.18 The problem?


pages: 425 words: 122,223

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

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

Though this hypothesis was developed by others during the 1960s, Samuelson gave it its embryonic prologue in his 1957 paper on the theory of speculation. He mentioned the idea again, calling it “Balanced Ignorance,” upon becoming a member of the American Philosophical Society. “My pearls were well received,” he recalls.23 The views of the classical economists underlie the rationale for the invisible hand that guides the free-enterprise system of competitive markets and private ownership of the means of production, propelled by workers, employers, and customers free to seek their own self-interest. In theory, at least, this system is more likely to arrive at optimal outcomes and bring greater satisfaction to a larger number of people than any other economic system.

In no other market, regardless of product, structure, or institutional arrangement, is competition as free, as vigorous, as effective as here. In no other market do prices convey so much information about what people are buying and selling. Harry Markowitz himself, in a recent address to his students, reminded them that. “Granted that the invisible hand is clumsy, heartless, and unfair, it is ever so much more deft and impartial than a central planning committee.”4 This is what fascinated the instigators of the revolution in finance. It was not the fun and games of investing that caught their fancy. It was the purity of the free market dynamics, the best that the study of economics can offer.

See also Portfolio insurance Insurance companies, investments of Intelligent Investor, The (Graham) Interactive Data Corporation (IDC) Interest/interest rates corporate debt junk bonds and payments risk-free stock indexes and stock prices and stock valuations swaps International Flavors and Fragrances Intertemporal capital asset pricing model Institute for Quantitative Analysis in Finance Investment Company Institute (ICI) Investors active vs. passive corporate/institutional equity individual response of to risk Invisible hand market theory “Is American Business Worth More Dead Than Alive?” (Graham) Journal of the American Statistical Association Journal of Business Journal of Finance Journal of the History of Ideas Journal of Political Economy (JPE) Journal of Portfolio Management, The Journal of the Royal Statistical Society Kidder Peabody Law of the Conservation of Investment Value Law of One Price: see Arbitrage Leland O’Brien Rubinstein Associates, Inc.


pages: 602 words: 120,848

Winner-Take-All Politics: How Washington Made the Rich Richer-And Turned Its Back on the Middle Class by Paul Pierson, Jacob S. Hacker

accounting loophole / creative accounting, active measures, affirmative action, air traffic controllers' union, Alan Greenspan, asset allocation, barriers to entry, Bear Stearns, Bonfire of the Vanities, business climate, business cycle, carried interest, Cass Sunstein, clean water, collective bargaining, corporate governance, Credit Default Swap, David Brooks, desegregation, employer provided health coverage, financial deregulation, financial innovation, financial intermediation, fixed income, full employment, Glass-Steagall Act, Home mortgage interest deduction, Howard Zinn, income inequality, invisible hand, John Bogle, knowledge economy, laissez-faire capitalism, Martin Wolf, medical bankruptcy, moral hazard, Nate Silver, new economy, night-watchman state, offshore financial centre, oil shock, Paul Volcker talking about ATMs, Powell Memorandum, Ralph Nader, Ronald Reagan, Savings and loan crisis, shareholder value, Silicon Valley, Tax Reform Act of 1986, The Wealth of Nations by Adam Smith, three-martini lunch, too big to fail, trickle-down economics, union organizing, very high income, War on Poverty, winner-take-all economy, women in the workforce

During his tenure as CEO, Fuld made $490 million (before taxes) cashing in stock options and stock he received as compensation.”68 Friends in High Places The myth of America’s winner-take-all economy is that government does not have much to do with it. Skyrocketing gains at the top are simply the impersonal beneficence of Adam Smith’s “invisible hand,” the natural outcome of free-market forces. Listen to Sanford Weill, the former chairman of Citigroup: “People can look at the last twenty-five years and say this is an incredibly unique period of time. We didn’t rely on somebody else to build what we built.”69 Weill may not have relied on “somebody else” during this “unique period.”

The real story, however, is what our national political elites have done for those at the top, both through their actions and through their deliberate failures to act. We have our suspect. The winner-take-all economy was made, in substantial part, in Washington. Yet identifying the main suspect only makes the core mystery more perplexing: How could this happen? No one expects the invisible hand of the market to press for equality. Yet there are good reasons for thinking that the visible hand of government will. Indeed, as we shall see in the next chapter, a long line of thinkers has argued that popular representation through democratic government creates powerful pressures for greater equality, as less-advantaged majorities use their political power to offset the economic power of those at the top.

Shep Melnick, “From Tax-and-Spend to Mandate-and-Sue: Liberalism After the Great Society,” in The Great Society and the High Tide of Liberalism, Sidney Milkis and Jerome Mileur, eds. (Amherst, MA: University of Massachusetts Press, 2005). 3 Lewis Powell, “Confidential Memorandum: Attack on the Free Enterprise System,” August 23, 1971, quoted in Kim Phelps-Fein, Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan (New York: Norton, 2009), 158, 160. 4 Thomas Byrne Edsall, The New Politics of Inequality (New York: Norton, 1984), 114. 5 Vogel, Fluctuating Fortunes, ch. 8. 6 Calculated from http://www.bea.gov/national/xls/gdplev.xls. 7 Ibid., 198. 8 Vogel, Fluctuating Fortunes, 198; John Judis, The Paradox of American Democracy: Elites, Special Interests, and the Betrayal of Public Trust (Pantheon: New York, 2000), 121. 9 Quoted in Sidney Blumenthal, The Rise of the Counter-Establishment: From Conservative Ideology to Political Power (New York: Times Books, 1986), 80. 10 Quoted in Leonard Silk and David Vogel, Ethics and Profits: The Crisis of Confidence in American Business (New York: Simon & Schuster, 1976), 65. 11 Blumenthal, Rise of the Counter-Establishment, 78. 12 Taylor E.


pages: 443 words: 125,510

The Great Delusion: Liberal Dreams and International Realities by John J. Mearsheimer

"World Economic Forum" Davos, affirmative action, Affordable Care Act / Obamacare, Ayatollah Khomeini, Cass Sunstein, Chelsea Manning, Clive Stafford Smith, Donald Trump, drone strike, Edward Snowden, failed state, Francis Fukuyama: the end of history, full employment, global village, Great Leap Forward, Gunnar Myrdal, invisible hand, laissez-faire capitalism, liberal world order, military-industrial complex, Monroe Doctrine, mutually assured destruction, Peace of Westphalia, Richard Thaler, Ronald Reagan, South China Sea, Steven Pinker, Suez crisis 1956, Ted Kaczynski, Thomas L Friedman, transaction costs

Their ultimate aim is to create a world where economics overshadows politics.19 This line of thinking, clearly reflected in the writings of John Locke, was pushed forward in its most comprehensive form by Adam Smith. He argues for doing as much as possible to keep the government from interfering in the economy so that individuals can pursue their own self-interest, which he claims will ultimately work to the benefit of the entire society. The “invisible hand,” he maintains, will guide the market to create increasing abundance, whereas the state, if it tried to guide the economy, would be more of a hindrance than a help. It is no exaggeration to say that capitalism and liberalism go hand in hand. Liberals understand that there will always be serious political disputes between individuals and between factions.

Given these and other hugely consequential developments, the state had no choice but to get seriously involved in managing various aspects of society, including the economy.66 Given the sheer size of the relevant enterprises, the speed at which technology changes, and the global nature of industrial capitalism, the necessary levels of planning and regulating were far beyond the capacities of local governments. Much to the chagrin of modus vivendi liberals, relying on the invisible hand to work its magic in the economy is not a feasible strategy. Liberal countries might be wedded to capitalism and a market economy, but that does not prevent the interventionist state from closely regulating not only its own economy but the international economy as well.67 These tasks involve making and implementing policies that unavoidably affect individual rights.

As John Stuart Mill notes, utilitarianism is “grounded on the permanent interests of man as a progressive being.”83 The state’s principal role in utilitarianism is to manage the bargaining process. The government must be concerned with important matters like determining how wealth and resources are distributed and which rights should be privileged over others. This is not a laissez-faire state that depends on the invisible hand to produce favorable outcomes: the hand here is visible, interventionist, and actively engaged in social engineering. Utilitarians, however, do not place much emphasis on the state acting as a night watchman, mainly because they do not believe there are profound differences about what constitutes the good life.


pages: 469 words: 124,784

Moon Shot: The Inside Story of America's Apollo Moon Landings by Jay Barbree, Howard Benedict, Alan Shepard, Deke Slayton, Neil Armstrong

Apollo 11, Apollo 13, Charles Lindbergh, clockwatching, Gene Kranz, gravity well, invisible hand, Kickstarter, low earth orbit, MITM: man-in-the-middle, Neil Armstrong, operation paperclip, orbital mechanics / astrodynamics, place-making

In his mind he saw the 105’s speed brakes. They’re right there, he told himself. Right there on this plane’s ass. Right where they’ll— He hit the control for the speed brakes. Four huge metal panels splashed outward in the form of a beautiful metal flower that slowed the plane. It felt as if a giant invisible hand had slapped the airplane. The sudden drag threw Deke against his seat and banged the aircraft’s nose toward the desert floor. The violent oscillations eased and then stopped. The world was no longer racing before his eyes. He smiled. He was back in control. Well, almost. He was still spinning, but the nose was down and the controls were responding.

But within Freedom Seven’s contained atmosphere they exerted pressure, and that pressure came to him as thuds, dimmed bangs carrying wonderful satisfaction. His ship was obeying its autopilot-commanded flight plan, turning on schedule, rotating into a position that would assure the blunt end of the capsule facing in the direction of reentry. Reality reached in through the capsule’s titanium shell, an invisible hand to tap him on the shoulder. Shepard grinned with the realization that this sense of comfort and freedom, the humming sounds of the spacecraft, had blanked out the fact that he was zinging along high above the planet’s atmosphere. But there was nothing by which to judge speed. You need relative comparison for that—a tree, a building, passing spacecraft.

“You people have just been missed by the rocket that carried the first American astronaut into space.” “Rocket?” “Affirmative.” “Astronaut?” Sturniola grinned. “That’s right. This is Grand Bahama Island, and astronaut Alan Shepard will be arriving here shortly.” “Okay this is Freedom Seven . . . my g-build-up is three . . . six . . . ” His voice faltered as a great invisible hand squeezed him with brutal force. “Nine . . . ” he grunted, using the proven system of body tightening and muscle rigidity to force the words through a tortured throat. Words still spoken under control. Grunt talk that worked. “Rog.” Deke didn’t want to miss a word from the plunging spacecraft.


pages: 386 words: 122,595

Naked Economics: Undressing the Dismal Science (Fully Revised and Updated) by Charles Wheelan

affirmative action, Alan Greenspan, Albert Einstein, Andrei Shleifer, barriers to entry, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, Boeing 747, Bretton Woods, business cycle, buy and hold, capital controls, carbon tax, Cass Sunstein, central bank independence, classic study, clean water, collapse of Lehman Brothers, congestion charging, creative destruction, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, currency risk, Daniel Kahneman / Amos Tversky, David Brooks, demographic transition, diversified portfolio, Doha Development Round, Exxon Valdez, financial innovation, fixed income, floating exchange rates, George Akerlof, Gini coefficient, Gordon Gekko, Great Leap Forward, greed is good, happiness index / gross national happiness, Hernando de Soto, income inequality, index fund, interest rate swap, invisible hand, job automation, John Markoff, Joseph Schumpeter, junk bonds, Kenneth Rogoff, libertarian paternalism, low interest rates, low skilled workers, Malacca Straits, managed futures, market bubble, microcredit, money market fund, money: store of value / unit of account / medium of exchange, Network effects, new economy, open economy, presumed consent, price discrimination, price stability, principal–agent problem, profit maximization, profit motive, purchasing power parity, race to the bottom, RAND corporation, random walk, rent control, Richard Thaler, rising living standards, Robert Gordon, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Sam Peltzman, school vouchers, seminal paper, Silicon Valley, Silicon Valley startup, South China Sea, Steve Jobs, tech worker, The Market for Lemons, the rule of 72, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, transaction costs, transcontinental railway, trickle-down economics, urban sprawl, Washington Consensus, Yogi Berra, young professional, zero-sum game

It was a money-losing proposition in the short run; the East German currency was still worthless—scraps of paper to the rest of the world. But it was a brilliant business decision made faster than any government body could ever hope to act. By 1995, per capita consumption of Coca-Cola in the former East Germany had risen to the level in West Germany, which was already a strong market. In a sense, it was Adam Smith’s invisible hand passing Coca-Cola through the Berlin Wall. Coke representatives weren’t undertaking any great humanitarian gesture as they passed beverages to the newly liberated East Germans. Nor were they making a bold statement about the future of communism. They were looking after business—expanding their global market, boosting profits, and making shareholders happy.

Fisheries managed with transferable quotas were half as likely to collapse as fisheries that use traditional methods.14 Two other points regarding incentives are worth noting. First, a market economy inspires hard work and progress not just because it rewards winners, but because it crushes losers. The 1990s were a great time to be involved in the Internet. They were bad years to be in the electric typewriter business. Implicit in Adam Smith’s invisible hand is the idea of “creative destruction,” a term coined by the Austrian economist Joseph Schumpeter. Markets do not suffer fools gladly. Take Wal-Mart, a remarkably efficient retailer that often leaves carnage in its wake. Americans flock to Wal-Mart because the store offers an amazing range of products cheaper than they can be purchased anywhere else.

Anybody who has suffered a 12-hour flight with a bawling baby in the row immediately ahead or a bored youngster viciously kicking their seat from behind, will grasp this as quickly as they would love to grasp the youngster’s neck. Here is a clear case of market failure: parents do not bear the full costs (indeed young babies travel free), so they are too ready to take their noisy brats with them. Where is the invisible hand when it is needed to administer a good smack?”2 Mobile phone use is under stricter scrutiny, both in public places, such as restaurants and commuter trains, where the behavior is fabulously annoying, but also in vehicles, where it has been linked to a higher rate of accidents. Texting is the second-most dangerous thing you can do while driving a car, next to driving drunk.


pages: 441 words: 124,798

Dopesick: Dealers, Doctors, and the Drug Company That Addicted America by Beth Macy

Affordable Care Act / Obamacare, Apollo 11, centre right, crack epidemic, David Sedaris, deindustrialization, Donald Trump, drug harm reduction, fulfillment center, invisible hand, labor-force participation, mandatory minimum, mass incarceration, McMansion, medical residency, meta-analysis, obamacare, offshore financial centre, opioid epidemic / opioid crisis, pill mill, RAND corporation, rent-seeking, single-payer health, urban renewal, War on Poverty, working poor

American companies would theoretically be able to export products to China’s growing consumer class, an argument Wall Street championed when stock prices climbed with every new plant-closing announcement. Corporate shareholders and CEOs ate up Clinton’s prediction, a cheery best-case version of Adam Smith’s eighteenth-century “invisible hand.” As the economists described it, Chinese peasants would better their lot by making chairs in factories, while dislocated American workers would retrain for more fulfilling, advanced jobs. But with ill-designed training for displaced Americans based on a lumbering federal program created in the 1960s, the second part of that equation very rarely came to pass.

The global economy created winners and losers, Bassett Furniture CEO Rob Spilman told me, explaining the dismissal of some eight thousand furniture workers from his payroll. “It was that or perish,” he said. “At the end of the day, we are not a social experiment.” In rural counties decimated by globalization, automation, and the decline of coal, the invisible hand manifested in soaring crime, food insecurity, and disability claims. In Martinsville and surrounding Henry County, unemployment rates rose to above 20 percent, food stamp claims more than tripled, and disability rates went up 60.4 percent. What those numbers looked like on the ground, as I began reporting on the recession in 2008 for the Roanoke Times and later for my first book, Factory Man (published in 2014), could be distilled in two images I observed but did not fully, at the time, comprehend: The first was of adults—black and white, old and young—arriving at area food pantries two hours before the doors opened, the older among them clutching canes or leaning on walkers.

We in Roanoke had heard opioid abuse was seeping into distressed factory towns like those in Henry County, but very rarely did our newspaper report on it. We were safe in our ignorance, or so we thought—content to stereotype drug addiction as the affliction of jobless hillbillies, a small group of inner-city blacks, and a few misguided suburban kids. But another invisible hand was upon us. Heinrich Dreser’s drug moved seamlessly across city and county lines, with zero regard for politics, race, neighborhood, or class. * I didn’t understand the connection between rural poverty, disability, and opioid addiction until I learned more about the accidental Bassett Furniture arsonist.


pages: 453 words: 122,586

Samuelson Friedman: The Battle Over the Free Market by Nicholas Wapshott

2021 United States Capitol attack, Alan Greenspan, bank run, basic income, battle of ideas, Bear Stearns, Berlin Wall, Bretton Woods, business cycle, California gold rush, collective bargaining, coronavirus, corporate governance, COVID-19, creative destruction, David Ricardo: comparative advantage, Donald Trump, double helix, en.wikipedia.org, fiat currency, financial engineering, fixed income, floating exchange rates, full employment, God and Mammon, greed is good, Gunnar Myrdal, income inequality, indoor plumbing, invisible hand, John von Neumann, Joseph Schumpeter, Kenneth Arrow, laissez-faire capitalism, light touch regulation, liquidity trap, lockdown, low interest rates, Machinery of Freedom by David Friedman, market bubble, market clearing, mass immigration, military-industrial complex, Money creation, money market fund, Mont Pelerin Society, moral hazard, new economy, Nixon shock, Nixon triggered the end of the Bretton Woods system, paradox of thrift, Paul Samuelson, Philip Mirowski, Phillips curve, price mechanism, price stability, public intellectual, pushing on a string, quantitative easing, rent control, road to serfdom, Robert Bork, Robert Solow, Ronald Coase, Ronald Reagan, school vouchers, seminal paper, Simon Kuznets, social distancing, Tax Reform Act of 1986, The Chicago School, The Great Moderation, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, too big to fail, trickle-down economics, universal basic income, upwardly mobile, urban renewal, War on Poverty, We are all Keynesians now, Works Progress Administration, zero-sum game

Friedman contended that, just as Adam Smith81 had suggested in The Wealth of Nations, self-interest was the constant factor that ensured that society worked well for the maximum number. “As Adam Smith wrote over 200 years ago,” Friedman wrote, “in the economic market, people who intend to serve only their own private interests are led by an invisible hand to serve public interests where there was no part of their intention to promote.”82 But for Samuelson, Smith was a creature of his place and age—eighteenth-century Scotland during the Enlightenment. By the mid-twentieth century, Smith’s notions about the role of self-interest and the application of the marketplace no longer applied.

Pragmatically, Smith would, if he were alive today, favor the [antimonopoly] Sherman Act84 and stronger antitrust legislation, or even public utility regulation generally.”85 In a gentle reprimand to Friedman and other conservatives who liked to invoke Smith, Samuelson continued, “One hundred per cent individualists skip these pragmatic lapses into good sense and concentrate on the purple passage in Adam Smith where he discerns an Invisible Hand that leads each selfish individual to contribute to the best public good.”86 While Friedman, citing Smith, argued that everything in an economy was driven by—or should be driven by—individual self-interest, Samuelson suggested that for a nation to be truly civilized it would need more to guide it than the unhindered free market.

Keynes makes a strong case in A Tract for the need to manage economies to iron out the vicissitudes of the business cycle, with its ebb and flow of money and concomitant rise and fall in prices. The notion that an economy could and should be managed was—and to some conservative economists remains—a controversial notion. Managing an economy elevated the importance and power of public officials and economists, pitting their competence and judgment against the invisible hands of market forces. Friedman agreed with Keynes that an economy could be managed by government, and it was his belief that prices not only could but should be managed—by the central bank controlling the amount of new money entering the system—that caused many free marketeers, including Hayek, to sputter.


pages: 710 words: 164,527

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

activist fund / activist shareholder / activist investor, Alan Greenspan, Albert Einstein, Asian financial crisis, banks create money, Bretton Woods, British Empire, business cycle, capital controls, Charles Lindbergh, currency manipulation / currency intervention, currency peg, deindustrialization, European colonialism, facts on the ground, fiat currency, financial independence, floating exchange rates, full employment, global reserve currency, imperial preference, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Rogoff, lateral thinking, low interest rates, margin call, means of production, Michael Milken, money: store of value / unit of account / medium of exchange, Monroe Doctrine, New Journalism, Nixon triggered the end of the Bretton Woods system, open economy, Paul Samuelson, Potemkin village, price mechanism, price stability, psychological pricing, public intellectual, reserve currency, road to serfdom, seigniorage, South China Sea, special drawing rights, Suez canal 1869, Suez crisis 1956, The Great Moderation, the market place, trade liberalization, Works Progress Administration

But we were not handled in a way which made apprehension easy.”26 A strange strain of optimism seemed to suffuse Keynes’s economic thinking in late March and early April. Writings and conversations now pointed toward “the invisible hand” as a possible way out of Britain’s huge financial problems27—an “invisible hand which I had tried to eject from economic thinking twenty years ago,” Keynes noted. This was, observed former Bank of England economist Henry Clay in a letter to now-retired Montagu Norman, “an interesting confession for our arch-planner.” “I think he relied on intellect, which perhaps means that he ignored the ‘invisible hand,’” Norman responded, “and I guess he was led astray by Harry White. But surely it is easy to arrange a loan if you ignore its repayment, and is there any hope of that, unless there is to be such an inflation across the Atlantic as will affect their claims and provide an easy way out?”

British visions of, 301–5; architecture of, 301; Articles of Agreement and, 216, 290, 339; Article VIII and, 332; bancor alternative and, 335; beginning operations of, 316; Bernstein and, 356; capital outflows and, 218; Coe and, 358; day-to-day organization of, 303; delegation issues over, 226–28, 288; exchange parity and, 331; financial assistance requests and, 316; fund articles amendments and, 316–17; resistance to, 342; Schweitzer and, 337–39, 366; Special Drawing Right (SDR) and, 335–36, 344–45, 404n18; symbolism of location of, 301–2; Taft and, 367; “Text of Address by Truman Explaining to Nation His Actions in the White Case” and, 352; Triffin model and, 335; U.S. hegemony and, 334; Washington base for, 300; White and, 7, 127–28, 214, 216, 297–99, 315–17, 324, 331–32, 348, 357, 368; Witteveen and, 339, 369 invasion currency, 155, 388n1 invisible hand, 305 Iron Battalion, 19 Iron Curtain, 306–7 isolationism: Kennedy and, 105–6; Neutrality Act and, 106; “Quarantine the Aggressors” speech and, 47; Roosevelt and, 47; United States and, 40, 47, 99, 105–6, 121, 176, 184, 206, 255, 259–60, 306 Italy, 43, 47, 49, 70, 101, 172 Jamaica, 102 Japan, 43; Atlantic Charter and, 127; Battle of the Coral Sea and, 129; Hiroshima bombing and, 276; Hull and, 54; Kurusu and, 54–55; modus vivendi and, 54–55; Morgenthau and, 58–59; Nagasaki bombing and, 276; Nomura and, 54–55; occupation of China and, 47–48, 55–58, 377n103; Operation Snow and, 56–58; Pearl Harbor and, 53–58, 126; postwar policy and, 266; Saipan Island and, 216; Stalin and, 56; Ten-Point Note and, 55; ultimatum to, 55–56; yen and, 337–38, 377n103 Jews, 3, 17–18, 20, 27, 79, 112, 174, 201–2, 288, 306–8, 356, 359 Jinnah, Mohammad Ali, 308 Johnson Act, 106 Joint Statement by Experts of United and Associated Nations on the Establishment of an International Stabilization Fund, 175–85, 187, 191 Joint Statement of Principles, 198, 210, 215, 248 J.

Churchill and, 77; The Economic Consequences of the Peace and, 71, 73, 77, 369; Economic Journal and, 64–65; education of, 61–62; Egyptian borrowing and, 305–6; exchange rate and, 73, 76, 139–41, 143, 150, 162, 166–67, 171, 173, 193–94, 196, 217, 289, 331; financial speculation of, 79, 88; as First Baron Tilton, 142, 204; first meeting with White and, 112; foreign policy and, 66–68; free trade and, 65–66, 74, 82–83, 141, 160, 278; General Theory and, 3, 5, 46, 73, 80, 84, 88–95, 365–66, 381n95; gold standard and, 64–65, 75–76, 131, 133, 137–47, 252; Grand Design negotiation and, 289; Halifax and, 4; Harrod and, 63, 146, 152, 168, 171, 173, 361; Hayek and, 85–86; health of, 61–62, 93, 95, 218–19, 278–80, 304; Henderson and, 81–83, 93, 141, 177–78, 361, 380n63; homosexuality of, 63; Hopkins and, 113–14; hotel room number of, 372n12; House of Lords speech of, 169; How to Pay for the War and, 95–96; IMF issues and, 301–4; inaugural encounter with Morgenthau, 112; Indian Currency and Finance and, 64; intelligence of, 61–64; Inter-Ally Council and, 69; International Clearing Bank (ICB) and, 143–53; internationalism and, 140–41; “in the long run we are all dead” aphorism of, 62; invisible hand and, 305; Jewish quips of, 174–75; Kahn and, 81, 86, 282, 302, 362; legacy of, 4; Lend-Lease and, 14, 110–19, 123–24, 180, 190–91, 261, 279–80; Liberal politics and, 65–66, 74, 82–83, 85, 88, 93, 95; lingering Bretton Woods issues and, 251–54, 258–67, 276–83, 285–89; Lloyd George and, 70–72, 362, 379n32; Lopokova and, 11–12, 73, 111, 283, 300, 363; McKenna and, 66, 68, 70; Macmillan Committee and, 81; marginalization of, 85; mathematical skill of, 1; The Means to Prosperity and, 86–87; Moggridge and, 304, 392n6; monetary duel of, 187–88; monetary reform and, 64–65, 75, 137; Morgenthau and, 369; Mosley and, 85; “National Self-Sufficiency” and, 87; New Deal and, 6, 87, 89, 113; New Statesman article and, 94; no-interest American loan and, 279–80; “Notes on the War for the President” and, 96–97; output of newspaper articles of, 73; Phillips and, 97–98, 159, 163, 165, 168, 170–71, 176; “Post War Currency Policy” and, 142; postwar global peace and, 1; “Proposals for an International Currency Union” and, 142; protectionism and, 74, 82–83, 87; quotas and, 230–31, 237, 243–47; “Recent Economic Events in India” and, 64; Robbins and, 12, 31, 82–83, 140, 170, 192–93, 203, 205, 218–19, 224, 279, 282–83, 392n6; on role of government, 77–85; Roosevelt and, 26, 96–97, 114; Rueff and, 73, 91–93; Say’s Law and, 90, 366; siting of International Monetary Fund and World Bank buildings and, 221–26; stabilization and, 3, 31–32, 65, 75–76, 89, 97, 138–40, 147, 149–51, 159–60, 166–67, 170, 173, 175–76, 179, 188, 193–94, 260, 340; sterling-dollar peg and, 68–69; style of, 3–4, 65–73, 113, 159–60, 173–76, 194, 208, 252–53; Supranational Bank and, 81; theory refinement of, 85–93; Treasury strategy and, 97; A Tract on Monetary Reform and, 75–76, 80, 137; Treatise on Money and, 79–81, 85, 91–92, 137, 142; on unemployment, 73–74, 78, 80–93, 142, 151, 186; U.S. dollar and, 3, 149–53, 169–73, 176–77, 180, 184, 188, 195–96, 212, 214, 252, 262, 301–3, 305, 310; U.S.


pages: 540 words: 168,921

The Relentless Revolution: A History of Capitalism by Joyce Appleby

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

Smith presented a brilliantly detailed explanation of the causes of the unparalleled wealth in Great Britain. (After the Scottish and English crowns were joined in 1706, England was called Great Britain or the United Kingdom.) Building on the new conception of human beings as responsibly pursuing their own interest, he advocated a system of “natural liberty” because he thought that the “invisible hand” of the market would function better if left free of most regulation. With few opportunities to choose among options, men and women had appeared as fickle, impulsive, and given over to their passions. From the Christian point of view, they were also bathed in sin. With such a picture of human nature, it would have been a form of madness to leave them free to do as they wished with their resources.

The inventions that culminated in industrialization had hardly begun when Smith wrote, but there had been enough improvements for him to divine the future. Integral to Smith’s theorizing was the law of unintended consequences, an arresting insight of the Scottish philosophers that explained how acts could be willed by self-interested individuals but still turn out to be beneficial to a larger group. The most famous example of course was the invisible hand of the market that used competition to convert the profit motive into a force for good. As Smith explained, it is “not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regards to their own interest.”51 Here was a concept that contributed to the strong impression that reality was often obscured by appearances.

Smith was responding to the developments of his lifetime, 1723–1790, when it was still relatively easy for an ambitious young baker to get the money to set himself up to compete effectively with established competitors. Later the concentration of capital took a lot of the optimizing agility out of the “invisible hand.” Smith and his fellow Scots proposed a conjectural history of mankind that traced human society from hunters and gatherers to herders, then to sedentary farmers, and finally to commercial society. The discovery of indigenous peoples of South and North America still hunting and gathering helped anchor the Scots’ hypotheses in observable facts.


pages: 1,233 words: 239,800

Public Places, Urban Spaces: The Dimensions of Urban Design by Matthew Carmona, Tim Heath, Steve Tiesdell, Taner Oc

"hyperreality Baudrillard"~20 OR "Baudrillard hyperreality", A Pattern Language, Arthur Eddington, Big bang: deregulation of the City of London, big-box store, Broken windows theory, Buckminster Fuller, car-free, carbon footprint, cellular automata, City Beautiful movement, Community Supported Agriculture, complexity theory, deindustrialization, disinformation, Donald Trump, drive until you qualify, East Village, edge city, food miles, Frank Gehry, Future Shock, game design, garden city movement, gentrification, global supply chain, Guggenheim Bilbao, income inequality, invisible hand, iterative process, Jane Jacobs, land bank, late capitalism, Lewis Mumford, longitudinal study, Masdar, Maslow's hierarchy, megaproject, megastructure, New Urbanism, peak oil, Peter Calthorpe, place-making, post-oil, precautionary principle, principal–agent problem, prisoner's dilemma, profit motive, Richard Florida, Seaside, Florida, starchitect, streetcar suburb, systems thinking, tacit knowledge, technological determinism, telepresence, the built environment, The Chicago School, The Death and Life of Great American Cities, The Great Good Place, the market place, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, Traffic in Towns by Colin Buchanan, Tragedy of the Commons, transaction costs, transit-oriented development, urban decay, urban planning, urban renewal, urban sprawl, vertical integration, zero-sum game

Adam Smith famously referred to this as the ‘invisible hand’ – that is, the invisible hand of competitive market processes, or as Desai (2002) describes: ‘… deep structures of interconnectedness beneath the seemingly chaotic and uncoordinated individual actions.’ Smith considered that, despite individuals pursuing their own advantage, the greatest benefit to society as a whole was achieved by their being free to do so, with each individual being ‘lead by an invisible hand to promote an end which was no part of his intention’. It is, as Varoufakis (1998: 20) suggests, ‘… as if an invisible hand forces on those who act shamelessly a collective outcome fit for saints.’

The organicist view, prevalent prior to the twentieth century, sees society as a self-organising process – that is, as a dynamic and adaptive process in that systems acquire and maintain structure and that no external agency controls. It defies human control and is, at best, moderately tameable. Adam Smith’s metaphor of the invisible hand is itself derived from an organic conception, whereby the outcome of myriad individual actions is essentially benevolent:‘… there is a harmony between the individual and the aggregate established by the “Invisible Hand” which is another name for deep structures of interconnectedness beneath the seemingly chaotic and uncoordinated individual actions.’ (Desai 2002) In this view, driven by an incessant search for profits, the market is a process of search and signalling, involving dynamic uncertainty, innovation and discovery.

It involves deregulating private activities and companies, the privatisation of previously ‘state’ or ‘collective’ services, the undermining of the collective powers of workers and providing the conditions for the private sector to find ever new sources of profitable activity.’ Elevating market exchanges over and above all other sets of connections between people, neo-liberalism seeks to minimise the role of the State and to allow Adam Smith’s invisible hand to do its work. Based on public choice critiques of government, the reduced role for the State was both because‘… it is presumed that states will always be inferior to markets in “guessing” what is necessary to do and because states are thought to be easily corruptible by private interest groups.’


pages: 725 words: 221,514

Debt: The First 5,000 Years by David Graeber

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

Newton had represented God as a cosmic watchmaker who had created the physical machinery of the universe in such a way that it would operate for the ultimate benefit of humans, and then let it run on its own. Smith was trying to make a similar, Newtonian argument.2 God—or Divine Providence, as he put it—had arranged matters in such a way that our pursuit of self-interest would nonetheless, given an unfettered market, be guided “as if by an invisible hand” to promote the general welfare. Smith’s famous invisible hand was, as he says in his Theory of Moral Sentiments, the agent of Divine Providence. It was literally the hand of God.3 Once economics had been established as a discipline, the theological arguments no longer seemed necessary or important. People continue to argue about whether an unfettered free market really will produce the results that Smith said it would; but no one questions whether “the market” naturally exists.

Newton himself was in no sense an atheist—in fact, he tried to use his mathematical abilities to confirm that the world really had been created, as Bishop Ussher had earlier argued, sometime around October 23, 4004 bc. 3. Smith first uses the phrase “invisible hand” in his Astronomy (III.2), but in Theory of Moral Sentiments IV.1.10, he is explicit that the invisible hand of the market is that of “Providence.” On Smith’s theology in general see Nicholls 2003:35–43; on its possible connection to Medieval Islam, see chapter 10 below. 4. Samuelson 1948:49. See Heinsohn and Steiger 1989 for a critique of this position; also Ingham 2004. 5.

One much-repeated story held that the Prophet himself had refused to force merchants to lower prices during a shortage in the city of Medina, on the grounds that doing so would be sacrilegious, since, in a free-market situation, “prices depend on the will of God.”82 Most legal scholars interpreted Mohammed’s decision to mean that any government interference in market mechanisms should be considered similarly sacrilegious, since markets were designed by God to regulate themselves.83 If all this bears a striking resemblance to Adam Smith’s “invisible hand” (which was also the hand of Divine Providence), it might not be a complete coincidence. In fact, many of the specific arguments and examples that Smith uses appear to trace back directly to economic tracts written in Medieval Persia. For instance, not only does his argument that exchange is a natural outgrowth of human rationality and speech already appear both in both Ghazali (1058–1111 ad), and Tusi (1201–1274 ad); both use exactly the same illustration: that no one has ever observed two dogs exchanging bones.84 Even more dramatically, Smith’s most famous example of division of labor, the pin factory, where it takes eighteen separate operations to produce one pin, already appears in Ghazali’s Ihya, in which he describes a needle factory, where it takes twenty-five different operations to produce a needle.85 The differences, however, are just as significant as the similarities.


pages: 165 words: 47,405

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

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

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

He said, however, there was no reason to worry about that because “upon equal or nearly equal profits, every wholesale merchant naturally prefers the home-trade to the foreign trade of consumption.” That is, British capitalists will individually prefer to use domestically produced goods and to invest at home. So, therefore, as if “led by an invisible hand to promote an end which was no part of his intention,” the threat of what’s now called neoliberalism will be avoided. The economist David Ricardo made a rather similar argument. Smith and Ricardo both realized that none of their theories would work if you had free capital movement and investment.6 At one time, the principle of solidarity was taken for granted.


Profit Over People: Neoliberalism and Global Order by Noam Chomsky

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

Adam Smith’s praise of division of labor is well known, but not his denunciation of its inhuman effects, which will turn working people into objects “as stupid and ignorant as it is possible for a human creature to be,” something that must be prevented “in every improved and civilized society” by government action to overcome the destructive force of the “invisible hand.” Also not well advertised is Smith’s belief that government “regulation in favour of the workmen is always just and equitable,” though not “when in favour of the masters.” Or his call for equality of outcome, which was at the heart of his argument for free markets. Other leading contributors to the classical liberal canon go much further.

According to some specialists, half of US trade worldwide consists of such centrally managed transactions, and much the same is true of other industrial powers,35 though one must treat with caution conclusions about institutions with limited public accountability. Some economists have plausibly described the world system as one of “corporate mercantilism,” remote from the ideal of free trade. The OECD concludes that “oligopolistic competition and strategic interaction among firms and governments rather than the invisible hand of market forces condition today’s competitive advantage and international division of labor in high-technology industries,”36 implicitly adopting a similar view. Even the basic structure of the domestic economy violates the neoliberal principles that are hailed. The main theme of the standard work on US business history is that “modern business enterprise took the place of market mechanisms in coordinating the activities of the economy and allocating its resources,” handling many transactions internally, another large departure from market principles.37 There are many others.


pages: 168 words: 46,194

Why Nudge?: The Politics of Libertarian Paternalism by Cass R. Sunstein

Affordable Care Act / Obamacare, Andrei Shleifer, availability heuristic, behavioural economics, Cass Sunstein, choice architecture, clean water, cognitive load, Daniel Kahneman / Amos Tversky, Edward Glaeser, endowment effect, energy security, framing effect, invisible hand, late fees, libertarian paternalism, loss aversion, nudge unit, randomized controlled trial, Richard Thaler

Choice Architecture and Inevitable Nudges We have seen an immediate objection to the rule-consequentialist suggestion, and it cannot be repeated often enough, simply because it is so often ignored (and so please forgive the italics): Choice architecture is inevitable. The social environment influences choices, and it is not possible to dispense with a social environment. This point holds whether the social environment is a product of self-conscious designers or of some kind of invisible-hand mechanism. There can be (and often is) choice architecture without choice architects.36 Default rules are omnipresent, and they matter. Do we have an opt-in design or an opt-out design? Whenever there is an answer, there is an effect on outcomes. Does this mean that paternalism is also unavoidable?

See Glaeser, supra note 10; Wright & Ginsburg, supra note 5. 34. See Glaeser, supra note 10, which has a rule-consequentialist flavor, but which is qualified through a recognition that (optional) nudging is justified in identifiable cases. 35. Mill, supra note 2. 36. For a valuable discussion, see Edna Ullmann-Margalit, Invisible Hand Explanations, 39 Synthese 263 (1978). 37. For discussion, see Richard H. Thaler & Cass R. Sunstein, Nudge: Improving Decisions About Health, Wealth, and Happiness (2008). Richard Thaler et al., Choice Architecture, in Behavioral Foundations of Policy 428, 428–31 (Eldar Shafir ed. 2012). I am bracketing here the potential effects of the kinds of choice architecture that are established by the basic rules of contract law, property law, tort law, and criminal law. 38.


Making Globalization Work by Joseph E. Stiglitz

"World Economic Forum" Davos, affirmative action, Alan Greenspan, Andrei Shleifer, Asian financial crisis, banking crisis, barriers to entry, benefit corporation, Berlin Wall, blood diamond, business process, capital controls, carbon tax, central bank independence, corporate governance, corporate social responsibility, currency manipulation / currency intervention, Doha Development Round, Exxon Valdez, Fall of the Berlin Wall, Firefox, full employment, Garrett Hardin, Gini coefficient, global reserve currency, Global Witness, Great Leap Forward, Gunnar Myrdal, happiness index / gross national happiness, illegal immigration, income inequality, income per capita, incomplete markets, Indoor air pollution, informal economy, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), inventory management, invisible hand, John Markoff, Jones Act, Kenneth Arrow, Kenneth Rogoff, low interest rates, low skilled workers, manufacturing employment, market fundamentalism, Martin Wolf, microcredit, moral hazard, negative emissions, new economy, North Sea oil, offshore financial centre, oil rush, open borders, open economy, price stability, profit maximization, purchasing power parity, quantitative trading / quantitative finance, race to the bottom, reserve currency, rising living standards, risk tolerance, Seymour Hersh, Silicon Valley, special drawing rights, statistical model, the market place, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, Tragedy of the Commons, trickle-down economics, union organizing, Washington Consensus, zero-sum game

Globalization is the field on which some of our major societal conflicts—including those over basic values—play out. Among the most important of those conflicts is that over the role of government and markets. It used to be that conservatives could appeal to Adam Smith’s “invisible hand”—the notion that markets and the pursuit of self-interest would lead, as if by an invisible hand, to economic efficiency. Even if they could admit that markets, by themselves, might not engender a socially acceptable distribution of income, they argued that issues of efficiency and equity should be separated. In this conservative view, economics is about efficiency, and issues of equity (which, like beauty, so often lies in the eyes of the beholder) should be left to politics.

Today, the intellectual defense of market fundamentalism has largely disappeared.2 My research on the economics of information showed that whenever information is imperfect, in particular when there are information asymmetries—where some individuals know something that others do not (in other words, always)—the reason that the invisible hand seems invisible is that it is not there.3 Without appropriate government regulation and intervention, markets do not lead to economic efficiency.4 In recent years we have seen dramatic illustrations of these theoretical insights. As I described in my book The Roaring Nineties, 5 the pursuit of self-interest by CEOs, accountants, and investment banks did not lead to economic efficiency, but rather to a bubble accompanied by massive misallocations of investment.

The annual Economic Report of the President in the early years of the Clinton presidency articulated these views, relating what the government should do closely to the limitations of the market. 3.The quest for understanding the circumstances under which Adam Smith’s idea that markets do or do not lead “as if by an invisible hand” to economic efficiency has been at the center of economic research for two centuries. Kenneth J. Arrow and Gerard Debreu won Nobel Prizes for their rigorous mathematical analyses. They defined the ideal conditions under which Smith was right, but also identified the numerous instances of market failures, where he was not—when, for instance, there are externalities (like pollution) where the actions of one individual have effects on others for which they are not compensated.


Year 501 by Noam Chomsky

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

From the point of view of policy choices, Great Britain was not an entity. “The wealth of nations” is no concern of the “architects of policy,” who, as Smith insists, seek private gain. The fate of the common people is no more their concern than that of the “mere savages” who stand in the way. If an “invisible hand” sometimes provided others with benefits, that is merely incidental. The basic focus on “wealth of nations” and what “Great Britain derives” is faulty from the start, undermined by illegitimate idealization, though at least it is qualified and corrected in Smith’s fuller discussion. The crucial qualifications have commonly been dropped, however, as they enter contemporary ideology in the hands of Smith’s latter-day disciples.

That being so, “the man whose life is spent in performing a few simple operations, of which the effects too are, perhaps, always the same, or very nearly the same, has no occasion to exert his understanding...and generally becomes as stupid and ignorant as it is possible for a human creature to be...But in every improved and civilized society this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless government takes some pains to prevent it.” Society must find some way to overcome the devilish impact of the “invisible hand.” Other major contributors to the classical liberal canon go much further. Wilhelm von Humboldt, who inspired John Stuart Mill, described the “leading principle” of his thought as “the absolute and essential importance of human development in its richest diversity,” a principle that is not only undermined by the narrow search for efficiency through division of labor, but by wage labor itself: “Whatever does not spring from a man’s free choice, or is only the result of instruction and guidance, does not enter into his very nature; he does not perform it with truly human energies, but merely with mechanical exactness”; when the laborer works under external control, “we may admire what he does, but we despise what he is.”19 Smith’s admiration for individual enterprise was tempered still further by his contempt for “the vile maxim of the masters of mankind”: “All for ourselves, and nothing for other people.”

The phenomenon is a well-known concomitant of the integration of the South into the world order in the service role; reports of sale of children are, in fact, some of the more benign that are familiar to those who do not choose to shield themselves from the wrong kind of facts. The “side effects” of the subjection of the South to market forces are not in the least unexpected, except to the laser-like vision of the trained ideologue. “Unexpected side effects” of the invisible hand have also been found in Russia, again eliciting much surprise. A front-page New York Times headline reads: “The Russians’ New Code: If It Pays, Anything Goes.” “It is not just a matter of crime, corruption, prostitution, smuggling, and drug and alcohol abuse,” all on the rise: “There is also a widespread view that...people are out for themselves and anything goes”—unlike the United States, where pursuit of “the vile maxim of the masters” is unknown, or the Third World domains that have been subject to our helping hand.


pages: 418 words: 128,965

The Master Switch: The Rise and Fall of Information Empires by Tim Wu

accounting loophole / creative accounting, Alfred Russel Wallace, Andy Rubin, AOL-Time Warner, Apple II, barriers to entry, British Empire, Burning Man, business cycle, Cass Sunstein, Clayton Christensen, commoditize, corporate raider, creative destruction, disinformation, disruptive innovation, don't be evil, Douglas Engelbart, Douglas Engelbart, Eben Moglen, Ford Model T, Howard Rheingold, Hush-A-Phone, informal economy, intermodal, Internet Archive, invention of movable type, invention of the telephone, invisible hand, Jane Jacobs, John Markoff, Joseph Schumpeter, Menlo Park, open economy, packet switching, PageRank, profit motive, radical decentralization, road to serfdom, Robert Bork, Robert Metcalfe, Ronald Coase, scientific management, search costs, seminal paper, sexual politics, shareholder value, Silicon Valley, Skype, Steve Jobs, Steve Wozniak, Telecommunications Act of 1996, The Chicago School, The Death and Life of Great American Cities, the long tail, the market place, The Wisdom of Crowds, too big to fail, Upton Sinclair, urban planning, vertical integration, Yochai Benkler, zero-sum game

“The vicious acts associated with aggressive competition are responsible for much, if not all, of the present antagonism in the public mind to business, particularly to large business.”5 Adam Smith, whose vision of capitalism is sacrosanct in the United States, believed that individual selfish motives could produce collective goods for humanity, by the operation of the “invisible hand.” But Vail didn’t buy it. “In the long run … the public as a whole has never benefited by destructive competition.” Smith’s key to efficient markets was Vail’s cause of waste. “All costs of aggressive, uncontrolled competition are eventually borne, directly or indirectly, by the public.” In his heterodox vision of capitalism, shared by men like John D.

., making a salable product out of) the technology’s potential; or too much variation in standards or protocols of use to allow one to market a high quality product that will answer the consumers’ dissatisfactions. When these problems reach a critical mass, and a lost potential for substantial gain is evident, the market’s invisible hand waves in some great mogul like Vail or band of them who promise a more orderly and efficient regime for the betterment of all users. Usually enlisting the federal government, this kind of mogul is special, for he defines a new type of industry, integrated and centralized. Delivering a better or more secure product, the mogul heralds a golden age in the life of the new technology.

Thus if everything is entrusted to a single mind, its inevitable subjective distortions will distort, if not altogether disable, the innovation process. By contrast, Nelson and Winter argued, the most rapid or efficient innovation typically results when the widest range of variations are proposed and the invisible hand of competition, as proxy of the future, picks among them. It is rather like Darwin’s idea of the relative fitness of individuals in determining the evolution of species, and like natural selection it depends on the power of accidents.10 Hush-A-Phone was a forerunner in this latter-day approach to innovation.


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Crisis Economics: A Crash Course in the Future of Finance by Nouriel Roubini, Stephen Mihm

Alan Greenspan, Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, barriers to entry, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, bond market vigilante , bonus culture, Bretton Woods, BRICs, British Empire, business cycle, call centre, capital controls, Carmen Reinhart, central bank independence, centralized clearinghouse, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, dark matter, David Ricardo: comparative advantage, debt deflation, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, fiat currency, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, financial intermediation, full employment, George Akerlof, Glass-Steagall Act, global pandemic, global reserve currency, Gordon Gekko, Greenspan put, Growth in a Time of Debt, housing crisis, Hyman Minsky, information asymmetry, interest rate swap, invisible hand, Joseph Schumpeter, junk bonds, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, Louis Bachelier, low interest rates, margin call, market bubble, market fundamentalism, Martin Wolf, means of production, Minsky moment, money market fund, moral hazard, mortgage debt, mortgage tax deduction, new economy, Northern Rock, offshore financial centre, oil shock, Paradox of Choice, paradox of thrift, Paul Samuelson, Ponzi scheme, price stability, principal–agent problem, private sector deleveraging, proprietary trading, pushing on a string, quantitative easing, quantitative trading / quantitative finance, race to the bottom, random walk, regulatory arbitrage, reserve currency, risk tolerance, Robert Shiller, Satyajit Das, Savings and loan crisis, savings glut, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, subprime mortgage crisis, Suez crisis 1956, The Great Moderation, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, too big to fail, tulip mania, Tyler Cowen, unorthodox policies, value at risk, We are all Keynesians now, Works Progress Administration, yield curve, Yom Kippur War

Much of mainstream economics, by contrast, is obsessed with showing how and why markets work—and work well. This preoccupation arguably dates back to the origins of the profession of economics, beginning with the Scottish thinker Adam Smith. In his Wealth of Nations, he advanced the now-famous metaphor of the “invisible hand” to capture the seemingly miraculous process by which the selfish and divergent interests of individual economic actors somehow coalesce into a stable, self-regulating economic system. Out of the chaos of innumerable individual choices comes order. Smith, however, did not acknowledge capitalism’s many vulnerabilities.

., April 8, 2005, online at http://www.federalreserve.gov/boarddocs/speeches/2005/20050408/default.htm. 33 slashing the rate: Jean Claude Trichet, “Activism and Alertness in Monetary Policy,” lecture to “Central Banks in the 21st Century” conference, Madrid, June 8, 2006, online at http://www.ecb.int/press/key/date/2006/html/sp060608_1.en.html. Chapter 2: Crisis Economists 39 “Practical men, who believe . . .”: Keynes, General Theory, 383. 40 “invisible hand”: Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London: Charles Knight, 1835), 3:112; Robert L. Heilbroner and Lester C. Thurow, Economics Explained (New York: Touchstone, 1987), 25-31. 40 economists refined and reworked: Denis P. O’Brien, “Classical Economics,” in Warren J.

Online at http://imf.org/external/pubs/ft/spn/2009/spn0908.pdf. Ghosh, B. N., ed. Global Financial Crises and Reforms: Cases and Caveats. London: Routledge, 2001. Gorton, Gary. “Banking Panics and Business Cycles.” Oxford Economic Papers 40 (1988): 751-81. ____. “Slapped in the Face by the Invisible Hand: Banking and the Panic of 2007.” Paper delivered at the Federal Reserve Bank of Atlanta’s 2009 Financial Markets Conference “Financial Innovation and Crises,” May 11-13, 2009. Online at http://www.frbatlanta.org/news/conferen/09fmc/gorton.pdf. Gross, Daniel. Pop! Why Bubbles Are Great for the Economy.


pages: 354 words: 92,470

Grave New World: The End of Globalization, the Return of History by Stephen D. King

"World Economic Forum" Davos, 9 dash line, Admiral Zheng, air freight, Alan Greenspan, Albert Einstein, Asian financial crisis, bank run, banking crisis, barriers to entry, Berlin Wall, Bernie Sanders, bilateral investment treaty, bitcoin, blockchain, Bonfire of the Vanities, borderless world, Bretton Woods, Brexit referendum, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collateralized debt obligation, colonial rule, corporate governance, credit crunch, currency manipulation / currency intervention, currency peg, currency risk, David Ricardo: comparative advantage, debt deflation, deindustrialization, Deng Xiaoping, Doha Development Round, Donald Trump, Edward Snowden, eurozone crisis, facts on the ground, failed state, Fall of the Berlin Wall, falling living standards, floating exchange rates, Francis Fukuyama: the end of history, full employment, George Akerlof, global supply chain, global value chain, Global Witness, Great Leap Forward, hydraulic fracturing, Hyman Minsky, imperial preference, income inequality, income per capita, incomplete markets, inflation targeting, information asymmetry, Internet of things, invisible hand, Jeremy Corbyn, joint-stock company, Kickstarter, Long Term Capital Management, low interest rates, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, middle-income trap, moral hazard, Nixon shock, offshore financial centre, oil shock, old age dependency ratio, paradox of thrift, Peace of Westphalia, plutocrats, post-truth, price stability, profit maximization, quantitative easing, race to the bottom, rent-seeking, reserve currency, reshoring, rising living standards, Ronald Reagan, Savings and loan crisis, Scramble for Africa, Second Machine Age, Skype, South China Sea, special drawing rights, technology bubble, The Great Moderation, The Market for Lemons, the market place, The Rise and Fall of American Growth, trade liberalization, trade route, Washington Consensus, WikiLeaks, Yom Kippur War, zero-sum game

Importantly, following Thatcher’s lead with her very early decision to abolish exchange controls, capital markets were to be subject to the discipline provided by international investors. There was to be no hiding place from the market and, by implication, no hiding place from international finance. This collection of beliefs began to spread like wildfire. Those who attempted to head off in a different direction were, all too often, humbled by the invisible hand of international capitalism. In the early 1980s, President Mitterrand tried to impose his brand of socialism on the French economy: a vast array of companies were nationalized, the minimum wage was raised, a solidarity wealth tax was introduced and social benefits were increased. The intention was to reduce unemployment.

With the collapse of the Soviet Union, there is no longer a binary choice between what might loosely be described as US-style free-market capitalism and Moscow-inspired communism. Managing an increasingly integrated global economy under these circumstances is incredibly difficult. For a while, it seemed as though the system might be self-regulating, through the wonders of the invisible hand. With the onset of the global financial crisis, that view was clearly wrong. And, in the absence of a self-regulating mechanism, it appears that our existing arrangements – based primarily on national self-interest and the occasional prod from various Washington-based institutions – may be inconsistent with an ever more integrated global economy.

But there is an obvious disadvantage: governments and central banks would be free to dip into people’s bank accounts at will, using negative interest rates as a technical – and largely non-democratic – alternative to a wealth tax to penalize those who have held onto their savings for a rainy day. The biggest loser from central banks’ experimental activities is, however, international capitalism itself. As central banks choose to purchase an ever-wider range of assets in a bid to stabilize the system as a whole, the allocation of capital is likely to deteriorate: Adam Smith’s invisible hand is slowly being dismembered, one digit at a time. Mario Draghi’s commitment to ‘do whatever it takes’ to preserve the euro has forced the European Central Bank to become a ‘lender of last resort’ to sovereign governments, effectively freeing them from the market discipline that might have encouraged some of them to deliver more in the way of fiscal consolidation or structural reform.


pages: 355 words: 92,571

Capitalism: Money, Morals and Markets by John Plender

activist fund / activist shareholder / activist investor, Alan Greenspan, Andrei Shleifer, asset-backed security, bank run, Berlin Wall, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, Black Swan, bond market vigilante , bonus culture, Bretton Woods, business climate, business cycle, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collapse of Lehman Brothers, collective bargaining, computer age, Corn Laws, Cornelius Vanderbilt, corporate governance, creative destruction, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, discovery of the americas, diversification, Eugene Fama: efficient market hypothesis, eurozone crisis, failed state, Fall of the Berlin Wall, fiat currency, financial engineering, financial innovation, financial intermediation, Fractional reserve banking, full employment, Glass-Steagall Act, God and Mammon, Golden arches theory, Gordon Gekko, greed is good, Hyman Minsky, income inequality, industrial research laboratory, inflation targeting, information asymmetry, invention of the wheel, invisible hand, Isaac Newton, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, joint-stock company, Joseph Schumpeter, labour market flexibility, liberal capitalism, light touch regulation, London Interbank Offered Rate, London Whale, Long Term Capital Management, manufacturing employment, Mark Zuckerberg, market bubble, market fundamentalism, mass immigration, means of production, Menlo Park, money market fund, moral hazard, moveable type in China, Myron Scholes, Nick Leeson, Northern Rock, Occupy movement, offshore financial centre, paradox of thrift, Paul Samuelson, plutocrats, price stability, principal–agent problem, profit motive, proprietary trading, quantitative easing, railway mania, regulatory arbitrage, Richard Thaler, rising living standards, risk-adjusted returns, Robert Gordon, Robert Shiller, Ronald Reagan, savings glut, shareholder value, short selling, Silicon Valley, South Sea Bubble, spice trade, Steve Jobs, technology bubble, The Chicago School, The Great Moderation, the map is not the territory, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, too big to fail, tulip mania, Upton Sinclair, Veblen good, We are the 99%, Wolfgang Streeck, zero-sum game

By preferring the support of domestic to that of foreign industry, he intends only his own security, and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. That reference to the invisible hand is perhaps the most celebrated positive example of the law of unintended consequences. While the expression is original, the thought is not. Similar ideas had been articulated not only by Hugh of St Victor but by Pascal in the mid-seventeenth century and by the Italian political philosopher Gianbattista Vico in his Scienza Nuova of 1725.

To finance the scheme and pay the workers, he uses paper money created by the emperor who rules over the territory. Where Goethe, who had been finance minister to the Duke of Saxe-Weimar, shows particular foresight is in identifying unintended consequences of capitalist enterprise – consequences that, unlike those associated with Adam Smith’s invisible hand, are far from positive. Environmental damage results from the creation of Faust’s dyke because he failed to provide an outlet for putrid water. His land consequently becomes a foetid quagmire that has to be drained. His insatiable desire for more land leads him to drive out long-standing residents of the dunes.


pages: 324 words: 92,805

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

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

As Adam Smith argued more than two centuries ago, when individuals freely pursue their own self-interests—presumably, even their most trivial desires—the aggregate effect is an economy that most efficiently and naturally delivers the most benefits to the greatest majority. (In Smith’s famous phrasing, by pursuing our own self-interests, it’s as if we “are led by an invisible hand to promote an end that was no part of [our] intention.”) And the truth is our self-centered economy delivers a lot of benefits. It generates a lot of wealth, a lot of innovation, and, perhaps most important, a lot of individual adaptability, which you and I can use to shape our lives, our feelings, and our very identities.

.† For advocates of “shareholder value” theory, it was this very idea of social obligations (that business somehow owed workers, or any other part of society, anything beyond efficient operations) that led so many firms to fail in their real social obligation: maximizing the wealth upon which all social progress depends. As economist Milton Friedman argued in a much-quoted article in The New York Times, “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits.” Here was the corporate variation on Adam Smith’s “invisible hand.” Companies turned loose to maximize their own wealth would improve society’s fortunes far more efficiently than would any government-induced strategy based on an ideal of social responsibility. By the 1980s the logic of efficient markets and shareholder value had expanded into a political philosophy.

From the very beginnings of the Industrial Revolution, it was understood that “commercial society,” as Adam Smith called capitalism, would need constant poking and prodding and nudging to ensure that its massive efficiencies benefited as wide a public as possible. As Smith wrote in The Wealth of Nations,1 “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.” Today, conservatives routinely invoke Smith and his invisible hand to argue for unfettered markets. But in fact, Smith recognized that markets needed occasional fettering—he favored, among other things, a progressive tax on the wealthy and, especially, hefty regulation of finance to prevent the consolidation of economic power in the hands of the few. Such regulatory intrusions, Smith readily acknowledged, were “in some respect a violation of natural liberty” of bankers and others with economic power.


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

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

re v isin g f o u c au lt 83 Moreover, the idea and practice of responsibilization — forcing the subject to become a responsible self-investor and self-provider — reconfigures the correct comportment of the subject from one naturally driven by satisfying interests to one forced to engage in a particular form of self-sustenance that meshes with the morality of the state and the health of the economy.20 Thus, neoliberalism differs from classical economic liberalism not only in that there ceases to be what Smith formulated as an “invisible hand” forging a common good out of individual, self-interested actions, 21 and not only because the naturalism is replaced by constructivism, although both of these are the case. Equally important, reconciling individual with national or other collective interests is no longer the contemporary problem understood to be solved by markets.

This citizen releases state, law, and economy from responsibility for and responsiveness to its own condition and predicaments and is ready when called to sacrifice to the cause of economic growth, competitive positioning and fiscal constraints. Thus, again, does a political rationality originally born in opposition to fascism turn out to mirror certain aspects of it, albeit through powers that are faceless and invisible-handed and absent an authoritarian state. This is not to say that neoliberalism is fascism or that we live in fascist times. It is only to note convergences between elements of twentieth-century fascism and inadvertent effects of neoliberal rationality today. These convergences appear in the valorization of a national economic project and sacrifice for a greater good into which all are integrated, but from which most must not expect personal benefit.42 They appear as well in the growing devaluation of politics, publics, intellectuals, educated citizenship, and all collective purposes apart from economy and security.

See, for example, The First Amendment, Democracy, and Romance (Princeton: Princeton University Press, 1990) where he argues: “A . . . commitment to sponsoring dissent does not require a belief that what emerges in the ‘market’ is usually right or that the ‘market’ is the best test of truth. Quite the contrary, the commitment to sponsor dissent assumes that societal pressures to conform are strong and that incentives to keep quiet are 256 notes often great. If the marketplace metaphor encourages the view than an invisible hand or voluntaristic arrangements have guided us patiently, but slowly, to Burkean harmony, the commitment to sponsoring dissent encourages us to believe that the cozy arrangements of the status quo have settled on something less than the true or the just. If the marketplace metaphor encourages the view that conventions, habits, and traditions have emerged as our best sense of the truth from the rigorous testing ground of the marketplace of ideas, the commitment to sponsoring dissent encourages the view that conventions, habits, and traditions are compromises open to challenge.


words: 49,604

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

Alan Greenspan, barriers to entry, Berlin Wall, Big bang: deregulation of the City of London, blue-collar work, Bretton Woods, business cycle, clean water, company town, computer age, Corn Laws, creative destruction, cross-subsidies, David Ricardo: comparative advantage, dematerialisation, Diane Coyle, Edward Glaeser, everywhere but in the productivity statistics, financial deregulation, flying shuttle, full employment, George Santayana, global village, Great Leap Forward, hiring and firing, Howard Rheingold, income inequality, informal economy, invention of the sewing machine, invisible hand, Jane Jacobs, Joseph Schumpeter, Kickstarter, knowledge economy, labour market flexibility, laissez-faire capitalism, lump of labour, Mahbub ul Haq, Marshall McLuhan, mass immigration, McJob, Meghnad Desai, microcredit, moral panic, Neal Stephenson, Network effects, new economy, Nick Leeson, night-watchman state, North Sea oil, offshore financial centre, pension reform, pension time bomb, pensions crisis, Robert Solow, Ronald Reagan, Silicon Valley, Snow Crash, spinning jenny, The Death and Life of Great American Cities, the market place, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tobin tax, Tragedy of the Commons, two tier labour market, very high income, War on Poverty, winner-take-all economy, working-age population

The next few chapters explore the most obvious manifestation of the weightless world and its risks and challenges: unemployment, new patterns of work and inequality. They are all features of the transition to weightlessness. Notes 1. 2. 3. 4. 5. Statistical Abstract for the United Kingdom 1871-1885, facsimile edition HMSO 1986. Interview in The Independent, London, 24 October 1996. In The Invisible Hand and the Weightless Economy, LSE, March 1996. OECD Communications Outlook, 1996. Published by the BIS, July 1996. The Weightless World 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 25 Computer Industry Almanac, Glenbrook, Nevada, December 1996. ‘We’d better watch out’, New York Times Book Review, 12 July 1978.

In Geography and Trade, MIT Press 1991. In Scientific American, February 1990. In Justice, Nature and the Geography of Distance. ‘Transeconomics’ in The Transparency of Evil. Conference speech in London, May 1995. In City of Bits. In ‘The Weightless Economy’ column in Centrepiece, February 1997. In The Invisible Hand and the Weightless Economy, CEP discussion paper, March 1996. In the New York Times magazine, October 1996. After the Nation State. See, for example, Making Sense of Subsidiarity, Begg et al. Speech at Future London conference, 11 December 1996. Chapter Ten. Redesigning Government The opinions of the philosopher Jean-Jacques Rousseau, one of the early architects of democratic thought, are as fresh now as they were two and a half centuries ago.

Diego Puga (February 1997) ‘The rise and fall of regional inequalities’, Discussion Paper 1575, Centre for Economic Policy Research, London. Robert Putnam (1993) Making Democracy Work: Civic Traditions in Modern Italy, Princeton University Press, Princeton, NJ. Bibliography 241 Robert Putnam (January 1995) ‘Bowling alone: America’s declining social capital’, Journal of Democracy, 6 (1). Danny Quah (March 1996) ‘The invisible hand and the weightless economy’, Centre for Economic Performance working paper, London School of Economics, London. Danny Quah (July 1996) ‘Twin Peaks: growth and convergence in models of distribution dynamics’, Economic Journal. Danny Quah (October 1996) Discarding Non-stick Frying Pans for Economic Growth, Centrepiece, Centre for Economic Performance, London School of Economics, London.


pages: 312 words: 91,835

Global Inequality: A New Approach for the Age of Globalization by Branko Milanovic

Asian financial crisis, assortative mating, Berlin Wall, bitcoin, Black Swan, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, centre right, colonial exploitation, colonial rule, David Ricardo: comparative advantage, deglobalization, demographic transition, Deng Xiaoping, discovery of the americas, European colonialism, Fall of the Berlin Wall, Francis Fukuyama: the end of history, full employment, Gini coefficient, Gunnar Myrdal, income inequality, income per capita, invisible hand, labor-force participation, liberal capitalism, low skilled workers, Martin Wolf, means of production, military-industrial complex, mittelstand, moral hazard, Nash equilibrium, offshore financial centre, oil shock, open borders, open immigration, Paul Samuelson, place-making, plutocrats, post scarcity, post-industrial society, profit motive, purchasing power parity, Ralph Nader, Robert Solow, Second Machine Age, seigniorage, Silicon Valley, Simon Kuznets, special economic zone, stakhanovite, trade route, transfer pricing, very high income, Vilfredo Pareto, Washington Consensus, women in the workforce

Simon Caney (2002) presents such an argument in terms of Rawls’s implicit “domain restriction”: civil and political rights and distributive justice apply to the domestic realm, but not to international affairs. It is not self-evident why this would be the case, though. Almost a century ago, the British economist Edwin Cannan, in his discussion of Adam Smith’s invisible hand, asked this question: “if … indeed, it [is] true that there is a natural coincidence between self-interest and the general good, why … does not this coincidence extend, as economic processes do, across national borders?”22 To maintain Rawls’s position, one must also show that national self-determination plays a fundamentally different role than individual “self-determination” does, that is, a person’s free will.

Moscow: Verlag für Fremdsprachige Literatur, 1939. Marx, Karl. 1973. Grundrisse: Foundations of the Critique of Political Economy. Translated and with an introduction by Martin Nicolaus. London: Penguin Classics. McGuire, Martin C., and Mancur Olson. 1996. “The Economics of Autocracy and Majority Rule: The Invisible Hand and the Use of Force.” Journal of Economic Literature 34(1): 72–96. Meadows, Donella H., Dennis L. Meadows, Jørgen Randers, and William W. Behrens III. 1972. The Limits to Growth: A Report for the Club of Rome’s Project on the Predicament of Mankind. New York: Universe Books. Mendershausen, Horst. 1946.

See also methodological nationalism; rich people and money (including one-percenters) inflation, 43, 64, 218 infrastructure spending, 181 inheritance, 186–187, 219, 221, 250n36 institutions, 64, 73 intergenerational transfers, 141 international development policies, 99 international dollars, 15 International Labor Day, 86 International Migration Outlook (2013) (OECD), 262n41 intersectoral inequality, 259n17 “invisible hand,” 142 Iraq, 158, 163, 164 Islam, 192–193, 261n31 Islam, fundamentalist, 164, 203 Israel, 144–146, 158, 256n24 Jayadev, Arjun, 197 justice, 131, 137, 139–140, 141, 143 Kanbur, Ravi, 106 Karabarbounis, Loukas, 181 Katz, Lawrence, 47, 94, 252n49 Kearney, Melissa S., 252n49 Keynes, John Maynard, 95 King, Gregory, 248n19 Kraus, Michael W., 203 Krugman, Paul, 252n49 Kuznets, Simon: on Great Leveling, 53, 246n7; on wars, 97, 98; on income gap reductions, 148; role of, 245n1; Gini points and, 250n34; on liberal profession incomes, 263n5 Kuznets curves: technological changes (1980s) and, 54; super, 69; literature on, 245n1; Prokopovitch and, 245n1; Industrial Revolution and, 248n25.


pages: 375 words: 88,306

The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism by Arun Sundararajan

"World Economic Forum" Davos, additive manufacturing, Airbnb, AltaVista, Amazon Mechanical Turk, asset light, autonomous vehicles, barriers to entry, basic income, benefit corporation, bike sharing, bitcoin, blockchain, book value, Burning Man, call centre, Carl Icahn, collaborative consumption, collaborative economy, collective bargaining, commoditize, commons-based peer production, corporate social responsibility, cryptocurrency, data science, David Graeber, distributed ledger, driverless car, Eben Moglen, employer provided health coverage, Erik Brynjolfsson, Ethereum, ethereum blockchain, Frank Levy and Richard Murnane: The New Division of Labor, future of work, general purpose technology, George Akerlof, gig economy, housing crisis, Howard Rheingold, independent contractor, information asymmetry, Internet of things, inventory management, invisible hand, job automation, job-hopping, John Zimmer (Lyft cofounder), Kickstarter, knowledge worker, Kula ring, Lyft, Marc Andreessen, Mary Meeker, megacity, minimum wage unemployment, moral hazard, moral panic, Network effects, new economy, Oculus Rift, off-the-grid, pattern recognition, peer-to-peer, peer-to-peer lending, peer-to-peer model, peer-to-peer rental, profit motive, public intellectual, purchasing power parity, race to the bottom, recommendation engine, regulatory arbitrage, rent control, Richard Florida, ride hailing / ride sharing, Robert Gordon, Ronald Coase, Ross Ulbricht, Second Machine Age, self-driving car, sharing economy, Silicon Valley, smart contracts, Snapchat, social software, supply-chain management, TaskRabbit, TED Talk, the long tail, The Nature of the Firm, total factor productivity, transaction costs, transportation-network company, two-sided market, Uber and Lyft, Uber for X, uber lyft, universal basic income, Vitalik Buterin, WeWork, Yochai Benkler, Zipcar

Capitalist economies have at least two ways of organizing economic activity. There are markets, in which individuals buy and sell from other individuals and invest their time and money into producing goods and services using their own equipment, sometimes perhaps financed by others who lend money. Markets are where Adam Smith’s famed “invisible hand” determines the prices that balance supply and demand. And then there is the “visible” hand—the “hierarchies” that we typically think of as firms or organizations (or government entities). These entities contain within them a set of operating units that are managed by a hierarchy of salaried employees.

Organizations would be the dominant feature of the landscape. A message sent back home, describing the scene, would speak of “large green areas interconnected by red lines.” It would not likely speak of “a network of red lines connecting green spots.”4 The transition of economies from market transactions governed by Adam Smith’s “invisible hand” to the ones we observe today has been gradual. In The Visible Hand,” a book I cite in the introduction and for the epigraph to this chapter, the economic historian Alfred Chandler traces this transition from the early 1800s through the late 20th century, documenting how although the United States in Adam Smith’s time was largely a market economy, there began a steady transition to hierarchies of increasing complexity as a consequence of a series of technological changes spanning 200 years.5 Chandler chronicles the creation of plantations, the emergence of textile mills, the use of armories, the revolutions in transportation and communication induced by the railroad and the telegraph in the mid-19th century, followed by the emergence first of mass distribution and then of mass production.

In chapter 2, I used a technology-centric lens, drawing on an evolving understanding of digital technologies to help you think about the future of capitalism as shaped by its digital and trust determinants. In chapter 3, you encountered the lens of transaction costs, of markets and hierarchies, thinking through what kinds of institutions this blurring of boundaries between the visible and invisible hands might yield. In chapter 4, through a short discussion about the new wave of digital enablers as well as their historical precedents, I hope you have a better lens through which to view how the decentralized peer-to-peer revolution unfolds, and, despite the surrounding idealism, recognize the significant possibility for value re-aggregation by large intermediaries.


We Need New Stories: Challenging the Toxic Myths Behind Our Age of Discontent by Nesrine Malik

"World Economic Forum" Davos, affirmative action, Affordable Care Act / Obamacare, barriers to entry, Bernie Sanders, Black Lives Matter, Boris Johnson, Brexit referendum, British Empire, centre right, cognitive dissonance, continuation of politics by other means, currency peg, disinformation, Donald Trump, fake news, feminist movement, financial independence, Francis Fukuyama: the end of history, gender pay gap, gentrification, ghettoisation, glass ceiling, illegal immigration, invisible hand, Jeremy Corbyn, mass immigration, moral panic, Nate Silver, obamacare, old-boy network, opioid epidemic / opioid crisis, Overton Window, payday loans, planetary scale, Ponzi scheme, public intellectual, race to the bottom, Ronald Reagan, Saturday Night Live, sexual politics, Steve Bannon, Steven Pinker, The Bell Curve by Richard Herrnstein and Charles Murray, Thomas L Friedman, transatlantic slave trade

In 2017, progress towards gender parity shifted into reverse. So even if one were to cite inexorable improvement in the world’s only superpower and the land of the free, and in aggregate on a global basis, it would appear that progress does not have its own momentum. It is not fuelled by the principles of the Enlightenment and oiled by the invisible hand of capitalism. It is a tentative and fragile state which is sustained by the effort of constant activism and vigilance, both on the ground and on the ideological battlefield. An appeal for context, to point out that the overall pattern is one of improvement, is an appeal for quietism. And the complacency of progress does not account for the reactionary backlash that progress often triggers, which makes it doubly difficult for the dermal layer to be treated, for ‘the wound to heal’.

At the heart of this is the kind of biological determinism that assumes that just because some things occur in nature, e.g. suspicion of other races due to group self-preservation instincts, that means that they should be accepted. This argument, strangely, is rarely made about violent crime or child abuse, both things that have occurred in nature since record keeping began. Related to that, there is also something unavoidably free market capitalist about the anti-PC animus. Just as the invisible hand regulates the market, so shall it regulate human interaction. The unintended accrued social benefits of an individual’s self-interested actions, with no intervention, will not just create the fairest economy, but the fairest society. When I spoke to Lola Olufemi, she had in her brief experience of PC scam media culture already developed a jaundiced attitude towards such quarters of the left.

The marketplace of ideas model of free speech holds that what is true factually, and what is good morally, will emerge after a competition of ideas in a free, unmoderated and transparent public discourse, a healthy debate where the truth will prevail. Bad ideas and ideologies will lose out and wither away as they are vanquished by superior ones. The problem with the marketplace of ideas theory (as with all ‘invisible hand’ type theories) is that it does not account for a world in which the market is skewed and not all ideas receive equal representation, because the market has monopolies and cartels. David Uberti, a contributor to Columbia Journalism Review who has written on false equivalence in the media since Donald Trump’s election, spoke to me about inherent imbalances in the American media, which render it less a marketplace of ideas and more a sort of prison tuck shop or commissary that provides few and overpriced goods to captive consumers.


pages: 741 words: 179,454

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

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

Schumpeter saw the Great Depression as part of the adjustment that would wipe out unsustainable debts and poor investments, allowing economic renewal. Keynesian economics was legitimizing interference in the natural process. For many politicians and economists, the severity of the Great Depression, the inability of markets to restore full employment and the rising human cost highlighted the failure of the invisible hand. Keynes gained credence and, for the next four decades, dominated economic thinking and policy. The ability of governments and central banks to fine-tune the economy through a judicious mix of budgetary and monetary policy as well as regulation became accepted faith. In the 1960s, the University of Chicago’s Milton Friedman challenged Keynes as the foremost public figure in economics of the twentieth century.

Free markets were considered better at regulating competing forces, allocating resources, and meeting consumer demand. The role of government was to remove impediments to and ensure the proper institutional framework for free and competitive markets. Harvard economist and U.S. Treasury Secretary Lawrence Summers “tried to leave [his] students with...the view that the invisible hand is more powerful than the [un]hidden hand. Things will happen in well-organized efforts without direction, controls, plans. That’s the consensus among economists.”25 Tony Blair’s New Labour government’s unalloyed support for the City reflected this belief. Upon succeeding Blair as the UK prime minister, Gordon Brown even invited Thatcher to No. 10 Downing Street for tea, seemingly to lend authority to his economic credentials.

Thomas Frank in One Market, One God captured this spirit: Efficient markets theory holds that stock markets process economic data quickly and flawlessly...commentators...believe that stock markets perform pretty much the same operation with general will, endlessly adjusting and modifying themselves in conformity with the vast and enigmatic popular mind.38 American Nobel-prize-winning economist Joseph Stiglitz dissented: “[Adam Smith’s] invisible hand often seems invisible [because] it is often not there.”39 Nineteenth-century Danish philosopher Søren Kierkegaard differentiated between objective truths and subjective truths. Objective truths are filtered and altered by our subjective truths. Financial economics, in its prioritization of evidence and its models, converted objective truths into subjective truths consistent with the Chicago Interpretation.


pages: 603 words: 182,826

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

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

With the sweep of imagination that gave lasting value to his ideas, Smith lifted this oscillation between altruism and selfishness into a universal context, quoting with approval the Stoics’ belief that “the vices and follies of mankind were as necessary [to the overall happiness of the world] . . . as their wisdom and virtues.” From this he derived the argument that people could not help contributing to the greater good even at their most selfish, because they “are led by an invisible hand . . . and thus without intending it, without knowing it, advance the interest of the society.” What Smith emphasized in The Theory of Moral Sentiments was that the “invisible hand” grew out of an awareness of other people’s opinions, and the desire for general happiness. It could not operate in a moral vacuum. “Justice is the main pillar that upholds the whole edifice,” he insisted.

A shortage of supply, for example, should result in higher prices that encourage greater produce and reduce demand; exchange rates ought to adjust to equalize the value of two different currencies; and cheaper production through division of labor will create increased market share until canceled out by rising wages and costs of distribution. This was the “invisible hand” at work, which led to growing prosperity so long as individuals were left free to pursue their own interests with the chance to maximize their gains and minimize their losses. There was, however, the same caveat as in the Theory, that the self-righting capacity of the hand only operated in the context of a concern for the general welfare.

Freedom exercised at the expense of someone else’s liberty became a form of tyranny. It had to be equal and inclusive. Consequently it was fundamental to Smith’s description of the free-market system that everyone, rich and poor, should have an equal opportunity to profit from their labor. Because there was no mechanism more effective in regulating wages and prices than the “invisible hand” of the free-market, it was incumbent on government to maintain open and equal access to it. Morality and efficiency coincided. The same reasoning required the laws of justice to underpin the system of private property. Perhaps surprisingly, the strongest modern advocate of this approach was the libertarian Robert Nozick.


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

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

Chapter 7 ends with an account of the ‘New Consensus’ – a mixture of ‘new’ classical and ‘new’ Keynesian economics, which was in turn brought down by the collapse of 2008. 9 I n t roduc t ion Following the theoretical twists and turns of this economic saga, no one can fail to be impressed by the persistence in economic theory of the core idea that an unimpeded market system tends to full employment equilibrium, unless obstructed by ‘spanners in the works’, generally thrown by governments. First suggested by Adam Smith’s metaphor of the ‘invisible hand’, this insight was formalized in the general equilibrium theory of Leon Walras in 1874. Much later, as late as in our own day, the microeconomics of Walras begat new classical macroeconomics. The main storyline has been heavily modified and qualified in face of disconfirming events, but has always re-emerged, in more or less unchanged form.

This important feature of the efficient market hypothesis postulates that markets are self-correcting and thus self-regulating, with government attempts to improve on this bound to be distorting.13 In this way, the efficient market hypothesis is essentially the modern manifestation of Adam Smith’s ‘invisible hand’. There is a paradox here. On the one hand, the theory says that 312 w h at wa s w rong w i t h t h e b a n k s? there is no point in trying to profit from speculation, because shares are always correctly priced and their movements cannot be predicted. But on the other hand, if investors did not try to profit, the market would not be efficient because there would be no self-correcting mechanism.

Keynes invented macroeconomics, raising it to co-equal status with microeconomics. Keynes’s fundamental claim was that there was no automatic realignment of disturbed economic particles, either in the short-run or in the long-run. It made no sense, therefore, to deduce macro outcomes from micro constructions like ‘the invisible hand’, where the play of individual self-interest of many agents ensures optimal market equilibria. Keynes argued repeatedly that the future was radically uncertain; it could not be reduced to known probability distributions. We make our own future in ways too complex to be grasped by a precise logic.


pages: 612 words: 179,328

Buffett by Roger Lowenstein

Alan Greenspan, asset allocation, Bear Stearns, book value, Bretton Woods, buy and hold, Carl Icahn, cashless society, collective bargaining, computerized trading, corporate raider, credit crunch, cuban missile crisis, Eugene Fama: efficient market hypothesis, index card, index fund, interest rate derivative, invisible hand, Jeffrey Epstein, John Meriwether, junk bonds, Long Term Capital Management, Michael Milken, moral hazard, Paul Samuelson, random walk, risk tolerance, Robert Shiller, Ronald Reagan, Savings and loan crisis, selection bias, Teledyne, The Predators' Ball, traveling salesman, Works Progress Administration, Yogi Berra, young professional, zero-coupon bond

A decade after its war with the Courier-Express, the News reached three-fourths of the households in Buffalo—the highest such ratio of any metropolitan paper in the country.51 But Buffalo was the poorer for having one newspaper instead of two, and total newspaper readership in the city was much less than when the Courier-Express had been alive.52 Certainly, Buffett had every right, and also every reason, to start a Sunday paper. And given what has occurred in other cities, there was little chance that two papers could have survived even had Buffett not come to town. In effect, he had merely given the Invisible Hand a push. Still, a paper had been buried and jobs had been lost. And in some remove of “the unfathomable human mind,” Buffett must have suspected, even in court, that it would turn out that way. Consider his words to a colleague on the survival prospects of second newspapers: In years past, hundreds of newspaper owners, putting up their own money, as well, I am sure, as most of the “experts”, felt that large cities would sustain more than one healthy newspaper.

Yet now that the raiders were in the ascendant, he was deeply troubled. CEOs were now his peers—in many cases, his friends. At a visceral level, he was uneasy with the raiders’ confrontational style. But his concerns went deeper. I had this idea that some sort of economic Darwinism would work and that if offers were made, it was the invisible hand working and that it would improve the breed of managers. And then over the years I’ve been troubled by two things I’ve observed—and I don’t know exactly where this leads me—I’ll just tell you what bothers me. The first thing is that over a good many [years] the very best-managed companies I know of have very frequently sold in the market at substantial discounts from what they were worth that day.… Takeovers, in theory, were a curative, the system’s method of pruning corporate deadwood.

Whenever news about a stock became public, traders pounced, buying or selling until its price reached equilibrium. Underlying this truism was an assumption that the old price had been as “wise” as traders could make it. Therefore, the new price—and each succeeding new price—would be wise as well. The traders merely did the work of Adam Smith’s Invisible Hand. Since everything worth knowing about a company was already in the price, most security analysis was, to cite a popular text, “logically incomplete and valueless.”2 The future course of a stock would depend on new (as yet unknowable) information. A stock, then, was unpredictable; it followed a “random walk.”


pages: 162 words: 51,473

The Accidental Theorist: And Other Dispatches From the Dismal Science by Paul Krugman

"World Economic Forum" Davos, Alan Greenspan, Bonfire of the Vanities, Bretton Woods, business cycle, carbon tax, clean water, collective bargaining, computerized trading, corporate raider, declining real wages, floating exchange rates, full employment, George Akerlof, George Gilder, Home mortgage interest deduction, income inequality, indoor plumbing, informal economy, invisible hand, It's morning again in America, Kenneth Arrow, knowledge economy, life extension, new economy, Nick Leeson, paradox of thrift, Paul Samuelson, plutocrats, price stability, rent control, Robert Solow, Ronald Reagan, Silicon Valley, trade route, very high income, working poor, zero-sum game

Indeed, if you want a simple model for predicting the unemployment rate in the United States over the next few years, here it is: It will be what Greenspan wants it to be, plus or minus a random error reflecting the fact that he is not quite God. But putting Greenspan (or his successor) into the picture restores much of the classical vision of the macroeconomy. Instead of an invisible hand pushing the economy toward full employment in some unspecified long run, we have the visible hand of the Fed pushing us toward its estimate of the noninflationary unemployment rate over the course of two or three years. To accomplish this, the board must raise or lower interest rates to bring savings and investment at that target unemployment rate in line with each other.

But there is also a deeper cause—an odd sort of tacit agreement between the Left and the Right to pretend that exotic global forces are at work even when the real action is prosaically domestic. Many on the Left dislike the global marketplace because it epitomizes what they dislike about markets in general: the fact that nobody is in charge. The truth is that the invisible hand rules most domestic markets, too, a reality that most Americans seem to accept as a fact of life. But those who would like to see us revert to a more managed society in all ways hope that popular unease over the economic influence of people who live in far-off places and have funny-sounding names can be used as the thin end of an ideological wedge.


pages: 296 words: 98,018

Winners Take All: The Elite Charade of Changing the World by Anand Giridharadas

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist lawyer, affirmative action, Airbnb, benefit corporation, Bernie Sanders, bitcoin, Black Lives Matter, Boeing 747, Brexit referendum, Burning Man, Capital in the Twenty-First Century by Thomas Piketty, carried interest, cognitive dissonance, collective bargaining, corporate raider, corporate social responsibility, critical race theory, crowdsourcing, David Brooks, David Heinemeier Hansson, deindustrialization, disintermediation, do well by doing good, Donald Trump, Edward Snowden, Elon Musk, fake it until you make it, fake news, food desert, friendly fire, gentrification, global pandemic, high net worth, hiring and firing, housing crisis, Hyperloop, impact investing, income inequality, independent contractor, invisible hand, Jeff Bezos, Kevin Roose, Kibera, Kickstarter, land reform, Larry Ellison, Lyft, Marc Andreessen, Mark Zuckerberg, microaggression, new economy, Occupy movement, offshore financial centre, opioid epidemic / opioid crisis, Panopticon Jeremy Bentham, Parag Khanna, Paul Graham, Peter Thiel, plutocrats, profit maximization, public intellectual, risk tolerance, rolodex, Ronald Reagan, shareholder value, sharing economy, Sheryl Sandberg, side hustle, side project, Silicon Valley, Silicon Valley billionaire, Silicon Valley startup, Skype, social distancing, Social Responsibility of Business Is to Increase Its Profits, Steven Pinker, systems thinking, tech baron, TechCrunch disrupt, technoutopianism, TED Talk, The Chicago School, The Fortune at the Bottom of the Pyramid, the High Line, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, Travis Kalanick, trickle-down economics, Two Sigma, Uber and Lyft, uber lyft, Upton Sinclair, Vilfredo Pareto, Virgin Galactic, work culture , working poor, zero-sum game

This idea that self-love trickles down to others is an early ancestor of win-win-ism. In his Theory of Moral Sentiments, Smith elaborates on the idea with his famous metaphor of the “invisible hand.” The rich, he writes, in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society.

“Business is the ultimate positive-sum game, in which it is possible to create a Win for all the stakeholders of the business,” John Mackey, the chief executive of Whole Foods Market, and Raj Sisodia write in a book that has become a bible of the win-win faith, Conscious Capitalism: Liberating the Heroic Spirit of Business. The new win-win-ism is arguably a far more radical theory than the “invisible hand.” That old idea merely implied that capitalists should not be excessively regulated, lest the happy by-products of their greed not reach the poor. The new idea goes further, in suggesting that capitalists are more capable than any government could ever be of solving the underdogs’ problems. An influential statement of this new creed is found in the book Philanthrocapitalism: How the Rich Can Save the World.


pages: 323 words: 95,939

Present Shock: When Everything Happens Now by Douglas Rushkoff

"Hurricane Katrina" Superdome, algorithmic trading, Alvin Toffler, Andrew Keen, bank run, behavioural economics, Benoit Mandelbrot, big-box store, Black Swan, British Empire, Buckminster Fuller, business cycle, cashless society, citizen journalism, clockwork universe, cognitive dissonance, Credit Default Swap, crowdsourcing, Danny Hillis, disintermediation, Donald Trump, double helix, East Village, Elliott wave, European colonialism, Extropian, facts on the ground, Flash crash, Future Shock, game design, global pandemic, global supply chain, global village, Howard Rheingold, hypertext link, Inbox Zero, invention of agriculture, invention of hypertext, invisible hand, iterative process, James Bridle, John Nash: game theory, Kevin Kelly, laissez-faire capitalism, lateral thinking, Law of Accelerating Returns, Lewis Mumford, loss aversion, mandelbrot fractal, Marshall McLuhan, Merlin Mann, messenger bag, Milgram experiment, mirror neurons, mutually assured destruction, negative equity, Network effects, New Urbanism, Nicholas Carr, Norbert Wiener, Occupy movement, off-the-grid, passive investing, pattern recognition, peak oil, Peter Pan Syndrome, price mechanism, prisoner's dilemma, Ralph Nelson Elliott, RAND corporation, Ray Kurzweil, recommendation engine, scientific management, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, SimCity, Skype, social graph, South Sea Bubble, Steve Jobs, Steve Wozniak, Steven Pinker, Stewart Brand, supply-chain management, technological determinism, the medium is the message, The Wisdom of Crowds, theory of mind, Tragedy of the Commons, Turing test, upwardly mobile, Whole Earth Catalog, WikiLeaks, Y2K, zero-sum game

They seemed to self-regulate even though no one was aware of anyone else’s intentions. This “invisible hand” of the marketplace ensured that as individuals try to maximize their own gains in a free market, prices find the appropriate levels, supply meets demand, and products improve. But Smith only got so far as to argue that, through the market, competition channels individual ambitions toward socially beneficial results. The mechanisms through which that happened were still poorly understood and expressed. In 1945 famed Hungarian economist Friedrich Hayek came up with a new way of talking about the “invisible hand” of the marketplace. Instead of seeing some magical, inexplicable method through which markets solved its problems fairly, Hayek saw markets working through a more systemic process.

(FAA), 89 Federal Reserve, 5, 148 feedback: apocalypto and, 263; definition of, 207; fractalnoia and, 205–19, 220, 221, 222, 224–25, 226–27, 236; speed of, 208, 209 Feldmar, Andrew, 156 Ferriss, Timothy, 95 field hospitals, 191 Filippi, Mark, 103–6 “filter failure,” 116–17 financial markets: algorithmic-driven, 178–79, 180; apocalypto and, 8, 257, 264; black box trading and, 179, 180; commodity trading and, 185–86; crashes in, 181, 230; dark pools for, 182; digiphrenia and, 1, 99–100; fractalnoia and, 201–2, 203, 226–27, 229–30; free, 226, 227; high-frequency trading in, 181–82; “invisible hand” of, 226–27; “meet me” room for, 180; narrative collapse and, 11–12; new “now” and, 5; overwinding and, 7, 8, 136, 173, 175–80, 181–83, 184, 185–86; physicial location of network and, 179–80; time as money and, 173, 175–80 flash pictures, 71 flashbacks, 28, 29 flow: apocalypto and, 265; of information, 141–42, 145–49; overwinding and, 189, 192, 194; of time, 141–42, 145–49 Forrest Gump (movie), 29–30 fox and hedgehog prototypes, 232–33, 235 Fox News, 49, 55–56 fractalnoia: “always-on” philosophy and, 211; apocalypto and, 245–46, 264; change and, 224, 235–37; chaos and, 202, 209, 219–30; choices and, 202, 215, 227; conversations and, 211; cybernetics and, 224–26, 227; definition/characteristics of, 201, 240–41; everything is everything concept and, 197, 199, 204, 205, 210, 212, 213, 228; feedback and, 205–19, 220, 221, 222, 224–25, 226–27, 236; game theory/gaming and, 220–21, 222–23, 224; impact of, 209–10; as manifestation of present shock, 7, 197–241; narrative collapse and, 212; patterns and, 197–205, 209, 216, 217–19, 229, 230–41; sharing and, 203–4; systems theory, 226–28.


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Essential: How the Pandemic Transformed the Long Fight for Worker Justice by Jamie K. McCallum

Affordable Care Act / Obamacare, American Legislative Exchange Council, Anthropocene, antiwork, Bear Stearns, Bernie Sanders, Black Lives Matter, carbon tax, cognitive dissonance, collective bargaining, company town, coronavirus, COVID-19, death from overwork, defund the police, deindustrialization, deskilling, Donald Trump, Elon Musk, future of work, George Floyd, gig economy, global pandemic, global supply chain, Great Leap Forward, green new deal, housing crisis, income inequality, independent contractor, invisible hand, Jeff Bezos, job automation, karōshi / gwarosa / guolaosi, labor-force participation, laissez-faire capitalism, lockdown, Loma Prieta earthquake, low-wage service sector, Lyft, manufacturing employment, market fundamentalism, minimum wage unemployment, moral hazard, Naomi Klein, occupational segregation, post-work, QR code, race to the bottom, remote working, rewilding, ride hailing / ride sharing, side hustle, single-payer health, social distancing, stock buybacks, strikebreaker, subprime mortgage crisis, TaskRabbit, The Great Resignation, the strength of weak ties, trade route, Triangle Shirtwaist Factory, Uber and Lyft, uber lyft, union organizing, Upton Sinclair, women in the workforce, working poor, workplace surveillance , Works Progress Administration, zoonotic diseases

Home healthcare aides in Paradise, California, for instance, served as first responders when the historic Camp Fire hit, wheeling their patients’ beds away from the encroaching flames.22 During Hurricane Harvey, nursing home workers in Texas sent out a call for help and rescued their elderly clients from historic levels of flooding.23 As the so-called invisible hand of the market attempts to push us off an ecological cliff, it’s the invisible hands of the behind-the-scenes care workers that are propping up our care infrastructure. Unions and labor rights organizations like the National Domestic Workers Alliance, Caring Across Generations, and the SEIU have been advocating for the rights of home care workers for years.24 Creating better jobs in this sector would benefit the elderly and disabled too because it would allow them to age and recover in their own homes.

That spirit was on full display during the early days of the pandemic through the creation of mutual aid networks. College students banded together to share resources as they quickly shipped home from school. A Minnesota group called COVIDsitters matched willing volunteers with the children of essential workers and was replicated across the country. A group called Invisible Hands formed a network in New York City to provide groceries to at-risk people who couldn’t shop in person, and many such networks popped up elsewhere. Others offered free routers to expand Wi-Fi access, peer-to-peer mental health support, and homemade hand sanitizer and face coverings. I helped form a group in my little corner of Vermont.


pages: 209 words: 53,236

The Scandal of Money by George Gilder

Affordable Care Act / Obamacare, Alan Greenspan, bank run, behavioural economics, Bernie Sanders, bitcoin, blockchain, borderless world, Bretton Woods, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, Claude Shannon: information theory, Clayton Christensen, cloud computing, corporate governance, cryptocurrency, currency manipulation / currency intervention, currency risk, Daniel Kahneman / Amos Tversky, decentralized internet, Deng Xiaoping, disintermediation, Donald Trump, fiat currency, financial innovation, Fractional reserve banking, full employment, George Gilder, glass ceiling, guns versus butter model, Home mortgage interest deduction, impact investing, index fund, indoor plumbing, industrial robot, inflation targeting, informal economy, Innovator's Dilemma, Internet of things, invisible hand, Isaac Newton, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Jeff Bezos, John Bogle, John von Neumann, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, Law of Accelerating Returns, low interest rates, Marc Andreessen, Mark Spitznagel, Mark Zuckerberg, Menlo Park, Metcalfe’s law, Money creation, money: store of value / unit of account / medium of exchange, mortgage tax deduction, Nixon triggered the end of the Bretton Woods system, obamacare, OSI model, Paul Samuelson, Peter Thiel, Ponzi scheme, price stability, Productivity paradox, proprietary trading, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, Ray Kurzweil, reality distortion field, reserve currency, road to serfdom, Robert Gordon, Robert Metcalfe, Ronald Reagan, Sand Hill Road, Satoshi Nakamoto, Search for Extraterrestrial Intelligence, secular stagnation, seigniorage, Silicon Valley, Skinner box, smart grid, Solyndra, South China Sea, special drawing rights, The Great Moderation, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Tim Cook: Apple, time value of money, too big to fail, transaction costs, trickle-down economics, Turing machine, winner-take-all economy, yield curve, zero-sum game

—turn out to harbor “biases” and habitual modes of thought, “anchoring” on previous inputs and prices, over-projecting from past experience into the future, overreacting to losses, succumbing to misleading contextual cues. (Did no one know this before?) All these behaviors cause economic players to make bad decisions, undermining their utility for the great machine. The biases, fixations, overreactions, and manias skew markets and perpetuate perilous disequilibria. The great machine sputters, the invisible hand jitters spastically, and recessions, crashes, panics, and depressions ensue. In such markets, justice and growth together fail. Justice, therefore, must be enforced by outside experts, popes, and professors, who much of the time reduce it to a matter of equal distribution determined by envy. None of these theories has anything very useful to say about technological innovation.

Justice is an effect not of the “spontaneous order” that is thought to emerge from free markets but of the constitutional order that is a planned effect of political leadership under the law. Unless citizens believe that the distributions of the market are just, they will not impose on themselves the discipline, devote the hours, or endure the risks and hardships of learning and growth. Self-interest will lead them as by an invisible hand to collaborate with government in pursuit of special privileges. Greed is the lust for unjust gains. It impels a drive for guaranteed outcomes in an ever-expanding welfare state—socialism not capitalism. At the same time, without growth, citizens will find their horizons close in on them in a zero-sum world in which they can win only by preying on others.


End the Fed by Ron Paul

affirmative action, Alan Greenspan, Bear Stearns, Bernie Madoff, Bernie Sanders, Bretton Woods, business cycle, crony capitalism, currency manipulation / currency intervention, fiat currency, Fractional reserve banking, guns versus butter model, hiring and firing, housing crisis, illegal immigration, invisible hand, Khyber Pass, Long Term Capital Management, low interest rates, market bubble, means of production, military-industrial complex, Money creation, moral hazard, Ponzi scheme, price mechanism, reserve currency, road to serfdom, Robert Gordon, Ronald Reagan, Savings and loan crisis, too big to fail, tulip mania, We are all Keynesians now, Y2K

Those who have, on principle, correctly argued against the tax-collecting tactics of our government and the unconstitutionality of our monetary system find that their punishments can be even harsher than that of rapists and murderers. As the iron fist grows in size and the invisible hand influence on the market is diminished, we will see a transformation of America that spells the end of a grand experiment in human liberty. All the actions of Congress, the administration, and the Federal Reserve to run the economy are designed to promote the public good, and the results are a disaster. None of the ongoing bailout programs could exist without the Federal Reserve. This process represents an iron fist. A hands-off attitude represents a more sensible approach—allowing the invisible hand of free markets to function and correct the imbalances.


How Will You Measure Your Life? by Christensen, Clayton M., Dillon, Karen, Allworth, James

air freight, Black Monday: stock market crash in 1987, Clayton Christensen, disruptive innovation, hiring and firing, invisible hand, Iridium satellite, job satisfaction, late fees, Mahatma Gandhi, Nick Leeson, Silicon Valley, Skype, Steve Jobs, working poor, young professional

Christensen, James Allworth, and Karen Dillon Contents Cover Title Page Dedication Prologue 1 Just Because You Have Feathers … Section I Finding Happiness in Your Career 2 What Makes Us Tick 3 The Balance of Calculation and Serendipity 4 Your Strategy Is Not What You Say It Is Section II Finding Happiness in Your Relationships 5 The Ticking Clock 6 What Job Did You Hire That Milkshake For? 7 Sailing Your Kids on Theseus’s Ship 8 The Schools of Experience 9 The Invisible Hand Inside Your Family Section III Staying Out of Jail 10 Just This Once … Epilogue Acknowledgments About the Authors Also by Clayton M. Christensen Credits Copyright About the Publisher Dedication To our families PROLOGUE ON THE LAST day of the course that I teach at Harvard Business School, I typically start by telling my students what I observed among my own business school classmates after we graduated.

It would be a mistake, however, to neglect the courses your children need to equip them for the future. Once you have that figured out, work backward: find the right experiences to help them build the skills they’ll need to succeed. It’s one of the greatest gifts you can give them. CHAPTER NINE The Invisible Hand Inside Your Family Most of us have—or had—an idyllic image of what our families would be like. The children will be well-behaved, they’ll adore and respect us, we’ll enjoy spending time together, and they’ll make us proud when they are off in the world without us by their side. And yet, as any experienced parent will tell you, wishing for that kind of family and actually having that kind of family are two very different things.


pages: 409 words: 145,128

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

clean water, Frederick Winslow Taylor, garden city movement, Garrett Hardin, General Motors Futurama, invisible hand, jitney, new economy, New Urbanism, public intellectual, Ralph Nader, scientific management, Silicon Valley, smart transportation, Thorstein Veblen, Tragedy of the Commons, Unsafe at Any Speed, urban planning, urban renewal

In 1926 the editor of The American City surveyed leading national traffic experts and found them in agreement that “streets are primarily provided for general public use” and that therefore “the rights of the different classes of traffic to unlimited use of the streets” were “subject to the public and civic welfare.”67 The New American Economics Beyond the courts, developments in economics contributed to this widening field of action, and engineers found justification for their work in the economists’ writings.68 The invisible hand seemed unable to restrain railroads and other “center” firms, and their excesses gave the progressives’ new political and legal views a receptive audience. The discoveries that monopolies corrupt free enterprise, and that they can be a normal consequence of a largely unregulated advanced economy, contributed to the popularity of progressivism at least as much as “the discovery that business corrupts politics.”69 These trends were shadowed by a decline in the influence of British classical economics in America, as institutional and marginalist economic ideas spread.

Streets as Public Utilities 119 Neoclassical economists continued to take their cue from Britain, but by the turn of the century their new master was not Mill but Alfred Marshall, described as “perhaps the most eminent and widely influential economist” of his time in “the English-speaking world.”79 To save classical economics, Marshall and his American followers accepted considerable amendments to its principles, sacrificing its neatness to preserve its applicability to an advanced industrial economy.80 They agreed with the institutional economists that the pure competition upon which Smith’s analysis depended could not exist, and that in many exchanges the unassisted invisible hand did not fashion the optimum result. Even the neoclassical economists allowed room for positive regulation.81 Natural Monopolies Mill’s modification of classical economics came on the eve of a great surge in the category of enterprises that did not behave according to the price law Smith had expounded.

In the 1920s, Herbert Hoover’s Notes to Chapter 4 309 rapid success was due in part to the assumption that as an engineer, he would be an expert administrator. 42. Taylor, Principles, 7, 16. For general treatments of the trend toward formalization and organization in politics, business, and social reform, see especially Robert H. Wiebe, The Search for Order, 1877–1920 (Hill and Wang, 1967), chapters 5–7 (111– 195); Guy Alchon, The Invisible Hand of Planning: Capitalism, Social Science, and the State in the 1920s (Princeton University Press, 1985), chapter 1 (8–20); Alfred D. Chandler, The Visible Hand: The Managerial Revolution in American Business (Belknap, 1977), 377–500; Stephen Skowronek, Building a New American State: The Expansion of National Administrative Capacities (Cambridge University Press, 1982); Morton Keller, Regulating a New Economy: Public Policy and Economic Change in America, 1900–1933 (Harvard University Press, 1990). 43.


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

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

16 Recognition of the importance of social and cultural evolution long precedes Darwin; it certainly can be found in the work of the thinkers of the Scottish Enlightenment. ‘Nations stumble upon establishments, which are indeed the result of human action, but not the execution of any human design,’ wrote Adam Ferguson in 1782. 17 And Adam Smith’s contemporaneous observation that ‘man is led by an invisible hand to promote an end which was no part of his intention’ is widely quoted today by people who know nothing else of economics. 18 These eighteenth-century Scottish Enlightenment figures had realised that social and cultural practices were themselves the product of evolutionary processes. Societies have established moral codes or religious practices to discourage non-cooperative behaviour.

In the early 1950s, an American, Kenneth Arrow, and a Frenchman, Gerard Debreu, used fixed point theorems (drawn from the latest advances in topology) to prove, under certain assumptions, the existence and efficiency of an equilibrium of a competitive market economy. 9 But although their mathematics is complicated, the conclusions are not; the authors provided a clear statement of the conditions under which a decentralised economy could successfully match supplies and demands, and offered a further expression of the conditions under which that equilibrium might be in a certain sense efficient. For many people, Arrow and Debreu provided the formal mathematical underpinning to Smith’s narrative of the ‘invisible hand’. 10 More than lemons Offensive though it may have been to the Retail Motor Federation, Akerlof’s work was followed by the development of many models, some useful, some not, of markets characterised by asymmetric information. Michael Spence explained how the prices of complex goods did not simply equate supply and demand, but were used to signal information about product characteristics. 11 Joseph Stiglitz emphasised the inherent contradiction in the efficient market hypothesis: if all information was ‘in the price’, why would anyone invest in obtaining information in the first place?

Humans are social animals and there is more to the behaviour of the group than the aggregate of independent individual decisions. Expectations need to be studied at both individual and aggregate level. Completeness and the grand auction Ever since the eighteenth century, when Adam Ferguson described ‘spontaneous order’ and Adam Smith supposedly lauded the ‘invisible hand’, the notion that decentralised markets might allocate resources more efficiently than central planning had been a theme of economic analysis. In the nineteenth century, Leon Walras, a French economist working at the University of Lausanne, attempted to express in a system of equations the idea that the uncoordinated decisions of millions of people might produce aggregate outcomes that were not only coherent but efficient. 10 But Walrasian analysis only reached fruition when, as described in chapter 14 , new and powerful mathematical tools were applied to economics by Kenneth Arrow and Gerard Debreu. 11 For some devotees of laissez faire, this was the analysis they had been waiting for – a rigorous mathematical demonstration of the maxim that ‘you can’t buck the market’.


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

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

With fears of the expansionist Soviet Union providing a wind at his back, Monnet evolved unification bit by bit, beginning with Europe’s coal and steel industries. He built his castle on the philosophy of Adam Smith, relying on the invisible hand of the market to allocate resources most efficiently. As Mark Leonard, director of foreign policy at the Centre for European Reform, explained in 2005: “Monnet’s genius was to develop a ‘European invisible hand’ that allows an orderly European society to emerge from each country’s national interest…. He did not try to abolish the nation-state or nationalism—simply to change its nature by pooling sovereignty.”8 The Emergence of Family Capitalism The genius of Adam Smith was not in his depiction of the age-old market process for allocating resources, but the much more nuanced melding of human nature and careful government regulation to sketch how markets can best be corralled and exploited to nourish mankind.

He endorsed placing the prosperity of families above the interests of the self-absorbed business community in the clearest possible language, explaining that “the welfare of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.”37 As much as we identify the concept of the invisible hand with capitalism, Smith’s most seminal contribution to economics was to channel Aristotle in clarifying that the goal of market capitalism is to enrich families at the expense of the business community. And one of the sharpest lessons offered by this book is that Reaganomics abandoned Smith’s goal, even as the family capitalism countries tightened their embrace of it.

The history of capitalism has been a process of learning and relearning this lesson.”4 DANI RODRIK, Harvard University, 2011 “Take it from a conservative economist who prefers less to more government: if markets are not competitive, or if they are otherwise failing to function properly, it takes the long arm of government to protect the invisible hand.”5 IRWIN STELZER, Director, Economic Policy, Hudson Institute It was the most extraordinary departures in memory from the genteel and courteous language at the hushed senior level of America’s central bank. Perhaps because it was delivered in Atlanta during the New Year’s holiday in 2010, away from the spotlight in Washington, the accusation attracted little attention.


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Seriously Curious: The Facts and Figures That Turn Our World Upside Down by Tom Standage

"World Economic Forum" Davos, agricultural Revolution, augmented reality, autonomous vehicles, Big Tech, blood diamond, business logic, corporate governance, CRISPR, deep learning, Deng Xiaoping, Donald Trump, Dr. Strangelove, driverless car, Elon Musk, failed state, financial independence, gender pay gap, gig economy, Gini coefficient, high net worth, high-speed rail, income inequality, index fund, industrial robot, Internet of things, invisible hand, it's over 9,000, job-hopping, Julian Assange, life extension, Lyft, M-Pesa, Mahatma Gandhi, manufacturing employment, mega-rich, megacity, Minecraft, mobile money, natural language processing, Nelson Mandela, plutocrats, post-truth, price mechanism, private spaceflight, prosperity theology / prosperity gospel / gospel of success, purchasing power parity, ransomware, reshoring, ride hailing / ride sharing, Ronald Coase, self-driving car, Silicon Valley, Snapchat, South China Sea, speech recognition, stem cell, supply-chain management, transaction costs, Uber and Lyft, uber lyft, undersea cable, US Airways Flight 1549, WikiLeaks, zoonotic diseases

That may not extend lifespans, but it can help people make the most of their remaining years. Why do companies exist? The idea of the price mechanism is central to the study of economics. Market prices convey information about what people want to buy and what others want to sell. Adam Smith used the metaphor of the “invisible hand” to describe how the economy is governed by price signals. In 1937 a paper published by Ronald Coase, a British economist, pointed out a flaw in this view: it did not explain what goes on within firms. When employees switch from one division to another, for instance, they do not do so in response to higher wages, but because they are ordered to.

Workers have little incentive to invest in firm-specific skills, so productivity suffers. The supply chains for complex goods, such as an iPhone or an Airbus A380 superjumbo, rely on long-term contracts between firms that are “incomplete”. Coase was the first to spot an enduring truth: economies need both the benign dictatorship of the firm and the invisible hand of the market. Millennial Americans are just as loyal to their employers as previous generations It is often claimed that millennials (people born between 1982 and 1999) are fickle employees, changing jobs frequently and reluctant to commit themselves to a single employer for the long term.


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

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

That means that they have brought the consequences of the monkeys to center stage. But, curiously, to the best of our knowledge, they have never interpreted their results in the context of Adam Smith’s fundamental idea regarding the invisible hand. Perhaps it was just too obvious. Only a child, or an idiot, would make an observation like that and expect anyone to notice. But we will see that this observation, simple as it may be, has real consequences. Especially so, because, as Adam Smith might say, as if by an invisible hand, others out of their own self-interest will satisfy those monkey-on-the-shoulder tastes. Thus we may be making only a small tweak to the usual economics (by noticing the difference between optimality in terms of our real tastes and optimality in terms of our monkey-on-the-shoulder tastes).

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


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Age of Anger: A History of the Present by Pankaj Mishra

anti-communist, Asian financial crisis, Ayatollah Khomeini, Berlin Wall, Boeing 747, Brexit referendum, British Empire, classic study, colonial rule, continuation of politics by other means, creative destruction, Donald Trump, Edward Snowden, Evgeny Morozov, Fall of the Berlin Wall, Fellow of the Royal Society, Francis Fukuyama: the end of history, George Santayana, global village, Great Leap Forward, Gunnar Myrdal, informal economy, invisible hand, liberal capitalism, Mahatma Gandhi, Marshall McLuhan, Martin Wolf, mass immigration, Nelson Mandela, Oklahoma City bombing, Peter Thiel, Philip Mirowski, planetary scale, plutocrats, power law, precariat, public intellectual, Republic of Letters, Scientific racism, Silicon Valley, Silicon Valley billionaire, smart cities, Snapchat, stem cell, technological solutionism, the scientific method, The Wealth of Nations by Adam Smith, Timothy McVeigh, trade route, traveling salesman, urban planning, Vilfredo Pareto, wage slave, women in the workforce, zero-sum game

Its publicists insisted, contra Montaigne, that individual interests, far from being opposed, could be harmonized by trade, and, more remarkably, such private gains were also congruent with the public good. Adam Smith envisaged an open global system of trade powered by envy and admiration of the rich. He argued that the human instinct for emulation of others could be turned, through a mechanism he called the ‘invisible hand’, into a constructive moral and social force. Montesquieu thought that commerce, which renders ‘superfluous things useful and useful things necessary’, would ‘cure destructive prejudices’ and promote ‘communication between peoples’. In Supplement to the Voyage of Bougainville (1772), Diderot fantasized about the new boldly sensuous man, a connoisseur of: the delights of society.

But nearly every major thinker in Europe – whether liberal, nationalist, Marxist, atheistic or agnostic – also transposed Christian providentialism into would-be rationalistic categories. Marx reproduced medieval and Reformation millenarian expectations in his utopia of a classless, stateless society. Herzen cautioned that liberalism with its invisible hand alchemizing selfishness into general welfare ‘is the final religion, though its church is not of the other world but of this’; and its ‘theology is political theory’, whose ‘mystical conciliations’ are to be achieved on Earth. Christian eschatology even suffuses the political ideals of today’s insistently Islamic radicals and Hindu nationalists – an inescapable irony of history that would enrage these vendors of gaudy particularism if they became aware of it.

Social Darwinism, as it rapidly developed, applied Darwin’s theory of natural selection – of the progress of species by adaptation to changing local environments, preserving the ‘favourable variations’ and rejecting the ‘injurious variations’ – to society at large. Progress still looked as inevitable as when Adam Smith first linked it to mimetic desire and aggressive mutual competition, but after Darwin and the rise of the masses the workings of the invisible hand no longer seemed adequate. * * * Drastic measures were needed; and eugenic thinking, as it became respectable in the wake of popular Darwinism, fed on a widely felt need for a systematic alternative to an old model that looked unsuitable for a struggle that only the fittest would survive. So did the vogue for looking at the world as a struggle between races.


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The End of Doom: Environmental Renewal in the Twenty-First Century by Ronald Bailey

3D printing, additive manufacturing, agricultural Revolution, Albert Einstein, Anthropocene, Asilomar, autonomous vehicles, biodiversity loss, business cycle, carbon tax, Cass Sunstein, Climatic Research Unit, commodity super cycle, conceptual framework, corporate governance, creative destruction, credit crunch, David Attenborough, decarbonisation, dematerialisation, demographic transition, disinformation, disruptive innovation, diversified portfolio, double helix, energy security, failed state, financial independence, Ford Model T, Garrett Hardin, Gary Taubes, Great Leap Forward, hydraulic fracturing, income inequality, Induced demand, Intergovernmental Panel on Climate Change (IPCC), invisible hand, knowledge economy, meta-analysis, Naomi Klein, negative emissions, Neolithic agricultural revolution, ocean acidification, oil shale / tar sands, oil shock, pattern recognition, peak oil, Peter Calthorpe, phenotype, planetary scale, precautionary principle, price stability, profit motive, purchasing power parity, race to the bottom, RAND corporation, Recombinant DNA, rent-seeking, rewilding, Stewart Brand, synthetic biology, systematic bias, Tesla Model S, trade liberalization, Tragedy of the Commons, two and twenty, University of East Anglia, uranium enrichment, women in the workforce, yield curve

This conclusion is further bolstered by a 2005 study by University of Helsinki economists Ulla Lehmijoki and Tapio Palokangas; according to this study, in the short run trade liberalization boosts birth rates, but in the long run it cuts fertility. Again, this is true largely because trade liberalization encourages the development of women’s human capital (education), which makes childbearing relatively more costly. The Invisible Hand of Population Control In 2002, Seth Norton, an economics professor at Wheaton College in Illinois, published a remarkably interesting study, “Population Growth, Economic Freedom, and the Rule of Law,” on the inverse relationship between prosperity and fertility. Norton compared the fertility rates of over a hundred countries with their index rankings for economic freedom and another index for the rule of law.

And as we have seen, the global total fertility rate is rapidly decelerating. Of the 231 countries and territories listed in the 2013 CIA World Factbook, 122 are at or below replacement fertility rates. Norton persuasively argues that Hardin’s fears of a population tragedy of the commons are actually realized when the invisible hand of economic freedom is shackled. Many poor countries have weakly specified and enforced property rights. Poor property rights means that many resources are effectively left in open-access commons where the incentive is to grab what one can before another individual gets it. Norton points out that in such situations, more children mean more hands for grabbing unowned and unprotected resources such as water, fodder, timber, fish, and pastures, and for the clearing of land.

Throughout history, most people lived in the institutional equivalents of open-access commons overseen by rapacious elites who encouraged high fertility rates and the plundering of natural resources. It turns out that economic freedom and the rule of law are the equivalent of enclosing the open-access breeding commons, causing parents to bear more and more of the costs of rearing children. In other words, economic freedom actually serves as an invisible hand of population control. Hope for Africa? The United Nations’ 2012 Revision forecasts that more than half of global population growth between now and 2050 will take place in Africa, rising from 1.1 billion to 2.4 billion. The middle-variant trend for sub-Saharan Africa projects that total fertility rate will fall from 4.9 children now to 3.1 by 2050, reaching 2.1 by 2100.


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The Meritocracy Myth by Stephen J. McNamee

Abraham Maslow, affirmative action, Affordable Care Act / Obamacare, American ideology, antiwork, Bernie Madoff, British Empire, business cycle, classic study, collective bargaining, computer age, conceptual framework, corporate governance, deindustrialization, delayed gratification, demographic transition, desegregation, deskilling, Dr. Strangelove, equal pay for equal work, estate planning, failed state, fixed income, food desert, Gary Kildall, gender pay gap, Gini coefficient, glass ceiling, helicopter parent, income inequality, informal economy, invisible hand, job automation, joint-stock company, junk bonds, labor-force participation, longitudinal study, low-wage service sector, marginal employment, Mark Zuckerberg, meritocracy, Michael Milken, mortgage debt, mortgage tax deduction, new economy, New Urbanism, obamacare, occupational segregation, old-boy network, pink-collar, plutocrats, Ponzi scheme, post-industrial society, prediction markets, profit motive, race to the bottom, random walk, Savings and loan crisis, school choice, Scientific racism, Steve Jobs, The Bell Curve by Richard Herrnstein and Charles Murray, The Spirit Level, the strength of weak ties, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, too big to fail, trickle-down economics, upwardly mobile, We are the 99%, white flight, young professional

Such efforts to reduce the nonmeritocratic effects of social capital, however, are still the exception rather than the rule since most employment occurs in private settings where such efforts are typically not required or employed. The Invisible Hand of Social Capital Having friends in high places increases the likelihood of receiving useful information in routine exchanges even without actively seeking such information (Lin 2000a). People with networks yielding access to substantial job information will be more apt to be presented with opportunities to change jobs without an active search. In short, having friends in high places is associated with the routine flow of useful information—“the invisible hand of social capital.” Only when such useful information is not available and not forthcoming would mobilization of social contacts become necessary.

Economic Origins Freedom from political tyranny, however, is not the same as “market freedom,” although the two are often mistakenly viewed as inextricable. Free markets mean that prices, profits, and wages are determined by the “free” operation of market forces—the outcome of innumerable matches of supply and demand for goods and services unregulated by governments. In free-market societies, “the invisible hand of the market” operates: the sole determinant of investment—the sale and purchase of land, labor, and business—is individual calculation of costs and benefits intended to maximize profits. But free markets themselves do not guarantee democracy, civil liberties, or political freedom. In one of the great coincidences of American history, America’s economic blueprint for a free-market economy was laid out in the same year, 1776, as its political blueprint for a democratic government.


pages: 350 words: 109,379

How to Run a Government: So That Citizens Benefit and Taxpayers Don't Go Crazy by Michael Barber

Affordable Care Act / Obamacare, anti-fragile, Atul Gawande, battle of ideas, Berlin Wall, Black Swan, Checklist Manifesto, collapse of Lehman Brothers, collective bargaining, deep learning, deliberate practice, facts on the ground, failed state, fear of failure, full employment, G4S, illegal immigration, invisible hand, libertarian paternalism, Mark Zuckerberg, Nate Silver, North Sea oil, obamacare, performance metric, Potemkin village, Ronald Reagan, school choice, The Signal and the Noise by Nate Silver, transaction costs, WikiLeaks

Nevertheless, the policy can also be attractive to politicians both because some ideologically prefer markets and because, if the policy works, it frees the government from day-to-day intervention as the system becomes sustainable. As Bevan and Wilson put it, ‘Quasi-markets have high transaction costs, but are popular with governments because pressure on poor performance comes from an invisible hand …’6 Blair saw choice as a key ingredient in creating ‘self-improving systems’ – different words for the same basic point. There is much academic debate about whether choice and competition work in the sense of driving up performance. The evidence so far is unclear, though cumulatively it is beginning to suggest that under the right conditions choice does work.

This is not to say that the measurement of productivity in the market sector is without its complexity, but for practical purposes most of the time it is straightforward. In the public sector – where the service is free at the point of use or where the price is fixed by government rather than the invisible hand of the market – the measurement of productivity becomes much harder. Adding to this complexity is what value to put on quality – how well a teacher teaches a lesson has a major impact on student outcomes, but it is hard to put a number to it. Or again, the thoughtfulness and responsiveness of a care worker who visits an elderly person in their home makes a huge difference to the person visited, but is hard to measure.

E. (2000), The Public Sector: Concepts, Models and Approaches, London, Sage Publications Lawson, N. (2010), The View from No. 11: Memoirs of a Tory Radical, revised edition, London, Biteback Lax, D. and Sebenius, J. (2006), 3-D Negotiation: Powerful Tools to Change the Game in Your Most Important Deals, Boston, Harvard Business School Press Le Grand, J. (2003), Motivation, Agency and Public Policy: Of Knights and Knaves, Pawns and Queens, New York, Oxford University Press — (2007), The Other Invisible Hand: Delivering Public Services through Choice and Competition, Princeton, Princeton University Press Lesley, E. (2014), Mapping a Transformation Journey: A Strategy for Malaysia’s Future, 2009–2010, Innovations for Successful Societies, Woodrow Wilson School of Public and International Affairs and the Mamdouha S.


pages: 387 words: 110,820

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

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

He reasoned that the common good was best served not by government regulation but by individuals making economic decisions that served their own interests. Given this, he said that good would be done as if by an “invisible hand.” In his words:Every individual intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.

Smith’s hero was the prudent man who behaved virtuously even when it was in his material interest to do otherwise. A prudent man, a practitioner of “frugality, and even some degree of parsimony” would likely not squander $7.99 a pound at the Whole Foods salad bar. But that doesn’t mean he has no interest in where his food is grown or in his community, or is out of reach of the “invisible hand.” Rather, a prudent man is likely to shop where his interests are best served. In Boston, for example, he might be at the Haymarket, a raucous open-air market favored by foodies on a budget. Every Friday afternoon and Saturday morning fifty or so vendors vie for business by hawking fruit, vegetables, and fish from ramshackle stalls.


pages: 357 words: 110,017

Money: The Unauthorized Biography by Felix Martin

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

Their love of luxury had made them encourage the monetisation of their feudal rents: “thus, for the gratification of the most childish, the meanest and the most sordid of all vanities, they gradually bartered their whole power and authority.”31 Smith’s metaphor for Mandeville’s paradoxical process—the “invisible hand” which ensures that “by pursuing his own interest [the individual] frequently promotes that of the society more effectually than when he really intends to promote it”—is so famous that it has long ago taken on a life of its own.32 Smith also emphasised that this pleasing outcome is a feature not so much of the individual’s decisions, as of the system itself: the individual “generally, indeed, neither intends to promote the publick interest, nor knows how much he is promoting it.”33 Smith articulated a vision of society in which economic value had become the measure of all things, and static traditional social relations were being replaced by dynamic monetary ones.

The more widespread that belief in the economists’ story of monetary society’s miraculous ability to regulate itself became, the greater became the capacity for moral disaster when policy-makers succumbed to the simplistic charms of its Looking-Glass world. The story of one of the most shameful episodes in the history of economic policy-making testifies to quite how bad things could get. THE INVISIBLE HAND IN ACTION In 1845, Ireland had been a full constituent nation of the United Kingdom for more than four decades, and an accessory of the British economy and polity, if often by force, for several centuries before that. Yet in its religion, politics, and language, Ireland retained a quite distinct culture from its neighbour: economically and socially speaking, it was almost of another era.

De Rubys, C. (1604), Histoire Veritable de la Ville de Lyon. Lyon. Dickson, P. (1967), The Financial Revolution in England: A Study in the Development of Public Credit, 1688–1756. London: Macmillan. Douglas, C.H. (1924), Social Credit. London: C. Palmer. Eatwell, J., Milgate, M., and Newman, P., eds (1989), The New Palgrave: The Invisible Hand. London: Macmillan. Elliot, G. (2006), The Mystery of Overend and Gurney. York: Methuen Publishing Ltd. Feavearyear, A.E. (1931), The Pound Sterling. Oxford: Clarendon Press. Fisher, I. (1936) [1935], 100% Money. New York: Adelphi Company. Flandreau, M. and Uglioni, S. (2011), “Where It All Began: Lending of Last Resort and the Bank of England During the Overend, Gurney Panic of 1866.”


pages: 382 words: 105,166

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

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

There was poison in this great industry, and even with Wedgwood’s true genius, he had not accounted for this heavy cost.33 Although Wedgwood the innovator would, in the end, use accounting to try to hold the status quo, economists and philosophers saw that accounting could be a tool for wider social and cultural change and progress. Adam Smith used accounting data to develop free-market theories. It was in ancient accounts, like the Domesday Book—which he called a “very imperfect book of accounts”—that Smith traced the movements of the invisible hand of market prices. He cited the accounts of French, English, and Scottish food markets to understand pricing. A professor of moral thought, Smith mixed the numbers of accounting with theories of moral commerce and liberty in his quest to design a model for human happiness.34 Moving beyond profit-oriented accounting, British Protestant thinkers tried to budget productiveness as well as happiness.

The most famous idea that emerged from the works of the French economic philosophers François Quesnay, Vincent de Gournay, and Anne-Robert-Jacques Turgot is what they famously called “laissez faire,” a theory of commerce based on the natural law of freedom. Before Adam Smith, it was their hope that by lifting government subsidies, price controls, and guild monopolies, an “invisible hand” would spur agricultural production and national wealth. Large-scale, state financial management was not necessary in a market regulated by the balance of nature itself. Although Quesnay used mathematics to study economic theory and de Gournay and Turgot were skilled accountants, their published work rarely contained analysis of complex numbers, accounts, or budgets.

Matthew (art) (Caravaggio), 23 International Accounting Standards Board (IASB), 194, 206 International Accounting Standards Committee (IASC), 194 Interstate Commerce Commission, 172 Introduction to the Counting House, An (Serjeant), 150 Inventorying, 2–3 Investment banks, x, 192, 200, 202–204 Investment in stocks Dutch East India Company and, 79–84 Great Depression and, 192–193 railroads and, 169, 174 risky mortgage bundles and, 202–203, 206 South Sea Company and, 106–112 Invisible hand, 130, 135 Irwin, Timothy, 207 Islington Academy, 119 Italian city republics. See Renaissance; Republics, Italian Jacombe, Robert, 110 Jacques Savary, 96–97 Jarry, Nicolas, 97 Jefferson, Thomas, 155–156 Jesuit order, 57 Jesus Christ, 23, 26 Jews, usury and, 21 Johnson, Lyndon, 198 Johnson, Samuel, 115 Joint Stock Companies Act of 1844 (England), 173 Jones, Joseph, 159 Jones, Lewis Davies, 173 Jullien, Adolph, 169 “Just price” concept (Aquinas), 21, 62 Kantoor van de Financie van Holland, 71 Keayne, Robert, 149 Kennedy, Joseph P., 192 Kent, William, 116 Knight, Robert, 112 KPMG, x, 202 Laffitte, Jacques, 167 “Laissez faire” theory, 135, 163, 171–172 Lampe, Barent, 81 Law, John, 107, 134 Lawrence, Thomas, 123 Le Maire, Isaac, 80–81 Le Peletier, Claude, 99 Leeson, Nick, 123 Lehman Brothers Bank, x, 203 Lenin, Vladimir, 187 Leonardo da Vinci, 50 Lerma, Duke of, 68 Leviathan (Hobbes), 104 Liabilities, in accounting, 83 Liancourt, Duke de, 145 Liber abaci (Fibonacci), 10 Libro segreto, 18–19, 34, 37, 44 L’Interdiction (The Ban) (Balzac), 178–179 Little Dorrit (Dickens), 171, 178, 180–181 Little Women (Alcott), 181–182 Locke, John, 103 London (Johnson), 115 Loose-leaf notebooks, 169 Lorenzo the Magnificent.


pages: 460 words: 107,454

Stakeholder Capitalism: A Global Economy That Works for Progress, People and Planet by Klaus Schwab, Peter Vanham

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 3D printing, additive manufacturing, agricultural Revolution, air traffic controllers' union, Anthropocene, Apple II, Asian financial crisis, Asperger Syndrome, basic income, Berlin Wall, Big Tech, biodiversity loss, bitcoin, Black Lives Matter, blockchain, blue-collar work, Branko Milanovic, Bretton Woods, British Empire, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, car-free, carbon footprint, carbon tax, centre right, clean tech, clean water, cloud computing, collateralized debt obligation, collective bargaining, colonial rule, company town, contact tracing, contact tracing app, Cornelius Vanderbilt, coronavirus, corporate governance, corporate social responsibility, COVID-19, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, cuban missile crisis, currency peg, cyber-physical system, decarbonisation, demographic dividend, Deng Xiaoping, Diane Coyle, digital divide, don't be evil, European colonialism, Fall of the Berlin Wall, family office, financial innovation, Francis Fukuyama: the end of history, future of work, gender pay gap, general purpose technology, George Floyd, gig economy, Gini coefficient, global supply chain, global value chain, global village, Google bus, green new deal, Greta Thunberg, high net worth, hiring and firing, housing crisis, income inequality, income per capita, independent contractor, industrial robot, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, Khan Academy, Kickstarter, labor-force participation, lockdown, low interest rates, low skilled workers, Lyft, manufacturing employment, Marc Benioff, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, Martin Wolf, means of production, megacity, microplastics / micro fibres, Mikhail Gorbachev, mini-job, mittelstand, move fast and break things, neoliberal agenda, Network effects, new economy, open economy, Peace of Westphalia, Peter Thiel, precariat, Productivity paradox, profit maximization, purchasing power parity, race to the bottom, reserve currency, reshoring, ride hailing / ride sharing, Ronald Reagan, Salesforce, San Francisco homelessness, School Strike for Climate, self-driving car, seminal paper, shareholder value, Shenzhen special economic zone , Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, social distancing, Social Responsibility of Business Is to Increase Its Profits, special economic zone, Steve Jobs, Steve Wozniak, synthetic biology, TaskRabbit, The Chicago School, The Future of Employment, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the scientific method, TikTok, Tim Cook: Apple, trade route, transfer pricing, Uber and Lyft, uber lyft, union organizing, universal basic income, War on Poverty, We are the 99%, women in the workforce, working poor, working-age population, Yom Kippur War, young professional, zero-sum game

Union membership started to decline, and collective bargaining became less common (though much of continental Europe, including Germany, France, and Italy clung to it until the 2000s, and some, like Belgium, still do today). Economic policies in two of the West's leading economies—the United Kingdom and the United States—were largely geared toward deregulation, liberalization, and privatization, and a belief that an invisible hand would lead markets to their optimal state. Many other Western economies later followed their path, in some cases after more left-leaning governments failed to jumpstart economic growth. On a more positive note, new technologies also made their contribution, leading to a Third Industrial Revolution.

It should come as no surprise then that many Western societies have become deeply polarized, people have become wary of their institutions and leaders, and increasingly, these various factions only interact within their own echo chamber. For decades, their leaders promised things would get better for everyone, and many privileged observers stood by. If only we let the free market run its course, they said, an invisible hand would allocate all resources optimally. If only companies were unshackled of regulation, they would create unmatched prosperity. And if only financial and technological innovators could blossom, we'd reach endless GDP growth, which would have benefits for all. Many leading economists believed in these dogmas, and they increasingly influenced government and central banks.

The car replaced the horse, the plane replaced the ship, and electric household devices replaced domestic workers. Milton Friedman and his colleagues at the University of Chicago (the so-called Chicago School) went a step further. Friedman believed in the naturally positive role of business in the economic system. An invisible hand ensured that markets would always have an optimal outcome, maximizing utility for society. It meant that “there is one and only one social responsibility of business,” Friedman wrote in a 1970 New York Times essay.43 It is “to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.”


pages: 460 words: 107,454

Stakeholder Capitalism: A Global Economy That Works for Progress, People and Planet by Klaus Schwab

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 3D printing, additive manufacturing, agricultural Revolution, air traffic controllers' union, Anthropocene, Apple II, Asian financial crisis, Asperger Syndrome, basic income, Berlin Wall, Big Tech, biodiversity loss, bitcoin, Black Lives Matter, blockchain, blue-collar work, Branko Milanovic, Bretton Woods, British Empire, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, car-free, carbon footprint, carbon tax, centre right, clean tech, clean water, cloud computing, collateralized debt obligation, collective bargaining, colonial rule, company town, contact tracing, contact tracing app, Cornelius Vanderbilt, coronavirus, corporate governance, corporate social responsibility, COVID-19, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, cuban missile crisis, currency peg, cyber-physical system, decarbonisation, demographic dividend, Deng Xiaoping, Diane Coyle, digital divide, don't be evil, European colonialism, Fall of the Berlin Wall, family office, financial innovation, Francis Fukuyama: the end of history, future of work, gender pay gap, general purpose technology, George Floyd, gig economy, Gini coefficient, global supply chain, global value chain, global village, Google bus, green new deal, Greta Thunberg, high net worth, hiring and firing, housing crisis, income inequality, income per capita, independent contractor, industrial robot, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, Khan Academy, Kickstarter, labor-force participation, lockdown, low interest rates, low skilled workers, Lyft, manufacturing employment, Marc Benioff, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, Martin Wolf, means of production, megacity, microplastics / micro fibres, Mikhail Gorbachev, mini-job, mittelstand, move fast and break things, neoliberal agenda, Network effects, new economy, open economy, Peace of Westphalia, Peter Thiel, precariat, Productivity paradox, profit maximization, purchasing power parity, race to the bottom, reserve currency, reshoring, ride hailing / ride sharing, Ronald Reagan, Salesforce, San Francisco homelessness, School Strike for Climate, self-driving car, seminal paper, shareholder value, Shenzhen special economic zone , Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, social distancing, Social Responsibility of Business Is to Increase Its Profits, special economic zone, Steve Jobs, Steve Wozniak, synthetic biology, TaskRabbit, The Chicago School, The Future of Employment, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the scientific method, TikTok, Tim Cook: Apple, trade route, transfer pricing, Uber and Lyft, uber lyft, union organizing, universal basic income, War on Poverty, We are the 99%, women in the workforce, working poor, working-age population, Yom Kippur War, young professional, zero-sum game

Union membership started to decline, and collective bargaining became less common (though much of continental Europe, including Germany, France, and Italy clung to it until the 2000s, and some, like Belgium, still do today). Economic policies in two of the West's leading economies—the United Kingdom and the United States—were largely geared toward deregulation, liberalization, and privatization, and a belief that an invisible hand would lead markets to their optimal state. Many other Western economies later followed their path, in some cases after more left-leaning governments failed to jumpstart economic growth. On a more positive note, new technologies also made their contribution, leading to a Third Industrial Revolution.

It should come as no surprise then that many Western societies have become deeply polarized, people have become wary of their institutions and leaders, and increasingly, these various factions only interact within their own echo chamber. For decades, their leaders promised things would get better for everyone, and many privileged observers stood by. If only we let the free market run its course, they said, an invisible hand would allocate all resources optimally. If only companies were unshackled of regulation, they would create unmatched prosperity. And if only financial and technological innovators could blossom, we'd reach endless GDP growth, which would have benefits for all. Many leading economists believed in these dogmas, and they increasingly influenced government and central banks.

The car replaced the horse, the plane replaced the ship, and electric household devices replaced domestic workers. Milton Friedman and his colleagues at the University of Chicago (the so-called Chicago School) went a step further. Friedman believed in the naturally positive role of business in the economic system. An invisible hand ensured that markets would always have an optimal outcome, maximizing utility for society. It meant that “there is one and only one social responsibility of business,” Friedman wrote in a 1970 New York Times essay.43 It is “to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.”


pages: 356 words: 106,161

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

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

Because for all the talk about how capitalism has been one of the great engines of human progress in their narrative, there is virtually no discussion of how markets, firms, and entrepreneurs have achieved this. This chapter is about the very visible hand of capitalism and whether its contribution to progress is what the New Optimists claim it is. Markets Behaving Badly “Money and power are inextricably linked. And with power has come influence over the market mechanism. The invisible hand of the marketplace is connected to a wealthy and muscular arm. It is perhaps no accident that those who argue most vehemently on behalf of an immutable and rational “free market” and against government “intrusion” are often the same people who exert disproportionate influence over the market mechanism.

Unfortunately, the complete mismatch of where global capitalism’s trillions of investable wealth ends up (unproductive but lucrative housing markets, risky third-world corporate debt, safe first-world public debt, or simply stashed away in tropical island tax havens) and where it should (clean energy, green infrastructure, social investments) is possibly the most serious indication of how modern capitalism is unfit for the challenge of climate change, or any challenge that requires prioritizing environmental and social needs rather than treating them as consequential to interest rates being in equilibrium with the profit motive of each individual firm. But even in the event that the invisible hand guided private capital towards climate mitigating investment, this comes up against yet another well-known quandary in environmental economics: the Jevons Paradox. Named after a mid-nineteenth-century English economist, William Stanley Jevons, the paradox is one that appears to be endemic to resource markets; the tendency for efficiency gains in any industry to result in increased demand.

., Capitalist Realism, pg. 80-81 ACKNOWLEDGEMENTS First and foremost, I would like to thank the wonderful staff at Repeater Books for helping put this book together, in particular Tariq Goddard for taking a chance with a manuscript from a first-time author as well as Josh Turner for his editing work and incredibly valuable feedback. It is a shame that Mark Fisher was no longer with us to be part of this project, but I would like to think that his “invisible hand” may have had some spiritual role in certain sections of the book. Publisher aside, I would also like to give thanks to Ivan Mulcahy for feedback on a very early version of the manuscript and steering it towards the direction it eventually took. A few people read some version of the manuscript and offered feedback, and/or had extended conversations with me (including the occasional heated debates) on the topics that were dealt with in the book.


pages: 824 words: 218,333

The Gene: An Intimate History by Siddhartha Mukherjee

Albert Einstein, Alfred Russel Wallace, All science is either physics or stamp collecting, Any sufficiently advanced technology is indistinguishable from magic, Asilomar, Asilomar Conference on Recombinant DNA, autism spectrum disorder, Benoit Mandelbrot, butterfly effect, CRISPR, dark matter, discovery of DNA, double helix, Drosophila, epigenetics, Ernest Rutherford, experimental subject, Gregor Mendel, Internet Archive, invisible hand, Isaac Newton, longitudinal study, medical residency, military-industrial complex, moral hazard, mouse model, New Journalism, out of africa, phenotype, Pierre-Simon Laplace, planned obsolescence, Ponzi scheme, Ralph Waldo Emerson, Recombinant DNA, Scientific racism, seminal paper, stem cell, The Bell Curve by Richard Herrnstein and Charles Murray, Thomas Malthus, twin studies

But aside from inventing a Latinate name for a vague principle, Wolff could provide no further specifics. The instructions, he argued obliquely, were blended together in the fertilized egg. The vis essentialis then came along, like an invisible hand, and molded the formation of this mass into a human form. While biologists, philosophers, Christian scholars, and embryologists fought their way through vicious debates between preformation and the “invisible hand” throughout much of the eighteenth century, a casual observer may have been forgiven for feeling rather unimpressed by it all. This was, after all, stale news. “The opposing views of today were in existence centuries ago,” a nineteenth-century biologist complained, rightfully.

“The opposing views of today were in existence centuries ago,” a nineteenth-century biologist complained, rightfully. Indeed, preformation was largely a restatement of Pythagoras’s theory—that sperm carried all the information to make a new human. And the “invisible hand” was, in turn, merely a gilded variant of Aristotle’s idea—that heredity was carried in the form of messages to create materials (it was the “hand” that carried the instructions to mold an embryo). In time, both the theories would be spectacularly vindicated, and spectacularly demolished. Both Aristotle and Pythagoras were partially right and partially wrong.

What hand, Darwin asked, had guided the creation of such different varieties of finches on those distant volcanic islands or made small armadillos out of giant precursors on the plains of South America? Darwin knew that he was now gliding along the dangerous edge of the known world, tacking south of heresy. He could easily have ascribed the invisible hand to God. But the answer that came to him in October 1838, in a book by another cleric, the Reverend Thomas Malthus, had nothing to do with divinity. Thomas Malthus had been a curate at the Okewood Chapel in Surrey by daytime, but he was a closet economist by night. His true passion was the study of populations and growth.


pages: 239 words: 62,311

The Next Factory of the World: How Chinese Investment Is Reshaping Africa by Irene Yuan Sun

"World Economic Forum" Davos, asset light, barriers to entry, Bretton Woods, business logic, capital controls, clean water, Computer Numeric Control, deindustrialization, demographic dividend, Deng Xiaoping, Donald Trump, European colonialism, floating exchange rates, full employment, global supply chain, Great Leap Forward, invisible hand, job automation, low skilled workers, M-Pesa, manufacturing employment, means of production, mobile money, Multi Fibre Arrangement, post-industrial society, profit motive, purchasing power parity, race to the bottom, RAND corporation, Ronald Reagan, Shenzhen special economic zone , Shenzhen was a fishing village, Silicon Valley, Skype, special economic zone, structural adjustment programs, tacit knowledge, Triangle Shirtwaist Factory, union organizing, Washington Consensus, working-age population

And it’s a recognition that no one can ever accomplish anything hard without at least giving it a try. If that sounds overly glib, consider that its very glibness serves a purpose. As the late, great economist Albert O. Hirschman observed, a certain amount of overconfidence is necessary for economic development. In a corollary to Adam Smith’s “invisible hand” that guides market decisions, Hirschman identified a “Hiding Hand” that obscures difficulties and allows people to embark on projects that are beyond their current ken. He writes, “The Hiding Hand can help accelerate the rate at which ‘mankind’ engages successfully in problem-solving: it takes up problems it thinks it can solve, finds they are really more difficult than expected, but then, being stuck with them, attacks willy-nilly the unsuspected difficulties—and sometimes even succeeds.”35 This is the mental enabler of bootstrapping: if you’re overconfident, you’re more likely to take on a challenge and more likely to stick with it when it gets hard.

See also union movements Humanwell Healthcare Group, 166–169 Ibrahim, Ahmed, 89–91, 93, 94 Ibrahim, Mo, 136 identity, 124–127 illiteracy, 95 import substitution industrialization, 37–38 Independent Democratic Union of Lesotho (IDUL), 103–104 India, 43–44, 161–162 industrialization China, 1–3 complaints about workers in, 91, 96–100 deaths during, 83–84 economic development and, 12–13, 20 economic slowing in China and, 171–172 flying geese theory of, 93, 112–113 government development with, 82–84 history of, 19–20 as human chain reaction, 17–30 import substitution, 37–38 negative effects of, 7–8 possibilities of, 9–10 product upgrading in, 26–27 societal transformations from, 91, 97–98, 101–107 uneven paths of, 109–127 infrastructure, 62–63, 65–66 Chinese investment in African, 43 clever, 175–177 good enough governance and, 140 Nigeria, 38 South Africa, 62–63 innovation, 142–148, 158 institutions, economic development and, 22 international aid, 9–10, 135–136, 151–169 International Labour Organization, 94 International Monetary Fund, 20, 37, 174 invisible hand, 165 Japan, industrialization in, 19, 25, 26, 29 Joseph, Michael, 144 Kaduna Textile Mills, 33–34, 35, 38 Kanono, Mpho Agatha, 102–105 Katzenstein, Peter, 147–148 Kenya, 11, 109–112 demographics, 190n14 industrialization in, 8 local ownership in, 119–120 M-Pesa in, 142–146, 190n14 pharmaceutical industry, 157 railroad project in, 175–177 worker skills training in, 129–134, 148–150 Kenya Association of Manufacturers, 120, 133–134 Kenya Technical Trainers College, 133, 149 Kenya Wildlife Service, 175 Kerry, John, 156 Kibaki, Mwai, 144 Knack, Stephen, 140–141 Kohl’s, 56 labor costs, 7, 23, 64 China vs.


pages: 442 words: 39,064

Why Stock Markets Crash: Critical Events in Complex Financial Systems by Didier Sornette

Alan Greenspan, Asian financial crisis, asset allocation, behavioural economics, Berlin Wall, Black Monday: stock market crash in 1987, Bretton Woods, Brownian motion, business cycle, buy and hold, buy the rumour, sell the news, capital asset pricing model, capital controls, continuous double auction, currency peg, Deng Xiaoping, discrete time, diversified portfolio, Elliott wave, Erdős number, experimental economics, financial engineering, financial innovation, floating exchange rates, frictionless, frictionless market, full employment, global village, implied volatility, index fund, information asymmetry, intangible asset, invisible hand, John von Neumann, joint-stock company, law of one price, Louis Bachelier, low interest rates, mandelbrot fractal, margin call, market bubble, market clearing, market design, market fundamentalism, mental accounting, moral hazard, Network effects, new economy, oil shock, open economy, pattern recognition, Paul Erdős, Paul Samuelson, power law, quantitative trading / quantitative finance, random walk, risk/return, Ronald Reagan, Schrödinger's Cat, selection bias, short selling, Silicon Valley, South Sea Bubble, statistical model, stochastic process, stocks for the long run, Tacoma Narrows Bridge, technological singularity, The Coming Technological Singularity, The Wealth of Nations by Adam Smith, Tobin tax, total factor productivity, transaction costs, tulip mania, VA Linux, Y2K, yield curve

Smith’s masterpiece [384], An Inquiry into the Nature and Causes of the Wealth of Nations, introduced the then-radical notion that selfish, greedy individuals, if allowed to pursue their interests largely unchecked, would interact to produce a wealthier society as if guided by an “invisible hand.” Smith never worked out a proof that this invisible hand existed. Not all subsequent economists agreed with his optimistic assessment. T. Malthus thought people would have too many children and overpopulate the world. Karl Marx thought capitalists would be so greedy they would 84 chapter 4 bring down the system. But they all shared Smith’s view of economics as the study of people trying to maximize their material well being. In 1954, K. Arrow and G. Debreu [16] published an article that in essence mathematically proved the existence of Adam Smith’s invisible hand. This “general equilibrium” proof, which relies on a set of very restricted assumptions of an idealized world, has been a mainstay of graduate-level economics training ever since.

Conway, G. and Toenniessen, G. (1999). Feeding the world in the twenty-first century, Nature 402, c55–c58. 92. Cootner, P. H., Editor (1967). The Random Character of Stock Market Prices (Cambridge, MA, MIT Press). 93. Cosmides, L. and Tooby, J. (1994). Better than rational—evolutionary psychology and the invisible hand, American Economic Review 84, 327–332. 94. Costanza, R., dArge, R., deGroot, R., Farber, S., Grasso, M., Hannon, B., Limburg, K., Naeem, S., O’Neill, R. N., Parvelo, J., Raskin, R. G., Sutton, P., and van den Belt, M. (1997). The value of the world’s ecosystem services and natural capital, Nature 387, 253–260. 95.


pages: 614 words: 174,226

The Economists' Hour: How the False Prophets of Free Markets Fractured Our Society by Binyamin Appelbaum

90 percent rule, airline deregulation, Alan Greenspan, Alvin Roth, Andrei Shleifer, anti-communist, battle of ideas, Benoit Mandelbrot, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, Celtic Tiger, central bank independence, clean water, collective bargaining, Corn Laws, correlation does not imply causation, Credit Default Swap, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, desegregation, Diane Coyle, Donald Trump, Dr. Strangelove, ending welfare as we know it, financial deregulation, financial engineering, financial innovation, fixed income, flag carrier, floating exchange rates, full employment, George Akerlof, George Gilder, Gini coefficient, greed is good, Greenspan put, Growth in a Time of Debt, Ida Tarbell, income inequality, income per capita, index fund, inflation targeting, invisible hand, Isaac Newton, It's morning again in America, Jean Tirole, John Markoff, Kenneth Arrow, Kenneth Rogoff, land reform, Les Trente Glorieuses, long and variable lags, Long Term Capital Management, low cost airline, low interest rates, manufacturing employment, means of production, Menlo Park, minimum wage unemployment, Mohammed Bouazizi, money market fund, Mont Pelerin Society, Network effects, new economy, Nixon triggered the end of the Bretton Woods system, oil shock, Paul Samuelson, Philip Mirowski, Phillips curve, plutocrats, precautionary principle, price stability, profit motive, public intellectual, Ralph Nader, RAND corporation, rent control, rent-seeking, Richard Thaler, road to serfdom, Robert Bork, Robert Gordon, Robert Solow, Ronald Coase, Ronald Reagan, Sam Peltzman, Savings and loan crisis, Silicon Valley, Simon Kuznets, starchitect, Steve Bannon, Steve Jobs, supply-chain management, The Chicago School, The Great Moderation, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, transaction costs, trickle-down economics, ultimatum game, Unsafe at Any Speed, urban renewal, War on Poverty, Washington Consensus, We are all Keynesians now

They did not think the government could increase growth by borrowing money from private citizens and spending it on public works. This was widely seen as equivalent to moving money from the left pocket to the right pocket of the same pair of pants. Keynes’s letter was an attack on this faith in markets. In his view, no invisible hand ensured markets automatically would deliver the best possible outcomes. Businesses uncertain about the future would refrain from investing; people would remain unemployed. The government, he said, needed to borrow and spend until “animal spirits” were revived.3 Keynes wrote that if Roosevelt followed his instructions, the President could spark a global recovery.

Dales, Pollution, Property and Prices (Toronto: University of Toronto Press, 1968), 100. 30. A number of recent works have influenced my understanding of the relationship between the rise of the conservative movement in American politics and the rise of trust-the-market economics, including: Bernstein, A Perilous Progress; Kim Phillips-Fein, Invisible Hands: The Businessmen’s Crusade Against the New Deal (New York: Norton, 2010); Lisa McGirr, Suburban Warriors: The Origins of the New American Right (Princeton, N.J.: Princeton University Press, 2001); Kevin Kruse, One Nation Under God: How Corporate America Invented Christian America (New York: Basic Books, 2015); and Rick Perlstein, Before the Storm: Barry Goldwater and the Unmaking of the American Consensus (New York: Hill and Wang, 2001). 31.

Powell wrote in his memo (see the next endnote) that Bank of America branches had been attacked 39 times in the previous eighteen months, “22 times with explosive devices and 17 times with fire bombs or by arsonists.” 23. Powell’s memo, “Attack on American Free Enterprise System,” was dated August 23, 1971. For the memo and the reaction, see Kim Phillips-Fein, Invisible Hands: The Businessman’s Crusade Against the New Deal (New York: Norton, 2010), 156–65. 24. Lee Edwards, The Power of Ideas: The Heritage Foundation at 25 Years (Ottawa, Ill.: Jameson Books, 1997), 9. 25. Jacob S. Hacker and Paul Pierson, Winner-Take-All Politics: How Washington Made the Rich Richer — and Turned Its Back on the Middle Class (New York: Simon and Schuster, 2010), 116. 26.


Manias, Panics and Crashes: A History of Financial Crises, Sixth Edition by Kindleberger, Charles P., Robert Z., Aliber

active measures, Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, Boeing 747, Bonfire of the Vanities, break the buck, Bretton Woods, British Empire, business cycle, buy and hold, Carmen Reinhart, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, Corn Laws, corporate governance, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cross-border payments, currency peg, currency risk, death of newspapers, debt deflation, Deng Xiaoping, disintermediation, diversification, diversified portfolio, edge city, financial deregulation, financial innovation, Financial Instability Hypothesis, financial repression, fixed income, floating exchange rates, George Akerlof, German hyperinflation, Glass-Steagall Act, Herman Kahn, Honoré de Balzac, Hyman Minsky, index fund, inflation targeting, information asymmetry, invisible hand, Isaac Newton, Japanese asset price bubble, joint-stock company, junk bonds, large denomination, law of one price, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, low interest rates, margin call, market bubble, Mary Meeker, Michael Milken, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, new economy, Nick Leeson, Northern Rock, offshore financial centre, Ponzi scheme, price stability, railway mania, Richard Thaler, riskless arbitrage, Robert Shiller, short selling, Silicon Valley, South Sea Bubble, special drawing rights, Suez canal 1869, telemarketer, The Chicago School, the market place, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, very high income, Washington Consensus, Y2K, Yogi Berra, Yom Kippur War

Household consumption spending is three or four times larger than investment spending in most countries, and accounted for most of the increase in total spending. The inevitable outcome of the adjustment process was that domestic saving declined in the countries that received large inflows of cross-border money. The invisible hand led to increases in the values of the currencies of the countries that experienced larger money inflows and to increases in the values of assets in these countries. Moreover the invisible hand led to higher rates of growth of GDP as asset prices increased and consumption spending climbed. Thus the increases in the variability in the ratios of the changes in the trade balances to GDP that resulted from the initial increase in the flows of money to countries induced changes in the adjustment process that led to higher rates of return on securities and other assets in these countries.

The price of securities available in the country also increased in response to the purchases by the foreign investors. When currencies were not pegged, comparable increases in the foreign demand for securities denominated in these currencies initiated the adjustment process to ensure that the countries’ trade balances changed by the amounts that corresponded to the increases in the money inflows. The invisible hand operated to ensure that the immediate impacts of the increases in the flows of money was that domestic investment spending increased as the cost of capital declined and consumption spending increased in response to higher levels of household wealth. Household consumption spending is three or four times larger than investment spending in most countries, and accounted for most of the increase in total spending.

Morier 163 excessive leverage concept 30 exchange rates 2, 293 floating 2, 165, 178, 186, 187, 229, 250, 279, 291 pegged 2, 6, 16, 17, 98, 168, 190, 229, 244, 246, 250, 277, 291 see also foreign exchange Exchequer bills 197, 200, 210–12 expectations adaptive 39–40 rational/irrational 39–40, 84–5 fallacy of composition 42, 213, 231 Fannie Mae 24, 87, 195, 263, 299, 300 Fastow, Andrew and Lea 132 Fauntleroy, Henry 141 Federal Deposit Insurance Corporation (FDIC) 65, 127, 210, 251, 262, 265, 270 Federal Reserve Act 1913 (US) 65, 224 Federal Reserve Bank of New York 82, 168, 208, 223, 227, 245, 246, 249, 252 Great Depression and 78–9, 99, 104, 167–8, 223 Federal Reserve Board 19, 77, 168, 183, 223, 227 Federal Reserve System 20, 65, 89, 91, 203, 251 Volcker shock, 1979 284 Federal Savings and Loan Insurance Corporation (FSLIC) 24, 127, 210 Fidelity group 104 financial deepening 259 financial distress 84–5, 90–4, 162, 166 swindles/fraud and 144 financial liberalization see deregulation financial regulation 174 bank regulation/supervision 193–4 Finland 121, 157, 280, 285 First Bank of the United States 219 First Jersey Securities 47, 138 First Republic Bank of Dallas 210 First World War see World War I Fisher, Irving 18, 27, 44 Fisk, Jim 46, 139, 165 Fordyce, Alexander 58, 96, 142 foreign exchange 1, 2, 35, 120, 148 see also exchange rates foreign exchange crises 2, 3, 6–7, 250 Foxwell, H.S. 101–2, 226 France 55, 63, 92 1825 crisis 235–6 1826–32 speculation 49–50 1836–39 crisis 89, 162 1857 crisis 89 1882 crash 74–5, 97 Alsace crisis, 1827–28 161, 204 Paris vs London 239–40 see also Bank of France; French Revolution Franco-Prussian indemnity 54, 165 Franklin National Bank, New York 3, 44, 103, 251 fraud see swindles/fraud Freddie Mac 24, 87, 195, 263, 299, 300 Frederick II of Prussia 54, 160, 200 French Revolution, 1789–95 53–4, 96 Friedman, Milton 41, 197, 209 on Great Depression 78–9, 81, 154–5, 215 G-5 256 G-7 252, 256 gambling 59, 60, 89, 140 see also swindles/fraud Garber, Peter M. 111 Garnier-Pagès, Louis Antoine 213 Genoa Conference, 1922 77 Germany 157–8, 165–6 1925 depression 21, 50, 53, 167–8 Berlin 112, 145, 160, 165, 237 Berlin crisis, 1763 200 Cologne 3, 163–4, 251, 278 Dawes loan to, 1924 242 Hamburg see Hamburg Maklerbanken 63 the mark 77, 78, 241 Reichsbank 91, 93, 224, 238 see also Prussia Gibbons, James S. 94, 150 Glass-Steagall Act 1932 (US) 91, 144, 150–1, 168–9, 194, 298 Global Crossing 119 Glyn, Mills & Co. 207 Goddefroy, Gustav 144 gold 3, 4, 14, 31, 43–4, 48, 63, 82, 91, 93, 164, 168, 230, 235, 238–9, 242, 245, 246, 247, 275 exchange standard 77–8, 83, 154 panic, 1869 46, 165 standard 66, 73, 79, 242, 243 gold agio, in US 46, 155, 165 gold discoveries 48–9, 60, 164 gold parity 2, 43 gold prices 1869 panic 46, 165 1970s surge 43–4 gold-exchange standard 77–8, 83, 154 Goldman Sachs 120, 270 Goldschmidt, Jacob 217, 244 Gould, Jay 46, 165 grain prices see corn prices Granger movement 101 Grasso, Richard 135 Great Britain 1636 bubble 11 1772 crisis 96 1810 crisis 160 1825 crash and panic 88, 92, 105 1864 crisis 97 1872–73 financial distress 238 1886 crisis 73 1907 financial distress 94, 119, 167–8 1931 crisis 244, 246 Cabinet Committee on Economic Information 243 Glorious Revolution, 1688 53 railway booms 45, 225 Scotland 81, 224 see also Bank of England Great Depression, 1928–33 causes of 21, 63, 76, 78–80, 89, 154, 167–9, 240–6 credit expansion and 78ff as international 167–9 Keynesian view of 79–80 lenders of last resort and 227, 228 monetarist view of 79–80 Greece 170, 171, 274, 275, 287 Greenspan, Alan 10, 19–20, 29, 90, 99, 183, 186, 191, 223, 227 Grill, Carlos and Claes 72 Grubman, Jack 22, 119, 137, 139 guarantee of liabilities 206–8 Guinness, Arthur and Co. 49 Guy, Thomas 100 Hamburg 50–1, 160 1836–39 crisis 236 1857 crisis 205–6, 236–7 Hansen, Alvin H. 35, 78 Harrison, George 223, 227 Hatry, Clarence 142 Hawtrey, R.G. 103, 162, 242–3 on IMF 330n44 Hayek, Friedrich 81 HealthSouth 119, 135, 152 hedge finance 29, 69 hedge funds 20, 55–6, 74, 86, 95, 121, 136–7, 150, 199, 262 see also Long-Term Capital Management (US) Herstatt AG, Cologne 3, 251, 278 Holland (the Netherlands) 59, 62 1763 crisis 235 Amsterdam see Amsterdam tulipmania, 1636 11, 17, 59, 109–11 home-equity credit 68–9 Hong Kong 85, 178, 233 Hoover, Herbert 154, 167, 195–6 Howson, Susan 242, 225 Hoyt, Homer 111–2 Hudson, George 147 Hungary 165, 242 Hunt, Bunker 94 Huskisson, William 211–12 Hyndman, H.M. 305n33 Iceland 4, 10, 20, 28, 36–7, 121, 154, 186, 187, 287 ImClone 135 India 54, 130, 139, 164 Indonesia, 1990s asset price bubble 1, 6, 8, 11, 24, 104, 126, 180, 253 inflation in 1970s 81, 282–3 hyperinflation 98, 241 in US 282–3 inflation rates 4–5, 181, 282–6 inflation targeting 115 information availability 303n10 ING (bank) 4 initial public offerings (IPOs) 56, 181 Innovation financial 51, 55–6, in credit expansion 62–5, 66, 69–77, 131 technological 18, 27, 56, 181 insiders see outsiders/insiders insider trading 120 installment credit 63, 69 Insull, Samuel 148 interest rates 44, 174, 284 on international loans 35–6 on junk bonds 71 panics and 49–50, 54–5, 82, 106 in Ponzi finance 29 International Bank for Reconstruction and Development (IBRD) see World Bank International Monetary Fund (IMF) 104, 202, 247–8 General Arrangements to Borrow 248 R.G. Hawtrey on 330n44 as lender of last resort 16, 25, 198, 231, 234, 248, 296 internet 147 investment banks 4, 9, 23, 56, 74, 119, 120–1, 130, 138, 149, 151, 174, 181–2, 183, 194, 208, 257ff, 298, 299, 300 invisible hand theory 293 Ireland 274, 275, 287 irrational exuberance concept 13, 90, 180, 183, 273 irrationality see rationality Israel, Jonathan 111 Istituto Per la Ricostruzione Industriale (IRI) 23 Italy 165 1907 crisis 23, 25, 167 Jackson, Andrew 91, 154 Janssen, Sir Theodore 158 Japan 1985–89 asset price bubble 1, 3, 4, 7, 8, 9, 17–18, 23, 36, 113, 125, 173–7, 176, 285, 251 1990s crisis 5, 24, 98, 176–7, 199 banking system 174–5, 175, 176 deregulation 56, 114, 174–5, 176, 285 real estate and share prices see 1985–89 asset price bubble above Tokyo 94–5, 175 Jellico, Charles 216 ‘jingle mail’ 93, 261 Johnson, Harry G. 40, 46 Johnson, Paul 196 Joplin, Thomas 16 Joseph, Arend 152, 196 journalism, as unethical 145–7 Juglar, Clement 155 Juglar cycle of investment 26 junk bonds 2, 20, 70–1, 128–9, 152 Kahn, Herman 104, 128 Kaminsky, Graciela 74 Kauffman Brothers, Hamburg 194 Kaufman, Henry 64 Keating, Charles 174 Kennedy, Joseph P.


pages: 412 words: 113,782

Business Lessons From a Radical Industrialist by Ray C. Anderson

"Friedman doctrine" OR "shareholder theory", addicted to oil, Alan Greenspan, Albert Einstein, An Inconvenient Truth, banking crisis, Bear Stearns, biodiversity loss, business cycle, carbon credits, carbon footprint, carbon tax, centralized clearinghouse, clean tech, clean water, corporate social responsibility, Credit Default Swap, dematerialisation, distributed generation, do well by doing good, Easter island, energy security, Exxon Valdez, fear of failure, Gordon Gekko, greed is good, Indoor air pollution, Intergovernmental Panel on Climate Change (IPCC), intermodal, invisible hand, junk bonds, late fees, Mahatma Gandhi, market bubble, music of the spheres, Negawatt, Neil Armstrong, new economy, off-the-grid, oil shale / tar sands, oil shock, old-boy network, peak oil, precautionary principle, renewable energy credits, retail therapy, shareholder value, Silicon Valley, six sigma, subprime mortgage crisis, supply-chain management, urban renewal, Y2K

There is the flawed view that when accumulating all that stuff gets us into trouble technology will see us through, even though it’s the extractive, abusive attributes of technology—especially when coupled with numbers-driven, unemotional, results-oriented, left brain intelligence—that got us into the fix to begin with. And there is the flawed view that relies on the invisible hand of the market to be an honest broker, even though we know the market can be very dishonest. Does the price of a pack of cigarettes reflect its true cost? Not even close! How about the price tag on a lead-tainted toy from China? A box of contaminated infant formula? I don’t think so. And the price of a barrel of oil?

Will he succumb to temptation and issue more regulations, unfunded mandates, and edicts? Or is there a better way here, too? The kind of future our children and grandchildren will live to see depends on getting this thing right. What should he do? Well, I expect you already know my thoughts about placing too much faith in that mythical invisible hand of the market. Trusting in its ultimate wisdom ( just like mistrusting anything government comes up with) may be bred into the bones of most business people. But as long as the market is steered by invisible subsidies and perverse incentives, as long as it remains blind to the real costs—economic, social, and environmental—it cannot steer a safe course through the storm any better than a blind helmsman can keep a ship off a reef.

It must become an even bigger part of the solution. In a sustainable society, technologies will share different general characteristics. They will be renewable, cyclical, solar-driven, waste-free, benign, and focused on resource-productivity. That old flawed view of reality holds that the invisible hand of the market is an honest broker. Yet the market is as blind as a bat if prices are dishonest. A sustainable society will insist on ecologically honest prices that will enable a sighted market to work for sustainability rather than against sustainability. The old, flawed view of reality holds that increasing labor productivity is the route to abundance for all, when it is obvious in a world of diminishing nature and increasing human population that the route to abundance for all is through increasing resource-productivity.


Hopes and Prospects by Noam Chomsky

air traffic controllers' union, Alan Greenspan, Albert Einstein, banking crisis, Bear Stearns, Berlin Wall, Bretton Woods, British Empire, capital controls, colonial rule, corporate personhood, Credit Default Swap, cuban missile crisis, David Ricardo: comparative advantage, deskilling, en.wikipedia.org, energy security, failed state, Fall of the Berlin Wall, financial deregulation, Firefox, Glass-Steagall Act, high-speed rail, Howard Zinn, Hyman Minsky, invisible hand, liberation theology, market fundamentalism, Martin Wolf, Mikhail Gorbachev, Monroe Doctrine, moral hazard, Nelson Mandela, new economy, nuremberg principles, one-state solution, open borders, Plutonomy: Buying Luxury, Explaining Global Imbalances, public intellectual, Ralph Waldo Emerson, RAND corporation, Robert Solow, Ronald Reagan, Savings and loan crisis, Seymour Hersh, structural adjustment programs, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, trade liberalization, uranium enrichment, Washington Consensus

The hazards of what is now called “neoliberalism” were recognized quite early. One prominent example is Adam Smith. The term “invisible hand” appears only once in his classic Wealth of Nations. His primary concern was England. He warned that if English merchants and manufacturers were free to import, export, and invest abroad, they would profit while English society would be harmed. But that is unlikely to happen, he argued. The reason is that English capitalists would prefer to invest and purchase in the home country, so as if by an “invisible hand,” England would be spared the ravages of economic liberalism. The other leading founder of classical economics, David Ricardo, drew similar conclusions.

See also health care reform interaction Nuclear Non-Proliferation Treaty and, 135, 169, 196, 197, 199, 249, 250 nuclear weapons and, 135, 169, 188, 194, 196–200, 249 International Atomic Energy Agency (IAEA), 170, 194 International Labor Organization, 208 International Monetary Fund (IMF), 67, 70, 72, 90, 106, 108 International Republican Institute (IRI), 68 Inter-Services Intelligence Directorate (ISI), 241 investment theory of politics, Ferguson’s, 32, 108, 208, 212 “invisible hand” (Adam Smith), 81 Iran, 127, 194 Iraq Baath party, 222 Clinton sanctions against, 128, 129 democracy and, 121–22 economic problems, 127 George W. Bush and, 23, 24, 42–44, 140, 141 “good news” about, 130–33 oil and, 140 oil-for-peace program, 128–29 “the right issue” and “more profound questions” regarding, 133–34 U.S. military bases in, 62–63, 140–41 “Iraq effect,” 28 Iraq War, 41–42, 125–29, 235–37 American public opinion and, 131–32 compared with Nazi war crimes, 131 compared with Vietnam War, 237 ethnic cleansing and, 132 refugees and displaced persons, 125–26 See also Iraq, “good news” about Iraqis “shared beliefs” and opinions, 130–31 U.S. attitude toward, 133 voice of, 133, 134 Israel attack on Iraq’s nuclear reactor, 197 democracy and, 157–58 Iran and, 139 North Korea and, 139 Syria and, 139 U.S. relations with, 139–40, 145 See also specific topics Israel Lands Administration, 159 Israel-Palestine problem “democracy promotion” and, 44 Obama and, 177, 178, 181, 190–91, 195–96, 233, 249–58 settlement expansion, 186–89, 253 United Nations and, 195, 252–53 See also specific topics Jackson, Robert, 131 Jacobs, Lawrence, 47 Japan, 15, 26, 48–49, 81 Jefferson, Thomas, 17–18 Jennings, Frances, 14 Jerusalem, 224–25 Jesus, 273–74 Jewish National Fund (JNF), 158 jihadis, 193–94, 241 Johnson, Lyndon B., 55–56 Johnson, Simon, 222 Jones, James, 223–24 Jordan, 125, 126 Joya, Malalai, 246–48 Karzai, Hamid, 242, 245, 257–58 Katz, Yisrael, 187 Kay, David, 197 Kayani, Ashfaq Parvez, 240 Kennan, George, 24–25, 28 Kennedy, Anthony, 32, 33 Kennedy, Edward M., 230 Kennedy, John F., 49, 53, 123, 237 Kennedy, Robert F., 50, 123 Kerry, John F., 201–3, 221 Keynes, John Maynard, 6, 82, 99 Kfoury, Assaf, 145 Khamenei, Ali, 197 Kimmerling, Baruch, 161–62 Kindelberger, Charles, 78 Kinsley, Michael, 265 Kirchner, Néstor, 70 Kissinger, Henry, 116, 223 Knox, Henry, 19 Kohl, Helmut, 273, 279 Kramer, Mark, 279 Kranish, Michael, 109–10 Krugman, Paul, 220 Kurtzer, Dan, 224, 225 labor, free circulation of, 29 labor law, 217–19 international, 208 Lahood, Ray, 95 Lanine, Nikolai, 248 Latin America China’s relations with, 25 choices facing, 102, 114–15 democratization, 100, 105 “Economic Charter for the Americas” imposed on, 25 economic inequality in, 71–72, 114 global conquest and, 4–6 militarization, 62 shift toward independence in, 71 “social cleansing,” 61 social justice, human rights, and, 38 unity of Caribbean and, 103–18 U.S. foreign policy and, 25, 37, 39–73, 116, 174 See also specific countries Lebanon, 146–47, 153, 154, 257 2008 election, 143 George W.


pages: 457 words: 125,329

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

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

Such interaction, he contended, was not down to ‘benevolence' or central planning.21 Rather, it was due to the ‘invisible hand' of the market: Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of the society which he has in view. But the study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to society ... He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was not part of his 22 intention.

Manufacturing labour, not land, was the source of value.23 The labour theory of value was born. Smith has become the figurehead of much modern economic theory because of his ideas about how capitalism is founded on supposedly immutable human behaviour, notably self-interest, and competition in a market economy. His metaphor of the ‘invisible hand' has been cited ad nauseam to support the current orthodoxy that markets, left to themselves, may lead to a socially optimal outcome - indeed, more beneficial than if the state intervenes. Smith's book is actually a collection of recipes for politicians and policymakers. Far from leaving everything to the market, he thinks of himself as giving guidance to ‘statesmen' on how to act to ‘enrich both the people and the sovereign'24 - how to increase the wealth of nations.


pages: 426 words: 118,913

Green Philosophy: How to Think Seriously About the Planet by Roger Scruton

An Inconvenient Truth, barriers to entry, carbon credits, carbon footprint, carbon tax, Cass Sunstein, Climategate, Climatic Research Unit, corporate social responsibility, demand response, Easter island, edge city, endowment effect, energy security, Exxon Valdez, failed state, food miles, garden city movement, Garrett Hardin, ghettoisation, happiness index / gross national happiness, Herbert Marcuse, hobby farmer, Howard Zinn, income inequality, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jane Jacobs, joint-stock company, joint-stock limited liability company, Kenneth Arrow, knowledge economy, Lewis Mumford, market friction, Martin Wolf, moral hazard, Naomi Klein, New Urbanism, Peter Singer: altruism, phenotype, precautionary principle, rent-seeking, Robert Solow, Ronald Coase, Sam Peltzman, Silicon Valley, Simon Kuznets, tacit knowledge, the built environment, The Death and Life of Great American Cities, the market place, Thomas Malthus, Tragedy of the Commons, transaction costs, University of East Anglia, urban planning, urban sprawl, Vilfredo Pareto, women in the workforce, zero-sum game

The result, in modern conditions, is a population explosion that is rapidly destroying the environment of Muslim Arabia and North Africa, spilling over into a Europe whose institutions and traditions are in friction with the Muslim way of life, and now putting in question half a century of uneasy dictatorship.15 There is a tendency among environmentalists to single out the big players in the market as the principal culprits: to pin environmental crime on those – like oil companies, motor manufacturers, logging corporations, agribusinesses, supermarkets – that make their profits by exporting their costs to others (including others who are not yet born). But this is to mistake the effect for the cause. In a free economy such ways of making money emerge by an invisible hand from choices made by all of us. It is the demand for cars, oil, cheap food and expendable luxuries that is the real cause of the industries that provide these things. Of course it is true that the big players externalize their costs whenever they can. But so do we. Whenever we travel by air, visit the supermarket, or consume fossil fuels, we are exporting our costs to others, and to future generations.

Their case has been amplified by Joel Garreau’s striking advocacy of ‘edge city’ – of the temporary focus on the edge of things, moving always outwards across the land, and largely indifferent to the chaos that it leaves in its wake.274 The conflict between the two visions of urbanization – the centripetal and the centrifugal – has come to a head with the emergence of the New Urbanist movement, with the work of Léon Krier, adviser to the Prince of Wales’s model new town of Poundbury in Dorset, and with the writings of Christopher Alexander and Nikos Salingaros.275 The New Urbanists have forcefully argued that aesthetic choices are not ecologically neutral but, on the contrary, internally connected to the whole enterprise of settlement. The aesthetic of the American suburb embodies an environmental policy as much as does the rival aesthetic of the city street – even if, in both cases, the policy is one that arose ‘by an invisible hand’. It is by attending to aesthetic requirements that the suburb becomes a shared habitat: one in which a residual delight in nature is punctuated by the desire to present an agreeable façade in a community of neighbours. Whether that aesthetic succeeds is a question that cannot be separated from the question whether the result is sustainable – the question whether people can live in this way from generation to generation.

It is of course unrealistic to expect to feed the entire population without the large farms that currently provide such staples as potatoes and corn, but the rebirth of local markets will change the ways that those farms produce and distribute what they grow. The pastures, hedgerows, copses, coverts and streams of England were not preserved simply because people loved them. They were created and preserved by the self-interest of those who farmed and owned the land. They arose by an invisible hand from pasture farming, from historic rights of way and the maintenance of boundaries, from field sports, and from the local food economy in which milk and cheese were sold in the markets. This local food economy survived intact until recent years, as did the other economic interests that maintained the landscape.


Sam Friedman and Daniel Laurison by The Class Ceiling Why it Pays to be Privileged (2019, Policy Press)

affirmative action, Ascot racecourse, Boris Johnson, Bullingdon Club, classic study, critical race theory, discrete time, Donald Trump, Downton Abbey, emotional labour, equal pay for equal work, gender pay gap, gig economy, Gini coefficient, glass ceiling, Hyperloop, if you build it, they will come, imposter syndrome, income inequality, invisible hand, Jeremy Corbyn, job satisfaction, knowledge economy, longitudinal study, Martin Parr, meritocracy, meta-analysis, microaggression, nudge theory, nudge unit, old-boy network, performance metric, psychological pricing, school choice, Skype, starchitect, The Spirit Level, the strength of weak ties, unpaid internship, upwardly mobile, W. E. B. Du Bois, work culture

The contrast here with acting and television – along with many other precarious elite occupations – is striking. In these arenas, where work is often freelance, short-term, poorly paid and extremely competitive, the Bank of Mum and Dad fundamentally mediates how people can respond to chronic early-career conditions of precarity, offering an invisible hand to some while leaving many others, often unwittingly, at an unfair disadvantage. Yet a helping hand does not always come from behind, or below. Similarly, it does not always have to come in the form of financial support or patronage. In many elite occupations, for example, particularly more traditional professions such as accountancy and architecture, support is more likely to come from above rather than below.

This is because for ‘merit’ to land it has to be given the opportunity to be demonstrated, it has to be performed in a way that aligns with dominant ideas about the ‘right’ way to work, and it has to be recognised as valuable by those holding the keys to progression. And in all of these ways, as we go on to explain, it is the privileged who enjoy a critical head start. The invisible hand (up) In most elite occupations, and certainly among the people we interviewed, there is a strong belief in the meritocratic ideal – the idea that career progression should be based on the abilities, skills and achievements of the individual. Yet we find that people rarely progress in elite occupations based only on their own efforts.

This, we argue, is social capital in the Bourdieusian sense, not necessarily being a ‘good networker’, but networking with the ‘right’ people and crucially, knowing them well enough to leverage their backing. These helping hands rig the game of progression in favour of the privileged. And the main reason they are so effective, we argue, is that they are largely hidden from public view – they operate as invisible hands, helping to propel some and simultaneously disadvantage others. In terms of sponsorship this is partly about a particular species of management jargon – the use of empty terms such as ‘talent mapping’ – that give a misleading impression of formalised performance management and obscure the autonomy enjoyed by senior leaders in advancing sponsees through the organisational ranks.


pages: 451 words: 115,720

Green Tyranny: Exposing the Totalitarian Roots of the Climate Industrial Complex by Rupert Darwall

1960s counterculture, active measures, Affordable Care Act / Obamacare, Albert Einstein, Bakken shale, Berlin Wall, Bernie Sanders, California energy crisis, carbon credits, carbon footprint, centre right, clean tech, collapse of Lehman Brothers, creative destruction, decarbonisation, deindustrialization, dematerialisation, disinformation, Donald Trump, electricity market, Elon Musk, energy security, energy transition, facts on the ground, Fall of the Berlin Wall, Garrett Hardin, gigafactory, Gunnar Myrdal, Herbert Marcuse, hydraulic fracturing, Intergovernmental Panel on Climate Change (IPCC), invisible hand, it's over 9,000, James Watt: steam engine, John Elkington, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, liberal capitalism, market design, means of production, megaproject, Mikhail Gorbachev, mittelstand, Murray Bookchin, Neil Armstrong, nuclear winter, obamacare, oil shale / tar sands, Paris climate accords, Peace of Westphalia, peak oil, plutocrats, postindustrial economy, precautionary principle, pre–internet, recommendation engine, renewable energy transition, rent-seeking, road to serfdom, rolling blackouts, Ronald Reagan, shareholder value, Silicon Valley, Silicon Valley billionaire, Solyndra, Strategic Defense Initiative, subprime mortgage crisis, tech baron, tech billionaire, The Wealth of Nations by Adam Smith, Tragedy of the Commons, women in the workforce, young professional

In 1968, Hardin gave a lecture to the American Association for the Advancement of Science that became one of ecology’s canonical texts (Science lists over 26,000 citations). “The Tragedy of the Commons” takes a (hypothetical) example of open pasture leading to overgrazing. On the basis of this, Hardin asserted that freedom in a commons brings ruin to all. Adam Smith’s invisible hand had to be replaced by government coercion. It was theorizing without facts. As the Nobel economist Elinor Ostrom wrote in a 1999 critique, such a prescription was not supported by extensive research. In fact, there is a wide diversity of institutional arrangements for coping with common-pool resources—when they had not been prevented by central authorities.42 Population control was at the core of Hardin’s concerns: “Freedom to breed will bring ruin to us all.”43 In an earlier biology textbook, Hardin had asked students to confront the benefits of eugenics in reducing the “supply of mutant types at equilibrium.”44 Should society resort to eugenics?

In 2000, the eponym of the first law and cofounder of Intel, Gordon Moore, and his wife set up the Palo Alto–based Moore Foundation with five billion dollars and later would spend one million dollars on the anti–Prop. 23 campaign.4 Climate change is ethics for the wealthy: It legitimizes great accumulations of wealth. Pledging to combat it immunizes climate-friendly corporate leaders and billionaires from being targeted as members of the top one-tenth of the top one percent. This signifies a profound shift in the nature and morality of capitalism. In the famous passage on the invisible hand in The Wealth of Nations, Adam Smith wrote of individuals who, intending their own gain, promote an end that was no part of their intention. “By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it.”5 Less well known are the two sentences that immediately follow: I have never known much good done by those who affected to trade for the public good.

The next two years saw the three branches of government clear the ground on which President Obama’s Energiewende would be built. Unlike Europe, America had already embarked on its own energy transformation, one not foreordained by politicians and regulators but brought about by the genius of capitalism and wrought by Adam Smith’s invisible hand. Geologists had long known about enormous shale formations such as the Bakken Shale of North Dakota and Montana, the Barnett Shale of Texas, and the Marcellus Shale running through northern Appalachia. Hydraulic fracturing dates back to the 1940s but was not widely deployed until 2003. Other than exempting fracking from the Safe Drinking Water Act in 2005, as far as politicians in Washington were concerned, the fracking revolution might as well have been happening on another planet.


pages: 243 words: 66,908

Thinking in Systems: A Primer by Meadows. Donella, Diana Wright

affirmative action, agricultural Revolution, Albert Einstein, Buckminster Fuller, business cycle, clean water, Dissolution of the Soviet Union, game design, Garrett Hardin, Gunnar Myrdal, illegal immigration, invisible hand, Just-in-time delivery, Kickstarter, Lewis Mumford, means of production, Mikhail Gorbachev, Nelson Mandela, peak oil, race to the bottom, Ralph Waldo Emerson, Ronald Reagan, Stanford prison experiment, systems thinking, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, Tragedy of the Commons, Whole Earth Review

Bounded Rationality As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of greatest value. . . he generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. . . . He intends his own security; . . . he intends only his own gain and he is in this . . . led by an invisible hand to promote an end which was no part of his intention. By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it. —Adam Smith,9 18th century political economist It would be so nice if the “invisible hand” of the market really did lead individuals to make decisions that add up to the good of the whole. Then not only would material selfishness be a social virtue, but mathematical of the economy would be much easier to make.


pages: 251 words: 67,801

And Then All Hell Broke Loose: Two Decades in the Middle East by Richard Engel

East Village, friendly fire, invisible hand, Mohammed Bouazizi, no-fly zone, off-the-grid, satellite internet, Skype, Yom Kippur War

Salafism is Islam as Allah recited it, and jihadi means “through war,” so it is a militant movement seeking an “originalist” form of Islam and willing to use force to get there. Salafism is often associated with the Wahhabi movement, an equally austere branch of Sunni Islam that arose in the early part of the eighteenth century. Wahhabis dominate Saudi Arabia, the paymaster and invisible hand behind many political machinations in the Middle East. In Cairo, living among the Muslim Brotherhood, Salafi dreamers, and seeing the horrors of what Salafi jihadis did at the Egyptian Museum and in Luxor, I delved deeper into the political side of the Islamic movement. I came in contact with a group called Tabligh wa Dawa.

Because of their long years in power, and their grandiose sense of entitlement, some Sunnis were convinced they comprised a majority of Iraqis, a self-deceiving mythology of arithmetic. They wound up with only 21 percent of the vote. They said the election was a fraud and blamed Iran, their ancient Persian and Shiite enemy, for rigging the vote. To them, Iran was the invisible hand, aiding its favorite Shia candidates. Zarqawi’s group lashed out at fellow Sunnis for voting this time, accusing them of legitimizing a Shiite project cooked up by Iran and Washington. Stressed-out by a year of violence and by covering the elections, journalists at the Hamra threw a New Year’s Eve bacchanalia, drinking to excess, dancing wildly, and knocking over any furniture that got in the way.


pages: 193 words: 11,060

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

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

For instance, it is often argued that markets are “just” or “fair” in that they determine, through the interacting forces of supply and demand, the prices of goods and services and their allocation in a way that takes into account the various needs of consumers and producers. However, not all ethical questions of distribution are dealt with by the “invisible hand” of the market, to use Adam Smith’s famous term. As was discussed earlier, for reasons of equity some market participants may need protection from adverse market forces. An influential contemporary theory of justice, which has been applied to economics, is that developed by the philosopher John Rawls.

An influential consequentialist thinker was Thomas Hobbes (1588– 1679), who argued that humans are fundamentally self-interested and should act in ways that maximise their own long-term interests. Similarly, Adam Smith (1723–90) argued that the pursuit of individual self-interest was permissible because it produced a morally desirable outcome through the workings of the “invisible hand” of the market. However, the bestknown and most influential form of consequentialist ethics is utilitarianism, the underlying principle of which is that we should act in such a way that maximises the good, happiness, pleasure or “utility” of the greatest number of people. Associated in particular with the work of Jeremy Bentham (1748–1832) and John Stuart Mill (1806–73), utilitarianism has provided the philosophical underpinning of much economic theory, where utility maximisation is a key guiding principle, and applied economics.


pages: 261 words: 64,977

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

Affordable Care Act / Obamacare, Alan Greenspan, bank run, Bear Stearns, big-box store, bonus culture, business cycle, carbon tax, classic study, collateralized debt obligation, collective bargaining, commoditize, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Deng Xiaoping, false flag, financial innovation, General Magic , Glass-Steagall Act, housing crisis, invisible hand, junk bonds, Kickstarter, low interest rates, money market fund, Naomi Klein, obamacare, Overton Window, payday loans, profit maximization, profit motive, road to serfdom, Robert Bork, 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

Their heroes, they quivered to learn, were victims of “persecution,” their nation was under “systematic assault” by its own leaders, and they who had defeated Soviet communism; they who rejoiced to see their enemies writhe in the dungeons of Guantánamo—why, now they were “Gulag Bound,” as a popular website of the day moaned rapturously.5 This time it was apocalypse that moved the needle, that swayed the undecided, that made the sale. We the Market And what it sold was the great god Market. The market’s invisible hand would lift the threat of “destruction” from the land. It would restore fairness to a nation laid waste by cronyism and bailouts. It would let the failures fail, at the same time comforting the thrifty and the diligent. Under its benevolent gaze, rewards would be proportionate to effort; the lazy and the deceiving would be turned away empty-handed, and once again would justice and stability prevail.

The president of the American Liberty League was Jouett Shouse, a former Kansas congressman, but its main backers were the DuPont family, the Koch brothers of their day. The speech in which this passage occurs was called “The New Deal vs. Democracy” and was issued as a pamphlet by the league in 1936. 15. See the account of the American Liberty League in Kim Phillips-Fein’s Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan (New York: Norton, 2009), p. 13. 16. Remley J. Glass, “Gentlemen, the Corn Belt!” Harper’s, July 1933, pp. 199–202. 17. “Virtually impossible”: cited in Theodore Saloutos and John D. Hicks, Twentieth Century Populism: Agricultural Discontent in the Middle West 1900–1939 (Lincoln, NE: University of Nebraska Press, 1951), p. 448.


pages: 254 words: 69,276

The Metric Society: On the Quantification of the Social by Steffen Mau

Airbnb, cognitive bias, cognitive load, collaborative consumption, connected car, crowdsourcing, digital capitalism, double entry bookkeeping, future of work, gamification, income inequality, informal economy, invisible hand, knowledge economy, labour market flexibility, lifelogging, Mark Zuckerberg, meritocracy, mittelstand, moral hazard, personalized medicine, positional goods, principal–agent problem, profit motive, QR code, reserve currency, school choice, selection bias, sharing economy, smart cities, subprime mortgage crisis, the scientific method, the strength of weak ties, Uber for X, vertical integration, web of trust, Wolfgang Streeck

Numbers safeguard a particular order of worth and help anchor it in society by their very existence. As such, there is a close correlation between value estimation in the context of quantification and esteem in the sense of social recognition. The calculative practices of the market The notion that markets evolve spontaneously and are guided by an invisible hand is a myth which, although still accepted in certain circles of economic theory, does not stand up to close scrutiny. We have known at least since Max Weber's (1930 [1906]) famous thesis of the ‘spirit of capitalism’ that market exchange processes are cultural practices, and that they are closely linked to the emergence of specific economic systems.

Hence the disappearance of the high street travel agent, for example: nowadays, people simply go to comparison sites for the cheapest deal. Thanks to the internet and the availability of comparative information, a new level of market transparency is emerging which in turn allows the physical expansion of those markets. It is no longer the invisible hand that orders and structures markets, but the differentiated evaluation of products and suppliers made possible by the collaborative efforts of consumers. Through ranking practices, such evaluation systems serve to generate trust in confusing and intransparent markets (Jeacle & Carter 2011). Tourism portals such as Tripadvisor (Gretzel & Yoo 2008), which are used by large numbers of travellers and where reviews of several million restaurants and hotels can be viewed, assume the role of mass navigators and exert a considerable influence on customer behaviour.


pages: 218 words: 63,471

How We Got Here: A Slightly Irreverent History of Technology and Markets by Andy Kessler

Albert Einstein, Andy Kessler, animal electricity, automated trading system, bank run, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, Bletchley Park, Bob Noyce, Bretton Woods, British Empire, buttonwood tree, Charles Babbage, Claude Shannon: information theory, Corn Laws, cotton gin, Dennis Ritchie, Douglas Engelbart, Edward Lloyd's coffeehouse, Fairchild Semiconductor, fiat currency, fixed income, floating exchange rates, flying shuttle, Fractional reserve banking, full employment, GPS: selective availability, Grace Hopper, invention of the steam engine, invention of the telephone, invisible hand, Isaac Newton, Jacquard loom, James Hargreaves, James Watt: steam engine, John von Neumann, joint-stock company, joint-stock limited liability company, Joseph-Marie Jacquard, Ken Thompson, Kickstarter, Leonard Kleinrock, Marc Andreessen, Mary Meeker, Maui Hawaii, Menlo Park, Metcalfe's law, Metcalfe’s law, military-industrial complex, Mitch Kapor, Multics, packet switching, pneumatic tube, price mechanism, probability theory / Blaise Pascal / Pierre de Fermat, profit motive, proprietary trading, railway mania, RAND corporation, Robert Metcalfe, Silicon Valley, Small Order Execution System, South Sea Bubble, spice trade, spinning jenny, Steve Jobs, Suez canal 1869, supply-chain management, supply-chain management software, systems thinking, three-martini lunch, trade route, transatlantic slave trade, tulip mania, Turing machine, Turing test, undersea cable, UUNET, Wayback Machine, William Shockley: the traitorous eight

Free enterprise was not yet ready for primetime, the 62 HOW WE GOT HERE monarchy was having too much fun doling out favors to friends of the crown. It worked for a while. There was so little trade with India that giving out a monopoly was no big deal. The next 200 years would see the growth of this mercantilism system until Adam Smith hallucinated the Invisible Hand. In the meantime, it turned out that Elizabeth I was way ahead of her time. She figured out that world trade and a strong navy were interdependent; she couldn’t afford the navy without the wealth created by trade, and a capital markets system to fund it. *** England had almost no colonies in the New World while Spain had spent the past 100 years exploring and controlling Central and South America and what is now Florida, Texas and California, giving it not only plenty of gold, but enough electoral votes to win any election.

A bursting of the Mississippi Bubble in 1720 caused a run on the Banque and a depression in France for years to come. Almost three hundred years later, the French don’t call their banks, Banques, but Credits, as in Credit Lyonnais. John Law proved economists shouldn’t be businessmen and his reputation killed the Real Bills Doctrine. Even when “invisible hand” Adam Smith backed Real Bills the Bullionists weren’t swayed. Too bad. Real Bills was only slightly flawed in that it didn’t check the amount of speculative loans a bank could issue, since loans are the source of bank profits. A floating reserve requirement, putting limits on fractional reserve banking in good times, could have fixed that flaw.


pages: 312 words: 93,504

Common Knowledge?: An Ethnography of Wikipedia by Dariusz Jemielniak

Andrew Keen, barriers to entry, Benevolent Dictator For Life (BDFL), citation needed, collaborative consumption, collaborative editing, commons-based peer production, conceptual framework, continuous integration, crowdsourcing, Debian, deskilling, digital Maoism, disinformation, en.wikipedia.org, Filter Bubble, Free Software Foundation, Gabriella Coleman, Google Glasses, Guido van Rossum, Hacker Ethic, hive mind, Internet Archive, invisible hand, Jaron Lanier, jimmy wales, job satisfaction, Julian Assange, knowledge economy, knowledge worker, Menlo Park, moral hazard, online collectivism, pirate software, RFC: Request For Comment, Richard Stallman, selection bias, Silicon Valley, Skype, slashdot, social software, Stewart Brand, the Cathedral and the Bazaar, The Hackers Conference, The Nature of the Firm, the strength of weak ties, The Wisdom of Crowds, transaction costs, Wayback Machine, WikiLeaks, wikimedia commons, Wikivoyage, Yochai Benkler, zero-sum game

Forking, often despised in open-collaboration communities as detrimental to common goals, is an option that ensures that the collaboration is truly free (Reagle, 2004; Cheliotis, 2009). The theoretical possibility of forking is itself a safety valve that all stakeholders are aware of and that empowers the minorities. It is the “invisible hand of sustainability” of projects, allowing them to develop (Nyman, Mikkonen, Lindman, & Fougère, 2011). Yet its practical possibility highly depends on the governance model used in the community (Kogut & Metiu, 2001). On Wikipedia, even though the theoretical possibility of forking has been discussed occasionally and a few attempts have been made (e.g., Citizendium, Wikinfo, the Spanish Enciclopedia Libre; for an analysis of Wikipedia forks, see Tkacz, 2011), a forking resulting in a success comparable to the original Wikimedia movement seems unlikely.

What motivates wikipedians? Communications of the ACM, 50(11), 60–64. Nyman, L., & Mikkonen, T. (2011). To fork or not to fork: Fork motivations in SourceForge projects. Open Source Systems: Grounding Research, 365, 259–268. Nyman, L., Mikkonen, T., Lindman, J., & Fougère, M. (2011). Forking: The invisible hand of sustainability in open source software. In I. Hammouda & B. Lundell (Eds.), Proceedings of SOS 2011: Towards Sustainable Open Source (pp. 1–5). Tampere, Finland: Tampere University of Technology. Retrieved from http://tutopen.cs.tut.fi/ sos11/papers/SOS11_proceedings.pdf#page=9 O’Mahony, S. (2003).

See also gender infoboxes, 21–22, 23, 229n11 infoplease.com, 73 informational-communal approach, 183 I n d e x    2 8 7 “information flux,” 103 “inner circles” accusations, 50 “insiderness,” 194 institutional trust, 122 instruction creep, 96 “internal-1” mailing lists, 53, 234n3 Internet Brands, 235n2 (chap. 8) “Internet ethnography,” 199 Internet Relay Chat (IRC) channel, 46, 86, 92, 136, 138 Internet revolution, 1–2 interpersonal relations, 85–86 interviews for this book, 197 interwikis, 68 “invisible hand of sustainability,” 146 IP addresses, blocking, 61, 137 iPhone, 191 IP-only/anonymous users: and accountability, 108; autoconfirmation of, 142, 203; close scrutiny of, 23, 87–88, 137; contributions of, 101–102; entry barriers for, 101; and flagged revisions, 136; insufficient scrutiny of, 51–52; and “IPs are human too” reminders, 88–89; as providing introductory editing, 144; and right of anonymity, 115, 117; status of, 32.


pages: 424 words: 121,425

How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy by Mehrsa Baradaran

access to a mobile phone, affirmative action, Alan Greenspan, asset-backed security, bank run, banking crisis, banks create money, barriers to entry, Bear Stearns, British Empire, call centre, Capital in the Twenty-First Century by Thomas Piketty, cashless society, credit crunch, David Graeber, disintermediation, disruptive innovation, diversification, failed state, fiat currency, financial innovation, financial intermediation, Glass-Steagall Act, Goldman Sachs: Vampire Squid, housing crisis, income inequality, Internet Archive, invisible hand, junk bonds, Kickstarter, low interest rates, M-Pesa, McMansion, Michael Milken, microcredit, mobile money, Money creation, moral hazard, mortgage debt, new economy, Own Your Own Home, Paul Volcker talking about ATMs, payday loans, peer-to-peer lending, price discrimination, profit maximization, profit motive, quantitative easing, race to the bottom, rent-seeking, Ronald Reagan, Ronald Reagan: Tear down this wall, Savings and loan crisis, savings glut, subprime mortgage crisis, the built environment, the payments system, too big to fail, trade route, transaction costs, unbanked and underbanked, underbanked, union organizing, W. E. B. Du Bois, white flight, working poor

Even Costa Rica, which has no army, and Kuwait, which has no taxes whatsoever, still have a state-supported banking system.3 The essential relationship between banks and the governments that enable them has largely been forgotten, yet it makes banks completely unlike any other corporation or commercial enterprise. Banks need government support. In turn, governments need banks. Banks often serve as an appendage to the state and carry out its economic policies. In other words, banks do not operate in markets guided by an “invisible hand” but are the hands that move markets—often at the behest of the state. Many people express discomfort with government “subsidies” to the banking sector. And there are subsidies, to be sure. To name just a few, take the billions of dollars of bailouts that flowed to the largest banks and prevented market corrections and lowered their costs of doing business.4 Underpriced deposit insurance is the reason the deposit insurance fund had a $9 billion shortfall during the recent financial crisis.5 Banks also pay less money for credit, as explained by the leading banking-law textbook: “On balance, we can conclude that banks receive a benefit not available to other firms—a subsidy notably evident in lower borrowing costs.”6 Although these subsidies may be a cause for concern, to characterize state support of the banking system as solely a subsidy mischaracterizes the nature of the bank-government relationship.

The credit that flowed into these insolvent banks helped them recover their losses, saving them. Ideally, the central bank would only lend to illiquid banks because otherwise, it is interfering with market discipline by “picking winners and losers.” However, during the recent crisis, the government decided that it would strong-arm the market’s “invisible hand” and bail out the banks because their failure was more detrimental than the long-term effects of moral hazard. Instead of letting the market punish the foolish debtors so that they would learn their lesson, the government smoothed their transition and let them live another day. Generally, we do not categorize individuals as insolvent or illiquid.

Paul Tucker, “Regimes for Handling Bank Failures—Redrawing the Banking Social Contract,” remarks, British Bankers’ Association Annual International Banking Conference “Restoring Confidence—Moving Forward,” London, June 30, 2009, accessed January 18, 2015, www.bis.org/review/r090708d.pdf. 21. Gary Gorton, “Slapped in the Face by the Invisible Hand: Banking and the Panic of 2007,” conference, Federal Reserve Bank of Atlanta’s 2009 Financial Markets Conference: Financial Innovation and Crisis, May 9, 2009, accessed March 13, 2015, www.frbatlanta.org/news/conferences/09-financial_markets_agenda.cfm. 22. See “Adding Up the Government’s Total Bailout Tab,” New York Times, July 24, 2011, accessed March 13, 2015, www.nytimes.com/interactive/2009/02/04/business/20090205-bailout-totals-graphic.html?


pages: 475 words: 127,389

Apollo's Arrow: The Profound and Enduring Impact of Coronavirus on the Way We Live by Nicholas A. Christakis

agricultural Revolution, Anthropocene, Atul Gawande, Boris Johnson, butterfly effect, Chuck Templeton: OpenTable:, classic study, clean water, Columbian Exchange, contact tracing, contact tracing app, coronavirus, COVID-19, dark matter, data science, death of newspapers, disinformation, Donald Trump, Downton Abbey, Edward Jenner, Edward Lorenz: Chaos theory, George Floyd, global pandemic, global supply chain, helicopter parent, Henri Poincaré, high-speed rail, income inequality, invention of agriculture, invisible hand, it's over 9,000, job satisfaction, lockdown, manufacturing employment, mass immigration, mass incarceration, medical residency, meta-analysis, New Journalism, randomized controlled trial, risk tolerance, Robert Shiller, school choice, security theater, social contagion, social distancing, Steven Pinker, TED Talk, the scientific method, trade route, Upton Sinclair, zoonotic diseases

Looking for a way to help others as the pandemic began to rage, he and a friend founded Invisible Hands, an organization whose goal was to deliver groceries and other necessities to the elderly and other at-risk people in their neighborhood and beyond. As soon as the website went live, volunteer and media interest exploded. Within four days, more than twelve hundred volunteers had signed up. To reach clients who were unlikely to find it online, Invisible Hands spread the word with old-fashioned flyers that volunteers translated into many languages and tacked up in buildings around the city. Within a month, Invisible Hands had signed up twelve thousand volunteers, fielded over four thousand requests for help, and started a subsidy program to provide some free food too.1 Many such organizations sprang into action across the country.2 Mutual aid societies, which have been around for more than a hundred years, have seen a resurgence.


pages: 230 words: 79,229

Respectable: The Experience of Class by Lynsey Hanley

Berlin Wall, cuban missile crisis, David Brooks, delayed gratification, Etonian, full employment, housing crisis, illegal immigration, intentional community, invisible hand, liberation theology, low skilled workers, meritocracy, mutually assured destruction, Neil Kinnock, Norman Mailer, Own Your Own Home, Right to Buy, Ronald Reagan, strikebreaker, upwardly mobile, Winter of Discontent

Seventy years after the Butler Act created the tripartite system of grammar, technical and secondary schools, and fifty years after most of them were replaced with comprehensives, our social class still largely determines the type and quality of education we receive. The effects of class are the hardest of all social evils to slay because they are the most given to mutation. Like the ‘invisible hand’ of capitalism itself, they shift shape in order to go unnoticed. What we are left to grapple with are the signs of class, the consequences of it and the injuries it inflicts on civil society. These ‘hidden injuries of class’, to use the sociologist Richard Sennett’s phrase, abound because of the intimate connection between how we feel about ourselves in relation to others, the relationship between what we start out wanting for ourselves and our loved ones and what we’re able to achieve, and our relationship to a social and economic structure that we did nothing to bring about.

To reverse this confidence trick, you have to force yourself to believe in a greater part of yourself than you actually do. You may feel infinitesimal in comparison with the forces that constrain you, yet you have to tell yourself that there’s a rope you can grab on to which won’t fray – or be yanked away by an invisible hand – when you give it your whole weight. This is the paradox of trying to achieve social mobility through the education system, which is nothing more than a finely tuned replica of the larger social system it serves. I would never discourage someone who is attempting to do just that, of course, aware that it may be their only tangible, navigable chance of getting out of the box.


pages: 267 words: 72,552

Reinventing Capitalism in the Age of Big Data by Viktor Mayer-Schönberger, Thomas Ramge

accounting loophole / creative accounting, Air France Flight 447, Airbnb, Alvin Roth, Apollo 11, Atul Gawande, augmented reality, banking crisis, basic income, Bayesian statistics, Bear Stearns, behavioural economics, bitcoin, blockchain, book value, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, Cass Sunstein, centralized clearinghouse, Checklist Manifesto, cloud computing, cognitive bias, cognitive load, conceptual framework, creative destruction, Daniel Kahneman / Amos Tversky, data science, Didi Chuxing, disruptive innovation, Donald Trump, double entry bookkeeping, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Evgeny Morozov, flying shuttle, Ford Model T, Ford paid five dollars a day, Frederick Winslow Taylor, fundamental attribution error, George Akerlof, gig economy, Google Glasses, Higgs boson, information asymmetry, interchangeable parts, invention of the telegraph, inventory management, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, job satisfaction, joint-stock company, Joseph Schumpeter, Kickstarter, knowledge worker, labor-force participation, land reform, Large Hadron Collider, lone genius, low cost airline, low interest rates, Marc Andreessen, market bubble, market design, market fundamentalism, means of production, meta-analysis, Moneyball by Michael Lewis explains big data, multi-sided market, natural language processing, Neil Armstrong, Network effects, Nick Bostrom, Norbert Wiener, offshore financial centre, Parag Khanna, payday loans, peer-to-peer lending, Peter Thiel, Ponzi scheme, prediction markets, price anchoring, price mechanism, purchasing power parity, radical decentralization, random walk, recommendation engine, Richard Thaler, ride hailing / ride sharing, Robinhood: mobile stock trading app, Sam Altman, scientific management, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley startup, six sigma, smart grid, smart meter, Snapchat, statistical model, Steve Jobs, subprime mortgage crisis, Suez canal 1869, tacit knowledge, technoutopianism, The Future of Employment, The Market for Lemons, The Nature of the Firm, transaction costs, universal basic income, vertical integration, William Langewiesche, Y Combinator

Globally, transactions worth well over $100 trillion take place every year, a figure that has grown by a factor of almost 2,000 since the 1500s. And every such transaction boils down to two parties communicating with each other. It’s an amazing feat—all achieved through a simple social innovation. The great Scottish philosopher Adam Smith coined the term “the invisible hand” to capture the essence of what makes markets work, nearly 250 years ago. But the simplicity of the metaphor conceals a complex and astonishing accomplishment that altered the conditions for coordination. It has to do with how much our goals have to be aligned for human coordination to happen.

See choice Human Use of Human Beings, The (Wiener), 160 human-centric firms, 214–215 Hurricane Grace, 133–134 IBM, 96, 109, 127, 163, 183 India, 184 Industrial Revolution, 4, 111, 162, 188, 201 Infi (machine learning system), 79 information asymmetry, 40, 72–73 information flows centralized vs. decentralized (see centralization; decentralization) complexity of processing, 43–44 cost of, 39–40, 44, 45, 81 data-rich markets and, 63, 64, 70, 72–73, 81 dyadic, 72 firms and, 90–100, 102, 106 historical improvements in, 51–52 impact of bad information on, 39 information overload and, 40–41, 70 information sharing and, 41, 46 information shortage and, 40, 52–56 markets and, 38–57, 63, 90 obstacles to, 41–42 innovation, 166, 199, 200 Instagram, 163 intercontinental nuclear missiles, 159 interest rates, 134–135, 143, 150–151, 165, 194 internal talent management, 126–129 Internet network effects and, 163 projected growth rates in traffic, 7–8 See also specific sites investment banking, 150, 154–155 investors, 143–144 capital share of, 185, 186 opportunities in data-rich markets, 144–145 problems caused by data-rich markets, 143–144 returns for, 195 “invisible hand” (Adam Smith), 27 InvisibleHand (app), 52 iPad, 54–55 iPhone, 136, 164 Italy, 134, 136 iTunes, 121–122 Japan, 30–31, 32 Jensen, Robert, 36 JetBlue, 112 Jobs, Steve, 54–55 Kabbage, 150 Kahneman, Daniel, 102 Kant, Immanuel, 223 Kawasaki, 30 Kay, John, 111 Kayak, 3, 52 Kensho, 155 Kerala fishermen, 35–37, 39 Kickstarter, 152–153, 156 kidneys, donor, 73–74 Kleiner, Eugene, 216 labor augmenting technology, 194 labor market, 13, 181–206 algorithms used in, 75 automation in, 181–188, 200–202, 205 declining participation in, 183–184 distributive measures for, 186–187, 189, 190, 193, 197–200 money unbundled from, 203–206, 218 participatory measures for, 186, 188–189, 190, 193, 200–202 self-employment in, 185–186 universal basic income and, 189–193, 205–206 labor share, 184–186, 188, 193–195, 198 labor unions, 205 Lake, Katrina, 207–209 Large Hadron Collider, 22, 25 Le Pen, Marine, 186 Lehman Brothers, 155 lending by banks, 150–151 by fintechs, 152–153 Les, Jason, 59–60 liberals, 190 libertarians, 190–191 Libratus (machine learning system), 59–62, 78 Lindblom, Charles, 23, 26 LinkedIn, 202 Linnaeus, Carolus, 22, 23 Linux, 166 Lorentzon, Martin, 122 Lufax, 152 LVMH, 75 machine learning.


pages: 275 words: 77,955

Capitalism and Freedom by Milton Friedman

"Friedman doctrine" OR "shareholder theory", affirmative action, Berlin Wall, central bank independence, Corn Laws, Deng Xiaoping, floating exchange rates, Fractional reserve banking, full employment, invisible hand, Joseph Schumpeter, liquidity trap, market friction, minimum wage unemployment, price discrimination, rent control, road to serfdom, Ronald Reagan, secular stagnation, Simon Kuznets, the market place, The Wealth of Nations by Adam Smith, union organizing

In such an economy, there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition, without deception or fraud. Similarly, the “social responsibility” of labor leaders is to serve the interests of the members of their unions. It is the responsibility of the rest of us to establish a framework of law such that an individual in pursuing his own interest is, to quote Adam Smith again, “led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.”4 Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible.

The United States has continued to progress; its citizens have become better fed, better clothed, better housed, and better transported; class and social distinctions have narrowed; minority groups have become less disadvantaged; popular culture has advanced by leaps and bounds. All this has been the product of the initiative and drive of individuals co-operating through the free market. Government measures have hampered not helped this development. We have been able to afford and surmount these measures only because of the extraordinary fecundity of the market. The invisible hand has been more potent for progress than the visible hand for retrogression. Is it an accident that so many of the governmental reforms of recent decades have gone awry, that the bright hopes have turned to ashes? Is it simply because the programs are faulty in detail? I believe the answer is clearly in the negative.


pages: 266 words: 76,299

Ever Since Darwin: Reflections in Natural History by Stephen Jay Gould

Alfred Russel Wallace, British Empire, correlation coefficient, Drosophila, European colonialism, invisible hand, Isaac Newton, Monroe Doctrine, Paul Samuelson, planned obsolescence, Scientific racism, sexual politics, the scientific method, twin studies

The ideal economy, Smith argued, might appear orderly and well balanced, but it would emerge “naturally” from the interplay of individuals who follow no path beyond the pursuit of their own best interests. The apparent direction towards a higher harmony, Smith argues in his famous metaphor, only reflects the operation of an “invisible hand.” As every individual … by directing (his) industry in such a manner as its produce may be of greatest value, intends only his own gain, he is in this as in many other cases led by an invisible hand to promote an end which was no part of his intention.… By pursuing his own interest he frequently promotes that of society more effectively than when he really intends to promote it. Since Darwin grafted Adam Smith upon nature to establish his theory of natural selection, we must seek an explanation for apparent harmony in the advantage that it confers upon individuals.


pages: 193 words: 63,618

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

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

Indeed, if placing a label on global poverty was enough to eliminate it, there would hardly be any reasons to disapprove of Fair Trade. The problem is that things are not quite what they seem. Between intentions and outcomes, there is a gap, often filled only with rhetoric. As I shall demonstrate, Fair Trade is but the most recent example of another sophisticated ‘scam’ by the ‘invisible hand’ of the free market. This noble endeavour for the salvation of the free market was tamed and domesticated by the very forces it wanted to fight. With its usual efficiency, the free market triggered the implosion of the Fair Trade universe and hijacked its mission, without Fair Trade supporters and stakeholders even realising it.

For Smith, economic principles could not logically produce economic policy 63 Sylla T02779 01 text 63 28/11/2013 13:04 the fair trade scandal recommendations that would be valid in all circumstances. The specific histories, the role of institutions, human nature, unforeseen consequences (symbolised by the notorious ‘invisible hand’) are, according to Smith, so many parameters that can create a gap between the general principles and the practical uses that these can lead to; hence, from a methodological point of view, his frequent digressions and his use of historical illustrations. Thus, Smith considered the ‘perfect freedom of trade’ as the ‘general principle of wealth and opulence’.


pages: 277 words: 80,703

Revolution at Point Zero: Housework, Reproduction, and Feminist Struggle by Silvia Federici

"World Economic Forum" Davos, Alan Greenspan, Community Supported Agriculture, declining real wages, equal pay for equal work, feminist movement, financial independence, fixed income, gentrification, global village, illegal immigration, informal economy, invisible hand, labor-force participation, land tenure, mass incarceration, means of production, microcredit, military-industrial complex, neoliberal agenda, new economy, Occupy movement, planetary scale, Scramble for Africa, statistical model, structural adjustment programs, the market place, tontine, trade liberalization, UNCLOS, wages for housework, Washington Consensus, women in the workforce, World Values Survey

It also relaunches the image of women as sexual objects and breeders, and institutes among women a relation similar to that between white and black women under the apartheid regime in South Africa. The antifeminist character of the new international division of labor is so evident that we must ask to what extent it has been the work of the “invisible hand” of the market, or it has been a planned response to the struggles women have made against discrimination, unpaid labor and “underdevelopment” in all its forms. In either case, feminists must organize against the recolonization attempt of which the NDIL is a vehicle and reopen the struggle on the terrain of reproduction.

We know, for instance, that it was King Leopold of Belgium who had a personal responsibility for the killing of millions of people in the Congo.24 By contrast, today, millions of Africans are dying every year because of the consequences of structural adjustment but no one is held responsible for it. On the contrary, the social causes of death in Africa are increasingly becoming as invisible as the “invisible hand” of the capitalist market.25 Finally, we have to realize that we cannot mobilize against the bombings alone, nor demand that bombing stops and call that “peace.” We know from the postwar scenario in Iraq, that the destruction of a country’s infrastructure produces more deaths than the bombs themselves.


pages: 259 words: 73,193

The End of Absence: Reclaiming What We've Lost in a World of Constant Connection by Michael Harris

4chan, Albert Einstein, algorithmic management, AltaVista, Andrew Keen, augmented reality, Burning Man, Carrington event, cognitive dissonance, crowdsourcing, dematerialisation, disinformation, en.wikipedia.org, Evgeny Morozov, Filter Bubble, Firefox, Google Glasses, informal economy, information retrieval, invention of movable type, invention of the printing press, invisible hand, James Watt: steam engine, Jaron Lanier, jimmy wales, Kevin Kelly, Lewis Mumford, lifelogging, Loebner Prize, low earth orbit, Marshall McLuhan, McMansion, moral panic, Nicholas Carr, off-the-grid, pattern recognition, Plato's cave, pre–internet, Republic of Letters, Silicon Valley, Skype, Snapchat, social web, Steve Jobs, technological solutionism, TED Talk, the medium is the message, The Wisdom of Crowds, traumatic brain injury, Turing test

We can presume that in the future much more will be selected by public consensus—and that we’ll be vaguely unaware of those selections, too. The computer scientist (and virtual reality pioneer) Jaron Lanier writes angrily against this “invisible hand” in Who Owns the Future?: If market pricing is the only legitimate test of quality, why are we still bothering with proving theorems? Why don’t we just have a vote on whether a theorem is true? To make it better we’ll have everyone vote on it, especially the hundreds of millions of people who don’t understand the math. Would that satisfy you? This invisible hand is at work each time you search online. When Google delivers your search results, its algorithm (mimicking an academic tradition) assumes that work that receives more citations has a greater authority.


pages: 539 words: 139,378

The Righteous Mind: Why Good People Are Divided by Politics and Religion by Jonathan Haidt

affirmative action, Black Swan, classic study, cognitive bias, cognitive load, illegal immigration, impulse control, income inequality, index card, invisible hand, lateral thinking, meta-analysis, mirror neurons, Monkeys Reject Unequal Pay, Necker cube, Nelson Mandela, out of africa, Peter Singer: altruism, phenotype, Philippa Foot, Plato's cave, Ralph Waldo Emerson, Richard Thaler, Ronald Reagan, social intelligence, social web, stem cell, Steven Pinker, systems thinking, tech billionaire, The Spirit Level, theory of mind, Thomas Malthus, Timothy McVeigh, Tony Hsieh, Tragedy of the Commons, ultimatum game

Reagan defeated Democrat Jimmy Carter in 1980, a time when Americans were being held hostage in Iran, the inflation rate was over 10 percent, and America’s cities, industries, and self-confidence were declining. The Reagan narrative goes like this: Once upon a time, America was a shining beacon. Then liberals came along and erected an enormous federal bureaucracy that handcuffed the invisible hand of the free market. They subverted our traditional American values and opposed God and faith at every step of the way.… Instead of requiring that people work for a living, they siphoned money from hardworking Americans and gave it to Cadillac-driving drug addicts and welfare queens. Instead of punishing criminals, they tried to “understand” them.

Think about all the work that went into it—the farmers, truckers, and supermarket employees, the miners and metalworkers who made the can—and think how miraculous it is that you can buy this can for under a dollar. At every step of the way, competition among suppliers rewarded those whose innovations shaved a penny off the cost of getting that can to you. If God is commonly thought to have created the world and then arranged it for our benefit, then the free market (and its invisible hand) is a pretty good candidate for being a god. You can begin to understand why libertarians sometimes have a quasi-religious faith in free markets. Now let’s do the devil’s work and spread chaos throughout the marketplace. Suppose that one day all prices are removed from all products in the supermarket.

See Cosmides and Tooby 2006 on how organizing labor along Marxist or socialist principles, which assume that people will cooperate in large groups, usually runs afoul of moral psychology. People do not cooperate well in large groups when they perceive that many others are free riding. Therefore, communist or heavily socialist nations often resort to the increasing application of threats and force to compel cooperation. Five-year plans rarely work as well as the invisible hand. 69. From “Conservatism as an ideology,” as quoted by Muller 1997, p.3. 70. Burke 2003/1790, p. 40. I don’t think Burke was right that the love of one’s platoon leads, in general, to a love of humanity. But it does seem as though increasing the love of one’s in-group usually doesn’t lead to an increase in hate for out-groups (see Brewer and Campbell 1976; de Dreu et al. 2011), so I’d be content to live in a world with vastly more parochial love and little or no decrease in love of humanity. 71.


pages: 493 words: 132,290

Vultures' Picnic: In Pursuit of Petroleum Pigs, Power Pirates, and High-Finance Carnivores by Greg Palast

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", anti-communist, back-to-the-land, bank run, Berlin Wall, Bernie Madoff, British Empire, capital asset pricing model, capital controls, centre right, Chelsea Manning, classic study, clean water, collateralized debt obligation, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, disinformation, Donald Trump, energy security, Exxon Valdez, Glass-Steagall Act, invisible hand, junk bonds, means of production, Myron Scholes, Nelson Mandela, offshore financial centre, Pepto Bismol, random walk, Ronald Reagan, sensible shoes, Seymour Hersh, transfer pricing, uranium enrichment, Washington Consensus, Yogi Berra

Thug had a big rock and put a fence around the best dirt for growing corn and left Ugh with just about nothing, and Thug said, “This is the rule and this is my big-ass rock. Get it?” And Ugh said, “OK.” So who holds the big rock today? Who made up this system and who enforces it for The Sack’s benefit, for Goldfinger, for BP PLC? We’re told the Invisible Hand of the Marketplace holds the rock now, but it must attach to a very powerful arm. Whose? There were many candidates, several Thugs and their generals moving assets and reserves around the map. Undoubtedly, one of them sat within the high-walled compound rising up in front of Badpenny and me, the headquarters of the WTO, the World Trade Organization.

How could my master Black have gotten it so horrifically wrong? He had slipped on the banana peel dropped by Milton Friedman. Friedman had sold Black and the world the idea that markets are perfectly “efficient,” from its pricing of French fries to derivatives and money itself, all set in a perfectly rational and fair way. The market’s magical Invisible Hand needed no arm attached. Government would only get in the way of this wondrous self-regulating economy. Crucial to the Friedman theory—and please pay attention to this—was that markets have “wisdom.” That is, prices in a free market communicate all information about a product, securities included (and their derivatives).

LONDON SCHOOL OF ECONOMICS Sometimes it’s helpful to have your paranoia justified by an expert. Joe Stiglitz is an expert, a big-shot economist. He made a big splash by analyzing the First Catechism of Free Market economics: that The Market has “wisdom,” that The Market is always right. That’s why we should be happy to designate The Market as the modern Thug, the Invisible Hand with a big rock to keep us in line with its wisdom. But Stiglitz proved, mathematically, that sometimes The Market can be just crazy, cruel, insane, ignorant, especially when some of the players in the market are keeping secrets. Now, you and I and Lonigro and most of the planet know that already, but to economists, the discovery that The Market could be wrong was so astonishing that they gave Stiglitz the Nobel Prize.


To the Ends of the Earth: Scotland's Global Diaspora, 1750-2010 by T M Devine

agricultural Revolution, British Empire, classic study, deindustrialization, deskilling, full employment, ghettoisation, Great Leap Forward, housing crisis, invention of the telegraph, invisible hand, it's over 9,000, joint-stock company, Khartoum Gordon, land tenure, Lewis Mumford, manufacturing employment, mass immigration, new economy, New Urbanism, oil shale / tar sands, railway mania, Red Clydeside, rising living standards, Robert Gordon, Scramble for Africa, Suez canal 1869, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transatlantic slave trade, transcontinental railway, women in the workforce

Above all, his social ideas were also those of the propertied classes because, like them, he accepted the existing economic order to be divinely ordained, opposed ‘democracy’ as a sure route to anarchy, condemned trade unions, and believed that the pursuit of self-interest would, through Adam Smith’s ‘invisible hand’, also promote the general welfare of all citizens. But Chalmers also argued that with the possession of wealth came the heavy responsibility of philanthropic action. This also generated a deep response among his middle-class audience: The effect was to turn the cities into the vibrant focus of aggressive Christianity with endless and very successful appeals for money for building churches, manses and mission stations, for mounting foreign missions, and for the publication of tracts.

., A Union for Empire: Political Thought and the British Union of 1707 (Cambridge, 1995). Robertson, P. L., ‘Shipping and Shipbuilding: The Case of William Denny and Brothers’, Business History, 16 (1974). Robertson, Seona and Les Wilson, Scotland’s War (Edinburgh, 1995). Rodger, R. G., ‘The Invisible Hand: Market Forces, Housing and the Urban Form in Victorian Cities’, in D. Fraser and A. Sutcliffe, eds., The Pursuit of Urban History (London, 1980). Rodgers, Nini, Ireland, Slavery and Anti-Slavery: 1612–1865 (Basingstoke, 2009). Ross, Andrew, ‘Scottish Missionary Concern 1874–1919: A Golden Era’, Scottish Historical Review, 1 (1972).

Smout, A Century of the Scottish People, 1830–1950 (London, 1986), pp. 109–13. 56. R. D. Anderson, Education and Opportunity in Victorian Scotland (Edinburgh, 1983), p. 152. 57. R. H. Campbell, The Rise and Fall of Scottish Industry, 1707–1939 (Edinburgh, 1980), pp. 76–101; Smout, Century of the Scottish People, p. 112. 58. R. G. Rodger, ‘The Invisible Hand: Market Forces, Housing and the Urban Form in Victorian Cities’, in D. Fraser and A. Sutcliffe, eds., The Pursuit of Urban History (London, 1980), pp. 190–211. 59. J. D. Gould, ‘European Intercontinental Emigration 1815–1914: Patterns and Causes’, Journal of European Economic History, 8 (1979). 60.


pages: 515 words: 132,295

Makers and Takers: The Rise of Finance and the Fall of American Business by Rana Foroohar

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, additive manufacturing, Airbnb, Alan Greenspan, algorithmic trading, Alvin Roth, Asian financial crisis, asset allocation, bank run, Basel III, Bear Stearns, behavioural economics, Big Tech, bonus culture, Bretton Woods, British Empire, business cycle, buy and hold, call centre, Capital in the Twenty-First Century by Thomas Piketty, Carl Icahn, Carmen Reinhart, carried interest, centralized clearinghouse, clean water, collateralized debt obligation, commoditize, computerized trading, corporate governance, corporate raider, corporate social responsibility, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, crowdsourcing, data science, David Graeber, deskilling, Detroit bankruptcy, diversification, Double Irish / Dutch Sandwich, electricity market, Emanuel Derman, Eugene Fama: efficient market hypothesis, financial deregulation, financial engineering, financial intermediation, Ford Model T, Frederick Winslow Taylor, George Akerlof, gig economy, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Greenspan put, guns versus butter model, High speed trading, Home mortgage interest deduction, housing crisis, Howard Rheingold, Hyman Minsky, income inequality, index fund, information asymmetry, interest rate derivative, interest rate swap, Internet of things, invisible hand, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", John Bogle, John Markoff, joint-stock company, joint-stock limited liability company, Kenneth Rogoff, Kickstarter, knowledge economy, labor-force participation, London Whale, Long Term Capital Management, low interest rates, manufacturing employment, market design, Martin Wolf, money market fund, moral hazard, mortgage debt, mortgage tax deduction, new economy, non-tariff barriers, offshore financial centre, oil shock, passive investing, Paul Samuelson, pensions crisis, Ponzi scheme, principal–agent problem, proprietary trading, quantitative easing, quantitative trading / quantitative finance, race to the bottom, Ralph Nader, Rana Plaza, RAND corporation, random walk, rent control, Robert Shiller, Ronald Reagan, Satyajit Das, Savings and loan crisis, scientific management, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, Snapchat, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, Steve Jobs, stock buybacks, subprime mortgage crisis, technology bubble, TED Talk, The Chicago School, the new new thing, The Spirit Level, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Tobin tax, too big to fail, Tragedy of the Commons, trickle-down economics, Tyler Cowen: Great Stagnation, Vanguard fund, vertical integration, zero-sum game

Still, this was a sensitive topic—since asset managers are hired to manage the retirement money of the very firms whose corporate governance they might be trying to direct—and Bogle’s suggestion got a rather mixed reaction. “I remember one of the guys from some big firm said, ‘We all know what you’re trying to do, Jack. Why don’t you just leave it to the markets? Leave it to Adam Smith’s Invisible Hand!’ And I said, ‘Don’t you realize that we are Adam Smith’s Invisible Hand?’ ”48 It’s a profound statement. Finance is in control, yes. But that means that it has the potential to be a force for economic and social good, rather than exploitation. Yet in this case, harnessing that force would require that the asset management industry turn its back on a business model that has been yielding unbelievably easy money for decades.

But Walter Wriston, a returning GI with a graduate degree in foreign affairs from Tufts who took an entry-level job with the bank in 1946, would change all that. Wriston was a child of privilege; his father, a successful academic who eventually became president of Brown University, had argued against the government planning of the New Deal and idolized Adam Smith and his “invisible hand.”38 (No matter that Smith only mentioned the hand a few times, briefly, in a couple of his works, or that this Scottish economist who came to emblematize laissez-faire economic thinking had built his ideas at a time when the economy was mostly small, family-owned businesses rather than large and growing corporations.)


pages: 480 words: 138,041

The Book of Woe: The DSM and the Unmaking of Psychiatry by Gary Greenberg

addicted to oil, Albert Einstein, Asperger Syndrome, autism spectrum disorder, back-to-the-land, David Brooks, Edward Jenner, impulse control, invisible hand, Isaac Newton, John Snow's cholera map, Kickstarter, late capitalism, longitudinal study, Louis Pasteur, McMansion, meta-analysis, neurotypical, phenotype, placebo effect, random walk, selection bias, statistical model, theory of mind, Winter of Discontent

Their colleagues/competitors included neurologists, but they also included anthropologists and art historians and social workers—nonmedical people who had been trained in psychoanalysis and had hung out their shingles. Given the ascendant power of medicine, these lay analysts might well have failed to capture much of the market from doctors, but the New York Psychoanalytic Society, dominated by psychiatrists, was not content to wait for the invisible hand to lift them to dominance. In 1926, for reasons it didn’t spell out explicitly, it declared that only physicians could practice psychoanalysis. Back in Vienna, Freud, who had long loathed America as a land of the shallow and unsophisticated, was livid. “As long as I live26,” he thundered, “I shall balk at having psychoanalysis swallowed by medicine.”

“Did this change the way you treated her?” I asked. “No.” “So what was its value, would you say?” “I got paid.” It is at least ironic that a profession once dedicated to the pursuit of psychological truth is now dependent on this kind of dishonesty for its survival. But I suppose that any system guided by the invisible hand—financial markets no more than health care financing—is bound to be gamed. And the DSM, whatever its flaws, has proved to be a superb playbook. • • • Maybe Michael First’s claim that psychiatry is somehow the victim of the selfsame diagnostic manual that pulled its chestnuts out of the fire sounds disingenuous to you, too.

“We are just going to get more and more diseases, since our expectations of health are going to become more sophisticated and expansive.” Thanks to a DSM that has kept pace with those expectations, that future is here. It has arrived in a capitalist age, which means that we have placed our well-being in the not-so-invisible hands of a medical-industrial complex whose proprietors have a stake in reducing suffering to biochemistry. It has spawned a psychiatry that can’t help giving us more and more diseases, at least not if it wants to meet the economic, if not the scientific, demands of the day. Still, the problem with psychiatry may not be that it lags behind the other medical specialties, with their magic bullets and the science by which they identify the targets.


pages: 464 words: 139,088

The End of Alchemy: Money, Banking and the Future of the Global Economy by Mervyn King

Alan Greenspan, Andrei Shleifer, Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, behavioural economics, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Monday: stock market crash in 1987, Black Swan, Boeing 747, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, centre right, classic study, collapse of Lehman Brothers, creative destruction, Credit Default Swap, crowdsourcing, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, distributed generation, Doha Development Round, Edmond Halley, Fall of the Berlin Wall, falling living standards, fiat currency, financial engineering, financial innovation, financial intermediation, floating exchange rates, foreign exchange controls, forward guidance, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, German hyperinflation, Glass-Steagall Act, Great Leap Forward, Hyman Minsky, inflation targeting, invisible hand, Japanese asset price bubble, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, labour market flexibility, large denomination, lateral thinking, liquidity trap, Long Term Capital Management, low interest rates, manufacturing employment, market clearing, Martin Wolf, Mexican peso crisis / tequila crisis, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, Nick Leeson, no-fly zone, North Sea oil, Northern Rock, oil shale / tar sands, oil shock, open economy, paradox of thrift, Paul Samuelson, Ponzi scheme, price mechanism, price stability, proprietary trading, purchasing power parity, quantitative easing, rent-seeking, reserve currency, Richard Thaler, rising living standards, Robert Shiller, Robert Solow, Satoshi Nakamoto, savings glut, secular stagnation, seigniorage, stem cell, Steve Jobs, The Great Moderation, the payments system, The Rise and Fall of American Growth, Thomas Malthus, too big to fail, transaction costs, Tyler Cowen: Great Stagnation, yield curve, Yom Kippur War, zero-sum game

As the eminent Cambridge economist, the late Professor Frank Hahn, wrote: ‘the most serious challenge that the existence of money poses to the theorist is this: the best developed model of the economy cannot find room for it’.46 Why is modern economics unable to explain why money exists? It is the result of a particular view of competitive markets. Adam Smith’s ‘invisible hand’ – the notion that the impersonal forces of competition among a large number of people pursuing their own self-interest would guide resources to activities where they would be used as efficiently as possible – was a beautiful idea. But if the ‘hand’ was invisible, what exactly did it correspond to in the world?

In the nineteenth century, important contributions came from Frenchman Léon Walras, who taught in Lausanne, and Englishman Alfred Marshall, who taught in Cambridge. Then, in the early 1950s, two economists, Kenneth Arrow and Gerard Debreu, both working in America, finally produced a rigorous explanation of the invisible hand (for which they were subsequently awarded the Nobel Prize).47 They imagined a hypothetical grand auction held at the beginning of time in which bids are made for every possible good and service that people might want to buy or sell at all possible future dates. The process continues until every market has cleared (that is, demand equals supply) with prices, demands and supplies of all goods and services determined in the auction.

., 163–4 leverage ratios (total assets to equity capital), 24, 25, 33, 36, 95–6, 110–11, 257, 276, 280, 307, 323; as regulatory heuristic, 139–40, 259 limited liability status, 98, 107–9, 254–5 liquidity, 119, 149, 163, 202–3, 208, 259, 269–81; and bank balance sheets, 97, 255, 257–8, 259; ‘Chicago Plan’ (1933), 261–4, 268, 273, 274, 277–8; coverage ratio, 256, 259; crisis (2007-8), 35–8, 64–5, 76, 110; demand for during crises, 65–6, 76–7, 86, 106, 110, 148, 182, 187–92, 194, 201–7, 253–4, 367; illusion of, 149–55, 253–4; liquidity regulation, 163, 187–92, 208, 259, 272, 276; ‘liquidity trap’ theory, 298–302; and money, 64–6, 76, 85, 86, 106, 119, 287 Lloyd George, David, 193, 195, 197–8, 199–200, 368 Long-Term Capital Management (LTCM), 120–1, 125 Lord’s cricket ground, 92 Lucas, Robert, 303 Macdonald, James, 350 Madoff, Bernie, 101 Magna Carta (1215), 286 Malthus, Thomas, 128 Mansfield, Lord, 260 market economy, 4–5, 10, 13, 17, 42–3, 50, 353–7; hypothetical grand auction, 79–81, 83, 128–9, 144, 149, 295, 297–8, 315; linking of present and future in, 11–12, 23, 46, 84–5, 325–6, 367; Adam Smith’s ‘invisible hand’, 79–80 ‘marking to market’ valuing, 147 Marshall, Alfred, 79 Martin, McChesney, 166 Marx, Karl, 19, 365 mathematics, 7, 12, 16, 93–4, 99–100, 121, 130, 143, 153, 293, 310 Max Planck Institute, Berlin, 123 McAdoo, William, 195, 196–7, 200, 201 McCain, John, 157 McCulloch, Hugh, 88 Meriwether, John, 121 Merkel, Angela, 224, 227 Merton, Robert, 120–1 Mesopotamia, 55–6 Mexico, 100, 367 Middle East, 56, 337 Mill, John Stuart, 214 Minsky, Hyman, 262, 306–8, 323 Mitchell, Andrea, 157 monetarism, 78 monetary policy, 45, 78, 167–72, 180–6, 247, 288, 315, 327–8, 352; and aggregate demand, 30, 41–9, 167, 184–5, 212–13, 221, 229–31, 291–2, 294–302, 319–24, 329–32, 335, 358; alternative strategies for pre-crisis period, 328–33; exhaustion of, 48, 347–8; and fiscal policy, 184, 347–8; and Great Depression (early 1930s), 76; and Great Stability, 22, 25, 30, 46–7, 315, 328–33; ‘helicopter drops’, 283, 358; intervention in asset markets, 172, 173–5, 265; and Keynes, 78, 298–302; and Diego Maradona, 176–7; and market expectations, 176–8; in post-crisis period, 48, 49, 168–9, 183–4, 291, 319–24, 335, 356, 358; short-term stimulus during crisis, 39, 41, 118–19, 182–3 monetary unions, 212–18, 238–49; see also European Monetary Union (EMU, euro area) money: acceptability criterion, 53, 54, 59–60, 61, 63, 64–6; and American colonists, 57–8, 68; central bank creation of, 65–6, 70–1, 160–1; commodities as, 55, 58, 68, 286–7; counterfeiting, 56, 57; definitions of, 53; and economists, 78–80; electronic transfers, 53, 281, 282–5; first paper banknotes, 57–8, 74; future of, 281–7; gold versus paper debate, 71–7; government monopoly on banknote issue, 62, 160; government printing of, 70, 85–6, 163–4, 358; history of, 4–5, 18–19, 54–8, 64, 67–8, 71–7, 160–1, 163–4, 187–202; history of (alternative view), 59–63; in Iraq (1991-2003), 218, 238–42; and liquidity, 64–6, 76, 85, 86, 106, 119, 287; ‘monetary base’, 291; and nation state, 211–12, 214, 215–18, 238–49; quantity theory of, 163; role and function of, 4–5, 8, 51–4, 57, 58–63, 65–6, 83–6, 281; role of precious metals, 55–7, 58, 59, 60, 62, 66, 71–7, 86, 216; and Scottish independence referendum (2014), 243–5, 248; share of bank deposits in total money, 62–3; single unit of account, 285–7; St Paul’s Epistle to Timothy, 51, 52; stability criterion, 53, 54, 60, 61, 63, 66–71, 163; standardised coinage, 56; and trust, 8, 55, 57, 66–71, 82–3, 155; UK Currency and Bank Notes Act (1914), 198 money market funds, 112–13 money supply, 62–3, 76, 77, 78, 85–7, 162, 327; and central banks, 63, 65–6, 76, 86–7, 162, 163, 180–4, 192, 196–201; ‘monetary base’, 65–6 Monti, Mario, 225 Moore, John, 51, 82 moral hazard, 192, 268, 274–5, 344 Morgan, John Pierpont (J.P.), 161, 196 Morgan Stanley, 98 mortgage-backed securities (MBS), 35, 64, 99, 113, 142, 143, 144, 150 mortgages, 32, 138, 139, 173, 174, 258, 335–6; sub-prime, 35–6, 99, 100, 143 Mundell, Robert, 212 Muth, John, 303 mutual funds, 102, 112–13 Nakamoto, Satoshi, 282 Napoleon Bonaparte, 28, 68, 159 nation states, 211–14, 215–18, 238–49; post-war expansion in numbers of, 214–15; sovereignty and economic integration, 212–13, 348–9, 351 neoclassical economics, 293, 294, 302–3, 304, 306; ‘New Keynesian’ models, 305–6; ‘optimising’ model, 129–31, 132, 134, 138, 309, 311; ‘rational’ expectations concept, 303–5, 310, 314; stability heuristic, 312–14, 319–21, 323, 331, 332 Netherlands, 49, 230 New Zealand, 92, 167, 170, 179, 348 Nixon, President Richard, 73 Norman, Montagu, 13 North Korea, 68 Northern Rock, 107, 139, 205 Obama, Barack, 334 oil market, 21, 295–6, 306, 318, 362 Olympic Games, London (2012), 227 O’Neill, Onora, 81 Overend, Gurney & Co, 189–90, 191 Panama, 246, 287 Pascal, Blaise, 123 Paulson, Hank, 37–8 pawnbroker for all seasons (PFAS) approach, 270–81, 288, 368 pension funds, 32, 103, 112, 183, 204 Pitt, William (the Younger), 75 Portugal, 221, 222, 224, 229, 363–4 Prince, Chuck, 90 prisoner’s dilemma, 25, 81, 89–90, 255, 302, 332, 333, 368; central banks and interest rates, 335; definition of, 9–10; escaping, 347–8, 352–3 privatisation, 41 probability theory, 121, 123, 302–3, 311 productivity (output per head), 17–19, 42, 318–19, 354, 359–62; see also economic growth Prudential Regulation Authority, UK, 260 quantitative easing (QE), 47–8, 182–3, 270, 275, 358 radical uncertainty, 9, 11–12, 126–31, 247, 257–9, 304–5, 306, 308; and Arrow–Debreu grand auction, 80, 83, 128–9, 144, 149, 295, 297–8, 315; and banking sector, 42–3, 106–10, 125, 136–40, 191, 257–8, 264–5, 269, 281; and central banks, 166–7, 171, 179, 180, 259; and coordination problem, 295–303, 310, 315–16, 332, 333; coping behaviour, 130–40, 150, 153–5, 170, 270–1, 288, 310–15, 316–17, 330–1, 352–3; and financial markets, 140, 143, 144–5, 149–55; heuristics, 130–1, 134–40, 170, 208, 278, 310–11, 312–14, 319–21, 323, 331, 332; illusion of certainty, 121–6; illusion of liquidity, 149–55; and Keynes, 293–302; and money, 42–3, 83–6; and narrative, 136, 137, 150, 153, 257, 310–16, 319–21, 323–4, 328, 332–3, 356, 357; narrative revision downturns, 328, 332–3, 356, 357, 358–9, 364; neoclassical rejection of, 302; as precondition of capitalist economy, 145; and ‘rational’ expectations concept, 304–5, 310, 314; and risk weights, 138–9, 258–9, 277; role of expectations, 310–17, 323, 331–3 rating agencies, 146, 224 ‘rational’ expectations concept, 302–4, 310, 314 regulation, 10, 17, 62, 112–13, 114, 137–9, 255–61, 280; Basel Committee, 255, 276; deregulation from late 1970s, 22, 23–4, 98, 174, 255; and extreme complexity, 259–61, 275–6; lax, 6, 33; PFAS approach, 270–81, 288; post-crisis reforms, 40–1, 255–6, 257–61; reintroduction of ring-fencing, 256, 264 Reinhart, Carmen M., 308 resolution mechanisms, 256, 279 Richardson, Gordon, 176 risk, 84, 121–2, 123, 124, 126–9, 143, 254; implicit taxpayer subsidy for, 191–2, 207, 254–5; maturity and risk transformation, 104–15, 117–19, 250–1, 254–5; ‘optimising’ model, 129–31, 132, 134, 138, 309, 311; risk premium, 32–3, 115, 183; risk weights, 138–9, 258–9, 277 Robinson, Joan, 12, 292–3 Rodrik, Dani, 348 Rogoff, Kenneth, 44, 308 Rome, ancient, 59, 164, 216 Roosevelt, President Franklin, 91, 316 Royal Bank of Scotland (RBS), 37, 89, 118, 206, 243 Russia, 121, 159 saving, 101–2, 155, 308–17, 362–3; in emerging economies, 22–3, 27–8, 29, 30; ‘paradox of thrift’, 297, 326; ‘savings glut’, 28, 29, 30, 46, 319, 325; as source of future demand, 11, 46, 84–5, 185, 325–6, 356 Schacht, Hjalmar, 341–2, 343 Schäuble, Wolfgang, 211 Scholes, Myron, 120–1 Schumpeter, Joseph, 152 Schwartz, Anna, 192, 328 Scotland, 218, 243–7, 248 Second World War, 20, 21, 219, 242, 317, 342 secular stagnation theory, 44, 291–2, 355 Seneca, 123–4 11 September 2001 terrorist attacks, 124 ‘shadow’ banking system, 107, 112–14, 256, 262, 274 Shiller, Robert, 151 Silber, William, 206 Simons, Henry, 262 Sims, Christopher, 79 Slovakia, 216 Smith, Adam, 17–18, 54–5, 79–80, 163 Smith, Ed, 124 sovereign debt (government bonds), 32, 65, 92, 138, 182–4, 196–7, 203, 258, 259, 338–40; bond yields, 29, 183–4, 224, 227, 228, 231, 299, 336; in euro area, 162, 190, 224, 226–31, 258, 338, 339–40, 342–4; framework for restructuring, 346–7; need for export surplus before payment, 339–40, 341–3; WW1 reparations, 340–2, 343, 345–6 Soviet Union, 27, 68, 216 Spain, 47, 93, 159, 216, 221, 222, 227–8, 229, 257–8, 355, 363–4 special purpose vehicles, 113–14 stock markets, 102, 125–6, 133, 151–4, 194, 195, 200, 347 Stresemann, Gustav, 219 Summers, Larry, 44 Sweden, 159, 166, 173, 179, 216–17, 279, 335 Swift, Jonathan, ‘Thoughts on Various Subjects’ (1703), 250, 290 Switzerland, 33, 70, 100, 118, 184, 216, 335 Syed, Matthew, 124 Taylor, John, 168 technological change, 83–4, 127, 129, 153–4, 281, 291, 354, 355, 365 Tequila crisis (1994), 367 Thaler, Richard, 132 Thornton, Henry, 188 Tobin, James, 262 trade surpluses and deficits, 33, 34, 46, 319, 321–2, 329, 352, 356, 364; in emerging economies, 27–8, 30, 329; in EMU, 222, 232–3, 236, 363–4; and exchange rates, 22–3; and interest rates, 23, 30, 46, 319–20; likely re-emergence of, 48–9 trading, financial, 3, 24, 64, 99–100, 257; bonuses, 99, 101, 117, 144, 147; erosion of ethical standards, 100–1, 288; ‘front-running’, 153–4, 284 Transatlantic Trade and Investment Partnership (TTIP), 361 Trans-Pacific Partnership (TPP), 361 Trichet, Jean-Claude, 225 trust, 10, 81–3, 106; and monetary unions, 220, 232, 237; and money, 8, 55, 57, 66–71, 82–3, 155 Tsipras, Alexis, 230, 231 Tuckett, Professor David, 133–4 Turner, Adair, 324 Tversky, Amos, 132 unemployment, 38, 292, 293, 294, 297–9, 302, 326–7, 329, 330; in euro area, 45, 226, 228, 229–30, 232, 234, 345; and inflation targeting, 168, 169; and interest rates, 169, 298–300; ‘stagflation’ (1970s), 5, 302–3, 318 United Kingdom: Acts of Union (1707), 215; alternative strategies for pre-crisis period, 328–32; Banking Act (2009), 40; Banking and Joint Stock Companies Act (1879), 109; Banking Reform Act (2013), 40; ‘Big Bang’ (1986), 23; City of Glasgow Bank failure (1878), 108–9; commercial property market, 47, 118; Currency and Bank Notes Act (1914), 198; Labour government (1964-70), 20; as monetary union, 215; need for export sector support, 357, 364; return to gold standard (1920s), 76; Scottish independence referendum (2014), 218, 243–5, 248; trade deficits, 30, 321, 322, 329, 364; tradition of national branch banking, 116; see also Bank of England United Nations, 214–15 United States: 1914 financial crisis, 192–201, 206; Aldrich-Vreeland Act (1908), 196, 206; Bureau of War Risk Insurance (1914), 200; Constitution, 286; Dodd-Frank Reform (2010), 40, 260; dollar and gold link, 73, 195, 200–1; dollar as world’s reserve currency, 25, 28, 34; ‘double liability’ (1865-1934), 107–8; ‘free banking’ era, 60–2, 77, 161; Glass-Steagall Act (1933), 23, 98, 260; gold reserves, 74, 77; Gramm-Leach-Bliley Act (1999), 23, 98; history of money in, 57–8, 67, 68, 160–1, 187, 188, 212, 215; as monetary union, 212, 215, 234; need for export sector support, 357, 364; New York becomes world money centre, 194–5, 200–1; notes and coins in, 281; Office of the Comptroller of the Currency, 137, 206; trade deficits, 30, 34, 46, 49, 319, 321, 329, 364 Van Court’s Counterfeit Detector and Bank Note List, 61 Vietnam War, 5, 20, 73, 306 Viniar, David, 123 Volcker, Paul, 176, 288 Voltaire, 126 Wall Street Crash (1929), 347 Walpole, Horace, 369 Walras, Léon, 79 Washington, George, 286 Weatherstone, Sir Dennis, 136–7, 278 weights and measures, 212, 286, 287 Wheeler, Judge Thomas C., 162 wholesale funding, 97 Willetts, David, 83 Wilson, Brigadier-General Henry, 89 Wimbledon tennis championships, 142, 187–8 Wolf, Martin, 96, 262 World Bank, 21, 350 World Trade Organisation, 361 Yellen, Janet, 176, 287 Yugoslavia, break-up of, 216 Zimbabwe, 68, 69–70 ABOUT THE AUTHOR Mervyn King was Governor of the Bank of England from 2003 to 2013, and is currently Professor of Economics and Law at New York University and School Professor of Economics at the London School of Economics.


pages: 491 words: 141,690

The Controlled Demolition of the American Empire by Jeff Berwick, Charlie Robinson

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, airport security, Alan Greenspan, American Legislative Exchange Council, American Society of Civil Engineers: Report Card, bank run, barriers to entry, Berlin Wall, Bernie Sanders, Big Tech, big-box store, bitcoin, Black Lives Matter, bread and circuses, Bretton Woods, British Empire, call centre, carbon credits, carbon footprint, carbon tax, Cass Sunstein, Chelsea Manning, clean water, cloud computing, cognitive dissonance, Comet Ping Pong, coronavirus, Corrections Corporation of America, COVID-19, crack epidemic, crisis actor, crony capitalism, cryptocurrency, dark matter, deplatforming, disinformation, Donald Trump, drone strike, Edward Snowden, Elon Musk, energy transition, epigenetics, failed state, fake news, false flag, Ferguson, Missouri, fiat currency, financial independence, George Floyd, global pandemic, global supply chain, Goldman Sachs: Vampire Squid, illegal immigration, Indoor air pollution, information security, interest rate swap, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jeff Bezos, Jeffrey Epstein, Julian Assange, Kickstarter, lockdown, Mahatma Gandhi, mandatory minimum, margin call, Mark Zuckerberg, mass immigration, megacity, microapartment, Mikhail Gorbachev, military-industrial complex, new economy, no-fly zone, offshore financial centre, Oklahoma City bombing, open borders, opioid epidemic / opioid crisis, pill mill, planetary scale, plutocrats, Ponzi scheme, power law, pre–internet, private military company, Project for a New American Century, quantitative easing, RAND corporation, reserve currency, RFID, ride hailing / ride sharing, Saturday Night Live, security theater, self-driving car, Seymour Hersh, Silicon Valley, smart cities, smart grid, smart meter, Snapchat, social distancing, Social Justice Warrior, South China Sea, stock buybacks, surveillance capitalism, too big to fail, unpaid internship, urban decay, WikiLeaks, working poor

The Visible Hand of Crony Capitalism Crony capitalism is defined as an economy in which businesses thrive, not as a result of risks they take, but rather as a return on money amassed through a nexus between a business class and the political class. This has been the mission statement of the United States for at least the last 30 years, and probably longer. The original economist, Adam Smith, described the “invisible hand” as enlightened self-interest, and a market force that helps the demand and supply of goods in a free market to reach equilibrium automatically. If a person makes a product and charges too much for it, nobody will buy it. This is both Common Sense 101 & Economics 101. Their competitor may sell a similar product and charge much less, so they would need to either lower their price to a point where they are competitive, or else they will never sell anything and the market will punish them.

The Sellers and Buyers will come to an agreement that they consider to be fair. If the price offered for a product is too low, the Seller simply will not sell. If the Buyer is unable to find any Sellers willing to take his offer, maybe his offer is just too low and will need to be raised in order to entice someone to sell. This is why they call it an invisible hand because it does not need anyone messing with it to make the market fair for the people. Crony capitalism gives the invisible middle finger to the people. When one manipulates either side of the equation, be it the demand or supply side, they end up with numbers that are invalid and warped. If the local butcher kept his thumb on the scale every time people bought meat from him, they would get fed up and go somewhere else.

There are examples of “Economic Darwinism” throughout the business landscape, and just because a person, family, or company dominated a segment of business for a generation, does not assure them continued success in the future. When was the last time someone bought a roll of Kodak film? How is the biggest pager company doing these days? When was the last time kids were excited to go home and play Atari after school? If the Invisible Hand balances things out, then Economic Darwinism is like a fat kid on one side of the See Saw. The other kids can try as hard as they like to push their side down, but their skinny ass might want to think about swinging on the monkey bars instead. When the government gets involved with marketplaces in order to prop up an aspect of the economy that they feel is important to stimulate, it delays the natural transition to something better.


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Shutdown: How COVID Shook the World's Economy by Adam Tooze

2021 United States Capitol attack, air freight, algorithmic trading, Anthropocene, Asian financial crisis, asset-backed security, Ayatollah Khomeini, bank run, banking crisis, Basel III, basic income, Ben Bernanke: helicopter money, Benchmark Capital, Berlin Wall, Bernie Sanders, Big Tech, bitcoin, Black Lives Matter, Black Monday: stock market crash in 1987, blue-collar work, Bob Geldof, bond market vigilante , Boris Johnson, Bretton Woods, Brexit referendum, business cycle, business process, business process outsourcing, buy and hold, call centre, capital controls, central bank independence, centre right, clean water, cognitive dissonance, contact tracing, contact tracing app, coronavirus, COVID-19, credit crunch, Credit Default Swap, cryptocurrency, currency manipulation / currency intervention, currency peg, currency risk, decarbonisation, deindustrialization, Donald Trump, Elon Musk, energy transition, eurozone crisis, facts on the ground, failed state, fake news, Fall of the Berlin Wall, fear index, financial engineering, fixed income, floating exchange rates, friendly fire, George Floyd, gig economy, global pandemic, global supply chain, green new deal, high-speed rail, housing crisis, income inequality, inflation targeting, invisible hand, It's morning again in America, Jeremy Corbyn, junk bonds, light touch regulation, lockdown, low interest rates, margin call, Martin Wolf, mass immigration, mass incarceration, megacity, megaproject, middle-income trap, Mikhail Gorbachev, Modern Monetary Theory, moral hazard, oil shale / tar sands, Overton Window, Paris climate accords, Pearl River Delta, planetary scale, Potemkin village, price stability, Productivity paradox, purchasing power parity, QR code, quantitative easing, remote working, reserve currency, reshoring, Robinhood: mobile stock trading app, Ronald Reagan, secular stagnation, shareholder value, Silicon Valley, six sigma, social distancing, South China Sea, special drawing rights, stock buybacks, tail risk, TikTok, too big to fail, TSMC, universal basic income, Washington Consensus, women in the workforce, yield curve

FAO and WFP, “FAO-WFP Early Warning Analysis of Acute Food Insecurity Hotspots,” July 17, 2020; www.wfp.org/publications/fao-wfp-early-warning-analysis-acute-food-insecurity-hotspots. 46. K. Hearst, “COVID-19 and the Garment Industry’s Invisible Hands,” Open Democracy, July 20, 2020; www.opendemocracy.net/en/oureconomy/covid-19-and-the-garment-industrys-invisible-hands/. 47. Z. Ebrahim, “ ‘Moving Mountains’: How Pakistan’s ‘Invisible’ Women Won Workers’ Rights,” Guardian, December 1, 2020. 48. G. Flynn and M. Dara, “Garment Workers Cornered by Job Loss, Virus Fears and Looming Debt,” VOD, April 16, 2020. 49.

Du, and K. W. Chan, “Unequal Pain: A Sketch of the Impact of the Covid-19 Pandemic on Migrants’ Employment in China,” Eurasian Geography and Economics 61, no. 4–5 (2020): 448–63. 30. “Xi Chairs Leadership Meeting on Epidemic Control,” Xinhua, February 3, 2020. 31. H. Lockett and S. Yu, “How the Invisible Hand of the State Works in Chinese Stocks,” Financial Times, February 4, 2020. 32. M. Mackenzie, “A Dicey Period for Risk Sentiment,” Financial Times, February 3, 2020. 33. H. Lockett, N. Liu, and S. Yu, “Chinese Stocks Suffer Worst Day Since 2015 on Coronavirus Fears,” Financial Times, February 3, 2020. 34.


pages: 77 words: 18,414

How to Kick Ass on Wall Street by Andy Kessler

Andy Kessler, Bear Stearns, Bernie Madoff, buttonwood tree, call centre, collateralized debt obligation, eat what you kill, family office, fixed income, hiring and firing, invention of the wheel, invisible hand, London Whale, low interest rates, margin call, NetJets, Nick Leeson, pets.com, risk tolerance, Silicon Valley, sovereign wealth fund, time value of money, too big to fail, value at risk

They can sell few shares and dilute fewer existing shareholders to raise the $1 billion for the new factory. When a stock goes down, the market is, in effect, starving the company for capital, making it more expensive to raise money. Management can lower costs, change product plans, whatever it takes to please investors to lower their cost of capital. For you economics majors, this is Adam Smith’s Invisible Hand writ large, pushing great companies (or ones the markets thinks their prospects are great) along, and spanking the ones it doesn’t like. Economists are often confused by the stock market and its seemingly Wild West way of allocating capital. Probably because most economists would rather be Central Planners and do the job themselves.


pages: 829 words: 186,976

The Signal and the Noise: Why So Many Predictions Fail-But Some Don't by Nate Silver

airport security, Alan Greenspan, Alvin Toffler, An Inconvenient Truth, availability heuristic, Bayesian statistics, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, big-box store, Black Monday: stock market crash in 1987, Black Swan, Boeing 747, book value, Broken windows theory, business cycle, buy and hold, Carmen Reinhart, Charles Babbage, classic study, Claude Shannon: information theory, Climategate, Climatic Research Unit, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, computer age, correlation does not imply causation, Credit Default Swap, credit default swaps / collateralized debt obligations, cuban missile crisis, Daniel Kahneman / Amos Tversky, disinformation, diversification, Donald Trump, Edmond Halley, Edward Lorenz: Chaos theory, en.wikipedia.org, equity premium, Eugene Fama: efficient market hypothesis, everywhere but in the productivity statistics, fear of failure, Fellow of the Royal Society, Ford Model T, Freestyle chess, fudge factor, Future Shock, George Akerlof, global pandemic, Goodhart's law, haute cuisine, Henri Poincaré, high batting average, housing crisis, income per capita, index fund, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), Internet Archive, invention of the printing press, invisible hand, Isaac Newton, James Watt: steam engine, Japanese asset price bubble, John Bogle, John Nash: game theory, John von Neumann, Kenneth Rogoff, knowledge economy, Laplace demon, locking in a profit, Loma Prieta earthquake, market bubble, Mikhail Gorbachev, Moneyball by Michael Lewis explains big data, Monroe Doctrine, mortgage debt, Nate Silver, negative equity, new economy, Norbert Wiener, Oklahoma City bombing, PageRank, pattern recognition, pets.com, Phillips curve, Pierre-Simon Laplace, Plato's cave, power law, prediction markets, Productivity paradox, proprietary trading, public intellectual, random walk, Richard Thaler, Robert Shiller, Robert Solow, Rodney Brooks, Ronald Reagan, Saturday Night Live, savings glut, security theater, short selling, SimCity, Skype, statistical model, Steven Pinker, The Great Moderation, The Market for Lemons, the scientific method, The Signal and the Noise by Nate Silver, The Wisdom of Crowds, Thomas Bayes, Thomas Kuhn: the structure of scientific revolutions, Timothy McVeigh, too big to fail, transaction costs, transfer pricing, University of East Anglia, Watson beat the top human players on Jeopardy!, Wayback Machine, wikimedia commons

They allow us to make transactions at one fixed price, at a consensus price, rather than having to barter or bet on everything.7 The Bayesian Invisible Hand In fact, free-market capitalism and Bayes’ theorem come out of something of the same intellectual tradition. Adam Smith and Thomas Bayes were contemporaries, and both were educated in Scotland and were heavily influenced by the philosopher David Hume. Smith’s “invisible hand” might be thought of as a Bayesian process, in which prices are gradually updated in response to changes in supply and demand, eventually reaching some equilibrium. Or, Bayesian reasoning might be thought of as an “invisible hand” wherein we gradually update and improve our beliefs as we debate our ideas, sometimes placing bets on them when we can’t agree.

., 187 incentives, 184, 250, 313, 333, 356, 357, 501 Inconvenient Truth, An, 385 index funds, 344, 370 India, 210n Indiana Pacers, 236n, 489 indicators: lagging, 187–88 leading, 186–88, 196–97 Indonesia, 209 Industrial Revolution, 2, 5–6, 112, 212 infectious disease, 16, 204–31 SIR model of, 220–21, 221, 223, 225, 389 see also specific diseases inflation, 11, 186n, 191, 198, 202 information, 1, 451 analyzing, 232 asymmetrical, 35 collecting, 232 exclusive, 98, 99–101 explosion of, 3–4, 6, 7, 12, 13, 17, 45 forecasting and, 5 quality of, 2, 13, 17 information age, 7, 45, 358 information overload, 12 information processing, 449 information technology, 411 revolution in, 1–4 information theory, 265 InfoSpace, 353, 360 initial condition uncertainty, 390–92 insider trading, 341–42 intelligent extraterrestrial species, 488 interest rates, 186n, 190, 202 International Panel on Climate Change (IPCC), 382, 383–84, 393 1990 predictions of, 373–76, 389, 393, 397–99, 397, 399, 401, 507 “uncertainty” in, 389 Internet, 13, 223, 250, 514 poker on, 296–97, 310 quality of information on, 3 Intrade, 333, 334, 335, 336–37, 358, 367, 497 invisible hand, 332 Ioannidis, John P. A., 11, 249, 250, 253 Iowa caucus, 60, 217, 252, 333, 334 Iran, 152–53 Iranian Revolution, 428 Iraq, 420 Ireland, 210 Irene, Hurricane, 139 Irish Confederate Wars, 4 irrational exuberance, 346–52 Irrational Exuberance (Shiller), 22, 347–48, 354 irrationality, 356–57 IRS, 481 Israel, 210, 440–42 Italy, 476 Ivey, Phil, 308–9 Jackson, Phil, 233 James, Bill, 77, 81–82, 84, 89, 102–5, 338, 471 Janabi, Rafid Ahmed Alwan al-, 443 Japan, 144, 145n, 190, 379, 394, 423, 476 Pearl Harbor attacked by, 10, 412–13, 414, 415–17, 419–20, 423, 426, 444, 510 real estate bubble in, 11, 31–32, 32, 45, 52 2011 earthquake in, 154, 155, 168–71, 172 Jesuits, 112 Jeter, Derek, 446 job growth, GDP growth vs., 189 Johnson, Magic, 237 Jones, Chipper, 85 Jordan, Tom, 174 Journal of Geophysics Research, 395 Journal of Zoology, 148 JSVAX (Janus Contrarian T), 339–40 judgment, see biases; heuristics Jupiter, 242–43 Justice Department, U.S., 319, 320 Kahneman, Daniel, 64, 366, 424 kamikaze, meaning of word, 145n kamikaze pilots, 423 Kanagawa Institute of Technology, 476 Kansas City, Mo., 136–37 Kansas City Athletics, 94 Kapanke, Dan, 70–72 Karpov, Anatoly, 280, 281 Kashyap, Anil, 26, 464 Kasparov, Garry, 266, 267–85, 443, 493–94 Deep Blue’s final games against, 282–83 Deep Blue’s first game against, 268, 270–79, 271, 274, 275, 276, 278 Deep Blue’s second game against, 279–82, 280 moves ahead seen by, 279 Katrina, Hurricane, 55, 108–10, 138–41, 388, 472, 473 Keilis-Borok, Vladimir, 159–60, 161, 167, 477 Kelling, George L., 439 Kemp, Matt, 89 Kennedy, John F., 50 Kenya, 422 Kerry, John, 55 Keynes, John Maynard, 65, 360 Killebrew, Harmon, 94 Kind, Ron, 70 Kinsler, Ian, 89 Knight, Frank H., 29 knowledge, accumulation of, 2–3 Kokko, Hanna, 219 Kotchman, Casey, 76 Koufax, Sandy, 94 KPMG, 78, 84, 296 Kroll, Jules, 23–24 Kroll Bond Ratings, 23–24 Kroll Inc., 23 Krugman, Paul, 7, 22, 40–41, 184 Kuwait City, 374 lagging indicators, 187–88 La Gloria, Mexico, 216 Lajoie, Nap, 102 Laliberté, Guy, 318 Lamont, Owen, 361 Lancet, The, 206 language, 230 Laplace, Pierre-Simon, 112–14, 242–43, 248–49, 251, 255 Laplace’s Demon, 112–14, 127 L’Aquila, Italy, 142–44, 148, 154–55, 157, 173, 476 Larsen, Bent, 268 Las Vegas, Nev., 10 housing in, 19 Laurila, David, 76–77 Law, Keith, 75 Leading Economic Index, 187, 480 leading indicators, 186–88, 196–97 learning ability, 98 Lehman Brothers, 19, 34–35, 36, 37–38, 42, 48 Lenin, Vladimir, 428 Lester, Jon, 89 leverage, 29, 33–37, 43, 196 “Leveraged Losses: Why Mortgage Defaults Matter” (Hatzius), 184 Levi, Michael, 435–36 Lewis, David, 204–5, 206 Lewis, Michael, 77, 93–94, 105, 355 liberalism, 509 LifeMinders, Inc., 353 lightning, 125–26 Lima, 158, 174 limit hold ’em, 311, 322, 322, 324n Lin, Jeremy, 119 linear regression, 498 linearity, see nonlinear systems Lipsitch, Marc, 223, 229 Lisbon earthquake, 145 literature, progress of, 4 Livingston Survey, 183 Lockerbie bombing, 427 Loft, Richard, 111, 112, 114–15, 118 logarithmic scales, 142n, 144, 146, 151, 263, 429–30, 430 logistic regression analysis, 489 Loma Prieta earthquake, 160 London, 222 Long Boom, 189–90 Long Leading Index, U.S., 196 Lorenz, Edward, 118, 119, 129, 472 Los Angeles, Calif., 368, 432, 476 Los Angeles Dodgers, 94, 98 Los Angeles Lakers, 233–37, 243, 246, 258, 489 Los Angeles Times, 160, 234 lottery tickets, 186, 324 Louisiana, 109 “Love Will Tear Us Apart,” 283 Lowess regression, 478 Lucas, Robert, 188, 200 luck, 79 skill vs., 321–23, 322, 338–39 Lugar, Richard, 434 lung cancer, 254–55, 258 Luther, Martin, 4 Lynn, Fred, 79 Macal, Chip, 229 McCain, John, 48–49, 59, 358, 468 McDaniel, Raymond, 25 McGovern, George, 67 McLaughlin, John, 47 McLaughlin Group, The, 47–50, 49, 56, 103, 129, 314 McNess, Stephen K., 198 McVeigh, Timothy, 425 malaria, 214 Malkiel, Burton, 340n mammogram, 245–46, 246 Mandelbrot, Benoit, 284 Manic Momentum strategy, 344–45, 345, 368 Mann, Michael, 408–9 manufacturing sector, 189 Maradona, Diego, 281 margin of error, 176, 178, 181, 213, 252, 452 in economic forecasts, 183, 184 in political polls, 62, 65, 176, 252, 452 Markakis, Nick, 90 “Market for Lemons, The” (Akerlof), 35 MARL, 264 Marshall Islands, 509 Martinez, Edgar, 82, 83 Marx, Karl, 53 Massa, Eric, 72 Massachusetts, 391 Mathematics of Poker, The (Chen and Ankenman), 323 Mathews, F.


pages: 840 words: 202,245

Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present by Jeff Madrick

Abraham Maslow, accounting loophole / creative accounting, Alan Greenspan, AOL-Time Warner, Asian financial crisis, bank run, Bear Stearns, book value, Bretton Woods, business cycle, capital controls, Carl Icahn, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, desegregation, disintermediation, diversified portfolio, Donald Trump, financial deregulation, fixed income, floating exchange rates, Frederick Winslow Taylor, full employment, George Akerlof, Glass-Steagall Act, Greenspan put, Hyman Minsky, income inequality, index fund, inflation targeting, inventory management, invisible hand, John Bogle, John Meriwether, junk bonds, Kitchen Debate, laissez-faire capitalism, locking in a profit, Long Term Capital Management, low interest rates, market bubble, Mary Meeker, Michael Milken, minimum wage unemployment, MITM: man-in-the-middle, Money creation, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Myron Scholes, new economy, Nixon triggered the end of the Bretton Woods system, North Sea oil, Northern Rock, oil shock, Paul Samuelson, Philip Mirowski, Phillips curve, price stability, quantitative easing, Ralph Nader, rent control, road to serfdom, Robert Bork, Robert Shiller, Ronald Coase, Ronald Reagan, Ronald Reagan: Tear down this wall, scientific management, shareholder value, short selling, Silicon Valley, Simon Kuznets, tail risk, Tax Reform Act of 1986, technology bubble, Telecommunications Act of 1996, The Chicago School, The Great Moderation, too big to fail, union organizing, V2 rocket, value at risk, Vanguard fund, War on Poverty, Washington Consensus, Y2K, Yom Kippur War

Henry Wriston’s reputation rose in these years and he was named president of Brown University in 1936, from which perch he was able to preach against FDR and the New Deal, convinced that the programs would lead to a planned economy. His heroes included Adam Smith, who, despite the complexities in thinking of the Scottish philosopher, he saw largely as the father of the invisible hand and laissez-faire economic philosophy. He also deeply admired the British philosopher Herbert Spencer, who a century after Smith had become popular for what was later called social Darwinism. Spencer, who beginning in the 1850s was philosophically opposed to government intervention in markets, was the popular author of the notion that human poverty was natural because the “survival of the fittest” (a phrase Charles Darwin borrowed from him) was a law of nature.

Americans were losing their confidence, increasingly frustrated and confused, but still clinging to the notion that all could return to normal. It bears repeating that Reagan mostly avoided making economic self-interest the centerpiece of his economic program. His was not the controversial morality of Smith’s invisible hand, or of the free market economists some of whom were his advisers, but rather something more like the opposite. It was the selflessness of hard work, self-reliance, and courage associated with an American Protestant ethic. Material success was its by-product, not its objective. He believed the rich earned what they made and he castigated those who saw a fat man and a skinny man together and blamed the fat man for the travails of the thin man.

, Pew Charitable Trusts, http://www.economicmobility.org/assets/pdfs/EMP%20American%20Dream%20Report.pdf. 5 THERE WERE POVERTY AND NEED: Davis, City of Quartz, p. 17. 6 THEY PARTICIPATED IN THE REAL AND RELIABLE: This actually characterized the history of the American economy since before the Civil War. 7 IN SOUTHERN CALIFORNIA: Perlstein, Before the Storm, pp. 608–16. 8 THEY FOUND POWERFUL ALLIES: A particularly useful history of the development of business political interest is Kim Phillips-Fein, Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan (New York: W. W. Norton, 2009). 9 “WE THOUGHT OF OURSELVES”: Author interview with Lewis Uhler, June 2004. 10 THE SOCIETY SOON DREW: Perlstein, Before the Storm, pp. 120–22; “Orange County had caught anti-communism fever,” he writes. 11 UHLER JOINED THE BIRCHERS: Lou Cannon, Governor Reagan: His Rise to Power (New York: PublicAffairs, 2003), p. 369. 12 UHLER WROTE A REPORT: Author interview with Lewis Uhler, October 2003. 13 THE INVESTIGATION CONCLUDED: Andy Furillo, “The Front Man for Proposition 75,” Sacramento Bee, August 15, 2005, p.


pages: 918 words: 257,605

The Age of Surveillance Capitalism by Shoshana Zuboff

"World Economic Forum" Davos, algorithmic bias, Amazon Web Services, Andrew Keen, augmented reality, autonomous vehicles, barriers to entry, Bartolomé de las Casas, behavioural economics, Berlin Wall, Big Tech, bitcoin, blockchain, blue-collar work, book scanning, Broken windows theory, California gold rush, call centre, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, choice architecture, citizen journalism, Citizen Lab, classic study, cloud computing, collective bargaining, Computer Numeric Control, computer vision, connected car, context collapse, corporate governance, corporate personhood, creative destruction, cryptocurrency, data science, deep learning, digital capitalism, disinformation, dogs of the Dow, don't be evil, Donald Trump, Dr. Strangelove, driverless car, Easter island, Edward Snowden, en.wikipedia.org, Erik Brynjolfsson, Evgeny Morozov, facts on the ground, fake news, Ford Model T, Ford paid five dollars a day, future of work, game design, gamification, Google Earth, Google Glasses, Google X / Alphabet X, Herman Kahn, hive mind, Ian Bogost, impulse control, income inequality, information security, Internet of things, invention of the printing press, invisible hand, Jean Tirole, job automation, Johann Wolfgang von Goethe, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, Kevin Roose, knowledge economy, Lewis Mumford, linked data, longitudinal study, low skilled workers, Mark Zuckerberg, market bubble, means of production, multi-sided market, Naomi Klein, natural language processing, Network effects, new economy, Occupy movement, off grid, off-the-grid, PageRank, Panopticon Jeremy Bentham, pattern recognition, Paul Buchheit, performance metric, Philip Mirowski, precision agriculture, price mechanism, profit maximization, profit motive, public intellectual, recommendation engine, refrigerator car, RFID, Richard Thaler, ride hailing / ride sharing, Robert Bork, Robert Mercer, Salesforce, Second Machine Age, self-driving car, sentiment analysis, shareholder value, Sheryl Sandberg, Shoshana Zuboff, Sidewalk Labs, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, slashdot, smart cities, Snapchat, social contagion, social distancing, social graph, social web, software as a service, speech recognition, statistical model, Steve Bannon, Steve Jobs, Steven Levy, structural adjustment programs, surveillance capitalism, technological determinism, TED Talk, The Future of Employment, The Wealth of Nations by Adam Smith, Tim Cook: Apple, two-sided market, union organizing, vertical integration, Watson beat the top human players on Jeopardy!, winner-take-all economy, Wolfgang Streeck, work culture , Yochai Benkler, you are the product

The notion that ignorance and freedom are essential characteristics of capitalism is rooted in the conditions of life before the advent of modern systems of communication and transportation, let alone global digital networks, the internet, or the ubiquitous computational, sensate, actuating architectures of Big Other. Until the last few moments of the human story, life was necessarily local, and the “whole” was necessarily invisible to the “part.” Adam Smith’s famous metaphor of the “invisible hand” drew on these enduring realities of human life. Each individual, Smith reasoned, employs his capital locally in pursuit of immediate comforts and necessities. Each one attends to “his own security… his own gain… led by an invisible hand to promote an end which was no part of his intention.” That end is the efficient employ of capital in the broader market: the wealth of nations. The individual actions that produce efficient markets add up to a staggeringly complex pattern, a mystery that no one person or entity could hope to know or understand, let alone to direct: “The statesman, who should attempt to direct private people in what manner they ought to employ their capitals, would… assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever.…”1 The neoliberal economist Friedrich Hayek, whose work we discussed briefly in Chapter 2 as the foundation for the market-privileging economic policies of the past half century, drew the most basic tenets of his arguments from Smith’s assumptions about the whole and the part.

.…”1 The neoliberal economist Friedrich Hayek, whose work we discussed briefly in Chapter 2 as the foundation for the market-privileging economic policies of the past half century, drew the most basic tenets of his arguments from Smith’s assumptions about the whole and the part. “Adam Smith,” Hayek wrote, “was the first to perceive that we have stumbled upon methods of ordering human economic cooperation that exceed the limits of our knowledge and perception. His ‘invisible hand’ had perhaps better have been described as an invisible or unsurveyable pattern.”2 As with Planck, Meyer, and Skinner, both Hayek and Smith unequivocally link freedom and ignorance. In Hayek’s framing, the mystery of the market is that a great many people can behave effectively while remaining ignorant of the whole.

We have carefully examined surveillance capitalism’s novel foundational mechanisms, economic imperatives, gathering power, and societal objectives. One conclusion of our investigations is that surveillance capitalism’s command and control of the division of learning in society are the signature feature that breaks with the old justifications of the invisible hand and its entitlements. The combination of knowledge and freedom works to accelerate the asymmetry of power between surveillance capitalists and the societies in which they operate. This cycle will be broken only when we acknowledge as citizens, as societies, and indeed as a civilization that surveillance capitalists know too much to qualify for freedom.


pages: 286 words: 82,970

A World in Disarray: American Foreign Policy and the Crisis of the Old Order by Richard Haass

access to a mobile phone, anti-communist, Berlin Wall, Bretton Woods, carbon footprint, carbon tax, central bank independence, colonial rule, cuban missile crisis, currency manipulation / currency intervention, deindustrialization, Doha Development Round, Donald Trump, Edward Snowden, energy security, European colonialism, failed state, Fall of the Berlin Wall, floating exchange rates, global pandemic, global reserve currency, guns versus butter model, hiring and firing, immigration reform, invisible hand, low interest rates, Mikhail Gorbachev, Monroe Doctrine, moral hazard, mutually assured destruction, no-fly zone, open economy, quantitative easing, RAND corporation, reserve currency, Ronald Reagan, South China Sea, special drawing rights, Steven Pinker, Suez crisis 1956, UNCLOS, UNCLOS, uranium enrichment, Yom Kippur War

The Internet grew up with little government role, even though it had its origins in a precursor invented in the late 1960s by the Advanced Research Projects Agency of the U.S. Department of Defense. Rules, to the extent they exist, have been set from the bottom up, by the efforts of and interactions among individuals, civil society, corporations, and governments. This “multistakeholder” process is the closest thing there is to a governing example of Adam Smith’s “invisible hand.” This era seems to have run its course, or at least run into strong headwinds. Cyberspace increasingly resembles nothing so much as the old American Wild West with no real sheriff. The Internet is more important to economies, societies, and militaries than ever, but there are few if any rules preventing or even limiting disruptive operations, the theft of intellectual property, violations of privacy, and government censorship—and even when there are rules, there are few or no means for enforcing them.19 This is not to suggest an absence of global governance and multilateral arrangements.

This is inevitable for several reasons, only one of which is that the United States is and will likely remain the most powerful country in the world for decades to come. The corollary to this point is that no other country or group of countries has either the capacity or the mind-set to build a global order. Nor can order ever be expected to emerge automatically; there is no invisible hand in the geopolitical marketplace. Again, a large part of the burden (or, more positively, opportunity) falls on the principal power of the day. There is more than a little self-interest at stake. The United States cannot remain aloof, much less unaffected by a world in disarray. Globalization is more reality than choice.


pages: 348 words: 83,490

More Than You Know: Finding Financial Wisdom in Unconventional Places (Updated and Expanded) by Michael J. Mauboussin

Alan Greenspan, Albert Einstein, Andrei Shleifer, Atul Gawande, availability heuristic, beat the dealer, behavioural economics, Benoit Mandelbrot, Black Swan, Brownian motion, butter production in bangladesh, buy and hold, capital asset pricing model, Clayton Christensen, clockwork universe, complexity theory, corporate governance, creative destruction, Daniel Kahneman / Amos Tversky, deliberate practice, demographic transition, discounted cash flows, disruptive innovation, diversification, diversified portfolio, dogs of the Dow, Drosophila, Edward Thorp, en.wikipedia.org, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, fixed income, framing effect, functional fixedness, hindsight bias, hiring and firing, Howard Rheingold, index fund, information asymmetry, intangible asset, invisible hand, Isaac Newton, Jeff Bezos, John Bogle, Kenneth Arrow, Laplace demon, Long Term Capital Management, loss aversion, mandelbrot fractal, margin call, market bubble, Menlo Park, mental accounting, Milgram experiment, Murray Gell-Mann, Nash equilibrium, new economy, Paul Samuelson, Performance of Mutual Funds in the Period, Pierre-Simon Laplace, power law, quantitative trading / quantitative finance, random walk, Reminiscences of a Stock Operator, Richard Florida, Richard Thaler, Robert Shiller, shareholder value, statistical model, Steven Pinker, stocks for the long run, Stuart Kauffman, survivorship bias, systems thinking, The Wisdom of Crowds, transaction costs, traveling salesman, value at risk, wealth creators, women in the workforce, zero-sum game

From the failure of humans to optimize in complex tasks, one need not conclude that the equilibria derived from the competitive model are descriptively irrelevant. We show that even in complex economic systems, such equilibria can be attained under a range of surprisingly weak assumptions about agent behavior. —Antoni Bosch-Domènech and Shyam Sunder, “Tracking the Invisible Hand” How could economics not be behavioral? If it isn’t behavioral, what the hell is it? —Charlie Munger, Psychology of Misjudgment Sorry Syllogism Classical economic theory assumes that all people have the same preferences, perfect knowledge of all alternatives, and an understanding of the consequences of their decisions.

“The Mutual Fund Industry Sixty Years Later: For Better or Worse?” Financial Analysts Journal 61, no. 1 (January-February 2005): 15-24. Bonabeau, Eric, Marco Dorigo, and Guy Theraulaz. Swarm Intelligence: From Natural to Artificial Systems. New York: Oxford University Press, 1999. Bosch-Domènech, Antoni, and Shyam Sunder. “Tracking the Invisible Hand: Convergence of Double Auctions to Competitive Equilibrium.” Computational Economics 16, no. 3 (December 2000): 257-84. Brandenburger, Adam M., and Barry J. Nalebuff. Co-opetition. New York: Currency, 1996 Britton, B.C., ed. Executive Control Processes. Hillsdale, N.J.: Lawrence Erlbaum Associates, 1987.


pages: 237 words: 72,716

The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality by Roland Berger, David Grusky, Tobias Raffel, Geoffrey Samuels, Chris Wimer

"World Economic Forum" Davos, Bear Stearns, Branko Milanovic, business cycle, Caribbean Basin Initiative, Celtic Tiger, collective bargaining, corporate governance, corporate social responsibility, double entry bookkeeping, equal pay for equal work, fear of failure, financial innovation, full employment, Gini coefficient, hiring and firing, illegal immigration, income inequality, invisible hand, Long Term Capital Management, long term incentive plan, microcredit, military-industrial complex, Money creation, offshore financial centre, principal–agent problem, profit maximization, proprietary trading, rent-seeking, shareholder value, Silicon Valley, Silicon Valley startup, time value of money, very high income

William Weld, a former Republican Governor in famously liberal Massachusetts, refers to the social stability created by a confident middle class and argues that prudence would suggest some spreading out and flattening of income curves. The guiding hand of religion which sometimes curbed excess has largely faded from secular Western countries to be replaced by invisible hands of globalized markets. “What is fair?” Maurice Lévy asks, “Today we are in a 158 T. Raffel and G. Samuels situation where all this is decided by what we call les forces du marché, the market conditions. So I’m not sure that someone can say from any standpoint – could be a philosopher, a sociologist, a politician, or a man in the street – what is equal, what is not?”

We are of course continuously engaged in reforming our economic institutions: We have to decide whether to enter into proposed trade alliances, whether to reform tax law, whether to allow new types of corporate forms, and so forth. When such decisions are being made, we typically refer back to first principles by asking whether the proposed reform will be competition-enhancing, in effect whether it will allow the “invisible hand” to better operate. We call ourselves market economies precisely because of this a priori commitment. When, however, we turn to poverty and inequality reform, we seem rather less tethered to any a priori commitments. In the absence of principles, our interventions tend to grow and accumulate into a sprawling array, one without any obviously unifying rhyme or reason.


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Why Your World Is About to Get a Whole Lot Smaller: Oil and the End of Globalization by Jeff Rubin

addicted to oil, air freight, banking crisis, Bear Stearns, big-box store, BRICs, business cycle, carbon footprint, carbon tax, collateralized debt obligation, collective bargaining, creative destruction, credit crunch, David Ricardo: comparative advantage, decarbonisation, energy security, food miles, Ford Model T, hydrogen economy, illegal immigration, immigration reform, Intergovernmental Panel on Climate Change (IPCC), invisible hand, James Watt: steam engine, Jevons paradox, Just-in-time delivery, low interest rates, market clearing, megacity, megaproject, North Sea oil, oil shale / tar sands, oil shock, peak oil, profit maximization, reserve currency, South Sea Bubble, subprime mortgage crisis, the market place, The Wealth of Nations by Adam Smith, trade liberalization, work culture , zero-sum game

Recessions don’t diminish our dependence on oil; they just cut back a little on our appetite for it. When we start to feel a little better, we will be guzzling it again, and we may well be left wanting more. Because unlike after past oil shocks, there is no post-shock boost in oil supply to look forward to any more. If we wait for Adam Smith’s invisible hand to pull abundant sources of new cheap oil out of the ground, we are going to be waiting for Godot. Governments around the world may be thrusting bailout money into the hands of businesses and taxpayers, but you can count on one thing. There will be no energy bailout. Just as I had good news and bad news for the oilmen, part 2 of this book will have good news and bad news for you too.

And of course this record increase in oil prices, with the aid of a world financial crisis to boot, has also brought the economy to its knees, but not before oil demand defied the laws of economic gravity for the better part of a decade. In fact, for most of that decade, world oil demand was growing faster than it did at the turn of the millennium, when oil was only a fraction of the price. That’s not the way a demand curve is supposed to behave. Somehow, Adam Smith’s invisible hand had been misled or misguided into consuming more oil just when it was expected to burn less. Why did oil have to skyrocket all the way to nearly $150 per barrel before the world economy stopped growing? Prices half that amount should have stopped global oil demand in its tracks long before the recession hit in late 2008.


pages: 278 words: 88,711

The Next 100 Years: A Forecast for the 21st Century by George Friedman

American ideology, banking crisis, British Empire, business cycle, deindustrialization, Deng Xiaoping, gentleman farmer, illegal immigration, immigration reform, invisible hand, low earth orbit, low interest rates, mass immigration, megastructure, Monroe Doctrine, pink-collar, Ronald Reagan, South China Sea, The Wealth of Nations by Adam Smith, trade route, working poor

From another, more substantial perspective, this is called geopolitics. Geopolitics is not simply a pretentious way of saying “international relations.” It is a method for thinking about the world and forecasting what will happen down the road. Economists talk about an invisible hand, in which the self-interested, short-term activities of people lead to what Adam Smith called “the wealth of nations.” Geopolitics applies the concept of the invisible hand to the behavior of nations and other international actors. The pursuit of short-term self-interest by nations and by their leaders leads, if not to the wealth of nations, then at least to predictable behavior and, therefore, the ability to forecast the shape of the future international system.


pages: 327 words: 84,627

The Green New Deal: Why the Fossil Fuel Civilization Will Collapse by 2028, and the Bold Economic Plan to Save Life on Earth by Jeremy Rifkin

"World Economic Forum" Davos, 1919 Motor Transport Corps convoy, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, American Society of Civil Engineers: Report Card, autonomous vehicles, Bernie Sanders, Big Tech, bike sharing, blockchain, book value, borderless world, business cycle, business process, carbon footprint, carbon tax, circular economy, collective bargaining, corporate governance, corporate social responsibility, creative destruction, decarbonisation, digital rights, do well by doing good, electricity market, en.wikipedia.org, energy transition, failed state, general purpose technology, ghettoisation, green new deal, Greta Thunberg, high-speed rail, hydrogen economy, impact investing, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, it's over 9,000, Joseph Schumpeter, means of production, megacity, megaproject, military-industrial complex, Network effects, new economy, off grid, off-the-grid, oil shale / tar sands, peak oil, planetary scale, prudent man rule, remunicipalization, renewable energy credits, rewilding, Ronald Reagan, shareholder value, sharing economy, Sidewalk Labs, Silicon Valley, Skype, smart cities, smart grid, sovereign wealth fund, Steven Levy, subprime mortgage crisis, the built environment, The Wealth of Nations by Adam Smith, Tim Cook: Apple, trade route, union organizing, urban planning, vertical integration, warehouse automation, women in the workforce, zero-sum game

Larry Summers, a former treasury secretary and president emeritus of Harvard University, spoke for the group, saying, “The gravity of the climate change problem concentrates minds and leads people to put aside differences. People who agree on little seem to agree on this. And that’s striking.”13 The signers said that the proposed carbon tax would send “a powerful price signal that harnesses the invisible hand of the marketplace to steer economic actors towards a low-carbon future” and “promote economic growth.” They recommended that the tax “should increase every year until emissions reductions goals are met and be revenue neutral to avoid debates over the size of the government,” because “a consistently rising carbon price will encourage technological innovation and large-scale infrastructure development and accelerate the shift to low and zero carbon goods and services.”

This, too, might be difficult to hear for those activists still wedded to the idea that the market is never on the side of the people. I am certainly aware that this is often the case, and for a lifetime I have been critical of various aspects of market capitalism. This time, however, and with this disruption, the market is a guardian angel looking over humanity. But the invisible hand alone will not steer us into the Age of Resilience. Building a new ecological civilization from the ashes will require a far more collective response that marshals our public capital, market capital, and social capital at every level of governance and engages the deep participation of the entire body politic.


pages: 304 words: 80,143

The Autonomous Revolution: Reclaiming the Future We’ve Sold to Machines by William Davidow, Michael Malone

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, agricultural Revolution, Airbnb, AlphaGo, American Society of Civil Engineers: Report Card, Automated Insights, autonomous vehicles, basic income, benefit corporation, bitcoin, blockchain, blue-collar work, Bob Noyce, business process, call centre, Cambridge Analytica, cashless society, citizen journalism, Clayton Christensen, collaborative consumption, collaborative economy, collective bargaining, creative destruction, crowdsourcing, cryptocurrency, deep learning, DeepMind, disintermediation, disruptive innovation, distributed ledger, en.wikipedia.org, Erik Brynjolfsson, fake news, Filter Bubble, Ford Model T, Francis Fukuyama: the end of history, general purpose technology, Geoffrey West, Santa Fe Institute, gig economy, Gini coefficient, high-speed rail, holacracy, Hyperloop, income inequality, industrial robot, Internet of things, invention of agriculture, invention of movable type, invention of the printing press, invisible hand, Jane Jacobs, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, license plate recognition, low interest rates, Lyft, Mark Zuckerberg, mass immigration, Network effects, new economy, peer-to-peer lending, QWERTY keyboard, ransomware, Richard Florida, Robert Gordon, robo advisor, Ronald Reagan, Second Machine Age, self-driving car, sharing economy, Shoshana Zuboff, Silicon Valley, Simon Kuznets, Skinner box, Snapchat, speech recognition, streetcar suburb, Stuxnet, surveillance capitalism, synthetic biology, TaskRabbit, The Death and Life of Great American Cities, The Rise and Fall of American Growth, the scientific method, trade route, Turing test, two and twenty, Uber and Lyft, uber lyft, universal basic income, uranium enrichment, urban planning, vertical integration, warehouse automation, zero day, zero-sum game, Zipcar

One customer reported that his auto mechanic charges him quite a bit more if he asks for a receipt.10 It is extremely difficult to make a voluntary compliance system work in a culture where large numbers believe it is acceptable to cheat. Tax evasion runs between 6 percent and 9 percent of GDP in Greece. Government revenues would be 20 to 25 percent higher if Greeks were as honest about their taxes as Americans.11 Adam Smith understood that moral authority served as the thumb of the invisible hand. If moral authority broke down, the invisible hand would lose its grip. In Smith’s day, business activity was predominantly local. One thing that ensured that market participants remained well-behaved was that most people conducted their business affairs in the communities in which they lived. As a result, control rested with one’s neighbors, the people one saw in church, and at meetings of local business organizations.


pages: 295 words: 87,204

The Capitalist Manifesto by Johan Norberg

AltaVista, anti-communist, barriers to entry, Berlin Wall, Bernie Sanders, Big Tech, Boris Johnson, business climate, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, carbon tax, Charles Babbage, computer age, coronavirus, COVID-19, creative destruction, crony capitalism, data is not the new oil, data is the new oil, David Graeber, DeepMind, degrowth, deindustrialization, Deng Xiaoping, digital map, disinformation, Donald Trump, Elon Musk, energy transition, Erik Brynjolfsson, export processing zone, failed state, Filter Bubble, gig economy, Gini coefficient, global supply chain, Google Glasses, Greta Thunberg, Gunnar Myrdal, Hans Rosling, Hernando de Soto, Howard Zinn, income inequality, independent contractor, index fund, Indoor air pollution, industrial robot, Intergovernmental Panel on Climate Change (IPCC), invention of the printing press, invisible hand, Jeff Bezos, Jeremy Corbyn, job automation, job satisfaction, Joseph Schumpeter, land reform, liberal capitalism, lockdown, low cost airline, low interest rates, low skilled workers, Lyft, manufacturing employment, Mark Zuckerberg, means of production, meta-analysis, Minecraft, multiplanetary species, Naomi Klein, Neal Stephenson, Nelson Mandela, Network effects, open economy, passive income, Paul Graham, Paul Samuelson, payday loans, planned obsolescence, precariat, profit motive, Ralph Nader, RAND corporation, rent control, rewilding, ride hailing / ride sharing, Ronald Coase, Rosa Parks, Salesforce, Sam Bankman-Fried, Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, Snapchat, social distancing, social intelligence, South China Sea, Stephen Fry, Steve Jobs, tech billionaire, The Spirit Level, The Wealth of Nations by Adam Smith, TikTok, Tim Cook: Apple, total factor productivity, trade liberalization, transatlantic slave trade, Tyler Cowen, Uber and Lyft, uber lyft, ultimatum game, Virgin Galactic, Washington Consensus, working-age population, World Values Survey, X Prize, you are the product, zero-sum game

The economist Weiying Zhang says the reform process was about ‘becoming good at using spontaneous forces and turning spontaneous forces into conscious policy.’ The process was not planned, controlled or even foreseen. It was, Weiying writes in an explicit reference to Adam Smith, as if it was controlled by an ‘invisible hand’.11 Everything that took China out of poverty happened outside the five-year plans. By the mid-1990s, the last four five-year plans had been abandoned before they reached halfway, and the plans thereafter were more about vague objectives than governance and commands. ‘How much of that success can be attributed to industrial policy and planning?’

Nikolai Shmelev & Vladimir Popov, The Turning Point: Revitalizing the Soviet Economy, Tauris, 1990, p.128f. 19. Apparently, Jevon’s son complained to Keynes that the children still had failed to use up their father’s paper reserves. Milanović 2019, p.256. 20. Karl Marx, Capital, Chicago: Charles H. Kerr and Co., 1909, vol.III, pt I, chap.5. See also Pierre Desrochers, ‘Did the invisible hand need a regulatory glove to develop a green thumb? Some historical perspective on market incentives, win-win innovations and the Porter hypothesis’, Environmental and Resource Economics, vol.41, February 2008. 21. For a discussion of how free market liberalism can and should be combined with environmental regulations, see Mattias Svensson, Miljöpolitik för moderater, Fores, 2015. 22.


pages: 82 words: 24,150

The Corona Crash: How the Pandemic Will Change Capitalism by Grace Blakeley

Anthropocene, asset-backed security, basic income, Big Tech, bond market vigilante , Bretton Woods, business cycle, capital controls, carbon tax, central bank independence, coronavirus, corporate governance, COVID-19, creative destruction, credit crunch, crony capitalism, debt deflation, decarbonisation, degrowth, deindustrialization, don't be evil, financial deregulation, Francis Fukuyama: the end of history, full employment, gig economy, global pandemic, global value chain, green new deal, Greenspan put, income inequality, informal economy, inverted yield curve, invisible hand, Jeff Bezos, liberal capitalism, light touch regulation, lockdown, low interest rates, Martin Wolf, Modern Monetary Theory, moral hazard, move fast and break things, Network effects, North Sea oil, Northern Rock, offshore financial centre, pensions crisis, Philip Mirowski, post-war consensus, price mechanism, quantitative easing, regulatory arbitrage, rent control, reshoring, Rishi Sunak, savings glut, secular stagnation, shareholder value, social distancing, structural adjustment programs, too big to fail, universal basic income, unorthodox policies, Washington Consensus, yield curve

These decisions are not being based on rational calculation – no consideration is being made, for example, of the environmental sustainability, tax practices or employment practices of the companies in question – but on the demands of various vested interests. As capitalism has become more centralised, the defining justification for its existence – that competition between firms promotes the most efficient use of society’s scarce resources – has ceased to apply. Adam Smith’s ‘invisible hand’ has been replaced by the iron fist of the modern monopoly, supported by the capitalist state, which has succeeded in extracting huge amounts of value from workers all over the world. When markets are dominated by a few large firms, and when state action is the only thing that stands between a firm and bankruptcy, it is hard to argue that resource allocation continues to be governed by free market competition.


pages: 790 words: 150,875

Civilization: The West and the Rest by Niall Ferguson

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

.* Yet perhaps the greatest achievement of the era was Smith’s analysis of the interlocking institutions of civil society (The Theory of Moral Sentiments) and the market economy (The Wealth of Nations). Significantly, by comparison with much else that was written in the period, both works were firmly rooted in observation of the Scottish bourgeois world Smith inhabited all his life. But where Smith’s ‘Invisible Hand’ of the market manifestly had to be embedded in a web of customary practice and mutual trust, the more radical Francophone philosophes sought to challenge not just established religious institutions but also established political institutions. The Swiss Jean-Jacques Rousseau’s Social Contract (1762) cast doubt on the legitimacy of any political system not based on ‘the general will’.

A wall of lead and iron suddenly hurled itself upon the attackers and the entanglements just in front of our trenches. A deafening hammering and clattering, cracking and pounding, rattling and crackling, beat everything to earth in ear-splitting, nerve-racking clamor. Our machine guns had flanked the blacks! Like an invisible hand they swept over the men and hurled them to earth, mangling and tearing them to pieces! Singly, in files, in rows and heaps, the blacks fell. Next to each other, behind each other, on top of each other.100 Eleven days before the battle, the Germans had in fact obtained detailed plans of the attack from a captured French NCO.

It can be seen not just in forest fires but also in earthquakes and epidemics. Only the steepness of the line varies.11 The political and economic structures made by humans share many of the features of complex systems. Indeed, heterodox economists such as W. Brian Arthur have been arguing along these lines for decades, going far beyond Adam Smith’s notion of an ‘Invisible Hand’, seeming to guide multiple profit-maximizing individuals, or Friedrich von Hayek’s later critique of economic planning and demand management.12 To Arthur, a complex economy is characterized by the interaction of dispersed agents, a lack of any central control, multiple levels of organization, continual adaptation, incessant creation of new market niches and no general equilibrium.


pages: 586 words: 159,901

Wall Street: How It Works And for Whom by Doug Henwood

accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, affirmative action, Alan Greenspan, Andrei Shleifer, asset allocation, asset-backed security, bank run, banking crisis, barriers to entry, bond market vigilante , book value, borderless world, Bretton Woods, British Empire, business cycle, buy the rumour, sell the news, capital asset pricing model, capital controls, Carl Icahn, central bank independence, computerized trading, corporate governance, corporate raider, correlation coefficient, correlation does not imply causation, credit crunch, currency manipulation / currency intervention, currency risk, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, dematerialisation, disinformation, diversification, diversified portfolio, Donald Trump, equity premium, Eugene Fama: efficient market hypothesis, experimental subject, facts on the ground, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, George Akerlof, George Gilder, Glass-Steagall Act, hiring and firing, Hyman Minsky, implied volatility, index arbitrage, index fund, information asymmetry, interest rate swap, Internet Archive, invisible hand, Irwin Jacobs, Isaac Newton, joint-stock company, Joseph Schumpeter, junk bonds, kremlinology, labor-force participation, late capitalism, law of one price, liberal capitalism, liquidationism / Banker’s doctrine / the Treasury view, London Interbank Offered Rate, long and variable lags, Louis Bachelier, low interest rates, market bubble, Mexican peso crisis / tequila crisis, Michael Milken, microcredit, minimum wage unemployment, money market fund, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, oil shock, Paul Samuelson, payday loans, pension reform, planned obsolescence, plutocrats, Post-Keynesian economics, price mechanism, price stability, prisoner's dilemma, profit maximization, proprietary trading, publication bias, Ralph Nader, random walk, reserve currency, Richard Thaler, risk tolerance, Robert Gordon, Robert Shiller, Savings and loan crisis, selection bias, shareholder value, short selling, Slavoj Žižek, South Sea Bubble, stock buybacks, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Market for Lemons, The Nature of the Firm, The Predators' Ball, The Wealth of Nations by Adam Smith, transaction costs, transcontinental railway, women in the workforce, yield curve, zero-coupon bond

In a speech reprinted in the Wall Street Journal, Harry Markowitz (1991), one of the creators of modern portfolio theory and CAPM, predictably summoned Adam Smith to defend program trading, Salomon Brothers' mortgage-backed bond depart- WALL STREET merit, and junk bond finance: "My own view is that the invisible hand could work its magic through mere humans is an essential part of Adam Smith's insight. Not many thousands of years ago, men like this would have clubbed each other over hunting rights. A few hundreds of years ago they would have hacked each other with axes and swords. Now they yelled at trainees while they brought together the supply and demand of [sic] home mortgages on a world-wide scale." Through mere humans? Smith, a man of his time, saw the invisible hand as attached to God's invisible arm; are we to believe that Milken & Co. were divine agents?

The point of this little review is not just to embarrass official wisdom, though certainly that is always fun, but to undermine confidence in the entire enterprise of conventional mathematized economics. And few sub-fields are as math-dense as finance. A lot of neat theories grew up in the 1950s, 1960s, and 1970s, only to be challenged by some neater theories in the 1980s and 1990s, but the entire project of clever, influential, and largely empty theorizing about capital markets and the invisible hand has yet to be severely questioned. Even the extensive empirical work by a number of financial economists, often based on thousands, even millions, of data points, fails to provide any significant enlightenment, because it asks such self-contained, even puerile, questions."* As Leontief argued — in the presidential address to the AEA given 20 years before Debreu's — that self-contained quality is a significant reason for the failings of econometric analysis.


pages: 538 words: 145,243

Behemoth: A History of the Factory and the Making of the Modern World by Joshua B. Freeman

anti-communist, British Empire, Capital in the Twenty-First Century by Thomas Piketty, Charles Babbage, classic study, clean water, collective bargaining, company town, Corn Laws, corporate raider, cotton gin, deindustrialization, Deng Xiaoping, disruptive innovation, driverless car, en.wikipedia.org, factory automation, flying shuttle, Ford Model T, Ford paid five dollars a day, Frederick Winslow Taylor, global supply chain, Great Leap Forward, Herbert Marcuse, high-speed rail, household responsibility system, indoor plumbing, interchangeable parts, invisible hand, James Hargreaves, joint-stock company, knowledge worker, mass immigration, means of production, mittelstand, Naomi Klein, new economy, On the Economy of Machinery and Manufactures, Panopticon Jeremy Bentham, Pearl River Delta, post-industrial society, Ralph Waldo Emerson, rising living standards, Ronald Reagan, scientific management, Shenzhen special economic zone , Silicon Valley, special economic zone, spinning jenny, Steve Jobs, strikebreaker, techno-determinism, technoutopianism, the built environment, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tim Cook: Apple, transaction costs, union organizing, Upton Sinclair, urban planning, Vanguard fund, vertical integration, women in the workforce, working poor, Works Progress Administration, zero-sum game

On war-related industrial development in the Southwest, see Elizabeth Tandy Shermer, Sunbelt Capitalism: Phoenix and the Transformation of American Politics (Philadelphia: University of Pennsylvania Press, 2013). 15.Metzgar, “The 1945–1946 Strike Wave”; Freeman, American Empire, 39–41; Kim Phillips-Fein, Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan (New York: W. W. Norton, 2009), 93–97; Elizabeth A. Fones-Wolf, Selling Free Enterprise: The Business Assault on Labor and Liberalism, 1945–60 (Urbana: University of Illinois Press, 1994), 138–39. 16.Kim Phillips-Fein, “Top-Down Revolution: Businessmen, Intellectuals and Politicians Against the New Deal, 1945–1964,” Ph.D. dissertation, Columbia University, 2004, 220; Joshua B.

Freeman, Working-Class New York: Life and Labor since World War II (New York: New Press, 2000), 60–71; Tami J. Friedman, “Communities in Competition: Capital migration and plant relocation in the United States carpet industry, 1929–1975,” Ph.D. dissertation, Columbia University, 2001, 22, 70–76, 201–04. 17.Schatz, Electrical Workers, 170–75; Phillips-Fein, Invisible Hands, 97–114. 18.Schatz, Electrical Workers, 233–34. 19.Schatz, Electrical Workers, 234–36; Freeman, American Empire, 303–06; Thomas J. Sugrue, The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit (Princeton, NJ: Princeton University Press, 1996), 128–29; James C. Cobb, The Selling of the South: The Southern Crusade for Industrial Development, 1936–1980 (Baton Rouge: Louisiana State University Press, 1982); Friedman, “Communities in Competition,” 111–66. 20.See, for example, Martin Beckman, Location Theory (New York: Random House, 1968); Gerald J.

Bramhall, Locational Analysis for Manufacturing: A Selection of Readings (Cambridge, MA: MIT Press, 1969); and Paul Krugman, Geography and Trade (Leuven, Belgium: Leuven University Press and Cambridge, MA: MIT Press, 1989), esp. 62–63 for discussion of Akron. 21.Counter to the common management view, the productivity of unionized workers often exceeded that of nonunion workers. Roger W. Schmenner, Making Business Location Decisions (Englewood Cliffs, NJ: Prentice-Hall, 1982), vii, 10–11, 124–26, 154–57, 239; Phillips-Fein, Invisible Hands, 104; Lawrence Mishel and Paula B. Voos, eds., Unions and Economic Competitiveness (New York: M.E. Sharpe, 1992). 22.Kimberly Phillips-Fein, “American Counterrevolutionary: Lemuel Ricketts Boulware and General Electric, 1950–1960,” in Lichtenstein, ed., American Capitalism, 266–67; John Barnard, American Vanguard: The United Auto Workers during the Reuther Years, 1935–1970 (Detroit, MI: Wayne State University Press, 2004), 483; Cowie, Capital Moves, 53–58.


pages: 665 words: 146,542

Money: 5,000 Years of Debt and Power by Michel Aglietta

accelerated depreciation, Alan Greenspan, bank run, banking crisis, Basel III, Berlin Wall, bitcoin, blockchain, Bretton Woods, British Empire, business cycle, capital asset pricing model, capital controls, cashless society, central bank independence, circular economy, collapse of Lehman Brothers, collective bargaining, corporate governance, David Graeber, debt deflation, dematerialisation, Deng Xiaoping, double entry bookkeeping, energy transition, eurozone crisis, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, floating exchange rates, forward guidance, Francis Fukuyama: the end of history, full employment, German hyperinflation, income inequality, inflation targeting, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invention of writing, invisible hand, joint-stock company, Kenneth Arrow, Kickstarter, land bank, liquidity trap, low interest rates, margin call, means of production, Money creation, money market fund, moral hazard, Nash equilibrium, Network effects, Northern Rock, oil shock, planetary scale, plutocrats, precautionary principle, price stability, purchasing power parity, quantitative easing, race to the bottom, reserve currency, secular stagnation, seigniorage, shareholder value, special drawing rights, special economic zone, stochastic process, Suez crisis 1956, the payments system, the scientific method, tontine, too big to fail, trade route, transaction costs, transcontinental railway, Washington Consensus

How can a society that is supposedly based on the sovereignty of the individual transform into its opposite – into a dictatorship of the market? The answer comes by way of a hypothesis that transforms supposedly decentralised exchanges into their opposite: a hypercentralisation of exchange. This hypercentralisation operates under the aegis of a metaphorical entity that Walras calls ‘the auctioneer’ and Adam Smith ‘the invisible hand of the Market’. This hypothesis holds that no market actor has any influence on prices. Everyone buys at the prices that the auctioneer announces. And yet this latter is nothing but a metaphor! Why do market actors take prices to be fixed? It would make no sense to reply that they are too small to influence prices.

Table 1.1 Alternative views of the genesis of money Theory of perfect competition General equilibrium model Evolutionary theory Models of prospection Institutional theory Mimetic model How is exchange conceptualised? – Individual subjects which are autonomous and endowed with their own utilities – Goods’ characteristics are common knowledge – Centralised exchanges – Coordination by the invisible hand – Same hypotheses on utility as in perfect competition – Decentralised exchanges – Coordination by the search for a means of exchange – Utilities depend on social relations – Exchanges are reciprocal debts with a view to the acquisition of the society’s resources – A search for liquidity regulating debts How is money introduced?

In so doing, it singularly reduces the traditional representation – from Smith onwards – of the market division of economic activities. This hypothesis is indispensable if we are to wish away any reciprocal dependency among market participants. A good available in the future is considered in the same way as any other good, enabling the hypothesis of fixed prices – a hypothesis indispensable to coordination by the invisible hand of the market – can be extended into the future. The anticipated price of a good available at a future date is called the fundamental value of the real future asset that produces this good. 25 Opposed to this are the transaction costs (information in order to understand the possible counterparties to the goods which each party wants to exchange, transport and insurance, verification, etc.).


pages: 285 words: 86,853

What Algorithms Want: Imagination in the Age of Computing by Ed Finn

Airbnb, Albert Einstein, algorithmic bias, algorithmic management, algorithmic trading, AlphaGo, Amazon Mechanical Turk, Amazon Web Services, bitcoin, blockchain, business logic, Charles Babbage, Chuck Templeton: OpenTable:, Claude Shannon: information theory, commoditize, Computing Machinery and Intelligence, Credit Default Swap, crowdsourcing, cryptocurrency, data science, DeepMind, disruptive innovation, Donald Knuth, Donald Shoup, Douglas Engelbart, Douglas Engelbart, Elon Musk, Evgeny Morozov, factory automation, fiat currency, Filter Bubble, Flash crash, game design, gamification, Google Glasses, Google X / Alphabet X, Hacker Conference 1984, High speed trading, hiring and firing, Ian Bogost, industrial research laboratory, invisible hand, Isaac Newton, iterative process, Jaron Lanier, Jeff Bezos, job automation, John Conway, John Markoff, Just-in-time delivery, Kickstarter, Kiva Systems, late fees, lifelogging, Loebner Prize, lolcat, Lyft, machine readable, Mother of all demos, Nate Silver, natural language processing, Neal Stephenson, Netflix Prize, new economy, Nicholas Carr, Nick Bostrom, Norbert Wiener, PageRank, peer-to-peer, Peter Thiel, power law, Ray Kurzweil, recommendation engine, Republic of Letters, ride hailing / ride sharing, Satoshi Nakamoto, self-driving car, sharing economy, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, Silicon Valley startup, SimCity, Skinner box, Snow Crash, social graph, software studies, speech recognition, statistical model, Steve Jobs, Steven Levy, Stewart Brand, supply-chain management, tacit knowledge, TaskRabbit, technological singularity, technological solutionism, technoutopianism, the Cathedral and the Bazaar, The Coming Technological Singularity, the scientific method, The Signal and the Noise by Nate Silver, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, transaction costs, traveling salesman, Turing machine, Turing test, Uber and Lyft, Uber for X, uber lyft, urban planning, Vannevar Bush, Vernor Vinge, wage slave

The “thing” that software has become is the cultural figure of the algorithm: instantiated metaphors for effective procedures. Software is like Bogost’s cathedral of computation, Chun argues, “a powerful metaphor for everything we believe is invisible yet generates visible effects, from genetics to the invisible hand of the market, from ideology to culture.”45 Like the crucifix or a bell-tower signaling Sunday mass, software is ubiquitous and mysterious even when it is obvious, manifesting in familiar forms that are only symbolic representations of the real work it does behind the scenes. The elegant formulation of software as a metaphor for metaphor, paired with Chun’s quotation of Weizenbaum—the MIT computer scientist who created an alarmingly successful algorithmic psychotherapist called ELIZA in the 1960s—draws together cybernetics and magic through the notion that computers themselves have become metaphors for the space of effective computability.

., 59 Jenkins, Henry, 102 Johansson, Scarlett, 78 Jonze, Spike, 11, 77–79, 84–85 Journalists, 3 automatization and, 38 Bitcoin and, 12 cultural values and, 171–172 Facebook and, 116, 170, 172 gamification and, 116 Gawker Media and, 170–175, 210n35 Google and, 75 Siri and, 58 Thiel and, 170–171 transactional algorithms and, 151 “Trending Topics” widget and, 180 Uber and, 129 Kael, Pauline, 175 Kasparov, Gary, 135–138 Kindle, 195 Kirschenbaum, Matthew, 47–48 Kiva Systems, 134 Kline, Ronald, 31 KnowledgeGraph, 71–73, 75, 94 Knuth, Donald, 17–18 Kurzweil, Ray, 184 Labor, 7, 18, 46, 122 Adam Smith on, 146 affective, 145–148 arbitrage and, 97, 112, 123–145 Bitcoin and, 164, 178 capitalism and, 165 cloud warehouses and, 131–445 culture machines and, 93, 119 deep structures of, 123 faking sincerity and, 146–147 feedback systems and, 145–148 HITs and, 135, 139, 141, 145 identity and, 146–147 intellectual, 12 interface economy and, 123–145 ludic, 120 mandatory smiles and, 146 Marx on, 165 Mechanical Turk and, 135–145 pickers and, 132–134 Taylorism and, 93 worker conditions and, 8, 132–134, 139–140 Lambda calculus, 24 Langlois, Ganaele, 111 Language abstraction and, 2, 24 advertisements and, 178 algorithms and, 24–28, 33–41, 44, 51, 54–55 cognition and, 39 color words and, 4 culture machines and, 39–40 epistemological layers and, 4, 11, 148, 155, 157, 175, 177, 188 ethos of information and, 159 grammar and, 2, 16, 25, 38–41, 62–64, 110–112, 138, 178–179 imagination and, 38, 185, 196 incompleteness and, 24, 40 as intellectual technology, 4 intelligent assistants and, 11, 57, 62, 64–65, 77 machine learning and, 2, 112 many registers of, 1–2 mathematics and, 2, 55 meaning and, 1 metaphor and, 183–184 (see also Metaphor) natural language processing (NLP) and, 62–63 of new media, 112, 122 plasticity and, 38, 191 power of, 1–2, 4–5 procedural, 3–4, 6 reality and, 1 rhetoric and, 6, 16, 22, 30, 45, 89, 96, 101, 104, 110, 112, 123, 127, 136 Siri and, 57–65, 71–84 spoken, 2, 58, 60, 62–63, 67, 84, 185 symbolic, 2, 26, 38–41 tricks and, 3–4 Turing Machine and, 33, 41 universal, 5 vocabulary and, 2, 4, 25, 138, 160, 190 Wiener and, 28 Language of New Media, The (Manovich), 122 Lawsuits, 90, 171, 175 Leibniz, Gottfried Wilhelm, 25–27, 72 Lem, Stanislaw, 184 Levy, Steven, 3 Lewis, Michael, 12, 151, 153, 168 Leyden, Peter, 160 Library Computer Access/Retrieval System (LCARS), 67–68 Life magazine, 31 Literacy, 5, 39, 52, 75, 109, 129, 159, 177 LiveJournal, 209n20 Loebner Prize, 87, 203n50 Logic general substitutability and, 33 Gödel and, 24, 40 halting states and, 41–46 information theory and, 10, 27 invisibly exclusionary, 110 pragmatist approach and, 18–25, 42, 58, 62 process and, 41–46 proofs and, 15, 24–25, 41, 44 rationality and, 38, 40 symbolic, 2, 21, 24, 39, 41, 44, 54–55 “Long Boom, The” (Schwartz and Leyden), 160–161 Lyft, 123, 127–130, 145, 148 Machine learning artificial intelligence (AI) and, 2, 15, 28, 42, 62, 66, 71, 85, 90, 112, 181–186, 191 big data and, 90 computationalist approach and, 183 DeepMind and, 28, 66, 181–182 Google and, 66, 181–186, 191 imagination and, 181–186 language and, 2, 112 Netflix and, 182–183 neural networks and, 28, 31, 39, 182–183, 185 Siri and, 62, 182 (see also Siri) Turing Machine and, 182 (see also Turing Machine) Macy Conferences, 30, 199n42 Madrigal, Alexis, 92, 94–95 Magic agency and, 78 artificial intelligence and, 135–136 cached content and, 159 code as, 1–5, 8, 10, 16, 49–50, 196 computation as, 4, 8, 10, 46, 52, 59–60, 94, 96, 121, 161 constructed reality and, 39 curses and, 1 data cloud and, 131, 134 fantasy and, 121, 124, 126 government currency and, 172 hacker powers as, 3, 51 incantations and, 1, 3–5, 51, 196 invisible sides of system and, 178 machines and, 137–138, 188 Memex and, 188 metaphors for, 32–36 myths and, 1–2, 10, 16 ontology and, 62–65 ratings and, 130 rational language for, 25 shamans and, 1, 3, 5 Siri and, 59–60, 62–65 sourcery and, 3, 10, 17, 21, 33–34 symbolic, 105 Manjoo, Farhad, 75 Manovich, Lev, 112, 122 Market impacts advertisements and, 34 (see also Advertisements) arbitrage and, 152, 161 attention and, 119 automobiles and, 127 Bitcoin and, 163–180 crashes and, 151 cryptocurrency and, 160–180 digital identity and, 159 digital trading and, 152 eliminating vulnerability and, 161–162 encryption and, 153, 162–163 fungible space and, 54 gaming and, 119, 121 gaming the system and, 153 Google and, 66 high frequency trading (HFT) and, 151–158, 168–169, 177 hyperinflation and, 166 international trade and, 12 invisible hand and, 33 labor and, 8 (see also Labor) Mechanical Turk and, 135–145 NASDAQ and, 152 Netflix and, 87, 97, 107–110, 114–115 NYSE and, 152 parallel computing and, 139 pension funds and, 151, 168 Siri and, 59, 75–77 stock market and, 12, 15, 154 transaction fees and, 164–165 transparency and, 160–164, 168, 171, 177–178 virtuous action and, 146 Wall Street and, 16, 66, 109, 151, 153, 171, 185 Marx, Karl, 165 Master Algorithm, The (Domingos), 183 Materiality, 26, 47–49, 53, 133 Mathematics abstract symbolism, 2, 55 algebra, 17 Babylonian, 17 Berlinski and, 9, 181 calculus, 24, 26, 30, 34, 44–45, 98, 148, 186 complexity, 28 computationalist approach and, 23, 183, 185 Conway and, 29–30 culture machines and, 49–50 Descartes and, 26, 69, 75 effective computability and, 40 “extended mind” hypothesis and, 40 Fibonacci sequence, 17 Golden Ratio, 2 Hilbert and, 23 Hindu-Arabic numerals, 17 language and, 2, 55 Leibniz and, 25–26, 72 logic, 2, 10, 24 machine duplication and, 22 materiality and, 26 Moschovakis and, 17 Nakamoto and, 161–162 Netflix Prize and, 87–91 ontology and, 84 perceived reality and, 20 Post and, 9 Pragmatic Chaos and, 90 proofs, 15, 24–25, 41, 44 pure, 47 reality and, 34 Rendell and, 30 Shannon and, 27 Strogatz and, 44, 183 theory of computation and, 18 Turing and, 6–9, 23–30, 33, 39–43, 54, 73, 79–82, 87, 138, 142, 182, 186 Mathesis universalis, 25–26, 28, 72 Matrix, The (film), 3, 36, 109 Maturana, Humberto, 28–29 McClelland, Mac, 132–133 McCloud, Scott, 110, 154–155 McCulloch-Pitts Neuron, 28, 39 Meaning acceleration of epistemological change and, 188–189 algorithms and, 35–36, 38, 44–45, 50, 54–55 belonging and, 122 black boxes and, 7, 15–16, 47–48, 51, 55, 64, 72, 92–93, 96, 136, 138, 146–147, 153, 162, 169–171, 179 Chun on, 35 Cow Clicker and, 116, 118–119 cultural exchange and, 12, 111–112 data mining and, 175 decision-making and, 20, 28, 34, 37, 90 digital culture and, 3, 7, 18, 22, 43, 49, 66, 87, 156, 160, 191, 193–194 endless hunt for, 184 imagination and, 184 (see also Imagination) intimacy and, 75 language and, 1 Mechanical Turk and, 136–140 metaphor and, 183–184 (see also Metaphor) obfuscations and, 7, 55, 64 organization of, 8 PageRank and, 169 Siri and, 65 structures of, 89, 96 value and, 155 vs. information, 9, 9–10 Mechanical Turk Google and, 12, 135–145 history of original, 136–138 meaning and, 136–140 as metaphor, 143 von Kempelen and, 135 worker conditions and, 139–140 Mechanisms (Kirschenbaum), 47–48 Memex, 186–189, 195 Memory computation and, 18, 21, 37, 43–44, 51, 56, 58, 69, 75, 159–160, 176, 185–186, 191–193 culture and, 43 human, 37, 43–44 process and, 21 technical, 51, 192 understanding and, 37 Metaphor, 121 assumption of code and, 43 cathedral of computation and, 6–8, 27, 33, 49, 51 Church-Turing thesis and, 41–42 cloud, 131 for communication, 32–36 computational, 22 cultural, 50, 54 effective computability and, 34 human cognition and, 39 imagination and, 183–184, 189 interfaces and, 25, 60 Mechanical Turk and, 143 Netflix as, 96, 104 obelisk and, 155 reality and, 10, 50 Samantha (Her) and, 84–85 Microsoft, 97, 144, 152 Miners (Bitcoin), 165, 167–168, 171–172, 175–179 Money abstraction and, 153, 159, 161, 165–167, 171–175 algorithmic trading and, 12, 20, 99, 155 arbitrage and, 151–152, 155–163, 169–171, 175–179 Bitcoin and, 160–180 as collective symbol, 165–166 ontology and, 156–159, 178–179 Moore’s Law, 43 Morowitz, Harold, 23 Moschovakis, Yiannis, 17 Moth machine (Wiener), 31–32, 34 Musk, Elon, 191 My Mother Was a Computer (Hayles), 21, 93 Myths ancient, 28 Campbell on, 94 code and, 7–8, 16, 44 cultural space and, 5 culture machine and, 55 fantasy and, 78 government currency and, 172 human-computer interaction and, 36, 51 magic and, 1–2, 10, 16 material reality and, 47 ontology and, 26 origin, 68 personalization and, 106–107 power of language and, 6, 44, 196 Sumerian, 3, 5, 16 unitary simplicity and, 49 Nakamoto, Satoshi, 161–162, 165–167 Nam-shubs, 1, 3–6, 37–40, 56, 135 Nardi, Bonnie, 121 NASDAQ, 152 Natural-Born Cyborgs (Clark), 37 Natural language processing (NLP), 62–63 Natural selection, 44 Negri, Antonio, 145 Netflix, 161 abstraction of aesthetics and, 87–112, 205n36 abundant choices and, 176 arbitrage and, 94, 97, 109–112, 124 art of personalization and, 97–103 Bogost on, 92–95 business model of, 87–88 Cinematch and, 88–90, 95 commissioned shows of, 97–98 computationalist approach and, 90, 104 consumer desire and, 93–96 disruptive technologies and, 124 effective computability and, 93 Facebook and, 91, 110 fan making and, 100–101 FCC and, 90 genre categories of, 94 ghost in the machine and, 55, 95, 183 gutter problem and, 110 Hastings and, 97–98 House of Cards and, 11, 54, 92, 98–112, 192 influence of, 87 interface economy and, 124 Leibniz and, 26 machine learning and, 182–183 market issues and, 87, 97, 107–110, 114–115 metaphor and, 96, 104 ontology and, 92, 94, 96 original content by, 97–98 parsing data and, 182 personalization and, 97–103, 109 Pragmatic Chaos and, 89–90 predictor ensemble and, 89–90 quantum mechanics and, 91–94, 96, 99, 112 recommendation algorithm competition of, 87–91 rejection of big-data approach and, 11 serendipitous glitches and, 55 Spoiler Foiler and, 101–102, 108 streaming and, 90 system behavior and, 16 taggers and, 54, 88, 92–93, 96, 99 techno-utopian rhetoric and, 16 Neural networks, 28, 31, 39, 182–183, 185 New Digital Age, The (Schmidt), 66 Newitz, Annalee, 60 Newton, Isaac, 17, 166 New York Stock Exchange (NYSE), 152 New York Times, 170 Nielsen ratings, 102 Note Book (Nunokawa), 53 @NSA_prismbot, 194–195 Nunokawa, Jeff, 53 Nyby, Christian I., II, 95 Of the Subcontract, Or Principles of Poetic Right (Thurston), 12, 140–145 OK Google, 51 One-way functions, 162–163 Ontology Apple and, 62–63, 65 computationalist approach and, 8 consciousness and, 178 culture machines and, 62–65, 68–69 Google and, 159–160 ideology and, 68 imagination and, 69, 73–74 of information, 8, 63, 69–71 mathematics and, 84 meaning and, 8, 21–22, 26, 39 money and, 156–159, 178–179 Netflix and, 92, 94, 96 Siri and, 62–65, 71–73, 82, 84 work of algorithms and, 122 Open source software, 6, 162, 167 ORION, 19, 47 Orwellian surveillance, 132–134 Page, Larry, 155–156 PageRank, 20, 111, 155–159, 169, 177–178, 189 Pariser, Eli, 46, 50 Parisian Great Exhibition, 80 Pasquale, Frank, 21 Pension funds, 151, 168 Perfect knowledge, 13, 65, 71, 73, 190 Perry Mason (TV series), 95–96 Phaedrus (Plato), 37 Phoenix, Joaquin, 77 Pickers, 132–134 Pitts, Walter, 28 Planned Parenthood, 64 Plato, 4, 31, 37–38, 40, 82 Popova, Maria, 175–176 Post, Emil, 9 Pragmatic Chaos (Netflix), 89–90 Pragmatist approach algorithmic, 2, 18–25, 42 effective computability and, 25–26 experimental humanities and, 193 growing power of computation and, 27 justice and, 146 models of reason and, 47 reframing humanities and, 193 Siri and, 58, 62 Privacy, 49, 62, 75, 90, 160–161, 163, 173 Private keys, 163 Programmability, 16, 178 Programmable culture, 169–175 Programmed Visions (Chun), 33 Project Loon, 66 Proofs, 15, 24–25, 41, 44 Protocol (Galloway), 50 Public keys, 163 Purdy, Jedediah, 146–147 Quantum mechanics Netflix and, 91–94, 96, 99, 112 Wiener and, 26–27 Raley, Rita, 194–195 Ramsey, Stephen, 52 Raymond, Eric, 6 Reading Machines (Ramsey), 52 Religion, 1, 7, 9, 49, 69, 71, 80, 136 Rendell, Paul, 30 Rice, Stephen P., 144–145 Rid, Thomas, 199n42 Riskin, Jessica, 136–137 Robotics, 31, 34, 43–45, 132–134, 188 Rood of Grace, 137 Rotten Tomatoes, 96 RSE encryption, 163 Samantha (Her), 77–85, 154, 181 Sample, Mark, 194–195 Sandvig, Christian, 107, 131 Sarandos, Ted, 98, 100, 104 Schmidt, Eric, 66, 73, 127 Schwartz, Peter, 160–161 Scorsese, Martin, 59 Searle, John, 4 Shannon, Claude, 27 Sharing economy, 54, 123, 127–129, 145, 148 Shoup, Donald, 127 Silicon Valley, 3, 9, 30–31, 49, 54, 87, 100, 124, 182 SimCity (game), 194 Simondon, Gilbert, 40, 42–44, 53, 59, 84, 106, 118 Singhal, Amit, 72, 76 Siri abortion scandal and, 64 abstraction and, 64–65, 82–84 anticipation and, 73–74 as beta release, 57 CALO and, 57–58, 63, 65, 67, 79, 81 cognition and, 57–65, 71–84 computationalist approach and, 65, 77 consciousness and, 57–65, 71–84 conversation and, 57–65, 71–84 DARPA and, 11, 57–58 Easter eggs in, 60, 148 effective computability and, 58, 62, 64, 72–76, 81 emotional work and, 148 Enlightenment and, 71–76, 79–80, 82 gender and, 60–61, 80 interfaces and, 59–60, 63, 75, 77 intimacy and, 11, 75–81 language and, 57–65, 71–84 launch of, 57 machine learning and, 62–65, 182 market issues and, 59, 75–77 meaning and, 65 ontology and, 62–65, 71–73, 82, 84 parsing data and, 182 performing knowledge and, 59–61 quest for knowledge and, 71–75, 82, 84 reading, 58–59 reduced abilities of, 59 speed of, 131 Skinner boxes, 61, 115–116, 119–120, 122 Smith, Adam, 12, 146–147 Smith, Kevin, 88 Sneakers (film), 3 Snow Crash (Stephenson), 1, 3–5, 9, 17, 36, 38, 50 Social behavior, 22, 146 addiction and, 114–119, 121–122 discrimination and, 21, 130 exploitationware and, 115–116 Social gaming, 114, 118, 120–122 Social media, 6 Arab Spring and, 111, 186 changing nature of, 171 digital culture and, 3, 7, 18, 22, 43, 49, 66, 87, 156, 160, 191, 193–194 Enlightenment and, 173 identity formation and, 191 in-person exchanges and, 195 intellectual connection and, 186 newsfeeds and, 116, 177–178 peer review and, 194 raising awareness and, 174 Spoiler Foiler (Netflix) and, 101–102, 108 transaction streams and, 177 Uber and, 148 Software agency and, 6 Apple and, 59, 62 apps and, 6, 8, 9, 15, 59, 83, 91, 94, 102, 113–114, 124, 128, 145, 149 blockchains and, 163–168, 171, 177, 179 cathedrals of computation and, 6–8, 27, 33, 49, 51 Chun on, 33, 42, 104 Church-Turing thesis and, 25 consciousness and, 77 dehumanizing nature of, 116 depersonification of, 6 digital materiality and, 53 experience and, 34 as foundation of computational expression, 47 imagination and, 186, 194 in-house affect and, 59 interfaces and, 124 (see also Interfaces) logic of general substitutability and, 33 Manovich and, 112 material layers and, 48 as metaphor for metaphors, 35 Metaverse, 50 networks vs. individuals and, 118 open source, 6, 162, 167 Pasquale on, 21 reality and, 10 self-modification and, 1, 38 Weizenbaum and, 33–40 Solaris (Lem), 184 Sourcery, 3, 10, 17, 21, 33–34 Space of computation, 2–5, 9, 21, 42, 45, 76, 154, 185 Spacey, Kevin, 98–99, 106–107 Spoiler Foiler (Netflix), 101–102, 108 SRI International, 57, 59, 63, 169 Srinivasan, Balaji, 169 Star Fleet Federation, 67 Star Trek computer anticipation and, 73–74 conversation and, 67 Google and, 11, 65–82, 159, 186 interfaces and, 67–68 LCARS and, 67–68 Memex and, 186–189, 195 public expectations and, 67 Star Trek: The Next Generation (TV series), 67 Stephenson, Neal, 1, 3–5, 9, 17, 36, 38, 50, 51 Stiegler, Bernard, 43–44, 53, 106 Streaming content, 49, 54, 87, 90–92, 97, 99, 101–102, 104, 205n39 Strogatz, Steven, 44, 183 Sumerian myths, 3, 5, 16 SuperPACs, 174 Symbolic logic, 2, 21, 24, 39, 41, 44, 54–55 Symposium (Plato), 82 Tacit negotiation, 20 Taggers, 54, 88, 92–93, 96, 99 Tanz, Jason, 116 TaskRabbit, 124 Taylorism, 93 Teller, Astro, 66 Terminator (film series), 191 Terrorism, 163, 178 Theory of Communicative Action, The (Habermas), 109 Theory of Moral Sentiments (Smith), 12, 146–147 Thiel, Peter, 170–171, 174 Third parties, 59, 114, 125, 132–133, 147, 162, 170–171 Thurston, Nick, 12, 140–145 Tindr, 128 Transaction fees, 164–165 Transcendent Man (Kurzweil), 184 Transparency bazaar model and, 6 cryptocurrency and, 160–164, 168, 171, 177–178 feedback and, 146 freedom and, 9 interfaces and, 189 market issues and, 160–164, 168, 171, 177–178 politics of algorithms and, 18, 20 proprietary platforms and, 9 Traveling salesman problem, 19 “Trending Topic” widget, 180 Turing, Alan, 8, 23, 42, 79–80, 182 Turing Machine, 182 Berlinski and, 9, 24 computability boundary and, 23–24 concept of, 23 effective computability and, 42 finite-time processes and, 42 game of life and, 29–31 language and, 33, 41 McCulloch-Pitts Neuron and, 28 as though experiment, 23–24 as uniting platform, 25 Turing’s Cathedral (Dyson), 6 Turing test, 43, 79–82, 87, 138, 142 Turner, Fred, 3, 46 Twain, Mark, 151 Twitter, 53, 101–102, 173, 177, 179, 194–195, 210n43 Uber, 9, 12, 97, 138 abstraction levels of, 129 African Americans and, 130 business model of, 54, 93–94, 96 feedback system of, 145–148 interface economy and, 123–133, 145, 147 massive infrastructure of, 131 threats to, 129 Ubiquitous computation algorithms and, 3–4, 15, 33, 43, 54, 119, 124–125, 127, 178, 189–190 Bitcoin and, 178 colonization of margins and, 119 gamification and, 124 imagination and, 189–190 interfaces and, 189 Uber and, 125, 127 Unit Operations (Bogost), 118 U.S.S.


pages: 315 words: 92,151

Ten Billion Tomorrows: How Science Fiction Technology Became Reality and Shapes the Future by Brian Clegg

Albert Einstein, Alvin Toffler, anthropic principle, Apollo 11, Brownian motion, call centre, Carrington event, Charles Babbage, combinatorial explosion, don't be evil, Dr. Strangelove, Ernest Rutherford, experimental subject, Future Shock, game design, gravity well, Higgs boson, hive mind, invisible hand, Isaac Newton, Johannes Kepler, John von Neumann, Kickstarter, Large Hadron Collider, machine translation, Neil Armstrong, Nick Bostrom, nuclear winter, pattern recognition, quantum entanglement, RAND corporation, Ray Kurzweil, RFID, Richard Feynman, Schrödinger's Cat, Search for Extraterrestrial Intelligence, silicon-based life, speech recognition, stem cell, Stephen Hawking, Steve Jobs, Turing test

The researchers suggest the accuracy and speed provided mean that it would be possible to mentally control typing at a speed of around fifteen words per minute, if such a system were available to a human brain. The significance of this development is that where someone using the BrainGate approach would have to consciously control an invisible hand—fine to move a cursor, but very slow for an action like typing—this approach would make it possible to think about typing and to have the appropriate signals produced, rather than consciously moving a virtual finger from key to key. These experiments show very early steps toward being able to directly control robotic limbs from the brain.

Almost always in fiction, the ability for an individual to become invisible corrupts that individual—and the temptations that invisibility offers prove to be largely criminal. The invisible person is not inclined to perform acts of kindness and valor, or even to hide from enemies. Time after time, he or she will peek and pry where invisible hands should not reach, will steal or abuse others in misdemeanors from petty pinching, eventually pushing to sexual transgressions and murder. In early stories, the ability to become invisible was usually produced by something that was worn—a ring, a hat, or in the mode that made its way all the way through to Harry Potter (and that verbally, at least, features in Star Trek), a cloak.


pages: 273 words: 93,419

Let them eat junk: how capitalism creates hunger and obesity by Robert Albritton

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", Bretton Woods, California gold rush, carbon tax, clean water, collective bargaining, computer age, corporate personhood, creative destruction, deindustrialization, Food sovereignty, Haber-Bosch Process, illegal immigration, immigration reform, invisible hand, joint-stock company, joint-stock limited liability company, Kickstarter, land reform, late capitalism, means of production, military-industrial complex, offshore financial centre, oil shale / tar sands, peak oil, planned obsolescence, price stability, profit maximization, profit motive, South Sea Bubble, the built environment, union organizing, Unsafe at Any Speed, upwardly mobile

The difference between the input costs and selling price of the produced commodity is the capitalist’s profit. Competition insures that capitalists always strive to maximize their profits, such that capital will always gravitate from the less profitable to the more profitable commodities. The use of the metaphor “invisible hand” in connection with capitalist markets implies that capitalism has its own inner logic. In other words, it has a life of its own that is not concerned with human flourishing, democracy or social justice, but instead is concerned with profits, which may or may not advance ethical norms as spin-offs.

Coli 115 ecology 6–7, 24, 148, 161, 219 see also environment Ecuador 138 election campaigns (US) 185–6 El Salvador 159 empty calories 3, 5, 94 see also junk food enclosures of commons 12, 21 England 31, 44, 54 environment 152, 146–65 environmental costs 61, 148, 183 environmental debt 147 environmental degradation 61, 147, 151 environmental regulations 45 see also ecology Environmental Protection Agency (EPA) 137, 151, 159, 192 equality x, 197 see also inequality erosion 157 ethanol 5, 15, 23, 107, 135, 147, 150–2, 154, 189, 212 Everglades 45, 100–1, 171, 216 exercise 104 export-oriented agriculture 125, 134–6, 141 externalities xii, 28, 208 see also social costs extinction 156 extreme weather 35, 153, 156, 158 F Factory Acts 31 factory farms 19, 29, 36, 150, 157 see also agriculture fair trade 204 254 INDEX family farms 8, 18, 19, 25, 42, 45, 49, 59, 69, 82, 83, 120, 123, 128–30, 138, 140–1, 144, 203 see also agriculture farm income 128–30 fashion 69 fast food 32, 92, 97–8, 109, 120 fast food chains 133, 120–2 feedlots 103 see also confined animal feeding operation (CAFO) field workers 126–8 Fiji Islands 176 fish 160 flourishing 6 food 10 food additives 63, 113 food aid 108 food crisis ix, x, 89 food disparagement laws 189 food inspection 112, 189 food prices ix, 5, 23, 41, 88, 108, 129, 135, 141–2, 150, 152, 187, 204 see also hunger, starvation, structural adjustment policies, subsidies food provisioning 164 food pyramid 188 food regime/system 6 food safety 189 food security 153 see also food prices, hunger, starvation, structural adjustment policies, subsidies food sovereignty 204 Food and Agriculture Organization (FAO) ix, 89, 97, 153, 188 forced labour 124, 127 see also slavery fossil fuel 148, 151, 155 see also coal, petroleum Framework Convention on Tobacco Control 187 Frank Statement 191–2 freedom 47, 189 see also rights French revolution 2 G General Marshall 182 General Pershing 182 genetically modified organisms (GMOs) 118–19, 147, 161–3, 193 Bt crops 162 Roundup ready crops 162 global warming xi, 4, 5, 35, 147, 150, 154–6, 159, 179, 218 globalization 43–6, 71 glyposate 118–19 see also Roundup golden age 13, 52, 53 Gore, Al 100 government 183 government regulation 168, 193, 206 grain crops 155 green house gas emissions 142, 146, 148, 151, 155, 157 Greenland ice sheet 154 green revolution 58, 61, 115, 118, 124, 135, 149 green tobacco sickness 220 group of eight xii guaranteed annual income 35, 205, 210 guest workers 127, 140 H Haber–Bosch process 57 Haiti 128 Hammer, Armand 63 health 6, 16, 81, 92–4, 144, 174, 190–1, 210 high blood pressure 109 high fructose corn syrup (HFCS) 96, 101 historical analysis 13 historical directionality 12 homogenization 24, 33–7, 66 see also monoculture, species loss human flourishing 213 INDEX human rights 132 human right to food 197 see also rights Human Rights Watch 131, 138–9 hunger 4, 80, 89, 91, 105–8, 158, 204 see also starvation I identity 6, 10 island identity 46–7 see also subjectivity, individualism, possessive individualism ideology 74–5, 168, 182, 196 see also capitalist ideology illegal drugs 141 immigrant labour 40, 124, 126 see also guest workers, undocumented workers India 142 Indian Ocean 158 indifference to use-value 28, 29, 77 see also quality versus quantity individualism 26, 73–4, 166, 168, 170, 179 Indonesia 142, 155 industrial reserve army 39 inelasticity 24 inequality 8, 72, 134, 152, 180, 184, 194, 213 see also equality, poverty, poverty line, wages inner logic 12 see also abstract theory, deep structure/cause, pure capitalism intensification 30, 131 see also speed international cooperation 204, 207, 211 see also movements International Monetary Fund (IMF) 134 invisible hand 11 irrationality x, xi, 6, 29, 195, 202, 207 see also contradiction, rationality irrigation 157 255 Ivory Coast 138, 202 J jobs 126 job security 125–6 job turnover 131, 133 Joe Camel 171 Johnson, President L. B. 57, 217 judicial system 85–7, 169–70, 183–4, 190 junk food 2, 3, 5–6, 92, 123, 172, 174, 176–7, 191 see also empty calories junk capitalism 5–6 K King, David 194 knowledge 8 Kyoto Accord 154 L labelling 162, 189, 236 labour 124 labour-intensive 140, 143–4, 220 land 21, 156–8 degradation 156–7 landless workers movement (MST) 203 Las Vegas 159 legal subjectivity 46, 47, 207 levels of analysis 10–14, 202 liberal-democracy 9, 14, 182–97 see also democracy liberalism 183 livestock 150, 155, 224 living conditions 142 long run 22–3 M Malawi 140 Malaysia 142 Mali 129 malnutrition x, 90, 106–7, 212 Marie Antoinette 2 256 INDEX market failure 15–16 marketing 86, 140, 168, 171–2, 177, 220 marketing to children 69, 70, 140, 165, 166, 172–7 markets 14–15, 19, 43, 144, 208 see also democratizing markets Marlboro Man 169, 171 Marx, Karl 9, 10, 11, 12, 18, 19, 20, 21, 22, 28, 30, 31, 39, 43, 46, 76, 81 massacre x meat production 149, 155 meatification 101, 104 mechanization 64, 128, 202 media 45, 85, 169, 172–77, 183–6, 195–7 medicalization 90, 91 mental illness 173, 177 merger movement 44 Mexico 136 mid-range theory 12–13, 51–78, 202, 216 see also levels of analysis military Keynesianism 75 military-industrial complex 75 miscarriages 151 monoculture 34, 66, 118, 151, 161, 203 see also homogenization, species diversity monopolistic trading companies 44–5 Monsanto 162, 189 movements xii, 8, 33, 203 see also cooperation, international cooperation N National Cancer Institute 62 nation-state xiii see also government, state, state intervention natural disasters 204 nemagon 137, 190, 193 Nestle, Marion 115, 149 Nicaragua 138 nitrates 151 nitrous oxide (N2O) 151, 155 Nixon, President Richard 63, 146 non-governmental organization (NGO) 211 North American Free Trade Agreement (NAFTA) 107, 136 nutrients 4, 115–17 nutrition 6, 80–122, 195 O obesity 4, 41, 90, 91, 93, 97–9, 104, 109, 172–3, 180, 188, 190, 221 obesity epidemic 32, 43–6 89, 93 objectification 47–9 see also subjectification oceans 154, 159–60 ocean levels 154 oestrogen 109–10, 225 Ogallala aquifer 157 oligopoly 43–6, 70–2 organic farming 144, 162, 205, 212 organic food 167 Organization of Petroleum Exporting Countries (OPEC) 57 P palm oil 142–3, 151 palm oil workers 142–3 peak oil 142–54 per capita emissions 155 perfect storm ix pesticides 58, 86, 110, 127–8, 130, 137–40, 142–4, 161, 179, 195, 206 petro-chemicals 147, 179 see also pesticides, petroleum petro-dollars 134 petro-food 58, 149, 150, 195 petroleum x, 57, 147, 149, 217 pharmaceutical industry 153 phase of consumerism 13, 51–77, 217 phase of imperialism 54 phase of liberalism 54 phase of mercantilism 54 INDEX Pimentel, David 5, 149 plankton 159 planning 14 policy 8 politics of fear xiii pollution 14, 146–7, 157, 159, 217 portion size 104, 121 possessive individualism 26, 46, 72, 166, 184 see also atomism, individualism, islandization, subjectification pouring rights 175 poverty 107, 128, 134, 141, 210, 213 poverty line 126, 127, 130, 227 power 21, 167, 175, 183, 185 see also class, corporations, state preference schedules 166–7 private property 21, 46–7, 207 privatize profits 62, 84, 180, 206, 208 processed food 92, 120, 149 profit 6, 9, 11, 15, 20, 22–3, 26–33, 62–3, 77, 82–4, 86–7, 92, 108, 112, 115, 121, 127, 129–33, 139, 142–3, 147–8, 153, 159, 162–3, 169, 171–2, 179–80, 189–90, 192–3, 197, 201–2, 206, 224 Proctor, Robert 192 public health 190 public sector 144, 180, 185, 191–2, 194, 204, 206 public transportation 179, 209, 217 pulp and paper industry 157 pure capitalism 23, 26, 38, 39, 42, 43, 43, 44, 48, 49, 50 see also abstract theory, deep structure, inner logic putting-out system 25, 54 Q quality versus quantity 20, 22, 27, 28, 32–3, 35, 37, 47 see also indifference to use-value R race 99 257 racism 66–7, 111, 124 rainforest 157, 179 Randall, Peggy 96 rationality xii, 19, 49, 86–7, 126, 164 capitalist rationality 9, 11, 15, 18, 19, 20, 146, 166, 169, 192 Reagan, President Ronald 62, 74, 140, 171–2 redistribution of wealth 123, 144, 204, 209 see also distributive justice, equality, inequality, progressive taxation reductionism 9 refrigeration 149 reproduction 109–110 rice 108 right to food 122, 226 rights x, 126, 132 formal rights 122 individual rights x social rights x Roundup 118–19, 195 see also glyposate rule of law 183 S salmonella 114 salt 108–9 schools 123, 172, 175–6 science 85, 90, 169, 183, 190–7 seeds 66, 83 see also genetically modified organisms, monoculture, species diversity self-regulating markets 48, 50 sense of community 49, 73 shopping malls 65 silent tsunami ix, xiii slaughterhouse workers 131–2 slavery 49, 127–8, 138–9, 144, 179, 227, 229 smoker’s bill of rights 170, 196 snacks 41 social costs xii, 8–9 14–15, 24, 28, 32, 258 INDEX 57, 64, 76, 83, 87, 102–4, 111, 183, 186, 200, 206–8 social injustice 144, 152, 164 social needs 210 social responsibility 26, 191, 197, 205 socialism 52–3, 62, 65, 74–5 socialization of costs 14, 62, 180, 206, 208 soft drinks/soda pop 92, 96, 98, 100, 174, 222 soil 18, 117–18, 215 South Sea Bubble 216 soy 109, 142, 151 soy formula 109 space 33–7, 64–6 see also homogenization, monoculture species diversity 34, 160–1 see also homogenization, monoculture speed 24, 30–3 53, 61–64, 72, 126, 131–2, 147, 178, 193, 218 see also intensification, space, time Sri Lanka 142 starvation ix, 88, 90, 105, 108, 153 see also hunger state see warfare state, welfare state state intervention 12, 15, 20, 38, 75, 75, 77, 186 see also regulation status symbol 73, 166 sterility 137–8, 193 Stern Report 16, 157 stewardship 23, 36, 45 strict settlement 215 structural adjustment policies (SAPs) 134, 141, 203, 205 subjectivity 46–9, 72–6 subsidies 15, 59, 69, 71, 75, 78, 86, 100–1, 107–8, 121, 124, 128–9, 131, 133, 135–6, 139, 141, 144, 150, 152, 154, 159, 171, 180, 187, 189, 204–6, 208–9, 236 suburbanization 65–6, 72 see also homogenization, space sugar 91, 95–6, 172, 177, 227 sugar industry 15, 45, 47, 97, 100, 127–8, 139, 151, 171, 188 suicide 129–30, 162, 228 Sumatra 155 supermarkets 119–20, 132–3 supply/demand 24, 37, 43, 48 Surgeon General (US) 170 surtax 208–9 sustainability 10, 16, 50, 164, 200, 201, 209, 210 T Tanzania 140 tax evasion 204–5, 207 taxation 194, 204–5, 220 Taylorism 30 tea workers 142 television 66, 69–70, 172–3, 217 Thatcher, Prime Minister Margaret 74 time 30–33, 61–4, 177, 215 see also intensification, speed tobacco industry 8, 60, 70, 84–7, 139–40, 143, 157, 168–71, 174, 182, 191, 217 tomatoes 34 toxic food environment 91, 173, 190, 226 toxic waste 156 toxicity 32, 61–2, 112–12, 127, 147, 167 toys 175 trade 152 deficit 171 trade unions 133, 215, 216 trans fat 102 transition 54 transparency 73, 207 transportation 149, 153 see also public transportation tree plantations 157 tropical commodities 14, 72, 141 tween strategy 173 see also marketing to children INDEX U underconsumption 25, 41–3, 68–71 underfunding of schools 175 undocumented workers 126–8, 132, 136 unemployment 227 uneven development 54 United Nations 107, 155, 160, 197, 211 United States Center for Disease Control (CDC) 112 government 3 food security 4 hegemony see American hegemony military 149 urban slums 107, 125, 136, 141 use-value 22, 28, 33 see also indifference to use-value, quality versus quantity V Valium 72 259 W water 108 wages 24–5, 37, 40–1, 67, 124–33, 137 warfare state 74, 76 war on cancer 63 welfare state 74–6 Winfrey, Oprah 189 women 6, 40, 72, 99, 107, 133 Wootan, M. 93 workers 7, 18, 21, 24, 28, 37–41, 124–45 food workers 125 working class 4, 80, 92–3 working conditions 67, 131–2 working day 31 World Bank 93 Z Ziegler, Jean 100


pages: 302 words: 92,546

Overdiagnosed: Making People Sick in the Pursuit of Health by H. Gilbert Welch, Lisa M. Schwartz, Steven Woloshin

23andMe, classic study, do well by doing good, double helix, Google Earth, Gregor Mendel, invisible hand, it's over 9,000, life extension, longitudinal study, mandelbrot fractal, medical residency, meta-analysis, phenotype, placebo effect, randomized controlled trial, Ronald Reagan, sugar pill, The Wealth of Nations by Adam Smith

Unlike most of my medical-school classmates, I was not a biology or biochemistry major in college. I majored in economics. I was taught about the value of free markets—how they worked to create the goods and services people want in the right quantities and at the lowest possible prices. I also learned about the “invisible hand”4: how individuals pursuing their own self-interests—and their desire to make money—can improve the welfare of the larger society. But I do think that the drive to make more money has become a bad thing for medical care. The problem is that medical care is nowhere close to being a free market.

[back] Although the drug-company study referenced above collected data on both symptomatic and asymptomatic compression fractures, the publication only reported on the combination.[back] I feel compelled to add that some of my ancestors were serious capitalists. My great-great-grandfather started a bank in the mid-nineteenth century and helped the federal government finance the Civil War. His offspring managed it over the next century.[back] The invisible hand is the term economists use to describe the self-regulating nature of markets to produce socially useful results. Although attributed to Adam Smith and his book The Wealth of Nations (published around the time of the American Revolution), he actually used the term only three times. [back] This is one of many ways to express the conditions required for a perfect market and is not intended to be a complete list.


pages: 323 words: 90,868

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

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

As in baseball, it is easy for all the participants in the economy to convince themselves that their participation is what matters, that they are the authentic creators of value, that their effort is what ought to be rewarded most handsomely. And everyone has a point. But while we can rely on economics to do some of the work of sorting out who deserves what, we are kidding ourselves if we think the invisible hand can be entrusted to handle the whole job. Left alone, the invisible hand is simply the thudding fist of the powerful. It would be wonderful if things were otherwise, but they aren’t. Like most people, I often wonder if I am paid fairly. I like to think that I am very good at my job. But I am keenly aware of my bargaining power.


pages: 386 words: 92,778

"Live From Cape Canaveral": Covering the Space Race, From Sputnik to Today by Jay Barbree

Apollo 11, Apollo 13, Charles Lindbergh, dark matter, Gene Kranz, gravity well, invisible hand, Mikhail Gorbachev, Neil Armstrong, Ronald Reagan, Stephen Hawking, Strategic Defense Initiative, white flight

It began with me staring at a vertical horizon and realizing the edge of the world now stood on its end. But not for long, as the Stearman continued on over, rolling around the inside of an invisible barrel in the air, until the ground was up and the sky was down. I had just enough time to catch my breath when the nose went down and an invisible hand pushed me gently into my seat and glued me there as the nose came up, and up. The horizon disappeared again, and the engine screamed with the dive. Then the nose was coming up, higher and higher, and the engine began to protest. The sun flashed in my eyes, and I found myself on my back as the Stearman soared up and over in a beautiful loop.

Where was God, I asked, and suddenly, out of the light, out of its magnificent brilliance there appeared a darker form, a bed—that’s what it was, a huge bed being pushed by two white shadowed forms, two nurses, and I heard the gallop of their feet, the high-pitched squeal of wheels needing oil… The brilliant light vanished. It was gone. There was only the huge bed, the nurses taking tremendous strides, crashing through the darkness, the squealing wheels… An invisible hand grasped me, swept me like a leaf in a high wind after the fleeing nurses. Instantly the bed and the nurses stopped, and I suddenly realized there was someone in the bed. A man. A familiar man, and he turned his head to face me. Me. Hell, it was my own body. I was in the bed, but I wasn’t. How could this be?


pages: 292 words: 94,660

The Loop: How Technology Is Creating a World Without Choices and How to Fight Back by Jacob Ward

2021 United States Capitol attack, 4chan, Abraham Wald, AI winter, Albert Einstein, Albert Michelson, Amazon Mechanical Turk, assortative mating, autonomous vehicles, availability heuristic, barriers to entry, Bayesian statistics, Benoit Mandelbrot, Big Tech, bitcoin, Black Lives Matter, Black Swan, blockchain, Broken windows theory, call centre, Cass Sunstein, cloud computing, contact tracing, coronavirus, COVID-19, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, dark matter, data science, deep learning, Donald Trump, drone strike, endowment effect, George Akerlof, George Floyd, hindsight bias, invisible hand, Isaac Newton, Jeffrey Epstein, license plate recognition, lockdown, longitudinal study, Lyft, mandelbrot fractal, Mark Zuckerberg, meta-analysis, natural language processing, non-fungible token, nudge unit, OpenAI, opioid epidemic / opioid crisis, pattern recognition, QAnon, RAND corporation, Richard Thaler, Robert Shiller, selection bias, self-driving car, seminal paper, shareholder value, smart cities, social contagion, social distancing, Steven Levy, survivorship bias, TikTok, Turing test

Between his two careers—one spent trying to understand how people become trapped in the most desperate circumstances, the other spent trying to help people find their way into a new financial life—Hernandez says he now understands that the grand circus of opportunity isn’t open to all Americans, that vast numbers of people have been handicapped by more than a century without the proper opportunity and investment, and that the “invisible hand” described by Adam Smith as equalizing the open market doesn’t exist. “If we could see the invisible hand,” he told me, “we’d see that it’s white.” As he explains it, when a neighborhood has been held in stasis for as long as Sacramento’s nonwhite neighborhoods have, it begins to look as if the conditions are somehow endemic. We as humans fall prey to the illusion that “bad” and “good” neighborhoods are a reflection of the moral standing and ongoing creditworthiness of their occupants, rather than a reflection of the discriminatory practices that created impossible conditions for them.


pages: 86 words: 27,453

Why We Work by Barry Schwartz

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

We may not expect business leaders to ask themselves “How can I make my employees’ lives better by restructuring their jobs?” But we surely would expect them to ask themselves “How can I make my business better by restructuring employees’ jobs?” As Adam Smith famously imagined in describing the “invisible hand” of market competition, when markets are competitive, we don’t need good intentions to improve human welfare; competition among selfish individuals does it for us. If competition will improve the lives of consumers of goods and services, as no doubt it has, surely it should also improve the lives of producers of goods and services as well.


pages: 108 words: 27,451

Magic Internet Money: A Book About Bitcoin by Jesse Berger

Alan Greenspan, barriers to entry, bitcoin, blockchain, Bretton Woods, Cambridge Analytica, capital controls, carbon footprint, correlation does not imply causation, cryptocurrency, diversification, diversified portfolio, Ethereum, ethereum blockchain, fiat currency, Firefox, forward guidance, Fractional reserve banking, George Gilder, inflation targeting, invisible hand, Johann Wolfgang von Goethe, liquidity trap, litecoin, low interest rates, Marshall McLuhan, Metcalfe’s law, Money creation, money: store of value / unit of account / medium of exchange, moral hazard, Network effects, Nixon shock, Nixon triggered the end of the Bretton Woods system, oil shale / tar sands, planned obsolescence, price mechanism, Ralph Waldo Emerson, rent-seeking, reserve currency, ride hailing / ride sharing, risk tolerance, Robert Metcalfe, Satoshi Nakamoto, the medium is the message, Vitalik Buterin

Instead, because of our high time preference orientation and unwillingness to accept economic dynamism, we again traded integrity for expediency by letting central banks dictate the distribution of newly created money. In doing so, they unilaterally granted irresponsible enterprises a second chance to double down on their mistakes, stealing opportunity from the invisible hand of free markets. 10.6 Amoral Safeguard “A wise neuter joins with neither, but uses both as his honest interest leads him.” William Penn, Writer & Democracy Advocate In Bitcoin, no moral hazard exists. No wizardry can compel unscheduled coins to come into existence or be spent unjustly. This system epitomizes freedom because it is both neutral, unaffected by biases or special interests, and also amoral, unable to accommodate even conscientious objections to the rightful use of property.


pages: 88 words: 26,706

Against the Web: A Cosmopolitan Answer to the New Right by Michael Brooks

4chan, Anton Chekhov, Ayatollah Khomeini, basic income, Bernie Sanders, capitalist realism, centre right, Community Supported Agriculture, crony capitalism, deindustrialization, Donald Trump, drone strike, Flynn Effect, gun show loophole, invisible hand, Jeremy Corbyn, late capitalism, market fundamentalism, mass incarceration, moral hazard, Nelson Mandela, open borders, Peter Thiel, Philippa Foot, public intellectual, Silicon Valley, Slavoj Žižek, The Bell Curve by Richard Herrnstein and Charles Murray, trolley problem, universal basic income, upwardly mobile

Competition would start kicking in and between UPS, Fed Ex and Amazon and drones and blah blah blah… Rogan doesn’t even make the obvious points about how much Amazon currently relies on the Post Office or how it would be massively unprofitable for private companies to service depopulated rural areas in a post-USPS world without enormously jacking up prices—all excellent reasons to think that it would indeed suck a great deal—but I have a hard time imagining that anyone watching the exchange or listening to it later could have missed the way that Rogan is bringing up practical realities while Rubin is both literally and figuratively hand-waving it all away. It gets even funnier when Rubin tries to back up his childlike belief in the invisible hand by telling a story about ordering live chickens from UPS. Rogan points out that Rubin’s story is actually a USPS success story. UPS doesn’t deliver live chickens. Flustered, Rubin concedes that his story was about the USPS, but insists that in a libertarian utopia UPS would deliver live chickens and that they’d do it even better.


Reaganland: America's Right Turn 1976-1980 by Rick Perlstein

8-hour work day, Aaron Swartz, affirmative action, air traffic controllers' union, airline deregulation, Alan Greenspan, Alistair Cooke, Alvin Toffler, American Legislative Exchange Council, anti-communist, Apollo 13, Ayatollah Khomeini, Berlin Wall, Bernie Sanders, Boeing 747, Brewster Kahle, business climate, clean water, collective bargaining, colonial rule, COVID-19, creative destruction, crowdsourcing, cuban missile crisis, currency peg, death of newspapers, defense in depth, Deng Xiaoping, desegregation, disinformation, Donald Trump, Dr. Strangelove, energy security, equal pay for equal work, facts on the ground, feminist movement, financial deregulation, full employment, global village, Golden Gate Park, guns versus butter model, illegal immigration, In Cold Blood by Truman Capote, index card, indoor plumbing, Internet Archive, invisible hand, Julian Assange, Kitchen Debate, kremlinology, land reform, low interest rates, Marshall McLuhan, mass immigration, military-industrial complex, MITM: man-in-the-middle, Monroe Doctrine, moral panic, multilevel marketing, mutually assured destruction, New Journalism, oil shock, open borders, Peoples Temple, Phillips curve, Potemkin village, price stability, Ralph Nader, RAND corporation, rent control, road to serfdom, Robert Bork, Robert Solow, rolodex, Ronald Reagan, Rosa Parks, Saturday Night Live, Silicon Valley, Suez crisis 1956, three-martini lunch, traveling salesman, unemployed young men, union organizing, unpaid internship, Unsafe at Any Speed, Upton Sinclair, upwardly mobile, urban decay, urban planning, urban renewal, wages for housework, walking around money, War on Poverty, white flight, WikiLeaks, Winter of Discontent, yellow journalism, Yom Kippur War, zero-sum game

On February 18 UPI, February 21, 1979; Gannett Service, February 21, 1979; “IRS Chief Calls Tax Changes Vital in Fight Against Private School Bias,” Baltimore Sun, February 21, 1979. Secret Service protection Thomas Edsall and Jane Byrne Edsall, Chain Reaction: The Impact of Race, Rights, and Taxes on American Politics (New York: W.W. Norton, 1991), 132. at least since 1962 Kim Phillips-Fein, Invisible Hands: The Businessmen’s Crusade Against the New Deal (New York: Norton, 2009), 226. “The next real major” Garry Wills, Lead Time: A Journalist’s Education (New York: Doubleday, 1983), 284. “vote for Christianity” Jewish Telegraphic Agency, October 21, 1976. the very next day William Martin, With God on Our Side: The Rise of the Religious Right in America (New York: Broadway Books, 1996), 171.

The version in which the name is brainstormed is in Michael Sean Winters, God’s Right Hand: How Jerry Falwell Made God a Republican and Baptized the American Right (New York: HarperOne, 2012), 119. historical record Falwell and Billings article in Jerry Falwell’s newspaper the Journal-Champion, February 23, 1979, quoted in Phillips-Fein, Invisible Hands, 233. Viguerie’s mailing lists Richard Viguerie and David Franke, Right Turn: How Conservatives Used New and Alternative Media to Take Over America (Lanham, MD: Taylor Trade Publishing, 2004), 133. his own telling “Political Gospel: Christian Soldiers Spread the ‘Right’ Word,” Minneapolis Star, August 25, 1980.

The Sunday after Presidents’ Day “Robison Show Is Canceled by Channel 8,” Fort Worth Star-Telegram, March 3, 1979; AP, March 4, 1979. Dallas Gay Political Caucus AP, May 27, 1979. WFAA had suspended Ibid. Falwell—who had run “TV Time Is Offered by a Carter Critic,” NYT, October 13, 1976; AP, October 15, 1976. Wallie Criswell Flippen, Jimmy Carter, 209. Tim LaHaye pitched in Phillips-Fein, Invisible Hands, 233. North Phoenix Baptist Church “Evangelist Defends Right to Speak Out on Moral Issues,” Arizona Republic, March 10, 1979. Michael Huckabee Ariel Levy, “Prodigal Son: Is the Wayward Republican Mike Huckabee Now His Party’s Best Hope?” New Yorker, June 21, 2010. news conference AP, May 27, 1979.


pages: 920 words: 233,102

Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State by Paul Tucker

"Friedman doctrine" OR "shareholder theory", Alan Greenspan, Andrei Shleifer, bank run, banking crisis, barriers to entry, Basel III, battle of ideas, Bear Stearns, Ben Bernanke: helicopter money, Berlin Wall, Bretton Woods, Brexit referendum, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, centre right, conceptual framework, corporate governance, diversified portfolio, electricity market, Fall of the Berlin Wall, financial innovation, financial intermediation, financial repression, first-past-the-post, floating exchange rates, forensic accounting, forward guidance, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, George Akerlof, Greenspan put, incomplete markets, inflation targeting, information asymmetry, invisible hand, iterative process, Jean Tirole, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, liberal capitalism, light touch regulation, Long Term Capital Management, low interest rates, means of production, Money creation, money market fund, Mont Pelerin Society, moral hazard, Northern Rock, operational security, Pareto efficiency, Paul Samuelson, price mechanism, price stability, principal–agent problem, profit maximization, public intellectual, quantitative easing, regulatory arbitrage, reserve currency, risk free rate, risk tolerance, risk-adjusted returns, road to serfdom, Robert Bork, Ronald Coase, seigniorage, short selling, Social Responsibility of Business Is to Increase Its Profits, stochastic process, subprime mortgage crisis, tail risk, The Chicago School, The Great Moderation, The Market for Lemons, the payments system, too big to fail, transaction costs, Vilfredo Pareto, Washington Consensus, yield curve, zero-coupon bond, zero-sum game

The idea of a Pareto improvement is, nevertheless, useful because it captures the thought that if we can make some people better off (improve their well-being) without making anyone worse off, we should. Over the middle decades of the last century, economists pinned down the circumstances under which Adam Smith’s invisible hand can bring about efficiency in this sense. In their famous “welfare theorems,” Kenneth Arrow, Gerard Debreu, and Lionel McKenzie uncovered the ideal or abstract conditions under which a market economy (the price mechanism) would deliver an efficient allocation of resources, with no gains from trade—no potential Pareto improvements—left unexploited and, therefore, with everyone left with their well-being as high as possible given the original distribution of resources.

From Political Theory to Political Values Part of the problem is that neither of the two dominant strands of modern political theory have had much to say about this. Modern Hobbesians do emphasize that, to meet the welfarist diktats of instrumental logic, the state will rationally incorporate limits on government in order to guard against abuses of power. And, since there is no analogue to Adam Smith’s “invisible hand” guiding government toward efficient policies, they hold that discretionary regulation is likely to substitute incurable government failure for curable market imperfections. A polity would, therefore, rationally seek to remedy impediments to efficient markets by creating new property rights; and should as far as possible look to rules rather than governmental discretion when addressing important collective-action problems that cannot be left to the market (chapters 3 and 8).3 In other words, Hobbesians typically carry a lot of prescriptive baggage on what the state should and should not do but relatively little on how things should be structured below the “constitutional” level.

., 232–33, 354; constitutionalism and, 6 (see also constitutionalism); credibility and, 432; credible commitment and, 223, 226–29, 232–33; democratic values and, 548, 552, 554, 565–66; elected executive and, 232–33; emergency state and, 521; European Court of Justice (ECJ) and, 43, 137, 328–29, 356, 359, 386; incentives and, 297–99, 302–3; incrementalism and, 228–29; independent agencies and, 97, 117, 135, 143, 160, 168, 174–77, 180, 182–94, 197, 223, 226–29, 334–37; insulated agencies and, 277–79, 287n24, 290–91; nonlegislative policy making and, 74–75; overmighty citizens and, 541–43; oversight issues and, 369; participation and, 228–29; power and, 6, 9–10, 14, 19, 377, 379, 385–87, 392, 398; Principles for Delegation and, 242, 246, 248, 256, 260, 309–16, 319, 322, 324–25, 328–29; Supreme Court and, 355 (see also Supreme Court); transparency and, 349, 354–65 credibility: Bank of England and, 232, 417, 423; centrality of commitment and, 98–105; consensus and, 229n13; constitutional democracies and, 233; constitutionalism and, 224–26; courts and, 432; Delegation Criteria and, 229, 569; democratic values and, 213–14; Design Precepts and, 229, 231, 235; different commitment problems and, 102–4; efficiency and, 231, 425; elected executive and, 232–33; elitism and, 421; executive agencies (EAs) and, 232; executive branch and, 421; Federal Reserve and, 416–18; Germany and, 416; guardians and, 234; independent agencies and, 92–108, 213–14; inflation and, 230, 414–24; interest rates and, 419; judges and, 221–35, 355, 422; judiciary and, 222, 227, 230, 422; labor and, 233; legislature and, 228–29, 232–33, 424; legitimacy and, 228, 231–35, 414–25; liberalism and, 225, 231, 236–51, 415; monetary policy and, 417, 419n13, 423, 426–29, 432–36; monitorable objectives and, 229, 232; override and, 231, 234, 420; political economy and, 419; power and, 14–18; public debate and, 229, 233, 420, 423; public reputation and, 419–21; regulatory state and, 225; representative democracy and, 224, 226, 234; robustness test and, 235; rule of law and, 225–31, 415; security and, 225; short/long-term realism and, 92–94; sovereignty and, 223–24; stability and, 225–26, 230, 414, 416, 423–24; stress tests and, 466, 476–80, 522; Supreme Court and, 227n9; sustaining checks and balances for, 418–21; technocracy and, 221, 414, 421; time-inconsistency problem and, 98, 103, 213, 267, 290, 414, 416, 418–19, 486, 532, 555; trustees and, 234, 419, 421; welfare and, 223, 233 credible commitment: administrative state and, 65; constraints of, 223–27; courts and, 223, 226–29, 232–33; Delegation Criteria and, 123; delegation decisions and, 13–14; democratic values and, 15, 221–35, 554; division of labor and, 233; effect of multiple veto points and, 309–10; elected executive and, 232–33; emergency state and, 16; European Union (EU) and, 327–32; expedited and simple abandonment of, 315; France and, 321–24; Germany and, 325–27; hierarchy for candidates and, 225–26; independent agencies and, 92–108, 116, 123, 208, 211n32, 213–14; legitimacy and, 228, 231–35; monetary independence and, 5–8, 23, 270–71, 290, 325n30, 395, 419, 450, 489, 493, 507, 509, 520, 526–27, 531–32; monetary policy and, 229; people’s rights and, 222; Principles for Delegation and, 135, 140, 145–46, 307–33; reordering constraints and, 319–20; rule of law and, 227–31; rule writing and, 221, 227, 231; self-binding, 223, 230–31; settled goals and, 92–108; social costs and, 226; stability and, 450–51; states’ capacity for, 307–33; tension from, 223–27; transparency and, 116; trial and error and, 222; United Kingdom and, 316–21; United States and, 308–16 credible stress tests, 478–79 credit funds, 445 crime, 50, 52, 74, 141n18, 207, 236, 247–49, 268, 308, 313–14, 558, 570 cross-sectional consistency, 102–3, 117 Currie, David, 346 Cutting, Bronson, 445 Dahl, Robert, 238n5, 239, 287 Darling, Alistair, 493, 503, 508 Davos Man, 540 debt management, 52, 129–30, 139, 395, 409n14, 492–93, 519 decision making: administrative state and, 33, 38, 83; committees and, 246; democratic values and, 264–66, 546n1, 554–56; emergency state and, 520n32; independent agencies and, 95, 105, 109, 114, 120, 169, 184–85, 199, 208, 264–66; insulated agencies and, 278n11; legal issues and, 349–52; power and, 14; Principles for Delegation and, 246–47, 264–67, 319 Declaration of Independence, 163 deferred esteem, 107 Delegation Criteria: agency design and, 105–8; Alesina-Tabellini model and, 99–104, 107–8; balance-sheet policy and, 491–92; central banks and, 193–94, 440, 450–51, 463, 467, 483, 491, 499, 505, 511–13, 529; constrained discretion and, 84, 109, 180, 282, 289, 488, 490, 510, 513, 559; credibility and, 229, 569; delegating everything and, 104–5; Design Precepts and, 110–11 (see also Design Precepts); incentives and, 305, 309, 315, 318; independent agencies and, 92, 99–102, 105–8, 114, 116, 123–24, 173, 183, 193–94, 569; insulated agencies and, 282, 289; monetary regimes and, 432; multiple-mission agencies and, 571–72; policy maker reputation and, 107–8; Principles for Delegation and, 127–28, 241, 254, 256, 309, 315, 318, 569, 571 deliberative democracy, 200n13, 206, 236, 264–66, 268, 281 delivery agencies, 39–40, 73–74, 84, 101, 217n39, 261n30 Delors Report, 428 democracy: authority of law and, 196–98; as challenge, 203–4; delegation-with-insulation and, 15, 145, 168, 206, 219, 232, 270, 281–83, 300, 319, 334, 375, 388, 411, 454, 462, 467n8, 547, 553, 555; extra demands of representative, 209–17; independent agencies and, 195–213, 217–20; instrumental justification and, 205–8; intrinsic warrant for, 204–5; robustness test of regime authority and, 208–9; trial and error, proceeding via, 206–7, 214–15, 222, 225, 268; as talking, 200–2; as voting, 198–200; as watchfulness, 203–4, 234–35, 250, 263, 315 democratic procedure, 284 democratic values: accountability and, 159, 170–71, 203–4, 215–16, 221, 229, 233, 241, 243, 250, 253, 259–64, 269, 555, 563; administrative state and, 547, 550–54, 557–58; authority of law and, 196–98; balance-sheet policy and, 561; Bank of England and, 548, 560; Berlin Wall and, 3, 431; central banks and, 559–64; Churchill and, 163, 205, 426, 430, 546, 564; civic virtue and, 165; conceptions of, 198–204; consensus and, 556; conservatism and, 163, 165–67, 251–53; constitutional democracies and, 555–59, 562; constitutionalism and, 173–94, 274–76, 557; courts and, 548, 552, 554, 565–66; credibility and, 213–14; credible commitment and, 15, 221–35, 554; debate and, 200–2; decision making and, 264–66, 546n1, 554–56; delegation issues and, 46–47; deliberative democracy and, 200n13, 206, 236, 264–66, 268, 281; Design Precepts and, 556; different political conceptions of, 163–70; direct democracy and, 33, 215–16, 261, 262n33, 377; distributional equity and, 380–82; elected executive and, 550–51, 554–55, 557; elitism and, 237, 549, 554 (see also elitism); emergency state and, 243–45, 561; equity and, 547, 550, 556, 559; Europe and, 1, 36, 553, 563; executive branch and, 550–51; executive orders and, 29; fairness and, 555; Federal Reserve and, 35, 557, 566; fiscal state and, 547, 561; France and, 553–54; General Will and, 57, 199–203; Germany and, 553; Great Financial Crisis and, 550, 559; guardians and, 285–87, 552–54, 563; incentives and, 300–5; independent agencies and, 147–71, 173–94, 195–220; inflation and, 555, 561–62; insulated agencies and, 195–220; interest-group corporatism and, 239–40; international policy making and, 283–85; intrinsic warrant for, 204–5; judges and, 554, 557, 560, 565; judiciary and, 550, 564–67; justification of, 204–9; legislature and, 549–52, 555–61, 568; legitimacy and, 147–71, 177, 547–48, 552, 555, 557, 564, 567–68; liberalism and, 148n3, 154n10, 156, 161–70, 173, 175, 181, 188–96, 199–201, 204, 210–11, 214, 218–19, 225, 231, 236, 238–57, 260, 268–69, 280, 283, 289, 548, 554–57, 561, 570; liberty and, 164–66, 196, 209, 216, 219, 254, 275, 287, 290, 437, 474, 558, 561; liquidity and, 561–62; many sides of democratic deficit and, 219–20; market failure and, 555; military and, 546, 564–67; monitorable objectives and, 556, 558; national democracy and, 12, 300, 467; overmighty citizens and, ix–x, 538–40, 568; participatory democrats and, 203, 267, 554; pluralism and, 161, 164, 200, 238–40, 242, 296, 301; populism and, 195, 199; power and, 448–49 (see also power); price stability and, 169–70; Principles for Delegation and, 250–51, 555–56; public debate and, 254–57, 555–62, 568; public interest and, 33–34, 554; public reason and, 200–2; regulatory state and, 547–52, 561; representative democracy and, 3, 8, 147, 162, 195, 198, 209–20, 224, 226, 234, 236, 238n5, 242, 249, 257–58, 262n33, 263, 272, 275, 286, 294–95, 341n16, 373, 376–77, 379, 510, 548, 556; Republicanism and, 163–65, 265 (see also Republicanism); robustness tests and, 208–9; rule of law and, 177, 376–77, 379, 384, 392, 415, 428, 503, 520, 536, 550, 554, 563; security and, 566; self-realization and, 165; self-restraint and, 564–67; separation of powers and, 173, 181–84, 186, 191, 217, 272, 275n4, 285–91, 294, 316, 352n5, 361–62, 392–93, 408, 472, 487, 526, 532, 543, 550; social costs and, 556; social democracy and, 5, 43, 163, 166–70, 175, 188n34, 269, 275, 366, 530; stability and, 546, 548, 554, 561–62, 566–67; standard of resilience and, 562; Supreme Court and, 552, 566; technocracy and, 548, 550, 553–57, 563, 568; transparency and, 159, 194, 241, 250, 265n37; by trial and error, 206–7, 214–15, 222, 225, 268; trustees and, 554, 563, 567; US Constitution and, 30n14, 32–33, 89, 224, 227n10, 253, 276, 341n16, 352n5, 361, 422, 551–52; values compatibility and, 550, 552, 557, 562, 564; voting and, 198–200; watchfulness and, 203–4, 234–35, 250, 263, 315, 422, 467; welfare and, 549, 567; Westminster system and, 38, 153, 179, 243n13, 253n21, 259, 273, 279n14, 297, 317–20, 342–47, 371–75, 387, 393, 405–6, 519, 539, 548, 552–53 Denning, Lord, 565 Department of Justice (DOJ), 135, 137, 184n26 dernier resort, 505 Design Precepts: accountability and, 110, 118–19 (see also accountability); appointments and, 114; balance-sheet policy and, 491–92; central banks and, 440n5, 464, 468, 476, 486, 490–92, 496, 499, 504, 507, 510–15, 520; committee procedures and, 114–15; constrained discretion and, 84, 109, 180, 282, 289, 488, 490, 510, 513, 559; credibility and, 229, 231, 235; democratic values and, 556; Emergencies and, 111, 119–21, 243–45, 382, 436, 504, 507, 510–15, 520, 571; incentives and, 304, 309, 315, 323, 333; independent agencies and, 92, 109–26, 159, 173–74, 180, 183–84, 187, 194, 216, 334–42, 345, 570–71; insulated agencies and, 109–10, 281, 285; legal issues and, 349–67; lexicographic objectives and, 113, 264, 344, 347, 570; limits of, 378–89; monetary regimes and, 432, 436; Money-Credit Constitution (MCC) and, 17–18, 402, 436, 456–59, 463, 511, 520, 526, 537, 562–63; nondelegation doctrine and, 334–48; normative expectation and, 112, 214, 479, 561; Operating Principles and, 110, 115–16, 354–55, 476, 510, 571; oversight issues and, 366, 372, 377; political balance and, 109–10; power and, 15, 382–88, 398; Principles for Delegation and, 127–28, 134, 238–47, 250, 253, 260, 262, 265, 268–69, 309, 315, 323, 333, 570–71; Procedures and, 110, 114–15, 570; Purpose-Powers and, 110–13, 118, 491, 570; transparency and, 110, 116–18 (see also transparency); trustees and, 110–11; warranted predictability and, 112, 124, 561 Dewey, John, 60, 195, 207–8, 257 Dicey, Albert Venn, 176, 185, 364 dichotomies: adjudication v. administration, 14, 363; ends v. means, 14, 262; politics versus administration, 14, 37, 96, 256–57 Diplock, Lord, 338, 356n13 direct democracy, 33, 215–16, 261, 262n33, 377 disaster management, 387, 505 discount windows, 449n21, 490n11, 516 distributional effects: administrative state and, 63; independent agencies and, 100–1, 105; power and, 380–81; overmighty citizens and, 528–30, 537; vs. distributional choices, 101, 134, 256, 308, 318, 381, 528–30 distributional justice, 52–58, 63–64, 67, 69, 144, 382 division of labor, 41, 69, 111, 146, 233, 247, 258n26, 523 Dodd-Frank Act, 384, 434, 476, 506, 516, 524 Dombret, Andreas, 7 Domesday Book, 36 double delegation, 210–11, 213, 237, 254, 552–53 Doylan, Delia, 410 Draghi, Mario, 19, 507, 544, 566 Dworkin, Ronald, 191 East India Company, 253, 548–49 École Nationale Administration (ENA), 276, 299, 369 Economic Affairs Committee of the European Parliament, 45 effective lower bound for interest rates (ELB), 490 efficiency: administrative state and, 37, 48, 52–72, 75; allocative, 52–53, 61, 63, 67, 69, 127, 403, 462; central banks and, 447, 462–64, 469, 510; cost-benefit analysis (CBA) and, 30n12, 34–35, 57–58, 60, 62–64, 261, 361, 381, 554, 571; credibility and, 231, 425; democratic values and, 547, 550, 556, 559; equity and, 14, 62–63, 69–70, 96–97, 101, 305, 318, 320; fairness and, 96–97; impediments to policy making and, 65; incentives and, 293, 305, 318; independent agencies and, 94, 96–97, 101, 105, 117, 125, 156, 168, 180, 182–83, 188, 210, 336; insulated agencies and, 274, 275n4; invisible hand and, 55, 274; market, 53–58, 60–61, 63–64, 69–70, 141, 168, 255, 274, 320, 336, 447; monetary regimes and, 432; Pareto, 53–57, 64, 66, 101, 105, 249; power and, 14, 382, 403; Principles for Delegation and, 127–28, 136–38, 141, 239, 249, 255–56, 318, 320, 328 electoral commissions, 19, 269, 273, 285–87, 290–91, 563 elected executive: administrative state and, 30–31, 35, 37–38, 42, 52, 73–76, 80, 84, 86, 91; central banks and, 443, 451, 459, 474, 499, 515, 532, 534; credibility and, 232–33; democratic values and, 550–51, 554–55, 557; independent agencies and, 97, 110–11, 125, 186–87, 215, 343–44; insulated agencies and, 273, 277, 284n20, 290; legal issues and, 361, 367; oversight issues and, 368n36, 375; power and, 18–19, 382–83, 392, 405, 443, 451, 459, 474, 499, 515, 532, 534; Principles for Delegation and, 135, 139, 238, 244, 248, 270, 312, 317, 319, 321n19, 324–25 electoral politics, 8, 103, 136, 421 elites, x; administrative state and, 42, 47; credibility and, 421; democratic values and, 549, 554; incentives and, 299–300; independent agencies and, 150–51, 193n44, 197, 201, 203, 214, 219, 276; internationalism and, 398–402; legal issues and, 366; overmighty citizens and, 540; oversight issues and, 369; power and, 8, 12, 21, 379, 398–404; Principles for Delegation and, 236–38, 251, 260; technocracy and, 8, 12, 21, 201, 219, 237, 299, 366, 554 Elster, Jon, 223n4 Emergencies precept, 111, 119–21, 243–45, 382, 436, 571 emergency state: administrative state and, 35, 41, 51–53; Bank of England and, 503–9, 512, 516; central banks and, 460, 503–25; contingencies and, 243–45; courts and, 521; credible commitment and, 16; decision making and, 520n32; democratic values and, 243–4; Design Precept and, 504, 507, 510–15, 520; disaster management and, 387, 505; economic sovereignty and, 504; European Union (EU) and, 386–87; executive branch and, 504, 513, 515; Federal Reserve and, 506, 507n8, 514, 516, 519, 523; Germany and, 386–87; judges and, 521; lender of last resort (LOLR) and, 447–48, 503–17, 521; liberalism and, 243–45; liquidity and, 442, 457, 472, 504–9, 513–16, 521, 523, 561–62; military and, 503–4, 517–24; monetary policy and, 510–12, 516, 519, 523; political economy and, 508; post-crisis monetary policy and, 527–34; power and, 17, 388, 460, 503–25; Principles for Delegation and, 243–45; public debate and, 514; public facilities and, 508–11; representative democracy and, 510; rules vs. principles and, 510–11; self-restraint and, 382–88; social costs and, 511–16; stability and, 506, 513–16, 522–23; United States and, 382–86 emerging market economies (EMEs), 411–12 End of Liberalism, The (Lowi), 173, 239 enforcement state, 51 entrenchment of basic laws and institutions, 3, 20, 81, 188–89, 222–23, 287, 290, 303, 457 Environmental Protection Agency (EPA), 31, 86, 93n4, 102, 336, 449n21 equality, 162, 166, 176, 182, 205, 254, 275, 364, 529n5, 566 equity: administrative state and, 51, 53, 62–63, 69–70; central banks and, 457n28, 463, 489n10, 514, 521; delegation criterion and, 380–82; efficiency and, 14, 62–63, 69–70, 96–97, 101, 305, 318, 320; incentives and, 305; independent agencies and, 96–97, 101, 178; power and, 14, 380–82; Principles for Delegation and, 142n20, 318, 320 error correction, 214 European Central Bank (ECB): administrative state and, 44, 85; Brexit and, 483; constitutionalism and, 393–94; crisis management and, 523, 563; democratic values and, 563; Draghi and, 19, 507, 544, 566; ECON committee and, 299; European Council and, 522; insulated agencies and, 278, 291; legal issues and, 359; lending discretion of, 516; levitational aid and, 544; monetary regimes and, 427n5, 434; negative interest rates and, 495; oversight issues and, 370, 373; power and, 1, 6–7, 10, 19, 386–87, 393–94, 398, 473, 475; Principles for Delegation and, 244, 265, 328, 332; quantitative easing and, 386–87; stress testing and, 478; as Siysyphus, 563 European Court of Justice (ECJ), 43, 137, 328–29, 356, 359, 386 European Exchange Rate Mechanism, 406 European Securities and Markets Authority (ESMA), 44, 86–87, 329, 387 European Supervisory Authorities (ESAs), 329, 331n37, 332 European Union (EU): administrative state and, 27, 41–45, 74–75, 86; Basel Capital Accord and, 45; Brexit and, 136n8, 368n37, 483; central banks and, 466, 540, 543; civil law nations within, 327–28; Competition Commissioner and, 350; confederal governance and, 299–300; credible commitment and, 327–32; democratic values and, 553; emergency state and, 386–87; evolving doctrine of, 328–29; executive functions and, 43–44; Great Financial Crisis and, 44, 299, 366; incentives and, 294, 299–305; independent agencies and, 218n42; insulated agencies and, 273; international policy making and, 44–48; legal issues and, 350, 352, 355–56, 359; limits of Design Precepts and, 379; majority vote and, 329; Meroni judgment and, 43n47, 328–29; monetary regimes and, 428; output legitimacy and, 304–5, 320; override and, 331–32; oversight issues and, 330–31, 368n37; power and, 1, 19, 22, 379, 393; Principles for Delegation and, 128, 132, 137, 144, 308, 318, 322, 324, 327–32; Treaty on the Functioning of European Union (TFEU) and, 356n12; veto points and, 329 examinations branch, 275–76 executive agencies (EAs): administrative state and, 30–31, 38, 73–74, 84, 86; central banks and, 452; conditions for delegating rule-making authority, 227–31; credibility and, 232; fiscal state and, 129–30; independent agencies and, 93n4, 341; legal issues and, 361; power and, 377, 381; Principles for Delegation and, 129–30, 310–11, 312n9, 315, 330 executive branch: administrative state and, 25, 29, 31, 39, 45, 73–76, 80, 84; congressional control and, 310–13; credibility and, 421; democratic values and, 550–51; emergency state and, 504, 513, 515; incentives and, 296, 302; independent agencies and, 93n4, 95, 97, 114, 121, 125, 174, 181n20, 183, 186, 214; insulated agencies and, 273, 275, 277, 288; legal issues and, 361, 364; overmighty citizens and, 532; oversight issues and, 366–67; power and, 377, 381, 383, 385, 405; presidential vs. congressional control and, 310–13; Principles for Delegation and, 1, 42, 135, 139, 248, 312n9, 318, 322–25, 331–32; stability and, 450, 452; statutorily required remits from, 344–45; trustees and, 11; use of term, 18n18; vague objectives and, 344–45; veto points and, 297, 308–10, 312–13, 317, 329, 361, 408–11 executive orders (EOs), 29–30, 34, 310, 381, 385 experts and expertise: administrative state and, 29, 34, 36, 66, 75, 83–84; Burkean trustees and, 211–13; credibility and, 229–34, 237, 421, 424; democratic values and, 553–55, 564, 566n17; emergency state and, 520; fiscal state and, 488; independent agencies and, 93–98, 105, 109–10, 114, 122, 176, 195–96, 206, 208, 211–13, 219, 342–43, 347; insulated agencies and, 284; legal issues and, 350, 363; monetary regimes and, 429, 431; oversight issues and, 375; power and, 1–2, 6, 8, 13–14, 394–95, 400; Principles for Delegation and, 128, 133, 135, 140, 142n20, 258–59, 264, 569; reliable information and, 94–95 externalities, 52, 59–60, 462 fairness: administrative state and, 56n9; central banks and, 472, 475; cross-sectional consistency and, 102–3, 117; democratic values and, 555; efficiency and, 96–97; independent agencies and, 96–97, 102–3, 114, 163–64, 176–77, 184n27, 192, 205; insulated agencies and, 281; judges and, 357–62; justice as, 56n9; legal issues and, 357–62, 365; power and, 377, 408; Principles for Delegation and, 128, 135–36, 243; rule of law and, 175–78 Fannie Mae, 52, 131–32 fascism, 29, 82 Federal Communications Commission (FCC), 232n14, 309n2, 336 Federal Deposit Insurance Corporation (FDIC), 30n12, 31–32, 133, 312n8, 345 Federal Energy Regulatory Commission, 336 Federal Housing Finance Agency, 132 Federalist Papers, 163, 182n22, 212n36, 293n1, 309n3 Federal Open Market Committee (FOMC), 29, 265, 475–76 Federal Reserve: administrative state and, 25, 29–32, 30n13, 32, 35, 46, 62; annual congressional budget approvals and, 10; Bernanke and, 30, 375, 449n21, 559; Blinder and, 14, 92, 99, 104, 106n24, 264n36, 289n28, 419n13, 423n21; credibility and, 416–18; democratic values and, 35, 557, 566; Dodd-Frank Act and, 384, 434, 476, 506, 516, 524; emergency state and, 506, 507n8, 514, 516, 519, 523; Financial CHOICE Act and, 10; fiscal state and, 482, 501; Greenspan and, 169, 408n9, 416, 431, 450, 453, 520n32, 542, 544, 566; incentives and, 303; independence of, 449n21; independent agencies and, 92, 102, 121, 123, 153n9, 173, 190, 201, 336, 345n23; insulated agencies and, 287; legal issues and, 367; as market maker of last resort (MMLR), 482; Martin and, 407–8, 452, 485n5; monetary regimes and, 15, 428, 430–31, 434, 442n8; multiple-mission agencies and, 121–22; overmighty citizens and, 539; oversight issues and, 374–75; power and, 384, 388, 393, 402n10, 407, 408n8, 464, 473, 475–78, 482–85, 503, 507, 516, 523–24, 530, 533n12; Principles for Delegation and, 128, 133, 244, 310–14; reform and, 6; regulatory state and, 464, 473, 475; stability and, 440n5, 442n8, 449n21, 464, 473, 475; stability policy and, 7; Volcker and, 169n44, 313, 413, 415–17, 431, 438–40, 446–47, 482; Wilson and, 28; Yellen and, 530 Federal Trade Commission (FTC), 28–30, 86, 110, 135, 137, 168 fiat money, 23, 288–90, 392, 405, 439, 457, 561 Financial CHOICE Act, 10 Financial Conduct Authority (FCA), 38, 39n37, 87, 141–43, 346 Financial Services Authority (FSA), 87n22, 122, 141–42, 262, 278n12, 318, 346, 353, 434 Financial Stability Board (FSB), 45–46, 399n7 financial trilemma, 283, 399, 401 First Bank of the United States, 443 Fiscal Carve-Out (FCO), 18, 289n29, 402, 436, 488–91, 510–11, 520, 562 Fiscal Shield, 289, 488, 491 fiscal state: administrative state and, 50–53, 90; balance-sheet policy and, 129–33, 435, 481–502, 526; capital market intervention and, 499–501; central banks and, 460, 480, 482–503, 525, 537–38; clarifying role of authority in, 537–38; debt management and, 52, 129–30, 139, 395, 409n14, 492–93, 519; democratic values and, 547, 561; executive agencies (EAs) and, 129–30; Federal Reserve and, 482, 501; helicopter money and, 492, 494, 562; independent agencies and, 113, 126; interest rates and, 482–84, 486n7, 490, 492, 495, 499–501; lender of last resort (LOLR) and, 485, 497; liquidity and, 482, 484, 490, 492, 496, 501; market maker of last resort (MMLR) and, 432, 482, 495–98; monetary policy and, 487, 493–94, 497–501; open market operations (OMOs) and, 485; parsimony and, 490; political economy and, 488n9, 489, 495–500; power and, 7, 17, 388, 402, 460, 480, 482–503, 525, 537–38; Principles for Delegation and, 128–33; public debate and, 490; pure credit policy and, 498–99; quantitative easing and, 486, 492–93, 498; restraining exuberance and, 499–501; social costs and, 487 Fischer, Stanley, 112n3, 415n3, 417, 428n10, 449n21 Fisher, Irving, 428n8, 438 forward-looking mandate, 213 Foucault, Michel, 21, 42 fractional-reserve banking (FRB), 440–42, 444–46, 487, 505, 561 France: AAIs and, 323–24; administrative state and, 42–43, 82; Conseil d’État and, 43, 182, 324, 341–42, 364–65; constitutionalism and, 322–23; credible commitment and, 321–24; democratic values and, 553–54; draft rules and, 354; École Nationale Administration and (ENA), 276, 299; incentives and, 294, 298–99; independent agencies and, 163, 181–82, 185, 341–42; insulated agencies and, 276; judges and, 364–65; legal issues and, 352, 354, 356, 360, 361n22, 364–66; limits of Design Precepts and, 378–79; oversight issues and, 368n37, 369; power and, 9, 22, 377–79; Principles for Delegation and, 308, 321–24, 327; republican values of, 42–43, 360, 366, 553; semi-presidential, 298; Tresor and, 42; vague objectives and, 341–42 Freddie Mac, 52, 131–32 free markets, 136, 165, 289 Friedman, Benjamin, 500n24, 531n9 Friedman, Milton, 48, 58, 62, 65, 272, 287, 291, 410, 414–15, 422, 494, 524 Friendly, Henry J., 228 Fukuyama, Francis, 431 Fuller, Lon, 174–75, 184 G7 countries, 405 G20 countries, 45, 400, 466 Geithner, Timothy, 385n6, 537n17 General Will, 57, 199–203 George, Eddie, x, 186n30, 252, 407, 409n14, 423, 427, 439n4, 440n6, 446n18, 461, 465, 507, 509, 520n32, 537, 566, 576 Germany, 22; administrative state and, 41–42, 82; Bankhauss Herstatt failure and, 399–400; Basic Law of, 41, 187, 325, 358, 379, 397, 553; Bundesbank and, 7, 325, 328, 397, 416–17, 427, 443n9, 449, 471n14; cartel office and, 135–36, 325; central banks and, 448, 471n14, 501, 528; chain of legitimacy of, 359, 379; credibility and, 416; credible commitment and, 325–27; democratic values and, 553; distributional effects and, 528; draft rules and, 354; emergency state and, 386–87; facts versus norms and, 308, 327; Great Financial Crisis and, 326; incentives and, 294, 298–99; independent agencies and, 168, 182n21, 187, 191, 198n9; legal issues and, 354–59; Lijphartian consensus and, 325; limits of Design Precepts and, 379; Merkel and, 299, 366; oversight issues and, 369; power and, 379, 397, 400; Principles for Delegation and, 134n5, 135–36, 308, 321, 325–28; Rechsstaat view and, 298, 379, 553; rule of law and, 356 Ginsburg, Douglas, 336n7 Ginsburg, Ruth Bader, 566 globalization, 4–5, 46, 283, 401 Goodfriend, Marvin, 482, 485, 488n9 Gordon Lecture, xi Gore, Al, 160 government failure, 22, 48, 62, 97, 196, 274, 459, 555 government-sponsored enterprises (GSEs), 52, 132n4 Great Depression, 4–5, 433, 465, 490, 528, 537 Great Financial Crisis, ix; accountability and, 41, 366; administrative state and, 35; aftermath of, 207; central banks and, 4–5, 8n14, 23, 44, 53, 68, 90, 221, 375, 380, 388, 402, 431, 433, 438, 442, 457n28, 501, 507, 517–18, 527, 532, 534–36, 550; democracy and, 550, 559; Emergencies precept and, 119; European Union (EU) and, 44, 299, 366; Financial Services Authority and, 318; financial trilemma and, 401; Germany and, 326; international policy cooperation and, 45; legitimacy and, 388, 402; limits of design and, 385, 387; monetary regimes and, 431; oversight issues and, 380; political upheavals from, 169; regulation and, 16, 53, 144–45, 230; securities and, 16; stability and, 438, 442, 445, 454, 457n28, 469; subdued growth since, 2, 4; United Kingdom and, x–xi, 318, 346, 366, 387; United States and, 131, 132n4, 366, 375 Great Moderation, 4, 431 Greenspan, Alan, 169, 408n9, 416, 431, 450, 453, 520n32, 542, 544, 566 Gross, Lord Justice, 83n15, 229n13 guardians: administrative state and, 72, 81–83, 85; central banks and, 538; constitutionalism and, 285–87, 392–93; credibility and, 234; democratic values and, 285–87, 552–54, 563; electoral commissions and, 285–87; hierarchy of, 290–92; independent agencies and, 191–92, 197, 203, 208; infinite regress and, 191–92; insulated agencies and, 285–91; judges and, 191–92; judiciary and, 81–83; power and, 9, 13, 19, 387, 391–94, 398–99; Principles for Delegation and, 322–23; Promissory Oaths Act and, 81n11; trustees and, 81–83 Habermas, Jürgen, 21, 42, 201, 202n18, 255, 327 Haldane Committee, 40 Hamilton, Alexander, xi, 163, 182n22, 195, 209, 293, 443, 547, 567 Hardin, Russell, 154n10, 157n14, 446n16 Hart, Henry, Jr., 278n11 Hart, Oliver, 88n24 Harvard, xi Hawtrey, R.


pages: 510 words: 163,449

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

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

The first is that Smith believed that the wealth of capitalism was generated by some great, guiding “invisible hand.” In fact, the term, which appears in Wealth of Nations and The Theory of Moral Sentiments, is meant to be taken, once again, as irony. Smith did believe that capitalism produces its own kind of natural rational order, based on the market and its complex, interlocking system of self-interested exchange. To a superficial observer it might appear as if everyone were moving according to a single directing mind or “invisible hand.” But his real point was not that a market-based order was perfect or even perfectible.

By devoting all his efforts and those of his employees and tenants to his land or his warehouse or factory, he ends up producing far more than he can consume himself: The rich consume little more than the poor [after all, you can drive only one Rolls-Royce at a time] and in spite of their natural selfishness and rapacity, though they mean only their own conveniency [and] their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand [my emphasis] to make the same distribution of the necessarities of life, which would have been made, had the earth been divided into equal portions among all its inhabitants. . . . Thus, without intending it, without knowing it, [the rich] advance the interest of the society, and afford means to the multiplication of the species.


pages: 1,015 words: 170,908

Empire by Michael Hardt, Antonio Negri

"hyperreality Baudrillard"~20 OR "Baudrillard hyperreality", Berlin Wall, Bretton Woods, colonial rule, conceptual framework, disinformation, equal pay for equal work, European colonialism, Fall of the Berlin Wall, feminist movement, Francis Fukuyama: the end of history, global pandemic, global village, Haight Ashbury, Herbert Marcuse, informal economy, invisible hand, late capitalism, low skilled workers, mass immigration, means of production, Monroe Doctrine, Nelson Mandela, New Urbanism, open borders, post-Fordism, post-industrial society, postindustrial economy, scientific management, Scramble for Africa, social intelligence, The Wealth of Nations by Adam Smith, union organizing, urban planning, W. E. B. Du Bois

Smith begins with a theory ofindustry that poses the contradiction between private enrichment and public interest. A first synthesis ofthese two levels is confided to the ‘‘invisible hand’’ ofthe market: the capitalist ‘‘intends only his own gain,’’ but he is ‘‘led by an invisible hand to promote an end which was no part ofhis intention.’’31 This first synthesis, however, is precarious and fleeting. Political economy, considered a branch ofthe science ofthe administrator and legislator, must go much further in conceiving the synthesis. It must understand the ‘‘invisible hand’’ ofthe market as a product ofpolitical economy itself, which is thus directed toward construct- ing the conditions ofthe autonomy ofthe market: ‘‘All systems either ofpreference or ofrestraint, therefore, being thus completely taken away, the obvious and simple system ofnatural liberty estab- lishes itselfofits own accord.’’32 In this case, too, however, the synthesis is not at all guaranteed.


pages: 580 words: 168,476

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

affirmative action, Affordable Care Act / Obamacare, airline deregulation, Alan Greenspan, Andrei Shleifer, banking crisis, barriers to entry, Basel III, battle of ideas, Bear Stearns, behavioural economics, Berlin Wall, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, collapse of Lehman Brothers, collective bargaining, colonial rule, corporate governance, Credit Default Swap, Daniel Kahneman / Amos Tversky, Dava Sobel, declining real wages, deskilling, electricity market, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, framing effect, full employment, George Akerlof, Gini coefficient, Glass-Steagall Act, Great Leap Forward, income inequality, income per capita, indoor plumbing, inflation targeting, information asymmetry, invisible hand, jobless men, John Bogle, John Harrison: Longitude, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, London Interbank Offered Rate, lone genius, low interest rates, low skilled workers, Marc Andreessen, Mark Zuckerberg, market bubble, market fundamentalism, mass incarceration, medical bankruptcy, microcredit, moral hazard, mortgage tax deduction, negative equity, obamacare, offshore financial centre, paper trading, Pareto efficiency, patent troll, Paul Samuelson, Paul Volcker talking about ATMs, payday loans, Phillips curve, price stability, profit maximization, profit motive, public intellectual, purchasing power parity, race to the bottom, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, search costs, shareholder value, short selling, Silicon Valley, Simon Kuznets, spectrum auction, Steve Jobs, stock buybacks, subprime mortgage crisis, technology bubble, The Chicago School, The Fortune at the Bottom of the Pyramid, The Myth of the Rational Market, The Spirit Level, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, Tragedy of the Commons, transaction costs, trickle-down economics, ultimatum game, uranium enrichment, very high income, We are the 99%, wealth creators, women in the workforce, zero-sum game

Markets matter, as do social forces (like discrimination). This chapter focuses on the myriad forms that rent seeking takes in our society, and the next turns to the other determinants of inequality. GENERAL PRINCIPLES Adam Smith’s invisible hand and inequality Adam Smith, the father of modern economics, argued that the private pursuit of self-interest would lead, as if by an invisible hand, to the well-being of all.5 In the aftermath of the financial crisis, no one today would argue that the bankers’ pursuit of their self-interest has led to the well-being of all. At most, it led to the bankers’ well-being, with the rest of society bearing the cost.

The formalization of this idea is called the “first welfare theorem of economics.” It asserts that under certain conditions—when markets work well—no one can be made better-off without making someone else worse-off. But, as we shall explain shortly, there are many instances in which markets do not work well. A recent popular analysis is Kaushik Basu, Beyond the Invisible Hand: Groundwork for a New Economics (Princeton: Princeton University Press, 2011). Basu uses the metaphor of a magic show to describe the way the discussion of economics on the political right draws attention to the conclusion of this theorem—that markets are efficient—and away from the very special and unrealistic conditions under which the conclusion holds—perfect markets.


pages: 436 words: 98,538

The Upside of Inequality by Edward Conard

affirmative action, Affordable Care Act / Obamacare, agricultural Revolution, Alan Greenspan, Albert Einstein, assortative mating, bank run, Berlin Wall, book value, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Climatic Research Unit, cloud computing, corporate governance, creative destruction, Credit Default Swap, crony capitalism, disruptive innovation, diversified portfolio, Donald Trump, en.wikipedia.org, Erik Brynjolfsson, Fall of the Berlin Wall, full employment, future of work, Gini coefficient, illegal immigration, immigration reform, income inequality, informal economy, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), invention of the telephone, invisible hand, Isaac Newton, Jeff Bezos, Joseph Schumpeter, Kenneth Rogoff, Kodak vs Instagram, labor-force participation, Larry Ellison, liquidity trap, longitudinal study, low interest rates, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, mass immigration, means of production, meta-analysis, new economy, offshore financial centre, paradox of thrift, Paul Samuelson, pushing on a string, quantitative easing, randomized controlled trial, risk-adjusted returns, Robert Gordon, Ronald Reagan, Second Machine Age, secular stagnation, selection bias, Silicon Valley, Simon Kuznets, Snapchat, Steve Jobs, survivorship bias, The Rise and Fall of American Growth, total factor productivity, twin studies, Tyler Cowen, Tyler Cowen: Great Stagnation, University of East Anglia, upwardly mobile, War on Poverty, winner-take-all economy, women in the workforce, working poor, working-age population, zero-sum game

“Civilian Labor Force Participation Rate,” Labor Force Statistics from the Current Population Survey, Bureau of Labor Statistics, accessed September 16, 2015, http://data.bls.gov/timeseries/LNS11300000. 37. Robert Frank, “Darwin, the Market Whiz,” New York Times, September 17, 2011, http://www.nytimes.com/2011/09/18/business/darwin-the-market-whiz.html. Robert Frank, “The Invisible Hand Trumped by Darwin?” New York Times, July 12, 2009, http://www.nytimes.com/2009/07/12/business/economy/12view.html?_r=0. 38. “Poverty Overview,” World Bank, updated April 6, 2015, http://www.world bank.org/en/topic/poverty/overview. 39. Peter Kuhn and Fernando Lozano, “The Expanding Workweek?

Erik Brynjolfsson, “The Future of Work in the Age of the Machine: A Hamilton Project Policy Forum,” National Press Club, Washington, DC, February 19, 2015, http://www.hamiltonproject.org/assets/legacy/files/download_and_links/2015_02_24_THP_Future_of_Work_in_Machine_Age_tran script_unedited.pdf. 4. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2013). 5. Bradford Delong, “Over at the Washington Center for Equitable Growth: Piketty Day Here at Berkeley: The Honest Broker for the Week of April 26 2014,” Grasping Reality with the Invisible Hand, April 23, 2014, http://delong.typepad.com/sdj/2014/04/piketty-day-here-at-berkeley-the-honest-broker-for-the-week-of-april-26-2014.html. 6. Lawrence Summers, “The Inequality Puzzle,” Democracy, 2014, http://demo cracyjournal.org/magazine/33/the-inequality-puzzle/?page=all. 7. Robert Putnam, Our Kids: The American Dream in Crisis (New York: Simon & Schuster, 2015), 73. 8.


pages: 341 words: 99,940

Will Storr vs. The Supernatural: One Man's Search for the Truth About Ghosts by Will Storr

Easter island, income inequality, invisible hand, Jon Ronson, place-making, quantum entanglement

And there was more. There had been twenty suicides at the house, all of which involved people hurling themselves off the same place. Their curiosity ignited, Andrew and his father went back to Montpelier Road for a poke about. When Andrew reached the stairs that led up to the tower, he felt invisible hands pushing him up. On reaching the top, he heard a powerful voice in his head telling him the garden was only twelve inches below and that he wouldn’t hurt himself if he jumped. Andrew was only slapped aware of the deadly height of the drop when his dad realised what was about to happen and yanked him back from the edge.

Don’t be in such a hurry all the time. You’re not in London now, you know.’ I sit back down and help myself to one of the folders of ghost reports. I flick through the pages. After an hour or so reading, patterns begin to emerge. As well as the usual footsteps and self-closing doors, many people have felt an invisible hand holding theirs, had their hair pulled or felt suddenly overcome with a powerful feeling of sadness in the child’s bedroom, upstairs. But the room next to that is said to be the most troubled of all. I read an interview with the house’s previous owner that’s been cut out of an old local newspaper.


pages: 370 words: 102,823

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

Alan Greenspan, balance sheet recession, banking crisis, basic income, Bear Stearns, Bernie Sanders, Bretton Woods, business climate, business cycle, carbon tax, Carmen Reinhart, central bank independence, circular economy, collaborative economy, complexity theory, conceptual framework, corporate governance, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, decarbonisation, degrowth, deindustrialization, dematerialisation, Detroit bankruptcy, double entry bookkeeping, Elon Musk, endogenous growth, energy security, eurozone crisis, factory automation, facts on the ground, fiat currency, Financial Instability Hypothesis, financial intermediation, Ford Model T, forward guidance, full employment, G4S, general purpose technology, Gini coefficient, Growth in a Time of Debt, Hyman Minsky, income inequality, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), Internet of things, investor state dispute settlement, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, knowledge economy, labour market flexibility, low interest rates, low skilled workers, Martin Wolf, mass incarceration, military-industrial complex, Modern Monetary Theory, Money creation, Mont Pelerin Society, neoliberal agenda, Network effects, new economy, non-tariff barriers, ocean acidification, paradox of thrift, Paul Samuelson, planned obsolescence, Post-Keynesian economics, 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, Solyndra, Steve Jobs, stock buybacks, systems thinking, the built environment, The Great Moderation, The Spirit Level, Thorstein Veblen, too big to fail, total factor productivity, Tragedy of the Commons, transaction costs, trickle-down economics, universal basic income, vertical integration, very high income

Chief among these is that markets generally produce positive outcomes which increase welfare, and should therefore be allowed to operate without much interference wherever possible. A basic regulatory framework of employment, consumer and environmental protection is required to correct for clear externalities and information asymmetries; but governments should not seek to direct markets or shape the businesses which operate in them. The ‘invisible hand’ of the market knows best, generating the highest welfare-producing activities where firms seek to maximise value for their shareholders. Even where the market might seem to get it wrong, governments cannot presume to know better. So governments should be extremely wary of seeking to ‘pick winners’ through industrial and innovation policy; of seeking to push banks and other financial institutions to make specific forms of investments; or of investing in the private economy themselves.

But I have seen no evidence for this sudden change in technology—and no theory for why this might have happened. 40 America’s mass incarceration policies have also been an important instrument of discrimination. See M. Alexander, The New Jim Crow: Mass Incarceration in the Age of Colorblindness, New York, The New Press, 2010. 41 For a recent account of this literature, see K. Basu, Beyond the Invisible Hand: Groundwork for a New Economics, Princeton, NJ, Princeton University Press, 2010. See also J. E. Stiglitz, ‘Approaches to the economics of discrimination’, American Economic Review, vol. 62, no. 2, 1973, pp. 287–95 and J. E. Stiglitz, ‘Theories of discrimination and economic policy’, in G. von Furstenberg, Ann R.


pages: 351 words: 96,780

Hegemony or Survival: America's Quest for Global Dominance by Noam Chomsky

"World Economic Forum" Davos, anti-communist, Berlin Wall, Bretton Woods, British Empire, capital controls, cuban missile crisis, declining real wages, disinformation, Doomsday Clock, facts on the ground, failed state, Fall of the Berlin Wall, invisible hand, launch on warning, liberation theology, long peace, market fundamentalism, Monroe Doctrine, Nelson Mandela, public intellectual, RAND corporation, Ronald Reagan, Search for Extraterrestrial Intelligence, Strategic Defense Initiative, uranium enrichment

The secretary-general of the Organization of American States, a strong advocate of neoliberal globalization, opened the annual session by warning that free movement of capital, “the most undesirable feature of globalisation”—in fact, its core feature—is the “greatest obstacle” to democratic governance, just as Keynes had warned.61 The fears go back to Adam Smith. His sole use of the phrase “invisible hand” in Wealth of Nations is in a discussion of the harmful consequences of foreign investment, which England need not fear, he believed, because an “invisible hand” will induce investors to keep their capital at home. The same is true of other parts of the neoliberal package: privatization, for example, reduces the arena of potential democratic choice, dramatically in the case of liberalization of “services,” which has evoked enormous popular opposition.


pages: 353 words: 98,267

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

Alan Greenspan, Alvin Roth, AOL-Time Warner, Asian financial crisis, Ayatollah Khomeini, banking crisis, barriers to entry, behavioural economics, Berlin Wall, British Empire, capital controls, carbon tax, Carmen Reinhart, Cass Sunstein, clean water, Credit Default Swap, Deng Xiaoping, Easter island, Edward Glaeser, European colonialism, Fall of the Berlin Wall, financial deregulation, financial engineering, flying shuttle, Ford paid five dollars a day, full employment, George Akerlof, Glass-Steagall Act, Gordon Gekko, guest worker program, happiness index / gross national happiness, housing crisis, illegal immigration, immigration reform, income inequality, income per capita, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jean Tirole, John Maynard Keynes: technological unemployment, Joshua Gans and Andrew Leigh, junk bonds, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, longitudinal study, loss aversion, low skilled workers, Martin Wolf, means of production, Menlo Park, Mexican peso crisis / tequila crisis, Michael Milken, Monkeys Reject Unequal Pay, new economy, New Urbanism, peer-to-peer, pension reform, Peter Singer: altruism, pets.com, placebo effect, precautionary principle, price discrimination, price stability, rent-seeking, Richard Thaler, rising living standards, risk tolerance, Robert Shiller, Ronald Reagan, search costs, Silicon Valley, stem cell, Steve Jobs, Stewart Brand, superstar cities, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade route, transatlantic slave trade, ultimatum game, unpaid internship, urban planning, Veblen good, women in the workforce, World Values Survey, Yom Kippur War, young professional, zero-sum game

In 2007, the Congressional Budget Office issued a report about how the nation might bring spiraling health-care costs under control by measuring the cost-effectiveness of medical treatments, as several other countries do. The report warned that putting a price on life might be politically tricky in the United States. “Many people find the notion uncomfortable if not objectionable,” noted the CBO, incompatible with “the sentiment that no expense should be spared to extend a patient’s life.” The invisible hand of the market is as ruthless in denying health care to the needy as the most coldhearted central planner. Our unwillingness to acknowledge life’s price does not mean it doesn’t have one. CHAPTER THREE The Price of Happiness ONE OF MEXICO’S most famous cultural exports, alongside mariachi bands and drunken spring break in Cancún, is the 1979 telenovela titled Los Ricos También Lloran, or The Rich Also Weep.

But in 1979, more than two hundred years later, Ayatollah Ruhollah Khomeini told the Italian journalist Oriana Fallaci that Iran’s “law of the four wives is a very progressive law, and was written for the good of women since there are more women than men.” Polygamy, he concluded, “is better than monogamy.” IT MIGHT SEEM odd to bring the invisible hand of the market to bear on the most intimate transactions between men and women. But there is an economic rationale for these mating arrangements. It has to do with the relatively low cost of sperm. Prices are on prominent display in the most intimate transaction that we know. In the market for mates, prices are attached to different things—husbands and wives rather than diamonds or sound systems.


pages: 337 words: 89,075

Understanding Asset Allocation: An Intuitive Approach to Maximizing Your Portfolio by Victor A. Canto

accounting loophole / creative accounting, airline deregulation, Alan Greenspan, Andrei Shleifer, asset allocation, Bretton Woods, business cycle, buy and hold, buy low sell high, California energy crisis, capital asset pricing model, commodity trading advisor, corporate governance, discounted cash flows, diversification, diversified portfolio, equity risk premium, financial engineering, fixed income, frictionless, global macro, high net worth, index fund, inflation targeting, invisible hand, John Meriwether, junk bonds, law of one price, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, low cost airline, low interest rates, market bubble, merger arbitrage, money market fund, new economy, passive investing, Paul Samuelson, Performance of Mutual Funds in the Period, Phillips curve, price mechanism, purchasing power parity, risk free rate, risk tolerance, risk-adjusted returns, risk/return, rolling blackouts, Ronald Reagan, Savings and loan crisis, selection bias, seminal paper, shareholder value, Sharpe ratio, short selling, statistical arbitrage, stocks for the long run, survivorship bias, systematic bias, Tax Reform Act of 1986, the market place, transaction costs, Y2K, yield curve, zero-sum game

The theoretical argument regarding market efficiency is, however, very compelling. Some time ago, Rex Sinquefield made the case that the efficient market theory—which, in brief, states consistently “beating the market” is improbable because existing stock prices are the result of all current information—is simply an application of Adam Smith’s invisible-hand theory to financial markets. I share this efficient market world view. More, although it is true market inefficiency is a sufficient condition for justifying active management, it is not a necessary condition. In this sense, I again part ways with Sinquefield’s passive-investing-only mandate.

See corporate debt international price rule, 89 international stocks location cycles, 57-58 optimal mix with domestic stocks, 24-25, 34-37, 125-126 performance of, 16-17, 42 risk measurement, 20 Sharpe ratio, 61-63 investor convictions empirical forecast method, 132-137 probabilities forecast method, 129-132, 137-142, 275-281 qualitative forecast method, 132-137 investor horizons, 115-116, 129 invisible-hand theory, 169 J-K-L Jensen’s alpha. See alpha junk bonds, 75-76 Kennedy, John F., 89 Kerry, John, 84 large-cap stocks active management tested against passive management, 166-168 annual returns, 19 elasticity, 184, 187-189 Index 311 location effect, 190-193, 202-204, 273-274 optimal mix with small-cap stocks, 23-24, 31-32, 123 performance of, 16-18, 41-43 regulatory fixed costs, 184-185 risk measurement, 20 size cycles, 54-55 active versus passive management during, 170-172, 175, 271-272 equal-weighted versus cap-weighted indexes, 175-180 and market breadth, 168-170, 237-238 in value-timing strategy, 243-250 LBOs (leveraged buyouts), 74 legislation.


Rockonomics: A Backstage Tour of What the Music Industry Can Teach Us About Economics and Life by Alan B. Krueger

"Friedman doctrine" OR "shareholder theory", accounting loophole / creative accounting, Affordable Care Act / Obamacare, Airbnb, Alan Greenspan, autonomous vehicles, bank run, behavioural economics, Berlin Wall, bitcoin, Bob Geldof, butterfly effect, buy and hold, congestion pricing, creative destruction, crowdsourcing, digital rights, disintermediation, diversified portfolio, Donald Trump, endogenous growth, Gary Kildall, George Akerlof, gig economy, income inequality, independent contractor, index fund, invisible hand, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kickstarter, Larry Ellison, Live Aid, Mark Zuckerberg, Moneyball by Michael Lewis explains big data, moral hazard, Multics, Network effects, obamacare, offshore financial centre, opioid epidemic / opioid crisis, Paul Samuelson, personalized medicine, power law, pre–internet, price discrimination, profit maximization, random walk, recommendation engine, rent-seeking, Richard Thaler, ride hailing / ride sharing, Saturday Night Live, Skype, Steve Jobs, the long tail, The Wealth of Nations by Adam Smith, TikTok, too big to fail, transaction costs, traumatic brain injury, Tyler Cowen, ultimatum game, winner-take-all economy, women in the workforce, Y Combinator, zero-sum game

This concern for fairness, which suppresses prices and creates a shortage, is the main reason there is a large and enduring secondary market for scalped tickets. You can’t understand markets or the economy without recognizing when and how the jazz of emotions, psychology, and social relations interfere with the invisible hands of supply and demand. Scale and non-substitutability: the two ingredients that create superstars. Music is the quintessential example of a superstar market, with a small number of players who attract most of the fanfare and earn most of the money. Economists have long understood what enables superstars to dominate certain markets.

I call this “block party economics,” and it is a rational way to build an industry and loyal customer base (although to agents like Marc Geiger, it smacks of rock and roll socialism). It is not surprising to see tension between the desire to treat customers fairly and the desire to price to whatever the market will bear in a block party economy. This tension often causes the invisible hand of the market to appear to be all thumbs when it comes to setting the price of concert tickets. Some artists hold to the practice of charging fans a reasonable price irrespective of the price that supply and demand would dictate. Musicians can be sensitive. They care about what is said about them on social media.


pages: 364 words: 99,613

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

air traffic controllers' union, Alan Greenspan, back-to-the-land, Bear Stearns, benefit corporation, Bernie Sanders, Black Swan, Bretton Woods, BRICs, British Empire, business cycle, call centre, centre right, classic study, cognitive dissonance, collateralized debt obligation, collective bargaining, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency manipulation / currency intervention, David Brooks, David Ricardo: comparative advantage, disruptive innovation, falling living standards, financial deregulation, financial innovation, full employment, Glass-Steagall Act, guns versus butter model, high-speed rail, hiring and firing, Howard Zinn, Hyman Minsky, illegal immigration, indoor plumbing, informal economy, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, junk bonds, Kevin Roose, Kickstarter, lake wobegon effect, Long Term Capital Management, low interest rates, market fundamentalism, Martin Wolf, McMansion, medical malpractice, Michael Milken, military-industrial complex, Minsky moment, mortgage debt, Myron Scholes, Naomi Klein, new economy, oil shock, old-boy network, open immigration, Paul Samuelson, plutocrats, price mechanism, price stability, private military company, public intellectual, radical decentralization, Ralph Nader, reserve currency, rising living standards, Robert Shiller, rolodex, Ronald Reagan, Savings and loan crisis, school vouchers, Silicon Valley, single-payer health, Solyndra, South China Sea, statistical model, Steve Jobs, Suez crisis 1956, 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, you are the product

Nelson Drew (Washington, DC: National Defense University, 1994), 90. 20. Meritt Roe Smith, Military Enterprise and Technological Change: Perspectives on the American Experience (Cambridge, MA: MIT Press, 1985), 4; John Gertner, “True Innovation,” Washington Post, February 20, 2012; Fred Block, “Innovation and the Invisible Hand of Government,” in State of Information: The U.S. Government’s Role in Technology Development, ed. Fred Black and Matthew R. Keller (Boulder, CO: Paradigm Publishers, 2011), 5–10. 21. Robert Whaples, “Hours of Work in U.S. History,” Economic History Association, February 1, 2010, http://eh.net/encyclopedia/article/whaples.cork.hours.us. 22.

He was specific; he condemned the repeal of the Glass-Steagall Act and said it was aimed more at “facilitating mergers than creating an efficient regulatory framework.” It was not simply some policy mistake, he noted. It was the work of a three-hundred-million-dollar lobbying campaign financed by many of the people in his audience. “This was not the invisible hand at work,” he noted. “Instead it was the hand of industry lobbyists tilting the playing field in Washington.”4 Throughout the campaign he eloquently indicted Wall Street and the compromised regulators in Washington. When the bottom finally fell out in September 2008, Obama had been right on the money.


Artificial Whiteness by Yarden Katz

affirmative action, AI winter, algorithmic bias, AlphaGo, Amazon Mechanical Turk, autonomous vehicles, benefit corporation, Black Lives Matter, blue-collar work, Californian Ideology, Cambridge Analytica, cellular automata, Charles Babbage, cloud computing, colonial rule, computer vision, conceptual framework, Danny Hillis, data science, David Graeber, deep learning, DeepMind, desegregation, Donald Trump, Dr. Strangelove, driverless car, Edward Snowden, Elon Musk, Erik Brynjolfsson, European colonialism, fake news, Ferguson, Missouri, general purpose technology, gentrification, Hans Moravec, housing crisis, income inequality, information retrieval, invisible hand, Jeff Bezos, Kevin Kelly, knowledge worker, machine readable, Mark Zuckerberg, mass incarceration, Menlo Park, military-industrial complex, Nate Silver, natural language processing, Nick Bostrom, Norbert Wiener, pattern recognition, phenotype, Philip Mirowski, RAND corporation, recommendation engine, rent control, Rodney Brooks, Ronald Reagan, Salesforce, Seymour Hersh, Shoshana Zuboff, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, Skype, speech recognition, statistical model, Stephen Hawking, Stewart Brand, Strategic Defense Initiative, surveillance capitalism, talking drums, telemarketer, The Signal and the Noise by Nate Silver, W. E. B. Du Bois, Whole Earth Catalog, WikiLeaks

Zeleny has argued that “the economy is not a machine but an organism.”40 When markets are left to be “free,” he claimed, the economy self-maintains and self-regulates without the need for centralized control (much like an organism), and he therefore linked “social autopoiesis” to Hayek’s conception of markets.41 He even described autopoiesis as a way to make notions like Adam Smith’s “Invisible Hand” more explicit in order to illuminate “business self-renewal.”42 This view of autopoiesis rehashes the epistemic forgery of neoliberal economics (which also manifests in AI) that the market is a self-organizing and powerful information-processor that stands outside people and institutions. Theories of living things as complex, self-maintaining systems have been broadly used as metaphors for markets, and vice versa.

Pylyshyn, “Connectionism and Cognitive Architecture: A Critical Analysis,” Cognition 28, no. 1–2 (1988): 3–71.   50.   Skinner, Reflections on Behaviorism and Society, 15.   51.   As Shoshana Zuboff has argued, the behaviorist frame aligns closely with the ideology of the major platform companies. These platforms are used to delegate “rewards and punishments of a new kind of invisible hand,” making it possible to modify “the behaviors of persons and things for profit and control.” Zuboff, “Big Other: Surveillance Capitalism and the Prospects of an Information Civilization,” Journal of Information Technology 30, no. 1 (2015): 75–89.   52.   For examples of the fascination with “explainable AI,” see Weinberger, “Our Machines Now Have Knowledge”; Finale Doshi-Velez et al., Accountability of AI Under the Law: The Role of Explanation (Cambridge, Mass.: Berkman Klein Center for Internet & Society Research Publication, 2017); David Weinberger, “Don’t Make AI Stupid in the Name of Transparency,” Wired, January 28, 2018.


pages: 318 words: 99,524

Why Aren't They Shouting?: A Banker’s Tale of Change, Computers and Perpetual Crisis by Kevin Rodgers

Alan Greenspan, algorithmic trading, bank run, banking crisis, Basel III, Bear Stearns, Berlin Wall, Big bang: deregulation of the City of London, bitcoin, Black Monday: stock market crash in 1987, Black-Scholes formula, buy and hold, buy low sell high, call centre, capital asset pricing model, collapse of Lehman Brothers, Credit Default Swap, currency peg, currency risk, diversification, Fall of the Berlin Wall, financial innovation, Financial Instability Hypothesis, fixed income, Flash crash, Francis Fukuyama: the end of history, Glass-Steagall Act, Hyman Minsky, implied volatility, index fund, interest rate derivative, interest rate swap, invisible hand, John Meriwether, latency arbitrage, law of one price, light touch regulation, London Interbank Offered Rate, Long Term Capital Management, Minsky moment, money market fund, Myron Scholes, Northern Rock, Panopticon Jeremy Bentham, Ponzi scheme, prisoner's dilemma, proprietary trading, quantitative easing, race to the bottom, risk tolerance, risk-adjusted returns, Silicon Valley, systems thinking, technology bubble, The Myth of the Rational Market, The Wisdom of Crowds, Tobin tax, too big to fail, value at risk, vertical integration, Y2K, zero-coupon bond, zero-sum game

How many FX staff, like spot brokers before them, could be made redundant? Where it might all end? Not really. As the (possibly apocryphal) quote by quantum physicist Niels Bohr has it, ‘Predictions are very hard to make, especially about the future.’ I suppose I just had a touching faith that if we gave our customers what they wanted, all would be well; the invisible hand would make things turn out fine. I was partly right. Meetings Monkey and Cat Herder A few months later, in early 2000, FX was reorganised. Jim was promoted to a role running FX in Europe and I was asked, along with my colleague Matt, to take over his old job running the options business globally.

n=PET&s=RWTC&f=D 20 Central Bank of Russia statistics website, http://www.cbr.ru/eng/statistics/print.aspx?file=b_sector/interest_rates_98_e.htm&pid=procstavnew&sid=svodProcStav 21‘An Historical Document: Long-Term Capital Management CEO John Meriwether Asks for Money’, Grasping Reality with the Invisible Hand, http://delong.typepad.com/sdj/2005/06/an_historical_d.html 22 ‘Long-Term Capital Management, Report to Congressional Requesters’, United States General Accounting Office, October 1999, http://www.gao.gov/assets/230/228446.pdf Chapter 6 1 ‘Weather risk market remains buoyant, claims Clemmons’, Paul Lyon, Risk.net, 24 October 2002, http://m.risk.net/risk-magazine/news/1503229/weather-risk-market-remains-buoyant-claims-clemmons 2 Presentation to Merrill Lynch European Banking & Insurance Conference London, Anshu Jain, 8 October 2002, https://www.db.com/ir/en/download/1382.pdf 3 Stern Business School, NYU, datasets, http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html 4 US Treasury data, http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/Historic-LongTerm-Rate-Data-Visualization.aspx 5 2015 Investor Company Handbook, Investment Company Institute, May 2015, Chapter 2, http://www.icifactbook.org/fb_ch2.html#popularity 6 ‘Studies on Stock and Bond Picking Performance’, Mark Hebner, Index Fund Advisors, May 2013, https://www.ifa.com/articles/studies_on_stock_picking_performance/ 7 ‘Speculators Have Discovered Palladium and Sugar’, William Baldwin, Forbes, March 2011, http://www.forbes.com/forbes/2011/0411/investing-william-baldwin-investment-strategies-palladium-sugar.html 8 Presentation to Merrill Lynch European Banking & Insurance Conference London, Anshu Jain, 8 October 2002, Slide 17, https://www.db.com/ir/en/download/1382.pdf 9 Ibid., Slide 14. 10 Market Surveys Data, 1987–2010, ISDA, 2010, http://www.isda.org/statistics/pdf/ISDA-Market-Survey-annual-data.pdf 11 ‘Introducing CCOs’, Credit magazine, February 2005, http://www.risk.net/credit/feature/1510254/introducing-ccos 12 ‘CDO Evaluator Applies Correlation and Monte Carlo Simulation to the Art of Determining Portfolio Quality’, Sten Bergman, Standard and Poor’s, 12 November 2001, http://www.globalriskguard.com/resources/crderiv/sp_portf_qual.pdf 13 ‘“The Formula That Killed Wall Street”?


pages: 104 words: 30,990

The Centrist Manifesto by Charles Wheelan

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, American Society of Civil Engineers: Report Card, Bernie Madoff, Bretton Woods, carbon tax, centre right, clean water, creative destruction, David Brooks, delayed gratification, demand response, high-speed rail, Home mortgage interest deduction, housing crisis, income inequality, invisible hand, obamacare, profit maximization, Ralph Nader, rent-seeking, Report Card for America’s Infrastructure, Ronald Reagan, Ronald Reagan: Tear down this wall, Solyndra, stem cell, the scientific method, transcontinental railway, Walter Mischel

Again, any introductory economics book makes the crucial point that markets do not work efficiently when private behavior generates costs that spill over and harm the rest of us—like air and water pollution. When markets do not send accurate price signals (e.g., when the private cost of producing electricity from coal does not include the cost of CO2 emissions), the “invisible hand” no longer points in a sensible direction. This is an overly technical explanation of what most Americans understand intuitively: private firms should not have free rein to do things that harm public health and well-being. Climate change makes the stakes all the higher in that regard. The Democrats are not effective in communicating their environmental message (Al Gore’s Oscar award notwithstanding), and the policies they advocate are not particularly well designed.


pages: 96 words: 33,963

Decline of the English Murder by George Orwell

British Empire, invisible hand, laissez-faire capitalism, Lao Tzu, Ralph Waldo Emerson, Thorstein Veblen, W. E. B. Du Bois

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. Useless Toil Frederick Jackson Turner The Significance of the Frontier in American History Marcel Proust Days of Reading Leon Trotsky An Appeal to the Toiling, Oppressed and Exhausted Peoples of Europe Sigmund Freud The Future of an Illusion Walter Benjamin The Work of Art in the Age of Mechanical Reproduction George Orwell Books v.


pages: 398 words: 111,333

The Einstein of Money: The Life and Timeless Financial Wisdom of Benjamin Graham by Joe Carlen

Abraham Maslow, Albert Einstein, asset allocation, Bernie Madoff, book value, Bretton Woods, business cycle, business intelligence, discounted cash flows, Eugene Fama: efficient market hypothesis, full employment, index card, index fund, intangible asset, invisible hand, Isaac Newton, John Bogle, laissez-faire capitalism, margin call, means of production, Norman Mailer, oil shock, post-industrial society, price anchoring, price stability, reserve currency, Robert Shiller, the scientific method, Vanguard fund, young professional

However, he was skeptical of those with a quasi-religious faith in the unmitigated societal benefits of unrestrained capitalism. Regarding Adam Smith's oft-quoted principle of the “invisible hand” (in which participants in a capitalist economy make decisions that, though motivated by personal profit, ultimately benefit society at large), Graham made the following observation at an address he delivered just months after retiring from Graham-Newman: This point of view [Smith's “invisible hand”] still has validity, but not in the unqualified over-enthusiastic way in which the proponents of laissez-faire presented it. It is now being offset by a complementary point of view, expressed by Peter F.


pages: 461 words: 109,656

On Grand Strategy by John Lewis Gaddis

British Empire, David Brooks, en.wikipedia.org, failed state, invisible hand, joint-stock company, long peace, Mikhail Gorbachev, military-industrial complex, Monroe Doctrine, Ronald Reagan, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, trade route, transcontinental railway

Enshrined formally in the 1648 Treaty of Westphalia, it saw little significance in the internal configuration of states: what mattered was their external behavior.63 But Machiavelli understands balancing in a second and subtler sense, conveyed more explicitly in The Discourses than in The Prince: [I]t is only in republics that the common good is looked to properly in that all that promotes it is carried out; and, however much this or that private person may be the loser on this account, there are so many who benefit thereby that the common good can be realized in spite of those few who suffer in consequence.64 This idea of an internal equilibrium within which competition strengthens community wouldn’t appear again until Adam Smith unveiled an “invisible hand” in The Wealth of Nations (1776), until the American Founding Fathers drafted and in The Federalist justified constitutional checks and balances (1787–88), and until Immanuel Kant linked republics, however distantly, with Perpetual Peace (1795). From all of this would emerge the twentieth-century idea of an international system consistent with order and justice, 65 although Augustine had foreseen it long before.

., 182, 218, 220–21, 224 Howard, Charles, 144 Howard, Michael, 192, 197 Hull, Cordell, 300 Ignatieff, Michael, 302 Iliad (Homer), 85 imagination, strategy and, 201, 203 improvisation: by FDR, 282 planning vs., 24–25, 26 intellect, temperament and, 308 intellectual capital, 23 intemperance, 309 intentions, see means, alignment of ends with “invisible hand,” 115 Ireland, 133–34 irony, 194 Isabel of France, queen of Spain, 128 “island” strategy, 31, 35, 36–37, 50, 54–55 Jackson, Andrew, 178, 218–19 James II, king of England, 157 James VI, king of Scotland, 141 Japan, 54 in attack on Pearl Harbor, 287, 288, 297 expansionism of, 280, 282 Jefferson, Thomas, 163–64, 175, 177 Johnson, Hiram, 301 Johnson, Lyndon, 312 Johnson, Samuel, 170 joint-stock companies, 153, 155 Jomini, Antoine-Henri, 237 Judaism, 94–95 Julia (Augustus’ daughter), 87–88, 89 justice: Augustine on order as necessary for, 101, 105, 114, 116 Machiavelli on, 112 order vs., 100 just wars, see war, just Kagan, Robert, 256 Kahneman, Daniel, 20 Kansas-Nebraska Act (1854), 225–26, 230 Kant, Immanuel, 115–16, 196 Kennan, George (surveyor), 93–94, 116 Kennan, George F., 93, 115, 260 Kennedy, John F., 60 Kennedy, Paul, 266 Kennedy, Robert F., 311 Kim Il-sung, 54 Kissinger, Henry, 58, 115, 274 on World War I, 263–64 knowledge, universal vs. local, 23 knowns, strategy and, 214–15 Korean War, 54, 55–56 Kundera, Milan, 107 Kushner, Tony, 17 Kutuzov, Mikhail, 189, 198, 199, 215 Tolstoy’s portrayal of, 206–7 Landon, Alf, 300 laws, theory vs., 191–92, 210–11 leaders, leadership: and alignment of means with ends, 204, 215 as combining fox and hedgehog thinking, 47–48 common sense and, 19, 20–21 as cultivators, 48–49, 84, 86, 90–91 friction and, 202, 204, 208 hedgehog thinking and, 26–27 Machiavelli on, 112–14 as navigators, 47–49, 84, 86 persuasion vs. confrontation in, 48–49 Sun Tzu on qualities of, 68 theory and, 208–9 League of Nations, 274, 275, 281 Lee, Robert E., 236, 242 Leicester, Earl of, 143 Lend-Lease, 286 Lenin, Vladimir Ilich, 272, 276, 278, 306 Leonidas, 10–11 Lepidus, 71–72, 76, 79 Lesbos, 51 Lexington and Concord, battles of (1775), 163 liberty: and necessity of choice, 15, 310–11 positive vs. negative, 310–11, 312 “lightness of being,” 107, 109, 118, 134, 147 Lincoln, Abraham, 24, 174, 175, 267, 309 alignment of ends and means by, 240 appearance of, 222 assassination of, 255 in balancing law and military necessity, 238 cabinet of, 233 in call for antislavery amendment, 243–44 childhood of, 221–22 as circuit court lawyer, 227 Civil War strategy of, 236–37, 240, 249, 251 Clausewitz’s principles intuited by, 237, 240, 249, 252 as combination of fox and hedgehog, 16–17, 19, 20 common sense of, 19, 20, 239, 250 as congressman, 221, 224 coup d’oeil of, 239–40, 243, 249 debating style of, 227–28 early jobs of, 223 in 1860 election, 232–33 in 1864 election, 247–48 Emancipation Proclamation of, 242–43, 247, 251 fatalism of, 222–23 first inaugural address of, 234 on free will vs. determinism, 253 in gradual adoption of abolitionism, 240–42 “House Divided” speech of, 230–31 humor as used by, 222 internal improvements and, 244–45 J.


pages: 339 words: 105,938

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

airport security, behavioural economics, Berlin Wall, carbon credits, carbon footprint, citizen journalism, clean water, cognitive dissonance, congestion charging, correlation does not imply causation, Diane Coyle, endogenous growth, experimental subject, Fall of the Berlin Wall, first-past-the-post, framing effect, Goodhart's law, GPS: selective availability, greed is good, happiness index / gross national happiness, hedonic treadmill, Intergovernmental Panel on Climate Change (IPCC), invisible hand, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, labour market flexibility, laissez-faire capitalism, libertarian paternalism, longitudinal study, new economy, Paradox of Choice, Pareto efficiency, pension reform, positional goods, precautionary principle, price elasticity of demand, Ralph Waldo Emerson, RAND corporation, risk tolerance, school choice, social discount rate, spectrum auction, Thomas Bayes, trade liberalization, ultimatum game, When a measure becomes a target

There is a widespread but implicit belief that non-economists are stupid. The economist Bryan Caplan is more explicit, devoting a book to discussing how non-economists repeatedly suffer from ‘antimarket bias, antiforeign bias, make-work bias, and pessimistic bias’.10 That is, compared to economists, non-economists ‘do not understand the “invisible hand” of the market ... underestimate the benefits of interaction with foreigners ... equate prosperity not with production, but with employment’. Lastly they are ‘overly prone to think that economic conditions are bad and getting worse’.11 It is true that Caplan produces strong evidence to show that ordinary people think differently about economics to those with PhDs in the subject (surprise, surprise).

Quarterly Journal of Economics 115(1): 99-144 Le Grand, J. (1990) ‘Equity versus efficiency: The elusive trade-off.’ Ethics 100: 554-568 Le Grand, J. (2003) Motivation, Agency, and Public Policy. Oxford, OUP Le Grand, J. (2006) ‘Equality and choice in public services.’ Social Research 73(2): 695-710 Le Grand, J. (2007) The Other Invisible Hand. Princeton, Princeton University Press Leat, D. (1990) For Love and Money. York, Joseph Rowntree Foundation Leat, D. and P. Gay (1987) Paying for Care. London, Policy Studies Institute Levett, R. (2003) A Better Choice of Choice. London, Fabian Society Levitt, S. and S. Dubner (2005) Freakonomics.


pages: 385 words: 111,807

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

"there is no alternative" (TINA), Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, antiwork, AOL-Time Warner, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, Bear Stearns, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, Charles Babbage, collateralized debt obligation, colonial rule, Corn Laws, corporate governance, corporate raider, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, discovery of the americas, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, falling living standards, financial deregulation, financial engineering, financial innovation, flying shuttle, Ford Model T, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Akerlof, Gini coefficient, Glass-Steagall Act, global value chain, Goldman Sachs: Vampire Squid, Gordon Gekko, Great Leap Forward, greed is good, Gunnar Myrdal, Haber-Bosch Process, happiness index / gross national happiness, high net worth, income inequality, income per capita, information asymmetry, intangible asset, interchangeable parts, interest rate swap, inventory management, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, laissez-faire capitalism, land bank, land reform, liberation theology, manufacturing employment, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, means of production, Mexican peso crisis / tequila crisis, Neal Stephenson, Nelson Mandela, Northern Rock, obamacare, offshore financial centre, oil shock, open borders, Pareto efficiency, Paul Samuelson, post-industrial society, precariat, principal–agent problem, profit maximization, profit motive, proprietary trading, purchasing power parity, quantitative easing, road to serfdom, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, scientific management, Scramble for Africa, search costs, shareholder value, Silicon Valley, Simon Kuznets, sovereign wealth fund, spinning jenny, structural adjustment programs, The Great Moderation, The Market for Lemons, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, transaction costs, transfer pricing, trickle-down economics, Vilfredo Pareto, Washington Consensus, working-age population, World Values Survey

Smith’s ideas were further developed in the early nineteenth century by three near-contemporaries – David Ricardo (1772–1823), Jean-Baptiste Say (1767–1832), and Robert Malthus (1766–1834). The invisible hand, Say’s Law and free trade: the key arguments of the Classical school According to the Classical school, the pursuit of self-interests by individual economic actors produces a socially beneficial outcome, in the form of maximum national wealth. This paradoxical outcome is made possible by the power of competition in the market. In their attempts to make profits, producers strive to supply cheaper and better things, ultimately producing their products at the minimum possible costs, thus maximizing national output. This idea is known as the invisible hand and has become arguably the most influential metaphor in economics, although Smith himself used it only once in The Wealth of Nations (TWON) and did not accord it a prominent role in his theory.* Most Classical economists believed in the so-called Say’s Law, which states that supply creates its own demand.


pages: 489 words: 106,008

Risk: A User's Guide by Stanley McChrystal, Anna Butrico

"Hurricane Katrina" Superdome, Abraham Maslow, activist fund / activist shareholder / activist investor, airport security, Albert Einstein, Apollo 13, banking crisis, Bernie Madoff, Boeing 737 MAX, business process, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, computer vision, coronavirus, corporate governance, cotton gin, COVID-19, cuban missile crisis, deep learning, disinformation, don't be evil, Dr. Strangelove, fake news, fear of failure, George Floyd, Glass-Steagall Act, global pandemic, Googley, Greta Thunberg, hindsight bias, inflight wifi, invisible hand, iterative process, late fees, lockdown, Paul Buchheit, Ponzi scheme, QWERTY keyboard, ride hailing / ride sharing, Ronald Reagan, San Francisco homelessness, School Strike for Climate, Scientific racism, Silicon Valley, Silicon Valley startup, Skype, social distancing, source of truth, Stanislav Petrov, Steve Jobs, Thomas L Friedman, too big to fail, Travis Kalanick, wikimedia commons, work culture

—Captain John Paul Jones, “Father of the US Navy” In reality, risk is neither mathematical nor finite. Its impact depends to a great extent on how we perceive, process, and respond. The Blade Above The heavy sword hung from the palace ceiling by a single horsehair, its sharpened blade pointed downward as if an invisible hand executing a lethal thrust from above had been suddenly stopped. Directly below, in sharp contrast to the image of imminent violence, a man sat on a regal bed of gold, surrounded by delicacies of food and drink while servants attended to his desires. The sword belonged to Dionysius II, the king of Syracuse, and it loomed over Damocles, a subject of the monarch who was receiving an unsubtle lesson in the perils of power, simultaneously enjoying its benefits while being made acutely aware of its mortal dangers.

(Photo by Leslie Jones) The SEC wasn’t alone in assuming Madoff’s good intentions: JPMorgan, who ran his bank account, did not raise any red flags about signs of money laundering, nor did accounting firms identify anything suspicious in their financial reviews. There was a demonstrated willingness for stakeholders to cover their eyes—to unquestionably accept something that was too good to be true, as long as it served their short-term benefit. As we shall examine in more detail throughout this chapter, bias is an invisible hand driven by self-interest. Too often it contributes to and reinforces an unfair system. It foments willful blindness, creating narratives that achieve personal goals at the cost of greater equity and justice. We all live with biases—biases of those around us and biases of our own. Left unexamined and unchecked, they can skew our ability to respond to threats.


pages: 687 words: 191,073

The Snow Queen by Joan D. Vinge

gravity well, invisible hand, Ralph Waldo Emerson, time dilation

They boarded the shuttle at the tail of the crowd. Moon caught a glimpse of its tubby, boxlike exterior through the airlock's port: It was a crate, just as Cress had said, with no propulsion of its own. It was drawn down to the planet and shunted back up again just like any other piece of freight, clutched in an invisible hand of repeller-or tractor--beams from one of the planetary distribution centers. A shipping window was a column of no-man's space thirty meters wide, licking out into the zone of heavy industry between Kharemough and its moons. On board they were led to tiers of seats above a central floor screen that showed her a view of the planet's surface, misty with blue and khaki; she tried to concentrate on the solid immensity of it, and not to remember that it was unspeakably far below them.

The island centrally below grew until it was all she could see, dividing and redividing into murals of mountain, forest, farmland, all rolling inexorably into morning .. . and then, before she quite realized it, a slender ring of twilit city laid out in ripples concentric around an immense, shining, treeless plain. ".. . landing field," Elsevier said. At the final moment she had the feeling that another giant's invisible hand plucked them out of the air, before they impacted on the glowing grid lines of the field. It swept them aside, into one of the stolid warehouse buildings that peri metered the landing area, and at last set them down. The crowd of passengers left the warm-colored interior of the passenger terminal.

The past becomes a continuous future, unless you break the Change.. .. No further analysis!" Aspundh's head dropped forward; he leaned against the table for a long moment before he looked up again. "It seemed to be--night, there." He took a sip from his drink. "And the room was full of strange faces.. .." Moon picked up her own glass, drank to loosen the invisible hand closing on her throat. He loved you, but he loves her now. Page 113 "What did I say?" Aspundh looked toward her, clear eyed again, but his face was drained and drawn. She told him, haltingly, helped on by the others. "But I don't understand it.. .." _I_ don't understand it! How could he love .. .


pages: 651 words: 180,162

Antifragile: Things That Gain From Disorder by Nassim Nicholas Taleb

"World Economic Forum" Davos, Air France Flight 447, Alan Greenspan, Andrei Shleifer, anti-fragile, banking crisis, Benoit Mandelbrot, Berlin Wall, biodiversity loss, Black Swan, business cycle, caloric restriction, caloric restriction, Chuck Templeton: OpenTable:, commoditize, creative destruction, credit crunch, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, discrete time, double entry bookkeeping, Emanuel Derman, epigenetics, fail fast, financial engineering, financial independence, Flash crash, flying shuttle, Gary Taubes, George Santayana, Gini coefficient, Helicobacter pylori, Henri Poincaré, Higgs boson, high net worth, hygiene hypothesis, Ignaz Semmelweis: hand washing, informal economy, invention of the wheel, invisible hand, Isaac Newton, James Hargreaves, Jane Jacobs, Jim Simons, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Arrow, knowledge economy, language acquisition, Lao Tzu, Long Term Capital Management, loss aversion, Louis Pasteur, mandelbrot fractal, Marc Andreessen, Mark Spitznagel, meta-analysis, microbiome, money market fund, moral hazard, mouse model, Myron Scholes, Norbert Wiener, pattern recognition, Paul Samuelson, placebo effect, Ponzi scheme, Post-Keynesian economics, power law, principal–agent problem, purchasing power parity, quantitative trading / quantitative finance, Ralph Nader, random walk, Ray Kurzweil, rent control, Republic of Letters, Ronald Reagan, Rory Sutherland, Rupert Read, selection bias, Silicon Valley, six sigma, spinning jenny, statistical model, Steve Jobs, Steven Pinker, Stewart Brand, stochastic process, stochastic volatility, synthetic biology, tacit knowledge, tail risk, Thales and the olive presses, Thales of Miletus, The Great Moderation, the new new thing, The Wealth of Nations by Adam Smith, Thomas Bayes, Thomas Malthus, too big to fail, transaction costs, urban planning, Vilfredo Pareto, Yogi Berra, Zipf's Law

Adam Smith himself made the analogy of the economy as a watch or a clock that once set in motion continues on its own. But I am certain that he did not quite think of matters in these terms, that he looked at the economy in terms of organisms but lacked a framework to express it. For Smith understood the opacity of complex systems as well as the interdependencies, since he developed the notion of the “invisible hand.” Click here for a larger image of this table. But alas, unlike Adam Smith, Plato did not quite get it. Promoting the well-known metaphor of the ship of state, he likens a state to a naval vessel, which, of course, requires the monitoring of a captain. He ultimately argues that the only men fit to be captain of this ship are philosopher kings, benevolent men with absolute power who have access to the Form of the Good.

Matt Ridley’s Anti-Teleological Argument The great medieval Arabic-language skeptic philosopher Algazel, aka Al-Ghazali, who tried to destroy the teleology of Averroes and his rationalism, came up with the famous metaphor of the pin—now falsely attributed to Adam Smith. The pin doesn’t have a single maker, but twenty-five persons involved; these are all collaborating in the absence of a central planner—a collaboration guided by an invisible hand. For not a single one knows how to produce it on his own. In the eyes of Algazel, a skeptic fideist (i.e., a skeptic with religious faith), knowledge was not in the hands of humans, but in those of God, while Adam Smith calls it the law of the market and some modern theorist presents it as self-organization.

And, no, you cannot centralize innovations, we tried that in Russia. Remarkably, to get a bit more philosophical with the ideas of Algazel, one can see religion’s effect here in reducing dependence on the fallibility of human theories and agency—so Adam Smith meets Algazel in that sense. For one the invisible hand is the market, for the other it is God. It has been difficult for people to understand that, historically, skepticism has been mostly skepticism of expert knowledge rather than skepticism about abstract entities like God, and that all the great skeptics have been largely either religious or, at least, pro-religion (that is, in favor of others being religious).


pages: 7,371 words: 186,208

The Long Twentieth Century: Money, Power, and the Origins of Our Times by Giovanni Arrighi

anti-communist, Asian financial crisis, barriers to entry, Bretton Woods, British Empire, business climate, business logic, business process, classic study, colonial rule, commoditize, Corn Laws, creative destruction, cuban missile crisis, David Ricardo: comparative advantage, declining real wages, deindustrialization, double entry bookkeeping, European colonialism, Fairchild Semiconductor, financial independence, financial intermediation, floating exchange rates, gentrification, Glass-Steagall Act, Great Leap Forward, income inequality, informal economy, invisible hand, joint-stock company, Joseph Schumpeter, Kōnosuke Matsushita, late capitalism, London Interbank Offered Rate, means of production, Meghnad Desai, military-industrial complex, Money creation, money: store of value / unit of account / medium of exchange, new economy, offshore financial centre, oil shock, Peace of Westphalia, post-Fordism, profit maximization, Project for a New American Century, RAND corporation, reserve currency, scientific management, spice trade, Strategic Defense Initiative, Suez canal 1869, the market place, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, trade route, transaction costs, transatlantic slave trade, transcontinental railway, upwardly mobile, vertical integration, Yom Kippur War

Both groups were the “governors,” not of the “imperial engine,” but of the finances of the imperial engine. They were business cliques who, in view of a profit and by means of the cosmopolitan business network which they controlled, acted as the “invisible hand” of an imperial organization — Imperial Britain and Imperial Spain, respectively. Thanks to this “invisible hand,” both imperial organizations could reach and control a greater number and variety of power and credit networks than they would have ever been able to do just by deploying the “visible hand” of their stateand war-making apparatuses. Instrumentality ran both ways.

In the latter half of the sixteenth century, however, the Genoese “nation” emerged as by far the most powerful among them. In 1617, Suarez de Figueroa went as far as claiming that Spain and Portugal had become “the Indies of the Genoese” (quoted in Elliott 1970b: 96). The hyperbole contained an important element of truth. As we shall detail in the next chapter, in the half-century or so preceding 1617 the “invisible hand” of Genoese capital, operating through the triangle-offlows that linked Seville, Antwerp, and Bisenzone to one another, had succeeded in turning the power pursuits of Imperial Spain, as well as the industrial pursuits of Genoa’s old rival and “model” city-state Venice, into powerful engines of its own self-—expansion.


pages: 1,020 words: 339,564

The confusion by Neal Stephenson

correlation does not imply causation, dark matter, Fellow of the Royal Society, Filipino sailors, invisible hand, Isaac Newton, land bank, Neal Stephenson, out of africa, Snow Crash, Socratic dialogue, South China Sea, spice trade, three-masted sailing ship, urban planning, web of trust

“As I watched Yevgeny’s bout this evening,” Moseh continued, “it came to me that said market is a sort of Invisible Hand that grips us all by the testicles—” “Hold, hold! Are you babbling some manner of Cabbalistic superstition now?” “No, Jack, now I am using a similitude. For there is no Invisible Hand—but there might as well be.” “Very good—pray continue.” “The workings of the market dictate that tutsaklar who are likely to be ransomed, and for large fees, are well-treated—” “And ones like us end up as galley-slaves,” Jack said. “And ’tis clear enough to me why I am assessed a low value by this market, and my nuts gripped most oppressively by the Invisible Hand of which you spoke.

But this ship was captured by the corsairs of Rabat, and we all ended up galley-slaves together, rowing to the strains of the Hava Negila; which, owing to its tiresome knack for getting stuck in the head, was the only Jewish song we knew.” “All right,” Jack said, “I am satisfied, now, that it is true what you said: namely that the Invisible Hand of yonder market is gripping our cojones just like that Nubian wrestler did Yevgeny’s. And now I suppose you’re going to say we should all do like the Rus and ignore the pain and swelling and score some sort of magnificent triumph of the human spirit, or some shit like that. Anyway, I am willing to listen, as it seems preferable to bedding down in the banyolar to listen to the antiphonal coughing of a thousand consumptive oar-slaves.”

When he tore his dark, quasi-Mongol eyes away from Sophie Charlotte (not easy in that she was very likely the most lovely and interesting female he had ever seen) and got a load of the tableau in the dining room, he came to a stop. His left eye twitched shut as if he were winking, then struggled open, then did it again. Then the whole left side of his face contorted as if an invisible hand had gripped his cheek and twisted it. He pulled free of Sophie Charlotte’s arm and clapped both hands over his face for a few moments, possibly from embarrassment and possibly to hide this twitching. Then both hands lunged out as he strode forward. He was so shockingly colossal that it seemed as if he were diving forward, launching himself towards his three guards like an immense bat.


Trading Risk: Enhanced Profitability Through Risk Control by Kenneth L. Grant

backtesting, business cycle, buy and hold, commodity trading advisor, correlation coefficient, correlation does not imply causation, delta neutral, diversification, diversified portfolio, financial engineering, fixed income, frictionless, frictionless market, George Santayana, global macro, implied volatility, interest rate swap, invisible hand, Isaac Newton, John Meriwether, Long Term Capital Management, managed futures, market design, Myron Scholes, performance metric, price mechanism, price stability, proprietary trading, risk free rate, risk tolerance, risk-adjusted returns, Sharpe ratio, short selling, South Sea Bubble, Stephen Hawking, the scientific method, The Wealth of Nations by Adam Smith, transaction costs, two-sided market, uptick rule, value at risk, volatility arbitrage, yield curve, zero-coupon bond

As with any investment, it requires the allocation of scarce resources, for which it is reasonable to expect a return. I’m biased, but I believe that a wellconceived and efficiently executed investment in a risk management program ought to generate as healthy and steady a return as anything that’s likely to make its way into your portfolio. And I heartily recommend that the next time the invisible hand of risk management finds its way into your nether regions, just do like I do: Close your eyes, repeat over and over again “It’s an investment,” and wait for the returns to come rolling in. The Risk Management Investment will insinuate itself into your otherwise tranquil portfolio management existence in myriad ways.

This helps him manage his risk, keep creditors at bay, and maintain the schedule flexibility he needs to be able to drop everything when he receives word (and the phone call is expected at any time) that Dreamworks has decided to provide funding for his bold but underdeveloped concept for a musical adaptation of Adam Smith’s The Wealth of Nations, featuring his selfpenned (soon to be) smash hit, “I Wanna Hold Your (Invisible) Hand.” In addition, I have a relative in this game, who I also consider a friend. Her name is Barbara. She’s raised a whole passel of kids and grandkids and is the chief financial officer of the family business. We don’t see eye-to-eye on every issue, but she has a better outlook on life than just about anybody I know.


pages: 409 words: 118,448

An Extraordinary Time: The End of the Postwar Boom and the Return of the Ordinary Economy by Marc Levinson

affirmative action, airline deregulation, Alan Greenspan, banking crisis, Big bang: deregulation of the City of London, Boycotts of Israel, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, car-free, Carmen Reinhart, central bank independence, centre right, clean water, deindustrialization, endogenous growth, falling living standards, financial deregulation, flag carrier, floating exchange rates, full employment, George Gilder, Gini coefficient, global supply chain, Great Leap Forward, guns versus butter model, high-speed rail, income inequality, income per capita, indoor plumbing, informal economy, intermodal, inverted yield curve, invisible hand, It's morning again in America, Kenneth Rogoff, knowledge economy, late capitalism, Les Trente Glorieuses, linear programming, low interest rates, manufacturing employment, Multi Fibre Arrangement, new economy, Nixon shock, Nixon triggered the end of the Bretton Woods system, North Sea oil, oil shock, Paul Samuelson, pension reform, Phillips curve, price stability, purchasing power parity, refrigerator car, Right to Buy, rising living standards, Robert Gordon, rolodex, Ronald Coase, Ronald Reagan, Simon Kuznets, statistical model, strikebreaker, structural adjustment programs, The Rise and Fall of American Growth, Thomas Malthus, total factor productivity, unorthodox policies, upwardly mobile, War on Poverty, Washington Consensus, Winter of Discontent, Wolfgang Streeck, women in the workforce, working-age population, yield curve, Yom Kippur War, zero-sum game

Cabinet Task Force on Oil Import Control, The Oil Import Question (Washington, DC: USGPO, 1970), 19; US Treasury, Office of Economic Stabilization, Historical Working Papers on the Economic Stabilization Program Vol. 2 (Washington, DC: USGPO, 1974), 1237. 11. Martha Derthick and Paul J. Quirk, The Politics of Deregulation (Washington, DC: Brookings Institution, 1985), 36. There are many other explanations for the onset of deregulation. See Kim Phillips-Fein, Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan (New York: Norton, 2009). Phillips-Fein sees deregulation as part of a conservative counterthrust against the social-democratic consensus that reigned in the years after World War II. See also Meg Jacobs, Panic at the Pump: The Energy Crisis and the Transformation of American Politics in the 1970s (New York: Hill and Wang, 2016), 26–27.

For example, see Daniel Yergin and Joseph Stanislaw, The Commanding Heights: The Battle Between Government and the Marketplace (New York: Simon & Schuster, 1998). 24. US Energy Information Administration, Monthly Energy Review, February 2015, Tables 9.1 and 9.4. 25. Stacy L. Schreft, “Credit Controls: 1980,” in Federal Reserve Bank of Richmond, Economic Review (November–December 1990): 25–55. 26. Phillips-Fein, Invisible Hands; Hugh Heclo and Rudolph Penner, “Fiscal and Political Strategy in the Reagan Administration,” in Fred I. Greenstein, ed., The Reagan Presidency: An Early Assessment (Baltimore: Johns Hopkins University Press, 1983). 27. Transcript of presidential debate between Ronald Reagan and Jimmy Carter, Cleveland, Ohio, October 28, 1980, http://www.debates.org/index.php?


pages: 403 words: 111,119

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

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

Economics: the twentieth-century neoliberal story (in which we go to the brink of collapse) Staging by Paul Samuelson Script by the Mont Pelerin Society Cast, in order of appearance: THE MARKET, which is efficient – so give it free rein. As Adam Smith famously wrote, ‘It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.’8 When the market’s invisible hand is set free to work its magic of allocative efficiency, it harnesses the self-interest of every household and business to provide all the goods and jobs that are wanted. BUSINESS, which is innovative – so let it lead. ‘The business of business is business’ summed up Milton Friedman’s influential philosophy in the 1970s.

Walras had an ambitious agenda for these scissors: he was convinced it was possible to scale the analysis up from a single commodity to all commodities, so creating a model of the whole market economy. And, he reasoned, if those markets were comprised of fully informed, small-scale competitive sellers and buyers, then the economy would reach a point of equilibrium that maximised total utility. In other words – in a neat echo of Smith’s invisible hand – it would, for any given income distribution, produce the best possible outcome for society as a whole. The mathematical techniques did not yet exist for Walras to prove his hunch but his agenda was later picked up by Kenneth Arrow and Gerard Debreu, who set out its equations in their 1954 model of general equilibrium.


pages: 379 words: 113,656

Six Degrees: The Science of a Connected Age by Duncan J. Watts

AOL-Time Warner, Berlin Wall, Bretton Woods, business process, corporate governance, Drosophila, Erdős number, experimental subject, fixed income, Frank Gehry, Geoffrey West, Santa Fe Institute, independent contractor, industrial cluster, invisible hand, it's over 9,000, Long Term Capital Management, market bubble, Milgram experiment, MITM: man-in-the-middle, Murray Gell-Mann, Network effects, new economy, Norbert Wiener, PalmPilot, Paul Erdős, peer-to-peer, power law, public intellectual, rolodex, Ronald Coase, Savings and loan crisis, scientific worldview, Silicon Valley, social contagion, social distancing, Stuart Kauffman, supply-chain management, The Nature of the Firm, the strength of weak ties, The Wealth of Nations by Adam Smith, Toyota Production System, Tragedy of the Commons, transaction costs, transcontinental railway, vertical integration, Vilfredo Pareto, Y2K

Economics, it must be remembered, is the antithesis of cynicism. People are selfish, it claims, but they are also rational. So greed is always mitigated by knowledge, and fear is absent entirely. The result, as Adam Smith famously predicted, is that rational agents, optimizing their selfish interests, will “be led by an invisible hand” to a collective outcome that is at least as good as any other. Governance—which is to say not just the government, but institutions, regulations, and externally imposed restrictions of all kinds—is likely only to upset the proper functioning of the market. Although Smith was writing specifically about the political economy of international trade, his logic has subsequently been applied to markets of all kinds, including financial markets, in which, naturally, there will not be any crises.

Manias, Panics, and Crashes: A History of Financial Crises, 4th ed. (Wiley, New York, 2000). Shiller, R. J. Irrational Exuberance (Princeton University Press, Princeton, NJ, 2000). Fear, Greed, and Rationality Adam Smith’s discussion of rationally optimizing agents, including his reference to the invisible hand, is in Smith, A. The Wealth of Nations, Vol. 1, Book 4 (University of Chicago Press, Chicago, 1976), chapter 2, p. 477. The paradox of the efficient market hypothesis is described in Chancellor, E. Devil Take the Hindmost: A History of Financial Speculation (Farrar, Straus and Giroux, New York, 1999).


pages: 424 words: 115,035

How Will Capitalism End? by Wolfgang Streeck

"there is no alternative" (TINA), accounting loophole / creative accounting, air traffic controllers' union, Airbnb, Alan Greenspan, basic income, behavioural economics, Ben Bernanke: helicopter money, billion-dollar mistake, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, centre right, Clayton Christensen, collective bargaining, conceptual framework, corporate governance, creative destruction, credit crunch, David Brooks, David Graeber, debt deflation, deglobalization, deindustrialization, disruptive innovation, en.wikipedia.org, eurozone crisis, failed state, financial deregulation, financial innovation, first-past-the-post, fixed income, full employment, Gini coefficient, global reserve currency, Google Glasses, haute cuisine, income inequality, information asymmetry, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, junk bonds, Kenneth Rogoff, labour market flexibility, labour mobility, late capitalism, liberal capitalism, low interest rates, market bubble, means of production, military-industrial complex, moral hazard, North Sea oil, offshore financial centre, open borders, pension reform, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, post-industrial society, private sector deleveraging, profit maximization, profit motive, quantitative easing, reserve currency, rising living standards, Robert Gordon, savings glut, secular stagnation, shareholder value, sharing economy, sovereign wealth fund, tacit knowledge, technological determinism, The Future of Employment, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transaction costs, Uber for X, upwardly mobile, Vilfredo Pareto, winner-take-all economy, Wolfgang Streeck

Capitalist society may be described in shorthand as a ‘progressive’ society in the sense of Adam Smith1 and the enlightenment, a society that has coupled its ‘progress’ to the continuous and unlimited production and accumulation of productive capital, effected through a conversion, by means of the invisible hand of the market and the visible hand of the state, of the private vice of material greed into a public benefit.2 Capitalism promises infinite growth of commodified material wealth in a finite world, by conjoining itself with modern science and technology, making capitalist society the first industrial society, and through unending expansion of free, in the sense of contestable, risky markets, on the coat-tails of a hegemonic carrier state and its market-opening policies both domestically and internationally.3 As a version of industrial society, capitalist society is distinguished by the fact that its collective productive capital is accumulated in the hands of a minority of its members who enjoy the legal privilege, in the form of rights of private property, to dispose of such capital in any way they see fit, including letting it sit idle or transferring it abroad.

A short recapitulation of the history of modern capitalism serves to illustrate this point.10 Liberal capitalism in the nineteenth century was confronted by a revolutionary labour movement that needed to be politically tamed by a complex combination of repression and co-optation, including democratic power sharing and social reform. In the early twentieth century, capitalism was commandeered to serve national interests in international wars, thereby converting it into a public utility under the planning regimes of a new war economy, as private property and the invisible hand of the market seemed insufficient for the provision of the collective capacities countries needed to prevail in international hostilities. After the First World War, restoration of a liberal-capitalist economy failed to produce a viable social order and had to give way in large parts of the industrial world to either Communism or Fascism, while in the core countries of what was to become ‘the West’ liberal capitalism was gradually succeeded, in the aftermath of the Great Depression, by Keynesian, state-administered capitalism.


pages: 436 words: 114,278

Crude Volatility: The History and the Future of Boom-Bust Oil Prices by Robert McNally

"World Economic Forum" Davos, Alan Greenspan, American energy revolution, Asian financial crisis, banking crisis, barriers to entry, Bear Stearns, Bretton Woods, collective bargaining, credit crunch, energy security, energy transition, geopolitical risk, housing crisis, hydraulic fracturing, Ida Tarbell, index fund, Induced demand, interchangeable parts, invisible hand, joint-stock company, market clearing, market fundamentalism, megaproject, moral hazard, North Sea oil, oil rush, oil shale / tar sands, oil shock, peak oil, price discrimination, price elasticity of demand, price stability, sovereign wealth fund, subprime mortgage crisis, Suez canal 1869, Suez crisis 1956, transfer pricing, vertical integration

Leonardo Maugeri noted: [Rockefeller’s] world was not Adam Smith’s. In Smith’s world each person contributed to the overall progress of society by embarking on and competing in economic activities, while the steady working of an invisible hand corrected all imbalances. But Rockefeller … saw only the world as it was: a brutal blind struggle fueled by rapacity and greed. To his mind, there was no “invisible hand” at work behind this world, which—in the case of oil—was moved by irrational people, whose addiction to building castles in the air brought disaster on themselves and on the whole oil business.45 A massive new oil field discovered in Pithole Creek, Pennsylvania, in 1865 encouraged the twenty-five-year-old Rockefeller to shed his other business activities and exclusively focus his talents on the refining industry.


pages: 385 words: 118,314

Cities Are Good for You: The Genius of the Metropolis by Leo Hollis

Airbnb, Alvin Toffler, banking crisis, Berlin Wall, Big Tech, Boris Johnson, Broken windows theory, Buckminster Fuller, call centre, car-free, carbon footprint, cellular automata, classic study, clean water, cloud computing, complexity theory, congestion charging, creative destruction, credit crunch, Credit Default Swap, crowdsourcing, Deng Xiaoping, digital divide, digital map, Disneyland with the Death Penalty, Donald Shoup, East Village, Edward Glaeser, Elisha Otis, Enrique Peñalosa, export processing zone, Firefox, Frank Gehry, General Motors Futurama, Geoffrey West, Santa Fe Institute, Gini coefficient, Google Earth, Great Leap Forward, Guggenheim Bilbao, haute couture, Hernando de Soto, high-speed rail, housing crisis, illegal immigration, income inequality, informal economy, Internet of things, invisible hand, Jane Jacobs, Jevons paradox, Kickstarter, knowledge economy, knowledge worker, Leo Hollis, Lewis Mumford, Long Term Capital Management, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, Masdar, mass immigration, megacity, negative equity, Neil Armstrong, new economy, New Urbanism, Occupy movement, off-the-grid, openstreetmap, packet switching, Panopticon Jeremy Bentham, place-making, power law, Quicken Loans, Ray Oldenburg, Richard Florida, sharing economy, Silicon Valley, Skype, smart cities, smart grid, spice trade, Steve Jobs, technoutopianism, the built environment, The Chicago School, The Death and Life of Great American Cities, The Great Good Place, the High Line, The Spirit Level, the strength of weak ties, The Wisdom of Crowds, Thomas Malthus, trade route, traveling salesman, urban planning, urban renewal, urban sprawl, walkable city, white flight, Y2K, Yom Kippur War

However, his poem celebrated the complexity: ‘Thus every Part was full of Vice,/Yet the whole Mass a Paradise’.5 The city itself was the incubator of the deadliest sins yet counterintuitively combined to create a place of virtue. Was it trade itself that kept the city safe? Did the prospects of business regulate and pacify society? Mandeville offers a vision of the city that did not need mayors, politicians or police, for the market itself was the invisible hand that made a virtuous whole out of the self-interested parts. Contrast this beehive with a contemporary image from the work of the French street artist JR, who uses his large black and white flyposts to question people’s assumptions about their place in society. In 2011 he was awarded the TED Prize, yet his career began when he found a camera on the Paris Métro and began to plaster around the city vast portraits of people that he knew from the banlieus, the forgotten estates on the periphery of Paris.

Good ideas often do not come from solitary moments of contemplation but from sharing; of rubbing two notions together to produce something new; they are hunches that have lain dormant for long periods which are rolled over and examined in a new light; moments of serendipity that cause a surprise symbiosis; the result of a friend of a friend offering essential help at the right time. The city also offers diversity and competition, the best forcing grounds for turning seeds into blossoming success. This is what Adam Smith calls the ‘invisible hand’ of capitalism: the market’s demand for the new, the supplier’s desire to reduce costs and scale up profits has always fuelled creativity. Competition forces innovation, finding the new edge or improvement that makes the vital difference. Best of all, good ideas breed other good ideas; creativity develops its own virtuous circle.


pages: 464 words: 116,945

Seventeen Contradictions and the End of Capitalism by David Harvey

accounting loophole / creative accounting, Alvin Toffler, bitcoin, Branko Milanovic, Bretton Woods, BRICs, British Empire, business climate, California gold rush, call centre, central bank independence, Charles Babbage, classic study, clean water, cloud computing, collapse of Lehman Brothers, colonial rule, company town, cotton gin, creative destruction, Credit Default Swap, David Ricardo: comparative advantage, death from overwork, deindustrialization, demographic dividend, Deng Xiaoping, deskilling, drone strike, end world poverty, falling living standards, fiat currency, first square of the chessboard, first square of the chessboard / second half of the chessboard, Food sovereignty, Frank Gehry, future of work, gentrification, global reserve currency, Great Leap Forward, Guggenheim Bilbao, Gunnar Myrdal, Herbert Marcuse, income inequality, informal economy, invention of the steam engine, invisible hand, Isaac Newton, Jane Jacobs, Jarndyce and Jarndyce, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Just-in-time delivery, knowledge worker, low skilled workers, Mahatma Gandhi, market clearing, Martin Wolf, means of production, microcredit, military-industrial complex, Money creation, Murray Bookchin, new economy, New Urbanism, Occupy movement, peak oil, phenotype, planned obsolescence, plutocrats, Ponzi scheme, quantitative easing, rent-seeking, reserve currency, road to serfdom, Robert Gordon, Ronald Reagan, Savings and loan crisis, scientific management, short selling, Silicon Valley, special economic zone, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, wages for housework, Wall-E, women in the workforce, working poor, working-age population

In cultivating monopoly power, capital realises far-reaching control over production and marketing. It can stabilise the business environment to allow for rational calculation and long-term planning, the reduction of risk and uncertainty. The ‘visible hand’ of the corporation, as Alfred Chandler terms it, has been and continues to be just as important to capitalist history as Adam Smith’s ‘invisible hand’.7 The ‘heavy hand’ of state power exercised broadly in support of capital also plays its part. Monopoly power is strongly associated with the centralisation of capital. On the other hand competition generally entails decentralisation. It is useful here to consider this cognate relation between the centralisation and decentralisation of political-economic activities as a subset of the contradictory unity between monopoly and competition.

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


pages: 463 words: 118,936

Darwin Among the Machines by George Dyson

Ada Lovelace, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Albert Einstein, anti-communist, backpropagation, Bletchley Park, British Empire, carbon-based life, cellular automata, Charles Babbage, Claude Shannon: information theory, combinatorial explosion, computer age, Computing Machinery and Intelligence, Danny Hillis, Donald Davies, fault tolerance, Fellow of the Royal Society, finite state, IFF: identification friend or foe, independent contractor, invention of the telescope, invisible hand, Isaac Newton, Jacquard loom, James Watt: steam engine, John Nash: game theory, John von Neumann, launch on warning, low earth orbit, machine readable, Menlo Park, Nash equilibrium, Norbert Wiener, On the Economy of Machinery and Manufactures, packet switching, pattern recognition, phenotype, RAND corporation, Richard Feynman, spectrum auction, strong AI, synthetic biology, the scientific method, The Wealth of Nations by Adam Smith, Turing machine, Von Neumann architecture, zero-sum game

Any brain, machine, or other thing that has a mind must be composed of smaller things that cannot think at all.”38 Or, as Samuel Butler put it in 1887: “Man is only a great many amoebas, most of them dreadfully narrow-minded, going up and down the country with their goods and chattels.”39 The archetypal invisible hand of Adam Smith (“He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”)40 appears to be capable of building not only an economy, or a damage-resistant communications network, but a brainlike structure, perhaps a mind. “Probably the closest parallel structure to the Internet is the free market economy,” observed Paul Baran.41 The incubation of intelligence within a network requires an exceptionally fluid, arborescent structure and the infiltration of this architecture by a statistical language analogous to the primary statistical language that von Neumann identified as the machine language of the brain.


pages: 387 words: 119,244

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

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

I am led to ponder to what extent the Chancellor’s renowned economic and financial skills are the result of exposure to the subliminal intellect-enhancing emanations of this area.’ Concluding a scholarly speech, Greenspan referred to the phrase ‘the invisible hand’ which Smith used to describe the workings of markets: ‘One could hardly imagine that today’s awesome array of international transactions would produce the relative economic stability that we experience daily if they were not led by some international version of Smith’s invisible hand.’ That night Brown hailed his friend Greenspan as ‘the greatest economist of his generation’. The next day, Monday 7 February, Greenspan got his honorary degree at Edinburgh with Brown in attendance.


The Code: Silicon Valley and the Remaking of America by Margaret O'Mara

A Declaration of the Independence of Cyberspace, accounting loophole / creative accounting, affirmative action, Airbnb, Alan Greenspan, AltaVista, Alvin Toffler, Amazon Web Services, An Inconvenient Truth, AOL-Time Warner, Apple II, Apple's 1984 Super Bowl advert, autonomous vehicles, back-to-the-land, barriers to entry, Ben Horowitz, Berlin Wall, Big Tech, Black Lives Matter, Bob Noyce, Buckminster Fuller, Burning Man, business climate, Byte Shop, California gold rush, Californian Ideology, carried interest, clean tech, clean water, cloud computing, cognitive dissonance, commoditize, company town, Compatible Time-Sharing System, computer age, Computer Lib, continuous integration, cuban missile crisis, Danny Hillis, DARPA: Urban Challenge, deindustrialization, different worldview, digital divide, Do you want to sell sugared water for the rest of your life?, don't be evil, Donald Trump, Doomsday Clock, Douglas Engelbart, driverless car, Dynabook, Edward Snowden, El Camino Real, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Fairchild Semiconductor, Frank Gehry, Future Shock, Gary Kildall, General Magic , George Gilder, gig economy, Googley, Hacker Ethic, Hacker News, high net worth, hockey-stick growth, Hush-A-Phone, immigration reform, income inequality, industrial research laboratory, informal economy, information retrieval, invention of movable type, invisible hand, Isaac Newton, It's morning again in America, Jeff Bezos, Joan Didion, job automation, job-hopping, John Gilmore, John Markoff, John Perry Barlow, Julian Assange, Kitchen Debate, knowledge economy, knowledge worker, Larry Ellison, Laura Poitras, Lyft, Marc Andreessen, Mark Zuckerberg, market bubble, Mary Meeker, mass immigration, means of production, mega-rich, Menlo Park, Mikhail Gorbachev, military-industrial complex, millennium bug, Mitch Kapor, Mother of all demos, move fast and break things, mutually assured destruction, Neil Armstrong, new economy, Norbert Wiener, old-boy network, Palm Treo, pattern recognition, Paul Graham, Paul Terrell, paypal mafia, Peter Thiel, pets.com, pirate software, popular electronics, pre–internet, prudent man rule, Ralph Nader, RAND corporation, Richard Florida, ride hailing / ride sharing, risk tolerance, Robert Metcalfe, ROLM, Ronald Reagan, Salesforce, Sand Hill Road, Second Machine Age, self-driving car, shareholder value, Sheryl Sandberg, side hustle, side project, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, skunkworks, Snapchat, social graph, software is eating the world, Solyndra, speech recognition, Steve Ballmer, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, Strategic Defense Initiative, supercomputer in your pocket, Susan Wojcicki, tacit knowledge, tech billionaire, tech worker, technoutopianism, Ted Nelson, TED Talk, the Cathedral and the Bazaar, the market place, the new new thing, The Soul of a New Machine, There's no reason for any individual to have a computer in his home - Ken Olsen, Thomas L Friedman, Tim Cook: Apple, Timothy McVeigh, transcontinental railway, Twitter Arab Spring, Uber and Lyft, uber lyft, Unsafe at Any Speed, upwardly mobile, Vannevar Bush, War on Poverty, Wargames Reagan, WarGames: Global Thermonuclear War, We wanted flying cars, instead we got 140 characters, Whole Earth Catalog, WikiLeaks, William Shockley: the traitorous eight, work culture , Y Combinator, Y2K

Let us instead look toward the future, for “the ideas and technologies of tomorrow are born here in California.” Gorbachev was as smitten with the Bay Area as Charles de Gaulle had been thirty years before. “I always wanted to come here, and I never had the chance,” he told a clutch of waiting reporters. “Fantastic!”28 But future-tense California had never been without the government’s invisible hand. The big money that flowed in via SCI and SDI contracts in the 1980s was a reminder that defense remained the big-government engine hidden under the hood of the Valley’s shiny new entrepreneurial sports car, flying largely under the radar screen of the saturation media coverage of hackers and capitalists.

Olmsted, Right Out of California: The 1930s and the Big Business Roots of Modern Conservatism (New York: The New Press, 2015). On business conservatism more broadly, see Angus Burgin, The Great Persuasion: Reinventing Free Markets Since the Depression (Cambridge, Mass.: Harvard University Press, 2012); Kim Phillips-Fein, Invisible Hands: The Businessmen’s Crusade Against the New Deal (New York: W. W. Norton, 2010). 12. Hoover chose Campbell on the recommendation of one of the fiercest critics of the New Deal, ex-Roosevelt aide Raymond Moley. See Gary Atkins, “Attacked for Politics, Policies; Critics Center on Hoover Boss,” The Stanford Daily, January 7, 1972, 1.

This was part of a broader business push against the New Deal that included the formulation of the rhetoric of “free enterprise”; see Lawrence Glickman, “Free Enterprise versus the New Deal Order,” paper presented at the “Beyond the New Deal Order” conference, Center for the Study of Work, Labor, and Democracy, University of California, Santa Barbara, September 24–26, 2015. Also see Kathryn S. Olmsted, Right Out of California: The 1930s and the Big Business Roots of Modern Conservatism (New York: The New Press, 2015); Kim Phillips-Fein, Invisible Hands: The Businessmen’s Crusade against the New Deal (New York: W. W. Norton, 2010); and Julia C. Ott, When Wall Street Met Main Street: The Quest for an Investors’ Democracy (Cambridge, Mass.: Harvard University Press, 2011). 8. “Curb Urged on Loans: Speculation Hit by Bankers,” The Los Angeles Times, October 5, 1928, 2; “Capital Gains Tax,” The Wall Street Journal, November 8, 1930, 1; “Whitney Attacks ‘Excessive’ Relief,” The New York Times, February 27, 1935, 29.


pages: 138 words: 43,748

Conscience of a Conservative: A Rejection of Destructive Politics and a Return to Principle by Jeff Flake

4chan, Affordable Care Act / Obamacare, battle of ideas, Berlin Wall, cognitive dissonance, crony capitalism, David Brooks, disinformation, Donald Trump, fake news, Fall of the Berlin Wall, Francis Fukuyama: the end of history, global supply chain, immigration reform, impulse control, invisible hand, Mark Zuckerberg, obamacare, Potemkin village, race to the bottom, road to serfdom, Ronald Reagan, Silicon Valley, Steve Bannon, uranium enrichment, zero-sum game

Someone in the car with us, remarking on the landscape, said, “Man, it looks like there was no planning at all.” Friedman just nodded his head and said, “Yes, isn’t it beautiful?” This was a classic Milton Friedman statement. Whatever the aesthetics of the suburban development, it wasn’t government coercion that had brought it into being. It was the invisible hand of the free market that had sprawled such a community. Planning requires control, control empowers government, and empowered government = disempowered individuals. Friedman’s musings out a car window are a pretty good distillation of what American conservatives used to believe. At least, it’s what we professed to believe when we were safely among the herd.


pages: 127 words: 51,083

The Oil Age Is Over: What to Expect as the World Runs Out of Cheap Oil, 2005-2050 by Matt Savinar

Alan Greenspan, Albert Einstein, clean water, disinformation, Easter island, energy security, hydrogen economy, illegal immigration, invisible hand, military-industrial complex, new economy, off-the-grid, oil shale / tar sands, oil shock, peak oil, post-oil, Ralph Nader, reserve currency, rolling blackouts, Rosa Parks, The Wealth of Nations by Adam Smith, Y2K

A few hours later, the clothes have been burned up. You and your family are shivering in the cold. If you don't get that stove working soon, you will all perish. What, or should I say who, are you going to put in the stove now? It's a tough decision, and not one your economics textbook is likely to help you make. D. Conclusion The “invisible hand of the market” is about to bitch-slap us back to the stone age. What about the whale oil crisis of the 19th century? The market solved that crisis, what makes you think it won’t solve this one? 46. During the early 1800’s, people used whale oil to light their lamps. As the whale population shrank, a crisis emerged in the early 1830’s.


pages: 134 words: 41,085

The Wake-Up Call: Why the Pandemic Has Exposed the Weakness of the West, and How to Fix It by John Micklethwait, Adrian Wooldridge

Admiral Zheng, Affordable Care Act / Obamacare, air traffic controllers' union, Alan Greenspan, basic income, battle of ideas, Berlin Wall, Bernie Sanders, bike sharing, Black Lives Matter, Boris Johnson, carbon tax, carried interest, cashless society, central bank independence, contact tracing, contact tracing app, Corn Laws, coronavirus, COVID-19, creative destruction, David Ricardo: comparative advantage, defund the police, Deng Xiaoping, Dominic Cummings, Donald Trump, Etonian, failed state, Fall of the Berlin Wall, Future Shock, George Floyd, global pandemic, Internet of things, invisible hand, it's over 9,000, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Jeremy Corbyn, Jones Act, knowledge economy, laissez-faire capitalism, Les Trente Glorieuses, lockdown, McMansion, military-industrial complex, night-watchman state, offshore financial centre, oil shock, Panopticon Jeremy Bentham, Parkinson's law, pensions crisis, QR code, rent control, Rishi Sunak, road to serfdom, Ronald Reagan, school vouchers, Shoshana Zuboff, Silicon Valley, smart cities, social distancing, Steve Bannon, surveillance capitalism, TED Talk, trade route, Tyler Cowen, universal basic income, Washington Consensus

John Maynard Keynes always saw himself as a liberal who disliked the Webbs’ puritanism as much as their collectivism and believed that the state should never consume more than about a quarter of GDP.27 But his book The General Theory of Employment, Interest and Money (1936) ripped apart laissez-faire capitalism. Left to itself, the market would not prove self-correcting, Keynes showed. Capitalism might be wonderful, but it was also self-destructive and needed to be saved from itself. The invisible hand of the market had to be guided by the visible hand of the state. During crises, government had to step in to boost demand by spending public money, particularly on infrastructure and unemployment pay. Events sealed the argument in favor of bigger government. The Wall Street crash proved that unrestrained capitalism might end in ruin, while Franklin Roosevelt’s New Deal between 1933 and 1939 proved that government spending worked.


pages: 433 words: 125,031

Brazillionaires: The Godfathers of Modern Brazil by Alex Cuadros

"World Economic Forum" Davos, affirmative action, Asian financial crisis, benefit corporation, big-box store, bike sharing, BRICs, buy the rumour, sell the news, cognitive dissonance, creative destruction, crony capitalism, Deng Xiaoping, Donald Trump, Elon Musk, facts on the ground, family office, financial engineering, high net worth, index fund, invisible hand, Jeff Bezos, Mark Zuckerberg, megaproject, NetJets, offshore financial centre, profit motive, prosperity theology / prosperity gospel / gospel of success, rent-seeking, risk/return, Rubik’s Cube, savings glut, short selling, Silicon Valley, sovereign wealth fund, stem cell, stock buybacks, tech billionaire, The Wealth of Nations by Adam Smith, too big to fail, transatlantic slave trade, We are the 99%, William Langewiesche

I met Olavo once, and he told me Eliezer wanted him to manage the project because Eike was better at finding assets than at bringing them to fruition. Even then they ran into money problems. So Eliezer got another friend, a rich Japanese businessman, to put more cash in. Eliezer Batista was an invisible hand in Eike’s rise. Eike liked to say he’d left TVX, his failed Toronto-listed gold venture, with a billion dollars in the bank—but other sources, and my own math from digging through his financial history, suggested he was broke by the time he set his sights on Brazil. His father helped him make his comeback.

Much as Eike touted an American culture of risk, Mauá held up the Anglo-Saxon line that self-interest was the engine of progress, and in this way too he went against the grain. The standard economic text in those days, the Viscount of Cairu’s Princípios de Economia Política, was supposed to be an adaptation of The Wealth of Nations, but Cairu jettisoned whatever concepts didn’t jibe with facts on the ground. Forget the invisible hand: “The sovereign of each nation must be considered the chief or head of a vast family, and thus care for all those therein like his children, cooperating for the greater good.” It was a “cordial man” approach to economic policy, state capitalism before the term ever existed. The problem, of course, was that the “greater good” didn’t always extend past the sovereign’s circle of friends.


pages: 452 words: 126,310

The Case for Space: How the Revolution in Spaceflight Opens Up a Future of Limitless Possibility by Robert Zubrin

Ada Lovelace, Albert Einstein, anthropic principle, Apollo 11, battle of ideas, Boeing 747, Charles Babbage, Charles Lindbergh, Colonization of Mars, complexity theory, cosmic microwave background, cosmological principle, Dennis Tito, discovery of DNA, double helix, Elon Musk, en.wikipedia.org, flex fuel, Francis Fukuyama: the end of history, gravity well, if you build it, they will come, Internet Archive, invisible hand, ITER tokamak, James Webb Space Telescope, Jeff Bezos, Johannes Kepler, John von Neumann, Kim Stanley Robinson, Kuiper Belt, low earth orbit, Mars Rover, Mars Society, Menlo Park, more computing power than Apollo, Naomi Klein, nuclear winter, ocean acidification, off grid, out of africa, Peter H. Diamandis: Planetary Resources, Peter Thiel, place-making, Pluto: dwarf planet, private spaceflight, Recombinant DNA, rising living standards, Search for Extraterrestrial Intelligence, self-driving car, Silicon Valley, SoftBank, SpaceX Starlink, Strategic Defense Initiative, Stuart Kauffman, telerobotics, Thomas Malthus, three-masted sailing ship, time dilation, transcontinental railway, uranium enrichment, Virgin Galactic, Wayback Machine

Entrepreneurs have opened the way toward cheap access to space. As a result, all sorts of commercial activities in near-Earth space will soon become not only practical but profitable, and consequently, they will happen. The invisible hand is unstoppable. If someone can make money doing something, it will be done, for good or ill, regardless of the wishes of kings, presidents, religions, or secret police. That said, the invisible hand cannot be counted upon to do everything that needs to be done. The private sector can be expected to fund the development of new and ever-more-advanced reusable launch vehicles to keep reducing the price of access to orbit and enable fast global travel.


pages: 420 words: 124,202

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

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

This was a remarkable bit of insight, the application of Locke’s labor theory of value to national policy. Smith argued that two conditions were necessary for labor to produce the maximum amount of wealth: perfect competition among sellers—everyone pursuing his or her selfish interest, the famous “invisible hand”—and the complete freedom of buyers to substitute one commodity for another. Under such ideal circumstances (Smith was not the first economist, but he was probably the first to “assume a can opener,” i.e. perfect conditions, in a model), specialization, or division of labor, was inevitable. Ten men could each bake their own bread, weave their own cloth, and build their own houses, but if one became a baker, another a weaver, and a third a builder, the result would be more food, clothing, bricks … and trade.

His pin factory, it turns out, was only a metaphor; he never set foot inside one. Nor did he show any understanding of Darby’s furnace, or Arkwright’s water frame, or Watt’s double-acting engine—none of the escape hatches out of humanity’s millennium-long Malthusian trap. The efficiencies of specialization are real, and the self-regulating “invisible hand” powerful, but it was the machines, and nothing else, that allowed Britain, and then the world, to finally produce food (or the wealth with which to buy food) faster than it produced mouths to consume it. A lot more is known about how population increases than how wealth grows. Indeed, the Industrial Revolution was decades old before anyone realized that wealth was growing at all.


pages: 578 words: 131,346

Humankind: A Hopeful History by Rutger Bregman

"Hurricane Katrina" Superdome, Airbnb, Anton Chekhov, basic income, behavioural economics, Berlin Wall, bitcoin, Bletchley Park, Broken windows theory, call centre, data science, David Graeber, domesticated silver fox, Donald Trump, Easter island, experimental subject, fake news, Fall of the Berlin Wall, Frederick Winslow Taylor, Garrett Hardin, Hans Rosling, invention of writing, invisible hand, knowledge economy, late fees, Mahatma Gandhi, mass incarceration, meta-analysis, Milgram experiment, mirror neurons, Nelson Mandela, New Journalism, nocebo, placebo effect, Rutger Bregman, scientific management, sharing economy, Shoshana Zuboff, Silicon Valley, social intelligence, Stanford prison experiment, Stephen Fry, Stephen Hawking, Steve Jobs, Steven Pinker, surveillance capitalism, TED Talk, The Spirit Level, The Wealth of Nations by Adam Smith, Tragedy of the Commons, transatlantic slave trade, tulip mania, universal basic income, W. E. B. Du Bois, World Values Survey

It’s hard to overstate the impact of Hardin’s paper, which went on to become the most widely reprinted ever published in a scientific journal, read by millions of people across the world.32 ‘[It] should be required reading for all students,’ declared an American biologist in the 1980s, ‘and, if I had my way, for all human beings.’33 Ultimately, ‘The Tragedy of the Commons’ would prove among the most powerful endorsements for the growth of the market and the state. Since common property was tragically doomed to fail, we needed either the visible hand of the state to do its salutary work, or the invisible hand of the market to save us. It seemed these two flavours – the Kremlin or Wall Street – were the only options available. Then, after the Berlin Wall came down in 1989, only one remained. Capitalism had won, and we became Homo economicus. 4 To be fair, at least one person was never swayed by Garrett Hardin’s arguments.

Enlightenment-era economists decided collective farmlands were not maximising their production potential, so they advised governments to create enclosures. That meant cutting collective property into parcels to be divvied up among wealthy landowners, under whose stewardship productivity would grow. Do you think capitalism’s ascent in the eighteenth century was a natural development? Hardly. It wasn’t the invisible hand of the market that gently shepherded peasants from their farms into factories, but the ruthless hand of the state, bayonet at the ready. Everywhere in the world, that ‘free market’ was planned and imposed from the top down.38 It wasn’t until the end of the nineteenth century that scores of unions and worker cooperatives began forming – spontaneously and from the bottom up – laying the basis for the twentieth century’s system of social safety nets.


The Party: The Secret World of China's Communist Rulers by Richard McGregor

activist lawyer, banking crisis, corporate governance, credit crunch, Deng Xiaoping, financial innovation, Gini coefficient, glass ceiling, global reserve currency, Great Leap Forward, haute couture, high-speed rail, hiring and firing, income inequality, invisible hand, kremlinology, land reform, Martin Wolf, megaproject, Mikhail Gorbachev, military-industrial complex, old-boy network, one-China policy, Panopticon Jeremy Bentham, pre–internet, reserve currency, risk/return, Shenzhen special economic zone , South China Sea, sovereign wealth fund, special economic zone, Upton Sinclair

The Party has not drawn one obvious lesson from the success of the economy–that the public policy sector that has been most open to debate and competition has produced the best outcomes. In the Party’s view, liberal economics have only succeeded in China because they have been married with authoritarian politics. China’s instincts in this respect are like those of much of Asia. The visible hand of the state and the invisible hand of the market, far from being contradictory, are made to complement and reinforce each other. These days, Chinese officials treat questions of any inherent contradiction between a communist political system and a capitalist economy as almost banal. In real life, China is full of symbols of how the Party has merged the two systems to its advantage.

A few extra steel mills built in defiance of central government diktats on industrial policy or a few rivers dirtier than they should have been, however bad that is, will not bring the country to its knees. But in instances such as the Sanlu case, where the city’s impulse to cover up a problem in its most profitable business was bolstered by the centre’s political priorities, the outcome was devastating. The largely invisible hand of party bodies, in assorted guises, at a variety of locations and at different levels of its competing hierarchies, was behind every important decision taken in the Sanlu case. In the public frenzy that followed the revelations about the poisoned babies, the Party ensured that the pivotal, and even sinister role played in the scandal by its institutions never became a topic for debate.


Bit by Bit: How P2P Is Freeing the World by Jeffrey Tucker

Affordable Care Act / Obamacare, Airbnb, airport security, altcoin, anti-fragile, bank run, bitcoin, blockchain, business cycle, crowdsourcing, cryptocurrency, disintermediation, distributed ledger, Dogecoin, driverless car, Fractional reserve banking, George Gilder, Google Hangouts, informal economy, invisible hand, Kickstarter, litecoin, Lyft, Money creation, obamacare, Occupy movement, peer-to-peer, peer-to-peer lending, public intellectual, QR code, radical decentralization, ride hailing / ride sharing, Ross Ulbricht, Satoshi Nakamoto, sharing economy, Silicon Valley, Skype, systems thinking, tacit knowledge, TaskRabbit, the payments system, uber lyft

It can vanish from one or a million nodes and reappear just as quickly on another one or million nodes. That’s why the distributed network evades the despots of the world. It knows no power, no geography, no jurisdiction, no regulation, no regimentation. It lives freely, developing like a global garden cultivated by an invisible hand. It’s a technological marvel, one that emerged auspiciously but has come to play a beautiful role in the freeing of the world from all forms of tyranny. Looking past the data and code, what’s really at stake is the liberation of lives. These technologies will not be uninvented. Over the past 10 years, they’ve found ever more applications.


Magical Urbanism: Latinos Reinvent the US City by Mike Davis

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", affirmative action, Berlin Wall, business cycle, clean water, collective bargaining, company town, deindustrialization, desegregation, digital divide, edge city, illegal immigration, immigration reform, Internet Archive, invisible hand, job automation, longitudinal study, manufacturing employment, market bubble, mass immigration, new economy, occupational segregation, postnationalism / post nation state, Ronald Reagan, Silicon Valley, strikebreaker, The Turner Diaries, union organizing, upwardly mobile, urban renewal, War on Poverty, white flight, white picket fence, women in the workforce, working poor

Indeed, they transform our understanding of the contemporary big city It is important to emphasize that but involves radical this is not merely metaphor, new social and geographical lifelines that have been forged by the cunning of communities and households adjudged most "expendable" by the invisible hand of the planetary marketplace. Pueblos whose genius for adaptive mutation lowed them to endure, now find first al- the Conquest, then the Porfiriato, that cultural survival in an age of cyber-capital requires TRANSNATIONAL SUBURBS 81 two parts to sustain a Strategic mitosis, dividing themselves into single heredity.


pages: 147 words: 45,890

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

Abraham Maslow, Alan Greenspan, Berlin Wall, business cycle, carbon tax, declining real wages, delayed gratification, Doha Development Round, endowment effect, Ford Model T, full employment, George Akerlof, high-speed rail, Home mortgage interest deduction, Hyman Minsky, illegal immigration, income inequality, invisible hand, job automation, junk bonds, labor-force participation, Long Term Capital Management, loss aversion, low interest rates, Michael Milken, military-industrial complex, mortgage debt, new economy, offshore financial centre, Ralph Nader, Ronald Reagan, school vouchers, sovereign wealth fund, The Theory of the Leisure Class by Thorstein Veblen, Thorstein Veblen, too big to fail, We are all Keynesians now, World Values Survey

HC106.84.R45 2010 330.973—dc22 2010004134 v3.1 To Ella Reich-Sharpe, and her generation Epochs of private interest breed contradictions … characterized by undercurrents of dissatisfaction, criticism, ferment, protest. Segments of the population fall behind in the acquisitive race.… Problems neglected become acute, threaten to become unmanageable and demand remedy.… A detonating issue—some problem growing in magnitude and menace and beyond the market’s invisible hand to solve—at last leads to a breakthrough into a new political epoch. —Arthur M. Schlesinger, Jr., The Cycles of American History CONTENTS Cover Other Books by This Author Title Page Copyright Dedication Epigraph INTRODUCTION: The Pendulum PART I The Broken Bargain Chapter 1.


pages: 478 words: 142,608

The God Delusion by Richard Dawkins

Albert Einstein, anthropic principle, Any sufficiently advanced technology is indistinguishable from magic, Ayatollah Khomeini, Bletchley Park, Boeing 747, Brownian motion, cosmological principle, David Attenborough, Desert Island Discs, double helix, en.wikipedia.org, experimental subject, Fellow of the Royal Society, gravity well, Gregor Mendel, invisible hand, John von Neumann, Jon Ronson, luminiferous ether, Menlo Park, meta-analysis, Murray Gell-Mann, Necker cube, Peter Singer: altruism, phenotype, placebo effect, planetary scale, Ralph Waldo Emerson, Richard Feynman, Schrödinger's Cat, scientific worldview, Search for Extraterrestrial Intelligence, stem cell, Stephen Hawking, Steven Pinker, the scientific method, theory of mind, Thorstein Veblen, trickle-down economics, unbiased observer

Because each is selected to be successful in the presence of the others – which are also being selected in a similar way – cartels of cooperating genes emerge. We have here something more like a free market than a planned economy. There is a butcher and a baker, but perhaps a gap in the market for a candlestick maker. The invisible hand of natural selection fills the gap. That is different from having a central planner who favours the troika of butcher + baker + candlestick maker. The idea of cooperating cartels assembled by the invisible hand will turn out to be central to our understanding of religious memes and how they work. Different kinds of gene cartel emerge in different gene pools. Carnivore gene pools have genes that program prey-detecting sense organs, prey-catching claws, carnassial teeth, meat-digesting enzymes and many other genes, all fine-tuned to cooperate with each other.


pages: 505 words: 142,118

A Man for All Markets by Edward O. Thorp

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", 3Com Palm IPO, Alan Greenspan, Albert Einstein, asset allocation, Bear Stearns, beat the dealer, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, Black-Scholes formula, book value, Brownian motion, buy and hold, buy low sell high, caloric restriction, caloric restriction, carried interest, Chuck Templeton: OpenTable:, Claude Shannon: information theory, cognitive dissonance, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Edward Thorp, Erdős number, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, Garrett Hardin, George Santayana, German hyperinflation, Glass-Steagall Act, Henri Poincaré, high net worth, High speed trading, index arbitrage, index fund, interest rate swap, invisible hand, Jarndyce and Jarndyce, Jeff Bezos, John Bogle, John Meriwether, John Nash: game theory, junk bonds, Kenneth Arrow, Livingstone, I presume, Long Term Capital Management, Louis Bachelier, low interest rates, margin call, Mason jar, merger arbitrage, Michael Milken, Murray Gell-Mann, Myron Scholes, NetJets, Norbert Wiener, PalmPilot, passive investing, Paul Erdős, Paul Samuelson, Pluto: dwarf planet, Ponzi scheme, power law, price anchoring, publish or perish, quantitative trading / quantitative finance, race to the bottom, random walk, Renaissance Technologies, RFID, Richard Feynman, risk-adjusted returns, Robert Shiller, rolodex, Sharpe ratio, short selling, Silicon Valley, Stanford marshmallow experiment, statistical arbitrage, stem cell, stock buybacks, stocks for the long run, survivorship bias, tail risk, The Myth of the Rational Market, The Predators' Ball, the rule of 72, The Wisdom of Crowds, too big to fail, Tragedy of the Commons, uptick rule, Upton Sinclair, value at risk, Vanguard fund, Vilfredo Pareto, Works Progress Administration

Smith suggested that in an economy of many small buyers and sellers, each trying to increase his own profit, our collective benefit would be maximized as though guided by an “invisible hand.” The notion is of limited use, because most markets are not as Smith assumed. Take computer chips: 99.8 percent of them, worldwide, are made by just two US companies, and the smaller one is fighting to survive. An opposite concept to the magic of the invisible hand is “the tragedy of the commons,” as explained in 1968 by Garrett Hardin. Imagine a natural resource that anyone can freely use, such as—once upon a time—catching fish in the ocean.


pages: 492 words: 141,544

Red Moon by Kim Stanley Robinson

artificial general intelligence, basic income, blockchain, Brownian motion, correlation does not imply causation, cryptocurrency, deep learning, Deng Xiaoping, gig economy, Great Leap Forward, Hyperloop, illegal immigration, income inequality, invisible hand, Ken Thompson, Kim Stanley Robinson, low earth orbit, machine translation, Magellanic Cloud, megacity, Neil Armstrong, precariat, quantum entanglement, Schrödinger's Cat, seigniorage, strong AI, Turing machine, universal basic income, zero-sum game

Their landing piste was more than two hundred kilometers long, Fred had been told, but going as fast as they were, something like 8300 kilometers an hour at touchdown, their ship would have to decelerate pretty hard for the whole length of the track. And in fact they were still being decisively pushed back into their seats, also pulled upward, or so it seemed, strange though that was. This slight upward force was already lessening, and the main shove was back into the seat, like pressure all over from a giant invisible hand. The view out the window looked like bad CGI. Landing at the speed of their spaceship’s escape velocity from Earth had allowed them to travel without deceleration fuel, much reducing the spaceship’s weight and size, therefore the cost of transit. But it meant they had come in around forty times faster than a commercial jet on Earth landed, while the tolerance for error in terms of meeting the piste was on the order of a few centimeters.

That’s the way it used to be. That’s the way it started.” John Semple laughed. “We all want that! We’ve lost that in America too. All this stuff in China, it’s happening in America too. We’re having simultaneous crises.” “Maybe it’s the same crisis. Maybe we’ve all lost it, everywhere. Lost it to the invisible hand. The tong that hides everywhere in plain sight.” “Maybe so.” John and Ta Shu stared at each other. “Can you see if these people brought along a comms device with them?” Ta Shu asked. “It’s one of those quantum key things, very heavy for its size.” John nodded. “I’ll have my people take a look for it when they get these folks in hand.”


pages: 457 words: 128,640

Servants: A Downstairs History of Britain From the Nineteenth Century to Modern Times by Lucy Lethbridge

Ada Lovelace, Arthur Marwick, British Empire, country house hotel, decarbonisation, garden city movement, high net worth, invisible hand, Louis Pasteur, new economy, period drama, Ralph Waldo Emerson, social web, The Theory of the Leisure Class by Thorstein Veblen, Thorstein Veblen, traveling salesman, women in the workforce

So high were the standards of management in the well-run wealthy home that the butler needed to develop a passion for detail that often bordered on fetish. It was absolutely crucial that the well-oiled wheels of the home were never on display, that no household necessity or comfort ever looked as though it were not always available in abundance, filled to the brim by invisible hands. Cigarette boxes had therefore to be constantly replenished; soap was always fresh and flowers just picked. ‘Efficiency to me is happiness,’ wrote Ernest King in the 1950s, looking back on half a century of butlering: ‘The aim for perfection I fear becomes a bit of an obsession.’15 By the mid-nineteenth century, the indispensable manservant, the opener of doors, the wearer of black suits, the imperturbable frontman and keeper of the gate, emerged in the form that we would recognise today.

Readers of Struther’s first column never found out who it is who answers Mrs Miniver when she rings for tea because the column ends tantalisingly at that moment. Yet to complete the image of perfection, the tea, so beautifully laid just at the moment when it is most required, must be delivered as it always has been delivered: on time, abundant and blessed by the loyal labour of the invisible hands that created it. In 1934, P. L. Travers’s Mary Poppins had flown in on her umbrella to bring magic and order to the Banks family in Cherry Tree Avenue, where chaos had ensued on the departure of their nanny. The quiet efficiency of a well-run household was the 1930s dream but in real life it was under threat, with servants difficult to secure and widely expected to leave at the drop of a hat, leaving catastrophe in their wake.


pages: 497 words: 143,175

Pivotal Decade: How the United States Traded Factories for Finance in the Seventies by Judith Stein

1960s counterculture, accelerated depreciation, activist lawyer, affirmative action, airline deregulation, Alan Greenspan, anti-communist, Ayatollah Khomeini, barriers to entry, Berlin Wall, blue-collar work, Bretton Woods, business cycle, capital controls, centre right, collective bargaining, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, deindustrialization, desegregation, do well by doing good, Dr. Strangelove, energy security, Fall of the Berlin Wall, falling living standards, feminist movement, financial deregulation, floating exchange rates, full employment, Glass-Steagall Act, Gunnar Myrdal, guns versus butter model, Ida Tarbell, income inequality, income per capita, intermodal, invisible hand, knowledge worker, laissez-faire capitalism, Les Trente Glorieuses, liberal capitalism, Long Term Capital Management, low interest rates, manufacturing employment, market bubble, Martin Wolf, new economy, Nixon triggered the end of the Bretton Woods system, oil shale / tar sands, oil shock, open economy, Paul Samuelson, payday loans, post-industrial society, post-oil, price mechanism, price stability, Ralph Nader, RAND corporation, reserve currency, Robert Gordon, Robert Solow, Ronald Reagan, Savings and loan crisis, Simon Kuznets, strikebreaker, three-martini lunch, trade liberalization, union organizing, urban planning, urban renewal, War on Poverty, Washington Consensus, working poor, Yom Kippur War

Norton, 1984) attributed the New Politics to business mobilization and labor weakness, which had nothing to do with race. For a critique of Edsall and Edsall, see Larry M. Bartels, Unequal Democracy: The Political Economy of the New Gilded Age (Princeton: Princeton University Press, 2008), 64–97. 9. Kim Phillips-Fein, Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan (New York: W. W. Norton, 2009). 10. Earnings for nonagricultural workers declined over the 1970s by nearly 13 percent; median family income was level largely because more wives entered the labor force. 11. Bagehot, “Through a Pint Glass, Darkly,” Economist (Apr. 11, 2009), 58. 12.

Lou Cannon, President Reagan: The Role of a Lifetime (New York: Public Affairs, 1991), 296. 33. NA, “An Explanation of the Reagan Victories in Texas and the Caucus States,” May 1976, 1, file Reagan, Ronald (2), box 25, Jerry Jones papers, Gerald R. Ford Presidential Library and Museum, Ann Arbor, Mich. 34. Kim Phillips-Fein, Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan (New York: W. W. Norton, 2009), 213–21. 35. Ibid., 2. 36. Elizabeth Drew, American Journal: The Events of 1976 (New York: Random House, 1977), 367. 37. Gerald M. Pomper et al., The Election of 1976: Reports and Interpretations (New York: David McKay, 1977), 36. 38.


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Sacred Economics: Money, Gift, and Society in the Age of Transition by Charles Eisenstein

Albert Einstein, back-to-the-land, bank run, Bernie Madoff, big-box store, bread and circuses, Bretton Woods, capital controls, carbon credits, carbon tax, clean water, collateralized debt obligation, commoditize, corporate raider, credit crunch, David Ricardo: comparative advantage, debt deflation, degrowth, deindustrialization, delayed gratification, disintermediation, diversification, do well by doing good, fiat currency, financial independence, financial intermediation, fixed income, floating exchange rates, Fractional reserve banking, full employment, global supply chain, God and Mammon, happiness index / gross national happiness, hydraulic fracturing, informal economy, intentional community, invisible hand, Jane Jacobs, land tenure, land value tax, Lao Tzu, Lewis Mumford, liquidity trap, low interest rates, McMansion, means of production, megaproject, Money creation, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, multilevel marketing, new economy, off grid, oil shale / tar sands, Own Your Own Home, Paul Samuelson, peak oil, phenotype, planned obsolescence, Ponzi scheme, profit motive, quantitative easing, race to the bottom, Scramble for Africa, special drawing rights, spinning jenny, technoutopianism, the built environment, Thomas Malthus, too big to fail, Tragedy of the Commons

In any case, our culture’s notion of spirit is that of something separate and nonworldly, that yet can miraculously intervene in material affairs, and that even animates and directs them in some mysterious way. It is hugely ironic and hugely significant that the one thing on the planet most closely resembling the forgoing conception of the divine is money. It is an invisible, immortal force that surrounds and steers all things, omnipotent and limitless, an “invisible hand” that, it is said, makes the world go ’round. Yet, money today is an abstraction, at most symbols on a piece of paper but usually mere bits in a computer. It exists in a realm far removed from materiality. In that realm, it is exempt from nature’s most important laws, for it does not decay and return to the soil as all other things do, but is rather preserved, changeless, in its vaults and computer files, even growing with time thanks to interest.

Tellingly, in both secular and religious thought, this abstraction has become more important than the physical vehicle, just as the “value” of a thing is more important than its physical attributes. In the introduction I mentioned the idea that we have created a god in the image of our money: an unseen force that moves all things, that animates the world, an “invisible hand” that orders human activity, nonmaterial yet ubiquitous. Many of these attributes of God or spirit go back to the pre-Socratic Greek philosophers who developed their ideas at precisely the time that money took over their society. According to Seaford, they were the first to even distinguish between essence and appearance, between the concrete and the abstract—a distinction completely absent (even implicitly) from Homer.


pages: 494 words: 142,285

The Future of Ideas: The Fate of the Commons in a Connected World by Lawrence Lessig

AltaVista, Andy Kessler, AOL-Time Warner, barriers to entry, Bill Atkinson, business process, Cass Sunstein, commoditize, computer age, creative destruction, dark matter, decentralized internet, Dennis Ritchie, disintermediation, disruptive innovation, Donald Davies, Erik Brynjolfsson, Free Software Foundation, Garrett Hardin, George Gilder, Hacker Ethic, Hedy Lamarr / George Antheil, history of Unix, Howard Rheingold, Hush-A-Phone, HyperCard, hypertext link, Innovator's Dilemma, invention of hypertext, inventory management, invisible hand, Jean Tirole, Jeff Bezos, John Gilmore, John Perry Barlow, Joseph Schumpeter, Ken Thompson, Kenneth Arrow, Larry Wall, Leonard Kleinrock, linked data, Marc Andreessen, Menlo Park, Mitch Kapor, Network effects, new economy, OSI model, packet switching, peer-to-peer, peer-to-peer model, price mechanism, profit maximization, RAND corporation, rent control, rent-seeking, RFC: Request For Comment, Richard Stallman, Richard Thaler, Robert Bork, Ronald Coase, Search for Extraterrestrial Intelligence, SETI@home, Silicon Valley, smart grid, software patent, spectrum auction, Steve Crocker, Steven Levy, Stewart Brand, systematic bias, Ted Nelson, Telecommunications Act of 1996, the Cathedral and the Bazaar, The Chicago School, tragedy of the anticommons, Tragedy of the Commons, transaction costs, vertical integration, Yochai Benkler, zero-sum game

There is good evidence that competition improves the quality of newspapers.49 And there is a general and broad view that the only justification for the power that the media has is that there is a broad range of views with the same power.50 No more. Never in our history has the concentration of media outlets been greater. Even a believer in the invisible hand might hope that this hand might muck things up a bit. SOMETHING has mucked things up a bit. Something has entered the field in a way that could make these concentrations change—not the government or a regulation imposed by the government, but the architecture of the Internet we have been describing so far.

Thus the consumer does not completely internalize the costs imposed by a closed system. And hence the pressure the consumer puts on closed systems to open themselves up is not equal to the costs that such closed systems impose on innovation generally. These are good reasons, I believe, for being skeptical about whether the invisible hand will solve the problem of closed networks. The observation that never in the history of telecommunications has a network voluntarily been opened after being closed is another reason to be skeptical. Finally, the interest of those who own these networks to keep control within the network is huge, and a huge reason to be skeptical about their control.


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The Euro: How a Common Currency Threatens the Future of Europe by Joseph E. Stiglitz, Alex Hyde-White

"there is no alternative" (TINA), "World Economic Forum" Davos, Alan Greenspan, bank run, banking crisis, barriers to entry, battle of ideas, behavioural economics, Berlin Wall, Bretton Woods, business cycle, buy and hold, capital controls, carbon tax, Carmen Reinhart, cashless society, central bank independence, centre right, cognitive dissonance, collapse of Lehman Brothers, collective bargaining, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, currency peg, dark matter, David Ricardo: comparative advantage, disintermediation, diversified portfolio, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial innovation, full employment, George Akerlof, Gini coefficient, global supply chain, Great Leap Forward, Growth in a Time of Debt, housing crisis, income inequality, incomplete markets, inflation targeting, information asymmetry, investor state dispute settlement, invisible hand, Kenneth Arrow, Kenneth Rogoff, knowledge economy, light touch regulation, low interest rates, manufacturing employment, market bubble, market friction, market fundamentalism, Martin Wolf, Mexican peso crisis / tequila crisis, money market fund, moral hazard, mortgage debt, neoliberal agenda, new economy, open economy, paradox of thrift, pension reform, pensions crisis, price stability, profit maximization, purchasing power parity, quantitative easing, race to the bottom, risk-adjusted returns, Robert Shiller, Ronald Reagan, Savings and loan crisis, savings glut, secular stagnation, Silicon Valley, sovereign wealth fund, the payments system, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, transfer pricing, trickle-down economics, Washington Consensus, working-age population

This, too, is a cross-cutting theme of our times: the neoliberal economic agenda may not have succeeded in increasing average growth rates, but of this we can be sure: it has succeeded in increasing inequality. The euro provides a detailed case study on how this has been accomplished. Two other themes relate more directly to work on economic systems in which I have long been engaged. It is now (finally) widely recognized that markets on their own are not efficient.14 Adam Smith’s invisible hand—by which individuals’ pursuit of self-interest is supposed to lead, in the aggregate, to the well-being of the entire society—is invisible because it is simply not there. And far too little attention has been paid to the instability of the market economy. Crises have been part of capitalism since the beginning.15 The standard model used by economists simply assumes that it is in equilibrium; in other words, if there is ever a dip in the economy, it quickly reverts to its normal path.16 The notion that the economy quickly converges to equilibrium after an upset is key in understanding the construction of the eurozone.

., 51–57 single currency and, 45–46 economic rents, 226, 280 economics, politics and, 308–18 economic security, 68 economies of scale, 12, 39, 55, 138 economists, poor forecasting by, 307 education, 20, 76, 344 investment in, 40, 69, 137, 186, 211, 217, 251, 255, 300 electricity, 217 electronic currency, 298–99, 389 electronics payment mechanism, 274–76, 283–84 emigration, 4, 68–69 see also migration employment: central banks and, 8, 94, 97 structural reforms and, 257–60 see also unemployment Employment Act (1946), 148 energy subsidies, 197 Enlightenment, 3, 318–19 environment, 41, 257, 260, 323 equality, 225–26 equilibrium, xviii–xix Erasmus program, 45 Estonia, 90, 331, 346 euro, xiv, 325 adjustments impeded by, 13–14 case for, 35–39 creation of, xii, 5–6, 7, 10, 333 creation of institutions required by, 10–11 divergence and, see divergence divorce of, 272–95, 307 economic integration and, 46–47, 268 as entailing fixed exchange rate, 8, 42–43, 46–47, 86–87, 92, 93, 94, 102, 105, 143, 193, 215–16, 240, 244, 249, 252, 254, 286, 297 as entailing single interest rate, 8, 85–88, 92, 93, 94, 105, 129, 152, 240, 244, 249 and European identification, 38–39 financial instability caused by, 131–32 growth promised by, 235 growth slowed by, 73 hopes for, 34 inequality increased by, xviii interest rates lowered by, 235 internal devaluation of, see internal devaluation literature on, 327–28 as means to end, xix peace and, 38 proponents of, 13 referenda on, 58, 339–40 reforms needed for, xii–xiii, 28–31 risk of, 49–50 weakness of, 224 see also flexible euro Eurobond, 356 euro crisis, xiii, 3, 4, 9 catastrophic consequences of, 11–12 euro-euphoria, 116–17 Europe, 151 free trade area in, 44–45 growth rates in, 63–64, 69, 73–74, 74, 75, 163 military conflicts in, 196 social models of, 21 European Central Bank (ECB), 7, 17, 80, 112–13, 117, 144, 145–73, 274, 313, 362, 368, 380 capture of, 158–59 confidence in, 200–201 corporate bonds bought by, 141 creation of, 8, 85 democratic deficit and, 26, 27 excessive expansion controlled by, 250 flexibility of, 269 funds to Greece cut off by, 59 German challenges to, 117, 164 governance and, 157–63 inequality created by, 154–55 inflation controlled by, 8, 25, 97, 106, 115, 145, 146–50, 151, 163, 165, 169–70, 172, 250, 256, 266 interest rates set by, 85–86, 152, 249, 302, 348 Ireland forced to socialize losses by, 134, 156, 165 new mandate needed by, 256 as political institution, 160–62 political nature of, 153–56 quantitative easing opposed by, 151 quantitative easing undertaken by, 164, 165–66, 170, 171 regulations by, 249, 250 unemployment and, 163 as unrepresentative, 163 European Commission, 17, 58, 161, 313, 332 European Court of Human Rights, 45 European Economic Community (EEC), 6 European Exchange Rate Mechanism (ERM), 30, 335 European Exchange Rate Mechanism II (ERM II), 336 European Free Trade Association, 44 European Free Trade Association Court, 44 European Investment Bank (EIB), 137, 247, 255, 301 European Regional Development Fund, 243 European Stability Mechanism, 23, 246, 357 European Union: budget of, 8, 45, 91 creation of, 4 debt and deficit limits in, 87–88 democratic deficit in, 26–27 economic growth in, 215 GDP of, xiii and lower rates of war, 196 migration in, 90 proposed exit of UK from, 4 stereotypes in, 12 subsidiarity in, 8, 41–42, 263 taxes in, 8, 261 Euro Summit Statement, 373 eurozone: austerity in, see austerity banking union in, see banking union counterfactual in, 235–36 double-dip recessions in, 234–35 Draghi’s speech and, 145 economic integration and, xiv–xx, 23, 39–50, 51–57 as flawed at birth, 7–9 framework for stability of, 244–52 German departure from, 32, 292–93 Greece’s possible exit from, 124 hours worked in, 71–72 lack of fiscal policy in, 152 and move to political integration, xvi, 34, 35, 51–57 Mundell’s work on dangers of, 87 policies of, 15–17 possible breakup of, 29–30 privatization avoided in, 194 saving, 323–26 stagnant GDP in, 12, 65–68, 66, 67 structure of, 8–9 surpluses in, 120–22 theory of, 95–97 unemployment in, 71, 135, 163, 177–78, 181, 331 working-age population of, 70 eurozone, proposed structural reforms for, 239–71 common financial system, see banking union excessive fiscal responsibility, 163 exchange-rate risks, 13, 47, 48, 49–50, 125, 235 exchange rates, 80, 85, 288, 300, 338, 382, 389 of China, 251, 254, 350–51 and competitive devaluation, 105–6 after departure of northern countries, 292–93 of euro, 8, 42–43, 46–47, 86–87, 92, 93, 94, 102, 105, 215–16, 240, 244, 249, 252, 254, 286, 297 flexible, 50, 248, 349 and full employment, 94 of Germany, 254–55, 351 gold and, 344–45 imports and, 86 interest rates and, 86 quantitative easing’s lowering of, 151 real, 105–6 and single currencies, 8, 42–43, 46–47, 86–87, 92, 93, 94, 97–98 stabilizing, 299–301 and trade deficits, 107, 118 expansionary contractions, 95–96, 208–9 exports, 86, 88, 97–99, 98 disappointing performance of, 103–5 external imbalances, 97–98, 101, 109 externalities, 42–43, 121, 153, 301–2 surpluses as, 253 extremism, xx, 4 Fannie Mae, 91 farmers, US, in deflation, xii Federal Deposit Insurance Corporation (FDIC), 91 Federal Reserve, US, 349 alleged independence of, 157 interest rates lowered by, 150 mandate of, 8, 147, 172 money pumped into economy by, 278 quantitative easing used by, 151, 170 reform of, 146 fiat currency, 148, 275 and taxes, 284 financial markets: lobbyists from, 132 reform of, 214, 228–29 short-sighted, 112–13 financial systems: necessity of, xix real economy of, 149 reform of, 257–58 regulations needed by, xix financial transaction system, 275–76 Finland, 16, 81, 122, 126, 292, 296, 331, 343 growth in, 296–97 growth rate of, 75, 76, 234–35 fire departments, 41 firms, 138, 186–87, 245, 248 fiscal balance: and cutting spending, 196–98 tax revenue and, 190–96 Fiscal Compact, 141, 357 fiscal consolidation, 310 fiscal deficits, see deficits, fiscal fiscal policy, 148, 245, 264 in center of macro-stabilization, 251 countercyclical, 244 in EU, 8 expansionary, 254–55 stabilization of, 250–52 fiscal prudence, 15 fiscal responsibility, 163 flexibility, 262–63, 269 flexible euro, 30–31, 272, 296–305, 307 cooperation needed for, 304–5 food prices, 169 forbearance, 130–31 forecasts, 307 foreclosure proposal, 180 foreign ownership, privatization and, 195 forestry, 81 France, 6, 14, 16, 114, 120, 141, 181–82, 331, 339–40, 343 banks of, 202, 203, 231, 373 corporate income tax in, 189–90 euro creation regretted in, 340 European Constitution referendum of, 58 extreme right in, xi growth in, 247 Freddie Mac, 91 Freefall (Stiglitz), 264, 335 free mobility of labor, xiv, 26, 40, 125, 134–36, 142–44, 242 Friedman, Milton, 151, 152–53, 167, 339 full employment, 94–97, 379 G-20, 121 gas: import of, 230 from Russia, 37, 81, 93 Gates Foundation, 276 GDP-indexed bonds, 267 German bonds, 114, 323 German Council of Economic Experts, 179, 365 Germany, xxi, 14, 30, 65, 108, 114, 141, 181–82, 207, 220, 286, 307, 331, 343, 346, 374 austerity pushed by, 186, 232 banks of, 202, 203, 231–32, 373 costs to taxpayers of, 184 as creditor, 140, 187, 267 debt collection by, 117 debt in, 105 and debt restructuring, 205, 311 in departure from eurozone, 32, 292–93 as dependent on Russian gas, 37 desire to leave eurozone, 314 ECB criticized by, 164 EU economic practices controlled by, 17 euro creation regretted in, 340 exchange rate of, 254–55, 351 failure of, 13, 78–79 flexible exchange of, 304 GDP of, xviii, 92 in Great Depression, 187 growing poverty in, 79 growth of, 78, 106, 247 hours worked per worker in, 72 inequality in, 79, 333 inflation in, 42, 338, 358 internal solidarity of, 334 lack of alternative to euro seen by, 11 migrants to, 320–21, 334–35, 393 minimum wage in, 42, 120, 254 neoliberalism in, 10 and place-based debt, 136 productivity in, 71 programs designed by, 53, 60, 61, 202, 336, 338 reparations paid by, 187 reunification of, 6 rules as important to, 57, 241–42, 262 share of global employment in, 224 shrinking working-age population of, 70, 78–79 and Stability and Growth Pact, 245 and structural reforms, 19–20 “there is no alternative” and, 306, 311–12 trade surplus of, 117, 118–19, 120, 139, 253, 293, 299, 350–52, 381–82, 391 “transfer union” rejected by, 22 US loans to, 187 victims blamed by, 9, 15–17, 177–78, 309 wages constrained by, 41, 42–43 wages lowered in, 105, 333 global financial crisis, xi, xiii–xiv, 3, 12, 17, 24, 67, 73, 75, 114, 124, 146, 148, 274, 364, 387 and central bank independence, 157–58 and confidence, 280 and cost of failure of financial institutions, 131 lessons of, 249 monetary policy in, 151 and need for structural reform, 214 originating in US, 65, 68, 79–80, 112, 128, 296, 302 globalization, 51, 321–23 and diminishing share of employment in advanced countries, 224 economic vs. political, xvii failures of, xvii Globalization and Its Discontents (Stig-litz), 234, 335, 369 global savings glut, 257 global secular stagnation, 120 global warming, 229–30, 251, 282, 319 gold, 257, 275, 277, 345 Goldman Sachs, 158, 366 gold standard, 148, 291, 347, 358 in Great Depression, xii, 100 goods: free movement of, 40, 143, 260–61 nontraded, 102, 103, 169, 213, 217, 359 traded, 102, 103, 216 Gordon, Robert, 251 governance, 157–63, 258–59 government spending, trade deficits and, 107–8 gravity principle, 124, 127–28 Great Depression, 42, 67, 105, 148, 149, 168, 313 Friedman on causes of, 151 gold standard in, xii, 100 Great Malaise, 264 Greece, 14, 30, 41, 64, 81, 100, 117, 123, 142, 160, 177, 265–66, 278, 307, 331, 343, 366, 367–68, 374–75, 386 austerity opposed by, 59, 60–62, 69–70, 207–8, 392 balance of payments, 219 banks in, 200–201, 228–29, 231, 270, 276, 367, 368 blaming of, 16, 17 bread in, 218, 230 capital controls in, 390 consumption tax and, 193–94 counterfactual scenario of, 80 current account surplus of, 287–88 and debt restructuring, 205–7 debt-to-GDP ratio of, 231 debt write-offs in, 291 decline in labor costs in, 56, 103 ECB’s cutting of funds to, 59 economic growth in, 215, 247 emigration from, 68–69 fiscal deficits in, 16, 186, 215, 233, 285–86, 289 GDP of, xviii, 183, 309 hours worked per worker in, 72 inequality in, 72 inherited debt in, 134 lack of faith in democracy in, 312–13 living standards in, 216 loans in, 127 loans to, 310 migrants and, 320–21 milk in, 218, 223, 230 new currency in, 291, 300 oligarchs in, 16, 227 output per working-age person in, 70–71 past downturns in, 235–36 pensions in, 16, 78, 188, 197–98, 226 pharmacies in, 218–20 population decline in, 69, 89 possible exit from eurozone of, 124, 197, 273, 274, 275 poverty in, 226, 261, 376 primary surplus of, 187–88, 312 privatization in, 55, 195–96 productivity in, 71, 342 programs imposed on, xv, 21, 27, 60–62, 140, 155–56, 179–80, 181, 182–83, 184–85, 187–88, 190–93, 195–96, 197–98, 202–3, 205, 206, 214–16, 218–23, 225–28, 229, 230, 231, 233–34, 273, 278, 308, 309–11, 312, 315–16, 336, 338 renewable energy in, 193, 229 social capital destroyed in, 78 sovereign spread of, 200 spread in, 332 and structural reforms, 20, 70, 188, 191 tax revenue in, 16, 142, 192, 227, 367–368 tools lacking for recovery of, 246 tourism in, 192, 286 trade deficits in, 81, 194, 216–17, 222, 285–86 unemployment in, xi, 71, 236, 267, 332, 338, 342 urgency in, 214–15 victim-blaming of, 309–11 wages in, 216–17 youth unemployment in, xi, 332 Greek bonds, 116, 126 interest rates on, 4, 114, 181–82, 201–2, 323 restructuring of, 206–7 green investments, 260 Greenspan, Alan, 251, 359, 363 Grexit, see Greece, possible exit from eurozone of grocery stores, 219 gross domestic product (GDP), xvii decline in, 3 measurement of, 341 Growth and Stability Pact, 87 hedge funds, 282, 363 highways, 41 Hitler, Adolf, 338, 358 Hochtief, 367–68 Hoover, Herbert, 18, 95 human capital, 78, 137 human rights, 44–45, 319 Hungary, 46, 331, 338 hysteresis, 270 Iceland, 44, 111, 307, 354–55 banks in, 91 capital controls in, 390 ideology, 308–9, 315–18 imports, 86, 88, 97–99, 98, 107 incentives, 158–59 inclusive capitalism, 317 income, unemployment and, 77 income tax, 45 Independent Commission for the Reform of International Corporate Taxation, 376–377 Indonesia, 113, 230–31, 314, 350, 364, 378 industrial policies, 138–39, 301 and restructuring, 217, 221, 223–25 Industrial Revolution, 3, 224 industry, 89 inequality, 45, 72–73, 333 aggregate demand lowered by, 212 created by central banks, 154 ECB’s creation of, 154–55 economic performance affected by, xvii euro’s increasing of, xviii growth’s lowering of, 212 hurt by collective action, 338 increased by neoliberalism, xviii increase in, 64, 154–55 inequality in, 72, 212 as moral issue, xviii in Spain, 72, 212, 225–26 and tax harmonization, 260–61 and tax system, 191 inflation, 277, 290, 314, 388 in aftermath of tech bubble, 251 bonds and, 161 central banks and, 153, 166–67 consequences of fixation on, 149–50, 151 costs of, 270 and debt monetization, 42 ECB and, 8, 25, 97, 106, 115, 145, 146–50, 151, 163, 165, 169–70, 172, 255, 256, 266 and food prices, 169 in Germany, 42, 338, 358 interest rates and, 43–44 in late 1970s, 168 and natural rate hypothesis, 172–73 political decisions and, 146 inflation targeting, 157, 168–70, 364 information, 335 informational capital, 77 infrastructure, xvi–xvii, 47, 137, 186, 211, 255, 258, 265, 268, 300 inheritance tax, 368 inherited debt, 134 innovation, 138 innovation economy, 317–18 inputs, 217 instability, xix institutions, 93, 247 poorly designed, 163–64 insurance, 355–356 deposit, see deposit insurance mutual, 247 unemployment, 91, 186, 246, 247–48 integration, 322 interest rates, 43–44, 86, 282, 345, 354 in aftermath of tech bubble, 251 ECB’s determination of, 85–86, 152, 249, 302, 348 and employment, 94 euro’s lowering of, 235 Fed’s lowering of, 150 on German bonds, 114 on Greek bonds, 4, 114, 181–82 on Italian bonds, 114 in late 1970s, 168 long-term, 151, 200 negative, 316, 348–49 quantitative easing and, 151, 170 short-term, 249 single, eurozone’s entailing of, 8, 85–88, 92, 93, 94, 105, 129, 152, 240, 244, 249 on Spanish bonds, 114, 199 spread in, 332 stock prices increased by, 264 at zero lower bound, 106 intermediation, 258 internal devaluation, 98–109, 122, 126, 220, 255, 388 supply-side effects of, 99, 103–4 International Commission on the Measurement of Economic Performance and Social Progress, 79, 341 International Labor Organization, 56 International Monetary Fund (IMF), xv, xvii, 10, 17, 18, 55, 61, 65–66, 96, 111, 112–13, 115–16, 119, 154, 234, 289, 309, 316, 337, 349, 350, 370, 371, 381 and Argentine debt, 206 conditions of, 201 creation of, 105 danger of high taxation warnings of, 190 debt reduction pushed by, 95 and debt restructuring, 205, 311 and failure to restore credit, 201 global imbalances discussed by, 252 and Greek debts, 205, 206, 310–11 on Greek surplus, 188 and Indonesian crisis, 230–31, 364 on inequality’s lowering of growth, 212–13 Ireland’s socialization of losses opposed by, 156–57 mistakes admitted by, 262, 312 on New Mediocre, 264 Portuguese bailout of, 178–79 tax measures of, 185 investment, 76–77, 111, 189, 217, 251, 264, 278, 367 confidence and, 94 divergence in, 136–38 in education, 137, 186, 211, 217, 251, 255, 300 infrastructure in, xvi–xvii, 47, 137, 186, 211, 255, 258, 265, 268, 300 lowered by disintermediation, 258 public, 99 real estate, 199 in renewable energy, 229–30 return on, 186, 245 stimulation of, 94 in technology, 137, 138–39, 186, 211, 217, 251, 258, 265, 300 investor state dispute settlement (ISDS), 393–94 invisible hand, xviii Iraq, refugees from, 320 Iraq War, 36, 37 Ireland, 14, 16, 44, 113, 114–15, 122, 178, 234, 296, 312, 331, 339–40, 343, 362 austerity opposed in, 207 debt of, 196 emigrants from, 68–69 GDP of, 18, 231 growth in, 64, 231, 247, 340 inherited debt in, 134 losses socialized in, 134, 156–57, 165 low debt in, 88 real estate bubble in, 108, 114–15, 126 surplus in, 17, 88 taxes in, 142–43, 376 trade deficits in, 119 unemployment in, 178 irrational exuberance, 14, 114, 116–17, 149, 334, 359 ISIS, 319 Italian bonds, 114, 165, 323 Italy, 6, 14, 16, 120, 125, 331, 343 austerity opposed in, 59 GDP per capita in, 352 growth in, 247 sovereign spread of, 200 Japan, 151, 333, 342 bubble in, 359 debt of, 202 growth in, 78 quantitative easing used by, 151, 359 shrinking working-age population of, 70 Java, unemployment on, 230 jobs gap, 120 Juncker, Jean-Claude, 228 Keynes, John Maynard, 118, 120, 172, 187, 351 convergence policy suggested by, 254 Keynesian economics, 64, 95, 108, 153, 253 King, Mervyn, 390 knowledge, 137, 138–39, 337–38 Kohl, Helmut, 6–7, 337 krona, 287 labor, marginal product of, 356 labor laws, 75 labor markets, 9, 74 friction in, 336 reforms of, 214, 221 labor movement, 26, 40, 125, 134–36, 320 austerity and, 140 capital flows and, 135 see also migration labor rights, 56 Lamers, Karl, 314 Lancaster, Kelvin, 27 land tax, 191 Latin America, 10, 55, 95, 112, 202 lost decade in, 168 Latvia, 331, 346 GDP of, 92 law of diminishing returns, 40 learning by doing, 77 Lehman Brothers, 182 lender of last resort, 85, 362, 368 lending, 280, 380 discriminatory, 283 predatory, 274, 310 lending rates, 278 leverage, 102 Lichtenstein, 44 Lipsey, Richard, 27 liquidity, 201, 264, 278, 354 ECB’s expansion of, 256 lira, 14 Lithuania, 331 living standards, 68–70 loans: contraction of, 126–27, 246 nonperforming, 241 for small and medium-size businesses, 246–47 lobbyists, from financial sector, 132 location, 76 London interbank lending rate (LIBOR), 131, 355 Long-Term Refinancing Operation, 360–361 Lucas, Robert, xi Luxembourg, 6, 94, 142–43, 331, 343 as tax avoidance center, 228, 261 luxury cars, 265 Maastricht Treaty, xiii, 6, 87, 115, 146, 244, 298, 339, 340 macro-prudential regulations, 249 Malta, 331, 340 manufacturing, 89, 223–24 market failures, 48–49, 86, 148, 149, 335 rigidities, 101 tax policy’s correction of, 193 market fundamentalism, see neoliberalism market irrationality, 110, 125–26, 149 markets, limitations of, 10 Meade, James, 27 Medicaid, 91 medical care, 196 Medicare, 90, 91 Mellon, Andrew, 95 Memorandum of Agreement, 233–34 Merkel, Angela, 186 Mexico, 202, 369 bailout of, 113 in NAFTA, xiv Middle East, 321 migrant crisis, 44 migration, 26, 40, 68–69, 90, 125, 320–21, 334–35, 342, 356, 393 unemployment and, 69, 90, 135, 140 see also labor movement military power, 36–37 milk, 218, 223, 230 minimum wage, 42, 120, 254, 255, 351 mining, 257 Mississippi, GDP of, 92 Mitsotakis, Constantine, 377–78 Mitsotakis, Kyriakos, 377–78 Mitterrand, François, 6–7 monetarism, 167–68, 169, 364 monetary policy, 24, 85–86, 148, 264, 325, 345, 364 as allegedly technocratic, 146, 161–62 conservative theory of, 151, 153 in early 1980s US, 168, 210 flexibility of, 244 in global financial crisis, 151 political nature of, 146, 153–54 recent developments in theory of, 166–73 see also interest rates monetary union, see single currencies money laundering, 354 monopolists, privatization and, 194 moral hazard, 202, 203 mortgage rates, 170 mortgages, 302 multinational chains, 219 multinational development banks, 137 multinationals, 127, 223, 376 multipliers, 211–12, 248 balanced-budget, 188–90, 265 Mundell, Robert, 87 mutual insurance, 247 mutualization of debt, 242–43, 263 national development banks, 137–38 natural monopolies, 55 natural rate hypothesis, 172 negative shocks, 248 neoliberalism, xvi, 24–26, 33, 34, 98–99, 109, 257, 265, 332–33, 335, 354 on bubbles, 381 and capital flows, 28 and central bank independence, 162–63 in Germany, 10 inequality increased by, xviii low inflation desired by, 147 recent scholarship against, 24 Netherlands, 6, 44, 292, 331, 339–40, 343 European Constitution referendum of, 58 New Democracy Party, Greek, 61, 185, 377–78 New Mediocre, 264 New World, 148 New Zealand, 364 Nokia, 81, 234, 297 nonaccelerating inflation rate of unemployment (NAIRU), 379–80 nonaccelerating wage rate of unemployment (NAWRU), 379–80 nongovernmental organizations (NGOs), 276 nonperforming loans, 241 nontraded goods sector, 102, 103, 169, 213, 217, 359 North American Free Trade Agreement (NAFTA), xiv North Atlantic Treaty Organization (NATO), 196 Norway, 12, 44, 307 referendum on joining EU, 58 nuclear deterrence, 38 Obama, Barack, 319 oil, import of, 230 oil firms, 36 oil prices, 89, 168, 259, 359 oligarchs: in Greece, 16, 227 in Russia, 280 optimal currency area, 345 output, 70–71, 111 after recessions, 76 Outright Monetary Transactions program, 361 overregulate, 132 Oxfam, 72 panic of 1907, 147 Papandreou, Andreas, 366 Papandreou, George, xiv, 60–61, 184, 185, 220, 221, 226–27, 309, 312, 366, 373 reform of banks suggested by, 229 paradox of thrift, 120 peace, 34 pensions, 9, 16, 78, 177, 188, 197–98, 226, 276, 370 People’s Party, Portugal, 392 periphery, 14, 32, 171, 200, 296, 301, 318 see also specific countries peseta, 14 pharmacies, 218–20 Phishing for Phools (Akerlof and Shiller), 132 physical capital, 77–78 Pinochet, Augusto, 152–53 place-based debt, 134, 242 Pleios, George, 377 Poland, 46, 333, 339 assistance to, 243 in Iraq War, 37 police, 41 political integration, xvi, 34, 35 economic integration vs., 51–57 politics, economics and, 308–18 pollution, 260 populism, xx Portugal, 14, 16, 64, 177, 178, 331, 343, 346 austerity opposed by, 59, 207–8, 315, 332, 392 GDP of, 92 IMF bailout of, 178–79 loans in, 127 poverty in, 261 sovereign spread of, 200 Portuguese bonds, 179 POSCO, 55 pound, 287, 335, 346 poverty, 72 in Greece, 226, 261 in Portugal, 261 in Spain, 261 predatory lending, 274, 310 present discount value, 343 Price of Inequality, The (Stiglitz), 154 prices, 19, 24 adjustment of, 48, 338, 361 price stability, 161 primary deficit, 188, 389 primary surpluses, 187–88 private austerity, 126–27, 241–42 private sector involvement, 113 privatization, 55, 194–96, 369 production costs, 39, 43, 50 production function, 343 productivity, 71, 332, 348 in manufacturing, 223–24 after recessions, 76–77 programs, 17–18 Germany’s design of, 53, 60, 61, 187–88, 205, 336, 338 imposed on Greece, xv, 21, 27, 60–62, 140, 155–56, 179–80, 181, 182–83, 184–85, 187–88, 190–93, 195–96, 197–98, 202–3, 205, 206, 214–16, 218–23, 225–28, 229, 230, 231, 233–34, 273, 278, 308, 309–11, 312, 315–16, 336, 338 of Troika, 17–18, 21, 155–57, 179–80, 181, 182–83, 184–85, 187–93, 196, 202, 205, 207, 208, 214–16, 217, 218–23, 225–28, 229, 231, 233–34, 273, 278, 308, 309–11, 312, 313, 314, 315–16, 323–24, 346, 366, 379, 392 progressive automatic stabilizers, 244 progressive taxes, 248 property rights, 24 property taxes, 192–93, 227 public entities, 195 public goods, 40, 337–38 quantitative easing (QE), 151, 164, 165–66, 170–72, 264, 359, 361, 386 railroads, 55 Reagan, Ronald, 168, 209 real estate bubble, 25, 108, 109, 111, 114–15, 126, 148, 172, 250, 301, 302 cause of, 198 real estate investment, 199 real exchange rate, 105–6, 215–16 recessions, recovery from, 94–95 recovery, 76 reform, 75 theories of, 27–28 regulations, 24, 149, 152, 162, 250, 354, 355–356, 378 and Bush administration, 250–51 common, 241 corporate opposition to, xvi difficulties in, 132–33 of finance, xix forbearance on, 130–31 importance of, 152–53 macro-prudential, 249 in race to bottom, 131–34 Reinhardt, Carmen, 210 renewable energy, 193, 229–30 Republican Party, US, 319 research and development (R&D), 77, 138, 217, 251, 317–18 Ricardo, David, 40, 41 risk, 104, 153, 285 excessive, 250 risk markets, 27 Rogoff, Kenneth, 210 Romania, 46, 331, 338 Royal Bank of Scotland, 355 rules, 57, 241–42, 262, 296 Russia, 36, 264, 296 containment of, 318 economic rents in, 280 gas from, 37, 81, 93, 378 safety nets, 99, 141, 223 Samaras, Antonis, 61, 309, 377 savings, 120 global, 257 savings and loan crisis, 360 Schäuble, Wolfgang, 57, 220, 314, 317 Schengen area, 44 schools, 41, 196 Schröeder, Gerhard, 254 self-regulation, 131, 159 service sector, 224 shadow banking system, 133 shareholder capitalism, 21 Shiller, Rob, 132, 359 shipping taxes, 227, 228 short-termism, 77, 258–59 Silicon Valley, 224 silver, 275, 277 single currencies: conflicts and, 38 as entailing fixed exchange rates, 8, 42–43, 46–47, 86–87, 92, 93, 94, 97–98 external imbalances and, 97–98 and financial crises, 110–18 integration and, 45–46, 50 interest rates and, 8, 86, 87–88, 92, 93, 94 Mundell’s work on, 87 requirements for, 5, 52–53, 88–89, 92–94, 97–98 and similarities among countries, 15 trade integration vs., 393 in US, 35, 36, 88, 89–92 see also euro single-market principle, 125–26, 231 skilled workers, 134–35 skills, 77 Slovakia, 331 Slovenia, 331 small and medium-sized enterprises (SMEs), 127, 138, 171, 229 small and medium-size lending facility, 246–47, 300, 301, 382 Small Business Administration, 246 small businesses, 153 Smith, Adam, xviii, 24, 39–40, 41 social cohesion, 22 Social Democratic Party, Portugal, 392 social program, 196 Social Security, 90, 91 social solidarity, xix societal capital, 77–78 solar energy, 193, 229 solidarity fund, 373 solidarity fund for stabilization, 244, 254, 264, 301 Soros, George, 390 South Dakota, 90, 346 South Korea, 55 bailout of, 113 sovereign risk, 14, 353 sovereign spreads, 200 sovereign wealth funds, 258 Soviet Union, 10 Spain, 14, 16, 114, 177, 178, 278, 331, 335, 343 austerity opposed by, 59, 207–8, 315 bank bailout of, 179, 199–200, 206 banks in, 23, 186, 199, 200, 242, 270, 354 debt of, 196 debt-to-GDP ratio of, 231 deficits of, 109 economic growth in, 215, 231, 247 gold supply in, 277 independence movement in, xi inequality in, 72, 212, 225–26 inherited debt in, 134 labor reforms proposed for, 155 loans in, 127 low debt in, 87 poverty in, 261 real estate bubble in, 25, 108, 109, 114–15, 126, 198, 301, 302 regional independence demanded in, 307 renewable energy in, 229 sovereign spread of, 200 spread in, 332 structural reform in, 70 surplus in, 17, 88 threat of breakup of, 270 trade deficits in, 81, 119 unemployment in, 63, 161, 231, 235, 332, 338 Spanish bonds, 114, 199, 200 spending, cutting, 196–98 spread, 332 stability, 147, 172, 261, 301, 364 automatic, 244 bubble and, 264 central banks and, 8 as collective action problem, 246 solidarity fund for, 54, 244, 264 Stability and Growth Pact, 245 standard models, 211–13 state development banks, 138 steel companies, 55 stock market, 151 stock market bubble, 200–201 stock market crash (1929), 18, 95 stock options, 259, 359 structural deficit, 245 Structural Funds, 243 structural impediments, 215 structural realignment, 252–56 structural reforms, 9, 18, 19–20, 26–27, 214–36, 239–71, 307 from austerity to growth, 263–65 banking union, 241–44 and climate change, 229–30 common framework for stability, 244–52 counterproductive, 222–23 debt restructuring and, 265–67 of finance, 228–29 full employment and growth, 256–57 in Greece, 20, 70, 188, 191, 214–36 growth and, 232–35 shared prosperity and, 260–61 and structural realignment, 252–56 of trade deficits, 216–17 trauma of, 224 as trivial, 214–15, 217–20, 233 subsidiarity, 8, 41–42, 263 subsidies: agricultural, 45, 197 energy, 197 sudden stops, 111 Suharto, 314 suicide, 82, 344 Supplemental Nutrition Assistance Program (SNAP), 91 supply-side effects: in Greece, 191, 215–16 of investments, 367 surpluses, fiscal, 17, 96, 312, 379 primary, 187–88 surpluses, trade, see trade surpluses “Swabian housewife,” 186, 245 Sweden, 12, 46, 307, 313, 331, 335, 339 euro referendum of, 58 refugees into, 320 Switzerland, 44, 307 Syria, 321, 342 Syriza party, 309, 311, 312–13, 315, 377 Taiwan, 55 tariffs, 40 tax avoiders, 74, 142–43, 227–28, 261 taxes, 142, 290, 315 in Canada, 191 on capital, 356 on carbon, 230, 260, 265, 368 consumption, 193–94 corporate, 189–90, 227, 251 cross-border, 319, 384 and distortions, 191 in EU, 8, 261 and fiat currency, 284 and free mobility of goods and capital, 260–61 in Greece, 16, 142, 192, 193–94, 227, 367–68 ideal system for, 191 IMF’s warning about high, 190 income, 45 increase in, 190–94 inequality and, 191 inheritance, 368 land, 191 on luxury cars, 265 progressive, 248 property, 192–93, 227 Reagan cuts to, 168, 210 shipping, 227, 228 as stimulative, 368 on trade surpluses, 254 value-added, 190, 192 tax evasion, in Greece, 190–91 tax laws, 75 tax revenue, 190–96 Taylor, John, 169 Taylor rule, 169 tech bubble, 250 technology, 137, 138–39, 186, 211, 217, 251, 258, 265, 300 and new financial system, 274–76, 283–84 telecoms, 55 Telmex, 369 terrorism, 319 Thailand, 113 theory of the second best, 27–28, 48 “there is no alternative” (TINA), 306, 311–12 Tocqueville, Alexis de, xiii too-big-to-fail banks, 360 tourism, 192, 286 trade: and contractionary expansion, 209 US push for, 323 trade agreements, xiv–xvi, 357 trade balance, 81, 93, 100, 109 as allegedly self-correcting, 98–99, 101–3 and wage flexibility, 104–5 trade barriers, 40 trade deficits, 89, 139 aggregate demand weakened by, 111 chit solution to, 287–88, 290, 299–300, 387, 388–89 control of, 109–10, 122 with currency pegs, 110 and fixed exchange rates, 107–8, 118 and government spending, 107–8, 108 of Greece, 81, 194, 215–16, 222, 285–86 structural reform of, 216–17 traded goods, 102, 103, 216 trade integration, 393 trade surpluses, 88, 118–21, 139–40, 350–52 discouragement of, 282–84, 299–300 of Germany, 118–19, 120, 139, 253, 293, 299, 350–52, 381–82, 391 tax on, 254, 351, 381–82 Transatlantic Trade and Investment Partnership, xv, 323 transfer price system, 376 Trans-Pacific Partnership, xv, 323 Treasury bills, US, 204 Trichet, Jean-Claude, 100–101, 155, 156, 164–65, 251 trickle-down economics, 362 Troika, 19, 20, 26, 55, 56, 58, 60, 69, 99, 101–3, 117, 119, 135, 140–42, 178, 179, 184, 195, 274, 294, 317, 362, 370–71, 373, 376, 377, 386 banks weakened by, 229 conditions of, 201 discretion of, 262 failure to learn, 312 Greek incomes lowered by, 80 Greek loan set up by, 202 inequality created by, 225–26 poor forecasting of, 307 predictions by, 249 primary surpluses and, 187–88 privatization avoided by, 194 programs of, 17–18, 21, 155–57, 179–80, 181, 182–83, 184–85, 187–93, 196, 197–98, 202, 204, 205, 207, 208, 214–16, 217, 218–23, 225–28, 229, 231, 233–34, 273, 278, 308, 309–11, 312, 313, 314, 315–16, 323–24, 348, 366, 379, 392 social contract torn up by, 78 structural reforms imposed by, 214–16, 217, 218–23, 225–38 tax demand of, 192 and tax evasion, 367 see also European Central Bank (ECB); European Commission; International Monetary Fund (IMF) trust, xix, 280 Tsipras, Alexis, 61–62, 221, 273, 314 Turkey, 321 UBS, 355 Ukraine, 36 unemployment, 3, 64, 68, 71–72, 110, 111, 122, 323, 336, 342 as allegedly self-correcting, 98–101 in Argentina, 267 austerity and, 209 central banks and, 8, 94, 97, 106, 147 ECB and, 163 in eurozone, 71, 135, 163, 177–78, 181, 331 and financing investments, 186 in Finland, 296 and future income, 77 in Greece, xi, 71, 236, 267, 331, 338, 342 increased by capital, 264 interest rates and, 43–44 and internal devaluation, 98–101, 104–6 migration and, 69, 90, 135, 140 natural rate of, 172–73 present-day, in Europe, 210 and rise of Hitler, 338, 358 and single currency, 88 in Spain, 63, 161, 231, 235, 332, 338 and structural reforms, 19 and trade deficits, 108 in US, 3 youth, 3, 64, 71 unemployment insurance, 91, 186, 246, 247–48 UNICEF, 72–73 unions, 101, 254, 335 United Kingdom, 14, 44, 46, 131, 307, 331, 332, 340 colonies of, 36 debt of, 202 inflation target set in, 157 in Iraq War, 37 light regulations in, 131 proposed exit from EU by, 4, 270 United Nations, 337, 350, 384–85 creation of, 38 and lower rates of war, 196 United States: banking system in, 91 budget of, 8, 45 and Canada’s 1990 expansion, 209 Canada’s free trade with, 45–46, 47 central bank governance in, 161 debt-to-GDP of, 202, 210–11 financial crisis originating in, 65, 68, 79–80, 128, 296, 302 financial system in, 228 founding of, 319 GDP of, xiii Germany’s borrowing from, 187 growing working-age population of, 70 growth in, 68 housing bubble in, 108 immigration into, 320 migration in, 90, 136, 346 monetary policy in financial crisis of, 151 in NAFTA, xiv 1980–1981 recessions in, 76 predatory lending in, 310 productivity in, 71 recovery of, xiii, 12 rising inequality in, xvii, 333 shareholder capitalism of, 21 Small Business Administration in, 246 structural reforms needed in, 20 surpluses in, 96, 187 trade agenda of, 323 unemployment in, 3, 178 united currency in, 35, 36, 88, 89–92 United States bonds, 350 unskilled workers, 134–35 value-added tax, 190, 192 values, 57–58 Varoufakis, Yanis, 61, 221, 309 velocity of circulation, 167 Venezuela, 371 Versaille, Treaty of, 187 victim blaming, 9, 15–17, 177–78, 309–11 volatility: and capital market integration, 28 in exchange rates, 48–49 Volcker, Paul, 157, 168 wage adjustments, 100–101, 103, 104–5, 155, 216–17, 220–22, 338, 361 wages, 19, 348 expansionary policies on, 284–85 Germany’s constraining of, 41, 42–43 lowered in Germany, 105, 333 wage stagnation, in Germany, 13 war, change in attitude to, 38, 196 Washington Consensus, xvi Washington Mutual, 91 wealth, divergence in, 139–40 Weil, Jonathan, 360 welfare, 196 West Germany, 6 Whitney, Meredith, 360 wind energy, 193, 229 Wolf, Martin, 385 worker protection, 56 workers’ bargaining rights, 19, 221, 255 World Bank, xv, xvii, 10, 61, 337, 357, 371 World Trade Organization, xiv youth: future of, xx–xxi unemployment of, 3, 64, 71 Zapatero, José Luis Rodríguez, xiv, 155, 362 zero lower bound, 106 ALSO BY JOSEPH E.


The Great Good Place: Cafes, Coffee Shops, Bookstores, Bars, Hair Salons, and Other Hangouts at the Heart of a Community by Ray Oldenburg

bread and circuses, citizen journalism, cognitive bias, feminist movement, fixed income, global village, invisible hand, Jane Jacobs, Lewis Mumford, New Journalism, New Urbanism, place-making, profit motive, Ralph Waldo Emerson, Ray Oldenburg, Seaside, Florida, the built environment, The Death and Life of Great American Cities, The Great Good Place, urban planning, urban renewal, urban sprawl, Victor Gruen, wage slave, young professional

The key to the whole interconnected system seems to be that of leaving the individual never really satisfied but always seeking, always hoping, and forever convinced that commercial establishments and commercialized forms of leisure can offer what is missing in the quest for contentment. The “invisible hand of the market” which, Adam Smith claimed, would usher us toward greater social harmony irrespective of the intentions of businesspeople, has not done so. The “hidden hand,” hardly even disguised anymore, never rests. It fidgets constantly in expectation of new prospects for commercial success.

Sexual contact, 250–251 Sexual equality, 245–246 Sexual segregation and the third place, 230–261 the Depression, effect of, 241–242 French rural villages, 234–235 Shades, 69 Shakespeare, William, 168 Shopping malls, 118–122 Community Builders Handbook, 208–209 “corporation country,” 119 hobbyists’ displays in, 120 “juggernaut,” 209 Kentucky Oaks mall, 209 seating, 119 social life of, 120–121 strangers in, 119–120 teenagers’ affinity for, 281–283 Sidewalk cafes, 83, 145–164 as a center of activity, 155–161 de Gaulle’s policy towards, 159 English pubs compared to, 145–146 espresso coffee, 160–161 lovers’ area, 147–148 names, absence of, 148 in New York City, 150–151 physical description of, 146–150 privacy, right to, 149–150 Silver, Nathan, 220 Simmel, Georg, 24–25, 55–56 Sims, Newell, 72–74 Six-packers, 261 Slater, Philip, 32, 236 Small towns, typical. See River Park. Smith, Adam, “invisible hand of the market,” 223 Smith Brothers, 183 Snooker, 224–225 Snow (Professor), 154 Sociability, 24–25, 60–61 Socializing, open-ended, 58–59, 61–62 Soda fountains, 9, 112–114 Soviet Union, 66 Spectator, 190 Star Tavern, 40 Status, surrender of. See Leveling. Steele, 190 Strangers, 13, 35, 119–120 Street, vocabulary related to, 213 Stress in America, 10 Suburban America, 3–7, 71 adolescents.


pages: 563 words: 136,190

The Next Shift: The Fall of Industry and the Rise of Health Care in Rust Belt America by Gabriel Winant

affirmative action, Affordable Care Act / Obamacare, anti-communist, antiwork, blue-collar work, business cycle, Capital in the Twenty-First Century by Thomas Piketty, classic study, clean water, collective bargaining, company town, coronavirus, COVID-19, creative destruction, deindustrialization, desegregation, deskilling, emotional labour, employer provided health coverage, Erik Brynjolfsson, Ford paid five dollars a day, full employment, future of work, ghettoisation, independent contractor, invisible hand, Kitchen Debate, labor-force participation, longitudinal study, low skilled workers, mandatory minimum, manufacturing employment, mass incarceration, MITM: man-in-the-middle, moral hazard, new economy, New Urbanism, obamacare, opioid epidemic / opioid crisis, pink-collar, post-industrial society, post-work, postindustrial economy, price stability, RAND corporation, Ronald Reagan, Second Machine Age, secular stagnation, the built environment, union organizing, upwardly mobile, urban renewal, vertical integration, War on Poverty, white flight, Wolfgang Streeck, women in the workforce, work culture , working poor

See Mike Davis, Prisoners of the American Dream: Politics and Economy in the History of the US Working Class (London: Verso, 1986), 121–124; David L. Stebenne, Arthur J. Goldberg: New Deal Liberal (New York: Oxford University Press, 1996), 154–232; Nelson Lichtenstein, State of the Union: A Century of American Labor (Princeton, NJ: Princeton University Press, 2002), 98–140; Kim Phillips-Fein, Invisible Hands: The Businessmen’s Crusade Against the New Deal (New York: Norton, 2009). See also Jefferson R. Cowie, Capital Moves: RCA’s Seventy-Year Quest for Cheap Labor (New York: New Press, 2001); Thomas J. Sugrue, The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit, 2nd ed. (Princeton, NJ: Princeton University Press, 2005); Jeremy Milloy, Blood, Sweat, and Fear: Violence at Work in the North American Auto Industry, 1960–1980 (Urbana: University of Illinois Press, 2017); Daniel J.

Minutes of Meeting with Grievance Committee, May 19, 1953, box 4, folder 6, USSCDWIRDR; Minutes of Meeting with Grievance Committee, January 19, 1954, box 4, folder 6, USSCDWIRDR; Minutes of Meeting with Grievance Committee, September 21, 1954, box 4, folder 6, USSCDWIRDR; Minutes of Meeting with Grievance Committee, September 19, 1956, box 4, folder 7, USSCDWIRDR; Employee Suggestion Plan Investigation Form, July 11, 1957, box 26, folder 2, USSCDWIRDR; Cost Reduction Project Report, November 1957, box 32, folder 2, USSCDWIRDR; Employee Request, June 18, 1957, box 29, USSCDWIRDR. 42. Memorandum, p. 5, October 16, 1956, box 3, series IV, RCCP. On the managerial offensive of the late 1950s, see Davis, Prisoners of the American Dream, 121–124; Stebenne, Arthur J. Goldberg, 154–232; Phillips-Fein, Invisible Hands, 87–114. 43. Memorandum of Special Third-Step Meeting Concerning Unanswered Grievance—Discharge of Pete Dohanic Jr., May 25, 1956, box 9, folder 2, USSCDWIRDR. On violence of this kind, see Milloy, Blood, Sweat, and Fear. 44. E. P. Thompson, “Time, Work-Discipline, and Industrial Capitalism,” Past and Present 38 (December 1967), 56–97. 45.


pages: 689 words: 134,457

When McKinsey Comes to Town: The Hidden Influence of the World's Most Powerful Consulting Firm by Walt Bogdanich, Michael Forsythe

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Alistair Cooke, Amazon Web Services, An Inconvenient Truth, asset light, asset-backed security, Atul Gawande, Bear Stearns, Boris Johnson, British Empire, call centre, Cambridge Analytica, carbon footprint, Citizen Lab, cognitive dissonance, collective bargaining, compensation consultant, coronavirus, corporate governance, corporate social responsibility, Corrections Corporation of America, COVID-19, creative destruction, Credit Default Swap, crony capitalism, data science, David Attenborough, decarbonisation, deindustrialization, disinformation, disruptive innovation, do well by doing good, don't be evil, Donald Trump, double entry bookkeeping, facts on the ground, failed state, financial engineering, full employment, future of work, George Floyd, Gini coefficient, Glass-Steagall Act, global pandemic, illegal immigration, income inequality, information security, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), invisible hand, job satisfaction, job-hopping, junk bonds, Kenneth Arrow, Kickstarter, load shedding, Mark Zuckerberg, megaproject, Moneyball by Michael Lewis explains big data, mortgage debt, Multics, Nelson Mandela, obamacare, offshore financial centre, old-boy network, opioid epidemic / opioid crisis, profit maximization, public intellectual, RAND corporation, Rutger Bregman, scientific management, sentiment analysis, shareholder value, Sheryl Sandberg, Silicon Valley, smart cities, smart meter, South China Sea, sovereign wealth fund, tech worker, The future is already here, The Nature of the Firm, too big to fail, urban planning, WikiLeaks, working poor, Yogi Berra, zero-sum game

As these raiders got rich off what Leopold called “the deindustrialization of America,” their apologists praised them for making corporations more efficient. Some companies had indeed become complacent, but raiders often bought companies to break them up and sell off the pieces, leaving thousands of employees without jobs. “This is not the invisible hand of the market,” Leopold said. “This is the financial extraction process.” The Business Roundtable, with a membership of the nation’s most powerful corporate bosses, did not believe that companies should have societal interests beyond their own well-being. The business group had a simple philosophy: a corporation should “generate economic returns to its owners.”

GO TO NOTE REFERENCE IN TEXT on a massive corporate reorganization: McDonald, Firm, 183–84. GO TO NOTE REFERENCE IN TEXT “Billions could be made”: Les Leopold, Runaway Inequality: An Activist’s Guide to Economic Justice (New York: Labor Institute Press, 2015), 53. GO TO NOTE REFERENCE IN TEXT “This is not the invisible hand”: Leopold, interview by Bogdanich. GO TO NOTE REFERENCE IN TEXT “It was the corporate downsizing”: Ed Michaels, Helen Handfield-Jones, and Beth Axelrod, The War for Talent (Boston: Harvard Business School Press, 2001), 7. GO TO NOTE REFERENCE IN TEXT “When management consulting untethered”: Daniel Markovits, “How McKinsey Destroyed the Middle Class,” Atlantic, Feb. 3, 2020.


pages: 237 words: 50,758

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

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

Yes, they seek profits, but they’re equally guided by a core ideology—core values and sense of purpose beyond just making money. Yet paradoxically, the visionary companies make more money than the purely profit driven companies. —Jim Collins and Jerry I. Porras, Built to Last2 He is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it. —Adam Smith, The Wealth of Nations3 Tell all the truth, but tell it slant. Success in circuit lies. —Emily Dickinson4 The American continent separates the Atlantic Ocean in the east from the Pacific in the west.


pages: 177 words: 50,167

The Populist Explosion: How the Great Recession Transformed American and European Politics by John B. Judis

affirmative action, Affordable Care Act / Obamacare, Albert Einstein, anti-communist, back-to-the-land, Bernie Sanders, Boris Johnson, Bretton Woods, capital controls, carbon tax, centre right, Charlie Hebdo massacre, collapse of Lehman Brothers, deindustrialization, desegregation, Donald Trump, eurozone crisis, financial deregulation, first-past-the-post, fixed income, full employment, ghettoisation, glass ceiling, Glass-Steagall Act, hiring and firing, illegal immigration, immigration reform, income inequality, invisible hand, Jeremy Corbyn, laissez-faire capitalism, Les Trente Glorieuses, mass immigration, means of production, neoliberal agenda, obamacare, Occupy movement, open borders, plutocrats, Post-Keynesian economics, post-materialism, rolodex, Ronald Reagan, Silicon Valley, War on Poverty, We are the 99%, white flight, Winter of Discontent

It had replaced a worldview that stressed a far more limited role for government in the economy. The role of underlying worldviews is characteristic of politics in the United States and Europe, and of all countries that are governed primarily by consent rather than by force and terror. In Great Britain, for instance, laissez-faire capitalism, associated with Adam Smith’s invisible hand, prevailed for much of the nineteenth century, but after World War II it was superseded by Keynesian economics. American politics is structured to sustain prevailing worldviews. Its characteristics of winner takes all, first past the post, single-member districts have encouraged a two-party system.


pages: 740 words: 227,963

The Warmth of Other Suns: The Epic Story of America's Great Migration by Isabel Wilkerson

anti-communist, Berlin Wall, California gold rush, card file, cotton gin, desegregation, Ford Model T, Gunnar Myrdal, index card, indoor plumbing, invisible hand, labor-force participation, Mason jar, mass immigration, medical residency, Rosa Parks, strikebreaker, trade route, traveling salesman, union organizing, W. E. B. Du Bois, white flight, Works Progress Administration

George took her to the Edd Pearson plantation, a few miles away, where he would sharecrop cotton and she would learn to be a wife. Two weeks later, something called the stock market crashed, and things would get harder than they ever knew they could. Because, if the planters suffered, so much more would the sharecroppers under them. An invisible hand ruled their lives and the lives of all the colored people in Chickasaw County and the rest of Mississippi and the entire South for that matter. It wasn’t one thing; it was everything. The hand had determined that white people were in charge and colored people were under them and had to obey them like a child in those days had to obey a parent, except there was no love between the two parties as there is between a parent and child.

Ida Mae lived only a few towns away from Calhoun City, Mississippi, where there were white parking spaces (the ones closest to the bank in the town square) and colored parking spaces (on the other side of the street) well into the 1950s.3 There were no signs for them; it was just the work of the invisible hand. Neither Miss Theenie nor George ever took Ida Mae into Houston or Okolona, where white people transacted their business affairs, and, growing up, Ida Mae had few direct dealings with white people. When she did, it was in the service of them and their whims whether she wished it or not, and, in the short time she was in their presence, it seems they made sure to remind her what her place was in their eyes even when she was too young to understand it.

Too many educated colored people, and it would upset the whole balance of power in the caste system and give other colored people ideas. The man turned to some other boys in line, who weren’t in school and didn’t need tuition, and hired them. Pershing had a long memory, and he would nurse that wound for years. Here he was trying to make something of himself, and the invisible hand was punishing the ambitious, and rewarding the servile to keep colored people in their place. Later in the summer, he went looking for work at the sawmill. He saw a classmate there from high school and was told the work wasn’t too hard. It was stacking wood staves to make barrels. Pershing asked the foreman for a job.


Rethinking Islamism: The Ideology of the New Terror by Meghnad Desai

Ayatollah Khomeini, battle of ideas, Berlin Wall, Dr. Strangelove, full employment, global village, illegal immigration, income per capita, invisible hand, liberal capitalism, liberation theology, Mahatma Gandhi, Martin Wolf, means of production, Meghnad Desai, Nelson Mandela, oil shock, purchasing power parity, Ronald Reagan, structural adjustment programs, The Wealth of Nations by Adam Smith, Timothy McVeigh, Yom Kippur War

฀Nationalism฀and฀ anarchism฀merged฀in฀his฀action.25 Yet,฀ in฀ principle,฀ an฀ adherent฀ of฀ the฀ free฀ market฀ idea฀ can฀ also฀ be฀ an฀ anti-state฀ anarchist฀ but฀ not฀ anti-capitalist.฀ It฀ is฀ possible฀ to฀ adhere฀ to฀ an฀ idea฀ that฀ private฀ property฀ in฀ small฀ amounts฀ can฀ be฀ owned฀ by฀ self-employed฀ people฀ and฀ their฀ mutual฀ interests฀ would฀ establish฀ a฀ peaceful฀ but฀ prosperous฀ society฀ relying฀ on฀ Adam฀ Smith’s฀ famous฀ ‘invisible฀ hand’.฀ Such฀ a฀ society฀ can฀ be฀ stateless฀ and฀peaceful,฀at฀least฀in฀theory.฀There฀is฀a฀variant,฀libertarianism,฀ that฀believes฀in฀the฀need฀for฀a฀minimal฀state.฀Either฀way,฀the฀philosophy฀ is฀ individualist฀ and฀ anti-authority.฀ Henry฀ David฀ Thoreau฀ is฀perhaps฀the฀most฀famous฀American฀anarchist.


pages: 172 words: 54,066

The End of Loser Liberalism: Making Markets Progressive by Dean Baker

Alan Greenspan, Asian financial crisis, banking crisis, Bear Stearns, Bernie Sanders, business cycle, collateralized debt obligation, collective bargaining, corporate governance, currency manipulation / currency intervention, Doha Development Round, financial innovation, full employment, Glass-Steagall Act, Home mortgage interest deduction, income inequality, inflation targeting, invisible hand, low interest rates, manufacturing employment, market clearing, market fundamentalism, medical residency, patent troll, pets.com, pirate software, price stability, public intellectual, quantitative easing, regulatory arbitrage, rent-seeking, Robert Shiller, Silicon Valley, too big to fail, transaction costs

Moving the value of the dollar up or down against other currencies by 10 percent has the impact on U.S. employment and wages of a hundred North American Free Trade Agreements. Yet how often might the dollar move that much without a peep from the press or progressive policy makers? Of course, the hand that controls dollar policy is not the invisible hand of the free market. Business and financial interests have the upper hand at the Treasury Department and the Fed, but almost no one is talking about this important lever of economic power. Housing policy Though it is not hard to follow and appreciate Fed policy or the ups and downs of the dollar, we ignore these important economic policies at our peril.


pages: 190 words: 53,409

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

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

POSITIONAL CONCERNS SPAWN WASTEFUL SPENDING, EVEN WHEN EVERYONE IS WELL INFORMED AND RATIONAL. Charles Darwin, the great British naturalist, was heavily influenced by Adam Smith and other economists. He saw that competition in nature, like competition in the marketplace, often produced benefits for both individuals and larger groups, just as in Smith’s Invisible Hand theory. Keen eyesight in hawks, for example, made both individual hawks and hawks as a species more successful. Yet Darwin also saw that many traits and behaviors helped individuals at the expense of larger groups. When success depends on relative position, as it almost always does in competitive struggles, wasteful “positional arms races” often result.


pages: 173 words: 53,564

Fair Shot: Rethinking Inequality and How We Earn by Chris Hughes

"World Economic Forum" Davos, basic income, Donald Trump, effective altruism, Elon Musk, end world poverty, full employment, future of journalism, gig economy, high net worth, hockey-stick growth, income inequality, invisible hand, Jeff Bezos, job automation, knowledge economy, labor-force participation, Lyft, M-Pesa, Mark Zuckerberg, meta-analysis, new economy, oil rush, payday loans, Peter Singer: altruism, Potemkin village, precariat, randomized controlled trial, ride hailing / ride sharing, Ronald Reagan, Rutger Bregman, Second Machine Age, self-driving car, side hustle, side project, Silicon Valley, TaskRabbit, TED Talk, The Bell Curve by Richard Herrnstein and Charles Murray, traveling salesman, trickle-down economics, uber lyft, universal basic income, winner-take-all economy, working poor, working-age population, zero-sum game

If we’re honest, we all know how much luck we’ve had.” But luck doesn’t just happen. We have created an economy dominated by forces that reward luck in an outsized way. Some of these changes might be desirable and some not, but they are all the result of political decisions that we purposefully make as a society. There is no invisible hand creating a winner-take-all economy in which luck takes on this disproportionate role. We are its authors and enablers. The natural result of our collective decision-making over the past decades is an economy in which a small number of people hit the jackpot each year. I’m not talking about the local dentist, lawyer, or doctor, the kind of rich folks I grew up around in North Carolina.


pages: 196 words: 54,339

Team Human by Douglas Rushkoff

1960s counterculture, Abraham Maslow, Adam Curtis, autonomous vehicles, basic income, Berlin Wall, big-box store, bitcoin, blockchain, Burning Man, carbon footprint, circular economy, clean water, clockwork universe, cloud computing, collective bargaining, Computing Machinery and Intelligence, corporate personhood, digital capitalism, disintermediation, Donald Trump, drone strike, European colonialism, fake news, Filter Bubble, full employment, future of work, game design, gamification, gig economy, Google bus, Gödel, Escher, Bach, hockey-stick growth, Internet of things, invention of the printing press, invention of writing, invisible hand, iterative process, John Perry Barlow, Kevin Kelly, Kevin Roose, knowledge economy, Larry Ellison, Lewis Mumford, life extension, lifelogging, Mark Zuckerberg, Marshall McLuhan, means of production, mirror neurons, multilevel marketing, new economy, patient HM, pattern recognition, peer-to-peer, Peter Thiel, planned obsolescence, power law, prosperity theology / prosperity gospel / gospel of success, Ray Kurzweil, recommendation engine, ride hailing / ride sharing, Ronald Reagan, Ronald Reagan: Tear down this wall, shareholder value, sharing economy, Silicon Valley, Silicon Valley billionaire, social intelligence, sovereign wealth fund, Steve Jobs, Steven Pinker, Stewart Brand, tech billionaire, technoutopianism, TED Talk, theory of mind, trade route, Travis Kalanick, Turing test, universal basic income, Vannevar Bush, We are as Gods, winner-take-all economy, zero-sum game

Adherents of this worldview say that it’s already too late to go back. There are already too many people, too much damage, and too much dependence on energy. The only way out is through. Regulating a market just slows it down, preventing it from reaching the necessary level of turbulence for the “invisible hand” to do its work. According to their curated history of humanity, whenever things look irredeemably awful, people come up with a new technology, unimaginable until then. They like to tell the story of the great horse manure crisis of 1894, when people in England and the United States were being overwhelmed by the manure produced by the horses they used for transportation.


Firefighting by Ben S. Bernanke, Timothy F. Geithner, Henry M. Paulson, Jr.

Asian financial crisis, asset-backed security, bank run, Basel III, Bear Stearns, break the buck, Build a better mousetrap, business cycle, Carmen Reinhart, collapse of Lehman Brothers, collateralized debt obligation, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Doomsday Book, financial deregulation, financial engineering, financial innovation, Glass-Steagall Act, housing crisis, Hyman Minsky, income inequality, invisible hand, Kenneth Rogoff, labor-force participation, light touch regulation, London Interbank Offered Rate, Long Term Capital Management, low interest rates, margin call, money market fund, moral hazard, mortgage debt, negative equity, Northern Rock, opioid epidemic / opioid crisis, pets.com, price stability, quantitative easing, regulatory arbitrage, Robert Shiller, Savings and loan crisis, savings glut, short selling, sovereign wealth fund, special drawing rights, tail risk, The Great Moderation, too big to fail

When possible, the U.S. government imposed tough terms on firms receiving aid; sometimes, the imperative to persuade stronger institutions as well as weaker ones to participate in efforts to strengthen the system and revive confidence limited how tough the terms of the programs could be. But we knew that stepping back and letting nature take its course was not a reasonable choice. The invisible hand of capitalism can’t stop a full-blown financial collapse; only the visible hand of government can do that. And full-blown financial collapses create vicious recessions that kill businesses, limit opportunities, and frustrate dreams. In fact, the financial shocks of 2008 were by many measures greater than the shocks before the Great Depression, and so was the initial economic impact.


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

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

A necessary corollary of this approach was judicial deference to the decisions of Congress and congressionally supervised federal agencies.21 The system that emerged in the US by the 1940s came to be known as “interest group liberalism,” a pluralist system in which public policy emerged from negotiations among economic interest groups, each with its own power brokers, rather than from a technocratic mandarinate of all-wise, altruistic experts insulated from popular pressure, or from the “invisible hand” of the free market. * * * — IN THE REALM of culture or civil society, including the mass media and education, as well as in the economy and politics, a system of democratic pluralism that empowered the working class coalesced in the United States and other Western democracies in the mid-twentieth century.


pages: 209 words: 53,175

The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness by Morgan Housel

airport security, Amazon Web Services, Bernie Madoff, book value, business cycle, computer age, Cornelius Vanderbilt, coronavirus, discounted cash flows, diversification, diversified portfolio, do what you love, Donald Trump, financial engineering, financial independence, Hans Rosling, Hyman Minsky, income inequality, index fund, invisible hand, Isaac Newton, It's morning again in America, Jeff Bezos, Jim Simons, John Bogle, Joseph Schumpeter, knowledge worker, labor-force participation, Long Term Capital Management, low interest rates, margin call, Mark Zuckerberg, new economy, Paul Graham, payday loans, Ponzi scheme, quantitative easing, Renaissance Technologies, Richard Feynman, risk tolerance, risk-adjusted returns, Robert Gordon, Robert Shiller, Ronald Reagan, side hustle, Stephen Hawking, Steven Levy, stocks for the long run, tech worker, the scientific method, traffic fines, Vanguard fund, WeWork, working-age population

Richard Feynman, the great physicist, once said, “Imagine how much harder physics would be if electrons had feelings.” Well, investors have feelings. Quite a few of them. That’s why it’s hard to predict what they’ll do next based solely on what they did in the past. The cornerstone of economics is that things change over time, because the invisible hand hates anything staying too good or too bad indefinitely. Investor Bill Bonner once described how Mr. Market works: “He’s got a ‘Capitalism at Work’ T-shirt on and a sledgehammer in his hand.” Few things stay the same for very long, which means we can’t treat historians as prophets. The most important driver of anything tied to money is the stories people tell themselves and the preferences they have for goods and services.


India's Long Road by Vijay Joshi

Affordable Care Act / Obamacare, barriers to entry, Basel III, basic income, blue-collar work, book value, Bretton Woods, business climate, capital controls, carbon tax, central bank independence, clean water, collapse of Lehman Brothers, collective bargaining, colonial rule, congestion charging, Cornelius Vanderbilt, corporate governance, creative destruction, crony capitalism, decarbonisation, deindustrialization, demographic dividend, demographic transition, Doha Development Round, eurozone crisis, facts on the ground, failed state, financial intermediation, financial repression, first-past-the-post, floating exchange rates, foreign exchange controls, full employment, germ theory of disease, Gini coefficient, global supply chain, global value chain, hiring and firing, income inequality, Indoor air pollution, Induced demand, inflation targeting, invisible hand, land reform, low interest rates, Mahatma Gandhi, manufacturing employment, Martin Wolf, means of production, microcredit, moral hazard, obamacare, Pareto efficiency, price elasticity of demand, price mechanism, price stability, principal–agent problem, profit maximization, profit motive, purchasing power parity, quantitative easing, race to the bottom, randomized controlled trial, rent-seeking, reserve currency, rising living standards, school choice, school vouchers, secular stagnation, Silicon Valley, smart cities, South China Sea, special drawing rights, The Future of Employment, The Market for Lemons, too big to fail, total factor productivity, trade liberalization, Tragedy of the Commons, transaction costs, universal basic income, urban sprawl, vertical integration, working-age population

The textbook virtue is that under certain well-​defined conditions, in particular the prevalence of perfect competition, market interaction achieves economic efficiency. This is because competitive discipline ensures that whatever is produced is produced at the lowest feasible cost; and, in addition, whatever is produced meets consumer demand at prices which reflect costs of production. The overall outcome, brought about by an ‘invisible hand’, is an ‘efficient allocation of resources’, meaning a state in which all possibilities of making some people better off (without making others worse off) are exhausted.6 This is a useful property, not to be despised. But its significance should also not be exaggerated. This is because an ‘efficient’ allocation of resources, in the sense defined, is compatible with any distribution of income, even one that is wildly inequitable

There can be more or less state ownership of the means of production in an economy that is largely privately owned. Note that a quite separate argument for private property is its connection with individual freedom. 6. This outcome is called ‘Pareto efficiency’ in the jargon of economics. Pareto efficiency is ensured by the ‘invisible hand’ of competition, if there are no ‘market failures’. 7. See Hayek (1940, 1945). Though better than central planning, the coordinating mechanism of the market is by no means perfect (see below). 8. Moreover, even if planning could somehow mimic a market system, the incentives of managers would not be such as to evoke efficient responses from them (see n. 5 above). 9.


pages: 514 words: 153,092

The Forgotten Man by Amity Shlaes

Alan Greenspan, anti-communist, bank run, banking crisis, Charles Lindbergh, collective bargaining, currency manipulation / currency intervention, electricity market, Ford Model T, Frederick Winslow Taylor, Glass-Steagall Act, Ida Tarbell, invisible hand, jobless men, Lewis Mumford, low interest rates, Mahatma Gandhi, plutocrats, short selling, Triangle Shirtwaist Factory, Upton Sinclair, wage slave, Works Progress Administration

The typical Republican of his day, he supported tariffs in the belief that they strengthened the United States. His failure to recognize the consequences of his policies, both abroad and for his country, was his greatest shortcoming. Hoover believed that government might help business do better, functioning as a sort of beneficent hand. Coolidge liked Adam Smith’s old invisible hand. The men were different breeds of Republican. Hoover believed that action was necessary to make the country live up to its potential. Coolidge had long ago determined that the world would do better if he involved himself less. Finally, there was a difference in temperament. Hoover strewed around phrases about individuality, but he could not control his own sense of agency.

He also made clear that he believed America must move toward regulation: “Our mass of regulation of public utilities and our legislation against restraint of trade is the monument to our intent to preserve an equality of opportunity,” he wrote—and, describing Mellon’s Adam Smith, put the word “capitalism” in quotation marks, to signal that he wanted to keep his distance. The message was clear: as far as he was concerned, men like Mellon could have Adam Smith’s invisible hand. In this view Hoover was in line with two academics popular in the 1920s, William Trufant Foster and Waddill Catchings. The pair were the ones who had popularized the phrase “beneficent hand.” Catchings and Foster introduced other novel theories. They deplored the traditional emphasis on supply; economic policy rather should pay attention to the consumer.


pages: 537 words: 158,544

Second World: Empires and Influence in the New Global Order by Parag Khanna

Abraham Maslow, Admiral Zheng, affirmative action, anti-communist, Asian financial crisis, Bartolomé de las Casas, Branko Milanovic, British Empire, call centre, capital controls, central bank independence, cognitive dissonance, colonial rule, complexity theory, continuation of politics by other means, crony capitalism, death from overwork, Deng Xiaoping, different worldview, Dissolution of the Soviet Union, Donald Trump, dual-use technology, Edward Glaeser, energy security, European colonialism, export processing zone, facts on the ground, failed state, flex fuel, Francis Fukuyama: the end of history, friendly fire, gentrification, Gini coefficient, global reserve currency, global supply chain, Great Leap Forward, guns versus butter model, haute couture, Hernando de Soto, illegal immigration, income inequality, informal economy, invisible hand, Islamic Golden Age, karōshi / gwarosa / guolaosi, Khyber Pass, Kickstarter, knowledge economy, land reform, Londongrad, low cost airline, low skilled workers, mass immigration, means of production, megacity, meritocracy, military-industrial complex, Monroe Doctrine, Nelson Mandela, no-fly zone, oil shale / tar sands, oil shock, oil-for-food scandal, open borders, open economy, Parag Khanna, Pax Mongolica, Pearl River Delta, pirate software, Plutonomy: Buying Luxury, Explaining Global Imbalances, Potemkin village, price stability, race to the bottom, RAND corporation, reserve currency, restrictive zoning, rising living standards, Robert Solow, Ronald Reagan, Silicon Valley, Skype, South China Sea, special economic zone, stem cell, Stephen Hawking, Suez crisis 1956, Thomas L Friedman, trade route, trickle-down economics, uranium enrichment, urban renewal, Washington Consensus, women in the workforce

Many restored buildings already fly the flag of the EU—which is more visible than Bosnia’s own flag. The artificial currency of Bosnia, the “Konvertible Mark,” will surely be replaced by the Euro. EU member-states do not need their own currencies. But EU membership is not itself a cure, rather it is a certificate of health after the invisible hand of the EU’s “Copenhagen criteria” of political, economic, and infrastructural reform have taken effect, connecting the various Balkan limbs to their new European heart. This machinery worked for Macedonia: A preventive peacekeeping deployment staved off spillover from the rest of Yugoslavia, and stabilization forces secured its borders to ensure independence.

7 Anti-Americanism continues even as America’s dominance fades.8 Americans frequently state that China’s uncertain course is the key “X factor” of the future, but it is the United States that has become the equivalent of the uncertainty principle: From different perspectives there is no agreement on where it stands. America now holds the mantle of Perfidious Albion. Neither democratic idealism nor hegemonic messianism holds much promise for restoring trust in America, which has gone from the invisible hand incarnate to merely one of several competing vendors or brands on the catwalk of credibility. The question for Americans has changed from “What’s in it for us?” to “Why aren’t we there?” International congresses and summits are being held elsewhere with none of the hassles of America’s arbitrary visa restrictions.


pages: 482 words: 149,351

The Finance Curse: How Global Finance Is Making Us All Poorer by Nicholas Shaxson

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Airbnb, airline deregulation, Alan Greenspan, anti-communist, bank run, banking crisis, Basel III, Bear Stearns, benefit corporation, Bernie Madoff, Big bang: deregulation of the City of London, Blythe Masters, Boris Johnson, Bretton Woods, British Empire, business climate, business cycle, capital controls, carried interest, Cass Sunstein, Celtic Tiger, central bank independence, centre right, Clayton Christensen, cloud computing, corporate governance, corporate raider, creative destruction, Credit Default Swap, cross-subsidies, David Ricardo: comparative advantage, demographic dividend, Deng Xiaoping, desegregation, Donald Trump, Etonian, export processing zone, failed state, fake news, falling living standards, family office, financial deregulation, financial engineering, financial innovation, forensic accounting, Francis Fukuyama: the end of history, full employment, gig economy, Gini coefficient, Glass-Steagall Act, global supply chain, Global Witness, high net worth, Ida Tarbell, income inequality, index fund, invisible hand, Jeff Bezos, junk bonds, Kickstarter, land value tax, late capitalism, light touch regulation, London Whale, Long Term Capital Management, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, megaproject, Michael Milken, Money creation, Mont Pelerin Society, moral hazard, neoliberal agenda, Network effects, new economy, Northern Rock, offshore financial centre, old-boy network, out of africa, Paul Samuelson, plutocrats, Ponzi scheme, price mechanism, proprietary trading, purchasing power parity, pushing on a string, race to the bottom, regulatory arbitrage, rent-seeking, road to serfdom, Robert Bork, Ronald Coase, Ronald Reagan, Savings and loan crisis, seminal paper, shareholder value, sharing economy, Silicon Valley, Skype, smart grid, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, special economic zone, Steve Ballmer, Steve Jobs, stock buybacks, Suez crisis 1956, The Chicago School, Thorstein Veblen, too big to fail, Tragedy of the Commons, transfer pricing, two and twenty, vertical integration, Wayback Machine, wealth creators, white picket fence, women in the workforce, zero-sum game

It often is, but it also has a particular history and meaning, which in terms of its practical effects has meant financial deregulation, privatisation and globalisation actively promoted and protected by governments. Neoliberalism is an outgrowth of eighteenth-century classic liberalism. There’s political liberalism, which is all about citizens having equal democratic rights in a system of sovereign law, and then there’s economic liberalism, which starts from Adam Smith’s ‘invisible hand’, by which free exchanges or trade in properly functioning markets are supposed to make society better off overall. The more liberal (or free) the exchange, in this view, the better for society as a whole; government’s role is to provide basic functions like defence, to enforce property rights, and to keep a watchful eye out for monopolies, but otherwise to get out of the way.

This in turn has refocused the attention of corporate managers – away from investment and towards more financial engineering (and even more monopolisation) to improve profits. In the process we’ve traded balanced economies with plentiful, stable well-paying jobs and thriving communities for unbalanced economies, zero-hour contracts, atomised communities and cheap televisions – and they probably aren’t much cheaper, either. We’ve traded Adam Smith’s invisible hand of the well-functioning market for the invisible fist of monopoly power. These changes have joined with other developments such as financial deregulation, independent central banking and the rise of the Euromarkets to create the typhoon-force winds filling the sails of large banks and multinational firms, nearly always to the detriment of smaller domestic competitors and taxpayers.


pages: 560 words: 158,238

Fifty Degrees Below by Kim Stanley Robinson

airport security, bioinformatics, bread and circuses, Burning Man, carbon credits, carbon tax, clean water, DeepMind, Donner party, full employment, Intergovernmental Panel on Climate Change (IPCC), invisible hand, iterative process, Kim Stanley Robinson, means of production, minimum wage unemployment, North Sea oil, off-the-grid, Ralph Waldo Emerson, Richard Feynman, statistical model, Stephen Hawking, the scientific method

However, since he had been elected with the help of big oil and everything transnationally corporate, and had done more than any previous president to strip-mine the nation and use it as a dumping ground, he did not appear to be as convincing as Phil. It was getting hard to believe his assertions that the invisible hand of the market would solve everything, because, as Phil put it, the invisible hand never picked up the check. So the election campaign wallowed along in its falsity and tedium, and surprise surprise, as the summer passed it became an ever-tightening race, just as all media hopeful for interested customers might have wished. These summer months were full enough of new weather anomalies and extreme events to keep Phil in the chase, as he liked to put it.


pages: 538 words: 147,612

All the Money in the World by Peter W. Bernstein

Albert Einstein, anti-communist, AOL-Time Warner, Bear Stearns, Berlin Wall, Bill Gates: Altair 8800, book value, call centre, Carl Icahn, Charles Lindbergh, clean tech, Cornelius Vanderbilt, corporate governance, corporate raider, creative destruction, currency peg, David Brooks, Donald Trump, estate planning, Fairchild Semiconductor, family office, financial engineering, financial innovation, George Gilder, high net worth, invisible hand, Irwin Jacobs: Qualcomm, Jeff Bezos, job automation, job-hopping, John Markoff, junk bonds, Larry Ellison, Long Term Capital Management, Marc Andreessen, Martin Wolf, Maui Hawaii, means of production, mega-rich, Menlo Park, Michael Milken, Mikhail Gorbachev, new economy, Norman Mailer, PageRank, Peter Singer: altruism, pez dispenser, popular electronics, Quicken Loans, Renaissance Technologies, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Sand Hill Road, school vouchers, Search for Extraterrestrial Intelligence, shareholder value, short squeeze, Silicon Valley, Silicon Valley billionaire, Silicon Valley startup, SoftBank, stem cell, Stephen Hawking, Steve Ballmer, Steve Jobs, Steve Wozniak, tech baron, tech billionaire, Teledyne, the new new thing, Thorstein Veblen, too big to fail, traveling salesman, urban planning, wealth creators, William Shockley: the traitorous eight, women in the workforce

He denounced CBS’s programming: Goldberg, Citizen Turner, p. 266. 24. Though Turner failed: Museum of Broadcast Communications, museum.tv/archives/ctv/P/htm/P/paleywillia-htm. 25. Captain Outrageous, as Turner was sometimes known: pbs.org/wgbh/theymadeamerica/whomade/turnerhi.htm. 26. Philip Anschutz: Glenn Bunting, “Denver Billionaire’s Invisible Hand Shapes L.A.,” Los Angeles Times, July 23, 2006. 27. Michael Eisner: James B. Stewart, Disney War (New York: Simon & Schuster, 2005). 28. David Geffen: Lisa Gubernick and Peter Newcomb, “The Richest Man in Hollywood,” BusinessWeek, Dec. 24, 1990. 29. William Paley: Christopher Buckley, “Success Was Not Enough,” New York Times, Nov. 4, 1990. 30.

Texas billionaire Bunker Hunt: Most of the information about Bunker and Lamar Hunt’s sports activities comes from Harry Hurt III, Texas Rich (New York: W. W. Norton, 1982). 67. “All through our school years”: Ibid., p. 329. 68. As Warren Buffett wrote: Janet Whitman, “Open Buffett,” New York Post, Mar. 2, 2007. 69. And at a match between soccer teams: Glenn F. Bunting, “A Denver Billionaire’s Invisible Hand,” Los Angeles Times, July 23, 2006. 70. That cost him $500,000: John Dorschner, “For NBA Owners, a Contrast in Style,” Miami Herald, June 11, 2006. 71. As head of Kroenke Sports Enterprises: Jack Bell, “Thinking Globally, Rapids and Arsenal See Win-Win Deal,” New York Times, Feb. 14, 2007. 72.Carnival Cruise Line heir Arison: Dorschner, “For NBA Owners.” 73.


The Cigarette: A Political History by Sarah Milov

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", activist lawyer, affirmative action, airline deregulation, American Legislative Exchange Council, barriers to entry, British Empire, business logic, collective bargaining, corporate personhood, deindustrialization, fixed income, Frederick Winslow Taylor, G4S, global supply chain, Herbert Marcuse, imperial preference, Indoor air pollution, information asymmetry, invisible hand, Kitchen Debate, land tenure, military-industrial complex, new economy, New Journalism, Philip Mirowski, pink-collar, Potemkin village, precariat, price stability, profit maximization, race to the bottom, Ralph Nader, rent-seeking, scientific management, Silicon Valley, structural adjustment programs, technological determinism, The Chicago School, Torches of Freedom, trade route, union organizing, Unsafe at Any Speed, Upton Sinclair, vertical integration, War on Poverty, women in the workforce

The history of the cigarette complicates the historiography of modern conservatism that emphasizes business’s dismantling of New Deal economic commitments. For histories of the political mobilization of business, see Benjamin Waterhouse, Lobbying America: The Politics of Business from Nixon to Nafta (Princeton: Princeton University Press, 2014); Kim Philips-Fein, Invisible Hands: The Businessman’s Crusade against the New Deal (New York: Norton, 2009); Elizabeth Fones-Wolf, Selling Free Enterprise: The Business Assault on Labor and Liberalism, 1945–1960 (Urbana: University of Illinois Press, 1995). 50. Campaign for Tobacco-Free Kids, “The Toll of Tobacco in the United States,” updated October 6, 2017, https://www.tobaccofreekids.org/problem/toll-us/. 51.

See Christopher Ketcham, “The Great Republican Land Heist,” Harper’s Magazine, February 2015. 122. Although scholars have noted the extent to which Charles Reich and Ralph Nader animated Powell’s defense of free enterprise, his reaction to the fairness ruling has gone unremarked upon. For a succinct explication of the Powell Memo, see Kim Philips-Fein, Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan (New York: Norton, 2009), 156–165. 123. G. Weissman, “Lewis Powell Recommendations Re: Cigarette Industry Environment”, September 22, 1969, Philip Morris Records, https://www.industrydocumentslibrary.ucsf.edu/tobacco/docs/yngb0131. 124.


pages: 667 words: 149,811

Economic Dignity by Gene Sperling

active measures, Affordable Care Act / Obamacare, antiwork, autism spectrum disorder, autonomous vehicles, basic income, behavioural economics, benefit corporation, Bernie Sanders, Big Tech, Cass Sunstein, collective bargaining, company town, corporate governance, cotton gin, David Brooks, desegregation, Detroit bankruptcy, disinformation, Donald Trump, Double Irish / Dutch Sandwich, driverless car, Elon Musk, employer provided health coverage, Erik Brynjolfsson, Ferguson, Missouri, fulfillment center, full employment, gender pay gap, ghettoisation, gig economy, Gini coefficient, green new deal, guest worker program, Gunnar Myrdal, housing crisis, Ida Tarbell, income inequality, independent contractor, invisible hand, job automation, job satisfaction, labor-force participation, late fees, liberal world order, longitudinal study, low skilled workers, Lyft, Mark Zuckerberg, market fundamentalism, mass incarceration, mental accounting, meta-analysis, minimum wage unemployment, obamacare, offshore financial centre, open immigration, payday loans, Phillips curve, price discrimination, profit motive, race to the bottom, RAND corporation, randomized controlled trial, Richard Thaler, ride hailing / ride sharing, Ronald Reagan, Rosa Parks, Second Machine Age, secular stagnation, shareholder value, Sheryl Sandberg, Silicon Valley, single-payer health, speech recognition, stock buybacks, subprime mortgage crisis, tech worker, TED Talk, The Chicago School, The Future of Employment, The Wealth of Nations by Adam Smith, Toyota Production System, traffic fines, Triangle Shirtwaist Factory, Uber and Lyft, uber lyft, union organizing, universal basic income, W. E. B. Du Bois, War on Poverty, warehouse robotics, working poor, young professional, zero-sum game

This is not to say that some regulations are not oppressive, poorly constructed, out of date, and worthy of review or repeal. But that review should not start from the presumption that any new rule on market structure interferes with pure markets. Indeed, even Adam Smith, the father of market competition, based his famous argument—that the “invisible hand” of individual pursuit of self-interest in free competitive markets will benefit the common good—on the idea that competition would be structured by government policymakers to prevent government or private sector monopoly power. Three guideposts should instruct our analysis of market structure and economic dignity.

See economic inequality; educational inequality inflation, 174, 175, 266–67 “inflation inequality,” 175 Ingrum, John, 118 innovation, government’s role, 98–99 in-prison college programs, 54, 55–56 intellectual or developmental disabilities (I/DDs), 194–200 breaking down barriers to purpose, potential, and contribution, 196–200 jobs empowering those with, 210–12 interest rates, 186, 220–21, 266 interest rates fees, 57, 58, 84–85 intergenerational mobility, 42–43, 203 International Ladies’ Garment Workers’ Union (ILGWU), 70 Interstate Commerce Act of 1887, 116 “invisible hand,” 107 involuntary servitude, 260–65 Mother Jones and fight against, 67–68, 72, 77 noncompete clauses, 263–64 visa system, 76, 261–63 wage theft, 264–65 Iora Health, 147 Irwin, Neil, 232–33 Itliong, Larry, 76, 255 ITT Technical Institute, 84 Ivy League, 277 Jacobellis v.


pages: 569 words: 156,139

Amazon Unbound: Jeff Bezos and the Invention of a Global Empire by Brad Stone

activist fund / activist shareholder / activist investor, air freight, Airbnb, Amazon Picking Challenge, Amazon Robotics, Amazon Web Services, autonomous vehicles, Bernie Sanders, big data - Walmart - Pop Tarts, Big Tech, Black Lives Matter, business climate, call centre, carbon footprint, Clayton Christensen, cloud computing, Colonization of Mars, commoditize, company town, computer vision, contact tracing, coronavirus, corporate governance, COVID-19, crowdsourcing, data science, deep learning, disinformation, disintermediation, Donald Trump, Downton Abbey, Elon Musk, fake news, fulfillment center, future of work, gentrification, George Floyd, gigafactory, global pandemic, Greta Thunberg, income inequality, independent contractor, invisible hand, Jeff Bezos, John Markoff, Kiva Systems, Larry Ellison, lockdown, Mahatma Gandhi, Mark Zuckerberg, Masayoshi Son, mass immigration, minimum viable product, move fast and break things, Neal Stephenson, NSO Group, Paris climate accords, Peter Thiel, Ponzi scheme, Potemkin village, private spaceflight, quantitative hedge fund, remote working, rent stabilization, RFID, Robert Bork, Ronald Reagan, search inside the book, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, Snapchat, social distancing, SoftBank, SpaceX Starlink, speech recognition, Steve Ballmer, Steve Jobs, Steven Levy, tech billionaire, tech bro, techlash, TED Talk, Tim Cook: Apple, Tony Hsieh, too big to fail, Tragedy of the Commons, two-pizza team, Uber for X, union organizing, warehouse robotics, WeWork

A major part of his candidacy was his bid to acquire the North Reading, Massachusetts–based robotics startup, Kiva Systems, which made the Roomba-like mobile robots. Instead of pickers walking a dozen miles a day to select items from shelves spread out over giant warehouses, Kiva robots maneuvered portable containers of merchandise around the building, an orchestral symphony conducted by the invisible hand of software. The idea behind Kiva was born from the same disaster that had inspired Doug Herrington to propose Amazon Fresh. After Webvan went bankrupt, one of its executives, Mick Mountz, realized that e-commerce companies were essentially paying people to spend two-thirds of their time walking.

Still, Porter’s retort, as well as Amazon’s reaction to the criticism of its Covid-19 plans, missed the substantive elements of Bray’s conscientious objection. Bray believed the testimonials of the activist employees reflected understandable anxiety at a harrowing time. But Amazon, in its reflexive defensiveness, didn’t see regular people with genuine concerns but the invisible hand of its opposition, such as organized labor groups. “Sometimes in the noise, it’s hard to tell when it’s our employees talking and when there are some of these paid third-party groups that are, you know, amplifying things,” Dave Clark told me. “There’s a group of people who love us no matter what we do, and there’s a group of people who really don’t like us, no matter what we do.”


pages: 205 words: 58,054

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

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

“[A]lmost everything that the classical economists considered of interest in economic life—in particular their crucial insights into the social effects of different markets on human capacities and social relationships and the ways that different markets are socially embedded—has been omitted” from the models and evaluative standards of neoclassical economics. Debra Satz, Why Some Things Should Not Be for Sale: The Moral Limits of Markets (Oxford and New York: Oxford University Press, 2010), 61. Smith, in particular, has been misread as a theorist of benign “invisible hand” self-interest and socially disembedded, selfequilibriating markets. Bromwich rightly invokes Polanyi against such illusions, but wrongly supposes that Smith held them. For corrections, see Gavin Kennedy, “Adam Smith: Some Popular Uses and Abuses,” in Adam Smith: His Life, Thought, and Legacy, edited by Ryan Hanley (Princeton, NJ: Princeton University Press, 2016), 461–77. 2.


pages: 203 words: 58,817

The Fire Starter Sessions: A Soulful + Practical Guide to Creating Success on Your Own Terms by Danielle Laporte

affirmative action, Albert Einstein, David Heinemeier Hansson, delayed gratification, do what you love, emotional labour, fake it until you make it, Frank Gehry, index card, invisible hand, Lao Tzu, off-the-grid, pattern recognition, Ralph Waldo Emerson, solopreneur, Steve Jobs, Steve Wozniak

What would surprise even you? Feel the high of the extreme dream. You should be peaking right about now. DREAM TEAM If you “follow your bliss…you will begin to meet people who are in the field of your bliss, and they open the doors to you,” said Joseph Campbell, explaining his theory of the “invisible hands” that help you through life. While you’re still tripping on the Milky Way of potential, call in your invisible elders, angels, or faith leaders. Imagine hanging out with the wisdom keepers or titans of your industry—your idols. Now assume that you are their contemporary—that you’ve earned your place alongside them.


pages: 187 words: 58,839

Status Anxiety by Alain de Botton

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

The rich might be arrogant and coarse, but their vices were transformed, through the operations of the marketplace, into virtues—or so Smith claimed in what has become possibly the most famous passage in the literature of capitalist economics: “In spite of their natural selfishness and rapacity, though they mean only their own convenience, though the sole end which they propose from the labours of all the thousands whom they employ be the gratification of their own vain and insatiable desires, the rich divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessities of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus, without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species.”


The Great Derangement: Climate Change and the Unthinkable by Amitav Ghosh

Alfred Russel Wallace, Anthropocene, Berlin Wall, Bernie Sanders, British Empire, carbon footprint, climate fiction, Donald Trump, double helix, Fellow of the Royal Society, Intergovernmental Panel on Climate Change (IPCC), invisible hand, James Watt: steam engine, Jeremy Corbyn, Mahatma Gandhi, market fundamentalism, megacity, megaproject, Michael Shellenberger, Naomi Klein, non-fiction novel, Ronald Reagan, spinning jenny, Ted Nordhaus, Upton Sinclair, upwardly mobile, urban planning

But even to enter into that argument is to recognize how deeply we are mired in the Great Derangement: our lives and our choices are enframed in a pattern of history that seems to leave us nowhere to turn but towards our self-annihilation. ‘Money flows toward short term gain,’ writes the geologist David Archer, ‘and toward the over-exploitation of unregulated common resources. These tendencies are like the invisible hand of fate, guiding the hero in a Greek tragedy toward his inevitable doom.’ This is indeed the essence of humanity’s present derangement. 9 Imperialism was not, however, the only obstacle in Asia’s path to industrialization: this model of economy also met with powerful indigenous resistances of many different kinds.


pages: 935 words: 267,358

Capital in the Twenty-First Century by Thomas Piketty

accounting loophole / creative accounting, Asian financial crisis, banking crisis, banks create money, Berlin Wall, book value, Branko Milanovic, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, carbon tax, central bank independence, centre right, circulation of elites, collapse of Lehman Brothers, conceptual framework, corporate governance, correlation coefficient, David Ricardo: comparative advantage, demographic transition, distributed generation, diversification, diversified portfolio, European colonialism, eurozone crisis, Fall of the Berlin Wall, financial intermediation, full employment, Future Shock, German hyperinflation, Gini coefficient, Great Leap Forward, high net worth, Honoré de Balzac, immigration reform, income inequality, income per capita, index card, inflation targeting, informal economy, invention of the steam engine, invisible hand, joint-stock company, Joseph Schumpeter, Kenneth Arrow, low interest rates, market bubble, means of production, meritocracy, Money creation, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, open economy, Paul Samuelson, pension reform, power law, purchasing power parity, race to the bottom, randomized controlled trial, refrigerator car, regulatory arbitrage, rent control, rent-seeking, Robert Gordon, Robert Solow, Ronald Reagan, Simon Kuznets, sovereign wealth fund, Steve Jobs, Suez canal 1869, Suez crisis 1956, The Nature of the Firm, the payments system, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade liberalization, twin studies, very high income, Vilfredo Pareto, We are the 99%, zero-sum game

To behave in this way is only human, especially since the necessary information is, in objective terms, highly imperfect. It may be excessive to accuse senior executives of having their “hands in the till,” but the metaphor is probably more apt than Adam Smith’s metaphor of the market’s “invisible hand.” In practice, the invisible hand does not exist, any more than “pure and perfect” competition does, and the market is always embodied in specific institutions such as corporate hierarchies and compensation committees. This does not mean that senior executives and compensation committees can set whatever salaries they please and always choose the highest possible figure.

Like Ricardo, Marx based his work on an analysis of the internal logical contradictions of the capitalist system. He therefore sought to distinguish himself from both bourgeois economists (who saw the market as a self-regulated system, that is, a system capable of achieving equilibrium on its own without major deviations, in accordance with Adam Smith’s image of “the invisible hand” and Jean-Baptiste Say’s “law” that production creates its own demand), and utopian socialists and Proudhonians, who in Marx’s view were content to denounce the misery of the working class without proposing a truly scientific analysis of the economic processes responsible for it.7 In short, Marx took the Ricardian model of the price of capital and the principle of scarcity as the basis of a more thorough analysis of the dynamics of capitalism in a world where capital was primarily industrial (machinery, plants, etc.) rather than landed property, so that in principle there was no limit to the amount of capital that could be accumulated.


pages: 225 words: 61,388

Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa by Dambisa Moyo

affirmative action, Asian financial crisis, belling the cat, Bob Geldof, Bretton Woods, business cycle, buy and hold, colonial rule, correlation does not imply causation, credit crunch, diversification, diversified portfolio, en.wikipedia.org, European colonialism, failed state, financial engineering, financial innovation, financial intermediation, Hernando de Soto, income inequality, information asymmetry, invisible hand, Live Aid, low interest rates, M-Pesa, market fundamentalism, Mexican peso crisis / tequila crisis, microcredit, moral hazard, Multics, Ponzi scheme, rent-seeking, risk free rate, Ronald Reagan, seminal paper, sovereign wealth fund, The Chicago School, trade liberalization, transaction costs, trickle-down economics, Washington Consensus, Yom Kippur War

., ‘The Determinants of Aid Allocation by Regional Multilateral Development Banks and United Nations Agencies’, International Studies Quarterly, 47 (2003), pp. 101–22 North, Douglass, The Economic Growth of the United States, 1790–1860, Eaglewood Cliffs, NJ: Prentice-Hall, 1961 —, Institutions, Institutional Change and Economic Performance, Cambridge: CUP, 1990 Olson, Mancur, Power and Prosperity: Outgrowing Communist and Capitalist Dictatorships, Oxford: OUP, 2000 Olson, Mancur (with Martin C. McGuire), ‘The Economics of Autocracy and Majority Rule: The Invisible Hand and the Use of Force’, Journal of Economic Literature, March 1996 O’Neill, J., A. Bevan, T. Yamakawa and T. Miura, ‘Refuting the JGB Downgrade: JGB’s Deserve Aaa’, Goldman Sachs Global Economics Paper No. 76, June 2006 Organisation for Economic Co-operation and Development, ‘Untying Aid to the Least Developed Countries’, Policy Brief, OECD Observer, 2001, at http://www.oecd.org/dataoecd/16/24/2002959.pdf —, ‘Aid flows top USD 100 billion in 2005’, 4 April 2006, at http://www.oecd.org/document/40/0,2340,en2649201185364183441111,00.html —, ‘Is It ODA?’


pages: 261 words: 10,785

The Lights in the Tunnel by Martin Ford

Alan Greenspan, Albert Einstein, Bear Stearns, Bill Joy: nanobots, Black-Scholes formula, business cycle, call centre, carbon tax, cloud computing, collateralized debt obligation, commoditize, Computing Machinery and Intelligence, creative destruction, credit crunch, double helix, en.wikipedia.org, factory automation, full employment, income inequality, index card, industrial robot, inventory management, invisible hand, Isaac Newton, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, knowledge worker, low skilled workers, mass immigration, Mitch Kapor, moral hazard, pattern recognition, prediction markets, Productivity paradox, Ray Kurzweil, Robert Solow, Search for Extraterrestrial Intelligence, Silicon Valley, Stephen Hawking, strong AI, technological singularity, the long tail, Thomas L Friedman, Turing test, Vernor Vinge, War on Poverty, warehouse automation, warehouse robotics

The Basis of the Free Market Economy: Incentives The free market economy is a natural system that pushes consumers, businesses, investors and workers to act in ways that ultimately propel society as a whole toward advancement and greater prosperity. In other words, as each of us pursues our own self-interest, collectively we move everyone forward. Through the logic of the market, these collective actions automatically allocate resources in the most efficient way so that economic output is maximized. This, of course, is the “invisible hand” that Adam Smith spoke of. We can divide the logic of the free market into three broad sets of incentives: Individual consumers act to find the best values for products and services. In other words, consumers shop around. No one wants to overpay, and no one wants to end up with an inferior product.


pages: 219 words: 62,816

"They Take Our Jobs!": And 20 Other Myths About Immigration by Aviva Chomsky

affirmative action, Bernie Sanders, British Empire, call centre, colonial exploitation, colonial rule, death from overwork, deindustrialization, Donald Trump, European colonialism, export processing zone, full employment, guest worker program, illegal immigration, immigration reform, informal economy, invisible hand, language acquisition, longitudinal study, low skilled workers, mass immigration, mass incarceration, new economy, open immigration, out of africa, postindustrial economy, race to the bottom, Ronald Reagan, Rosa Parks, structural adjustment programs, The Chicago School, thinkpad, trickle-down economics, union organizing, War on Poverty, Washington Consensus, women in the workforce

Fast food, child care, elder care, and home health care became rapid-growth sectors. These were jobs that could not be moved abroad. But if workers without social and economic rights might be recruited, they could provide a low-wage labor force. Economist Nancy Folbre calls this aspect of the economy the “invisible heart”—as opposed to the “invisible hand” that classical economists argue governs the marketplace. The paid world of work and business, she explains, couldn’t exist without the unpaid, invisible network of care provided mostly by women. The economic shifts that began in the 1970s both demanded more working hours outside the home and cut back on public services and benefits, creating what Barbara Ehrenreich and Arlie Hochschild have termed a “care deficit” in the first world.8 Much of the new wave of immigrants that began after 1965 moved in to fill this care deficit.


pages: 219 words: 61,720

American Made: Why Making Things Will Return Us to Greatness by Dan Dimicco

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Affordable Care Act / Obamacare, Alan Greenspan, American energy revolution, American Society of Civil Engineers: Report Card, Apollo 11, Bakken shale, barriers to entry, Bernie Madoff, California high-speed rail, carbon credits, carbon footprint, carbon tax, clean water, congestion pricing, crony capitalism, currency manipulation / currency intervention, David Ricardo: comparative advantage, decarbonisation, digital divide, driverless car, fear of failure, full employment, Google Glasses, high-speed rail, hydraulic fracturing, invisible hand, job automation, knowledge economy, laissez-faire capitalism, Loma Prieta earthquake, low earth orbit, manufacturing employment, Neil Armstrong, oil shale / tar sands, Ponzi scheme, profit motive, Report Card for America’s Infrastructure, rolling blackouts, Ronald Reagan, Savings and loan crisis, Silicon Valley, smart grid, smart meter, sovereign wealth fund, The Wealth of Nations by Adam Smith, too big to fail, uranium enrichment, Washington Consensus, Works Progress Administration

A mercantilist trading policy is one in which a government protects and heavily subsidizes key industries, exporting as much as possible and importing as little as possible. The great Scottish philosopher and economist Adam Smith said the remedy to mercantilism was laissez-faire capitalism. The “invisible hand” of capitalism has always struggled with the heavy hand of government meddling. The U.S. trade deficit, which had fallen 60 percent during Reagan’s second term and into the elder Bush’s presidency, began to expand again in the early 1990s.7 The move toward free trade (which we’ll discuss at greater length in chapter 5) left U.S. industries vulnerable once again to predatory foreign trade practices.


pages: 254 words: 61,387

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

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

You didn’t have to force or beg a butcher to be a butcher. Because this was what enabled people to survive and meet the needs of their family, it’s what they would do on their own. This was an empowering idea. A society built on trusting people to look out for themselves was possible—and preferable. Smith believed that the “invisible hand” of our collective individual wills would maintain a balance of power between capital, land, and workers. This balance would create a continuous cycle of production, reinvestment, and improvement that would benefit everyone. Quite a lovely idea, don’t you think? But note that Smith didn’t say that the butcher must maximize hog slaughter rates, lower standards to an acceptable minimum, and underpay and overwork laborers to maximize those profits, and then redirect that money to executives and investors instead.


Land of Big Numbers: Stories by Te-Ping Chen

index card, invisible hand

When they reached the house, we heard them shout up to the window. The window slid open, and a bucket tied to a rope was flung out. From our vantage point, the woman and her child looked as small as dolls. It was hard to see what happened next, but then the bucket was rising, slowly and jerkily pulled by an invisible hand. “See? There’s someone inside,” Gao’s mother said. For a moment, I thought I saw a flash of a face at the window, but it disappeared too quickly to be sure. All I could see was the rope, and the bucket that hung from it, dangling. We got back into the car. The light was fading, and we were two strangers anxious to get home.


pages: 199 words: 61,648

Having and Being Had by Eula Biss

Capital in the Twenty-First Century by Thomas Piketty, David Graeber, Donald Trump, Garrett Hardin, glass ceiling, Haight Ashbury, index fund, invisible hand, Jeff Bezos, Joan Didion, job satisfaction, Landlord’s Game, means of production, moral hazard, new economy, Norman Mailer, Occupy movement, precariat, Robert Shiller, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tragedy of the Commons, trickle-down economics, Upton Sinclair, wage slave, wages for housework

The historian led Eric to a roped-off area and told him to stay within it. The trading floor was filled with men. The countdown to the bell began. It was a round, flat bell, like the fire alarm bells in public schools, but it was gold. Eric’s view was blocked, so he could see only the bell, not the hand that rang it. It was, he tells me, the invisible hand of capitalism. The bell rang, and it kept ringing. The only thing like it that he had ever experienced was the solar eclipse. The world went dark, crickets chirped, birds panicked. People around him were clapping and laughing. Tears came to his eyes, which embarrassed him, but nobody noticed.


pages: 282 words: 63,385

Attention Factory: The Story of TikTok and China's ByteDance by Matthew Brennan

Airbnb, AltaVista, augmented reality, Benchmark Capital, Big Tech, business logic, Cambridge Analytica, computer vision, coronavirus, COVID-19, deep learning, Didi Chuxing, Donald Trump, en.wikipedia.org, fail fast, Google X / Alphabet X, growth hacking, ImageNet competition, income inequality, invisible hand, Kickstarter, Mark Zuckerberg, Menlo Park, natural language processing, Netflix Prize, Network effects, paypal mafia, Pearl River Delta, pre–internet, recommendation engine, ride hailing / ride sharing, Sheryl Sandberg, Silicon Valley, Snapchat, social graph, Steve Jobs, TikTok, Travis Kalanick, WeWork, Y Combinator

Using the metaphor of immigration between countries was Alex’s roundabout way of saying Musical.ly set the rules of the game. They drove vast traffic to specific individuals such as Baby Ariel, catapulting them overnight to online influencer status. As the platform grew, this group became outright celebrities, in some part due to their creativity, persistence, and hard work, in most part due to the invisible hand of the Shanghai content operations team tilting the attention game heavily in their favor. Younger than Snapchat Once the platform had grown large enough to garner mainstream media attention, the first thing reporters picked up on was the users’ age. “This is no question the youngest social network we’ve ever seen,” exclaimed online marketing guru Gary Vaynerchuk in an article profiling the platform. 158 “Snapchat and Instagram skew a little bit young… but with Musical.ly, you’re talking about first, second, third grade.”


pages: 596 words: 163,682

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

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

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

Milton Friedman was characteristically bold in his answer to these questions: “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”40 Since profits are what go to shareholders, Friedman was saying management should maximize the value of the corporation’s shares, allowing each shareholder the maximum freedom to use her valuable shares to fund causes dear to her heart. Let her support the local football team in her neighborhood or donate to the firefighters’ fund if she chooses to, Friedman insisted; after all, it is her money, earned from bearing risk. Friedman’s dictum had an “invisible hand” aspect to it—by maximizing the value of the only claim to the corporation that was not fixed, management would not just be maximizing shareholder value but also the corporation’s value, and thus the corporation’s contribution to society. Friedman firmly rejected any role for the corporation in helping the state do its job, for example, in containing inflation, or in undertaking charitable activities, especially if it impinged on its profitability.


pages: 598 words: 172,137

Who Stole the American Dream? by Hedrick Smith

Affordable Care Act / Obamacare, Airbus A320, airline deregulation, Alan Greenspan, anti-communist, asset allocation, banking crisis, Bear Stearns, Boeing 747, Bonfire of the Vanities, British Empire, business cycle, business process, clean water, cloud computing, collateralized debt obligation, collective bargaining, commoditize, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, David Brooks, Deng Xiaoping, desegregation, Double Irish / Dutch Sandwich, family office, financial engineering, Ford Model T, full employment, Glass-Steagall Act, global supply chain, Gordon Gekko, guest worker program, guns versus butter model, high-speed rail, hiring and firing, housing crisis, Howard Zinn, income inequality, independent contractor, index fund, industrial cluster, informal economy, invisible hand, John Bogle, Joseph Schumpeter, junk bonds, Kenneth Rogoff, Kitchen Debate, knowledge economy, knowledge worker, laissez-faire capitalism, Larry Ellison, late fees, Long Term Capital Management, low cost airline, low interest rates, manufacturing employment, market fundamentalism, Maui Hawaii, mega-rich, Michael Shellenberger, military-industrial complex, MITM: man-in-the-middle, mortgage debt, negative equity, new economy, Occupy movement, Own Your Own Home, Paul Samuelson, Peter Thiel, Plutonomy: Buying Luxury, Explaining Global Imbalances, Ponzi scheme, Powell Memorandum, proprietary trading, Ralph Nader, RAND corporation, Renaissance Technologies, reshoring, rising living standards, Robert Bork, Robert Shiller, rolodex, Ronald Reagan, Savings and loan crisis, shareholder value, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Solyndra, Steve Jobs, stock buybacks, tech worker, Ted Nordhaus, The Chicago School, The Spirit Level, too big to fail, transaction costs, transcontinental railway, union organizing, Unsafe at Any Speed, Vanguard fund, We are the 99%, women in the workforce, working poor, Y2K

Paul Volcker: The Lake Wobegon Syndrome CEOs and their corporate boards boldly argued that rising CEO pay was merited because CEOs increased shareholder value; moreover, they said, the rise was dictated by the invisible hand of the market. Shareholder activists and scholars dispute this. Princeton economist Paul Krugman suggested that the seedbed for CEO fortunes was the cozy fraternity inside corporate boards of directors. “The key reason executives are paid so much now is that they appoint the members of the corporate board that determines their compensation …,” Krugman said. “So it’s not the invisible hand of the market that leads to those monumental executive incomes; it’s the invisible handshake in the boardroom.”


pages: 1,239 words: 163,625

The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated by Gautam Baid

Abraham Maslow, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, Albert Einstein, Alvin Toffler, Andrei Shleifer, asset allocation, Atul Gawande, availability heuristic, backtesting, barriers to entry, beat the dealer, Benoit Mandelbrot, Bernie Madoff, bitcoin, Black Swan, book value, business process, buy and hold, Cal Newport, Cass Sunstein, Checklist Manifesto, Clayton Christensen, cognitive dissonance, collapse of Lehman Brothers, commoditize, corporate governance, correlation does not imply causation, creative destruction, cryptocurrency, Daniel Kahneman / Amos Tversky, deep learning, delayed gratification, deliberate practice, discounted cash flows, disintermediation, disruptive innovation, Dissolution of the Soviet Union, diversification, diversified portfolio, dividend-yielding stocks, do what you love, Dunning–Kruger effect, Edward Thorp, Elon Musk, equity risk premium, Everything should be made as simple as possible, fear index, financial independence, financial innovation, fixed income, follow your passion, framing effect, George Santayana, Hans Rosling, hedonic treadmill, Henry Singleton, hindsight bias, Hyman Minsky, index fund, intangible asset, invention of the wheel, invisible hand, Isaac Newton, it is difficult to get a man to understand something, when his salary depends on his not understanding it, Jeff Bezos, John Bogle, Joseph Schumpeter, junk bonds, Kaizen: continuous improvement, Kickstarter, knowledge economy, Lao Tzu, Long Term Capital Management, loss aversion, Louis Pasteur, low interest rates, Mahatma Gandhi, mandelbrot fractal, margin call, Mark Zuckerberg, Market Wizards by Jack D. Schwager, Masayoshi Son, mental accounting, Milgram experiment, moral hazard, Nate Silver, Network effects, Nicholas Carr, offshore financial centre, oil shock, passive income, passive investing, pattern recognition, Peter Thiel, Ponzi scheme, power law, price anchoring, quantitative trading / quantitative finance, Ralph Waldo Emerson, Ray Kurzweil, Reminiscences of a Stock Operator, reserve currency, Richard Feynman, Richard Thaler, risk free rate, risk-adjusted returns, Robert Shiller, Savings and loan crisis, search costs, shareholder value, six sigma, software as a service, software is eating the world, South Sea Bubble, special economic zone, Stanford marshmallow experiment, Steve Jobs, Steven Levy, Steven Pinker, stocks for the long run, subscription business, sunk-cost fallacy, systems thinking, tail risk, Teledyne, the market place, The Signal and the Noise by Nate Silver, The Wisdom of Crowds, time value of money, transaction costs, tulip mania, Upton Sinclair, Walter Mischel, wealth creators, Yogi Berra, zero-sum game

Rockefeller, a mere one hundred years ago.) A big part of America’s success has come by combining the benefits of its abundant natural resources with a system of government that has allowed its citizens the freedom to work hard, pursue innovative ideas, and risk capital in pursuit of financial gain. Adam Smith’s “invisible hand” has played a significant role in unleashing the market forces of capitalism. Immigrants and capital are always attracted to countries with rule of law. Where there is rule of law, there is also more trust in business relations. America will continue to attract the best talent from around the world and to create some of the world’s best companies that provide innovative products and services to customers.

See also compound interest Internet, 219–220; bubble, 87; diversity and, 291 interrelatedness, 224 intrinsic value, 169; Buffett on, 161–162, 209–210; in business models, 216 inventory turnover ratio, 132 inversion, 23; Munger on, 57–58 investing: Bhagavad Gita on, 331–332; Buffett on, 11, 60, 68–69, 99–100, 109, 148, 219; comparison of results in, 216; control in, 237; in cyclicals, 197–198; delayed gratification and, 104–105; edges in, 104–108; empathy in, 184–186; equity, 103; in expanding businesses, 317–318; flexibility in, 75–76; game-changing, 188; Graham on, 117, 176–177, 273; hidden opportunities for, 203; of Keynes, 106; long-term, 103; Lynch on, 60, 103; of Munger, 107, 155, 245; outcomes, 195; politics and, 277–281; with sector tailwind, 315–317; sidecar, 313–315; Templeton on, 299; value, 163–164 Investing Between the Lines (Rittenhouse), 124 investment banks, 182 investor frenzy, 182 invisible hand, 278 IPOs. See initial public offerings irrational exuberance, 235 irrational statements, 303 ittaikan, 34–35 Ivanov, Ivaylo, 233, 236 Jackson, Michael, 67 Jacobi, Carl Gustav Jacob, 57 James, William, 72–73 J-curve, 107 jealousy, 135 Jefferson, Thomas, 35, 64 jiko jitsugen, 34–35 Jobs, Steve, 39, 304 Johnson, Samuel, 35 Jun, Jae, 205 junior bonds, 240 Kahneman, Daniel, 141, 237–238, 288–289, 292, 328, 344; on outside and inside views, 294–295; on stereotyping, 238–239; on WYSIATI, 305 kai, 33 kaizen, 111, 112, 352 Kant, Immanuel, 93–94 karma, 66, 95; Munger on, 67 Kaufman, Henry, 258 Kaufman, Peter, 28, 90, 91, 129, 156 Kelkar, Swanand, 291 Keller, Gary, 74 Kelly, John L., 249 Kelly criterion, 249–251 Kennon, Joshua, 354 Keynes, John Maynard, 69, 154, 165, 187, 247, 284; on compound interest, 215; on diversification, 245; as investor, 106; on market conditions, 235; on short-term thinking, 108 Khandelwal, Vishal, 333–334 Khare, Anshul, 103 Kiewit, Peter, 64–65 Kiewit corporation, 225 Kindleberger, Charles, 340 King, Stephen, 144 Kipling, Rudyard, 376–377 Kiyosaki, Robert, 61, 79 Klarman, Seth, 24, 76, 102, 149–150, 171; on spinoffs, 201 knowledge: Buffett on, 368; building, 2–3; compounding, 367–370; Einstein on, 51–52; expert, 51–52; factor, 313; Graham on, 92; growth of, 11; Matthew effect in acquisition of, 18–19; Munger on, 335; Musk on, 21 Koller, Tim, 101; on value creation, 221 Korean Stock Exchange, 60 Krishna, 331–332 Kurzweil, Ray, 318 Lakonishok, Josef, 348 Lampert, Eddie, 47–48 Lapthorne, Andrew, 183 Latimore, Ed, 34 learning: Buffett on, 36; Munger on, 1, 6; passion for, 13–16; reading and, 14; from role models, 46; time management and, 11–13; vicarious, 10–11, 23, 46.


Economic Gangsters: Corruption, Violence, and the Poverty of Nations by Raymond Fisman, Edward Miguel

accounting loophole / creative accounting, Andrei Shleifer, Asian financial crisis, barriers to entry, behavioural economics, blood diamond, clean water, colonial rule, congestion charging, crossover SUV, Donald Davies, European colonialism, failed state, feminist movement, George Akerlof, Great Leap Forward, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), invisible hand, mass immigration, megacity, oil rush, prediction markets, random walk, Scramble for Africa, selection bias, Silicon Valley, South China Sea, unemployed young men

Because of this daily deluge of updates and the differences of opinion among investors in how to interpret the news—How much of the UPS price hike will Amazon be able to pass on to its customers? How much of what we read in the morning paper is rumor versus reality?—prices bounce around a lot. A share price reflects investors’ consensus view of future profits—the invisible hand of the market at work—and this collective wisdom of thousands of well-informed buyers and sellers is captured by the daily ups and downs of stock prices. How does this fit into our corruption discussion? Recall the West End Corporation (WEC) discussed in chapter 1 that was set up by journalists to sting politicians and military brass by trying to bribe its way into selling night-vision cameras to the Indian army.


pages: 247 words: 71,698

Avogadro Corp by William Hertling

Any sufficiently advanced technology is indistinguishable from magic, cloud computing, crowdsourcing, Hacker Ethic, hive mind, invisible hand, messenger bag, natural language processing, Netflix Prize, off-the-grid, private military company, Ray Kurzweil, Recombinant DNA, recommendation engine, Richard Stallman, Ruby on Rails, standardized shipping container, tech worker, technological singularity, Turing test, web application, WikiLeaks

Since ELOPe was born, the percentage of news stories covering these chance encounters leading to a news-worthy positive outcome was at least five times as higher than previous years. ELOPe had woven itself into human existence, becoming an intrinsic part of the human ecosystem. The more Mike looked, the more he was convinced that the AI’s invisible hand was everywhere. Mike had a pet theory. ELOPe’s original goal, as defined by David, had been to maximize the success of the project. To meet that goal, mere survival of ELOPe was necessary but insufficient. Maximizing success meant maximum use of ELOPe. And maximizing use meant maximizing the human users of Avogadro email.


pages: 242 words: 68,019

Why Information Grows: The Evolution of Order, From Atoms to Economies by Cesar Hidalgo

Ada Lovelace, Albert Einstein, Arthur Eddington, assortative mating, business cycle, Claude Shannon: information theory, David Ricardo: comparative advantage, Douglas Hofstadter, Everything should be made as simple as possible, Ford Model T, frictionless, frictionless market, George Akerlof, Gödel, Escher, Bach, income inequality, income per capita, industrial cluster, information asymmetry, invention of the telegraph, invisible hand, Isaac Newton, James Watt: steam engine, Jane Jacobs, job satisfaction, John von Neumann, Joi Ito, New Economic Geography, Norbert Wiener, p-value, Paul Samuelson, phenotype, price mechanism, Richard Florida, Robert Solow, Ronald Coase, Rubik’s Cube, seminal paper, Silicon Valley, Simon Kuznets, Skype, statistical model, Steve Jobs, Steve Wozniak, Steven Pinker, Stuart Kauffman, tacit knowledge, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, working-age population

The idea of information also found its way into the social sciences, and in particular into economics. Friedrich Hayek, an Austrian economist and a contemporary of Shannon, argued famously that prices transmitted information about the supply of and demand for goods. This helped reveal the information needed for Smith’s “invisible hand” to work. As Hayek wrote, “In a system in which the knowledge of the relevant facts is dispersed among many people, prices can act to coördinate the separate actions of different people.”4 The idea of information also helped economists understand some important market failures. George Akerlof became famous by showing that markets could fail to operate when people had asymmetric information about the quality of the goods they wanted to exchange.5 On a parallel front, Herbert Simon, a polymath who contributed to economics, organizational theory, and artificial intelligence, introduced the idea of bounded rationality, which focused on the behavior of economic actors who had limited information about the world.


pages: 222 words: 70,132

Move Fast and Break Things: How Facebook, Google, and Amazon Cornered Culture and Undermined Democracy by Jonathan Taplin

"Friedman doctrine" OR "shareholder theory", "there is no alternative" (TINA), 1960s counterculture, affirmative action, Affordable Care Act / Obamacare, Airbnb, AlphaGo, Amazon Mechanical Turk, American Legislative Exchange Council, AOL-Time Warner, Apple's 1984 Super Bowl advert, back-to-the-land, barriers to entry, basic income, battle of ideas, big data - Walmart - Pop Tarts, Big Tech, bitcoin, Brewster Kahle, Buckminster Fuller, Burning Man, Clayton Christensen, Cody Wilson, commoditize, content marketing, creative destruction, crony capitalism, crowdsourcing, data is the new oil, data science, David Brooks, David Graeber, decentralized internet, don't be evil, Donald Trump, Douglas Engelbart, Douglas Engelbart, Dynabook, Edward Snowden, Elon Musk, equal pay for equal work, Erik Brynjolfsson, Fairchild Semiconductor, fake news, future of journalism, future of work, George Akerlof, George Gilder, Golden age of television, Google bus, Hacker Ethic, Herbert Marcuse, Howard Rheingold, income inequality, informal economy, information asymmetry, information retrieval, Internet Archive, Internet of things, invisible hand, Jacob Silverman, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Maynard Keynes: technological unemployment, John Perry Barlow, John von Neumann, Joseph Schumpeter, Kevin Kelly, Kickstarter, labor-force participation, Larry Ellison, life extension, Marc Andreessen, Mark Zuckerberg, Max Levchin, Menlo Park, Metcalfe’s law, military-industrial complex, Mother of all demos, move fast and break things, natural language processing, Network effects, new economy, Norbert Wiener, offshore financial centre, packet switching, PalmPilot, Paul Graham, paypal mafia, Peter Thiel, plutocrats, pre–internet, Ray Kurzweil, reality distortion field, recommendation engine, rent-seeking, revision control, Robert Bork, Robert Gordon, Robert Metcalfe, Ronald Reagan, Ross Ulbricht, Sam Altman, Sand Hill Road, secular stagnation, self-driving car, sharing economy, Silicon Valley, Silicon Valley ideology, Skinner box, smart grid, Snapchat, Social Justice Warrior, software is eating the world, Steve Bannon, Steve Jobs, Stewart Brand, tech billionaire, techno-determinism, technoutopianism, TED Talk, The Chicago School, the long tail, The Market for Lemons, The Rise and Fall of American Growth, Tim Cook: Apple, trade route, Tragedy of the Commons, transfer pricing, Travis Kalanick, trickle-down economics, Tyler Cowen, Tyler Cowen: Great Stagnation, universal basic income, unpaid internship, vertical integration, We are as Gods, We wanted flying cars, instead we got 140 characters, web application, Whole Earth Catalog, winner-take-all economy, women in the workforce, Y Combinator, you are the product

The libertarian belief that the supremacy of the free market is the natural order of things is in reality nothing more than an “imagined order,” which the historian Yuval Noah Harari defines in his book Sapiens as the shared myths we use to induce cooperation. “In order to safeguard an imagined order,” Harari writes, “continuous and strenuous efforts are imperative.” Adam Smith’s “invisible hand” is no more a law of nature or physics than Moses’s Ten Commandments. Of course Thiel’s comment about capitalism and democracy being incompatible points to an even darker part of the libertarian cult that Charles Koch flirted with, sometimes known as anarcho-capitalism or paleo-libertarianism.


pages: 295 words: 66,824

A Mathematician Plays the Stock Market by John Allen Paulos

Alan Greenspan, AOL-Time Warner, Benoit Mandelbrot, Black-Scholes formula, book value, Brownian motion, business climate, business cycle, butter production in bangladesh, butterfly effect, capital asset pricing model, confounding variable, correlation coefficient, correlation does not imply causation, Daniel Kahneman / Amos Tversky, diversified portfolio, dogs of the Dow, Donald Trump, double entry bookkeeping, Elliott wave, endowment effect, equity risk premium, Erdős number, Eugene Fama: efficient market hypothesis, four colour theorem, George Gilder, global village, greed is good, index fund, intangible asset, invisible hand, Isaac Newton, it's over 9,000, John Bogle, John Nash: game theory, Larry Ellison, Long Term Capital Management, loss aversion, Louis Bachelier, mandelbrot fractal, margin call, mental accounting, Myron Scholes, Nash equilibrium, Network effects, passive investing, Paul Erdős, Paul Samuelson, Plato's cave, Ponzi scheme, power law, price anchoring, Ralph Nelson Elliott, random walk, Reminiscences of a Stock Operator, Richard Thaler, risk free rate, Robert Shiller, short selling, six sigma, Stephen Hawking, stocks for the long run, survivorship bias, transaction costs, two and twenty, ultimatum game, UUNET, Vanguard fund, Yogi Berra

Whether we’re negotiators in business, spouses in a marriage, or nations in a dispute, our choices can often be phrased in terms of the prisoner’s dilemma. If both (all) parties pursue their own interests exclusively and do not cooperate, the outcome is worse for both (all) of them; yet in any given situation, any given party is better off not cooperating. Adam Smith’s invisible hand ensuring that individual pursuits bring about group well-being is, at least in these situations (and some others), quite arthritic. The dilemma has the following multi-person market version: Investors who notice some exploitable stock market anomaly may either act on it, thereby diminishing its effectiveness (the non-cooperative option) or ignore it, thereby saving themselves the trouble of keeping up with developments (the cooperative option).


pages: 267 words: 71,123

End This Depression Now! by Paul Krugman

airline deregulation, Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, bond market vigilante , Bretton Woods, business cycle, capital asset pricing model, Carmen Reinhart, centre right, correlation does not imply causation, credit crunch, Credit Default Swap, currency manipulation / currency intervention, debt deflation, Eugene Fama: efficient market hypothesis, financial deregulation, financial innovation, Financial Instability Hypothesis, full employment, German hyperinflation, Glass-Steagall Act, Gordon Gekko, high-speed rail, Hyman Minsky, income inequality, inflation targeting, invisible hand, it is difficult to get a man to understand something, when his salary depends on his not understanding it, It's morning again in America, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Joseph Schumpeter, junk bonds, Kenneth Rogoff, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, Long Term Capital Management, low interest rates, low skilled workers, Mark Zuckerberg, Minsky moment, Money creation, money market fund, moral hazard, mortgage debt, negative equity, paradox of thrift, Paul Samuelson, price stability, quantitative easing, rent-seeking, Robert Gordon, Ronald Reagan, Savings and loan crisis, Upton Sinclair, We are all Keynesians now, We are the 99%, working poor, Works Progress Administration

True, just after Lehman Brothers fell, Greenspan declared himself in a state of “shocked disbelief,” because “the whole intellectual edifice” had “collapsed.” By March 2011, however, he was back to his old position, calling for a repeal of the (very modest) attempts to tighten financial regulation in the wake of the crisis. Financial markets were fine, he wrote in the Financial Times: “With notably rare exceptions (2008, for example), the global ‘invisible hand’ has created relatively stable exchange rates, interest rates, prices, and wage rates.” Hey, what’s an occasional world-economy-destroying crisis? The political scientist Henry Farrell, in a blog post, quickly responded by inviting readers to find other uses for the “notably rare exceptions” construction—for example, “With notably rare exceptions, Japanese nuclear reactors have been safe from earthquakes.”


pages: 265 words: 69,310

What's Yours Is Mine: Against the Sharing Economy by Tom Slee

4chan, Airbnb, Amazon Mechanical Turk, asset-backed security, barriers to entry, Benchmark Capital, benefit corporation, Berlin Wall, big-box store, bike sharing, bitcoin, blockchain, Californian Ideology, citizen journalism, collaborative consumption, commons-based peer production, congestion charging, Credit Default Swap, crowdsourcing, data acquisition, data science, David Brooks, democratizing finance, do well by doing good, don't be evil, Dr. Strangelove, emotional labour, Evgeny Morozov, gentrification, gig economy, Hacker Ethic, impact investing, income inequality, independent contractor, informal economy, invisible hand, Jacob Appelbaum, Jane Jacobs, Jeff Bezos, John Zimmer (Lyft cofounder), Kevin Roose, Khan Academy, Kibera, Kickstarter, license plate recognition, Lyft, machine readable, Marc Andreessen, Mark Zuckerberg, Max Levchin, move fast and break things, natural language processing, Netflix Prize, Network effects, new economy, Occupy movement, openstreetmap, Paul Graham, peer-to-peer, peer-to-peer lending, Peter Thiel, pre–internet, principal–agent problem, profit motive, race to the bottom, Ray Kurzweil, recommendation engine, rent control, ride hailing / ride sharing, sharing economy, Silicon Valley, Snapchat, software is eating the world, South of Market, San Francisco, TaskRabbit, TED Talk, the Cathedral and the Bazaar, the long tail, The Nature of the Firm, Thomas L Friedman, transportation-network company, Travis Kalanick, Tyler Cowen, Uber and Lyft, Uber for X, uber lyft, ultimatum game, urban planning, WeWork, WikiLeaks, winner-take-all economy, Y Combinator, Yochai Benkler, Zipcar

In an extended report written in 2013,3 journalist Kevin Carhart unpacked many of the problems with TaskRabbit. Carhart quotes a TaskRabbit blog post (now removed) “rhapsodizing over networked mobile devices as an exciting kind of metaphor for spontaneous order,” which goes back to Adam Smith’s idea of the “invisible hand” of the free market. Here is TaskRabbit: [Adam] Smith is saying that governments should simply provide an unrestricted market system for people to easily exchange goods and services, and then get the heck out of the way! Market forces will take care of the rest. Yep, we totally agree! . . . The interconnectedness and transparency offered by the Internet and social networks make it possible for Smith’s vision to be realized for individuals in a community . . .


pages: 255 words: 68,829

How PowerPoint Makes You Stupid by Franck Frommer

Abraham Maslow, Albert Einstein, An Inconvenient Truth, business continuity plan, cuban missile crisis, dematerialisation, disinformation, hypertext link, invention of writing, inventory management, invisible hand, Just-in-time delivery, knowledge worker, Larry Ellison, Marshall McLuhan, means of production, new economy, oil shock, Ronald Reagan, Silicon Valley, Steve Jobs, Steve Wozniak, union organizing

The concept of multidivisional form was devised by the economist and business historian Alfred Chandler. In one of his best known books, The Visible Hand, on the basis of an analysis of American economic history, Chandler concludes that the “visible hand” of managers of modern companies has replaced the “invisible hand” of the market that dominated traditional small business.2 He shows how large American companies, such as Standard Oil, General Electric, and DuPont, integrated all the functions needed to supply a product or service: design, production, distribution, and so on. Known as a multidivisional firm, this organization became the model of the largest companies, particularly in America.3 These more “horizontal” organizations had to have means of communication for the exchange and comparison of data.


pages: 208 words: 67,582

What About Me?: The Struggle for Identity in a Market-Based Society by Paul Verhaeghe

"there is no alternative" (TINA), Alan Greenspan, autism spectrum disorder, Berlin Wall, call centre, capitalist realism, cognitive dissonance, deskilling, epigenetics, Fall of the Berlin Wall, Francis Fukuyama: the end of history, Gregor Mendel, income inequality, invisible hand, jimmy wales, job satisfaction, knowledge economy, knowledge worker, Louis Pasteur, market fundamentalism, meritocracy, Milgram experiment, mirror neurons, new economy, Panopticon Jeremy Bentham, post-industrial society, Richard Feynman, Silicon Valley, Stanford prison experiment, stem cell, The Spirit Level, ultimatum game, working poor

Hence the importance of education, because we live in a rapidly evolving knowledge economy that requires highly trained individuals with flexible competencies. A single higher-education qualification is good, two is better, and lifelong learning a must. Everyone must continue to grow because competition is fierce. That’s what lies behind the current compulsion for performance interviews and constant evaluations, all steered by an invisible hand from central management. This is a brief summary of the grand narrative that controls our culture today and that consequently forms our identity. Culture needs to be broadly interpreted here, because this narrative has meanwhile taken over all sectors of society, from science and education to health care and the media.


pages: 272 words: 64,626

Eat People: And Other Unapologetic Rules for Game-Changing Entrepreneurs by Andy Kessler

23andMe, Abraham Maslow, Alan Greenspan, Andy Kessler, bank run, barriers to entry, Bear Stearns, behavioural economics, Berlin Wall, Bob Noyce, bread and circuses, British Empire, business cycle, business process, California gold rush, carbon credits, carbon footprint, Cass Sunstein, cloud computing, collateralized debt obligation, collective bargaining, commoditize, computer age, Cornelius Vanderbilt, creative destruction, disintermediation, Douglas Engelbart, Dutch auction, Eugene Fama: efficient market hypothesis, fiat currency, Firefox, Fractional reserve banking, George Gilder, Gordon Gekko, greed is good, income inequality, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, Joseph Schumpeter, junk bonds, Kickstarter, knowledge economy, knowledge worker, Larry Ellison, libertarian paternalism, low skilled workers, Mark Zuckerberg, McMansion, Michael Milken, Money creation, Netflix Prize, packet switching, personalized medicine, pets.com, prediction markets, pre–internet, profit motive, race to the bottom, Richard Thaler, risk tolerance, risk-adjusted returns, Silicon Valley, six sigma, Skype, social graph, Steve Jobs, The Wealth of Nations by Adam Smith, transcontinental railway, transfer pricing, vertical integration, wealth creators, Yogi Berra

The stock market allocates precious capital to companies it thinks can maximize profits and starves those that can’t. In other words, the stock market is democracy’s half-evil henchman, whose tool is the size of the carrot, not the use of the stick. The tenets of capitalism’s great economists, from Adam Smith’s Invisible Hand to Joseph Schumpeter’s Creative Destruction and Gordon Gekko’s Greed Is Good, are all powerful concepts, but it’s profits and the stock market that carry out the dirty work. No Five-Year Plans. All men are created equal, but a few of you need to be canned and retrained so progress can happen again.


Shampoo Planet by Douglas Coupland

gentrification, invisible hand, Maui Hawaii, McJob, Menlo Park, microapartment, Ronald Reagan, Silicon Valley, telemarketer

In no particular order: YOU DISGUISE YOUR LAZINESS AS PRIDE YOU ARE PARALYZED BY THE FACT THAT CRUELTY IS OFTEN AMUSING YOU PRETEND TO BE MORE ECCENTRIC THAN YOU ACTUALLY ARE BECAUSE YOU WORRY YOU ARE AN INTERCHANGEABLE COG YOU MISTAKE MOTION FOR GROWTH AND ARE LURED INTO VEXING SITUATIONS YOU DEFEND OTHER PEOPLE'S IDEAS AT THE EXPENSE OF YOUR OWN YOU STILL DON'T KNOW WHAT YOU DO WELL YOU ARE UNABLE TO VISUALIZE YOURSELF IN A FUTURE YOUR INABILITY TO SUSTAIN SEXUAL INTEREST IN JUST ONE OTHER PERSON DRAINS YOUR LIFE OF THE POSSIBILITY OF INTIMACY YOUR OWN ABILITY TO RATIONALIZE YOUR BAD DEEDS MAKES YOU BELIEVE THE ENTIRE UNIVERSE IS AS AMORAL AS YOURSELF YOU WILLFULLY IGNORE THE SMALL, GENTLE OBSERVATIONS IN LIFE WHICH YOU KNOW ARE THE MOST IMPORTANT Stephanie is mutilating cash, too, garnishing my mottoes with messy red lipstick kisses as we bring into the foreground the secret language of money--biting the invisible hand that feeds us. YOUR FEAR OF CHANGE IS TOO CLEARLY VISIBLE IN YOUR EYES YOU ARE WASTING YOUR YOUTH, YOUR TIME, AND YOUR MONEY BECAUSE YOU WON'T ACKNOWLEDGE YOUR SHORTCOMINGS YOUR REFUSAL TO ACKNOWLEDGE THE DARK SIDE OF HUMANITY MAKES YOU PREY TO THAT DARK SIDE YOU WORRY THAT IF YOU LOWER YOUR GUARD, EVEN FOR ONE SECOND, YOUR WHOLE WORLD WILL DISINTEGRATE INTO CHAOS YOU WAIT FOR FATE TO BRING ABOUT THE CHANGES IN LIFE WHICH YOU SHOULD BE BRINGING ABOUT YOURSELF YOU ARE DAZED BY THE EASE WITH WHICH OBLITERATION CAN BE OBTAINED YOU FEEL YOU HAVE MORE MEMORIES THAN YOU HAVE ENERGY TO PROCESS THOSE MEMORIES YOU ARE UNABLE TO DIFFERENTIATE BETWEEN FACADE AND SUBSTANCE Hours later we pay the Comfortmobile's hospital bill with some of our "tragic cash."


pages: 249 words: 66,492

The Rare Metals War by Guillaume Pitron

Albert Einstein, Berlin Wall, carbon footprint, circular economy, clean tech, cloud computing, collapse of Lehman Brothers, commodity super cycle, connected car, David Attenborough, decarbonisation, degrowth, deindustrialization, dematerialisation, Deng Xiaoping, Donald Trump, driverless car, dual-use technology, Elon Musk, energy transition, Fairphone, full employment, green new deal, green transition, industrial robot, Internet of things, invisible hand, Jeff Bezos, Kickstarter, knowledge economy, Lyft, mittelstand, offshore financial centre, oil shale / tar sands, planetary scale, planned obsolescence, Silicon Valley, smart cities, smart grid, smart meter, South China Sea, spinning jenny, Tesla Model S, Yom Kippur War

But according to a London analyst, the prices set by the LME still serve as a benchmark, and he didn’t believe that it would change anytime soon.44 He did concede, however, that ‘Indonesia applied a very original idea’. Indeed, to support its industrial policy, the nation needed to build road networks, electricity grids, ports, train stations, and airports. It would take strong and stable mineral prices to pay off and maintain these investments. So Indonesia warded off the invisible hand of the market by using the controls of the stock market. This inspired other Asian markets. In 2015, the Shanghai Futures Exchange included tin among the metals for trade on its futures market,45 and announced in 2018 that it would soon include copper.46 Malaysia followed suit in 2016.47 Other trading floors also introduced trading platforms for copper, nickel, and zinc.48 But Indonesia’s nationalisation of its mining resources did not meet with the same success as its Chinese counterpart, for it failed to put the necessary means behind its policy.


pages: 687 words: 189,243

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

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

As Rowe (2001, p. 114) shows, Chen was an unusually progressive scholar, who in some ways resembled the physiocrats and Adam Smith and decried the ivory-tower antiquarianism of the kaozheng scholars, who he thought were too “mired in the past.” He strongly believed in markets and the power of commerce to bring out efficiency in production and came close to Smith’s concept of an invisible hand. Rowe (2001 p. 214) points out that the one element that Enlightenment Europe had, which was entirely missing in Chen, is the strong belief in the economic virtue of emulation, which was a central element of the European Enlightenment ideology. But equally striking is the absence in his work of a concept of useful knowledge as a source of economic progress.14 Chen was deeply interested in creating prosperity, and his proposals included active economic policies to encourage mining, commerce, and manufacturing.

“Twisting the Lion’s Tail: Practice and Theory at the Court of Henry Prince of Wales.” In Bruce T. Moran, ed., Patronage and Institutions: Science, Technology and Medicine at the European Court, 1500–1750. Rochester, NY : Boydell Press, pp. 67–83. Cosmides, Leda, and John Tooby. 1994. “Better than Rational: Evolutionary Psychology and the Invisible Hand.” American Economic Review Vol. 84, pp. 327–32. Cowan, Brian. 2005. The Social Life of Coffee: The Emergence of the British Coffeehouse. New Haven, CT and London: Yale University Press. Cranmer-Byng, J.L., and Trevor Levere. 1981. “A Case Study in Cultural Collision: Scientific Apparatus in the Macartney Embassy to China, 1793.”


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

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

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

Philippon, Thomas. 2019. The Great Reversal: How America Gave Up on Free Markets. Cambridge, MA: Harvard University Press. Philippon, Thomas, and Ariell Reshef. 2012. “Wages in Human Capital in the U.S. Finance Industry: 1909‒2006.” Quarterly Journal of Economics 127:1551‒1609. Phillips-Fein, Kim. 2010. Invisible Hands: The Businessmen’s Crusade Against the New Deal. New York: W.W. Norton. Piff, Paul K., Daniel M. Stancato, Stéphane Côté, Rodolfo Mendoza-Denton, and Dacher Keltner. 2012. “Higher Social Class Predicts Increased Unethical Behavior.” Proceedings of the National Academy of Sciences 109, no. 11: 4086‒4091.


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

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

If Schumpeter is widely remembered today, it’s because he owns the intellectual copyright on creative destruction – the evolutionary process by which new technologies and business methods displace older, less efficient ways of doing things. Schumpeter’s borrowing from Darwin’s theory of natural selection is as important to our understanding of the nature of capitalism as Adam Smith’s ‘invisible hand’. Most discussion of creative destruction revolves around the adoption of new technologies, the roles played by entrepreneurs as harbingers of change and by competition in selecting the most efficient businesses. Less recognized is the important part played by interest in this dynamic process.

If their issuance was limited to no more than the economy’s trend growth rate, this money would be as good as gold.16 A digital Gold Standard would have some of the advantages, and fewer of the disadvantages, of the classical Gold Standard. One advantage is that central bankers would no longer be able to pursue an active monetary policy. The cost of borrowing would more accurately reflect the supply of and demand for actual savings. Guided by the market’s invisible hand, the rate of interest would find its natural level. 1. This basalt stele from c. 1760 BC depicts the sun god Shamash (seated) handing a body of laws to the Babylonian king, Hammurabi. The cuneiform text below contains regulations limiting the maximum rate of interest and prescribing conditions for loan forgiveness. 2.


Blindside: How to Anticipate Forcing Events and Wild Cards in Global Politics by Francis Fukuyama

Asian financial crisis, banking crisis, Berlin Wall, Bletchley Park, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, cognitive bias, contact tracing, cuban missile crisis, currency risk, energy security, Fairchild Semiconductor, flex fuel, global pandemic, Herman Kahn, income per capita, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John von Neumann, low interest rates, mass immigration, Menlo Park, Mikhail Gorbachev, moral hazard, Norbert Wiener, oil rush, oil shale / tar sands, oil shock, packet switching, RAND corporation, Ray Kurzweil, reserve currency, Ronald Reagan, The Wisdom of Crowds, trade route, Vannevar Bush, Vernor Vinge, Yom Kippur War

A nationwide deployment of flex-fuel cars, plug-in hybrids, and alternative fuels could take place within two decades. But such a transformation will not occur by itself. In a perfect world government would not need to intervene in the energy market, but in a time of war, the United States is taking an unacceptable risk by leaving the problem to be solved by the invisible hand. This is especially true since the energy market is anything but free. It is manipulated by a cartel, heavily rigged in favor of the status quo, and, as the case of Brazilian ethanol shows, riddled with protectionism. In the absence of appropriate public policy, hundreds of millions of petroleum-burning cars ill-suited to address the changing geopolitics and geology of oil will roll onto our roads in coming decades, with profound implications for the future.


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The War on Normal People: The Truth About America's Disappearing Jobs and Why Universal Basic Income Is Our Future by Andrew Yang

3D printing, Airbnb, assortative mating, augmented reality, autonomous vehicles, basic income, Bear Stearns, behavioural economics, Ben Horowitz, Bernie Sanders, call centre, corporate governance, cryptocurrency, data science, David Brooks, DeepMind, Donald Trump, Elon Musk, falling living standards, financial deregulation, financial engineering, full employment, future of work, global reserve currency, income inequality, Internet of things, invisible hand, Jeff Bezos, job automation, John Maynard Keynes: technological unemployment, Khan Academy, labor-force participation, longitudinal study, low skilled workers, Lyft, manufacturing employment, Mark Zuckerberg, megacity, meritocracy, Narrative Science, new economy, passive income, performance metric, post-work, quantitative easing, reserve currency, Richard Florida, ride hailing / ride sharing, risk tolerance, robo advisor, Ronald Reagan, Rutger Bregman, Sam Altman, San Francisco homelessness, self-driving car, shareholder value, Silicon Valley, Simon Kuznets, single-payer health, Stephen Hawking, Steve Ballmer, supercomputer in your pocket, tech worker, technoutopianism, telemarketer, The future is already here, The Wealth of Nations by Adam Smith, traumatic brain injury, Tyler Cowen, Tyler Cowen: Great Stagnation, Uber and Lyft, uber lyft, unemployed young men, universal basic income, urban renewal, warehouse robotics, white flight, winner-take-all economy, Y Combinator

The United States has reached a point where its current form of capitalism is faltering in producing an increasing standard of living for the majority of its citizens. It’s time for an upgrade. THE NEXT STAGE OF CAPITALISM Adam Smith, the Scottish economist who wrote The Wealth of Nations in 1776, is often regarded as the father of modern capitalism. His ideas of an invisible hand that guides the market, division of labor, and that self-interest and competition lead to wealth creation have been so deeply internalized that today we take most of them for granted. Our general thinking today is to contrast capitalism with socialism, which arose in the 1800s and advocated social ownership or democratic control of industries.


pages: 477 words: 75,408

The Economic Singularity: Artificial Intelligence and the Death of Capitalism by Calum Chace

"World Economic Forum" Davos, 3D printing, additive manufacturing, agricultural Revolution, AI winter, Airbnb, AlphaGo, Alvin Toffler, Amazon Robotics, Andy Rubin, artificial general intelligence, augmented reality, autonomous vehicles, banking crisis, basic income, Baxter: Rethink Robotics, Berlin Wall, Bernie Sanders, bitcoin, blockchain, Boston Dynamics, bread and circuses, call centre, Chris Urmson, congestion charging, credit crunch, David Ricardo: comparative advantage, deep learning, DeepMind, Demis Hassabis, digital divide, Douglas Engelbart, Dr. Strangelove, driverless car, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Fairchild Semiconductor, Flynn Effect, full employment, future of work, Future Shock, gender pay gap, Geoffrey Hinton, gig economy, Google Glasses, Google X / Alphabet X, Hans Moravec, Herman Kahn, hype cycle, ImageNet competition, income inequality, industrial robot, Internet of things, invention of the telephone, invisible hand, James Watt: steam engine, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Maynard Keynes: technological unemployment, John von Neumann, Kevin Kelly, Kiva Systems, knowledge worker, lifelogging, lump of labour, Lyft, machine translation, Marc Andreessen, Mark Zuckerberg, Martin Wolf, McJob, means of production, Milgram experiment, Narrative Science, natural language processing, Neil Armstrong, new economy, Nick Bostrom, Occupy movement, Oculus Rift, OpenAI, PageRank, pattern recognition, post scarcity, post-industrial society, post-work, precariat, prediction markets, QWERTY keyboard, railway mania, RAND corporation, Ray Kurzweil, RFID, Rodney Brooks, Sam Altman, Satoshi Nakamoto, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Skype, SoftBank, software is eating the world, speech recognition, Stephen Hawking, Steve Jobs, TaskRabbit, technological singularity, TED Talk, The future is already here, The Future of Employment, Thomas Malthus, transaction costs, Two Sigma, Tyler Cowen, Tyler Cowen: Great Stagnation, Uber for X, uber lyft, universal basic income, Vernor Vinge, warehouse automation, warehouse robotics, working-age population, Y Combinator, young professional

On the rare occasion when human intervention is needed, the gig economy[ccx] can probably furnish one quickly enough. Once it is economically feasible to replace human drivers with machines, it is a very short step to being economically compelling. Drivers account for 25-35% of the cost of a trucking operation.[ccxi] You can't escape the invisible hand of economics for long. In a free market, once one firm replaces its drivers the rest will have to follow suit, or go out of business. Of course, trade unions and sympathetic governments may try to stop the process in some jurisdictions. They may succeed for a while, but only by rendering their industry uneconomic, and burdening their customers with unnecessary costs which will damage them in turn.


pages: 251 words: 76,868

How to Run the World: Charting a Course to the Next Renaissance by Parag Khanna

"World Economic Forum" Davos, Albert Einstein, Asian financial crisis, back-to-the-land, bank run, blood diamond, Bob Geldof, borderless world, BRICs, British Empire, call centre, carbon footprint, carbon tax, charter city, clean tech, clean water, cloud computing, commoditize, congestion pricing, continuation of politics by other means, corporate governance, corporate social responsibility, Deng Xiaoping, Doha Development Round, don't be evil, double entry bookkeeping, energy security, European colonialism, export processing zone, facts on the ground, failed state, financial engineering, friendly fire, global village, Global Witness, Google Earth, high net worth, high-speed rail, index fund, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Kickstarter, Kiva Systems, laissez-faire capitalism, Live Aid, Masdar, mass immigration, megacity, Michael Shellenberger, microcredit, military-industrial complex, mutually assured destruction, Naomi Klein, Nelson Mandela, New Urbanism, no-fly zone, off grid, offshore financial centre, oil shock, One Laptop per Child (OLPC), open economy, out of africa, Parag Khanna, private military company, Productivity paradox, race to the bottom, RAND corporation, reserve currency, Salesforce, Silicon Valley, smart grid, South China Sea, sovereign wealth fund, special economic zone, sustainable-tourism, Ted Nordhaus, The Fortune at the Bottom of the Pyramid, The Wisdom of Crowds, too big to fail, trade liberalization, trickle-down economics, UNCLOS, uranium enrichment, Washington Consensus, X Prize

Americans who cynically ask what a world led by Asia would look like should get out of their chairs and go there. Good luck finding the border between state and market. Since China favors state capitalism to unbridled laissez-faire, that is how it will be. In the thirteenth century, the Chinese state already played a strong but invisible hand in partnership with its merchants. Today, as Shanghai joins Hong Kong—what some call “Shangkong”—as a world financial hub, corporate rules are bending the Chinese way. Among China’s more than one hundred thousand state-owned enterprises are the Industrial and Commercial Bank of China and the China Construction Bank, the two largest banks in the world by market capitalization.


Chomsky on Mis-Education by Noam Chomsky

Alan Greenspan, American ideology, classic study, deindustrialization, deskilling, disinformation, dual-use technology, Howard Zinn, invisible hand, Korean Air Lines Flight 007, means of production, military-industrial complex, public intellectual, Ronald Reagan, strikebreaker, union organizing, W. E. B. Du Bois, Washington Consensus

According to some specialists, half of U.S. trade worldwide consists of such centrally managed transactions, and much the same is true of other industrial powers,47 though one must treat with caution conclusions about institutions with limited public accountability. Some economists have plausibly described the world system as one of “corporate mercantilism,” remote from the ideal of free trade. The OECD concludes that “oligopolistic competition and strategic interaction among firms and governments rather than the invisible hand of market forces condition today’s competitive advantage and international division of labor in high-technology industries,”48 implicitly adopting a similar view. Even the basic structure of the domestic economy violates the neoliberal principles that are hailed. The main theme of the standard work on U.S. business history is that “modern business enterprise took the place of market mechanisms in coordinating the activities of the economy and allocating its resources,” handling many transactions internally, another large departure from market principles.49 There are many others.


Microchip: An Idea, Its Genesis, and the Revolution It Created by Jeffrey Zygmont

Albert Einstein, Bob Noyce, business intelligence, computer age, El Camino Real, Fairchild Semiconductor, invisible hand, popular electronics, side project, Silicon Valley, Silicon Valley startup, William Shockley: the traitorous eight

It is also the noble generosity that trusts in democratic outcomes, letting people make their own choices, individually and unimpeded. But those attitudes only permitted the innovations. The work also required motivation and encouragement. That came from commerce. That came from familiar capitalism, with Prologue xxi Adam Smiths invisible hand moving faster than it's ever moved, competitively selecting the most beneficial discoveries and developments. The story of the microchip is a story about incentives available and choices made in intensely competitive businesses. It is about discoveries pursued for the promise of rewards—rewards that included wealth, personal independence, public recognition, and the intensely private satisfaction of unscrambling puzzles and revealing mysteries.


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Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream by Arianna Huffington

Alan Greenspan, American Society of Civil Engineers: Report Card, Apollo 13, Bear Stearns, Bernie Madoff, Bernie Sanders, call centre, carried interest, citizen journalism, clean water, collateralized debt obligation, Cornelius Vanderbilt, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, do what you love, extreme commuting, Exxon Valdez, full employment, Glass-Steagall Act, greed is good, Greenspan put, guns versus butter model, high-speed rail, housing crisis, immigration reform, invisible hand, knowledge economy, laissez-faire capitalism, late fees, low interest rates, market bubble, market fundamentalism, Martin Wolf, medical bankruptcy, microcredit, military-industrial complex, Neil Armstrong, new economy, New Journalism, offshore financial centre, Ponzi scheme, post-work, proprietary trading, Report Card for America’s Infrastructure, Richard Florida, Ronald Reagan, Rosa Parks, Savings and loan crisis, single-payer health, smart grid, The Wealth of Nations by Adam Smith, Timothy McVeigh, too big to fail, transcontinental railway, trickle-down economics, winner-take-all economy, working poor, Works Progress Administration

They had, but rather than Ponce de León, it was Ronald Reagan who led the income-boosting expedition, marching into Washington under the banner of lowering the taxes of America’s moneyed elite.14 But, the Reagan Revolution of the 1980s was about more than shifting the tax burden—it was about shifting the way America looked at itself. In short order, government was no longer seen as a solution—it was fingered as the problem. Tocqueville’s “welfare of the greatest possible number” was replaced by the notion that the invisible hand of the free market could best determine society’s winners and losers—until, that is, the winners got into trouble in 2008 and the government rushed to the rescue in the name of preventing Armageddon. In books such as The Virtue of Selfishness and Atlas Shrugged, Ayn Rand, the high priestess of free-marketeers such as Alan Greenspan, championed the notion that by doing what is best for yourself, you end up doing what is best for everyone.


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Prediction Machines: The Simple Economics of Artificial Intelligence by Ajay Agrawal, Joshua Gans, Avi Goldfarb

Abraham Wald, Ada Lovelace, AI winter, Air France Flight 447, Airbus A320, algorithmic bias, AlphaGo, Amazon Picking Challenge, artificial general intelligence, autonomous vehicles, backpropagation, basic income, Bayesian statistics, Black Swan, blockchain, call centre, Capital in the Twenty-First Century by Thomas Piketty, Captain Sullenberger Hudson, carbon tax, Charles Babbage, classic study, collateralized debt obligation, computer age, creative destruction, Daniel Kahneman / Amos Tversky, data acquisition, data is the new oil, data science, deep learning, DeepMind, deskilling, disruptive innovation, driverless car, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, financial engineering, fulfillment center, general purpose technology, Geoffrey Hinton, Google Glasses, high net worth, ImageNet competition, income inequality, information retrieval, inventory management, invisible hand, Jeff Hawkins, job automation, John Markoff, Joseph Schumpeter, Kevin Kelly, Lyft, Minecraft, Mitch Kapor, Moneyball by Michael Lewis explains big data, Nate Silver, new economy, Nick Bostrom, On the Economy of Machinery and Manufactures, OpenAI, paperclip maximiser, pattern recognition, performance metric, profit maximization, QWERTY keyboard, race to the bottom, randomized controlled trial, Ray Kurzweil, ride hailing / ride sharing, Robert Solow, Salesforce, Second Machine Age, self-driving car, shareholder value, Silicon Valley, statistical model, Stephen Hawking, Steve Jobs, Steve Jurvetson, Steven Levy, strong AI, The Future of Employment, the long tail, The Signal and the Noise by Nate Silver, Tim Cook: Apple, trolley problem, Turing test, Uber and Lyft, uber lyft, US Airways Flight 1549, Vernor Vinge, vertical integration, warehouse automation, warehouse robotics, Watson beat the top human players on Jeopardy!, William Langewiesche, Y Combinator, zero-sum game

Some might be open-minded about exploration, discovery, and peace, while others may be paper-clip makers. So long as interests compete, competition will flourish, meaning that the paper-clip AI will likely find it more profitable to trade for resources than fight for them and, as if guided by an invisible hand, will end up promoting benefits distinct from its original intention. Thus, economics provides a powerful way to understand how a society of superintelligent AIs will evolve. That said, our models do not determine what happens to humanity in this process. What we have called AI in this book is not general artificial intelligence but decidedly narrower prediction machines.


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The New Silk Roads: The Present and Future of the World by Peter Frankopan

"World Economic Forum" Davos, active measures, Berlin Wall, Big Tech, bitcoin, blockchain, Boris Johnson, cashless society, clean water, cryptocurrency, Deng Xiaoping, don't be evil, Donald Trump, Ethereum, ethereum blockchain, F. W. de Klerk, failed state, fake news, Fall of the Berlin Wall, global supply chain, high-speed rail, illegal immigration, income inequality, invisible hand, land reform, Londongrad, low interest rates, Mark Zuckerberg, mass incarceration, Meghnad Desai, Nelson Mandela, Paris climate accords, purchasing power parity, ransomware, Rubik’s Cube, smart cities, South China Sea, sovereign wealth fund, Steve Bannon, trade route, trickle-down economics, UNCLOS, urban planning, WikiLeaks, zero-sum game

Asian Development Bank Special Report: Coming up Fast (April 2018). 32‘China to establish court for OBOR disputes’, Asia Times, 25 January 2018. 33Saptarshi Ray, ‘China to tunnel beneath Himalayas for Nepal railway link’, The Times, 23 June 2018. 34Anil Giri, ‘China looks at Nepal as potential gateway to South Asia, expands footprints in market’, Hindustan Times, 19 October 2017. 35Turloch Mooney, ‘New Asia–Europe rail services added amid weak ocean rates’, Journal of Commerce, 31 May 2016. 36An additional ten containers were unloaded at Duisberg, Railway Gazette, ‘First China to UK rail freight service arrives in London’, 18 January 2017. 37Dirk Visser, ‘Snapshot: The World’s Ultra-Large Container Ship Fleet’, The Maritime Executive, 2 June 2018. 38Quoted in the Economist, ‘Western firms are coining it along China’s One Belt, One Road’, 3 August 2017. 39Goldman Sachs, ‘The Rise of China’s New Consumer Class’ at http://www.goldmansachs.com/our-thinking/macroeconomic-insights/growth-of-china/chinese-consumer/ 40Zhidong Li, Kokichi Ito and Ryoichi Komiyama, Energy Demand and Supply Outlook in China for 2030 and A Northeast Asian Energy Community – The automobile strategy and nuclear power strategy of China (2018). 41Robin Mills, ‘China’s Big Play for Middle East Oil’, Bloomberg, 10 May 2017; Elena Mazneva, Stephen Bierman and Javier Blas, ‘China Deepens Oil Ties With Russia in $9 Billion Rosneft Deal’, Bloomberg, 8 September 2017; Anthony Dipaola and Aibing Guo, ‘China’s CNPC pays $1.18 billion for concessions in Abu Dhabi’, World Oil, 21 March 2018. 42US Energy Information Administration, ‘China surpassed the United States as the world’s largest crude oil importer in 2017’, 5 February 2017. 43Reuters, ‘Kazakhstan to produce nuclear fuel for China’, 26 May 2017. 44Fred Gale, James Hansen and Michael Jewison, China’s Growing Demand for Agricultural Imports, US Department of Agriculture, (2014), pp. 11–12. 45China Water Risk, ‘North China Plain Groundwater’, statement, 26 February 2013. 46South China Morning Post, ‘Air quality worsening in China’s Yangtze River Delta in 2018, figures show’, 23 May 2018. 47Li Gao, ‘Greening Chinese Patent Law to Incentivize Green Technology Innovation in China’, in Yahong Li, The Role of Patents in China’s Industrial Innovation (Cambridge, 2017), pp. 79–105. 48See, for example, Xinhua, ‘President vows vast battle with pollution’, 19 May 2018. 49International Monetary Fund, Press release 18/200, ‘IMF Staff Completes 2018 Article IV Mission to China’, 29 May 2018. 50Yan Chunlin, ‘Visible and invisible hand in creating and reducing overcapacity’, in Scott Kennedy (ed.), State and Market in Contemporary China: Toward the 13th Five-Year Plan (Lanham, 2016), pp. 30–32; Peter Ferdinand, ‘Westward ho – The China dream and “one belt, one road”: Chinese foreign policy under Xi Jinping’, International Affairs 92.4 (2016), pp. 941–57. 51Andrei Kirillov, ‘В Казахстане регулярно говорят о некачественном ремонте дорог’, Kapital, 26 June 2014. 52Asian Development Bank, Meeting Asia’s Infrastructure Needs (2017). 53ICE, PeopleResearch on India’s Consumer Economy, 360° survey 2016. 54Tom Hancock, ‘US fast food chains chase growth in small-town China’, Financial Times, 18 October 2017; Salvatore Babones, ‘China’s middle class is pulling up the ladder behind slowly’, Foreign Policy, 1 February 2018. 55Tom Hancock and Wang Xueqiao, ‘China’s smaller cities compete to increase population’, Financial Times, 20 July 2018. 56Zhao Lei, ‘Xinjiang’s GDP growth beats the national average’, China Daily, 20 October 2017; Frank Tang, ‘Xinjiang halts all government projects as crackdown on debt gets serious’, South China Morning Post, 4 April 2018. 57Joseph Hope, ‘Returning Uighur Fighter and China’s National Security Dilemma’, China Brief 18(13), 25 July 2018. 58Emily Feng, ‘Crackdown in Xinjiang: Where have all the people gone?’


pages: 301 words: 78,638

Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones by James Clear

Atul Gawande, Cal Newport, Checklist Manifesto, choice architecture, clean water, cognitive dissonance, cognitive load, delayed gratification, deliberate practice, en.wikipedia.org, financial independence, Goodhart's law, invisible hand, Lao Tzu, late fees, meta-analysis, microaggression, Paul Graham, randomized controlled trial, ride hailing / ride sharing, Sam Altman, Saturday Night Live, side hustle, survivorship bias, Walter Mischel, When a measure becomes a target

If I walk into the kitchen and see a plate of cookies on the counter, I’ll pick up half a dozen and start eating, even if I hadn’t been thinking about them beforehand and didn’t necessarily feel hungry. If the communal table at the office is always filled with doughnuts and bagels, it’s going to be hard not to grab one every now and then. Your habits change depending on the room you are in and the cues in front of you. Environment is the invisible hand that shapes human behavior. Despite our unique personalities, certain behaviors tend to arise again and again under certain environmental conditions. In church, people tend to talk in whispers. On a dark street, people act wary and guarded. In this way, the most common form of change is not internal, but external: we are changed by the world around us.


pages: 283 words: 73,093

Social Democratic America by Lane Kenworthy

affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, barriers to entry, basic income, benefit corporation, business cycle, carbon tax, Celtic Tiger, centre right, clean water, collective bargaining, corporate governance, David Brooks, desegregation, Edward Glaeser, endogenous growth, full employment, Gini coefficient, hiring and firing, Home mortgage interest deduction, illegal immigration, income inequality, invisible hand, Kenneth Arrow, labor-force participation, manufacturing employment, market bubble, minimum wage unemployment, new economy, off-the-grid, postindustrial economy, purchasing power parity, race to the bottom, rent-seeking, rising living standards, Robert Gordon, Robert Shiller, Ronald Reagan, school choice, shareholder value, sharing economy, Skype, Steve Jobs, too big to fail, Tyler Cowen, Tyler Cowen: Great Stagnation, union organizing, universal basic income, War on Poverty, working poor, zero day

“Free Trade and Fair Trade.” SIEPR 2008 Economic Summit Conference, Stanford, CA. DeLong, J. Bradford. 2009. “Slow Income Growth and Absolute Poverty in the North Atlantic Region.” Unpublished paper. DeLong, J. Bradford. 2012. “The Changing Structure of Prices since 1960.” Grasping Reality with Both Invisible Hands, December 8. DeLuca, Stefanie and Peter Rosenblatt. 2010. “Does Moving to Better Neighborhoods Lead to Better Schooling Opportunities? Parental School Choice in an Experimental Housing Voucher Program.” Teachers College Record 112: 1443–1491. DeParle, Jason. 2004. American Dream. New York: Penguin.


pages: 322 words: 77,341

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

Alan Greenspan, asset-backed security, bank run, banking crisis, Bear Stearns, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, Black-Scholes formula, Blythe Masters, Celtic Tiger, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, Daniel Kahneman / Amos Tversky, diversified portfolio, double entry bookkeeping, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial engineering, financial innovation, fixed income, George Akerlof, Glass-Steagall Act, greed is good, Greenspan put, hedonic treadmill, hindsight bias, housing crisis, Hyman Minsky, intangible asset, interest rate swap, invisible hand, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Jane Jacobs, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, junk bonds, Kickstarter, laissez-faire capitalism, light touch regulation, liquidity trap, Long Term Capital Management, loss aversion, low interest rates, Martin Wolf, money market fund, mortgage debt, mortgage tax deduction, mutually assured destruction, Myron Scholes, negative equity, new economy, Nick Leeson, Norman Mailer, Northern Rock, off-the-grid, Own Your Own Home, Ponzi scheme, quantitative easing, reserve currency, Right to Buy, risk-adjusted returns, Robert Shiller, Ronald Reagan, Savings and loan crisis, shareholder value, South Sea Bubble, statistical model, Tax Reform Act of 1986, The Great Moderation, the payments system, too big to fail, tulip mania, Tyler Cowen, value at risk

This is his summary of what the bankers asked for and got: From this confluence of campaign finance, personal connections, and ideology there flowed, in just the past decade, a river of deregulatory policies that is, in hindsight, astonishing: • insistence on free movement of capital across borders • the repeal of Depression-era regulations separating commercial and investment banking • a congressional ban on the regulation of credit-default swaps • major increases in the amount of leverage allowed to investment banks • a light (dare I say invisible?) hand at the Securities and Exchange Commission in its regulatory enforcement • an international agreement to allow banks to measure their own riskiness • and an intentional failure to update regulations so as to keep up with the tremendous pace of financial innovation7 The undoing of the Depression-era banking legislation was a critical component in this.


pages: 206 words: 9,776

Rebel Cities: From the Right to the City to the Urban Revolution by David Harvey

Alan Greenspan, Bretton Woods, business cycle, collateralized debt obligation, commoditize, creative destruction, David Graeber, deindustrialization, financial innovation, Garrett Hardin, gentrification, Guggenheim Bilbao, Hernando de Soto, high-speed rail, housing crisis, illegal immigration, indoor plumbing, invisible hand, Jane Jacobs, late capitalism, Lewis Mumford, Long Term Capital Management, low interest rates, market bubble, market fundamentalism, means of production, military-industrial complex, moral hazard, mortgage debt, mortgage tax deduction, Murray Bookchin, New Urbanism, Ponzi scheme, precariat, profit maximization, race to the bottom, radical decentralization, Robert Shiller, Savings and loan crisis, special economic zone, the built environment, the High Line, The Wealth of Nations by Adam Smith, Tragedy of the Commons, transcontinental railway, urban planning, We are the 99%, William Langewiesche, Works Progress Administration

They thereby realize far- reaching control over production and marketing, and hence stabilize their business environment to allow for rational calcula­ tion and long- term planning, the reduction of risk and uncertainty, and 94 REBEL CITIES more generally guarantee themselves a relatively peaceful and untrou­ bled existence. The visible hand of the corporation, as Alfred Chandler terms it, has consequently been of far greater importance to capitalist his­ torical geography than the invisible hand of the market made so much of by Adam Smith, and paraded ad nauseam before us in recent years as the guiding power in the neoliberal ideology of contemporary globalization.7 But it is here that the mirror image of the first contradiction comes most clearly into view: market processes crucially depend upon the indi­ vidual monopoly of capitalists (of all sorts) over ownership of the means of production, including finance and land.


pages: 219 words: 75,735

All Families Are Psychotic by Douglas Coupland

invisible hand, Pepto Bismol, place-making

The Impala was at a red light; the quieted engine made this last word of William's sound as if an ogre had belched it out. The moment was charged and needed defusing. 'Helena, turn on the radio,' Janet piped up. 'I feel like hearing Dean Martin.' William said, 'That wop?' 'Daddy, he's not a wop.' William accelerated through the newly green light. Invisible hands pulled Janet into the rear seat's foam. Helena asked to be dropped off at home, near the corner of Bloor and St. George, so William had to make a detour. Once there, Helena pointed out the house in which she was renting an upper floor. 'What a dump, eh, Mr. Troo?' 'You're the arty type, Helena.


pages: 491 words: 77,650

Humans as a Service: The Promise and Perils of Work in the Gig Economy by Jeremias Prassl

3D printing, Affordable Care Act / Obamacare, Airbnb, algorithmic management, Amazon Mechanical Turk, Andrei Shleifer, asset light, autonomous vehicles, barriers to entry, call centre, cashless society, Clayton Christensen, collaborative consumption, collaborative economy, collective bargaining, creative destruction, crowdsourcing, death from overwork, Didi Chuxing, disruptive innovation, Donald Trump, driverless car, Erik Brynjolfsson, full employment, future of work, George Akerlof, gig economy, global supply chain, Greyball, hiring and firing, income inequality, independent contractor, information asymmetry, invisible hand, Jeff Bezos, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Roose, Kickstarter, low skilled workers, Lyft, machine readable, Mahatma Gandhi, Mark Zuckerberg, market friction, means of production, moral hazard, Network effects, new economy, obamacare, pattern recognition, platform as a service, Productivity paradox, race to the bottom, regulatory arbitrage, remote working, ride hailing / ride sharing, Robert Gordon, Ronald Coase, Rosa Parks, scientific management, Second Machine Age, secular stagnation, self-driving car, shareholder value, sharing economy, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, Simon Singh, software as a service, Steve Jobs, TaskRabbit, TechCrunch disrupt, The Future of Employment, The Market for Lemons, The Nature of the Firm, The Rise and Fall of American Growth, transaction costs, transportation-network company, Travis Kalanick, two tier labour market, two-sided market, Uber and Lyft, Uber for X, uber lyft, union organizing, warehouse automation, work culture , working-age population

Arun Sundararajan of New York University Stern Business School draws on a wide range of literature to suggest that platforms ‘represent a new structure for organizing economic activity, one that is an interesting hybrid of a market and a hierarchy, and that could signal the evolution of 20th century managerial capitalism into 21st-century crowd-based capitalism’.5 The starting point for this assertion is a juxtaposition between two models for organizing modern economies: ‘Markets . . . where Adam Smith’s famed “invisible hand” determines the prices that balance supply and demand. And then there is the “visible hand”—the “hierarchies” that we typically think of as firms or organizations (or govern- ment entities).’6 Drawing on the work of Massachusetts Institute of Technology (MIT) economists Tom Malone, Joanne Yates, and Robert Benjamin, Sundararajan suggests that gig-economy innovation will fundamentally reshape our economy by incentivizing entrepreneurs to move away from the hierarchical organization of business in large corporations towards open markets: ‘[A]s digital technologies progress, the coordination costs associated with hand- ling complex product descriptions through markets decrease, thus making market-based activity feasible for a larger set of activities.’7 The result?


pages: 244 words: 78,884

Finding Your Element: How to Discover Your Talents and Passions and Transform Your Life by Ken Robinson, Lou Aronica

do what you love, fear of failure, follow your passion, Frank Gehry, haute cuisine, invisible hand, Ralph Waldo Emerson, science of happiness, Silicon Valley, TED Talk

I’ve seen this happen many times: when you pursue what truly inspires you, opportunities open up that you might never have imagined. You gravitate toward people who share your passion, your combined efforts create a higher state of energy and proximity to these people increases the chance of your taking the pursuit to a new level—the opening of doors of which Campbell speaks. Campbell likens this to being helped by “invisible hands.” It’s impossible to avoid the spiritual connotation there, and depending on your inclination you might interpret that in any number of ways. What seems clear, regardless of how you look at it, is that following your bliss, or exploring your passions—Paulo Coelho calls it the personal legend—makes the world more alive for you and makes you more alive within it.


pages: 261 words: 74,471

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

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

Such companies have a much harder time making silk stockings that are affordable for factory girls than the companies that do so through beneficial incentives and generalized rules of conduct. Smith and Hayek demonstrated that prosperity can take place only through spontaneous order, an order that results from unscripted human action, not human design. Smith described this as the “invisible hand” by which, in the proper system, man is led “to promote an end which is no part of his intentions.”14 Hayek showed how prosperity requires that the knowledge dispersed throughout society be put to productive use, saying it “cannot be gathered and conveyed to an authority charged with the task of deliberately creating order.”15 This point was memorably illustrated by economist Thomas Sowell in his book Knowledge and Decisions: “When Soviet nail factories had their output measured by weight, they tended to make big, heavy nails, even if those big nails sat unsold on the shelves while the country was crying out for small nails.”16 In other words, when governments plan how people should run their lives, everybody (but those in power) loses.


pages: 291 words: 72,937

The Midnight Library by Matt Haig

carbon footprint, glass ceiling, invisible hand, Lao Tzu, Ralph Waldo Emerson, Schrödinger's Cat, Stephen Fry, TED Talk, you are the product

In fact, while staring at the open pages of the book, the pain was actually worse than it had been wandering around Bedford. The power of all the regrets simultaneously emanating from the book was becoming agony. The weight of guilt and remorse and sorrow too strong. She leaned back on her elbows, dropped the heavy book and squeezed her eyes shut. She could hardly breathe, as if invisible hands were around her neck. ‘Make it stop!’ ‘Close it now,’ instructed Mrs Elm. ‘Close the book. Not just your eyes. Close it. You have to do it yourself.’ So Nora, feeling like she was about to pass out, sat back up and placed her hand under the front cover. It felt even heavier now but she managed to close the book and gasped in relief.


pages: 225 words: 74,210

Wanderland by Jini Reddy

Airbnb, country house hotel, Day of the Dead, Google Earth, invisible hand, Nelson Mandela

There were plenty who spoke out about the climate emergency too. I supported the protesters, I joined them, but the longing that I felt was the longing that I felt. I could not deny myself. I could appreciate the physical beauty of the land and its creatures but I also wanted to be led by nature’s invisible hand, the wildness you could not see. I realised I was happiest with a foot in both worlds. A Woman of the Old Ways That wildness you could not see – well, some could see it. A shaman could. I was acquainted with a white shaman from Botswana who’d been diagnosed with the ‘illness of calling’, as he put it, when he was 11.


pages: 305 words: 75,697

Cogs and Monsters: What Economics Is, and What It Should Be by Diane Coyle

3D printing, additive manufacturing, Airbnb, Al Roth, Alan Greenspan, algorithmic management, Amazon Web Services, autonomous vehicles, banking crisis, barriers to entry, behavioural economics, Big bang: deregulation of the City of London, biodiversity loss, bitcoin, Black Lives Matter, Boston Dynamics, Bretton Woods, Brexit referendum, business cycle, call centre, Carmen Reinhart, central bank independence, choice architecture, Chuck Templeton: OpenTable:, cloud computing, complexity theory, computer age, conceptual framework, congestion charging, constrained optimization, coronavirus, COVID-19, creative destruction, credit crunch, data science, DeepMind, deglobalization, deindustrialization, Diane Coyle, discounted cash flows, disintermediation, Donald Trump, Edward Glaeser, en.wikipedia.org, endogenous growth, endowment effect, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, Evgeny Morozov, experimental subject, financial deregulation, financial innovation, financial intermediation, Flash crash, framing effect, general purpose technology, George Akerlof, global supply chain, Goodhart's law, Google bus, haute cuisine, High speed trading, hockey-stick growth, Ida Tarbell, information asymmetry, intangible asset, Internet of things, invisible hand, Jaron Lanier, Jean Tirole, job automation, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, knowledge worker, Les Trente Glorieuses, libertarian paternalism, linear programming, lockdown, Long Term Capital Management, loss aversion, low earth orbit, lump of labour, machine readable, market bubble, market design, Menlo Park, millennium bug, Modern Monetary Theory, Mont Pelerin Society, multi-sided market, Myron Scholes, Nash equilibrium, Nate Silver, Network effects, Occupy movement, Pareto efficiency, payday loans, payment for order flow, Phillips curve, post-industrial society, price mechanism, Productivity paradox, quantitative easing, randomized controlled trial, rent control, rent-seeking, ride hailing / ride sharing, road to serfdom, Robert Gordon, Robert Shiller, Robert Solow, Robinhood: mobile stock trading app, Ronald Coase, Ronald Reagan, San Francisco homelessness, savings glut, school vouchers, sharing economy, Silicon Valley, software is eating the world, spectrum auction, statistical model, Steven Pinker, tacit knowledge, The Chicago School, The Future of Employment, The Great Moderation, the map is not the territory, The Rise and Fall of American Growth, the scientific method, The Signal and the Noise by Nate Silver, the strength of weak ties, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, Uber for X, urban planning, winner-take-all economy, Winter of Discontent, women in the workforce, Y2K

Nudds, 2006, Rational Animals?, Oxford: Oxford University Press. Hutton, W., 2012, ‘Argentina’s Oil Grab Is Timely Retort to Rampaging Capitalism’, The Guardian, 22 April, https://www.theguardian.com/commentisfree/2012/apr/22/will-hutton-argentina-oil-grab-justified. IDEI, Toulouse School of Economics, 2011, ‘The Invisible Hand Meets the Invisible Gorilla: The Economics and Psychology of Scarce Attention’, Summary of a conference held at IDEI, Toulouse School of Economics, September, http://www.idei.fr/doc/conf/psy/2011/summary.pdf, accessed 4 May 2012. Ioannidis, J.P.A., T. D. Stanley, and H. Doucouliagos, 2017, ‘The Power of Bias in Economics Research’, The Economic Journal, 127, F236–F265, doi:10.1111/ecoj.12461.


China's Superbank by Henry Sanderson, Michael Forsythe

"World Economic Forum" Davos, addicted to oil, Asian financial crisis, Bretton Woods, BRICs, Carmen Reinhart, Credit Default Swap, deindustrialization, Deng Xiaoping, Dutch auction, failed state, financial innovation, financial repression, fixed income, Great Leap Forward, high-speed rail, if you build it, they will come, income inequality, invisible hand, joint-stock company, junk bonds, Kenneth Rogoff, land bank, London Interbank Offered Rate, low interest rates, megacity, new economy, New Urbanism, price mechanism, race to the bottom, reserve currency, Ronald Reagan, Shenzhen special economic zone , Shenzhen was a fishing village, Silicon Valley, Solyndra, South Sea Bubble, sovereign wealth fund, special drawing rights, special economic zone, too big to fail, urban renewal, urban sprawl, work culture

Instead, the government needed to take up that role; otherwise, there would be inflation and growing unrest. “The market can function on its own but its needs certain interventions, for example, industrial policies and control on aggregate demand,” he wrote. “Those people who think the market is the invisible hand and can perfectly allocate resources is what I call ‘market utopia’ or ‘market omnipotence.’” The “recentralization” he called for meant that the state needed to exert influence in strategically important areas and let go of nonstrategic areas where enterprises could have more power. To be a strong country, China needed to develop its own system, and the experience of all industrial countries showed they had first developed with the backing of a strong state.


pages: 255 words: 80,190

Your Life in My Hands: A Junior Doctor's Story by Rachel Clarke

clockwatching, David Attenborough, Donald Trump, gender pay gap, glass ceiling, imposter syndrome, invisible hand, Kickstarter, lateral thinking, Nelson Mandela, pattern recognition, post-truth, profit motive, sensible shoes, Snapchat, women in the workforce, zero-sum game

NHS detractors often dismiss these sentiments as nothing more than obfuscatory fluff. For them, the cold, hard, unpalatable truth is that the NHS is a monolithic dinosaur, a clunky, plodding relic of old that underperforms, overspends and should, by rights, have been extinct long ago were it not for the mawkishness of those who ignore the benefits of the free market’s invisible hand. As political strategist John McTernan claims, writing for the right-wing think tank the Institute of Economic Affairs, Facts and arguments don’t matter when it comes to the NHS – only emotion and sentiment register. Commentators often talk about us living in a ‘postfact’ world. If that is so the NHS led the way – debate about its future has been conducted in post-factual terms for quite some time.80 This, of course, is a glib overstatement.


pages: 693 words: 204,042

New York 2140 by Kim Stanley Robinson

Anthropocene, availability heuristic, back-to-the-land, Black-Scholes formula, Burning Man, central bank independence, creative destruction, credit crunch, crowdsourcing, decarbonisation, East Village, full employment, gentrification, happiness index / gross national happiness, hive mind, income inequality, invisible hand, Jane Jacobs, Ken Thompson, Kim Stanley Robinson, liquidity trap, Mason jar, mass immigration, megastructure, microbiome, music of the spheres, New Urbanism, offshore financial centre, Planet Labs, plutocrats, Ponzi scheme, precariat, quantitative easing, Reflections on Trusting Trust, rent-seeking, Social Justice Warrior, the built environment, too big to fail

We live in a world where people pretend money can buy you anything, so money becomes the point, so we all work for money. Money is thought of as value.” “Okay, I get that. We’re broke and I get that.” “So good, keep hanging with me. We live by buying things with money, in a market that sets all the prices.” “The invisible hand.” “Right. Sellers offer stuff, buyers buy it, and in the flux of supply and demand the price gets determined. It’s crowdsourced, it’s democratic, it’s capitalism, it’s the market.” “It’s the way of the world.” “Right. And it’s always, always wrong.” “What do you mean wrong?” “The prices are always too low, and so the world is fucked.

In other words, taken all in all, a place that might make for a very high rate of return on investment! So a situation was developing. Push was coming to shove. And when push comes to shove—well, who knows? Anything can happen. PART FOUR EXPENSIVE OR PRICELESS? Property becomes a claim to the yield. —Maurizio Lazzarato, Governing by Debt The invisible hand never picks up the check. a) Franklin By the time I got back from rescuing the two little drowned rats with the building’s super, I was late to pick up Jojo. “God damn you guys,” I said as we gurgled into the boathouse, “you’ve made me late.” “For a very important date,” Vlade added heavily.


pages: 708 words: 196,859

Lords of Finance: The Bankers Who Broke the World by Liaquat Ahamed

Alan Greenspan, Albert Einstein, anti-communist, bank run, banking crisis, Bretton Woods, British Empire, business cycle, capital controls, central bank independence, centre right, credit crunch, currency manipulation / currency intervention, Etonian, Ford Model T, full employment, gentleman farmer, German hyperinflation, Glass-Steagall Act, index card, invisible hand, Lao Tzu, large denomination, Long Term Capital Management, low interest rates, margin call, market bubble, Mexican peso crisis / tequila crisis, mobile money, money market fund, moral hazard, new economy, open economy, plutocrats, price stability, purchasing power parity, pushing on a string, rolodex, scientific management, the market place

European central bankers had been dealing with financial crises for more than a century. They had long absorbed the lesson that while most of the time the economy works very well left in the care of the invisible hand, during panics, that hand seems to lose its grip. Markets, particularly financial markets, became unthinkingly fearful. To reestablish sanity and restore some sort of equilibrium in these circumstances required a very visible head to guide the invisible hand. In a word, it required leadership. After 1929, responsibility for world monetary affairs ended up in the hands of a group of men who understood none of this, whose ideas about the economy were at best outmoded and at worst plain wrong.


pages: 716 words: 192,143

The Enlightened Capitalists by James O'Toole

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Abraham Maslow, activist fund / activist shareholder / activist investor, anti-communist, Ayatollah Khomeini, benefit corporation, Bernie Madoff, Bletchley Park, book value, British Empire, business cycle, business logic, business process, California gold rush, carbon footprint, City Beautiful movement, collective bargaining, company town, compensation consultant, Cornelius Vanderbilt, corporate governance, corporate social responsibility, Credit Default Swap, crowdsourcing, cryptocurrency, desegregation, do well by doing good, Donald Trump, double entry bookkeeping, end world poverty, equal pay for equal work, Frederick Winslow Taylor, full employment, garden city movement, germ theory of disease, glass ceiling, God and Mammon, greed is good, high-speed rail, hiring and firing, income inequality, indoor plumbing, inventory management, invisible hand, James Hargreaves, job satisfaction, joint-stock company, Kickstarter, knowledge worker, Lao Tzu, Larry Ellison, longitudinal study, Louis Pasteur, Lyft, Marc Benioff, means of production, Menlo Park, North Sea oil, passive investing, Ponzi scheme, profit maximization, profit motive, Ralph Waldo Emerson, rolodex, Ronald Reagan, Salesforce, scientific management, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, Socratic dialogue, sovereign wealth fund, spinning jenny, Steve Jobs, Steve Wozniak, stock buybacks, stocks for the long run, stocks for the long term, The Fortune at the Bottom of the Pyramid, The Wealth of Nations by Adam Smith, Tim Cook: Apple, traveling salesman, Uber and Lyft, uber lyft, union organizing, Vanguard fund, white flight, women in the workforce, young professional

Quite remarkably, given that they were all committed capitalists, none of our enlightened leaders was driven to do good by market demand: their virtuous actions were seldom, if ever, in response to customer desire for responsible corporate behavior. And there is a clear explanation for why those practical businesspeople ignored (at least in this regard) the dictates of Adam Smith’s invisible hand. In a 2006 review of corporate attempts to do good while doing well, business scholar David Vogel found that “the market for virtue” was, at best, a small one, with precious little evidence that consumers opted to buy products based on the admirable deeds of the companies that made them, or that companies reaped financial gain from acts of social responsibility.2 And there is even less evidence that shareholders reward ethical leaders.

., 134 “scientific management” system, 81, 106–7 Scott, Mary, Companies with a Conscience, 497n29 Seabra, Luiz, 359 Seagate, 260 Sears, Roebuck and Company, 37, 47, 48, 49, 112, 211, 330 Sellars, Richard, 163, 167, 170 Semler, Ricardo, 353 “servant leadership,” 136–37, 161, 233, 317–18 Shakespeare, William, Julius Caesar, xi Shamrock Holdings, 326 Shaw, George Bernard, 68–70 Major Barbara, 69–70 Shaw, Kathryn, 271 Shultz, George, 333 Sieff, David, 220 Sieff, Edward, 217 Sieff, Ephraim, 208 Sieff, Israel, 209, 214, 431 as Baron, 217 economic philosophy, 209–10 employee lunchrooms and, 212 friendship with Simon Marks, 208, 209 institutionalization of practices, 435 marriage and family, 209 paternalism and, 213 retirement of, 217 Weizmann’s influence on, 210, 211, 428 Sieff, Marcus, 212, 214, 215, 399 business practices, 218–19 CEOs reject his practices, 219 Don’t Ask the Price, 217 The Ethics of the Fathers, 218 as future Marks & Spencer CEO, 215 as Lord Sieff of Brimpton, 217 as Marks & Spencer CEO, 217–19 personality of, 218–19 socializing with the rich and famous, 217–18 social responsibility and, 218 wealth and upbringing, 217 Weizmann’s influence on, 218 Sieff, Michael, 217 Sieff, Rebecca Marks, 209 Siegel, Sam, 273, 275 Sierra Club, 307 “single tax” theory, 115 sin investing, 460 Sisodia, Rajendra, 454–55 60 Minutes (TV show), 171–72 Skoll World Forum, 452 Smith, Adam, 154 business as human commonality, xxi case against business idealism, xxxiv free markets and, 21 invisible hand, 428 opposition to corporate do-goodism, xxxvii The Wealth of Nations, xxxiv, 7 Smith, Liz, 329 Snavely, Mattie, 73, 74, 75 Social Contract, The (Rousseau), 9 social Darwinism, xxxi, 155 Social Enterprise Business Centre, 457 social enterprise movement, 404 social entrepreneurship, 456–59 social investment funds, 459 socialism, 7, 21, 59, 432 Lincoln’s system as alternative to, 97, 111, 114 social responsibility, xi, xii, xv, xvi, xvii, xx, 497n29 Arco and, 307–9 Ben & Jerry’s and, 383, 387–88, 393–94, 497n29 CDC and, 249, 254, 261 changing investor attitudes and, 459–62 company failure, relationship of, 426–27 consortia of enlightened capitalists and, 451–56 consumerist behavior overriding social conscience, 467 of corporate capitalism, xxxviii–xl critics of, 424 Davos 2018 and, xiv, 461 Drucker on, 431 ethical compasses and, xx Friedman on, 439, 507n13 future prospects for, 442–72 global in scope, xxxix–xl Herman Miller Company and, 238 Hershey Chocolate Company and, 89 as job of government not business, xxxvi John Lewis Partnership and, 132 Johnson and, 150–51, 157–58 large corporations rejection of, 425 Levi Strauss and, 178, 184, 186–89, 202 Levi Strauss’s global sourcing guidelines, 202–3, 204 Marks & Spencer and, 210, 213, 216, 218, 222 MBA programs and, 424–25 no financial gain from, 429 opposition to corporate do-goodism, xxxvi, xxxvii, xli, 462 Patagonia and, 400–403, 497n29 paternalism and, xxxvii, xlii Penney and, 39 Polman as outspoken advocate, 66–68 profit vs. virtue and, xl–xli promotion of diversity and, xxxvi proponents of corporate do-goodism, xxxviii–xl public demand for, 463–72 questions business leaders need to ask, xli–xliii Roddick, the Body Shop, and, 349–54 SWA and, 295–97 Tom’s of Maine and, 372 Unilever and, 65–68, 393–94, 444–45 Weizmann and, 210 Social Venture Network, 349, 451 sole proprietorship, 396 Solheim, Jostein, 393 Sony, 325 Soul of a Business, The (Chappell), 361–62, 367–68 Southwest Airlines (SWA), 117n, 426 big airlines oppose creation of, 288 business model, 289, 296 culture committee, 291–93 customer service and, 293–94 employee focus of company, 289–93 employee volunteers, 296 environmental issues, 295–97 exemplary practices, 293–94 FDA fine, 294 Fortune’s Most Admired Corporations list, 294 future of, 297 hiring women and people of color, 292–93 Kelleher as CEO, 288–94 Kelly as CEO, 292, 295, 296–97 Kelly as CFO, 293 management and employee involvement, 291–93 profitability and, 289, 296 social responsibility and, 295–97 Southwest Airlines One Report, 295–96 stock ownership plan, 290, 406 stock price, 294 wages, 290 Spencer, Herbert, xxxi, 155 Spencer, Thomas, Jr., 209 Spencer, Thomas, Sr., 208–9 partnership with Marks, 208 retirement, 208–9 Sperry Rand, 244 Springfield, Mo., 409 SRC Holdings, 407–9, 426, 476 business education at, 407 community relations, 409 cost control at, 407–8 employee ownership, 407 employees and, 407–9 number of employees, 409 “open-book management,” 407 share price, 409 Springfield Re and, 407, 408, 409, 410 Stack, Jack, 395, 407–9, 411, 428, 451 “exit money” and, 409 The Great Game of Business, 407 leadership philosophy of, 407 “open-book management,” 407 stakeholder benefits, xii Standard Oil, xxvii Starbucks, 425, 444, 464, 467 acquisition of La Boulange, 448 State Street Global Advisors, 470 Stern, David, 176, 177 Stern, Sigmund, 178–79, 180 Stevens Aviation, 290 stock exchanges, 46–47 Stonyfield Farms, 454–55 Stout, Lynn, 438, 458 Strauss, Levi, 176–79, 495n1 death and estate of, 178 heirs of, 177, 395 philanthropy of, 178 Sulzberger family, 399 Sumner, William Graham, 155 Sunset Scavengers, 415–16 Syntegra, 260 Tawney, R.


pages: 282 words: 82,107

An Edible History of Humanity by Tom Standage

agricultural Revolution, amateurs talk tactics, professionals talk logistics, Bartolomé de las Casas, British Empire, carbon footprint, Columbian Exchange, Corn Laws, cotton gin, demographic transition, Deng Xiaoping, Eratosthenes, financial innovation, food miles, Great Leap Forward, Haber-Bosch Process, invisible hand, James Watt: steam engine, Kickstarter, Louis Pasteur, Mikhail Gorbachev, special economic zone, spice trade, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transatlantic slave trade, women in the workforce

Taking a long-term historical perspective also provides a new way to illuminate modern debates about food, such as the controversy surrounding genetically modified organisms, the relationship between food and poverty, the rise of the “local” food movement, the use of crops to make biofuels, the effectiveness of food as a means of mobilizing political support for various causes, and the best way to reduce the environmental impact of modern agriculture. In his book The Wealth of Nations, first published in 1776, Adam Smith famously likened the unseen influence of market forces, acting on participants who are all looking out for their own best interests, to an invisible hand. Food’s influence on history can similarly be likened to an invisible fork that has, at several crucial points in history, prodded humanity and altered its destiny, even though people were generally unaware of its influence at the time. Many food choices made in the past turn out to have had far-reaching consequences, and to have helped in unexpected ways to shape the world in which we now live.


pages: 305 words: 79,303

The Four: How Amazon, Apple, Facebook, and Google Divided and Conquered the World by Scott Galloway

"Susan Fowler" uber, activist fund / activist shareholder / activist investor, additive manufacturing, Affordable Care Act / Obamacare, Airbnb, Amazon Robotics, Amazon Web Services, Apple II, autonomous vehicles, barriers to entry, Ben Horowitz, Bernie Sanders, Big Tech, big-box store, Bob Noyce, Brewster Kahle, business intelligence, California gold rush, Cambridge Analytica, cloud computing, Comet Ping Pong, commoditize, cuban missile crisis, David Brooks, Didi Chuxing, digital divide, disintermediation, don't be evil, Donald Trump, Elon Musk, fake news, follow your passion, fulfillment center, future of journalism, future of work, global supply chain, Google Earth, Google Glasses, Google X / Alphabet X, Hacker Conference 1984, Internet Archive, invisible hand, Jeff Bezos, Jony Ive, Khan Academy, Kiva Systems, longitudinal study, Lyft, Mark Zuckerberg, meta-analysis, Network effects, new economy, obamacare, Oculus Rift, offshore financial centre, passive income, Peter Thiel, profit motive, race to the bottom, RAND corporation, ride hailing / ride sharing, risk tolerance, Robert Mercer, Robert Shiller, Search for Extraterrestrial Intelligence, self-driving car, sentiment analysis, shareholder value, Sheryl Sandberg, Silicon Valley, Snapchat, software is eating the world, speech recognition, Stephen Hawking, Steve Ballmer, Steve Bannon, Steve Jobs, Steve Wozniak, Stewart Brand, supercomputer in your pocket, Tesla Model S, the long tail, Tim Cook: Apple, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, undersea cable, vertical integration, warehouse automation, warehouse robotics, Wayback Machine, Whole Earth Catalog, winner-take-all economy, working poor, you are the product, young professional

More significant is that we, as a nation, decided to shift the consumer to the front of the line, in every way. At Home Depot, you could pick out your own lumber. At Best Buy you could shop every possible TV and take your choice home in your car. Getting our stuff at the lowest possible price was now more important than any specific company, sector, or even the health of the broader community. The invisible hand began bitch-slapping small or inefficient retailers all over the United States and Europe. Mom-and-pop stores, previously a large part of community life, faced towering competition. The era also saw a new generation of retail infrastructure technology, including the first barcode scanner, installed in a Kroger in 1967.29 Until the sixties there were laws against retailers offering discounts for bulk purchases.


pages: 289 words: 87,292

The Strange Order of Things: The Biological Roots of Culture by Antonio Damasio

Albert Einstein, algorithmic bias, biofilm, business process, CRISPR, Daniel Kahneman / Amos Tversky, double helix, Gordon Gekko, invention of the wheel, invention of writing, invisible hand, job automation, mental accounting, meta-analysis, microbiome, Nick Bostrom, Norbert Wiener, pattern recognition, Peter Singer: altruism, planetary scale, post-truth, profit motive, Ray Kurzweil, Richard Feynman, self-driving car, Silicon Valley, Steven Pinker, Stuart Kauffman, Thomas Malthus

The problem is that even one’s typical disposition tends to flicker between light and dark when it comes to so much trouble and uncertainty. Meanwhile, we can approach the problem with equanimity and conclude as follows. The human condition encompasses two worlds. One world is made up of the nature-given rules of life regulation, the strings of which are pulled by the invisible hands of pain and pleasure. We are not conscious of the rules or of their undergirding; we are only conscious of certain outcomes we call pain or pleasure. We had nothing to do with the making of the rules—nor, for that matter, with the existence of the powerful forces of pain and pleasure—and we cannot modify them any more than we can change the movements of the stars or prevent earthquakes.


pages: 287 words: 80,050

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, carbon tax, clean water, Community Supported Agriculture, corporate raider, critique of consumerism, Daniel Kahneman / Amos Tversky, dark matter, degrowth, 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, it is difficult to get a man to understand something, when his salary depends on his not understanding it, loss aversion, McMansion, means of production, move fast and break things, negative equity, New Urbanism, off-the-grid, Paradox of Choice, paradox of thrift, Ralph Waldo Emerson, sunk-cost fallacy, Thales and the olive presses, Thales of Miletus, the market place, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, Thorstein Veblen, Upton Sinclair, Veblen good, Virgin Galactic, Zipcar

Thus Vice nursed Ingenuity, Which join’d with time; and Industry Had carry’d Life’s Conveniencies, It’s real Pleasures, Comforts, Ease, To such a Height, the very Poor Lived better than the Rich before.28 Adam Smith more or less endorsed this idea in arguing that when individuals single-mindedly pursue “the gratification of their own vain and insatiable desires,” they unintentionally, as if “led by an invisible hand,” benefit society as a whole.29 In making this argument, he was reflecting and assisting a broad shift in moral perspective, shared by his friend David Hume, according to which traits should be classified as virtues and vices not by reference to some idealized personality type or lifestyle, but according to their social utility.30 Thus Hume, in a similar fashion, criticizes “the men of severe morals [who] blame even the most innocent luxury,” and offers an early defense of consumerism: The increase and consumption of all the commodities, which serve to the ornament and pleasure of life, are advantageous to society; because, at the same time that they multiply those innocent gratifications to individuals, they are a kind of storehouse of labour, which, in the exigencies of state, may be turned into a public service.


pages: 275 words: 84,980

Before Babylon, Beyond Bitcoin: From Money That We Understand to Money That Understands Us (Perspectives) by David Birch

"World Economic Forum" Davos, agricultural Revolution, Airbnb, Alan Greenspan, bank run, banks create money, bitcoin, blockchain, Bretton Woods, British Empire, Broken windows theory, Burning Man, business cycle, capital controls, cashless society, Clayton Christensen, clockwork universe, creative destruction, credit crunch, cross-border payments, cross-subsidies, crowdsourcing, cryptocurrency, David Graeber, dematerialisation, Diane Coyle, disruptive innovation, distributed ledger, Dogecoin, double entry bookkeeping, Ethereum, ethereum blockchain, facts on the ground, fake news, fault tolerance, fiat currency, financial exclusion, financial innovation, financial intermediation, floating exchange rates, Fractional reserve banking, index card, informal economy, Internet of things, invention of the printing press, invention of the telegraph, invention of the telephone, invisible hand, Irish bank strikes, Isaac Newton, Jane Jacobs, Kenneth Rogoff, knowledge economy, Kuwabatake Sanjuro: assassination market, land bank, large denomination, low interest rates, M-Pesa, market clearing, market fundamentalism, Marshall McLuhan, Martin Wolf, mobile money, Money creation, money: store of value / unit of account / medium of exchange, new economy, Northern Rock, Pingit, prediction markets, price stability, QR code, quantitative easing, railway mania, Ralph Waldo Emerson, Real Time Gross Settlement, reserve currency, Satoshi Nakamoto, seigniorage, Silicon Valley, smart contracts, social graph, special drawing rights, Suez canal 1869, technoutopianism, The future is already here, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, wage slave, Washington Consensus, wikimedia commons

The revaluation and exchange limits triggered panic, particularly among market traders with substantial hoards of the worthless old money. Gresham’s Law took immediate effect: the new currency disappeared from the marketplace and people began to use whatever hard currencies they could get their hands on, forcing the Dear Leader to grab hold of the invisible hand. He banned everyone from using dollars or euros and the national TV network began exhorting the populace to immediately report counter-revolutionary elements using dollars. I’m not saying that it’s only dictators who don’t understand how money works, and I’m certainly not trying to imply that money cannot be debased under a democratic government, as it was under Henry VIII, but I do want to emphasize the point that the marketplace needs a circulating medium of exchange and that it is the marketplace that is the source of wealth – something that Sir Thomas Gresham understood very well.


pages: 306 words: 82,765

Skin in the Game: Hidden Asymmetries in Daily Life by Nassim Nicholas Taleb

anti-fragile, availability heuristic, behavioural economics, Benoit Mandelbrot, Bernie Madoff, Black Swan, Brownian motion, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, cellular automata, Claude Shannon: information theory, cognitive dissonance, complexity theory, data science, David Graeber, disintermediation, Donald Trump, Edward Thorp, equity premium, fake news, financial independence, information asymmetry, invisible hand, knowledge economy, loss aversion, mandelbrot fractal, Mark Spitznagel, mental accounting, microbiome, mirror neurons, moral hazard, Murray Gell-Mann, offshore financial centre, p-value, Paradox of Choice, Paul Samuelson, Ponzi scheme, power law, precautionary principle, price mechanism, principal–agent problem, public intellectual, Ralph Nader, random walk, rent-seeking, Richard Feynman, Richard Thaler, Ronald Coase, Ronald Reagan, Rory Sutherland, Rupert Read, Silicon Valley, Social Justice Warrior, Steven Pinker, stochastic process, survivorship bias, systematic bias, tail risk, TED Talk, The Nature of the Firm, Tragedy of the Commons, transaction costs, urban planning, Yogi Berra

You populate markets with zero intelligence agents, that is buying and selling randomly, under some structure such that a proper auction process matches bids and offers in a regular way. And guess what? We get the same allocative efficiency as if market participants were intelligent. Friedrich Hayek has been, once again, vindicated. Yet one of the most cited ideas in history, that of the invisible hand, appears to be the least integrated into modern psyche. Furthermore: It may be that be that some idiosyncratic behavior on the part of the individual (deemed at first glance “irrational”) may be necessary for efficient functioning at the collective level. More critically for the “rationalist” crowd, Individuals don’t need to know where they are going; markets do.


pages: 283 words: 81,163

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

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

Because of private property and the free-market capitalism it enables. Under a free-market system, all of these thousands of people, very few of whom actually know one another, have an economic incentive to cooperate with one another under a division of labor and produce pencils. There’s no magic or invisible hand involved. It is the common sense of everyday life under capitalism. As long as there is a consumer demand for pencils—and thus the potential for profit—people will cooperate with others to figure out a way to produce and market pencils. Consumers get the pencils they want, and the people who produce them improve the standard of living for themselves and their families.


pages: 317 words: 87,566

The Happiness Industry: How the Government and Big Business Sold Us Well-Being by William Davies

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 1960s counterculture, Abraham Maslow, Airbnb, behavioural economics, business intelligence, business logic, corporate governance, data science, dematerialisation, experimental subject, Exxon Valdez, Frederick Winslow Taylor, Gini coefficient, income inequality, intangible asset, invisible hand, joint-stock company, Leo Hollis, lifelogging, market bubble, mental accounting, military-industrial complex, nudge unit, Panopticon Jeremy Bentham, Philip Mirowski, power law, profit maximization, randomized controlled trial, Richard Thaler, road to serfdom, Ronald Coase, Ronald Reagan, science of happiness, scientific management, selective serotonin reuptake inhibitor (SSRI), sentiment analysis, sharing economy, Slavoj Žižek, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, social contagion, social intelligence, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, TED Talk, The Chicago School, The Spirit Level, theory of mind, urban planning, Vilfredo Pareto, W. E. B. Du Bois, you are the product

Michael Hardt and Antonio Negri, Empire, Cambridge, MA: Harvard University Press, 2000; Adam Arvidsson and Nicolai Peitersen, The Ethical Economy: Rebuilding Value After the Crisis, New York: Columbia University Press, 2014; Jeremy Gilbert, Common Ground: Democracy and Collectivity in an Age of Individualism, London: Pluto Press, 2014. 5 The Crisis of Authority 1‘Full Text: Blair’s Newsnight Interview’, theguardian.com, 21 April 2005. 2Richard Wilkinson and Kate Pickett, The Spirit Level. 3ESPNcricinfo staff, ‘We Urge the Development of Inner Fitness’, espncricinfo.com, 1 April 2014. 4‘Competitiveness and Perfectionism: Common Traits of Both Athletic Performance and Disordered Eating’, medicalnewstoday.com, 22 May 2009. 5Tim Kasser, The High Price of Materialism, Cambridge, MA: MIT Press, 2003. 6See Toben Nelson et al., ‘Do Youth Sports Prevent Pediatric Obesity? A Systematic Review and Commentary’, Current Sports Medicine Reports 10: 6, 2011. 7This is according to the Gini coefficient. 8Kim Phillips-Fein, Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan, New York: W. W. Norton & Company, 2009. 9Jessica Grogan, Encountering America: Humanistic Psychology, Sixties Culture and the Shaping of the Modern Self, New York: Harper Perennial, 2013. 10Hadley Cantril, The Pattern of Human Concerns, New Brunswick: Rutgers University Press, 1966. 11Quoted in Jamie Peck, Constructions of Neoliberal Reason, Oxford: Oxford University Press, 2010, 117. 12Andrew McGettigan, ‘Human Capital in English Higher Education’, paper given at Governing Academic Life, London School of Economics and Political Science, 25–26 June 2014. 13Edmund Kitch, ‘The Fire of Truth: A Remembrance of Law and Economics at Chicago, 1932–1970’, Journal of Law and Economics 26: 1, 1983. 14Ibid. 15George Priest, ‘The Rise of Law and Economics: A Memoir of the Early Years’, in Francesco Parisi and Charles Rowley, eds., The Origins of Law and Economics: Essays by the Founding Fathers, Cheltenham: Edward Elgar, 2005, 356. 16Milton Friedman, ‘The Social Responsibility of Business Is to Increase Its Profits’, The New York Times Magazine, 13 September 1970. 17Will Davies, The Limits of Neoliberalism: Authority, Sovereignty and the Logic of Competition, London: Sage, 2014. 18Nikolas Rose, ‘Neurochemical Selves’, Society, November/December, 2003; Nikolas Rose, Politics of Life Itself: Biomedicine, Power and Subjectivity in the Twenty-First Century, Princeton, NJ: Princeton University Press, 2007. 19Peter Kramer, Listening to Prozac, London: Fourth Estate, 1994. 20Alain Ehrenberg, The Weariness of the Self: Diagnosing the History of Depression in the Contemporary Age, Montreal: McGill-Queen’s University Press, 2010. 21David Healy, The Antidepressant Era, Cambridge, MA: Harvard University Press, 1997. 22As has been widely researched and commented on, antidepressants are only marginally more effective than placebos, and the effectiveness of placebos has been growing year on year.


pages: 282 words: 80,907

Who Gets What — and Why: The New Economics of Matchmaking and Market Design by Alvin E. Roth

Affordable Care Act / Obamacare, Airbnb, algorithmic trading, barriers to entry, behavioural economics, Berlin Wall, bitcoin, Build a better mousetrap, centralized clearinghouse, Chuck Templeton: OpenTable:, commoditize, computer age, computerized markets, crowdsourcing, deferred acceptance, desegregation, Dutch auction, experimental economics, first-price auction, Flash crash, High speed trading, income inequality, Internet of things, invention of agriculture, invisible hand, Jean Tirole, law of one price, Lyft, market clearing, market design, medical residency, obamacare, PalmPilot, proxy bid, road to serfdom, school choice, sealed-bid auction, second-price auction, second-price sealed-bid, Silicon Valley, spectrum auction, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, The Wealth of Nations by Adam Smith, two-sided market, uber lyft, undersea cable

Along with a handful of colleagues around the world, I’ve helped create the new discipline of market design. Market design helps solve problems that existing marketplaces haven’t been able to solve naturally. Our work gives us new insights into what really makes “free markets” free to work properly. Most markets and marketplaces operate in the substantial space between Adam Smith’s invisible hand and Chairman Mao’s five-year plans. Markets differ from central planning because no one but the participants themselves determines who gets what. And marketplaces differ from anything-goes laissez-faire because participants enter the marketplace knowing that it has rules. Boxing was transformed from brawl to sport when John Douglas, the ninth Marquess of Queensberry, endorsed the rules that bear his name.


pages: 283 words: 85,824

The People's Platform: Taking Back Power and Culture in the Digital Age by Astra Taylor

"World Economic Forum" Davos, A Declaration of the Independence of Cyberspace, Aaron Swartz, Alan Greenspan, American Legislative Exchange Council, Andrew Keen, AOL-Time Warner, barriers to entry, Berlin Wall, big-box store, Brewster Kahle, business logic, Californian Ideology, citizen journalism, cloud computing, collateralized debt obligation, Community Supported Agriculture, conceptual framework, content marketing, corporate social responsibility, creative destruction, cross-subsidies, crowdsourcing, David Brooks, digital capitalism, digital divide, digital Maoism, disinformation, disintermediation, don't be evil, Donald Trump, Edward Snowden, Evgeny Morozov, Fall of the Berlin Wall, Filter Bubble, future of journalism, Gabriella Coleman, gentrification, George Gilder, Google Chrome, Google Glasses, hive mind, income inequality, informal economy, Internet Archive, Internet of things, invisible hand, Jane Jacobs, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Perry Barlow, Julian Assange, Kevin Kelly, Kickstarter, knowledge worker, Laura Poitras, lolcat, Mark Zuckerberg, means of production, Metcalfe’s law, Naomi Klein, Narrative Science, Network effects, new economy, New Journalism, New Urbanism, Nicholas Carr, oil rush, peer-to-peer, Peter Thiel, planned obsolescence, plutocrats, post-work, power law, pre–internet, profit motive, recommendation engine, Richard Florida, Richard Stallman, self-driving car, shareholder value, sharing economy, Sheryl Sandberg, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, slashdot, Slavoj Žižek, Snapchat, social graph, Steve Jobs, Stewart Brand, technological solutionism, technoutopianism, TED Talk, the long tail, trade route, Tragedy of the Commons, vertical integration, Whole Earth Catalog, WikiLeaks, winner-take-all economy, Works Progress Administration, Yochai Benkler, young professional

Although new-media celebrants claim to crusade on behalf of the “yeoman creator,” they treat the kings of the digital domain with unwavering reverence, the beneficence of their rule evident in the freedom that their platforms and services allow. Praising the development of what he calls “hybrid economies,” where sharing and selling coexist, Lessig argues that advances in advertising will provide adequate support for the creation and dissemination of culture in a digital age. “As if by an invisible hand,” the ways we access culture will dramatically change as the dinosaurs “fall to a better way of making money” via hypertargeted marketing. Lessig is deeply concerned about control of culture and appalled that a generation has been criminalized for downloading copyrighted content, yet he ignores the problem of commercialism and is sanguine about the prospect of these same youth being treated as products, their personal data available for a price.23 Though the reviled traditional broadcast model evolved the way it did to serve the interests of advertisers, Internet enthusiasts brush away history’s warnings, confident that this time will be different.


pages: 273 words: 87,159

The Vanishing Middle Class: Prejudice and Power in a Dual Economy by Peter Temin

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Affordable Care Act / Obamacare, air traffic controllers' union, American Legislative Exchange Council, American Society of Civil Engineers: Report Card, anti-communist, Bernie Sanders, Branko Milanovic, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carried interest, clean water, corporate raider, Corrections Corporation of America, crack epidemic, deindustrialization, desegregation, Donald Trump, driverless car, Edward Glaeser, Ferguson, Missouri, financial innovation, financial intermediation, floating exchange rates, full employment, income inequality, independent contractor, intangible asset, invisible hand, longitudinal study, low skilled workers, low-wage service sector, mandatory minimum, manufacturing employment, Mark Zuckerberg, mass immigration, mass incarceration, means of production, mortgage debt, Network effects, New Urbanism, Nixon shock, Nixon triggered the end of the Bretton Woods system, obamacare, offshore financial centre, oil shock, plutocrats, Powell Memorandum, price stability, race to the bottom, road to serfdom, Robert Solow, Ronald Reagan, Savings and loan crisis, secular stagnation, Silicon Valley, Simon Kuznets, the scientific method, War on Poverty, Washington Consensus, white flight, working poor

Accessed September 22, 2016. Pfaff, John. 2016. “A Mockery of Justice for the Poor.” New York Times, April 29. Philippon, Thomas, and Ariell Reshef. 2012. “Wages and Human Capital in the U.S. Finance Industry: 1909–2006.” Quarterly Journal of Economics 127 (November): 1551–1609. Phillips-Fein, Kim. 2009. Invisible Hands: The Businessmen’s Crusade Against the New Deal. New York: Norton. Pierce, Justin R., and Peter K. Schott. 2016. “The Surprisingly Swift Decline of US Manufacturing Employment.” American Economic Review 106 (7) (July): 1632–1662. Piketty, Thomas. 2014. Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press.


pages: 250 words: 83,367

Methland: The Death and Life of an American Small Town by Nick Reding

Alfred Russel Wallace, call centre, crack epidemic, illegal immigration, invisible hand, Isaac Newton, Kickstarter, Multics, trade route, union organizing

This squeezes out all but the heartiest souls, like the Leins, who care enough about their way of life to essentially take a vow of poverty. Douglas Constance characterizes the changes in rural America in terms of Karl Marx’s critique of the theory of political economy posited by Adam Smith. With many buyers and many sellers, says Constance, there is perfect competition and no need for government intervention. Smith’s “invisible hand of capitalism” works, in theory, to effect the highest amount of economic blood flow at all levels. In reality, says Constance, Marx’s countertheory has unfortunately proved more insightful. Strapped with the mandate to “grow or die,” businesses are encouraged to cannibalize competition until there are no longer many buyers and many sellers, but rather, many buyers and an increasingly limited number of sellers.


pages: 219 words: 15,438

The Essays of Warren Buffett: Lessons for Corporate America by Warren E. Buffett, Lawrence A. Cunningham

book value, business logic, buy and hold, compensation consultant, compound rate of return, corporate governance, Dissolution of the Soviet Union, diversified portfolio, dividend-yielding stocks, fixed income, George Santayana, Henry Singleton, index fund, intangible asset, invisible hand, junk bonds, large denomination, low cost airline, Michael Milken, oil shock, passive investing, price stability, Ronald Reagan, stock buybacks, Tax Reform Act of 1986, Teledyne, the market place, transaction costs, Yogi Berra, zero-coupon bond

(We are aware of the pie-expanding argument that says that such activities improve the rationality of the capital allocation process. We think that this argument is specious and that, on balance, hyperactive equity markets subvert rational capital allocation and act as pie shrinkers. Adam Smith felt that all noncollusive acts in a free market were guided by an invisible hand that led an economy to maximum progress; our view is that casino-type markets and hair-trigger investment management act as an invisible foot that trips up and slows down a forward-moving economy.) Contrast the hyperactive stock with Berkshire. The bid-andask spread in our stock currently is about 30 points, or a little over 2%.


pages: 281 words: 83,505

Palaces for the People: How Social Infrastructure Can Help Fight Inequality, Polarization, and the Decline of Civic Life by Eric Klinenberg

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, American Society of Civil Engineers: Report Card, assortative mating, basic income, Big Tech, big-box store, bike sharing, Black Lives Matter, Broken windows theory, carbon footprint, Cass Sunstein, classic study, clean water, deindustrialization, desegregation, digital divide, Donald Trump, East Village, fake news, Filter Bubble, food desert, gentrification, ghettoisation, helicopter parent, income inequality, informal economy, invisible hand, Jane Jacobs, John Snow's cholera map, late fees, Mark Zuckerberg, mass incarceration, megaproject, Menlo Park, New Urbanism, opioid epidemic / opioid crisis, Peter Thiel, public intellectual, Ray Oldenburg, Richard Florida, Ronald Reagan, Rosa Parks, shareholder value, Silicon Valley, smart grid, the built environment, The Death and Life of Great American Cities, The Great Good Place, the High Line, universal basic income, urban planning, young professional

They are the kinds of places where the public, private, and philanthropic sectors can work together to reach for something higher than the bottom line. Not everyone believes this. In recent decades, political leaders driven by the logic of the market have proclaimed that institutions like the library don’t work any longer, that we’d be better off investing in new technologies and trusting our fate to the invisible hand. The influence of these arguments is reflected in the way we treat what was once a sacred public institution. Today, libraries in most places are starved for resources. Across the country, branch libraries have reduced their hours and days of operation despite rising attendance and circulation, leaving those with weekday obligations like work and school with fewer opportunities to visit.


pages: 282 words: 81,873

Live Work Work Work Die: A Journey Into the Savage Heart of Silicon Valley by Corey Pein

"World Economic Forum" Davos, 23andMe, 4chan, affirmative action, Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, Anne Wojcicki, artificial general intelligence, bank run, barriers to entry, Benevolent Dictator For Life (BDFL), Bernie Sanders, Big Tech, bitcoin, Bitcoin Ponzi scheme, Build a better mousetrap, California gold rush, cashless society, colonial rule, computer age, cryptocurrency, data is the new oil, deep learning, digital nomad, disruptive innovation, Donald Trump, Douglas Hofstadter, driverless car, Elon Musk, Evgeny Morozov, Extropian, fail fast, fake it until you make it, fake news, gamification, gentrification, gig economy, Google bus, Google Glasses, Google X / Alphabet X, Greyball, growth hacking, hacker house, Hacker News, hive mind, illegal immigration, immigration reform, independent contractor, intentional community, Internet of things, invisible hand, Isaac Newton, Jeff Bezos, job automation, Kevin Kelly, Khan Academy, Larry Ellison, Law of Accelerating Returns, Lean Startup, life extension, Lyft, Mahatma Gandhi, Marc Andreessen, Mark Zuckerberg, Menlo Park, minimum viable product, move fast and break things, mutually assured destruction, Neal Stephenson, obamacare, Parker Conrad, passive income, patent troll, Patri Friedman, Paul Graham, peer-to-peer lending, Peter H. Diamandis: Planetary Resources, Peter Thiel, platform as a service, plutocrats, Ponzi scheme, post-work, public intellectual, Ray Kurzweil, regulatory arbitrage, rent control, RFID, Robert Mercer, rolodex, Ronald Reagan, Ross Ulbricht, Ruby on Rails, Sam Altman, Sand Hill Road, Scientific racism, self-driving car, selling pickaxes during a gold rush, sharing economy, side project, Silicon Valley, Silicon Valley billionaire, Silicon Valley startup, Singularitarianism, Skype, Snapchat, Social Justice Warrior, social software, software as a service, source of truth, South of Market, San Francisco, Startup school, stealth mode startup, Steve Bannon, Steve Jobs, Steve Wozniak, TaskRabbit, tech billionaire, tech bro, tech worker, TechCrunch disrupt, technological singularity, technoutopianism, telepresence, too big to fail, Travis Kalanick, tulip mania, Tyler Cowen, Uber for X, uber lyft, ubercab, unit 8200, upwardly mobile, Vernor Vinge, vertical integration, Virgin Galactic, X Prize, Y Combinator, Zenefits

Not to us mortals, anyway. The quasimythical tech industry elite would never be expected to mingle with the rest of us; they inhabited a higher plane, one with robot servants and Bay views. I recognized the freebies for what they were—not simple acts of personal generosity, but manna from above, bestowed by the invisible hand of venture capital. The first free thing I got was a bright pink coupon that I fished out of a basket next to a cash register. The coupon bestowed a free introductory taxi ride from the city’s second-largest “app-based pickup service,” Lyft. I found the corporate vowel swapping obnoxious. (Couldn’t it just be Lift?)


pages: 334 words: 82,041

How Did We Get Into This Mess?: Politics, Equality, Nature by George Monbiot

Affordable Care Act / Obamacare, Alfred Russel Wallace, Anthropocene, bank run, bilateral investment treaty, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, Corn Laws, creative destruction, credit crunch, David Attenborough, dematerialisation, demographic transition, drone strike, en.wikipedia.org, first-past-the-post, full employment, Gini coefficient, hedonic treadmill, income inequality, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, invisible hand, land bank, land reform, land value tax, Leo Hollis, market fundamentalism, meta-analysis, Mont Pelerin Society, moral panic, Naomi Klein, Northern Rock, obamacare, oil shale / tar sands, old-boy network, peak oil, place-making, planned obsolescence, plutocrats, profit motive, rent-seeking, rewilding, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, urban sprawl, We are all Keynesians now, wealth creators, World Values Survey

He either ignores or glosses over the costs of ever-expanding trade and perpetual growth. His timing, as BP fails to contain the oil spill in the Gulf of Mexico, is unfortunate. Like the collapse of Northern Rock, the Deepwater Horizon disaster was made possible by weak regulation. Ridley would weaken it even further, leaving public protection to the invisible hand of the market. He might not have been chastened by experience, but it would be wrong to claim that he has learnt nothing. On the contrary, he has developed a fine line in blame-shifting and post-rational justification. He mentions Northern Rock only once in his book, where he blames the crisis on ‘government housing and monetary policy’.23 It was the state wot made him do it.


pages: 266 words: 87,411

The Slow Fix: Solve Problems, Work Smarter, and Live Better in a World Addicted to Speed by Carl Honore

Albert Einstein, An Inconvenient Truth, Apollo 13, Atul Gawande, Broken windows theory, call centre, carbon credits, Checklist Manifesto, clean water, clockwatching, cloud computing, crowdsourcing, Dava Sobel, delayed gratification, drone strike, Enrique Peñalosa, Erik Brynjolfsson, Ernest Rutherford, Exxon Valdez, fail fast, fundamental attribution error, game design, Great Leap Forward, income inequality, index card, invention of the printing press, invisible hand, Isaac Newton, Jeff Bezos, John Harrison: Longitude, lateral thinking, lone genius, medical malpractice, microcredit, Netflix Prize, no-fly zone, planetary scale, Ralph Waldo Emerson, RAND corporation, reality distortion field, retail therapy, shareholder value, Silicon Valley, Skype, stem cell, Steve Jobs, Steve Wozniak, TED Talk, the scientific method, The Wisdom of Crowds, ultimatum game, urban renewal, War on Poverty

“He’s a crack-of-dawn, leaving-after-dark kind of guy who meets with all the schools, the teachers, the parents, the management, the security, and you run everything by him,” says Phil Wolfson, head of Locke’s special education department. “Kelly is the glue that holds it all together.” Even David Edwards, a crusader for collaboration, remains the invisible hand behind many projects at Le Labo. “The vision and passion of a core creator is essential,” he says. Though Apple relies on collaboration and teamwork to forge its game-changing gadgets, it also encourages project leaders to act as “auteurs,” who lead from the front and stamp their personality all over the final product.


pages: 284 words: 84,169

Talk on the Wild Side by Lane Greene

Affordable Care Act / Obamacare, Albert Einstein, Boris Johnson, deep learning, Donald Trump, ending welfare as we know it, experimental subject, facts on the ground, fake news, framing effect, Google Chrome, Higgs boson, illegal immigration, invisible hand, language acquisition, Large Hadron Collider, machine translation, meta-analysis, Money creation, moral panic, natural language processing, obamacare, public intellectual, Ronald Reagan, Sapir-Whorf hypothesis, Snapchat, sparse data, speech recognition, Steven Pinker, TED Talk, Turing test, Wall-E

No language’s speakers have ever found that they could do without the subject-object distinction, leaving any sentence of the “John killed Jim” type ambiguous as to who killed and who was killed. People care about that kind of thing. Language organises itself in order to carry out the tasks needed of its users. Adam Smith created the image of an “invisible hand” guiding the economy. But of course what he meant was that lots of uncoordinated decisions by many participants in a market were efficient at creating order – setting prices that were neither too low to deter sellers nor too high to put off buyers – that no planner could have achieved alone. Modern scientists and social scientists have come up with a less vivid but more accurate description of such situations: spontaneous order.


pages: 257 words: 84,498

Admissions: A Life in Brain Surgery by Henry Marsh

cognitive dissonance, country house hotel, Daniel Kahneman / Amos Tversky, endowment effect, fear of failure, Google Earth, invisible hand, nocebo, placebo effect, profit motive, selective serotonin reuptake inhibitor (SSRI)

This is about as bad as it gets, I thought with disgust as I started to remove several cubic centimetres of Mr Williams’s brain, the sucker slurping obscenely. What’s the glory in this? This coarse and crude surgery. This evil tumour, changing this man’s very nature, destroying both himself and his family. It’s time to go. As I watched my sucker down the microscope, controlled by my invisible hands, working on the poor man’s brain, teasing and pulling out the tumour, I told myself that I wouldn’t have panicked in the past. I would just have shrugged and got on with it. But now that my surgical career was coming to an end, I could feel the defensive psychological armour that I had worn for so many years starting to fall away, leaving me as naked as my patients.


pages: 330 words: 83,319

The New Rules of War: Victory in the Age of Durable Disorder by Sean McFate

Able Archer 83, active measures, anti-communist, barriers to entry, Berlin Wall, blood diamond, Boeing 747, Brexit referendum, cognitive dissonance, commoditize, computer vision, corporate governance, corporate raider, cuban missile crisis, disinformation, Donald Trump, double helix, drone strike, escalation ladder, European colonialism, failed state, fake news, false flag, hive mind, index fund, invisible hand, John Markoff, joint-stock company, military-industrial complex, moral hazard, mutually assured destruction, Nash equilibrium, nuclear taboo, offshore financial centre, pattern recognition, Peace of Westphalia, plutocrats, private military company, profit motive, RAND corporation, ransomware, Ronald Reagan, Silicon Valley, South China Sea, Steve Bannon, Stuxnet, Suez crisis 1956, technoutopianism, vertical integration, Washington Consensus, Westphalian system, yellow journalism, Yom Kippur War, zero day, zero-sum game

What makes this possible is the enabling power of mercenaries. When anyone can hire mercenaries to wage war, the ultrarich can become a new kind of power in world affairs. This may sound preposterous, but it’s not. Actually, it’s the law of supply and demand. War is becoming marketized, and mercenary supply will attract new demand through the invisible hand of the marketplace. But that demand won’t just be states; it will be anyone who has money and wants security. That’s a lot of people. We live in an increasingly insecure world, and mercenaries sell security. Clients will emerge, and some will grow powerful in the decades to come. They will become a new ruling class in international relations.


pages: 290 words: 84,375

China's Great Wall of Debt: Shadow Banks, Ghost Cities, Massive Loans, and the End of the Chinese Miracle by Dinny McMahon

"World Economic Forum" Davos, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, American Society of Civil Engineers: Report Card, Andrei Shleifer, Asian financial crisis, bank run, business cycle, California gold rush, capital controls, crony capitalism, dark matter, Deng Xiaoping, Donald Trump, Edward Glaeser, eurozone crisis, financial innovation, fixed income, Gini coefficient, Global Witness, Great Leap Forward, high-speed rail, if you build it, they will come, income inequality, industrial robot, invisible hand, low interest rates, megacity, middle-income trap, military-industrial complex, money market fund, mortgage debt, new economy, peer-to-peer lending, Ponzi scheme, Ronald Reagan, short selling, Silicon Valley, subprime mortgage crisis, too big to fail, trickle-down economics, urban planning, working-age population, zero-sum game

Rules are simply a tool of governance, not to be adhered to but rather to be applied—or ignored—in the service of any given agenda. In a 2008 interview with CNN, Premier Wen Jiabao explained the interplay of markets and government power like this: “We have one important piece of experience of the past 30 years, that is to ensure that both the visible hand and invisible hand are given full play in regulating the market forces,” he said. That sounds reasonable. After all there’s no such thing as a perfectly free market. Even in liberal democracies, the government’s visible hand is everywhere, imposing rules to regulate safety and health standards, and environmental emissions, and workers’ pay, and financial-sector risks.


pages: 301 words: 89,076

The Globotics Upheaval: Globalisation, Robotics and the Future of Work by Richard Baldwin

agricultural Revolution, Airbnb, AlphaGo, AltaVista, Amazon Web Services, Apollo 11, augmented reality, autonomous vehicles, basic income, Big Tech, bread and circuses, business process, business process outsourcing, call centre, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, commoditize, computer vision, Corn Laws, correlation does not imply causation, Credit Default Swap, data science, David Ricardo: comparative advantage, declining real wages, deep learning, DeepMind, deindustrialization, deskilling, Donald Trump, Douglas Hofstadter, Downton Abbey, Elon Musk, Erik Brynjolfsson, facts on the ground, Fairchild Semiconductor, future of journalism, future of work, George Gilder, Google Glasses, Google Hangouts, Hans Moravec, hiring and firing, hype cycle, impulse control, income inequality, industrial robot, intangible asset, Internet of things, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, Kevin Roose, knowledge worker, laissez-faire capitalism, Les Trente Glorieuses, low skilled workers, machine translation, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, manufacturing employment, Mark Zuckerberg, mass immigration, mass incarceration, Metcalfe’s law, mirror neurons, new economy, optical character recognition, pattern recognition, Ponzi scheme, post-industrial society, post-work, profit motive, remote working, reshoring, ride hailing / ride sharing, Robert Gordon, Robert Metcalfe, robotic process automation, Ronald Reagan, Salesforce, San Francisco homelessness, Second Machine Age, self-driving car, side project, Silicon Valley, Skype, Snapchat, social intelligence, sovereign wealth fund, standardized shipping container, statistical model, Stephen Hawking, Steve Jobs, supply-chain management, systems thinking, TaskRabbit, telepresence, telepresence robot, telerobotics, Thomas Malthus, trade liberalization, universal basic income, warehouse automation

The Communist Manifesto was published in 1848 and thus was part of the historical turning point that history failed to take. But history did take this turning in 1917 in the form of the Russian Revolution. The communist solution was to remove the market from the system entirely. Society’s great choices were not to be made by individuals based on self-interest and guided by the market’s invisible hand. They were to be made in the interest of the people and guided by the very visible hand of the Communist Party. The market was out; the plan was in. This would shelter people from the side effects of progress. The degree of economic control that this implied required absolute political control, so communism soon slipped into a form of dictatorship.


pages: 365 words: 88,125

23 Things They Don't Tell You About Capitalism by Ha-Joon Chang

accelerated depreciation, affirmative action, Alan Greenspan, AOL-Time Warner, Asian financial crisis, bank run, banking crisis, basic income, Berlin Wall, Bernie Madoff, borderless world, business logic, Carmen Reinhart, central bank independence, collateralized debt obligation, colonial rule, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, deskilling, digital divide, ending welfare as we know it, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, full employment, German hyperinflation, Gini coefficient, Glass-Steagall Act, hiring and firing, Hyman Minsky, income inequality, income per capita, invisible hand, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labour market flexibility, light touch regulation, Long Term Capital Management, low skilled workers, manufacturing employment, market fundamentalism, means of production, Mexican peso crisis / tequila crisis, microcredit, Myron Scholes, North Sea oil, offshore financial centre, old-boy network, post-industrial society, price stability, profit maximization, profit motive, purchasing power parity, rent control, Robert Solow, shareholder value, short selling, Skype, structural adjustment programs, the market place, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, Toyota Production System, trade liberalization, trickle-down economics, women in the workforce, working poor, zero-sum game

Often, government regulation works, especially in complex areas like the modern financial market, not because the government has superior knowledge but because it restricts choices and thus the complexity of the problems at hand, thereby reducing the possibility that things may go wrong. Markets may fail, but … As expressed by Adam Smith in the idea of the invisible hand, free-market economists argue that the beauty of the free market is that the decisions of isolated individuals (and firms) get reconciled without anybody consciously trying to do so. What makes this possible is that economic actors are rational, in the sense that they know best their own situations and the ways to improve them.


pages: 342 words: 86,256

Walkable City: How Downtown Can Save America, One Step at a Time by Jeff Speck

A Pattern Language, active transport: walking or cycling, benefit corporation, bike sharing, car-free, carbon footprint, carbon tax, congestion charging, congestion pricing, David Brooks, Donald Shoup, edge city, Edward Glaeser, Enrique Peñalosa, food miles, Frank Gehry, Guggenheim Bilbao, if you build it, they will come, Induced demand, intermodal, invisible hand, it is difficult to get a man to understand something, when his salary depends on his not understanding it, Jane Jacobs, Lewis Mumford, meta-analysis, New Urbanism, parking minimums, peak oil, Ralph Waldo Emerson, Richard Florida, skinny streets, smart cities, starchitect, Stewart Brand, tech worker, the built environment, The Death and Life of Great American Cities, transit-oriented development, Upton Sinclair, urban planning, urban renewal, urban sprawl, walkable city, white flight, white picket fence, young professional, zero-sum game, Zipcar

●Moreover, thanks to meager federal commitment, a significant uptick in wind, solar, hydro, tidal, or even nuclear generation seems at least a generation away. It is almost inevitable that the path to energy independence, so important to our nation’s security and solvency, will take us through a sooty valley of even greater carbon expulsion. As David Owen notes in Green Metropolis, “sometimes the invisible hand goes for the throat” (66). See also Daniel Gros, “Coal vs. Oil: Pure Carbon vs. Hydrocarbon,” achangeinthewind.com, December 28, 2007. Electricity generation is also responsible for about 20 percent of all water consumption in the United States (John F. Wasik, The Cul-de-Sac Syndrome, 60). ●LEED refers to the now widely adopted standards of the U.S.


pages: 304 words: 80,965

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

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

When challenged, economists point out that most economics is about market failures and problems. To say that financial economics is about simple market mechanisms is a “straw man and a textbook model.” But that model gets used, and misused. As the economist Andrew Scott told us, “We teach it as a benchmark, of what is the best you can do thanks to Adam Smith’s invisible hand, and then every thing is about how you get back to that first best given an imperfect world. And of course most people with limited economics remember just that very clear result—competition is good and markets work well.”33 But whether the economics profession is to blame, or its pupils, or its interaction with the finance industry, is a moot point.


pages: 314 words: 83,631

Tubes: A Journey to the Center of the Internet by Andrew Blum

air freight, cable laying ship, call centre, digital divide, Donald Davies, global village, Hibernia Atlantic: Project Express, if you build it, they will come, inflight wifi, invisible hand, John Markoff, Kevin Kelly, Leonard Kleinrock, Marc Andreessen, Mark Zuckerberg, Menlo Park, Mercator projection, messenger bag, Neal Stephenson, Network effects, New Urbanism, packet switching, Ralph Waldo Emerson, RAND corporation, satellite internet, side project, Silicon Valley, Skype, South of Market, San Francisco, Steve Crocker, Steve Jobs, Steven Levy, undersea cable, urban planning, UUNET, WikiLeaks, zero-sum game

She weighs the relative merits of describing the Internet as a Tootsie Roll, a hot tub, a highway, or a plane, before finally acknowledging how ugly the Internet—the real Internet, the one I’ve been visiting—actually is. “I wish,” she concludes, “the Internet looked like Matt Damon, or like lines of light written by an invisible hand in the night sky.” And so she finds our old friend again: the amorphous blob, the infinite universe, vast, uncontainable, and expanding. The poets’ metaphors all nestle together under the same starry night. But comedians, I’ve noticed, tend to go in the other direction, toward “the Internet” as a single machine.


pages: 284 words: 85,643

What's the Matter with White People by Joan Walsh

affirmative action, Affordable Care Act / Obamacare, air traffic controllers' union, banking crisis, clean water, collective bargaining, David Brooks, desegregation, Donald Trump, Edward Glaeser, full employment, General Motors Futurama, Glass-Steagall Act, global village, Golden Gate Park, hiring and firing, impulse control, income inequality, invisible hand, It's morning again in America, knowledge worker, labor-force participation, mass immigration, new economy, obamacare, Occupy movement, plutocrats, Ralph Nader, Ronald Reagan, Savings and loan crisis, Triangle Shirtwaist Factory, upwardly mobile, urban decay, W. E. B. Du Bois, War on Poverty, We are the 99%, white flight, women in the workforce, zero-sum game

My father also made sure that I saw the scaffolding beneath our family, the help they had climbing out of poverty. I knew we were responsible to help those coming up behind us. In New York, the capital of liberalism, strong unions, churches, neighborhood groups, and extended family helped my grandparents rise. In my parents’ generation, the invisible hand of government felt like wind at our backs, guiding all of us gently but steadily into the middle class. It turned out that I was growing up at the dreamiest moment of the American Dream. My family’s move to Long Island—to the humble town of Oceanside, used by Tom Wolfe to symbolize downscale suburban dowdiness in his tales of radical chic—was subsidized by a government-powered building boom and highway construction.


Dark Summit: The True Story of Everest's Most Controversial Season by Nick Heil

Abraham Maslow, airport security, British Empire, invisible hand, rent control, trade route

Many veteran mountaineers have at least one story of extraordinary, even inexplicable good luck—the avalanche that swept within feet of their tent, the sketchy anchor that held them during a fall—and here was one of Brice’s. As he led the way down, facing the slope, the blizzard lashing them, he bumped into a bamboo wand marking the edge of a bergschrund, an ice cliff that fell away into the murk. It was as though some invisible hand had reached out to prevent him from simply stepping backward into space, yanking his rope team with him. “We could have all died there,” Brice recalled. “But we kept on and camped a little further down, and took care of ourselves.” To have come so close on the West Ridge was technically a failure, but practically it was a fine success.


pages: 278 words: 84,002

Strategy Strikes Back: How Star Wars Explains Modern Military Conflict by Max Brooks, John Amble, M. L. Cavanaugh, Jaym Gates

a long time ago in a galaxy far, far away, British Empire, data acquisition, false flag, invisible hand, Jon Ronson, risk tolerance, South China Sea, Steven Pinker, Strategic Defense Initiative, Stuxnet, The future is already here, Yogi Berra

They can go on their way.” The stormtroopers parrot his words and wave the speeder away. An Imperial officer on the Death Star mocks the futility of Darth Vader’s “sorcerer’s ways.” Vader, standing some two yards away, makes a small hand gesture. The officer starts choking as if being strangled by invisible hands. In the swamps of Dagobah, aspiring Jedi Luke Skywalker practices psychokinesis by lifting large rocks with his mind. His abilities seem remarkable until his teacher, the small, green-skinned Jedi master Yoda, challenges him to raise his crashed X-wing fighter from the swamp. Luke fails. Yoda closes his eyes.


pages: 304 words: 86,028

Bootstrapped: Liberating Ourselves From the American Dream by Alissa Quart

2021 United States Capitol attack, 3D printing, affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, Bernie Sanders, Black Lives Matter, Burning Man, Capital in the Twenty-First Century by Thomas Piketty, carried interest, coronavirus, COVID-19, critical race theory, crowdsourcing, Daniel Kahneman / Amos Tversky, David Graeber, defund the police, Donald Trump, Elon Musk, financial independence, fixed income, George Floyd, gig economy, glass ceiling, high net worth, housing justice, hustle culture, illegal immigration, impact investing, income inequality, independent contractor, invisible hand, Jeff Bezos, lockdown, longitudinal study, loss aversion, Lyft, Marc Benioff, Mark Zuckerberg, meta-analysis, microaggression, Milgram experiment, minimum wage unemployment, multilevel marketing, obamacare, Overton Window, payday loans, post-work, Ralph Waldo Emerson, ride hailing / ride sharing, Ronald Reagan, Salesforce, Scientific racism, sharing economy, Sheryl Sandberg, side hustle, Silicon Valley, Silicon Valley ideology, Snapchat, social distancing, Steve Jobs, Steve Wozniak, tech worker, TED Talk, Travis Kalanick, trickle-down economics, Uber and Lyft, uber lyft, union organizing, W. E. B. Du Bois, wealth creators, women in the workforce, working poor, Works Progress Administration

a “massive transfer of wealth”: In Freedom from the Market, Konczal writes that the word freedom should be used to describe “free land,” or “free time,” rather than “freedom” from, where we are supposedly entirely independent of our society. Mike Konczal: Freedom from the Market: America’s Fight to Liberate Itself from the Grip of the Invisible Hand (New York: The New Press, 2021). he was not such a great farmer: This is described in Caroline Fraser, Prairie Fires: The American Dreams of Laura Ingalls Wilder (New York: Henry Holt, 2017). Pa Ingalls, Fraser writes, also had a “moral ambiguity missing from the portrait his daughter would one day so lovingly polish.”


pages: 287 words: 85,518

Please Report Your Bug Here: A Novel by Josh Riedel

Burning Man, Chuck Templeton: OpenTable:, financial independence, Golden Gate Park, invisible hand, Joan Didion, Mason jar, Menlo Park, messenger bag, off-the-grid, Port of Oakland, pre–internet, risk/return, Sand Hill Road, shareholder value, Silicon Valley, tech bro, tech worker, Whole Earth Catalog, work culture

Wires ran from its base all the way up the inside of the trunk, yellow and blue lights flashing overhead. I sat on a small wooden stool. The trunk slid closed and darkness swallowed me as the lights faded. “Hey!” I shouted, and tried to pry open the door, but it wouldn’t budge. I shouted again. “Noma!” The sequoia absorbed my voice. Then it seemed to absorb me. An invisible hand pressed hard on my chest, pinning me to the tree. 3, 2, 1, Noma’s recorded voice said. My body soaked into the fibrous bark and traveled upward, extending out to the sequoia’s awl-shaped leaves. * * * The grass rolled in waves as I trudged through the windy meadow. I hiked for a long time, longer than I ever had before, out to the edge of my world, and sat there, legs dangling into empty space.


pages: 1,051 words: 334,334

Gravity's Rainbow by Thomas Pynchon

centre right, classic study, company town, Eratosthenes, experimental subject, invisible hand, Isaac Newton, ought to be enough for anybody, plutocrats, random walk

"No, my dear," her cheeks molded with previous tears, "I'm listen-ing." "It's control. All these things arise from one difficulty: control. For the first time it was inside, do you see. The control is put inside. No more need to suffer passively under 'outside forces'—to veer into any wind. As if... "A market needed no longer be run by the Invisible Hand, but now could create itself—ils own logic, momentum, style, from inside. Putting the control inside was ratifying what de facto had happened— that you had dispensed with God. But you had taken on a greater, and more harmful, illusion. The illusion of control. That A could do B. But that was false.

It is a situation not without its chances for a good practical joke now and then—poor Nora will be suckered into seances that wouldn't fool your great-aunt, visits from the likes of Ronald Cherrycoke in a Jesus Christ getup, whistling down the wires into a hidden ultraviolet baby spot where he will start fluorescing in most questionable taste, blithering odd bits of Gospel together, reaching down from his crucified altitudes to actually cop feels of Nora's girdled behind . . . highly offended, she will flee into hallways full of clammy invisible hands—poltergeists will back toilets up on her, ladylike turds will bob at her virgin vertex, and screaming ugh, ass dripping, girdle around her knees, she will go staggering into her own drawing-room to find no refuge even there, no, someone will have caused to materialize for her a lesbian elephant soixante-neuf, slimy trunks pistoning symmetrically in and out of juicy elephant vulvas, and when she turns to escape this horrid exhibition she'll find some playful ghost has latched the door behind her, and another's just about to sock her in the face with a cold Yorkshire pudding. . . .

And the data happen to hump up in poor sections, Jewish sections, drug, homosexual, prostitute, and magic sections of the capital. Here are the most logical bulbsnatchers, in terms of what the crime is. Look at all the propaganda. It's a moral crime. Phoebus discovered—one of the great undiscovered discoveries of our time—that consumers need to feel a sense of sin. That guilt, in proper invisible hands, is a most powerful weapon. In America, Lyle Bland and his psychologists had figures, expert testimony and money (money in the Puritan sense—an outward and visible O.K. on their intentions) enough to tip the Discovery of Guilt at the cusp between scientific theory and fact. Growth rates in later years were to bear Bland out (actually what bore Bland out was an honorary pallbearer sextet of all the senior members of Salitieri, Poore, Nash, De Brutus and Short, plus Lyle, Jr., who was sneezing.


pages: 801 words: 209,348

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

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

Functions for trading hubs required the type of work known today as white collar: coordinating logistics, arranging for insurance, negotiating trade terms, extending trade capital, maintaining wholesale facilities, and others. Trading spawned other activity. Trading ports were the prime conduits of information, the aggregate of which Adam Smith would call the “invisible hand” of the market: information used by entrepreneurs and businessmen to adjust their activity to maximize profit. The more dynamic the information flow, the more fluid the opportunities were to profit from the shifting tides of the market. The more fluid the opportunities, the easier it was for new entrants and upstarts to make a name.

Such policies were successful in diversifying and growing the industrial base: America did emerge as the largest steel producer in the world by the end of the century. From here the growth of the American steel industry paved the way for a variety of ancillary and dependent industries over the next few decades. Even military might in the next century would be firmly rooted in steelmaking capacity. But laissez-faire capitalism it was not. The invisible hand of Adam Smith’s free market was accompanied by the guiding hand of government policy. Fourteen MACHINES The Gilded Age had a philosopher who seemed perfect for the times. Herbert Spencer built upon his fellow countryman Charles Darwin’s observations on natural selection and developed a social treatise that flowed from this evolutionary spirit.


pages: 927 words: 216,549

Empire of Guns by Priya Satia

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

This was the age of the “polite and commercial people,” and guns helped propertied people build that reputation of politeness even while they were antagonistically engaged against the propertyless. Emotion was invested in the property they defended but actively denied in the relationship to the person threatening it. The gun’s threat was as impersonal, like the new mode of social discipline embodied by Smith’s “invisible hand.” Capitalism alienates nature as private property, but property also helps people identify with a place. Guns ensured that physical identification between property owner and place, keeping threats at a polite distance. If property is the power to exclude others from taking or using certain things, the gun was the handheld instrument that made it effective (along with the law).

By launching a sugar boycott, the abolition movement illuminated the remote effects of market decisions, sensitizing eighteenth-century Britons to their complicity in slavery, but Galton turned that awareness on its head, arguing that complicity in gun production was so general that it rendered individual acts of abstinence futile. He imagined himself a cog in an enormous, inescapable wheel of highly divided industrial production in which many individuals earned profits too modest to impinge on any conscience. Cognizance of the impersonal efficiency of the “invisible hand” inhibited perception of a need for radical individual action; the system was always already in an optimal equilibrium. Opponents of abolition similarly considered the “intricate web of mutual dependencies” between buyers and sellers an insuperable obstacle. Competing views of market relationships coexisted: in some, the market enabled new understandings of complicity and possibilities for individual remedial action; in others, the market freed all from particular responsibility and constrained their scope of action as individuals.


pages: 767 words: 208,933

Liberalism at Large: The World According to the Economist by Alex Zevin

"there is no alternative" (TINA), activist fund / activist shareholder / activist investor, affirmative action, Alan Greenspan, anti-communist, Asian financial crisis, bank run, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business climate, business cycle, capital controls, carbon tax, centre right, Chelsea Manning, collective bargaining, Columbine, Corn Laws, corporate governance, corporate social responsibility, creative destruction, credit crunch, David Ricardo: comparative advantage, debt deflation, desegregation, disinformation, disruptive innovation, do well by doing good, Donald Trump, driverless car, Edward Snowden, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, Francis Fukuyama: the end of history, full employment, Gini coefficient, Glass-Steagall Act, global supply chain, guns versus butter model, hiring and firing, imperial preference, income inequality, interest rate derivative, invisible hand, It's morning again in America, Jeremy Corbyn, John von Neumann, Joseph Schumpeter, Julian Assange, junk bonds, Khartoum Gordon, land reform, liberal capitalism, liberal world order, light touch regulation, Long Term Capital Management, low interest rates, market bubble, Martin Wolf, means of production, Michael Milken, Mikhail Gorbachev, Monroe Doctrine, Mont Pelerin Society, moral hazard, Naomi Klein, new economy, New Journalism, Nixon triggered the end of the Bretton Woods system, no-fly zone, Norman Macrae, Northern Rock, Occupy movement, Philip Mirowski, plutocrats, post-war consensus, price stability, quantitative easing, race to the bottom, railway mania, rent control, rent-seeking, road to serfdom, Ronald Reagan, Rosa Parks, Seymour Hersh, Snapchat, Socratic dialogue, Steve Bannon, subprime mortgage crisis, Suez canal 1869, Suez crisis 1956, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, trade liberalization, trade route, unbanked and underbanked, underbanked, unorthodox policies, upwardly mobile, War on Poverty, WikiLeaks, Winter of Discontent, Yom Kippur War, young professional

With few exceptions, the hundred or so staff in London and abroad toil anonymously – common enough at nineteenth-century newspapers, but almost unheard of today. Individualism may be the editorial line, but as a result of this Victorian holdover, the editorial leaders are written in an unusually cooperative and collegial manner, as if guided by invisible hands.11 Anonymity was always designed to amplify the voice of the Economist. Today, so do the covers, with Photoshop acting as a slingshot for pop-cultural lèse-majesté: Kim Jong Il blasts into space as ‘Rocket Man’; Angela Merkel appears as Kurtz, groaning in horror at Greeks in ‘Acropolis Now’; Hu Jintao and Barack Obama are the cowboy lovers from Brokeback Mountain.

Or to at last throw open the ports, in which case, ‘any supply that America could afford would then be brought hither by the regular course of trade, and employment – not eleemosynary aid – would enable people to purchase it.’71 The result of following the Economist’s prescriptions was a utopian social experiment on par with the better-known holocausts of the twentieth century.72 During the worst of the famine years of 1845–1849, one and a half million people died out of a population of 8 million, and another million fled. The British government showed its commitment to the invisible hand of the market throughout, with the Economist critical of even the smallest departure from its rigours. In 1845–1846 Peel had shown insufficient firmness. He had ordered small batches of Indian corn to be bought discreetly by Baring Brothers in North America, as a reserve to keep prices in check; but the severity of the famine forced him to release small dribbles at select government depots.


Americana by Bhu Srinivasan

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

Functions for trading hubs required the type of work known today as white collar: coordinating logistics, arranging for insurance, negotiating trade terms, extending trade capital, maintaining wholesale facilities, and others. Trading spawned other activity. Trading ports were the prime conduits of information, the aggregate of which Adam Smith would call the “invisible hand” of the market: information used by entrepreneurs and businessmen to adjust their activity to maximize profit. The more dynamic the information flow, the more fluid the opportunities were to profit from the shifting tides of the market. The more fluid the opportunities, the easier it was for new entrants and upstarts to make a name.

Such policies were successful in diversifying and growing the industrial base: America did emerge as the largest steel producer in the world by the end of the century. From here the growth of the American steel industry paved the way for a variety of ancillary and dependent industries over the next few decades. Even military might in the next century would be firmly rooted in steelmaking capacity. But laissez-faire capitalism it was not. The invisible hand of Adam Smith’s free market was accompanied by the guiding hand of government policy. Fourteen MACHINES The Gilded Age had a philosopher who seemed perfect for the times. Herbert Spencer built upon his fellow countryman Charles Darwin’s observations on natural selection and developed a social treatise that flowed from this evolutionary spirit.


pages: 669 words: 226,737

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

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

In the "languor of disease and the weariness of old age," the moral insignificance of worldly goods appeared in its true light, according to Smith, since neither possessions nor even the beauty and utility so universally admired in "any production of art" proved capable, under conditions of adversity, of bringing true happiness. People seldom looked at the matter in this "abstract and philosophical light," however; and "it is well that nature imposes upon us in this manner," Smith wrote in The Theory of Moral Sentiments, in a passage that alluded for the first time to the "invisible hand" that leads men and women to accumulate wealth and thus inadvertently to serve as social benefactors in their pursuit of deceptively attractive but ultimately empty possessions. "It is this deception which rouses and keeps in continual motion the industry of mankind." Smith's Misgivings about "General Security and Happiness" Smith's work is instructive, in the unfamiliar context of the development of progressive ideology, not only because it enables us to see what was really distinctive about that ideology—the exemption of the modern world from the judgment of time—but because it illustrates the persistence of certain reservations that qualified the optimism produced by the modern discovery of abundance.

Small, Adam Smith and Modern Sociology (1907); Rexford G. Tugwell, The Industrial Discipline and the Governmental Arts (1933); and Kallen, Decline and Rise of the Consumer. For Henry George's understanding of the "prevailing belief' in progress, see Progress and Poverty (1879); and for the statement about "managed capitalism," Guy Alchon, The Invisible Hand of Planning: Capitalism, Social Science, and the State in the 1920s (1985). My discussion of Keynes rests on the biographies by Roy Harrod (1951), Charles H. Hession (1984), and Robert Skidelsky (1983), and on Robert L. Heilbroner, The Worldly Philosophers: The Lives, Times, and Ideas of the Great Economic Thinkers (1953).


pages: 298 words: 95,668

Milton Friedman: A Biography by Lanny Ebenstein

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

[T]he only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to other persons....Over himself, over his own body and mind, the individual is sovereign.”5 By economic freedom, Friedman has in mind the ideas of Adam Smith—one of Friedman’s unheralded accomplishments is to have contributed to the popular rehabilitation of Smith. Through the 1970s, Smith had been more likely to be looked on as a historical curiosity who had put forward ideas that were antiquated and obsolete even in his lifetime (1723–1790). For decades his idea of an “invisible hand” was routinely ridiculed. But according to Friedman in Free to Choose: “Smith’s key insight was that both parties to an exchange can benefit and that, so long as cooperation is strictly voluntary, no exchange will take place unless both parties do benefit.”6 The great merit of free exchange, whether at home or abroad, is that both parties believe that they benefit.


pages: 298 words: 89,287

Who Are We—And Should It Matter in the 21st Century? by Gary Younge

affirmative action, Berlin Wall, British Empire, call centre, David Brooks, equal pay for equal work, F. W. de Klerk, failed state, feminist movement, financial independence, gentrification, glass ceiling, global village, illegal immigration, inflation targeting, invisible hand, It's morning again in America, liberal capitalism, low interest rates, mass immigration, Mikhail Gorbachev, moral panic, phenotype, Ronald Reagan, Rosa Parks, Skype, Steven Levy, upwardly mobile, W. E. B. Du Bois, Wolfgang Streeck, World Values Survey

But if that program isn’t sufficiently kind to capital, investors can move their money to a place where labor is cheaper, unions are weaker or interest rates are higher, rendering democratic demands moot when pitted against the pursuit of profit. Take Brazil. In 2002, Luiz Inácio Lula da Silva was elected president at the head of the left-wing Workers’ Party on a platform of fighting poverty and redistributing wealth—the first time a Left government had been elected in the country’s history. But on the way to his inauguration, the invisible hand of the market took him by the scruff of the neck and shook what was left of the socialism out of him. In the three months between his winning the vote and being sworn in, the nation’s currency plummeted by 30 percent, $6 billion in hot money left the country and some agencies had given Brazil the highest debt-risk ratings in the world.


pages: 302 words: 87,776

Dollars and Sense: How We Misthink Money and How to Spend Smarter by Dr. Dan Ariely, Jeff Kreisler

accounting loophole / creative accounting, Airbnb, Albert Einstein, behavioural economics, bitcoin, Burning Man, collateralized debt obligation, Daniel Kahneman / Amos Tversky, delayed gratification, endowment effect, experimental economics, hedonic treadmill, IKEA effect, impact investing, invisible hand, loss aversion, mental accounting, mobile money, PalmPilot, placebo effect, price anchoring, Richard Thaler, sharing economy, Silicon Valley, Snapchat, Stanford marshmallow experiment, Steve Jobs, TaskRabbit, the payments system, Uber for X, ultimatum game, Walter Mischel, winner-take-all economy

We certainly appear to have a dormant “harrumph” lurking in our economic dealings. We like to tell our trading partners, “Do not profit at my expense!” We are grumpy, judgmental people: We pass up good value that seems unfair, out of spite and in search of revenge. When our sense of fairness is engaged, we don’t care if there are legitimate reasons for a higher price. The invisible hand of the market gets smacked away. In a telephone survey (remember telephones?), 82 percent of respondents said that it was unfair to raise shovel prices after a snowstorm (a hybrid of umbrellas in the rain and Uber in the snow), even though the standard economic rule of supply and demand makes it the efficient, legitimate, correct thing to do.2 In 2011, Netflix announced, in a blog post, that it would soon change its pricing structure.


pages: 336 words: 92,056

The Battery: How Portable Power Sparked a Technological Revolution by Henry Schlesinger

Albert Einstein, animal electricity, Any sufficiently advanced technology is indistinguishable from magic, Apollo 11, Apollo 13, British Empire, Copley Medal, Cornelius Vanderbilt, cotton gin, Fairchild Semiconductor, Fellow of the Royal Society, Ford Model T, index card, invention of the telegraph, invisible hand, Isaac Newton, James Watt: steam engine, Livingstone, I presume, Menlo Park, Metcalfe’s law, pneumatic tube, popular electronics, Ralph Waldo Emerson, RFID, Robert Metcalfe, Stephen Hawking, Thales of Miletus, the scientific method, Thomas Davenport, transcontinental railway, Upton Sinclair, Vannevar Bush, vertical integration, Yogi Berra

As later incidents have proved, however, that was only an insignificant portion of the work. Hundreds of miles of roaring battle line, hostile warships roving the remotest wastes of the sea, aeroplanes and Zeppelins soaring high above the earth, even the stealthy submarines, lurking in the depths for victims, are subservient to the invisible hand of the wireless. As the magazine’s story also noted, French and Belgian planes were equipped with hundred-pound radios capable of sending and receiving messages for more than fifty miles. No doubt this was exciting stuff. The use of radios by armies and spies on both sides during the war piqued the interest of the amateur enthusiast who read breathless accounts of the technology in magazines like Electrical Experimental, Popular Mechanics, and Popular Science.


pages: 255 words: 88,987

An Astronaut's Guide to Life on Earth by Chris Hadfield

Apollo 13, dark matter, invisible hand, Kickstarter, Neil Armstrong, off-the-grid, orbital mechanics / astrodynamics, Skype, éminence grise

It was like being a passenger in a big locomotive, but one who can throw the emergency hand brake if necessary. We had some degree of control. The challenge was knowing if and when to assert it. Within a minute, we were pushed down in our seats more and more heavily. Initial ascent felt purposeful but smooth, a little like being on a broomstick that an invisible hand was calmly steering a bit to the left, then a bit to the right, back and forth. The rocket ship was self-correcting its attitude as we ascended and the wind and jet stream changed. The ride got less smooth as it went on, though. As our first-stage engines cut off and the boosters exploded off the side, there was a noticeable change in vibration and a decrease in acceleration—not speed, that was always increasing.


pages: 328 words: 91,474

Everything Is Perfect When You're a Liar by Kelly Oxford

Ford Model T, invisible hand, Isaac Newton, Saturday Night Live

I shut the door behind her, lifted the fuzzy pink toilet seat, pulled my pants down, and peed . . . into a proper toilet. I spent the next few hours on a couch in the yard, surrounded by people, talking to no one. As the sun came up, I realized I was watching my innocence fading with the night sky. I’d always been led by this invisible hand of optimism: “Friendships are all about fun!” I’d always expected that self-discovery would be great, you know? Who am I going to be when I grow up?—the very thought gave me tingles. But as I sat there that morning, I realized I already was who I was, and all of this social garbage was going to make growing up, and feeling optimistic, pretty difficult.


pages: 332 words: 89,668

Two Nations, Indivisible: A History of Inequality in America: A History of Inequality in America by Jamie Bronstein

Affordable Care Act / Obamacare, back-to-the-land, barriers to entry, basic income, Bernie Sanders, big-box store, Black Lives Matter, blue-collar work, Branko Milanovic, British Empire, Capital in the Twenty-First Century by Thomas Piketty, clean water, cognitive dissonance, collateralized debt obligation, collective bargaining, Community Supported Agriculture, corporate personhood, crony capitalism, deindustrialization, desegregation, Donald Trump, ending welfare as we know it, Frederick Winslow Taylor, full employment, Gini coefficient, Glass-Steagall Act, income inequality, interchangeable parts, invisible hand, job automation, John Maynard Keynes: technological unemployment, labor-force participation, land reform, land tenure, longitudinal study, low skilled workers, low-wage service sector, mandatory minimum, mass incarceration, minimum wage unemployment, moral hazard, moral panic, mortgage debt, New Urbanism, non-tariff barriers, obamacare, occupational segregation, Occupy movement, oil shock, plutocrats, price discrimination, race to the bottom, rent control, road to serfdom, Ronald Reagan, Sam Peltzman, scientific management, Scientific racism, Simon Kuznets, single-payer health, Strategic Defense Initiative, strikebreaker, the long tail, too big to fail, trade route, transcontinental railway, Triangle Shirtwaist Factory, trickle-down economics, universal basic income, Upton Sinclair, upwardly mobile, urban renewal, vertical integration, W. E. B. Du Bois, wage slave, War on Poverty, women in the workforce, working poor, Works Progress Administration

Another tangible possibility is for the federal government to resurrect the notion of becoming the employer of last resort, as Franklin Roosevelt had suggested in 1944, or as the Humphrey-Hawkins Bill of 1978 purported to do. As economist Helen Lachs Ginsburg has pointed out, our economy is shaped by human choices as much as it is by the “invisible hand.” It would be possible, for example, for the government to prioritize full employment—not defined simply as some unemployment figure less than 5 percent but rather as the human right of each person to have work. It is difficult to move in that direction because people have been educated to believe that market efficiency ought to be the ultimate value of the economy, despite the fact that even perfectly efficient markets say nothing about distribution of incomes or about standards of living.83 The last few years have seen an active philosophical debate about the desirability of a basic income guarantee, a variation on the theme of the “negative income tax” attempted by Nixon in his Family Assistance Plan.


pages: 369 words: 90,630

Mindwise: Why We Misunderstand What Others Think, Believe, Feel, and Want by Nicholas Epley

affirmative action, airport security, Amazon Mechanical Turk, autism spectrum disorder, behavioural economics, Cass Sunstein, cognitive load, crowdsourcing, cuban missile crisis, drone strike, friendly fire, invisible hand, meta-analysis, Milgram experiment, payday loans, Peter Singer: altruism, pirate software, Richard Thaler, school choice, social intelligence, the scientific method, theory of mind

You stand almost exactly two feet away from your friend without the aid of a ruler because that distance just feels right—any closer would be creepy and any further would be cold. Stepping into the elevator, you instinctively face toward the door, instead of the back or the side, without hesitation. Neural associations create habits that guide our actions like invisible hands, behaving brainfully but mindlessly. My favorite example of this comes from an experiment examining the routine scripts we follow when asking others for help.14 You know these scripts already. When you ask someone for help, you first have to state your request—“I need you to stay late at work today”—and then give a reason for your request—“because we’re way behind on an important project.”


pages: 345 words: 92,849

Equal Is Unfair: America's Misguided Fight Against Income Inequality by Don Watkins, Yaron Brook

3D printing, Affordable Care Act / Obamacare, Apple II, barriers to entry, Berlin Wall, Bernie Madoff, blue-collar work, business process, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, collective bargaining, colonial exploitation, Cornelius Vanderbilt, corporate governance, correlation does not imply causation, creative destruction, Credit Default Swap, crony capitalism, David Brooks, deskilling, Edward Glaeser, Elon Musk, en.wikipedia.org, financial deregulation, immigration reform, income inequality, indoor plumbing, inventory management, invisible hand, Isaac Newton, Jeff Bezos, Jony Ive, laissez-faire capitalism, Louis Pasteur, low skilled workers, means of production, minimum wage unemployment, Naomi Klein, new economy, obamacare, Peter Singer: altruism, Peter Thiel, profit motive, rent control, Ronald Reagan, Silicon Valley, Skype, Solyndra, statistical model, Steve Jobs, Steve Wozniak, The Spirit Level, too big to fail, trickle-down economics, Uber for X, urban renewal, War on Poverty, wealth creators, women in the workforce, working poor, zero-sum game

It is, shall we say, a situation conducive to overstatement both of the executive’s personal qualities and of how much those supposed personal qualities matter for the company’s bottom line.”32 Piketty concurs, adding, “It may be excessive to accuse senior executives of having their ‘hands in the till,’ but the metaphor is probably more apt than Adam Smith’s metaphor of the market’s ‘invisible hand.’”33 But the case for these claims is embarrassingly weak. For starters, research by University of Chicago professor Steven N. Kaplan and Stanford University professor Joshua Rauh suggests that the rise in CEO pay is in line with the rise in pay for superstar performers generally: top financiers, lawyers, and professional athletes have all seen their incomes rise more or less in tandem with top executives, which, as Kaplan and Rauh explain, “is less consistent with an argument that the gains to the top 1 percent are rooted in greater managerial power or changes in social norms about what managers should earn.34 Another study by Kaplan is equally enlightening.


pages: 268 words: 89,761

Unhealthy societies: the afflictions of inequality by Richard G. Wilkinson

attribution theory, business cycle, clean water, correlation coefficient, experimental subject, full employment, fundamental attribution error, Gini coefficient, income inequality, income per capita, Indoor air pollution, invisible hand, land reform, longitudinal study, means of production, purchasing power parity, rising living standards, twin studies, upwardly mobile

Impact of income maintenance on low birth weight: Evidence from the Gary experiment. Journal of Human Resources 14:435–62. 1979. Kelleher, C., Cooper, J. and Sadlier, D. ABO blood group and social class: a prospective study in a regional blood bank. Journal of Epidemiology and Community Health 44:59–61. 1990. Kelly, R. The invisible hand behind the inexorable increase in the rate of crime. The Guardian, 30 August, 1993. Kennedy, B.P. and Kawachi, I. and Prothrow-Stith, D. Income distribution and mortality: Cross sectional ecological study of the Robin Hood Index in the United States. British Medical Journal 1996; 312:1004–7. Kennedy, S., Kiecolt-Glaser, J.K. and Glaser, R.


pages: 336 words: 90,749

How to Fix Copyright by William Patry

A Declaration of the Independence of Cyberspace, barriers to entry, big-box store, borderless world, bread and circuses, business cycle, business intelligence, citizen journalism, cloud computing, commoditize, content marketing, creative destruction, crowdsourcing, death of newspapers, digital divide, en.wikipedia.org, facts on the ground, Frederick Winslow Taylor, George Akerlof, Glass-Steagall Act, Gordon Gekko, haute cuisine, informal economy, invisible hand, John Perry Barlow, Joseph Schumpeter, Kickstarter, knowledge economy, lone genius, means of production, moral panic, new economy, road to serfdom, Ronald Coase, Ronald Reagan, search costs, semantic web, shareholder value, Silicon Valley, The Chicago School, The Wealth of Nations by Adam Smith, trade route, transaction costs, trickle-down economics, Twitter Arab Spring, Tyler Cowen, vertical integration, winner-take-all economy, zero-sum game

Just as the shift from the cultural industries to the creative industries led to a shift away from the expressive nature of authors’ and artists’ contributions and toward commodity sales, so too culture is now seen as merely another aspect of the “knowledge economy,”163 judged by how it performs in an invisible hand marketplace. But you can’t economically measure how an increase in knowledge will lead to productivity gains. If we want more creative works and more knowledgeable citizens, we will have to disassociate these goals from commodity markets, and focus on why people create and learn. We must then be willing to commit public monies to their encouragement where market forces have proved inadequate to the task.


pages: 322 words: 87,181

Straight Talk on Trade: Ideas for a Sane World Economy by Dani Rodrik

3D printing, airline deregulation, Asian financial crisis, bank run, barriers to entry, behavioural economics, Berlin Wall, Bernie Sanders, blue-collar work, Bretton Woods, BRICs, business cycle, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Carmen Reinhart, carried interest, central bank independence, centre right, collective bargaining, conceptual framework, continuous integration, corporate governance, corporate social responsibility, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, Donald Trump, endogenous growth, Eugene Fama: efficient market hypothesis, eurozone crisis, export processing zone, failed state, financial deregulation, financial innovation, financial intermediation, financial repression, floating exchange rates, full employment, future of work, general purpose technology, George Akerlof, global value chain, income inequality, inflation targeting, information asymmetry, investor state dispute settlement, invisible hand, Jean Tirole, Kenneth Rogoff, low interest rates, low skilled workers, manufacturing employment, market clearing, market fundamentalism, meta-analysis, moral hazard, Nelson Mandela, new economy, offshore financial centre, open borders, open economy, open immigration, Pareto efficiency, postindustrial economy, precautionary principle, price stability, public intellectual, pushing on a string, race to the bottom, randomized controlled trial, regulatory arbitrage, rent control, rent-seeking, Richard Thaler, Robert Gordon, Robert Shiller, Ronald Reagan, Sam Peltzman, Silicon Valley, Solyndra, special economic zone, spectrum auction, Steven Pinker, tacit knowledge, The Rise and Fall of American Growth, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, total factor productivity, trade liberalization, transaction costs, Tyler Cowen, unorthodox policies, Washington Consensus, World Values Survey, zero-sum game, éminence grise

By ignoring the fact that international trade sometimes—certainly not always—involves redistributive outcomes that we would consider problematic at home, they fail to engage the public debate properly. They also miss the opportunity to mount a more robust defense of trade when ethical concerns are less warranted. Economics instruction suffers from the same problem. In their zeal to display the profession’s crown jewels in untarnished form—market efficiency, the invisible hand, comparative advantage—economists skip over the real-world complications and nuances. It is as if introductory physics courses assumed a world without gravity, because everything becomes so much simpler that way. Downplaying the diversity of intellectual frameworks within their own discipline does not make economists better analysts of the real world.


pages: 279 words: 90,278

Heartland: A Memoir of Working Hard and Being Broke in the Richest Country on Earth by Sarah Smarsh

call centre, financial independence, housing crisis, income inequality, invisible hand, late fees, Mason jar, mortgage debt, mortgage tax deduction, off-the-grid, offshore financial centre, Pepto Bismol, profit motive, Ronald Reagan, trickle-down economics, women in the workforce, working poor

Their eyes were on immediate concerns: Was the hot combine shaking beneath them running right for the wheat harvest? Was there gas in the car to get to work? Had the cattle been fed? Who would pick up children from babysitters? That’s what my early life felt like, and it’s how yours would have felt, too—like some invisible hand was making decisions that affected us in ways we didn’t have the knowledge to describe or the access to fight. In July 1979, amid a national panic over fossil-fuel shortages, President Carter visited Kansas City to promote his new energy program. The night before, he had given a televised speech about the oil panic from the Oval Office.


pages: 383 words: 92,837

Incognito: The Secret Lives of the Brain by David Eagleman

Ada Lovelace, Albert Einstein, Any sufficiently advanced technology is indistinguishable from magic, Charles Babbage, Columbine, Daniel Kahneman / Amos Tversky, delayed gratification, endowment effect, facts on the ground, impulse control, invisible hand, Isaac Newton, Jeff Hawkins, Johann Wolfgang von Goethe, out of africa, Pierre-Simon Laplace, Ralph Waldo Emerson, Robert Shiller, Rodney Brooks, Saturday Night Live, selective serotonin reuptake inhibitor (SSRI), Steven Pinker, Stuart Kauffman, subprime mortgage crisis, Thales of Miletus, trolley problem

So small that we may be able to think about bad decision making in the same way we think about any other physical process, such as diabetes or lung disease.16 The principle states that the answer to the free-will question simply does not matter. Even if free will is conclusively proven to exist one hundred years from now, it will not change the fact that human behavior largely operates almost without regard to volition’s invisible hand. To put this another way, Charles Whitman, Alex the sudden pedophile, the frontotemporal shoplifters, the gambling Parkinson’s patients, and Kenneth Parks all share the common upshot that acts cannot be considered separately from the biology of the actors. Free will is not as simple as we intuit—and our confusion about it suggests that we cannot meaningfully use it as the basis of punishment decisions.


pages: 333 words: 86,662

Zeitgeist by Bruce Sterling

anti-communist, Ayatollah Khomeini, Berlin Wall, bread and circuses, cotton gin, Frank Gehry, Grace Hopper, informal economy, invisible hand, Iridium satellite, jitney, market bubble, Maui Hawaii, new economy, offshore financial centre, PalmPilot, rolodex, sexual politics, shareholder value, Silicon Valley, Ted Kaczynski, the scientific method, undersea cable, upwardly mobile, urban decay, Y2K

The little pariah state was often described as “unspoiled,” but this couldn’t capture the full glory and wonder of its anomolous position in the world. Turkish Cyprus was not “unspoiled.” It was counterspoiled; driven into limbo by twenty-five years of political impasse and frantic ethnic hatred. Its pygmy regime was formally unrecognized by any state but Turkey. The invisible hand of the global market couldn’t get a proper grip in this thorny little locale. The truth was visibly written all over the Cypriot landscape. For instance, the local ruins. The Turkish Republic of Northern Cyprus was one of the last spots in Europe where the Ancient Ruins © ® ™ were actual, fully authentic ancient ruins.


pages: 348 words: 99,383

The Financial Crisis and the Free Market Cure: Why Pure Capitalism Is the World Economy's Only Hope by John A. Allison

Affordable Care Act / Obamacare, Alan Greenspan, American ideology, bank run, banking crisis, Bear Stearns, Bernie Madoff, business cycle, clean water, collateralized debt obligation, correlation does not imply causation, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, disintermediation, fiat currency, financial innovation, Fractional reserve banking, full employment, Greenspan put, high net worth, housing crisis, inverted yield curve, invisible hand, life extension, low skilled workers, market bubble, market clearing, minimum wage unemployment, money market fund, moral hazard, negative equity, obamacare, open immigration, Paul Samuelson, price mechanism, price stability, profit maximization, quantitative easing, race to the bottom, reserve currency, risk/return, Robert Shiller, subprime mortgage crisis, The Bell Curve by Richard Herrnstein and Charles Murray, too big to fail, transaction costs, Tyler Cowen, yield curve, zero-sum game

See also “Bernanke Sees No Recession, but Big Challenge,” National Public Radio, February 27, 2008, http://www.npr.org/templates/story/story.php?story ld=74992288. 17. See Friedrich A. Hayek, The Fatal Conceit: The Errors of Socialism (Chicago: University of Chicago Press, 1989). 18. See George A. Selgin and Lawrence H. White, “How Would the Invisible Hand Handle Money?” Journal of Economic Literature (December 1994), pp. 1718–1749. 19. Deflation can be bad if it simply reflects a change in the long-term length of the monetary yardstick. The problem with a paper money system (fiat money) coupled with fractional reserve banking is that the velocity (turnover) of money becomes a major factor in the amount of usable money in circulation.


pages: 309 words: 91,581

The Great Divergence: America's Growing Inequality Crisis and What We Can Do About It by Timothy Noah

air traffic controllers' union, Alan Greenspan, assortative mating, autonomous vehicles, Bear Stearns, blue-collar work, Bonfire of the Vanities, Branko Milanovic, business cycle, call centre, carbon tax, collective bargaining, compensation consultant, computer age, corporate governance, Credit Default Swap, David Ricardo: comparative advantage, Deng Xiaoping, easy for humans, difficult for computers, Erik Brynjolfsson, Everybody Ought to Be Rich, feminist movement, Ford Model T, Frank Levy and Richard Murnane: The New Division of Labor, Gini coefficient, government statistician, Gunnar Myrdal, income inequality, independent contractor, industrial robot, invisible hand, It's morning again in America, job automation, Joseph Schumpeter, longitudinal study, low skilled workers, lump of labour, manufacturing employment, moral hazard, oil shock, pattern recognition, Paul Samuelson, performance metric, positional goods, post-industrial society, postindustrial economy, proprietary trading, purchasing power parity, refrigerator car, rent control, Richard Feynman, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, Stephen Hawking, Steve Jobs, subprime mortgage crisis, The Spirit Level, too big to fail, trickle-down economics, Tyler Cowen, Tyler Cowen: Great Stagnation, union organizing, upwardly mobile, very high income, Vilfredo Pareto, War on Poverty, We are the 99%, women in the workforce, Works Progress Administration, Yom Kippur War

Philip Elmer-DeWitt, “Apple’s Headcount, Up 30 %, Still Industry’s Most Productive,” Fortune, Oct. 30, 2011, at http://tech.fortune.cnn.com/2011/10/30/apples-headcount-up-30-still-industrys-most-productive/; “History of the Rouge,” Henry Ford Museum Web site, at http://www.thehenryford.org/rouge/historyofrouge.aspx. 18. Marianne Bertrand, “From the Invisible Handshake to the Invisible Hand? How Import Competition Changes the Employment Relationship,” Journal of Labor Economics 22, no. 4 (2004), 723–65; Mine Zeynep Senses, “The Effects of Outsourcing on the Elasticity of Labor Demand” (Washington: Center for Economic Studies, 2006). 19. Alan Blinder, “Offshoring: The Next Industrial Revolution?”


The Data Revolution: Big Data, Open Data, Data Infrastructures and Their Consequences by Rob Kitchin

Bayesian statistics, business intelligence, business process, cellular automata, Celtic Tiger, cloud computing, collateralized debt obligation, conceptual framework, congestion charging, corporate governance, correlation does not imply causation, crowdsourcing, data science, discrete time, disruptive innovation, George Gilder, Google Earth, hype cycle, Infrastructure as a Service, Internet Archive, Internet of things, invisible hand, knowledge economy, Large Hadron Collider, late capitalism, lifelogging, linked data, longitudinal study, machine readable, Masdar, means of production, Nate Silver, natural language processing, openstreetmap, pattern recognition, platform as a service, recommendation engine, RFID, semantic web, sentiment analysis, SimCity, slashdot, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, smart grid, smart meter, software as a service, statistical model, supply-chain management, technological solutionism, the scientific method, The Signal and the Noise by Nate Silver, transaction costs

His worry is that the digital humanities are not just facilitating and promoting ‘distant reading’, but are making it ‘possible to do literary research without reading at all: find all the instances of the words beg and beggar in novels by two different authors and write up your conclusions’ (p. 24). Similarly, Trumpener (2009: 164) argues that the ‘statistically driven model of literary history... seems to necessitate an impersonal invisible hand’. Moreover, it identifies patterns but avoids assigning causality, which can only be addressed ‘by tackling publishers’ archives, reading individual manuscript drafts in rare book libraries, and trying to figure out, book for book, who determined each novel’s title: author, publisher, or publicist’ (p. 164).


pages: 313 words: 92,907

Green Metropolis: Why Living Smaller, Living Closer, and Driving Less Are Thekeys to Sustainability by David Owen

A Pattern Language, active transport: walking or cycling, big-box store, Buckminster Fuller, car-free, carbon footprint, carbon tax, clean water, congestion charging, congestion pricing, delayed gratification, distributed generation, drive until you qualify, East Village, Easter island, electricity market, food miles, Ford Model T, garden city movement, hydrogen economy, invisible hand, Jane Jacobs, Jevons paradox, linear programming, McMansion, megaproject, Michael Shellenberger, military-industrial complex, Murano, Venice glass, Negawatt, New Urbanism, off grid, off-the-grid, oil shale / tar sands, PalmPilot, peak oil, placebo effect, Stewart Brand, systems thinking, Ted Nordhaus, The Death and Life of Great American Cities, Thomas L Friedman, unemployed young men, urban planning, urban sprawl, walkable city, zero-sum game

The near certainty is that, for many years to come, what the market will replace oil with is not something better (such as nuclear fusion, which, at the very least, is decades or generations away) but something considerably worse (such as low-grade coal, China’s main fuel, which makes oil’s carbon footprint and pollution profile look demure), and that ordinary market forces, rather than leading us inexorably toward a golden future, will most likely entice us to compound our growing troubles by prompting us to invest heavily in the energy equivalents of patent medicines (such as shale oil and ethanol). Sometimes, the invisible hand goes for the throat. It now seems clear that the main reason oil became so expensive for Americans in 2008 was speculation, even market manipulation. Another reason was that the dollars we were buying oil with had declined in value in comparison with other currencies. But those dollars were weak in part because we had spent so many of them on oil and other imports that the world outside our borders had more dollars than it knew what to do with, a condition that hasn’t gone away.


pages: 326 words: 88,905

Days of Destruction, Days of Revolt by Chris Hedges, Joe Sacco

Berlin Wall, Bernie Sanders, clean water, collective bargaining, company town, corporate personhood, dumpster diving, Easter island, Exxon Valdez, food desert, Goldman Sachs: Vampire Squid, Howard Zinn, Intergovernmental Panel on Climate Change (IPCC), invisible hand, laissez-faire capitalism, Mahatma Gandhi, mass immigration, mass incarceration, Naomi Klein, Nelson Mandela, Occupy movement, oil shale / tar sands, race to the bottom, Ralph Nader, Silicon Valley, Steve Jobs, strikebreaker, union organizing, urban decay, wage slave, white flight, women in the workforce

Germino stresses that slavery will not disappear until the growers and the corporations that buy the produce are forced to comply with basic labor standards. The agricultural industry, she said, has long enslaved citizens as well as noncitizens. The problem did not begin with the arrival of undocumented workers to the fields. “There’s this invisible hand of this corporate buyer asking for high volume at low price,” she says: I don’t want them to be forgotten about. It’s like the movie The Burning Season, about Carlos Mendes. There is the middleman who does the actual violence, but it’s the oil people living in Rio or whatever that are behind the destruction of the forests.


pages: 307 words: 92,165

Fabricated: The New World of 3D Printing by Hod Lipson, Melba Kurman

3D printing, a long time ago in a galaxy far, far away, additive manufacturing, barriers to entry, Berlin Wall, carbon footprint, Charles Babbage, cloud computing, crowdsourcing, DIY culture, dumpster diving, Easter island, en.wikipedia.org, factory automation, Free Software Foundation, game design, global supply chain, invisible hand, James Watt: steam engine, Jeff Bezos, Kickstarter, Lean Startup, lifelogging, Mars Rover, Marshall McLuhan, microcredit, Minecraft, Neal Stephenson, new economy, off grid, personalized medicine, planned obsolescence, printed gun, Ray Kurzweil, Richard Feynman, stem cell, Steve Jobs, technological singularity, TED Talk, the long tail, the market place

You know you need to impart some core concepts, such as the notion of kinetic energy and some simple mathematical ratios. True, you can teach all of this from a number of tried and true basic math and science lesson plans. But you’d like to try something different, just to see what happens. Most of us don’t realize that what’s taught in public schools is the work of a thousand pairs of invisible hands. An elementary school teacher does not just dream up lesson plans that she thinks her students will like. Instead, at least in the United States and many Western countries, classroom curriculum is a living, breathing microcosm of the larger world outside the walls of the schools. States create education standards.


pages: 293 words: 88,490

The End of Theory: Financial Crises, the Failure of Economics, and the Sweep of Human Interaction by Richard Bookstaber

asset allocation, bank run, Bear Stearns, behavioural economics, bitcoin, business cycle, butterfly effect, buy and hold, capital asset pricing model, cellular automata, collateralized debt obligation, conceptual framework, constrained optimization, Craig Reynolds: boids flock, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, dark matter, data science, disintermediation, Edward Lorenz: Chaos theory, epigenetics, feminist movement, financial engineering, financial innovation, fixed income, Flash crash, geopolitical risk, Henri Poincaré, impact investing, information asymmetry, invisible hand, Isaac Newton, John Conway, John Meriwether, John von Neumann, Joseph Schumpeter, Long Term Capital Management, margin call, market clearing, market microstructure, money market fund, Paul Samuelson, Pierre-Simon Laplace, Piper Alpha, Ponzi scheme, quantitative trading / quantitative finance, railway mania, Ralph Waldo Emerson, Richard Feynman, risk/return, Robert Solow, Saturday Night Live, self-driving car, seminal paper, sovereign wealth fund, the map is not the territory, The Predators' Ball, the scientific method, Thomas Kuhn: the structure of scientific revolutions, too big to fail, transaction costs, tulip mania, Turing machine, Turing test, yield curve

Annual Review of Psychology 62: 451–82. doi: 10.1146/annurev-psych-120709-145346. Glasserman, Paul, and H. Peyton Young. 2015. “Contagion in Financial Networks.” Office of Financial Research, OFR Working Paper no. 15-21. https://financialresearch.gov/working-papers/files/OFRwp-2015-21_Contagion-in-Financial-Networks.pdf. Gorton, Gary. 2010. Slapped by the Invisible Hand: The Panic of 2007. Financial Management Association Survey and Synthesis Series. Oxford: Oxford University Press. Gray, Robert M. 2009. Probability, Random Processes, and Ergodic Properties. 2nd ed. New York: Springer. Haldane, Andrew G., and Robert M. May. 2011. “Systematic Risk in Banking Ecosystems.”


pages: 309 words: 96,434

Ground Control: Fear and Happiness in the Twenty First Century City by Anna Minton

"there is no alternative" (TINA), Abraham Maslow, Albert Einstein, Berlin Wall, Big bang: deregulation of the City of London, Boris Johnson, Broken windows theory, call centre, crack epidemic, credit crunch, deindustrialization, East Village, energy security, Evgeny Morozov, Francis Fukuyama: the end of history, gentrification, ghettoisation, high-speed rail, hiring and firing, housing crisis, illegal immigration, invisible hand, Jane Jacobs, Jaron Lanier, Kickstarter, moral panic, new economy, New Urbanism, race to the bottom, rent control, Richard Florida, Right to Buy, Silicon Valley, Steven Pinker, the built environment, The Death and Life of Great American Cities, The Spirit Level, trickle-down economics, University of East Anglia, urban decay, urban renewal, white flight, white picket fence, World Values Survey, young professional

It also feeds into the contemporary obsession with finding places which are ‘real’ and ‘authentic’, with the irony that this is exactly what the Business Improvement Districts are trying to achieve for themselves in their aspiration to be distinctive and unique. Yet the way these places are marketed and sold only makes them more and more similar and less and less ‘real’. At the same time the feeling of an invisible hand directing what is going on, combined with the guards and the ‘electronic eyes’ of hundreds of CCTV cameras, changes and deadens the atmosphere. The manager who told me she liked ‘planned creativity’ also said, ‘I like Disney. It’s great and it’s fun. But you are aware all the time that Big Brother is behind it.’


Ugly Americans: The True Story of the Ivy League Cowboys Who Raided the Asian Markets for Millions by Ben Mezrich

index arbitrage, index card, invisible hand, Nick Leeson, profit motive, proprietary trading, short selling, vertical integration, white picket fence

Malcolm skirted past the crowd at the check-in desk and made his way directly to the bank of elevators on the far side of the lobby. He didn’t realize until the doors whiffed shut behind him that the elevator was made of glass, designed to ride up the outer spine of the building. Again, at a loss for breath, he stared out through the thick glass as the city unfolded outward beneath him, an origami unwound by invisible hands, as he rocketed up toward the clouds. The view from the glass capsule was staggering, a Salvador Dalí canvas come to life. The lights were beginning to sparkle along the Golden Mile, as dusk gave way to night, and the harbor glowed in the neon from the nearby advertisement billboards and ubiquitous disco parlors.


pages: 305 words: 97,214

Future Tense: Jews, Judaism, and Israel in the Twenty-First Century by Jonathan Sacks

Abraham Maslow, Alan Greenspan, Atahualpa, back-to-the-land, cognitive dissonance, invisible hand, Joseph Schumpeter, long peace, Socratic dialogue, Thorstein Veblen, trade route, zero-sum game

There were times—between the first and nineteenth centuries—when the primary bond between Jews was faith. There were others—during the Holocaust—when it was fate. It is that double bond that has held Jews together. When one failed, the other came to the fore. Call it chance, or the cunning of history, or an invisible hand, or Divine providence, but the old polarities—fate and faith, goral and ye’ud—remain, dividing Jews and uniting them in a way that is sometimes exasperating but often inspiring. A people Jews were. A people they still are. But if they are to survive as a people, they will have to solve another and yet more fundamental problem: the challenge of Jewish continuity. 3 Jewish Continuity and How to Achieve It In the Cairo museum stands a giant slab of black granite known as the Merneptah stele.


pages: 324 words: 89,875

Modern Monopolies: What It Takes to Dominate the 21st Century Economy by Alex Moazed, Nicholas L. Johnson

3D printing, Affordable Care Act / Obamacare, Airbnb, altcoin, Amazon Web Services, Andy Rubin, barriers to entry, basic income, bitcoin, blockchain, book value, Chuck Templeton: OpenTable:, cloud computing, commoditize, connected car, disintermediation, driverless car, fake it until you make it, future of work, gig economy, hockey-stick growth, if you build it, they will come, information asymmetry, Infrastructure as a Service, intangible asset, Internet of things, invisible hand, jimmy wales, John Gruber, Kickstarter, Lean Startup, Lyft, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Marshall McLuhan, means of production, Metcalfe’s law, money market fund, multi-sided market, Network effects, PalmPilot, patent troll, peer-to-peer lending, Peter Thiel, pets.com, platform as a service, power law, QWERTY keyboard, Ray Kurzweil, ride hailing / ride sharing, road to serfdom, Robert Metcalfe, Ronald Coase, Salesforce, self-driving car, sharing economy, Sheryl Sandberg, Silicon Valley, Skype, Snapchat, social graph, software as a service, software is eating the world, source of truth, Startup school, Steve Jobs, TaskRabbit, technological determinism, the medium is the message, transaction costs, transportation-network company, traveling salesman, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, white flight, winner-take-all economy, Y Combinator

Only later, once it had optimized its initial transaction—friending and viewing other people’s profiles—did it begin to add new transactions and new features. 6 The Visible Hand The Four Functions of a Platform Well-designed networks reduce friction and help good stuff be found. —Ev Williams, founder and CEO of Medium, founder and former CEO of Twitter Now that we’ve covered the core transaction, our next step is to take a closer look at the four functions of a platform, which we covered briefly in chapter 1. Economists like to talk about the invisible hand as the magical force that guides markets to work efficiently. However, in the case of the platform, the hand is very visible. A platform’s network doesn’t appear out of nothing. The platform has to create it and enable the core transaction to turn that network into value. To do this, a platform needs to engage in four key support activities.


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The Revolution That Wasn't: GameStop, Reddit, and the Fleecing of Small Investors by Spencer Jakab

4chan, activist fund / activist shareholder / activist investor, barriers to entry, behavioural economics, Bernie Madoff, Bernie Sanders, Big Tech, bitcoin, Black Swan, book value, buy and hold, classic study, cloud computing, coronavirus, COVID-19, crowdsourcing, cryptocurrency, data science, deal flow, democratizing finance, diversified portfolio, Dogecoin, Donald Trump, Elon Musk, Everybody Ought to Be Rich, fake news, family office, financial innovation, gamification, global macro, global pandemic, Google Glasses, Google Hangouts, Gordon Gekko, Hacker News, income inequality, index fund, invisible hand, Jeff Bezos, Jim Simons, John Bogle, lockdown, Long Term Capital Management, loss aversion, Marc Andreessen, margin call, Mark Zuckerberg, market bubble, Masayoshi Son, meme stock, Menlo Park, move fast and break things, Myron Scholes, PalmPilot, passive investing, payment for order flow, Pershing Square Capital Management, pets.com, plutocrats, profit maximization, profit motive, race to the bottom, random walk, Reminiscences of a Stock Operator, Renaissance Technologies, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robinhood: mobile stock trading app, Saturday Night Live, short selling, short squeeze, Silicon Valley, Silicon Valley billionaire, SoftBank, Steve Jobs, TikTok, Tony Hsieh, trickle-down economics, Vanguard fund, Vision Fund, WeWork, zero-sum game

“We only know about old fashioned stock I’m afraid,” said one tweet, referring to the medieval punishment to which retail investors wouldn’t have minded subjecting Vlad Tenev.[5] Celebrities such as the rapper Ja Rule and late-night talk show hosts lambasted the broker. Stephen Colbert riffed: “Oh, you’re all for unfair capitalism unless you lose? Come on guys, there’s no manipulation. It’s just the invisible hand of the market extending you an invisible middle finger.”[6] Politicians immediately sensed which way the wind was blowing, often before stopping to understand what had actually happened. At a time of bitter political rancor, dunking on Robinhood, as well as evil hedge funds, was the one issue on which Left and Right seemed to agree.


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Demanding the Impossible: A History of Anarchism by Peter Marshall

agricultural Revolution, anti-communist, anti-globalists, Bertrand Russell: In Praise of Idleness, classic study, clean water, collective bargaining, colonial rule, David Graeber, different worldview, do-ocracy, feminist movement, garden city movement, gentleman farmer, Great Leap Forward, Herbert Marcuse, hive mind, Howard Zinn, intentional community, invisible hand, laissez-faire capitalism, land reform, land tenure, Lao Tzu, Lewis Mumford, liberation theology, Machinery of Freedom by David Friedman, Mahatma Gandhi, means of production, military-industrial complex, MITM: man-in-the-middle, Murray Bookchin, Naomi Klein, open borders, Panopticon Jeremy Bentham, plutocrats, post scarcity, profit motive, public intellectual, radical decentralization, Ralph Waldo Emerson, rewilding, road to serfdom, Ronald Reagan, sexual politics, the market place, union organizing, wage slave, washing machines reduced drudgery

Radical libertarianism has recently had a considerable vogue in the USA, where the Libertarian Party has taken up many of its ideas, and in Great Britain where the right wing of the Conservative Party talk its language. While all anarchists are individualist to some degree in that they do not want to be ruled by others, collectivists and communists maintain that social problems cannot be solved on an individual basis or by the invisible hand of the market. In order to change existing society and establish an equitable replacement, it is necessary, they argue, to combine with others and work together. In recent times, the various currents of anarchism have flown closer together. There are genuine differences between those who are strict pacifists and those who would allow a minimal use of violence to achieve their common goal.

Since they are inherently self-equilibrating, they need the struggles of their members for their further evolution. But where struggle took a military form in feudal society, Spencer would like to see the combination of competition and co-operation prevalent in industrial society take its place. In addition, he was confident that evolution operated as a kind of ‘invisible hand’ transforming private interest into the general good.14 The long term direction of evolution was from egotism to altruism. In the process, social life would achieve the greatest development of individuality together with the greatest degree of sociability. Drawing on contemporary anthropology, Spencer argued like Kropotkin that societies originally regulated their affairs by custom.

Free market capitalism, they insist, is hindered not enhanced by the State. Anarcho-capitalists share Adam Smith’s confidence that somehow private interest will translate itself into public good rather than public squalor. They are convinced that the ‘natural laws’ of economics can do without the support of positive man-made law. The ‘invisible hand’ of the market will be enough to bring social order. Anarcho-capitalism has recently had the greatest impact in the United States, where the Libertarian Party has been influenced by it, and where Republicans like Ronald Reagan wanted to be remembered for cutting taxation and for getting ‘the government off people’s backs’.


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Merchants of Truth: The Business of News and the Fight for Facts by Jill Abramson

"World Economic Forum" Davos, 23andMe, 4chan, Affordable Care Act / Obamacare, Alexander Shulgin, Apple's 1984 Super Bowl advert, barriers to entry, Bernie Madoff, Bernie Sanders, Big Tech, Black Lives Matter, Cambridge Analytica, Charles Lindbergh, Charlie Hebdo massacre, Chelsea Manning, citizen journalism, cloud computing, commoditize, content marketing, corporate governance, creative destruction, crowdsourcing, data science, death of newspapers, digital twin, diversified portfolio, Donald Trump, East Village, Edward Snowden, fake news, Ferguson, Missouri, Filter Bubble, future of journalism, glass ceiling, Google Glasses, haute couture, hive mind, income inequality, information asymmetry, invisible hand, Jeff Bezos, Joseph Schumpeter, Khyber Pass, late capitalism, Laura Poitras, Marc Andreessen, Mark Zuckerberg, move fast and break things, Nate Silver, new economy, obamacare, Occupy movement, Paris climate accords, performance metric, Peter Thiel, phenotype, pre–internet, race to the bottom, recommendation engine, Robert Mercer, Ronald Reagan, Saturday Night Live, self-driving car, sentiment analysis, Sheryl Sandberg, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, skunkworks, Snapchat, social contagion, social intelligence, social web, SoftBank, Steve Bannon, Steve Jobs, Steven Levy, tech billionaire, technoutopianism, telemarketer, the scientific method, The Wisdom of Crowds, Tim Cook: Apple, too big to fail, vertical integration, WeWork, WikiLeaks, work culture , Yochai Benkler, you are the product

Though the Facebook forum seemed organically social—early reviews likened it to the water cooler of old—its easy interface masked the complex considerations that were hardwired into the network’s code. Users were in control of one input: they chose whom to declare a Friend. After that, Facebook’s invisible hand took over. Its unseen algorithm, operated by 26-year-old Greg Marra, decided which of your friends’ posts to show you, and in which order. The calculus was mysterious but had an uncanny knack for serving up the photos, messages, and links you wanted to see, whether you knew it or not. It determined the priority level of the items based on whose post it was, how popular it was among other users, what type of medium it was, and how recently it was posted, along with other micro factors indexed and assessed by the Facebook machine.

Looking at Facebook through analytical tools like CrowdTangle, Silverman explained, you could plainly see that the most successful posts were often ones that played to bias and emotion. This had always been true. The other fundamental factor that could make or break a publisher’s audience, though, was the invisible hand Facebook exercised in the social conversation, and this was becoming only more pronounced as the network elevated winners and buried the laggards in an increasingly competitive field. The only way for a business to be profitable on this network was to be out ahead of the pack of publishers, quickly and unquestioningly adapting to Facebook’s constantly evolving calculus.


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This Changes Everything: Capitalism vs. The Climate by Naomi Klein

"World Economic Forum" Davos, 1960s counterculture, activist fund / activist shareholder / activist investor, An Inconvenient Truth, Anthropocene, battle of ideas, Berlin Wall, Big Tech, big-box store, bilateral investment treaty, Blockadia, Boeing 747, British Empire, business climate, Capital in the Twenty-First Century by Thomas Piketty, carbon credits, carbon footprint, carbon tax, clean tech, clean water, Climategate, cognitive dissonance, coherent worldview, colonial rule, Community Supported Agriculture, complexity theory, crony capitalism, decarbonisation, degrowth, deindustrialization, dematerialisation, different worldview, Donald Trump, Downton Abbey, Dr. Strangelove, electricity market, energy security, energy transition, equal pay for equal work, extractivism, Exxon Valdez, failed state, fake news, Fall of the Berlin Wall, feminist movement, financial deregulation, food miles, Food sovereignty, gentrification, geopolitical risk, global supply chain, green transition, high-speed rail, hydraulic fracturing, ice-free Arctic, immigration reform, income per capita, Intergovernmental Panel on Climate Change (IPCC), Internet Archive, invention of the steam engine, invisible hand, Isaac Newton, James Watt: steam engine, Jones Act, Kickstarter, Kim Stanley Robinson, land bank, light touch regulation, man camp, managed futures, market fundamentalism, Medieval Warm Period, Michael Shellenberger, military-industrial complex, moral hazard, Naomi Klein, new economy, Nixon shock, Occupy movement, ocean acidification, off-the-grid, offshore financial centre, oil shale / tar sands, open borders, patent troll, Pearl River Delta, planetary scale, planned obsolescence, post-oil, precautionary principle, profit motive, quantitative easing, race to the bottom, Ralph Waldo Emerson, Rana Plaza, remunicipalization, renewable energy transition, Ronald Reagan, Russell Brand, scientific management, smart grid, special economic zone, Stephen Hawking, Stewart Brand, structural adjustment programs, Ted Kaczynski, Ted Nordhaus, TED Talk, the long tail, the scientific method, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, trickle-down economics, Upton Sinclair, uranium enrichment, urban planning, urban sprawl, vertical integration, Virgin Galactic, wages for housework, walkable city, Washington Consensus, Wayback Machine, We are all Keynesians now, Whole Earth Catalog, WikiLeaks

CLICK HERE TO SIGN UP or visit us online to sign up at eBookNews.SimonandSchuster.com CONTENTS * * * Epigraph Introduction  One Way or Another, Everything Changes PART ONE BAD TIMING 1. The Right Is Right: The Revolutionary Power of Climate Change 2. Hot Money: How Free Market Fundamentalism Helped Overheat the Planet 3. Public and Paid For: Overcoming the Ideological Blocks to the Next Economy 4. Planning and Banning: Slapping the Invisible Hand, Building a Movement 5. Beyond Extractivism: Confronting the Climate Denier Within PART TWO MAGICAL THINKING 6. Fruits, Not Roots: The Disastrous Merger of Big Business and Big Green 7. No Messiahs: The Green Billionaires Won’t Save Us 8. Dimming the Sun: The Solution to Pollution Is . . .

This is why the persistent positing of population control as a solution to climate change is a distraction and moral dead end. As this research makes clear, the most significant cause of rising emissions is not the reproductive behavior of the poor but the consumer behaviors of the rich. 4 * * * PLANNING AND BANNING Slapping the Invisible Hand, Building a Movement “Post-modernism has cut off the present from all futures. The daily media adds to this by cutting off the past. Which means that critical opinion is often orphaned in the present.” —John Berger, Keeping a Rendezvous, 19911 “A reliably green company is one that is required to be green by law.”


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Expected Returns: An Investor's Guide to Harvesting Market Rewards by Antti Ilmanen

Alan Greenspan, Andrei Shleifer, asset allocation, asset-backed security, availability heuristic, backtesting, balance sheet recession, bank run, banking crisis, barriers to entry, behavioural economics, Bernie Madoff, Black Swan, Bob Litterman, bond market vigilante , book value, Bretton Woods, business cycle, buy and hold, buy low sell high, capital asset pricing model, capital controls, carbon credits, Carmen Reinhart, central bank independence, classic study, collateralized debt obligation, commoditize, commodity trading advisor, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, deal flow, debt deflation, deglobalization, delta neutral, demand response, discounted cash flows, disintermediation, diversification, diversified portfolio, dividend-yielding stocks, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, fiat currency, financial deregulation, financial innovation, financial intermediation, fixed income, Flash crash, framing effect, frictionless, frictionless market, G4S, George Akerlof, global macro, global reserve currency, Google Earth, high net worth, hindsight bias, Hyman Minsky, implied volatility, income inequality, incomplete markets, index fund, inflation targeting, information asymmetry, interest rate swap, inverted yield curve, invisible hand, John Bogle, junk bonds, Kenneth Rogoff, laissez-faire capitalism, law of one price, London Interbank Offered Rate, Long Term Capital Management, loss aversion, low interest rates, managed futures, margin call, market bubble, market clearing, market friction, market fundamentalism, market microstructure, mental accounting, merger arbitrage, mittelstand, moral hazard, Myron Scholes, negative equity, New Journalism, oil shock, p-value, passive investing, Paul Samuelson, pension time bomb, performance metric, Phillips curve, Ponzi scheme, prediction markets, price anchoring, price stability, principal–agent problem, private sector deleveraging, proprietary trading, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, random walk, reserve currency, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, riskless arbitrage, Robert Shiller, savings glut, search costs, selection bias, seminal paper, Sharpe ratio, short selling, sovereign wealth fund, statistical arbitrage, statistical model, stochastic volatility, stock buybacks, stocks for the long run, survivorship bias, systematic trading, tail risk, The Great Moderation, The Myth of the Rational Market, too big to fail, transaction costs, tulip mania, value at risk, volatility arbitrage, volatility smile, working-age population, Y2K, yield curve, zero-coupon bond, zero-sum game

.; and Kevin Krieger (2010), “Implications for asset returns in the implied volatility skew,” Financial Analysts Journal 66(1), 65–76. Driessen, Joost; Pascal J. Maenhout; and Grigory Vilkov (2009), “The price of correlation risk: Evidence from equity options,” Journal of Finance 64(3), 1377–1406. Drobny, Steven (2010), The Invisible Hands: Hedge Funds Off the Record—Rethinking Real Money, Hoboken, NJ: John Wiley & Sons, Inc. Duarte, Jefferson; Francis A. Longstaff; and Fan Yu (2007), “Risk and return in fixed income arbitrage: Nickels in front of a steamroller?” Review of Financial Studies 20, 769–811. Duffie, Darrell (2010), “Presidential address: Asset price dynamics with slow-moving capital,” Journal of Finance 65(4), 1237–1267.

.; Akiko Watanabe; and Masahiro Watanabe (2009), “Investor expectations, business conditions, and the pricing of beta-instability risk,” Yale ICF working paper, available at SSRN: http://ssrn.com/abstract=1108711 Gordon, Myron J. (1962), The Investment, Financing, and Valuation of the Corporation, Homewood, IL: Irwin. Gorton, Gary B. (2010), Slapped by the Invisible Hand: The Panic of 2007, Oxford University Press. Gorton, Gary B.; Fumio Hayashi; and K. Geert Rouwenhorst (2007), “The fundamentals of commodity futures returns,” University of Pennsylvania working paper. Gorton, Gary B.; and K. Geert Rouwenhorst (2006), “Facts and fantasies about commodity futures,” Financial Analysts Journal 62, 86–93.


pages: 351 words: 102,379

Too big to fail: the inside story of how Wall Street and Washington fought to save the financial system from crisis--and themselves by Andrew Ross Sorkin

"World Economic Forum" Davos, affirmative action, Alan Greenspan, Andy Kessler, Asian financial crisis, Bear Stearns, Berlin Wall, book value, break the buck, BRICs, business cycle, Carl Icahn, collapse of Lehman Brothers, collateralized debt obligation, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, deal flow, Dr. Strangelove, Emanuel Derman, Fall of the Berlin Wall, fear of failure, financial engineering, fixed income, Glass-Steagall Act, Goldman Sachs: Vampire Squid, housing crisis, indoor plumbing, invisible hand, junk bonds, Ken Thompson, London Interbank Offered Rate, Long Term Capital Management, low interest rates, margin call, market bubble, Michael Milken, Mikhail Gorbachev, money market fund, moral hazard, naked short selling, NetJets, Northern Rock, oil shock, paper trading, proprietary trading, risk tolerance, Robert Shiller, rolodex, Ronald Reagan, Savings and loan crisis, savings glut, shareholder value, short selling, sovereign wealth fund, supply-chain management, too big to fail, uptick rule, value at risk, éminence grise

The idea that financial wizards had conjured up a new era of low-risk profits, and that American-style financial engineering was the global gold standard, was officially dead. As the unraveling began, many on Wall Street confronted a market unlike any they had ever encountered—one gripped by a fear and disorder that no invisible hand could tame. They were forced to make the most critical decisions of their careers, perhaps of their lives, in the context of a confusing rush of rumors and policy shifts, all based on numbers that were little more than best guesses. Some made wise choices, some got lucky, and still others lived to regret their decisions.

“I can’t see why they’re getting anything,” he told Dimon. So far, nobody other than Dimon knew that the Treasury secretary of the United States of America was behind the original paltry sale price, and Paulson wanted to keep it that way. Like most conservatives, he still honored the principle of “the invisible hand”—that widely held, neoclassical economic notion that official intervention was at best a last resort. As a former CEO himself, Paulson understood Dimon’s position perfectly well. He, too, wanted to restore calm to the markets, for it had been a nail-biter of a week. After the $2-a-share purchase price had been announced, Bear’s shareholders and employees had practically revolted, threatening to upend not just the deal but also the entire market.


pages: 146 words: 43,446

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

Alan Greenspan, Albert Einstein, Andy Kessler, Benchmark Capital, business climate, classic study, creative destruction, data acquisition, Fairchild Semiconductor, family office, high net worth, invention of the steam engine, invisible hand, Ivan Sutherland, Jeff Bezos, Larry Ellison, Marc Andreessen, Mary Meeker, Menlo Park, PalmPilot, pre–internet, risk tolerance, Sand Hill Road, Silicon Valley, Silicon Valley startup, tech worker, the new new thing, Thorstein Veblen, wealth creators, Y2K

What happened to Clark in Silicon Valley was far more interesting than luck. It was the interplay of a char- Page 251 acter who had a deep feel for technology, and a taste for anarchy, with an environment that rewarded both traits. Silicon Valley in the late 1990s was the closest that business has ever come to resembling a child's chemistry experiment. Some tiny invisible hand poured one chemical after another into a test tube in the irresponsible hope of making it go Boom! Clarkand people like himturned out to be the active ingredient. At any rate, in the spring of 1999, after Healtheon had established itself as the most successful IPO in a year of fabulously successful IPOs, Clark was a more active ingredient than ever before.


Powers and Prospects by Noam Chomsky

anti-communist, Berlin Wall, Bretton Woods, colonial rule, declining real wages, deindustrialization, deskilling, Fall of the Berlin Wall, invisible hand, Jacques de Vaucanson, John von Neumann, language acquisition, liberation theology, Monroe Doctrine, Nixon triggered the end of the Bretton Woods system, old-boy network, RAND corporation, Ronald Reagan, South China Sea, theory of mind, Tobin tax, Turing test

This is not ‘trade’ in any meaningful sense; rather, operations internal to corporations, centrally managed by a highly visible hand, with all sorts of mechanisms for undermining markets in the interest of profit and power.40 In reality, the quasi-mercantilist system of transnational corporate capitalism is rife with the kinds of ‘conspiracies’ of the masters against the public of which Adam Smith famously warned, not to speak of the traditional reliance on state power and public subsidy. A 1992 OECD study concludes that ‘Oligopolistic competition and strategic interaction among firms and governments rather than the invisible hand of market forces condition today’s competitive advantage and international division of labor in high-technology industries’, as in agriculture, pharmaceuticals, services, and major areas of economic activity generally. The vast majority of the world’s population, who are subjected to market discipline and regaled with odes to its wonders, are not supposed to hear such words; and rarely do.


pages: 391 words: 102,301

Zero-Sum Future: American Power in an Age of Anxiety by Gideon Rachman

"World Economic Forum" Davos, Alan Greenspan, Asian financial crisis, bank run, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, Bonfire of the Vanities, borderless world, Bretton Woods, BRICs, capital controls, carbon tax, centre right, clean water, collapse of Lehman Brothers, colonial rule, currency manipulation / currency intervention, deindustrialization, Deng Xiaoping, Doha Development Round, energy security, failed state, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, full employment, Glass-Steagall Act, global reserve currency, Global Witness, Golden arches theory, Great Leap Forward, greed is good, Greenspan put, Hernando de Soto, illegal immigration, income inequality, invisible hand, It's morning again in America, Jeff Bezos, laissez-faire capitalism, Live Aid, low interest rates, market fundamentalism, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, moral hazard, mutually assured destruction, Naomi Klein, Nelson Mandela, offshore financial centre, Oklahoma City bombing, open borders, open economy, Peace of Westphalia, peak oil, pension reform, plutocrats, popular capitalism, price stability, RAND corporation, reserve currency, rising living standards, road to serfdom, Ronald Reagan, Savings and loan crisis, shareholder value, Sinatra Doctrine, sovereign wealth fund, special economic zone, Steve Jobs, Stewart Brand, Tax Reform Act of 1986, The Chicago School, The Great Moderation, The Myth of the Rational Market, Thomas Malthus, Timothy McVeigh, trickle-down economics, Washington Consensus, Winter of Discontent, zero-sum game

It was a lesson that he traced all the way back to the “simple, time-tested principle promulgated by Adam Smith in 1776: individuals trading freely with one another following their own self-interest leads to a growing, stable economy.”16 Toward the end of the Age of Optimism, and just before the crash, it became clear that the global financial market was so huge and so complex that no single individual or institution could fully comprehend its scope—and no regulator could control it. Yet this realization did not perturb Greenspan, who believed firmly in the market’s ability to self-regulate: “As I saw it … the largely unregulated global financial markets, with some notable exceptions, appeared to be moving from one state of equilibrium to another. Adam Smith’s invisible hand was at work on a global scale.”17 By 2008, the world was facing the mother of all “notable exceptions.” The global financial system was on the point of collapse and the world economy was entering its deepest recession since the 1930s. Far from guarding their own interests and exemplifying the virtues of private profit-seeking, the giants of Wall Street had either collapsed like Lehman Brothers or had to be bailed out by the taxpayer to the tune of billions of dollars.


Gaming the Vote: Why Elections Aren't Fair (And What We Can Do About It) by William Poundstone

affirmative action, Albert Einstein, book value, business cycle, Debian, democratizing finance, desegregation, Donald Trump, en.wikipedia.org, Everything should be made as simple as possible, global village, guest worker program, guns versus butter model, hiring and firing, illegal immigration, invisible hand, jimmy wales, John Nash: game theory, John von Neumann, Kenneth Arrow, manufacturing employment, Nash equilibrium, Paul Samuelson, Pierre-Simon Laplace, prisoner's dilemma, Ralph Nader, RAND corporation, Ronald Reagan, Silicon Valley, slashdot, the map is not the territory, Thomas Bayes, Tragedy of the Commons, transcontinental railway, Unsafe at Any Speed, Y2K

When there is a tight race between the two major candidates, a third-party "spoiler" candidate can take enough votes from one of the from-runners to hand the election to his rival. This happened in the 2000 presidential race, when Green candidate Ralph Nader tipped the balance from AI Gore to George W. Bush in Florida, and thus determined the election. Vote splitting is an invisible hand misguiding the whole electoral process. The consequences are weakened mandates, loss of faith in the democratic process, squandered dollars, and sometimes squandered lives. This book asks a simple question: Is it possible to devise a fair way of voting, one immune to vote splitting? Until recently, any wellinformed person would have told you the answer was a most definite no.


pages: 353 words: 101,130

Schild's Ladder by Greg Egan

framing effect, gravity well, invisible hand, Turing machine

The crest of the wave was thirty meters away. This was too complicated. They'd never have time. Yann said calmly, "Give me your body. I've worked out the steps." Tchicaya surrendered motor control, and they began to move together in a perfect, symmetrical ballet. It was as if his limbs had been gripped by a dozen firm, invisible hands, manipulating him without resistance. His back arched, his arms stretched painfully, but their fingers stayed tangled in a monkey grip as their legs forced their bodies apart, until their feet met, sole to sole. Tchicaya said, "You made me an isotopy." Yann laughed. "Nothing original, I'm afraid."


pages: 327 words: 103,336

Everything Is Obvious: *Once You Know the Answer by Duncan J. Watts

"World Economic Forum" Davos, active measures, affirmative action, Albert Einstein, Amazon Mechanical Turk, AOL-Time Warner, Bear Stearns, behavioural economics, Black Swan, business cycle, butterfly effect, carbon credits, Carmen Reinhart, Cass Sunstein, clockwork universe, cognitive dissonance, coherent worldview, collapse of Lehman Brothers, complexity theory, correlation does not imply causation, crowdsourcing, death of newspapers, discovery of DNA, East Village, easy for humans, difficult for computers, edge city, en.wikipedia.org, Erik Brynjolfsson, framing effect, Future Shock, Geoffrey West, Santa Fe Institute, George Santayana, happiness index / gross national happiness, Herman Kahn, high batting average, hindsight bias, illegal immigration, industrial cluster, interest rate swap, invention of the printing press, invention of the telescope, invisible hand, Isaac Newton, Jane Jacobs, Jeff Bezos, Joseph Schumpeter, Kenneth Rogoff, lake wobegon effect, Laplace demon, Long Term Capital Management, loss aversion, medical malpractice, meta-analysis, Milgram experiment, natural language processing, Netflix Prize, Network effects, oil shock, packet switching, pattern recognition, performance metric, phenotype, Pierre-Simon Laplace, planetary scale, prediction markets, pre–internet, RAND corporation, random walk, RFID, school choice, Silicon Valley, social contagion, social intelligence, statistical model, Steve Ballmer, Steve Jobs, Steve Wozniak, supply-chain management, tacit knowledge, The Death and Life of Great American Cities, the scientific method, The Wisdom of Crowds, too big to fail, Toyota Production System, Tragedy of the Commons, ultimatum game, urban planning, Vincenzo Peruggia: Mona Lisa, Watson beat the top human players on Jeopardy!, X Prize

The people who have less productive uses will therefore buy less iron, while the people who have more productive uses will buy more of it. Nobody needs to know why the price went up, or who it is that suddenly wants more iron—in fact, no one needs to know anything about the process at all. Rather, it is the “invisible hand” of the market that automatically allocates the limited amount of iron in the world to whomever can make the best use of it. Hayek’s paper is often held up by free market advocates as an argument that government-designed solutions are always worse than market-based ones, and no doubt there are cases where this conclusion is correct.


pages: 325 words: 99,983

Globish: How the English Language Became the World's Language by Robert McCrum

Alistair Cooke, anti-communist, AOL-Time Warner, Berlin Wall, Bletchley Park, British Empire, call centre, Charles Lindbergh, classic study, colonial rule, credit crunch, cuban missile crisis, Deng Xiaoping, Etonian, export processing zone, failed state, Fall of the Berlin Wall, Ford Model T, Francis Fukuyama: the end of history, invention of movable type, invention of writing, invisible hand, Isaac Newton, jimmy wales, knowledge economy, Livingstone, I presume, Martin Wolf, Naomi Klein, Norman Mailer, Parag Khanna, Ralph Waldo Emerson, Republic of Letters, Ronald Reagan, sceptred isle, Scramble for Africa, Silicon Valley, Steven Pinker, the new new thing, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade route, transatlantic slave trade, transcontinental railway, upwardly mobile

Lockwood Kipling, for instance, marvelled at his son’s popularity in words that seem strangely modern: Owing to the recent development & organising of journalism, syndicates & what not, each new [Kipling] book is more portentous, more widespread and more voluminous in print than the last and it will literally be true that in one year this youngster will have had more said about his work, over a wider extent of the world’s surface, than some of the greatest of England’s writers in their whole lives. Moreover, there was still the ‘invisible hand’ of global capitalism in Britain’s favour, combined with the imperial self-belief inspired by the Jubilee celebrations of 1897, the sixtieth anniversary of Queen Victoria’s ascent to the British throne. CHAPTER TEN At the Top of the World’ The Imperial Swan Song The ‘decline’ of England seems to me a tremendous and even, almost, an inspiring spectacle, and if the British Empire is once more to shrink up into that plethoric little island, the process will be the greatest drama in history


pages: 289 words: 99,936

Digital Dead End: Fighting for Social Justice in the Information Age by Virginia Eubanks

affirmative action, Alvin Toffler, Berlin Wall, call centre, cognitive dissonance, creative destruction, desegregation, digital divide, Fall of the Berlin Wall, future of work, game design, global village, index card, informal economy, invisible hand, Kevin Kelly, knowledge economy, labor-force participation, low-wage service sector, microcredit, new economy, post-industrial society, race to the bottom, rent control, rent stabilization, Shoshana Zuboff, Silicon Valley, social contagion, South of Market, San Francisco, tech worker, telemarketer, Thomas L Friedman, trickle-down economics, union organizing, urban planning, web application, white flight, women in the workforce, work culture , working poor

Has the company looked for sources of private funding before attempting to access taxpayer money? Does the price we pay per job make sense? What other benefits are these investments likely to bring to the area? What other burdens do these investments place on our communities? 3. Respect and Reward the Work of Care As Nancy Folbre eloquently argues, “the invisible hand of the free market depends upon an invisible heart of care” (2001: vii). The information economy drives increases in employment in the human and consumer services industries, amplifies the vulnerability of many American families, and exposes us all to more of the shocks and strains of volatile continuity.


pages: 317 words: 106,130

The New Science of Asset Allocation: Risk Management in a Multi-Asset World by Thomas Schneeweis, Garry B. Crowder, Hossein Kazemi

asset allocation, backtesting, Bear Stearns, behavioural economics, Bernie Madoff, Black Swan, book value, business cycle, buy and hold, capital asset pricing model, collateralized debt obligation, commodity trading advisor, correlation coefficient, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, diversification, diversified portfolio, financial engineering, fixed income, global macro, high net worth, implied volatility, index fund, interest rate swap, invisible hand, managed futures, market microstructure, merger arbitrage, moral hazard, Myron Scholes, passive investing, Richard Feynman, Richard Feynman: Challenger O-ring, risk free rate, risk tolerance, risk-adjusted returns, risk/return, search costs, selection bias, Sharpe ratio, short selling, statistical model, stocks for the long run, survivorship bias, systematic trading, technology bubble, the market place, Thomas Kuhn: the structure of scientific revolutions, transaction costs, value at risk, yield curve, zero-sum game

As expected, the practitioner’s starting point is that regrettably mistakes have obviously happened; and, notwithstanding these mistakes, they operate within a systemic code of market order in which the actual trading of strategies and the traders themselves are forced by the trading environment to provide an honest product, backed by honest people, providing honest services to honest investors. Here, the invisible hand of the market actually ensures order and governments are overreacting. Order means, of course, different things to different participants in the investment process. Those who promote government order are concerned that government order is required to ensure market order (e.g., systemic risk).


pages: 410 words: 99,654

This Is Memorial Device by David Keenan

Easter island, invisible hand

What was I thinking, I asked myself. Why did I get involved in any of it? Isn’t sitting here at home, safe, at night, with all my cassettes, with the music playing low, in the first flush of youth, looking good, being one of the faces of Airdrie, isn’t that enough? Of course not, I knew that, and even then I felt an invisible hand which I knew was really my own, or God’s own, or Paul Weller’s own, whatever you want to call it, pushing me past the tipping point, urging me on. I called Mr Scotia. It’s more complicated, I told him. Death has reared its ugly head. He told me a story about being in the army, about soldiers tossing coins to decide who gets to disembark and who gets to stay on the island.


pages: 463 words: 105,197

Radical Markets: Uprooting Capitalism and Democracy for a Just Society by Eric Posner, E. Weyl

3D printing, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, anti-communist, augmented reality, basic income, Berlin Wall, Bernie Sanders, Big Tech, Branko Milanovic, business process, buy and hold, carbon footprint, Cass Sunstein, Clayton Christensen, cloud computing, collective bargaining, commoditize, congestion pricing, Corn Laws, corporate governance, crowdsourcing, cryptocurrency, data science, deep learning, DeepMind, Donald Trump, Elon Musk, endowment effect, Erik Brynjolfsson, Ethereum, feminist movement, financial deregulation, Francis Fukuyama: the end of history, full employment, gamification, Garrett Hardin, George Akerlof, global macro, global supply chain, guest worker program, hydraulic fracturing, Hyperloop, illegal immigration, immigration reform, income inequality, income per capita, index fund, informal economy, information asymmetry, invisible hand, Jane Jacobs, Jaron Lanier, Jean Tirole, Jeremy Corbyn, Joseph Schumpeter, Kenneth Arrow, labor-force participation, laissez-faire capitalism, Landlord’s Game, liberal capitalism, low skilled workers, Lyft, market bubble, market design, market friction, market fundamentalism, mass immigration, negative equity, Network effects, obamacare, offshore financial centre, open borders, Pareto efficiency, passive investing, patent troll, Paul Samuelson, performance metric, plutocrats, pre–internet, radical decentralization, random walk, randomized controlled trial, Ray Kurzweil, recommendation engine, rent-seeking, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robert Shiller, Ronald Coase, Rory Sutherland, search costs, Second Machine Age, second-price auction, self-driving car, shareholder value, sharing economy, Silicon Valley, Skype, special economic zone, spectrum auction, speech recognition, statistical model, stem cell, telepresence, Thales and the olive presses, Thales of Miletus, The Death and Life of Great American Cities, The Future of Employment, The Market for Lemons, The Nature of the Firm, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, Tragedy of the Commons, transaction costs, trickle-down economics, Tyler Cowen, Uber and Lyft, uber lyft, universal basic income, urban planning, Vanguard fund, vertical integration, women in the workforce, Zipcar

Open markets embody the idea that by cooperating as broadly as possible, we can all benefit from each other. Smith saw the markets blossoming around him as not only a productive force, but also a profoundly egalitarian one. He famously argued that in a well-functioning market, “The rich … are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants; and thus, without intending it, without knowing it, advance the interest of the society.”27 The portion of this quotation we have italicized is usually neglected in discussions of Smith, perhaps because it originates from a book that preceded his most famous Wealth of Nations.


pages: 404 words: 95,163

Amazon: How the World’s Most Relentless Retailer Will Continue to Revolutionize Commerce by Natalie Berg, Miya Knights

3D printing, Adam Neumann (WeWork), Airbnb, Amazon Robotics, Amazon Web Services, asset light, augmented reality, Bernie Sanders, big-box store, business intelligence, cloud computing, Colonization of Mars, commoditize, computer vision, connected car, deep learning, DeepMind, digital divide, Donald Trump, Doomsday Clock, driverless car, electronic shelf labels (ESLs), Elon Musk, fulfillment center, gig economy, independent contractor, Internet of things, inventory management, invisible hand, Jeff Bezos, Kiva Systems, market fragmentation, new economy, Ocado, pattern recognition, Ponzi scheme, pre–internet, QR code, race to the bottom, random stow, recommendation engine, remote working, Salesforce, sensor fusion, sharing economy, Skype, SoftBank, Steve Bannon, sunk-cost fallacy, supply-chain management, TaskRabbit, TechCrunch disrupt, TED Talk, trade route, underbanked, urban planning, vertical integration, warehouse automation, warehouse robotics, WeWork, white picket fence, work culture

Whoever wins the race to mass drone deployment, one thing’s for certain – it won’t be the last innovation in the race to own the cheapest and fastest last mile. Notes 1 Harkaway, Nick (2012) Amazon aren’t destroying publishing, they’re reshaping it, Guardian, 26 April. Available from: https://www.theguardian.com/books/2012/apr/26/amazon-publishing-destroying [Last accessed 5/11/2018]. 2 Sisson, Patrick (2017) How Amazon’s ‘invisible’ hand can shape your city, Curbed, 2 May. Available from: https://www.curbed.com/2017/5/2/15509316/amazon-prime-retail-urban-planning [Last accessed 6/6/2018]. 3 Holmes, Thomas J (2005) The diffusion of Wal-Mart and economies of density, Semantic Scholar, November. Available from: https://pdfs.semanticscholar.org/947c/d95a37c55eefb84ccab56896b4037f5c2acd.pdf [Last accessed 6/6/2018]. 4 Machkovech, Sam (2015) Amazon Flex will pay you ‘$18-25 per hour’ to deliver Prime Now packages, Arstechnica, 29 September.


pages: 371 words: 101,792

Skygods: The Fall of Pan Am by Robert Gandt

airline deregulation, Ayatollah Khomeini, Berlin Wall, Boeing 747, Carl Icahn, Charles Lindbergh, collective bargaining, flag carrier, hiring and firing, invisible hand, Maui Hawaii, RAND corporation, revenue passenger mile, Tenerife airport disaster, yield management, Yogi Berra, Yom Kippur War

A debate was under way in Congress and in the media about the efficacy of government intervention in corporate debacles like those of Lockheed and Penn Central—and perhaps Pan Am. It was rumored in the business press that Pan Am was near bankruptcy. Should Pan Am be saved? Senator Proxmire of Wisconsin, chief slayer of the SST, thought not. “Let the invisible hand of free enterprise do its work,” Proxmire told reporters. Which was to say, to hell with Pan Am. “We’re going to get screwed again,” Beasley said. “Yup,” said Hotchkiss. He was a new hire, 1964 vintage. His bright hopes for Pan Am, like those of his classmates, were headed down the drain. “What are we going to do about it?”


pages: 378 words: 102,966

Affluenza: The All-Consuming Epidemic by John de Graaf, David Wann, Thomas H Naylor, David Horsey

Abraham Maslow, big-box store, carbon tax, classic study, Community Supported Agriculture, Corrections Corporation of America, Dennis Tito, disinformation, Donald Trump, Exxon Valdez, financial independence, Ford Model T, Ford paid five dollars a day, full employment, God and Mammon, greed is good, income inequality, informal economy, intentional community, invisible hand, Isaac Newton, It's morning again in America, junk bonds, low interest rates, Mark Shuttleworth, McMansion, medical malpractice, new economy, PalmPilot, Paradox of Choice, Peter Calthorpe, planned obsolescence, Ralph Nader, Ray Oldenburg, Ronald Reagan, Silicon Valley, Simon Kuznets, single-payer health, space junk, SpaceShipOne, systems thinking, The Great Good Place, trade route, upwardly mobile, Yogi Berra, young professional

Many of these ingredients are incorporated into familiar products like detergents, varnishes, plastics, fingernail polish, bug spray, and pharmaceuticals, as well as behind-the-scenes industrial products like degreasers and plasticizers. A new chemical substance is discovered every nine seconds of the working day, as the “invisible hand of the market” continues to call forth legions of them, like a throng of marching broomsticks straight out of The Sorcerer’s Apprentice. It’s become impossible to call them off, and as a consequence, we’re living in a sea of our own waste products. We’re exposed to chemicals in consumer products and in the workplace.


pages: 364 words: 101,286

The Misbehavior of Markets: A Fractal View of Financial Turbulence by Benoit Mandelbrot, Richard L. Hudson

Alan Greenspan, Albert Einstein, asset allocation, Augustin-Louis Cauchy, behavioural economics, Benoit Mandelbrot, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, Black-Scholes formula, British Empire, Brownian motion, business cycle, buy and hold, buy low sell high, capital asset pricing model, carbon-based life, discounted cash flows, diversification, double helix, Edward Lorenz: Chaos theory, electricity market, Elliott wave, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, Fellow of the Royal Society, financial engineering, full employment, Georg Cantor, Henri Poincaré, implied volatility, index fund, informal economy, invisible hand, John Meriwether, John von Neumann, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, market bubble, market microstructure, Myron Scholes, new economy, paper trading, passive investing, Paul Lévy, Paul Samuelson, plutocrats, power law, price mechanism, quantitative trading / quantitative finance, Ralph Nelson Elliott, RAND corporation, random walk, risk free rate, risk tolerance, Robert Shiller, short selling, statistical arbitrage, statistical model, Steve Ballmer, stochastic volatility, transfer pricing, value at risk, Vilfredo Pareto, volatility smile

It takes no great leap of the imagination to see how such spurious patterns could also appear in otherwise random financial data. This is not to say that price charts are meaningless, or that prices all vary by the whim of luck. But it does say that, when examining price charts, we should guard against jumping to conclusions that the invisible hand of Adam Smith is somehow guiding them. It is a bold investor who would try to forecast a specific price level based solely on a pattern in the charts. 9. Forecasting Prices May Be Perilous, but You Can Estimate the Odds of Future Volatility. All is not hopeless. Markets are turbulent, deceptive, prone to bubbles, infested by false trends.


Lectures on Urban Economics by Jan K. Brueckner

accelerated depreciation, affirmative action, Andrei Shleifer, behavioural economics, company town, congestion charging, Edward Glaeser, invisible hand, market clearing, mortgage tax deduction, negative equity, New Economic Geography, profit maximization, race to the bottom, rent control, rent-seeking, Ronald Coase, The Nature of the Firm, transaction costs, urban sprawl

Review of Economics and Statistics 85: 377–393. Rosenthal, Stuart S., and William C. Strange. 2004. Evidence on the Nature and Sources of Agglomeration Economies. In Handbook of Urban and Regional Economics. vol. 4. ed. J. V. Henderson and J.-F. Thisse. Elsevier. Scotchmer, Suzanne. 1994. Public Goods and the Invisible Hand. In Modern Public Finance, ed. J. Quigley and E. Smolensky. Harvard University Press. Shoup, Carl S. 1964. Standards for Distributing a Free Government Service: Crime Protection. Public Finance 19: 383–392. Shoup, Donald. 2005. The High Cost of Free Parking. Planners Press. Sinai, Todd, and Nichloas S.


Free Money for All: A Basic Income Guarantee Solution for the Twenty-First Century by Mark Walker

3D printing, 8-hour work day, additive manufacturing, Affordable Care Act / Obamacare, basic income, Baxter: Rethink Robotics, behavioural economics, Capital in the Twenty-First Century by Thomas Piketty, commoditize, confounding variable, driverless car, financial independence, full employment, guns versus butter model, happiness index / gross national happiness, industrial robot, intangible asset, invisible hand, Jeff Bezos, job automation, job satisfaction, John Markoff, Kevin Kelly, laissez-faire capitalism, late capitalism, longitudinal study, market clearing, means of production, military-industrial complex, new economy, obamacare, off grid, off-the-grid, plutocrats, precariat, printed gun, profit motive, Ray Kurzweil, rent control, RFID, Rodney Brooks, Rosa Parks, science of happiness, Silicon Valley, surplus humans, The Future of Employment, the market place, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, universal basic income, warehouse robotics, working poor

We expect them to be motivated by personal profit. These individual self-interested acts, argues Smith, lead to the greater good of society. As Smith claims: “By directing that industry in such a manner as its produce may be of greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”6 Smith’s consequentialist defense of private motivation suggests good consequentialist reasons for not permitting unlimited property rights. The easiest way to see this is in the case where an individual or group has a monopoly. Suppose a town has three transportation companies: a toll highway, a railway, and an airline that provide service to a remote mountain location.


The Pirate's Dilemma by Matt Mason

Albert Einstein, augmented reality, barriers to entry, blood diamond, citizen journalism, creative destruction, digital divide, don't be evil, Donald Trump, Douglas Engelbart, East Village, Firefox, Free Software Foundation, future of work, glass ceiling, global village, Hacker Ethic, haute couture, Howard Rheingold, Internet of things, invisible hand, Isaac Newton, jimmy wales, job satisfaction, John Markoff, John Perry Barlow, Joseph Schumpeter, Kickstarter, Lao Tzu, Marshall McLuhan, means of production, Naomi Klein, new economy, New Urbanism, patent troll, peer-to-peer, prisoner's dilemma, public intellectual, RAND corporation, RFID, Richard Florida, Richard Stallman, SETI@home, side hustle, Silicon Valley, South China Sea, Stephen Hawking, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, the long tail, Tim Cook: Apple, urban sprawl, Whole Earth Catalog

Who do you think is fighting back against government censorship in China? That guy from the corner again. When Beijing banned the film Memoirs of a Geisha in 2006 for being “socially unhealthy,” pirates stepped in, selling millions of copies and punching through the great wall of propaganda with the invisible hand of the free market. The $565 million market† motivates the pirates who produce 95 percent of all Chinese DVDs sold, but the side effect is free speech on a scale that renders movie censorship irrelevant. “Forbidden things are always attractive,” subversive Chinese blogger Muzimei‡ later said.


Pale Rider: The Spanish Flu of 1918 and How It Changed the World by Laura Spinney

Albert Einstein, Anthropocene, autism spectrum disorder, British Empire, colonial rule, dark matter, Donald Trump, Downton Abbey, Edward Jenner, experimental subject, Ford Model T, Francisco Pizarro, global pandemic, Hernando de Soto, Higgs boson, invisible hand, John Snow's cholera map, Louis Pasteur, Mahatma Gandhi, Nelson Mandela, nocebo, placebo effect, social distancing, trade route, urban renewal

‘The Germans have started epidemics in Europe, and there is no reason why they should be particularly gentle with America,’ he was quoted as saying.4 These theories shrivelled and died, like Dr Heys’ roses, as it became clear that soldiers on both sides of the front were dropping like flies. But other theories implicating an invisible hand took their place. How else could people explain the breathtaking cruelty of the disease? It became apparent very early on that, besides the elderly and the very young, it had a predilection for those in the prime of life–people in their twenties and thirties, especially men. Women seemed to be less susceptible, unless they had the misfortune to be pregnant, in which case, stripped of that invisible shield, they lost their babies and died in droves.


pages: 325 words: 97,162

The 5 AM Club: Own Your Morning. Elevate Your Life. by Robin Sharma

Abraham Maslow, Albert Einstein, dematerialisation, epigenetics, fake news, Grace Hopper, hedonic treadmill, impulse control, index card, invisible hand, Johann Wolfgang von Goethe, Kickstarter, Lao Tzu, large denomination, Mahatma Gandhi, Menlo Park, mirror neurons, Nelson Mandela, New Journalism, Rosa Parks, telemarketer, white picket fence

And, finally, he removed his helmet. The billionaire, the entrepreneur and the artist were astonished by what they saw. It was The Spellbinder. Sterile and calculating fluorescent lighting kept the prison on Robben Island hauntingly eerie, even during the daytime. And feeling frugal, brutal and unsparing. A set of invisible hands seemed to be guiding the members of The 5 AM Club on that fantastic South African morning because, by some precious symphony of synchronicity—the billionaire would call it “the magic”—the security guard who had raced up in the dusty pickup truck was a huge follower of The Spellbinder’s. An “I’m your #1 fan” kind of fan.


pages: 362 words: 97,288

Ghost Road: Beyond the Driverless Car by Anthony M. Townsend

A Pattern Language, active measures, AI winter, algorithmic trading, Alvin Toffler, Amazon Robotics, asset-backed security, augmented reality, autonomous vehicles, backpropagation, big-box store, bike sharing, Blitzscaling, Boston Dynamics, business process, Captain Sullenberger Hudson, car-free, carbon footprint, carbon tax, circular economy, company town, computer vision, conceptual framework, congestion charging, congestion pricing, connected car, creative destruction, crew resource management, crowdsourcing, DARPA: Urban Challenge, data is the new oil, Dean Kamen, deep learning, deepfake, deindustrialization, delayed gratification, deliberate practice, dematerialisation, deskilling, Didi Chuxing, drive until you qualify, driverless car, drop ship, Edward Glaeser, Elaine Herzberg, Elon Musk, en.wikipedia.org, extreme commuting, financial engineering, financial innovation, Flash crash, food desert, Ford Model T, fulfillment center, Future Shock, General Motors Futurama, gig economy, Google bus, Greyball, haute couture, helicopter parent, independent contractor, inventory management, invisible hand, Jane Jacobs, Jeff Bezos, Jevons paradox, jitney, job automation, John Markoff, John von Neumann, Joseph Schumpeter, Kickstarter, Kiva Systems, Lewis Mumford, loss aversion, Lyft, Masayoshi Son, megacity, microapartment, minimum viable product, mortgage debt, New Urbanism, Nick Bostrom, North Sea oil, Ocado, openstreetmap, pattern recognition, Peter Calthorpe, random walk, Ray Kurzweil, Ray Oldenburg, rent-seeking, ride hailing / ride sharing, Rodney Brooks, self-driving car, sharing economy, Shoshana Zuboff, Sidewalk Labs, Silicon Valley, Silicon Valley startup, Skype, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, SoftBank, software as a service, sovereign wealth fund, Stephen Hawking, Steve Jobs, surveillance capitalism, technological singularity, TED Talk, Tesla Model S, The Coming Technological Singularity, The Death and Life of Great American Cities, The future is already here, The Future of Employment, The Great Good Place, too big to fail, traffic fines, transit-oriented development, Travis Kalanick, Uber and Lyft, uber lyft, urban planning, urban sprawl, US Airways Flight 1549, Vernor Vinge, vertical integration, Vision Fund, warehouse automation, warehouse robotics

As Jevons realized, this would force competitors to do the same, by getting hold of their own coal-conserving technology, or be forced out of business. And here’s the painful irony of what’s come to be called the Jevons paradox, or the rebound effect—even though our hypothetical steelmaking sector has converted (quite swiftly, in fact) to the new coal-conserving technology without any government subsidy, it is using more coal than ever. The invisible hand of the market giveth, and it taketh away. Things only get worse from here, as the effects of cheap steel made with efficient coal-produced power ripple through the economy. Now that steel is being overproduced, its price falls relative to other materials. Cotton, wood, and other labor-intensive raw materials whose production didn’t benefit from the leap forward in coaltech are set aside as other industries develop new ways to exploit the abundance of cheap steel.


pages: 341 words: 98,954

Owning the Sun by Alexander Zaitchik

"World Economic Forum" Davos, American Legislative Exchange Council, anti-communist, back-to-the-land, Berlin Wall, business cycle, classic study, colonial rule, coronavirus, corporate personhood, COVID-19, crowdsourcing, desegregation, Donald Trump, energy transition, informal economy, invisible hand, It's morning again in America, knowledge economy, lone genius, Louis Pasteur, Mahatma Gandhi, Menlo Park, Mont Pelerin Society, Nelson Mandela, oil shock, Philip Mirowski, placebo effect, Potemkin village, profit motive, proprietary trading, Ralph Nader, rent-seeking, road to serfdom, Robert Bork, Ronald Reagan, shareholder value, Silicon Valley, Stewart Brand, supercomputer in your pocket, The Chicago School, Unsafe at Any Speed, Upton Sinclair, Whole Earth Catalog

NEW DEAL, ANTITRUST, AND CHICAGO The neoliberal project that brought the drug companies into a strategic partnership with the law and economics departments at the University of Chicago began in Republican Party–wide loathing and fear of Roosevelt in 1932. See Eric Rauchway, Winter War: Hoover, Roosevelt, and the First Clash Over the New Deal (2018). How this curdled into various extreme forms is the subject of Frank Mintz’s The Liberty Lobby and the American Right (1975), Kim Phillips-Fein’s Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan (2009), Rick Perlstein’s Before the Storm: Barry Goldwater and the Unmaking of the American Consensus (2001), and Nancy MacLean’s Democracy in Chains: The Deep History of the Radical Right’s Stealth Plan for America (2017). See also Smedley Butler, War Is a Racket (1935) and the front-page, above-the-fold story in the November 21, 1934, edition of The New York Times, “GEN.


pages: 347 words: 103,518

The Stolen Year by Anya Kamenetz

"Hurricane Katrina" Superdome, 2021 United States Capitol attack, Anthropocene, basic income, Black Lives Matter, contact tracing, coronavirus, COVID-19, crowdsourcing, Day of the Dead, desegregation, disinformation, Donald Trump, East Village, emotional labour, ending welfare as we know it, epigenetics, food desert, George Floyd, glass ceiling, global pandemic, helicopter parent, informal economy, inventory management, invisible hand, Kintsugi, labor-force participation, lockdown, Mark Zuckerberg, Maui Hawaii, medical residency, Minecraft, moral panic, opioid epidemic / opioid crisis, Ponzi scheme, QAnon, Ralph Waldo Emerson, RAND corporation, randomized controlled trial, rent stabilization, risk tolerance, school choice, Sheryl Sandberg, Silicon Valley, social distancing, Thorstein Veblen, TikTok, traveling salesman, trickle-down economics, universal basic income, upwardly mobile, wages for housework, War on Poverty, white flight, women in the workforce, working poor, Works Progress Administration

Parents lucky enough to have paid jobs had to choose every day between working, sleeping, and taking care of their children and often failed at all three. Mothers were forced out of the workforce by the millions, which will ultimately drive more children into poverty. Domestic workers, nannies, and the other invisible hands who care for children day in and day out were left without income, had little access to government aid, and were driven from the field. Children missed basic medical care like vaccinations. Depression, anxiety, suicidality, obesity, eating disorders, and diabetes climbed. Nearly two hundred thousand US children were bereaved and orphaned as the uncontrolled pandemic raged on.


pages: 376 words: 101,759

Shorting the Grid: The Hidden Fragility of Our Electric Grid by Meredith. Angwin

airline deregulation, California energy crisis, carbon credits, carbon footprint, congestion pricing, corporate governance, Credit Default Swap, crony capitalism, David Brooks, decarbonisation, demand response, distributed generation, electricity market, en.wikipedia.org, energy security, green new deal, Hans Rosling, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jones Act, Just-in-time delivery, load shedding, market clearing, Michael Shellenberger, Negawatt, off-the-grid, performance metric, plutocrats, renewable energy credits, rolling blackouts, Silicon Valley, smart grid, smart meter, the map is not the territory, Tragedy of the Commons, uranium enrichment, vertical integration, washing machines reduced drudgery, zero-sum game

In RTO areas, the grid is becoming more fragile and more expensive. Fragility is the most dangerous problem. In the near future, “rolling blackouts” may become common in many RTO areas. This book is about why this will happen and what we can do to prevent those blackouts. What about the “free market,” which could conceivably use its invisible hand to bring reliable electricity to the customers? There is no free market. There are false markets, ruled by insider decisions. In my opinion, a grid meltdown is coming. Reliable power will become part of the Good Old Days that parents tell their children about. Unlike the heroes of The Big Short, I am not in a position to place some sort of bet that will make me rich.


pages: 850 words: 254,117

Basic Economics by Thomas Sowell

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

{607} “Paradise Lost,” a special report on international banking, The Economist, May 17, 2008, p. 23. {608} “Foreseeing the Future,” The Economist, March 15, 2003, pp. 69–70. {609} Heather Timmons, “India’s Banks Are Seen as Antiquated and Unproductive,” New York Times, March 23, 2007, p. C6. {610} Deepak Lal, Reviving the Invisible Hand: The Case for Classical Liberalism in the Twenty-First Century (Princeton: Princeton University Press, 2006), p. 170. {611} Benjamin M. Anderson, Economics and Public Welfare: A Financial and Economic History of the United States, 1914–46 (Indianapolis: Liberty Press, 1979), p. 308. {612} Milton Friedman and Anna Jacobson Schwartz, A Monetary History of the United States, p. 352

{827} “Going Global,” The Economist, December 8, 2001, p. 67. {828} Tom Hindle, “The Third Age of Globalisation,” The World in 2004, p. 109. {829} Sarah P. Scott, “U.S. International Transactions: Fourth Quarter and Year 2012,” Survey of Current Business, April 2013, p. 36. {830} Deepak Lal, Reviving the Invisible Hand: The Case for Classical Liberalism in the Twenty-First Century (Princeton: Princeton University Press, 2006), p. 136. {831} Nikolai Shmelev and Vladimir Popov, The Turning Point: Revitalizing the Soviet Economy (New York: Doubleday, 1989), p. 49. {832} Peter Bauer, Equality, the Third World, and Economic Delusion (Cambridge, MA: Harvard University Press, 1981), p. 102


pages: 273 words: 34,920

Free Market Missionaries: The Corporate Manipulation of Community Values by Sharon Beder

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Alan Greenspan, anti-communist, battle of ideas, business climate, Cornelius Vanderbilt, corporate governance, electricity market, en.wikipedia.org, full employment, Herbert Marcuse, Ida Tarbell, income inequality, invisible hand, junk bonds, liquidationism / Banker’s doctrine / the Treasury view, minimum wage unemployment, Mont Pelerin Society, new economy, old-boy network, popular capitalism, Powell Memorandum, price mechanism, profit motive, Ralph Nader, rent control, risk/return, road to serfdom, Ronald Reagan, school vouchers, shareholder value, spread of share-ownership, structural adjustment programs, The Chicago School, the market place, The Wealth of Nations by Adam Smith, Thomas L Friedman, Torches of Freedom, trade liberalization, traveling salesman, trickle-down economics, two and twenty, Upton Sinclair, Washington Consensus, wealth creators, young professional

They do not seek other non-material goals nor do they act altruistically.24 This ideal of buyers and sellers freely competing in the Market to achieve their self-interest is considered to be the best of all possible worlds, ‘a prescription for a socially and ethically desirable’ world. Adam Smith was the first in a long line of economists who argued that the pursuit of economic self-interest by businessmen served the public good. He claimed that even though a businessman ‘intends only his own gain . . . he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.’25 Thus the selfishness of the businessman in trying to get rich is beneficial to society, including workers and consumers: It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own self-interest.


pages: 377 words: 110,427

The Boy Who Could Change the World: The Writings of Aaron Swartz by Aaron Swartz, Lawrence Lessig

Aaron Swartz, affirmative action, Alfred Russel Wallace, American Legislative Exchange Council, Benjamin Mako Hill, bitcoin, Bonfire of the Vanities, Brewster Kahle, Cass Sunstein, deliberate practice, do what you love, Donald Knuth, Donald Trump, failed state, fear of failure, Firefox, Free Software Foundation, full employment, functional programming, Hacker News, Howard Zinn, index card, invisible hand, Joan Didion, John Gruber, Lean Startup, low interest rates, More Guns, Less Crime, peer-to-peer, post scarcity, power law, Richard Feynman, Richard Stallman, Ronald Reagan, school vouchers, semantic web, single-payer health, SpamAssassin, SPARQL, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, the scientific method, Toyota Production System, unbiased observer, wage slave, Washington Consensus, web application, WikiLeaks, working poor, zero-sum game

* Note how many of them directly inherited their fortunes. I’ll leave it to someone more inclined to psychological speculation to comment on the relationship between a conservative philosophy and strong support for the system that let your father make his millions. * Kim Phillips-Fein’s excellent new history, Invisible Hands, is notable for how hard it works to put the Powell Memo in its proper context, noting how much was done before the memo was even written and casting a skeptical eye on claims of the memo’s influence. † For an example in another field, see my previous piece on Roger Bate, whose Africans Fighting Malaria spends its time trying to claim environmentalists kill African babies.


pages: 391 words: 105,382

Utopia Is Creepy: And Other Provocations by Nicholas Carr

Abraham Maslow, Air France Flight 447, Airbnb, Airbus A320, AltaVista, Amazon Mechanical Turk, augmented reality, autonomous vehicles, Bernie Sanders, book scanning, Brewster Kahle, Buckminster Fuller, Burning Man, Captain Sullenberger Hudson, centralized clearinghouse, Charles Lindbergh, cloud computing, cognitive bias, collaborative consumption, computer age, corporate governance, CRISPR, crowdsourcing, Danny Hillis, data science, deskilling, digital capitalism, digital map, disruptive innovation, Donald Trump, driverless car, Electric Kool-Aid Acid Test, Elon Musk, Evgeny Morozov, factory automation, failed state, feminist movement, Frederick Winslow Taylor, friendly fire, game design, global village, Google bus, Google Glasses, Google X / Alphabet X, Googley, hive mind, impulse control, indoor plumbing, interchangeable parts, Internet Archive, invention of movable type, invention of the steam engine, invisible hand, Isaac Newton, Jeff Bezos, jimmy wales, Joan Didion, job automation, John Perry Barlow, Kevin Kelly, Larry Ellison, Lewis Mumford, lifelogging, lolcat, low skilled workers, machine readable, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, Max Levchin, means of production, Menlo Park, mental accounting, natural language processing, Neal Stephenson, Network effects, new economy, Nicholas Carr, Nick Bostrom, Norman Mailer, off grid, oil shale / tar sands, Peter Thiel, plutocrats, profit motive, Ralph Waldo Emerson, Ray Kurzweil, recommendation engine, Republic of Letters, robot derives from the Czech word robota Czech, meaning slave, Ronald Reagan, scientific management, self-driving car, SETI@home, side project, Silicon Valley, Silicon Valley ideology, Singularitarianism, Snapchat, social graph, social web, speech recognition, Startup school, stem cell, Stephen Hawking, Steve Jobs, Steven Levy, technoutopianism, TED Talk, the long tail, the medium is the message, theory of mind, Turing test, Tyler Cowen, Whole Earth Catalog, Y Combinator, Yochai Benkler

And the people who design and deploy technologies of production are rarely motivated by a desire to create new jobs or make existing jobs more interesting or expand human potential. They’re motivated, as Adam Smith also pointed out, by a desire to make money. Jobs have always been a by-product of the market’s invisible hand, not its aim. The biggest beneficiaries of the endless-ladder myth are those who have gained enormous wealth through the profit-concentrating effects of commercial computers. The myth helps them feel good about themselves. They, after all, are the ones who are setting in motion the virtuous cycle that, in the fullness of time, will bring us all to the nirvana of “higher-and-higher-value work.”


pages: 403 words: 105,431

The death and life of the great American school system: how testing and choice are undermining education by Diane Ravitch

"World Economic Forum" Davos, confounding variable, David Brooks, desegregation, gentrification, hiring and firing, invisible hand, Jane Jacobs, longitudinal study, mega-rich, Menlo Park, Ralph Waldo Emerson, RAND corporation, Robert Gordon, Ronald Reagan, school choice, school vouchers, The Death and Life of Great American Cities

Policymakers have a theory of action, even if they can’t articulate it, and they implement plans based on their theory of action, their guess about how the world works. Historians are trained to recognize assumptions and theories and to spot their flaws. Market reforms have a certain appeal to some of those who are accustomed to “seeing like a state.” There is something comforting about the belief that the invisible hand of the market, as Adam Smith called it, will bring improvements through some unknown force. In education, this belief in market forces lets us ordinary mortals off the hook, especially those who have not figured out how to improve low-performing schools or to break through the lassitude of unmotivated teens.


pages: 411 words: 108,119

The Irrational Economist: Making Decisions in a Dangerous World by Erwann Michel-Kerjan, Paul Slovic

"World Economic Forum" Davos, Alan Greenspan, An Inconvenient Truth, Andrei Shleifer, availability heuristic, bank run, behavioural economics, Black Swan, business cycle, Cass Sunstein, classic study, clean water, cognitive dissonance, collateralized debt obligation, complexity theory, conceptual framework, corporate social responsibility, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-subsidies, Daniel Kahneman / Amos Tversky, endowment effect, experimental economics, financial innovation, Fractional reserve banking, George Akerlof, hindsight bias, incomplete markets, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, iterative process, Kenneth Arrow, Loma Prieta earthquake, London Interbank Offered Rate, market bubble, market clearing, money market fund, moral hazard, mortgage debt, Oklahoma City bombing, Pareto efficiency, Paul Samuelson, placebo effect, precautionary principle, price discrimination, price stability, RAND corporation, Richard Thaler, Robert Shiller, Robert Solow, Ronald Reagan, Savings and loan crisis, social discount rate, source of truth, statistical model, stochastic process, subprime mortgage crisis, The Wealth of Nations by Adam Smith, Thomas Bayes, Thomas Kuhn: the structure of scientific revolutions, too big to fail, transaction costs, ultimatum game, University of East Anglia, urban planning, Vilfredo Pareto

Sen, “Rational Fools: A Critique of the Behavioral Foundations of Economic Theory,” Philosophy and Public Affairs 6 (1977): 317-344. 9 This was apparent in his seminal book The Wealth of Nations, published in 1776. Unfortunately, many people forget that in his first and also very influential book, The Theory of Moral Sentiments (1759)—in which the image of the “invisible hand” is already employed—he also elaborated a morality centered on sympathy and benevolence to explain the source of mankind’s ability to form moral judgments—a critical element of decision making—in spite of man’s natural inclinations toward self-interest. Chapter 2 Akerlof and Shiller: Berserk Weather Forecasters, Beauty Contests, and Delicious Apples on Wall Street 1 This chapter is excerpted from George A.


pages: 518 words: 107,836

How Not to Network a Nation: The Uneasy History of the Soviet Internet (Information Policy) by Benjamin Peters

Albert Einstein, American ideology, Andrei Shleifer, Anthropocene, Benoit Mandelbrot, bitcoin, Brownian motion, Charles Babbage, Claude Shannon: information theory, cloud computing, cognitive dissonance, commons-based peer production, computer age, conceptual framework, continuation of politics by other means, crony capitalism, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Graeber, disinformation, Dissolution of the Soviet Union, Donald Davies, double helix, Drosophila, Francis Fukuyama: the end of history, From Mathematics to the Technologies of Life and Death, Gabriella Coleman, hive mind, index card, informal economy, information asymmetry, invisible hand, Jacquard loom, John von Neumann, Kevin Kelly, knowledge economy, knowledge worker, Lewis Mumford, linear programming, mandelbrot fractal, Marshall McLuhan, means of production, megaproject, Menlo Park, Mikhail Gorbachev, military-industrial complex, mutually assured destruction, Network effects, Norbert Wiener, packet switching, Pareto efficiency, pattern recognition, Paul Erdős, Peter Thiel, Philip Mirowski, power law, RAND corporation, rent-seeking, road to serfdom, Ronald Coase, scientific mainstream, scientific management, Steve Jobs, Stewart Brand, stochastic process, surveillance capitalism, systems thinking, technoutopianism, the Cathedral and the Bazaar, the strength of weak ties, The Structural Transformation of the Public Sphere, transaction costs, Turing machine, work culture , Yochai Benkler

It examines the Soviet command economy, which proved inflexible to the fluctuating demands of the emerging global network economy and eventually imploded on itself. Some readers may feel that the Internet and the Soviet Union seem to be fundamentally opposed information projects: one is a salvific vehicle for the invisible hand of modern-day commerce, and the other is remembered for its dead hand; one led to the knowledge explosion that is Wikipedia, and the other, to the nuclear catastrophe at Chernobyl; one produced Linux, and the other, the Lada; one is a haven for technoenthusiasts, libertarians, and free-speech absolutists, and the other, the whipping boy for the same.


pages: 371 words: 108,317

The Inevitable: Understanding the 12 Technological Forces That Will Shape Our Future by Kevin Kelly

A Declaration of the Independence of Cyberspace, Aaron Swartz, AI winter, Airbnb, Albert Einstein, Alvin Toffler, Amazon Web Services, augmented reality, bank run, barriers to entry, Baxter: Rethink Robotics, bitcoin, blockchain, book scanning, Brewster Kahle, Burning Man, cloud computing, commoditize, computer age, Computer Lib, connected car, crowdsourcing, dark matter, data science, deep learning, DeepMind, dematerialisation, Downton Abbey, driverless car, Edward Snowden, Elon Musk, Filter Bubble, Freestyle chess, Gabriella Coleman, game design, Geoffrey Hinton, Google Glasses, hive mind, Howard Rheingold, index card, indoor plumbing, industrial robot, Internet Archive, Internet of things, invention of movable type, invisible hand, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Perry Barlow, Kevin Kelly, Kickstarter, lifelogging, linked data, Lyft, M-Pesa, machine readable, machine translation, Marc Andreessen, Marshall McLuhan, Mary Meeker, means of production, megacity, Minecraft, Mitch Kapor, multi-sided market, natural language processing, Netflix Prize, Network effects, new economy, Nicholas Carr, off-the-grid, old-boy network, peer-to-peer, peer-to-peer lending, personalized medicine, placebo effect, planetary scale, postindustrial economy, Project Xanadu, recommendation engine, RFID, ride hailing / ride sharing, robo advisor, Rodney Brooks, self-driving car, sharing economy, Silicon Valley, slashdot, Snapchat, social graph, social web, software is eating the world, speech recognition, Stephen Hawking, Steven Levy, Ted Nelson, TED Talk, The future is already here, the long tail, the scientific method, transport as a service, two-sided market, Uber for X, uber lyft, value engineering, Watson beat the top human players on Jeopardy!, WeWork, Whole Earth Review, Yochai Benkler, yottabyte, zero-sum game

Platform Synergy For a long time there were two basic ways to organize human work: a firm and a marketplace. A firm, such as a company, had definite boundaries, was permission based, and enabled people to increase their efficiency via collaboration more than if they worked outside the firm. A marketplace had more permeable borders, required no permission to participate, and used the “invisible hand” to allot resources most efficiently. Recently a third way to organize work has emerged: the platform. A platform is a foundation created by a firm that lets other firms build products and services upon it. It is neither market nor firm, but something new. A platform, like a department store, offers stuff it did not create.


pages: 519 words: 104,396

Priceless: The Myth of Fair Value (And How to Take Advantage of It) by William Poundstone

availability heuristic, behavioural economics, book value, Cass Sunstein, collective bargaining, Daniel Kahneman / Amos Tversky, delayed gratification, Donald Trump, Dr. Strangelove, East Village, en.wikipedia.org, endowment effect, equal pay for equal work, experimental economics, experimental subject, feminist movement, game design, German hyperinflation, Henri Poincaré, high net worth, index card, invisible hand, John von Neumann, Kenneth Arrow, laissez-faire capitalism, Landlord’s Game, Linda problem, loss aversion, market bubble, McDonald's hot coffee lawsuit, mental accounting, meta-analysis, Nash equilibrium, new economy, no-fly zone, Paul Samuelson, payday loans, Philip Mirowski, Potemkin village, power law, price anchoring, price discrimination, psychological pricing, Ralph Waldo Emerson, RAND corporation, random walk, RFID, Richard Thaler, risk tolerance, Robert Shiller, rolodex, social intelligence, starchitect, Steve Jobs, The Chicago School, The Wealth of Nations by Adam Smith, three-martini lunch, ultimatum game, working poor

However, caring about absolutes does not confer the power to perceive them accurately. When estimating monetary values, people are easily swayed by the legerdemain of anchoring, by illusions trading on contrasts and the power of suggestion. To an extent that few could have anticipated, this work revealed an invisible hand guiding, and misguiding, the world’s financial decision making. Practically no one outside of psychophysics paid the slightest attention to it. Part Three “Incoherence is more than skin deep” Eight Input to Output Like most of the Jewish mobsters who ran Las Vegas, Benny Goffstein was a family man.


pages: 338 words: 106,936

The Physics of Wall Street: A Brief History of Predicting the Unpredictable by James Owen Weatherall

Alan Greenspan, Albert Einstein, algorithmic trading, Antoine Gombaud: Chevalier de Méré, Apollo 11, Asian financial crisis, bank run, Bear Stearns, beat the dealer, behavioural economics, Benoit Mandelbrot, Black Monday: stock market crash in 1987, Black Swan, Black-Scholes formula, Bonfire of the Vanities, book value, Bretton Woods, Brownian motion, business cycle, butterfly effect, buy and hold, capital asset pricing model, Carmen Reinhart, Claude Shannon: information theory, coastline paradox / Richardson effect, collateralized debt obligation, collective bargaining, currency risk, dark matter, Edward Lorenz: Chaos theory, Edward Thorp, Emanuel Derman, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, Financial Modelers Manifesto, fixed income, George Akerlof, Gerolamo Cardano, Henri Poincaré, invisible hand, Isaac Newton, iterative process, Jim Simons, John Nash: game theory, junk bonds, Kenneth Rogoff, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, Market Wizards by Jack D. Schwager, martingale, Michael Milken, military-industrial complex, Myron Scholes, Neil Armstrong, new economy, Nixon triggered the end of the Bretton Woods system, Paul Lévy, Paul Samuelson, power law, prediction markets, probability theory / Blaise Pascal / Pierre de Fermat, quantitative trading / quantitative finance, random walk, Renaissance Technologies, risk free rate, risk-adjusted returns, Robert Gordon, Robert Shiller, Ronald Coase, Sharpe ratio, short selling, Silicon Valley, South Sea Bubble, statistical arbitrage, statistical model, stochastic process, Stuart Kauffman, The Chicago School, The Myth of the Rational Market, tulip mania, Vilfredo Pareto, volatility smile

NAS At What Price: ‘The Wild vs. the Mild.’ ” Slides presented at the 2002 Conference on Research in Income and Wealth. Available at http://faculty-web.at.northwestern.edu/economics/gordon/BoskinvsNAS.ppt. — — — . 2006. “The Boskin Commission Report: A Retrospective One Decade Later.” International Productivity Monitor 12 (June): 7–22. Gorton, Gary. 2010. Slapped by the Invisible Hand: The Panic of 2007. New York: Oxford University Press. Gray, Robert M. 2011. Entropy and Information Theory. New York: Springer-Verlag. Greenlees, John S. 2006. “The BLS Response to the Boskin Commission Report.” International Productivity Monitor 12 (June): 23–41. Greer, John F., Jr. 1996.


pages: 372 words: 107,587

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

3D printing, agricultural Revolution, Alan Greenspan, Anthropocene, Apollo 11, back-to-the-land, banking crisis, banks create money, Bear Stearns, biodiversity loss, Bretton Woods, business cycle, carbon footprint, Carmen Reinhart, clean water, cloud computing, collateralized debt obligation, computerized trading, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, David Graeber, David Ricardo: comparative advantage, degrowth, dematerialisation, demographic dividend, Deng Xiaoping, Elliott wave, en.wikipedia.org, energy transition, falling living standards, financial deregulation, financial innovation, Fractional reserve banking, full employment, Gini coefficient, Glass-Steagall Act, global village, green transition, happiness index / gross national happiness, I think there is a world market for maybe five computers, income inequality, intentional community, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Jevons paradox, Kenneth Rogoff, late fees, liberal capitalism, low interest rates, mega-rich, military-industrial complex, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, naked short selling, Naomi Klein, Negawatt, new economy, Nixon shock, offshore financial centre, oil shale / tar sands, oil shock, peak oil, Ponzi scheme, price stability, private military company, quantitative easing, reserve currency, ride hailing / ride sharing, rolling blackouts, Ronald Reagan, short selling, special drawing rights, systems thinking, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, trade liberalization, tulip mania, WikiLeaks, working poor, world market for maybe five computers, zero-sum game

The end of growth is the ultimate credit event, as everyone gradually comes to realize there will be no surplus later with which to repay interest on debt that is accruing now. CHAPTER 3 EARTH’S LIMITS : WHY GROWTH WON’T RETURN The 2008 crude oil price, $147 per barrel, shattered the global economy. The “invisible hand” of economics became the invisible fist, pounding down world economic growth to match the limitations of crude oil production. — Kenneth Deffeyes (petroleum geologist) We have just seen why, since 2007, growth has languished for reasons internal to the world financial system — the system of money and debt.


pages: 289 words: 112,697

The new village green: living light, living local, living large by Stephen Morris

Alan Greenspan, An Inconvenient Truth, back-to-the-land, Buckminster Fuller, carbon tax, clean tech, clean water, collective bargaining, Columbine, Community Supported Agriculture, company town, computer age, cuban missile crisis, David Sedaris, deindustrialization, discovery of penicillin, distributed generation, Easter island, energy security, energy transition, Fellow of the Royal Society, financial independence, Firefox, Hacker Conference 1984, index card, Indoor air pollution, intentional community, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Elkington, Kevin Kelly, Louis Pasteur, low interest rates, Mahatma Gandhi, mass immigration, McMansion, Menlo Park, messenger bag, Negawatt, off grid, off-the-grid, peak oil, precautionary principle, rolodex, Silicon Valley, Steve Jobs, Stewart Brand, systems thinking, Whole Earth Catalog, Whole Earth Review

(Gore, in an important speech at New York University last month, proposed scrapping all payroll taxes and replacing them with a levy on carbon.) If that day came – and it’s the day at least envisioned by efforts like the Kyoto Treaty – then everything from solar panels to windmills to safe nuclear reactors (if they can be built) would spread much more easily: the invisible hand would be free to do more interesting work than it’s accomplishing at the moment. Perhaps it would actually begin to operate with the speed necessary to head off Lovelock’s nightmares. But that will only happen if local, national, and international officials can come together to make it happen, which in turn requires political action.


pages: 344 words: 103,532

The Big U by Neal Stephenson

anti-communist, Chuck Templeton: OpenTable:, invisible hand, Neal Stephenson, Ronald Reagan, Snow Crash, Socratic dialogue

The Maoist whipped off his designer belt and began to whirl the buckle around his head as though it were dangerous. The monetarist watched indecisively, then ran up and stuck out his arm so that the belt wrapped around it. As he had his eyes closed, he did not know where he was going, but as though guided by some invisible hand he rammed into the Algerian’s belly with his head and they fell onto a stack of picket signs and received minor injuries. The Algerian grabbed the monetarist’s Adam Smith tie and tried to strangle him, but the latter’s gold collar pin prevented the knot from tightening. He grabbed the Maoist’s all-natural-fiber earthtone slacks and yanked them down to midthigh, occasioning a strange cry from his opponent, who removed one hand from the Adam Smith tie to prevent the loss of further garments; the monetarist grasped the Algerian’s pinkie and yanked the other hand free.


pages: 355 words: 63

The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics by William R. Easterly

Andrei Shleifer, business climate, business cycle, Carmen Reinhart, central bank independence, clean water, colonial rule, correlation does not imply causation, creative destruction, endogenous growth, financial repression, foreign exchange controls, Gini coefficient, government statistician, Gunnar Myrdal, income inequality, income per capita, inflation targeting, interchangeable parts, inventory management, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, large denomination, low interest rates, manufacturing employment, Money creation, Network effects, New Urbanism, open economy, PalmPilot, Productivity paradox, purchasing power parity, rent-seeking, Robert Solow, Ronald Reagan, selection bias, Silicon Valley, Simon Kuznets, The Wealth of Nations by Adam Smith, Thomas Malthus, total factor productivity, trade liberalization, Tragedy of the Commons, urban sprawl, Watson beat the top human players on Jeopardy!, Yogi Berra, Yom Kippur War

See also Factions Interest rates, 11,55, 109, 113, 119, 128, 132,226,228,258 International Conference on Population and Development, 89 International Credit Risk Guide, 110 International Development Association, 132,133 International financial institutions, 35, 36, 39, 40,41 International Monetary Fund, 36, 102, 104, 109,110,135, 181,241,249,29029 1 International trade restrictions, 155 Internet, 179-181 Investment, 38,44,47,151-155,167-168, 177, 179, 180, 185, 196, 199, 203, 225, 232,246,258,289,291 foreign direct, 179,185-186 rate of return to, 152-154, 158,260 Invisible hand, 201 Iran, 201, 251 Iraq, 250-251 Iron Curtain, 25, 62 Islamic Empire, 175, 243 Israel, 39, 217-219 Italy, 163, 198, 251, 268, 280 Ivory Coast, 14,109,135, 136,201,206, 281 Jaffna, 274 Jamaica, 12, 71, 119, 193, 219, 221, 234, 243 Japan, 74,182-185,188,243,246,265, 270,276,279 Jews, 164, 268 339 Index Jim Crow era,276 Johnson, Lyndon, 262 Jubilee 2000,123, 127 Kaldor, Nicholas, 25 Kamarck, Andrew, 26 Kashmir, 287 Kawasaki Steel, 183-184 Kazakhstan, 233-234 Kennedy, JohnF., 33 Kennedy, Paul, 181 Kenya, 107,108,111,117,119,198,233234,271 Kerosene, 173,177 Khmer, 270 Khruschev, Nikita, 33,47 Killick, Tony, 25, 27 King, Robert, 228-229, 236 Klenow, Peter, 67 Korea, 74,104,148, 184-185, 206,231, 244,265,270,279 Kosovo, 267 Kraay, Aart, 14 Kremer, Michael, 94, 95 Krugman, Paul, 66 Kuznets curve hypothesis,281 Kuznets, Simon, 32, 94.See ulso Beneficent Population Growth and Growth Theories Kyrgyz Republic, 167,234 Labor, 29, 40, 48, 57, 79, 146, 151, 155, 175-176,264 productivity, 48, 51, 52 skilled, 156, 158, 160-162, 190, 197 supply, 40,48, 53 unskilled, 158-162, 192, 197 Lagos, 232 Laissez-faire, 155, 213 Landsburg, Steven, xii Lanjouw, Peter, 253 Latin America, 36, 59, 101, 168,200, 229, 237,265 League of Nations, 30 Lebanon, 164,250-251,268 Lee, Jong-wha, 231 Levine, Ross, 228-229,236 Lewis, Arthur, 25, 30, 32 Liberia, 12, 39, 65, 115, 125, 210, 245, 250 Libya, 251 Lincoln, Abraham, 207 Liquidity, 108 Literacy.


pages: 366 words: 107,145

Fuller Memorandum by Stross, Charles

Any sufficiently advanced technology is indistinguishable from magic, Beeching cuts, Bletchley Park, British Empire, carbon credits, cognitive dissonance, complexity theory, congestion charging, Crossrail, death from overwork, dumpster diving, escalation ladder, false flag, finite state, Firefox, Herman Kahn, HyperCard, invisible hand, land reform, linear programming, messenger bag, MITM: man-in-the-middle, operational security, peak oil, Plato's cave, post-work, prosperity theology / prosperity gospel / gospel of success, quantum entanglement, reality distortion field, security theater, sensible shoes, side project, Sloane Ranger, telemarketer, Turing machine

Proximate results: they got into orbit using hand calculators, but completely dropped the ball on anything that required complexity theory, automated theorem proving, or sacrificial goats. But that was then, and this is now, and we're not dealing with the Union of Soviet Socialist Republics, we're dickering with the Russian Federation. (When we're not trying to save ourselves from the end of the world, that is.) The Russians are no longer dragged backwards by the invisible hand of Lenin. Their populace have taken with gusto to god-bothering and hacking, their official government ideology is "hail to the chief," and Moscow is the number one place on the planet to go if you want to rent a botnet. There's a pragmatic and pugnacious attitude to their overseas operations these days.


pages: 335 words: 104,850

Conscious Capitalism, With a New Preface by the Authors: Liberating the Heroic Spirit of Business by John Mackey, Rajendra Sisodia, Bill George

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Abraham Maslow, Bear Stearns, benefit corporation, Berlin Wall, Buckminster Fuller, business process, carbon footprint, collective bargaining, corporate governance, corporate social responsibility, creative destruction, crony capitalism, cross-subsidies, do well by doing good, en.wikipedia.org, Everything should be made as simple as possible, Fall of the Berlin Wall, fear of failure, Flynn Effect, income per capita, invisible hand, Jeff Bezos, job satisfaction, John Elkington, lone genius, low interest rates, Mahatma Gandhi, microcredit, Nelson Mandela, Occupy movement, profit maximization, Ralph Waldo Emerson, shareholder value, six sigma, social intelligence, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, Steven Pinker, systems thinking, The Fortune at the Bottom of the Pyramid, The Wealth of Nations by Adam Smith, too big to fail, union organizing, wealth creators, women in the workforce, zero-sum game

Conscious Capitalism recognizes that business is the ultimate positive-sum game, in which it is possible to create a Win6 for all the stakeholders of the business. No one has to lose, not even competitors; if competitors see each other as potential teachers and allies in helping each other improve, they can all become better and less antagonistic or complacent. Adam Smith’s “invisible hand” works fairly well at the market level to align what companies do with what people need. At the company level, however, it is essential that the “conscious mind” of management create a system in which all major stakeholders are aligned with the purpose of the organization and with each other.


pages: 385 words: 101,761

Creative Intelligence: Harnessing the Power to Create, Connect, and Inspire by Bruce Nussbaum

"World Economic Forum" Davos, 3D printing, Airbnb, Albert Einstein, Berlin Wall, Black Swan, Chuck Templeton: OpenTable:, clean water, collapse of Lehman Brothers, creative destruction, Credit Default Swap, crony capitalism, crowdsourcing, Danny Hillis, declining real wages, demographic dividend, disruptive innovation, Elon Musk, en.wikipedia.org, Eugene Fama: efficient market hypothesis, fail fast, Fall of the Berlin Wall, follow your passion, game design, gamification, gentrification, housing crisis, Hyman Minsky, industrial robot, invisible hand, James Dyson, Jane Jacobs, Jeff Bezos, jimmy wales, John Gruber, John Markoff, Joseph Schumpeter, Kevin Roose, Kickstarter, Larry Ellison, lone genius, longitudinal study, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Martin Wolf, Max Levchin, Minsky moment, new economy, Paul Graham, Peter Thiel, QR code, race to the bottom, reality distortion field, reshoring, Richard Florida, Ronald Reagan, shareholder value, Sheryl Sandberg, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, SimCity, six sigma, Skype, SoftBank, Steve Ballmer, Steve Jobs, Steve Wozniak, supply-chain management, Tesla Model S, The Chicago School, The Design of Experiments, the High Line, The Myth of the Rational Market, thinkpad, TikTok, Tim Cook: Apple, too big to fail, tulip mania, Tyler Cowen, We are the 99%, Y Combinator, young professional, Zipcar

I may have witnessed the apogee of financial capitalism in Davos, but it got its start some four decades earlier in Chicago. In May of 1970, Eugene Fama, a professor at the Booth School of Business, published an article in the Journal of Finance called “Efficient Capital Markets: A Review of Theory and Empirical Work.” In it, Fama would take Adam Smith’s theory of the “invisible hand” to new levels. Along with that of Milton Friedman, Frank Knight, George Stigler, and other economists at Chicago, Fama’s work led to the economic model we now call the efficient market hypothesis or efficient market theory. In its purely financial form, EMT attempted to describe how stocks and markets functioned.


The Culture of Narcissism: American Life in an Age of Diminishing Expectations by Christopher Lasch

Abraham Maslow, classic study, cuban missile crisis, delayed gratification, desegregation, feminist movement, full employment, Future Shock, George Santayana, Herman Kahn, impulse control, Induced demand, invisible hand, Kitchen Debate, Marshall McLuhan, Maslow's hierarchy, mass immigration, means of production, Norman Mailer, planned obsolescence, prosperity theology / prosperity gospel / gospel of success, road to serfdom, scientific management, Scientific racism, Stewart Brand, technoutopianism, The Theory of the Leisure Class by Thorstein Veblen, theory of mind, Thorstein Veblen, union organizing, upwardly mobile, urban renewal, yellow journalism

In the words of Andrew Ure, the philosopher of manufactures, introduction of the factory system enabled the capi- The Art of Social Survival The transformation of the myth of success-of the definition of success and of the qualities believed to promote it-is a long-term development arising not from particular historical events but from general changes in the structure of society: the shifting emphasis from capitalist production to consumption; the growth of large organizations and bureaucracies; the increasingly dangerous and warlike conditions of so- cial life. More than twenty-five years have passed since David Riesman argued that the transition from the "invisible hand" to the "glad hand" marked a fundamental change in the organization of personality, from the inner-directed type dominant in the nineteenth century to the other-directed type of today Other scholars at that time, when interest in culture and personality studies was . stronger than it is now proposed similar descriptions of the , changing character structure of advanced capitalist society .


pages: 408 words: 108,985

Rewriting the Rules of the European Economy: An Agenda for Growth and Shared Prosperity by Joseph E. Stiglitz

"World Economic Forum" Davos, accelerated depreciation, Airbnb, Alan Greenspan, balance sheet recession, bank run, banking crisis, barriers to entry, Basel III, basic income, behavioural economics, benefit corporation, Berlin Wall, bilateral investment treaty, business cycle, business process, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, central bank independence, collapse of Lehman Brothers, collective bargaining, corporate governance, corporate raider, corporate social responsibility, creative destruction, credit crunch, deindustrialization, discovery of DNA, diversified portfolio, Donald Trump, eurozone crisis, Fall of the Berlin Wall, financial engineering, financial intermediation, Francis Fukuyama: the end of history, full employment, gender pay gap, George Akerlof, gig economy, Gini coefficient, Glass-Steagall Act, hiring and firing, housing crisis, Hyman Minsky, income inequality, independent contractor, inflation targeting, informal economy, information asymmetry, intangible asset, investor state dispute settlement, invisible hand, Isaac Newton, labor-force participation, liberal capitalism, low interest rates, low skilled workers, market fundamentalism, mini-job, moral hazard, non-tariff barriers, offshore financial centre, open economy, Paris climate accords, patent troll, pension reform, price mechanism, price stability, proprietary trading, purchasing power parity, quantitative easing, race to the bottom, regulatory arbitrage, rent-seeking, Robert Shiller, Ronald Reagan, selection bias, shareholder value, Silicon Valley, sovereign wealth fund, TaskRabbit, too big to fail, trade liberalization, transaction costs, transfer pricing, trickle-down economics, tulip mania, universal basic income, unorthodox policies, vertical integration, zero-sum game

And Britain’s highly financialized economy arguably turned London into the global capital of finance. The mantra of the age was self-regulation, the idea that these leaders of finance knew better how to manage risk than any government official. Adam Smith’s dictum—that the pursuit of self-interest would lead (by dint of the invisible hand) to the well-being of society—was often quoted, but without acknowledging the many qualifications that Smith put on it. Contrary to the views of his twenty-first-century acolytes, Smith saw an important role for government. Unfortunately, the public in Europe became aware of the importance of a stable financial system and the failures of self-regulation only when something went terribly wrong.


pages: 319 words: 108,797

Dark, Salt, Clear: Life in a Cornish Fishing Town by Lamorna Ash

Apollo 11, Garrett Hardin, gentrification, hive mind, invisible hand, Jim Simons, Joan Didion, Ralph Waldo Emerson, Tragedy of the Commons, Year of Magical Thinking

The works was eventually abandoned for a newer, more efficient factory built down by the harbour. The old works has stood empty for fifteen years, a haunting, salt-grey building casting a shadow over the Fradgan and Freddie’s cottage with it. The wind through its walls is the only movement in the place, invisible hands raking through industrial equipment, long untouched. Ropes of moss run up its sides, blurring its architecture. Most of its windows are cracked and, inside, piles of rubbish grow towards the roof. ‘When I was in there working you wouldn’t even see a matchstick on the floor,’ Freddie says. ‘No one would smoke in there or nothing.’


pages: 380 words: 109,724

Don't Be Evil: How Big Tech Betrayed Its Founding Principles--And All of US by Rana Foroohar

"Susan Fowler" uber, "World Economic Forum" Davos, accounting loophole / creative accounting, Airbnb, Alan Greenspan, algorithmic bias, algorithmic management, AltaVista, Andy Rubin, autonomous vehicles, banking crisis, barriers to entry, behavioural economics, Bernie Madoff, Bernie Sanders, Big Tech, bitcoin, Black Lives Matter, book scanning, Brewster Kahle, Burning Man, call centre, Cambridge Analytica, cashless society, clean tech, cloud computing, cognitive dissonance, Colonization of Mars, computer age, corporate governance, creative destruction, Credit Default Swap, cryptocurrency, data is the new oil, data science, deal flow, death of newspapers, decentralized internet, Deng Xiaoping, digital divide, digital rights, disinformation, disintermediation, don't be evil, Donald Trump, drone strike, Edward Snowden, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Etonian, Evgeny Morozov, fake news, Filter Bubble, financial engineering, future of work, Future Shock, game design, gig economy, global supply chain, Gordon Gekko, Great Leap Forward, greed is good, income inequality, independent contractor, informal economy, information asymmetry, intangible asset, Internet Archive, Internet of things, invisible hand, Jaron Lanier, Jeff Bezos, job automation, job satisfaction, junk bonds, Kenneth Rogoff, life extension, light touch regulation, low interest rates, Lyft, Mark Zuckerberg, Marshall McLuhan, Martin Wolf, Menlo Park, military-industrial complex, move fast and break things, Network effects, new economy, offshore financial centre, PageRank, patent troll, Paul Volcker talking about ATMs, paypal mafia, Peter Thiel, pets.com, price discrimination, profit maximization, race to the bottom, recommendation engine, ride hailing / ride sharing, Robert Bork, Sand Hill Road, search engine result page, self-driving car, shareholder value, sharing economy, Sheryl Sandberg, Shoshana Zuboff, side hustle, Sidewalk Labs, Silicon Valley, Silicon Valley startup, smart cities, Snapchat, SoftBank, South China Sea, sovereign wealth fund, Steve Bannon, Steve Jobs, Steven Levy, stock buybacks, subscription business, supply-chain management, surveillance capitalism, TaskRabbit, tech billionaire, tech worker, TED Talk, Telecommunications Act of 1996, The Chicago School, the long tail, the new new thing, Tim Cook: Apple, too big to fail, Travis Kalanick, trickle-down economics, Uber and Lyft, Uber for X, uber lyft, Upton Sinclair, warehouse robotics, WeWork, WikiLeaks, zero-sum game

(The paper that came out of that experience was titled “Using a Market Economy to Provision Compute Resources Across Planet-wide Clusters.”)41 Predictably, his theories of the new data economics tended to favor his employer. As Shoshana Zuboff has written, in the sort of surveillance capitalism practiced by Google and other Big Tech firms, “Contract and the rule of law are supplanted by the rewards and punishments of a new kind of invisible hand,”42 the algorithmic hand of Silicon Valley. Varian and his team were unique, and foreshadowed an era in which most big companies would hire data scientists and data economists in great numbers. The existing laws that governed commerce were, like most laws in the view of Big Tech, made to be broken.


pages: 453 words: 111,010

Licence to be Bad by Jonathan Aldred

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

Harvard economist Dani Rodrik acknowledges that many economists have been guilty in public of over-simplistic advocacy of free trade. Yet in private, Rodrik reports, most economists are well aware that the answer to ‘Free trade or protectionism?’ is ‘It depends.’ The reason for economists’ dogmatic public pronouncements, Rodrik argues, is their ‘zeal to display the profession’s crown jewels … market efficiency, the invisible hand … in untarnished form, and to shield them from attack by self-interested barbarians, namely the protectionists … The economists who let their enthusiasm for free markets run wild are in fact not being true to their own discipline.’21 Rodrik is right that economic theory does not justify free-market zealotry: it must therefore come from the political ideology of some economists.


pages: 419 words: 109,241

A World Without Work: Technology, Automation, and How We Should Respond by Daniel Susskind

"World Economic Forum" Davos, 3D printing, agricultural Revolution, AI winter, Airbnb, Albert Einstein, algorithmic trading, AlphaGo, artificial general intelligence, autonomous vehicles, basic income, Bertrand Russell: In Praise of Idleness, Big Tech, blue-collar work, Boston Dynamics, British Empire, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, computer age, computer vision, computerized trading, creative destruction, David Graeber, David Ricardo: comparative advantage, deep learning, DeepMind, Demis Hassabis, demographic transition, deskilling, disruptive innovation, Donald Trump, Douglas Hofstadter, driverless car, drone strike, Edward Glaeser, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, fake news, financial innovation, flying shuttle, Ford Model T, fulfillment center, future of work, gig economy, Gini coefficient, Google Glasses, Gödel, Escher, Bach, Hans Moravec, income inequality, income per capita, industrial robot, interchangeable parts, invisible hand, Isaac Newton, Jacques de Vaucanson, James Hargreaves, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Joi Ito, Joseph Schumpeter, Kenneth Arrow, Kevin Roose, Khan Academy, Kickstarter, Larry Ellison, low skilled workers, lump of labour, machine translation, Marc Andreessen, Mark Zuckerberg, means of production, Metcalfe’s law, natural language processing, Neil Armstrong, Network effects, Nick Bostrom, Occupy movement, offshore financial centre, Paul Samuelson, Peter Thiel, pink-collar, precariat, purchasing power parity, Ray Kurzweil, ride hailing / ride sharing, road to serfdom, Robert Gordon, Sam Altman, Second Machine Age, self-driving car, shareholder value, sharing economy, Silicon Valley, Snapchat, social intelligence, software is eating the world, sovereign wealth fund, spinning jenny, Stephen Hawking, Steve Jobs, strong AI, tacit knowledge, technological solutionism, TED Talk, telemarketer, The Future of Employment, The Rise and Fall of American Growth, the scientific method, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, Travis Kalanick, Turing test, Two Sigma, Tyler Cowen, Tyler Cowen: Great Stagnation, universal basic income, upwardly mobile, warehouse robotics, Watson beat the top human players on Jeopardy!, We are the 99%, wealth creators, working poor, working-age population, Y Combinator

What we need to do, he said, is to begin to “reexamine what we value, what we are collectively willing to pay for—whether it’s teachers, nurses, caregivers, moms or dads who stay at home, artists, all the things that are incredibly valuable to us right now but don’t rank high on the pay totem pole.”66 And if we adopt a CBI, we will be driven to do exactly that: to take activities that the invisible hand of the labor market had marked down as worthless, and, with the visible hand of the community, to hold them up as being valuable and important. We will have a chance to allocate value through community recognition rather than through market wages. Fulfilling the requirements of a CBI may turn out to provide a sense of self-satisfaction not too different from that of bringing home a paycheck: the warm glow of earning one’s keep, albeit earned in a different way.


pages: 363 words: 109,077

The Raging 2020s: Companies, Countries, People - and the Fight for Our Future by Alec Ross

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Affordable Care Act / Obamacare, air gap, air traffic controllers' union, Airbnb, Albert Einstein, An Inconvenient Truth, autonomous vehicles, barriers to entry, benefit corporation, Bernie Sanders, Big Tech, big-box store, British Empire, call centre, capital controls, clean water, collective bargaining, computer vision, coronavirus, corporate governance, corporate raider, COVID-19, deep learning, Deng Xiaoping, Didi Chuxing, disinformation, Dissolution of the Soviet Union, Donald Trump, Double Irish / Dutch Sandwich, drone strike, dumpster diving, employer provided health coverage, Francis Fukuyama: the end of history, future of work, general purpose technology, gig economy, Gini coefficient, global supply chain, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, high-speed rail, hiring and firing, income inequality, independent contractor, information security, intangible asset, invisible hand, Jeff Bezos, knowledge worker, late capitalism, low skilled workers, Lyft, Marc Andreessen, Marc Benioff, mass immigration, megacity, military-industrial complex, minimum wage unemployment, mittelstand, mortgage tax deduction, natural language processing, Oculus Rift, off-the-grid, offshore financial centre, open economy, OpenAI, Parag Khanna, Paris climate accords, profit motive, race to the bottom, RAND corporation, ride hailing / ride sharing, Robert Bork, rolodex, Ronald Reagan, Salesforce, self-driving car, shareholder value, side hustle, side project, Silicon Valley, smart cities, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, sparse data, special economic zone, Steven Levy, stock buybacks, strikebreaker, TaskRabbit, tech bro, tech worker, transcontinental railway, transfer pricing, Travis Kalanick, trickle-down economics, Uber and Lyft, uber lyft, union organizing, Upton Sinclair, vertical integration, working poor

That trend is consistent across all sectors of the agriculture industry. The family farms that sustained rural America for generations have been replaced by corporate agriculture. As food production has become more concentrated in the hands of a few large companies, rural communities have suffered heavily. One can argue that consolidation is simply the invisible hand of the market working its magic—the more efficient the farm, the better. But as farms optimized for efficiency, the animals, the environment, and even farmers ended up worse off. Large-scale operations pack as many animals into as small a space as possible and maximize the production of each animal.


pages: 400 words: 108,843

Kill Switch: The Rise of the Modern Senate and the Crippling of American Democracy by Adam Jentleson

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", active measures, activist lawyer, affirmative action, Affordable Care Act / Obamacare, anti-communist, collective bargaining, cotton gin, COVID-19, desegregation, Donald Trump, global pandemic, greed is good, income inequality, invisible hand, obamacare, plutocrats, Robert Bork, Ronald Reagan, Savings and loan crisis, Ted Kaczynski, Timothy McVeigh, trade route, W. E. B. Du Bois

Congressional Research Service. 13. https://www.senate.gov/legislative/nominations/SupremeCourtNominations1789present.htm. 14.Ibid. 15.Toobin, Jeffrey. “The Conservative Pipeline to the Supreme Court.” New Yorker. April 10, 2017. 16.Greenhouse, Linda. “Playing the Long Game for the Supreme Court.” New York Times. October 25, 2018. 17.Toobin, “The Conservative Pipeline to the Supreme Court.” 18.Phillips-Fein, Kim. Invisible Hands: The Businessmen’s Crusade against the New Deal. New York: W. W. Norton, 2010. 162. 19.McLaughlin, Danielle; and Avery, Michael. The Federalist Society: How Conservatives Took the Law Back from Liberals. Nashville, TN: Vanderbilt University Press, 2013. 16–17. 20.Ibid. 17. 21.Mayer, Jane. Dark Money.


pages: 359 words: 105,248

Power Button: A History of Pleasure, Panic, and the Politics of Pushing by Rachel Plotnick

augmented reality, cognitive load, crowdsourcing, Donald Trump, Douglas Engelbart, Douglas Engelbart, Dr. Strangelove, Frederick Winslow Taylor, future of work, Google Glasses, Internet Archive, invisible hand, means of production, Milgram experiment, Oculus Rift, scientific management, Shoshana Zuboff, software studies, Steve Jobs

Not only could one send a message to someone at a location removed from the sender, but telegraphic communication also seemed to challenge how message senders and receivers thought about their bodies, for “Telegraph lines ... appeared to carry the animating ‘spark’ of consciousness itself beyond the confines of the physical body.”14 This notion of extending one’s consciousness through wires took on a particularly compelling character at world’s fair events, when a telegraph wired from a remote location to machinery at the event site could activate steam engines, lights, and other displays on the fairgrounds, as though an invisible hand had reached across thousands of miles to push a button. Such long-distance button events became increasingly popular—and even standard—at the turn of the twentieth century. These spectacles featured prominent figures and politicians, especially US presidents and their family members, as the button pushers to emphasize the political and physical importance of touch across distance.


pages: 322 words: 106,663

Women Talk Money: Breaking the Taboo by Rebecca Walker

Affordable Care Act / Obamacare, anti-communist, back-to-the-land, BIPOC, Black Lives Matter, call centre, clean water, coronavirus, COVID-19, export processing zone, fake news, Ferguson, Missouri, financial independence, gentrification, George Floyd, global pandemic, high net worth, hockey-stick growth, hustle culture, impact investing, invisible hand, Jeff Bezos, job satisfaction, Kickstarter, Mark Zuckerberg, mass incarceration, Maui Hawaii, microaggression, neurotypical, obamacare, opioid epidemic / opioid crisis, Rana Plaza, Silicon Valley, Silicon Valley startup, TED Talk, unpaid internship, upwardly mobile, women in the workforce, working poor, Y Combinator

Because I did not yet have furniture, I’d settle down on the floor at night on an exercise mat, with a comforter wrapped around me, and try to sleep. But then, on the third or fourth night, I woke gasping for breath. This was a new feeling: not the usual tightening in my chest, but complete suffocation—as if someone had placed an invisible hand over my nose and mouth; as if my lungs were being squeezed from the inside. I went to the window, opened it, and sucked in the air. Finally, I burst through the back door and out to the yard—it was like breaking through the surface of water. I filled my lungs, desperate for oxygen. Whatever was causing this misery was inside the house, and it wasn’t dust.


pages: 454 words: 107,163

Break Through: Why We Can't Leave Saving the Planet to Environmentalists by Michael Shellenberger, Ted Nordhaus

"World Economic Forum" Davos, Abraham Maslow, affirmative action, An Inconvenient Truth, anti-communist, Berlin Wall, bread and circuses, carbon credits, carbon tax, clean water, conceptual framework, David Brooks, deindustrialization, Easter island, facts on the ground, falling living standards, Francis Fukuyama: the end of history, full employment, Great Leap Forward, Herbert Marcuse, illegal immigration, Indoor air pollution, insecure affluence, Intergovernmental Panel on Climate Change (IPCC), invisible hand, knowledge economy, land reform, loss aversion, market fundamentalism, McMansion, means of production, meta-analysis, Michael Shellenberger, microcredit, new economy, oil shock, postindustrial economy, Ralph Waldo Emerson, Richard Florida, science of happiness, seminal paper, Silicon Valley, Stewart Brand, Ted Nordhaus, the strength of weak ties, Thomas Kuhn: the structure of scientific revolutions, trade liberalization, War on Poverty, We are as Gods, winner-take-all economy, World Values Survey, zero-sum game

Environmentalists imagine that they are protecting nature from people, just as market fundamentalists imagine they are protecting the market from people (that is, from the government). When there are crises in nature, the market, or both, environmentalists and market fundamentalists tend to blame irrational human intrusion. We speak of the market in the singular, but markets, like nature, have no spirit, essence, or invisible hand. They are little more than (to borrow from the textbook definition) mechanisms for efficiently distributing scarce resources. Markets have no universal end goal, nor do they operate according to a universal set of values. Some markets are good, which is to say that they serve our values, and others are bad, which is to say that they don’t.


pages: 388 words: 111,099

Democracy for Sale: Dark Money and Dirty Politics by Peter Geoghegan

4chan, Adam Curtis, Affordable Care Act / Obamacare, American Legislative Exchange Council, anti-globalists, basic income, Berlin Wall, Big Tech, Black Lives Matter, Boris Johnson, Brexit referendum, British Empire, Cambridge Analytica, centre right, corporate raider, crony capitalism, data science, deepfake, deindustrialization, demographic winter, disinformation, Dominic Cummings, Donald Trump, East Village, Etonian, F. W. de Klerk, fake news, first-past-the-post, Francis Fukuyama: the end of history, Frank Gehry, Greta Thunberg, invisible hand, James Dyson, Jeremy Corbyn, John Bercow, Mark Zuckerberg, market fundamentalism, military-industrial complex, moral panic, Naomi Klein, Nelson Mandela, obamacare, offshore financial centre, open borders, Overton Window, Paris climate accords, plutocrats, post-truth, post-war consensus, pre–internet, private military company, Renaissance Technologies, Robert Mercer, Ronald Reagan, Silicon Valley, Snapchat, special economic zone, Steve Bannon, surveillance capitalism, tech billionaire, technoutopianism, Torches of Freedom, universal basic income, WikiLeaks, Yochai Benkler, éminence grise

“By influencing today’s generation of students, we can create tomorrow’s social and economic freedoms,” claimed the IEA’s successful funding bid. It’s a line that Antony Fisher or Major Smedley might have written. Even by US standards, Templeton is a particularly zealous donor. Successful applications have to include a spiritual dimension. “You just talk about the invisible hand of the market,” one grantee told me. Edinburgh and St Andrews universities have received money from Templeton in recent years. A couple of months after the launch of Plan A+, Singham, David Davis and former Northern Ireland secretary Owen Paterson travelled to the United States to present their vision of a US free trade deal with post-Brexit Britain.


pages: 870 words: 259,362

Austerity Britain: 1945-51 by David Kynaston

Alistair Cooke, anti-communist, Arthur Marwick, British Empire, Chelsea Manning, collective bargaining, continuous integration, deindustrialization, deskilling, Etonian, full employment, garden city movement, hiring and firing, industrial cluster, invisible hand, job satisfaction, labour mobility, Lewis Mumford, light touch regulation, mass immigration, moral panic, Neil Kinnock, occupational segregation, price mechanism, public intellectual, rent control, reserve currency, road to serfdom, Ronald Reagan, shared worldview, stakhanovite, strikebreaker, the market place, upwardly mobile, urban planning, urban renewal, very high income, wage slave, washing machines reduced drudgery, wealth creators, women in the workforce, young professional

Or as Bevin had put it a few months earlier at a meeting of the relevant Cabinet committee, ‘We’ve got to have the bloody Union Jack on top of it.’6. What, in the generally difficult circumstances, was the economic way ahead? ‘I find myself,’ John Maynard Keynes privately reflected in April 1946, ‘more and more relying for a solution of our problems on the invisible hand [ie of the market] which I tried to eject from economic thinking twenty years ago.’ He died a few days later, but Keynesianism – seeing that invisible hand as at best a regrettable, to-be-circumscribed necessity – was poised to enter into its inheritance. First, though, there was the playing out of the new government’s commitment, explicit in its election manifesto, to socialist planning.


pages: 864 words: 272,918

Palo Alto: A History of California, Capitalism, and the World by Malcolm Harris

2021 United States Capitol attack, Aaron Swartz, affirmative action, air traffic controllers' union, Airbnb, Alan Greenspan, Alvin Toffler, Amazon Mechanical Turk, Amazon Web Services, Apple II, Apple's 1984 Super Bowl advert, back-to-the-land, bank run, Bear Stearns, Big Tech, Bill Gates: Altair 8800, Black Lives Matter, Bob Noyce, book scanning, British Empire, business climate, California gold rush, Cambridge Analytica, capital controls, Charles Lindbergh, classic study, cloud computing, collective bargaining, colonial exploitation, colonial rule, Colonization of Mars, commoditize, company town, computer age, conceptual framework, coronavirus, corporate personhood, COVID-19, cuban missile crisis, deindustrialization, Deng Xiaoping, desegregation, deskilling, digital map, double helix, Douglas Engelbart, Edward Snowden, Elon Musk, Erlich Bachman, estate planning, European colonialism, Fairchild Semiconductor, financial engineering, financial innovation, fixed income, Frederick Winslow Taylor, fulfillment center, future of work, Garrett Hardin, gentrification, George Floyd, ghettoisation, global value chain, Golden Gate Park, Google bus, Google Glasses, greed is good, hiring and firing, housing crisis, hydraulic fracturing, if you build it, they will come, illegal immigration, immigration reform, invisible hand, It's morning again in America, iterative process, Jeff Bezos, Joan Didion, John Markoff, joint-stock company, Jony Ive, Kevin Kelly, Kickstarter, knowledge worker, land reform, Larry Ellison, Lean Startup, legacy carrier, life extension, longitudinal study, low-wage service sector, Lyft, manufacturing employment, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Marshall McLuhan, Max Levchin, means of production, Menlo Park, Metcalfe’s law, microdosing, Mikhail Gorbachev, military-industrial complex, Monroe Doctrine, Mont Pelerin Society, moral panic, mortgage tax deduction, Mother of all demos, move fast and break things, mutually assured destruction, new economy, Oculus Rift, off grid, oil shale / tar sands, PageRank, PalmPilot, passive income, Paul Graham, paypal mafia, Peter Thiel, pets.com, phenotype, pill mill, platform as a service, Ponzi scheme, popular electronics, power law, profit motive, race to the bottom, radical life extension, RAND corporation, Recombinant DNA, refrigerator car, Richard Florida, ride hailing / ride sharing, rising living standards, risk tolerance, Robert Bork, Robert Mercer, Robert Metcalfe, Ronald Reagan, Salesforce, San Francisco homelessness, Sand Hill Road, scientific management, semantic web, sexual politics, Sheryl Sandberg, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, social web, SoftBank, software as a service, sovereign wealth fund, special economic zone, Stanford marshmallow experiment, Stanford prison experiment, stem cell, Steve Bannon, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, stock buybacks, strikebreaker, Suez canal 1869, super pumped, TaskRabbit, tech worker, Teledyne, telemarketer, the long tail, the new new thing, thinkpad, Thorstein Veblen, Tim Cook: Apple, Tony Fadell, too big to fail, Toyota Production System, Tragedy of the Commons, transcontinental railway, traumatic brain injury, Travis Kalanick, TSMC, Uber and Lyft, Uber for X, uber lyft, ubercab, union organizing, Upton Sinclair, upwardly mobile, urban decay, urban renewal, value engineering, Vannevar Bush, vertical integration, Vision Fund, W. E. B. Du Bois, War on Poverty, warehouse robotics, Wargames Reagan, Washington Consensus, white picket fence, William Shockley: the traitorous eight, women in the workforce, Y Combinator, Y2K, Yogi Berra, éminence grise

Thanks to his friendly associations with various incipient industries, Hoover left a large ideological footprint in the American historical mud. In the squelching vacuum of his death, a menagerie of capitalist creepy-crawlies came forth to continue his work with the same messianic fervor. In her book Invisible Hands: The Businessmen’s Crusade Against the New Deal, the historian Kim Phillips-Fein reveals that Hoover affiliates played major roles in keeping the anticommunist torch lit during the long FDR-plus liberal era. Leonard Read (a Palo Alto real estate agent turned chamber of commerce leader) was flipped against the New Deal by W.

Michael Brenes, For Might and Right: Cold War Defense Spending and the Remaking of American Democracy (Amherst: University of Massachusetts Press, 2020), 152. 72. Stewart McBride, “HOOVER INSTITUTION; Leaning to the Right,” Christian Science Monitor, March 27, 1980. Chapter 4.2 War Capitalism 1. Ann R. Markusen and Joel Yudken, Dismantling the Cold War Economy (New York: Basic Books, 1992), 58. 2. Ibid. 3. Kim Phillips-Fein, Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan (New York: W. W. Norton, 2009), 56. 4. Ethan Swift, “Young Americans for Freedom and the Anti-War Movement: Pro-War Encounters with the New Left at the Height of the Vietnam War” 2019, MSSA Kaplan Prize for Use of MSSA Collections, 42, https://elischolar.library.yale.edu/mssa_collections/19. 5.


pages: 396 words: 112,832

Bread, Wine, Chocolate: The Slow Loss of Foods We Love by Simran Sethi

biodiversity loss, Chuck Templeton: OpenTable:, data science, food desert, Food sovereignty, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Ken Thompson, Louis Pasteur, microbiome, phenotype, placebo effect, Skype, TED Talk, The Wealth of Nations by Adam Smith, women in the workforce

I bent down and touched the tiny saplings, the vibrant baby coffee. “They look ahead because they want to pass this on to the next generation. But with modernization, now people look for high production and go first for the market.” That market is guided by what economist Adam Smith called “the invisible hand”84—the unseen force that manages the supply and demand of goods. The hand that impacts the present and future of coffee. Mass-consumer coffee (think big brands sold in giant tins in grocery stores) is sourced in bulk on commodities markets, unlike specialty coffee, which involves smaller volumes.


pages: 405 words: 117,219

In Our Own Image: Savior or Destroyer? The History and Future of Artificial Intelligence by George Zarkadakis

3D printing, Ada Lovelace, agricultural Revolution, Airbnb, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, animal electricity, anthropic principle, Asperger Syndrome, autonomous vehicles, barriers to entry, battle of ideas, Berlin Wall, bioinformatics, Bletchley Park, British Empire, business process, carbon-based life, cellular automata, Charles Babbage, Claude Shannon: information theory, combinatorial explosion, complexity theory, Computing Machinery and Intelligence, continuous integration, Conway's Game of Life, cosmological principle, dark matter, data science, deep learning, DeepMind, dematerialisation, double helix, Douglas Hofstadter, driverless car, Edward Snowden, epigenetics, Flash crash, Google Glasses, Gödel, Escher, Bach, Hans Moravec, income inequality, index card, industrial robot, intentional community, Internet of things, invention of agriculture, invention of the steam engine, invisible hand, Isaac Newton, Jacquard loom, Jacques de Vaucanson, James Watt: steam engine, job automation, John von Neumann, Joseph-Marie Jacquard, Kickstarter, liberal capitalism, lifelogging, machine translation, millennium bug, mirror neurons, Moravec's paradox, natural language processing, Nick Bostrom, Norbert Wiener, off grid, On the Economy of Machinery and Manufactures, packet switching, pattern recognition, Paul Erdős, Plato's cave, post-industrial society, power law, precautionary principle, prediction markets, Ray Kurzweil, Recombinant DNA, Rodney Brooks, Second Machine Age, self-driving car, seminal paper, Silicon Valley, social intelligence, speech recognition, stem cell, Stephen Hawking, Steven Pinker, Strategic Defense Initiative, strong AI, Stuart Kauffman, synthetic biology, systems thinking, technological singularity, The Coming Technological Singularity, The Future of Employment, the scientific method, theory of mind, Turing complete, Turing machine, Turing test, Tyler Cowen, Tyler Cowen: Great Stagnation, Vernor Vinge, Von Neumann architecture, Watson beat the top human players on Jeopardy!, Y2K

Such self-organised systems constantly hover at the edge of disorganisation, or chaos. Their states of precarious stability are often called ‘attractors’ because they tend to pull the system towards them. In the case of our body, life – the big attractor – is a constant battle against death. Social and economic systems are also cybernetic. The ‘invisible hand’ of the market economy is the market itself acting as a self-regulating, dynamic, chaotic and autonomous system, made up of millions of individual and interacting parts whose goal it is to optimise the allocation of scarce resources. From a cybernetic perspective, the ‘bust and boom’ cycles in the economy can be viewed as catastrophic oscillations between various attractors.


pages: 474 words: 120,801

The End of Power: From Boardrooms to Battlefields and Churches to States, Why Being in Charge Isn’t What It Used to Be by Moises Naim

"World Economic Forum" Davos, additive manufacturing, AOL-Time Warner, barriers to entry, Berlin Wall, bilateral investment treaty, business cycle, business process, business process outsourcing, call centre, citizen journalism, Clayton Christensen, clean water, collapse of Lehman Brothers, collective bargaining, colonial rule, conceptual framework, corporate governance, creative destruction, crony capitalism, deskilling, disinformation, disintermediation, disruptive innovation, don't be evil, Evgeny Morozov, failed state, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, illegal immigration, immigration reform, income inequality, income per capita, intangible asset, intermodal, invisible hand, job-hopping, Joseph Schumpeter, Julian Assange, Kickstarter, Lewis Mumford, liberation theology, Martin Wolf, mega-rich, megacity, military-industrial complex, Naomi Klein, Nate Silver, new economy, Northern Rock, Occupy movement, open borders, open economy, Peace of Westphalia, plutocrats, price mechanism, price stability, private military company, profit maximization, prosperity theology / prosperity gospel / gospel of success, radical decentralization, Ronald Coase, Ronald Reagan, seminal paper, Silicon Valley, Skype, Steve Jobs, The Nature of the Firm, Thomas Malthus, too big to fail, trade route, transaction costs, Twitter Arab Spring, vertical integration, Washington Consensus, WikiLeaks, World Values Survey, zero-sum game

These new industrial plants used vastly more capital, workers, and managers. As a result, growth in scale became the precondition for business success and big became synonymous with corporate power. In his seminal work (aptly titled The Visible Hand), Chandler argued that the visible hand of powerful managers replaced the invisible hand of market forces as the main driver of modern business.3 The power and the decisions of these professional managers who led giant companies, or giant divisions within companies, shaped economic activities and outcomes as much as if not more than the prices determined by market exchanges. The ascent and dominance of these large industrial companies led Chandler to identify three distinct models of capitalism, each associated with one of the three leading bastions of capitalism at the time of this second industrial revolution: (a) the “personal capitalism” found in Great Britain, (b) the competitive (or managerial) one common in the United States, and (c) Germany’s “cooperative capitalism.”4 In Chandler’s view, even successful large industrial firms in Britain were impaired by the familial nature of the dominant entrepreneurial dynasty that owned and managed them; they lacked the drive, agility, and ambition of their American counterparts.


pages: 492 words: 118,882

The Blockchain Alternative: Rethinking Macroeconomic Policy and Economic Theory by Kariappa Bheemaiah

"World Economic Forum" Davos, accounting loophole / creative accounting, Ada Lovelace, Adam Curtis, Airbnb, Alan Greenspan, algorithmic trading, asset allocation, autonomous vehicles, balance sheet recession, bank run, banks create money, Basel III, basic income, behavioural economics, Ben Bernanke: helicopter money, bitcoin, Bletchley Park, blockchain, Bretton Woods, Brexit referendum, business cycle, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, cashless society, cellular automata, central bank independence, Charles Babbage, Claude Shannon: information theory, cloud computing, cognitive dissonance, collateralized debt obligation, commoditize, complexity theory, constrained optimization, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, crowdsourcing, cryptocurrency, data science, David Graeber, deep learning, deskilling, Diane Coyle, discrete time, disruptive innovation, distributed ledger, diversification, double entry bookkeeping, Ethereum, ethereum blockchain, fiat currency, financial engineering, financial innovation, financial intermediation, Flash crash, floating exchange rates, Fractional reserve banking, full employment, George Akerlof, Glass-Steagall Act, Higgs boson, illegal immigration, income inequality, income per capita, inflation targeting, information asymmetry, interest rate derivative, inventory management, invisible hand, John Maynard Keynes: technological unemployment, John von Neumann, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, knowledge economy, large denomination, Large Hadron Collider, Lewis Mumford, liquidity trap, London Whale, low interest rates, low skilled workers, M-Pesa, machine readable, Marc Andreessen, market bubble, market fundamentalism, Mexican peso crisis / tequila crisis, Michael Milken, MITM: man-in-the-middle, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, natural language processing, Network effects, new economy, Nikolai Kondratiev, offshore financial centre, packet switching, Pareto efficiency, pattern recognition, peer-to-peer lending, Ponzi scheme, power law, precariat, pre–internet, price mechanism, price stability, private sector deleveraging, profit maximization, QR code, quantitative easing, quantitative trading / quantitative finance, Ray Kurzweil, Real Time Gross Settlement, rent control, rent-seeking, robo advisor, Satoshi Nakamoto, Satyajit Das, Savings and loan crisis, savings glut, seigniorage, seminal paper, Silicon Valley, Skype, smart contracts, software as a service, software is eating the world, speech recognition, statistical model, Stephen Hawking, Stuart Kauffman, supply-chain management, technology bubble, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Nature of the Firm, the payments system, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, trade liberalization, transaction costs, Turing machine, Turing test, universal basic income, Vitalik Buterin, Von Neumann architecture, Washington Consensus

As agents adapt and inform themselves via feedback, they begin to form alliances based on internal constraints and preferences and subsequently establish themselves into autonomous organizational structures that do not need central co-ordination. Dissecting the emergence of this organizational process is akin to witnessing the physical embodiment of Adam Smith’s invisible hand. Path Dependence In a word, path dependence can be summarized as history. Path dependence is the dependence of economic outcomes on the path of previous outcomes, rather than based on current conditions. For example, the statement “we saved and invested last year and therefore we have assets today” might be more fashionably expressed as, “the capital stock is path dependent”’ (Margolis and Liebowitz, 1998).


pages: 374 words: 114,600

The Quants by Scott Patterson

Alan Greenspan, Albert Einstein, AOL-Time Warner, asset allocation, automated trading system, Bear Stearns, beat the dealer, Benoit Mandelbrot, Bernie Madoff, Bernie Sanders, Black Monday: stock market crash in 1987, Black Swan, Black-Scholes formula, Blythe Masters, Bonfire of the Vanities, book value, Brownian motion, buttonwood tree, buy and hold, buy low sell high, capital asset pricing model, Carl Icahn, centralized clearinghouse, Claude Shannon: information theory, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computerized trading, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, Doomsday Clock, Dr. Strangelove, Edward Thorp, Emanuel Derman, Eugene Fama: efficient market hypothesis, financial engineering, Financial Modelers Manifesto, fixed income, Glass-Steagall Act, global macro, Gordon Gekko, greed is good, Haight Ashbury, I will remember that I didn’t make the world, and it doesn’t satisfy my equations, index fund, invention of the telegraph, invisible hand, Isaac Newton, Jim Simons, job automation, John Meriwether, John Nash: game theory, junk bonds, Kickstarter, law of one price, Long Term Capital Management, Louis Bachelier, low interest rates, mandelbrot fractal, margin call, Mark Spitznagel, merger arbitrage, Michael Milken, military-industrial complex, money market fund, Myron Scholes, NetJets, new economy, offshore financial centre, old-boy network, Paul Lévy, Paul Samuelson, Ponzi scheme, proprietary trading, quantitative hedge fund, quantitative trading / quantitative finance, race to the bottom, random walk, Renaissance Technologies, risk-adjusted returns, Robert Mercer, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Savings and loan crisis, Sergey Aleynikov, short selling, short squeeze, South Sea Bubble, speech recognition, statistical arbitrage, The Chicago School, The Great Moderation, The Predators' Ball, too big to fail, transaction costs, value at risk, volatility smile, yield curve, éminence grise

Waxman asked, seeming genuinely bewildered. “A flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.” The model Greenspan referred to was the belief that financial markets and economies are self-correcting—a notion as old as Adam Smith’s mysterious “invisible hand” in which prices guide resources toward the most efficient outcome through the laws of supply and demand. Economic agents (traders, lenders, homeowners, consumers, etc.) acting in their own self-interest create the best of all possible worlds, as it were—guiding them inexorably to the Truth, the efficient market machine the quants put their faith in.


pages: 397 words: 112,034

What's Next?: Unconventional Wisdom on the Future of the World Economy by David Hale, Lyric Hughes Hale

"World Economic Forum" Davos, affirmative action, Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, Berlin Wall, biodiversity loss, Black Swan, Bretton Woods, business cycle, capital controls, carbon credits, carbon tax, Cass Sunstein, central bank independence, classic study, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, currency risk, Daniel Kahneman / Amos Tversky, debt deflation, declining real wages, deindustrialization, diversification, energy security, Erik Brynjolfsson, Fall of the Berlin Wall, financial engineering, financial innovation, floating exchange rates, foreign exchange controls, full employment, Gini coefficient, Glass-Steagall Act, global macro, global reserve currency, global village, high net worth, high-speed rail, Home mortgage interest deduction, housing crisis, index fund, inflation targeting, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), inverted yield curve, invisible hand, Just-in-time delivery, Kenneth Rogoff, Long Term Capital Management, low interest rates, Mahatma Gandhi, Martin Wolf, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, military-industrial complex, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mortgage tax deduction, Network effects, new economy, Nicholas Carr, oil shale / tar sands, oil shock, open economy, passive investing, payday loans, peak oil, Ponzi scheme, post-oil, precautionary principle, price stability, private sector deleveraging, proprietary trading, purchasing power parity, quantitative easing, race to the bottom, regulatory arbitrage, rent-seeking, reserve currency, Richard Thaler, risk/return, Robert Shiller, Ronald Reagan, Savings and loan crisis, sovereign wealth fund, special drawing rights, subprime mortgage crisis, technology bubble, The Great Moderation, Thomas Kuhn: the structure of scientific revolutions, Tobin tax, too big to fail, total factor productivity, trade liberalization, Tragedy of the Commons, Washington Consensus, Westphalian system, WikiLeaks, women in the workforce, yield curve

These are: • The emergence of three billion new consumers, producers, and savers: The interaction between three historic events set off this dynamic megatrend—the breakup of the Soviet bloc, the opening up of China, and the end of proxy wars between communism and capitalism in the developing world. The result was that almost the entire world population found their lives guided for the first time by the invisible hand of market forces instead of being ruled by the iron fists of communism and feudalism or the clumsy robotic grip of central planning. • Globalization: It transformed almost every economic activity in every country, as the principles of market competition, private enterprise, and free trade won universal acceptance after the breakdown of central planning and state ownership.


pages: 416 words: 118,592

A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing by Burton G. Malkiel

accounting loophole / creative accounting, Alan Greenspan, Albert Einstein, asset allocation, asset-backed security, backtesting, Bear Stearns, beat the dealer, Bernie Madoff, book value, BRICs, butter production in bangladesh, buy and hold, capital asset pricing model, compound rate of return, correlation coefficient, Credit Default Swap, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, dogs of the Dow, Edward Thorp, Elliott wave, Eugene Fama: efficient market hypothesis, experimental subject, feminist movement, financial engineering, financial innovation, fixed income, framing effect, hindsight bias, Home mortgage interest deduction, index fund, invisible hand, Isaac Newton, Japanese asset price bubble, John Bogle, junk bonds, Long Term Capital Management, loss aversion, low interest rates, margin call, market bubble, Mary Meeker, money market fund, mortgage tax deduction, new economy, Own Your Own Home, PalmPilot, passive investing, Paul Samuelson, pets.com, Ponzi scheme, price stability, profit maximization, publish or perish, purchasing power parity, RAND corporation, random walk, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, short selling, Silicon Valley, South Sea Bubble, stock buybacks, stocks for the long run, sugar pill, survivorship bias, The Myth of the Rational Market, the rule of 72, The Wisdom of Crowds, transaction costs, Vanguard fund, zero-coupon bond

The wisdom of crowd behavior is perhaps best illustrated in the economy as a whole by the free-market price system. A variety of individual decisions by consumers and producers leads the economy to produce the goods and services that people want to buy. Responding to the forces of demand and supply, the price system guides the economy through Adam Smith’s invisible hand to produce the correct quantity of products. As communist economies have discovered to their dismay, an all-powerful central planner cannot possibly achieve any semblance of market efficiency in deciding what goods to produce and how resources should be allocated. Similarly, millions of individual and institutional investors by their collective buying and selling decisions produce a tableau of stock-market prices that appear to make one stock just as good a buy as another.


pages: 470 words: 118,051

The Fallen Blade: Act One of the Assassini by Jon Courtenay Grimwood

invisible hand, Murano, Venice glass, trade route

There would always be another step until he was no longer human. If he’d ever been human. Remembering Prince Leopold’s agony as his muscles ripped and tendons broke, and his body became wolf, Tycho said, “I won’t.” If he closed his eyes he could see it happen. Skin splitting, flesh tearing and bones being twisted into new shapes by invisible hands. Bad enough the Black Crucifers would torture him. Why would Tycho do it to himself? “That’s twice,” A’rial said. “I won’t offer a third time. But you call, I’ll come to you then.” “Never.” Tycho was firm. “Don’t count on it,” A’rial said. There were two tides a day. A low and a high. The first mattered neither here nor there to those in the pit, who were removed from the festering mud banks of Venice’s edges, and the stink of sour water, as backstreet canals revealed rubbish, puddles and the occasional corpse with every ebbing tide.


pages: 401 words: 115,959

Philanthrocapitalism by Matthew Bishop, Michael Green, Bill Clinton

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Abraham Maslow, Albert Einstein, An Inconvenient Truth, anti-communist, AOL-Time Warner, barriers to entry, battle of ideas, Bernie Madoff, Big Tech, Bob Geldof, Bonfire of the Vanities, business process, business process outsourcing, Charles Lindbergh, clean tech, clean water, corporate governance, corporate social responsibility, Dava Sobel, David Ricardo: comparative advantage, digital divide, do well by doing good, don't be evil, family office, financial innovation, full employment, global pandemic, global village, Global Witness, God and Mammon, Hernando de Soto, high net worth, Ida Tarbell, Intergovernmental Panel on Climate Change (IPCC), invisible hand, James Dyson, John Elkington, John Harrison: Longitude, joint-stock company, junk bonds, knowledge economy, knowledge worker, Larry Ellison, Live Aid, lone genius, Marc Andreessen, Marc Benioff, market bubble, mass affluent, Michael Milken, microcredit, Mikhail Gorbachev, Neil Armstrong, Nelson Mandela, new economy, offshore financial centre, old-boy network, PalmPilot, peer-to-peer lending, performance metric, Peter Singer: altruism, plutocrats, profit maximization, profit motive, Richard Feynman, risk tolerance, risk-adjusted returns, Ronald Coase, Ronald Reagan, Salesforce, scientific management, seminal paper, shareholder value, Silicon Valley, Slavoj Žižek, South Sea Bubble, sovereign wealth fund, SpaceShipOne, stem cell, Steve Jobs, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade liberalization, transaction costs, trickle-down economics, Tyler Cowen, wealth creators, winner-take-all economy, working poor, World Values Survey, X Prize

New York: Anchor Books, 2001. Miller, John J. A Gift of Freedom: How the John M. Olin Foundation Changed America. San Francisco, CA: Encounter Books, 2006. Miskimin, H. A. The Economy of Later Renaissance Europe 1460–1600. Cambridge, UK: Cambridge University Press, 1977. Mulgan, Geoff, and Charles Landry. The Other Invisible Hand: Remaking Charity for the 21st Century. London: Demos, 1995. Murphy, Cullen. Are We Rome? New York: Mariner Books, 2007. Nasaw, David. Andrew Carnegie. New York: The Penguin Press, 2006. Nicholls, Alex, ed. Social Entrepreneurship: New Models of Sustainable Social Change. New York: Oxford University Press, 2006.


pages: 389 words: 119,487

21 Lessons for the 21st Century by Yuval Noah Harari

"World Economic Forum" Davos, 1960s counterculture, accounting loophole / creative accounting, affirmative action, Affordable Care Act / Obamacare, agricultural Revolution, algorithmic trading, augmented reality, autonomous vehicles, Ayatollah Khomeini, basic income, behavioural economics, Bernie Sanders, bitcoin, blockchain, Boris Johnson, Brexit referendum, call centre, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, carbon-based life, Charlie Hebdo massacre, cognitive dissonance, computer age, computer vision, cryptocurrency, cuban missile crisis, decarbonisation, DeepMind, deglobalization, disinformation, Donald Trump, Dr. Strangelove, failed state, fake news, Filter Bubble, Francis Fukuyama: the end of history, Freestyle chess, gig economy, glass ceiling, Google Glasses, illegal immigration, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, job automation, knowledge economy, liberation theology, Louis Pasteur, low skilled workers, Mahatma Gandhi, Mark Zuckerberg, mass immigration, means of production, Menlo Park, meta-analysis, Mohammed Bouazizi, mutually assured destruction, Naomi Klein, obamacare, pattern recognition, post-truth, post-work, purchasing power parity, race to the bottom, RAND corporation, restrictive zoning, Ronald Reagan, Rosa Parks, Scramble for Africa, self-driving car, Silicon Valley, Silicon Valley startup, TED Talk, transatlantic slave trade, trolley problem, Tyler Cowen, Tyler Cowen: Great Stagnation, universal basic income, uranium enrichment, Watson beat the top human players on Jeopardy!, zero-sum game

Very soon somebody will have to decide how to use this power – based on some implicit or explicit story about the meaning of life. Philosophers are very patient people, but engineers are far less patient, and investors are the least patient of all. If you don’t know what to do with the power to engineer life, market forces will not wait a thousand years for you to come up with an answer. The invisible hand of the market will force upon you its own blind reply. Unless you are happy to entrust the future of life to the mercy of quarterly revenue reports, you need a clear idea what life is all about. In the final chapter I indulge in a few personal remarks, talking as one Sapiens to another, just before the curtain goes down on our species and a completely different drama begins.


pages: 457 words: 112,439

Zero History by William Gibson

augmented reality, business intelligence, dark matter, edge city, hive mind, invisible hand, messenger bag, new economy, pattern recognition, Pepto Bismol, placebo effect, Ponzi scheme, RFID, too big to fail

Barrel moving, slightly— Jerking, as something dark and rectangular shot beneath it. Fiona’s drone. Gracie looked up. Through the penguin, directly at Milgrim. Who must have done that awkward thing, though he could never remember it, the configuration she’d shown him in the cube. Something smashed Gracie down, and sideways, out of his sniper’s posture, an idiot giant’s invisible hand, the penguin jerking simultaneously, image blurring. Milgrim never saw the wires at all, those fifteen feet of them, but he supposed they were very thin. Gracie rolled on his back, convulsed as Milgrim fired the Taser again. “Galvanism,” the word recalled from high school biology. Gracie grabbed invisible strings.


pages: 374 words: 114,660

The Great Escape: Health, Wealth, and the Origins of Inequality by Angus Deaton

Admiral Zheng, agricultural Revolution, Branko Milanovic, BRICs, British Empire, call centre, carbon tax, clean water, colonial exploitation, Columbian Exchange, compensation consultant, creative destruction, declining real wages, Downton Abbey, Easter island, Edward Jenner, end world poverty, financial engineering, financial innovation, Ford Model T, germ theory of disease, Gini coefficient, Glass-Steagall Act, Great Leap Forward, illegal immigration, income inequality, invention of agriculture, invisible hand, John Snow's cholera map, knowledge economy, Louis Pasteur, low skilled workers, new economy, off-the-grid, Paul Volcker talking about ATMs, purchasing power parity, randomized controlled trial, rent-seeking, rising living standards, Robert Solow, Ronald Reagan, Simon Kuznets, Steve Jobs, Steven Pinker, structural adjustment programs, The Spirit Level, too big to fail, trade route, Tragedy of the Commons, very high income, War on Poverty, zoonotic diseases

The historian Keith Thomas writes about changes in the ways that people sought personal fulfillment in England, and how, by the eighteenth century, the pursuit of wealth came to be seen as a legitimate and ethical route to happiness.24 Adam Smith’s Wealth of Nations crystallized the long-evolving idea that the pursuit of wealth not only was a respectable activity for individuals but also brought benefits to society as a whole. Smith’s metaphor of the “invisible hand” has become part of our understanding of how capitalism works. Yet, as Thomas notes, Smith was skeptical about the personal benefits of wealth. Indeed, in his Theory of Moral Sentiments, Smith described the idea that wealth would make as happy as a deception, albeit a useful one “which rouses and keeps in perpetual motion the industry of mankind.”


pages: 420 words: 119,928

The Three-Body Problem (Remembrance of Earth's Past) by Cixin Liu

Apollo 13, back-to-the-land, cosmic microwave background, Deng Xiaoping, game design, Henri Poincaré, horn antenna, information security, invisible hand, Isaac Newton, Norbert Wiener, Panamax, quantum entanglement, RAND corporation, Search for Extraterrestrial Intelligence, Von Neumann architecture

As he listened to the solemn, sacred music, Wang Miao once again felt that the universe had shrunk until it was the size of an empty church. The domed ceiling was hidden by the flashing red light of the background radiation, and he was an ant crawling through the cracks in the floor. He felt a giant, invisible hand caressing his trembling heart, and he was once again a helpless babe. Something deep in his mind that had once held him up softened like wax and collapsed. He covered his eyes and began to cry. Wang’s cries were interrupted by laughter. “Hahaha, another one bites the dust!” He turned around.


pages: 421 words: 110,406

Platform Revolution: How Networked Markets Are Transforming the Economy--And How to Make Them Work for You by Sangeet Paul Choudary, Marshall W. van Alstyne, Geoffrey G. Parker

3D printing, Affordable Care Act / Obamacare, Airbnb, Alvin Roth, Amazon Mechanical Turk, Amazon Web Services, Andrei Shleifer, Apple's 1984 Super Bowl advert, autonomous vehicles, barriers to entry, Benchmark Capital, big data - Walmart - Pop Tarts, bitcoin, blockchain, business cycle, business logic, business process, buy low sell high, chief data officer, Chuck Templeton: OpenTable:, clean water, cloud computing, connected car, corporate governance, crowdsourcing, data acquisition, data is the new oil, data science, digital map, discounted cash flows, disintermediation, driverless car, Edward Glaeser, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, financial innovation, Free Software Foundation, gigafactory, growth hacking, Haber-Bosch Process, High speed trading, independent contractor, information asymmetry, Internet of things, inventory management, invisible hand, Jean Tirole, Jeff Bezos, jimmy wales, John Markoff, Kevin Roose, Khan Academy, Kickstarter, Lean Startup, Lyft, Marc Andreessen, market design, Max Levchin, Metcalfe’s law, multi-sided market, Network effects, new economy, PalmPilot, payday loans, peer-to-peer lending, Peter Thiel, pets.com, pre–internet, price mechanism, recommendation engine, RFID, Richard Stallman, ride hailing / ride sharing, Robert Metcalfe, Ronald Coase, Salesforce, Satoshi Nakamoto, search costs, self-driving car, shareholder value, sharing economy, side project, Silicon Valley, Skype, smart contracts, smart grid, Snapchat, social bookmarking, social contagion, software is eating the world, Steve Jobs, TaskRabbit, The Chicago School, the long tail, the payments system, Tim Cook: Apple, transaction costs, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, winner-take-all economy, zero-sum game, Zipcar

This was a utopian vision that assumed good intentions on the part of all Wikipedia users; or, a trifle less idealistically, it assumed that the varying, sometimes conflicting motivations and attitudes of users would eventually balance one another, producing content that represented the combined wisdom of the entire community, much as, in capitalist theory, the “invisible hand” of the market is supposed to maximize the benefits for all through the interaction of countless self-interested participants. However, reality teaches us that democracy—like free markets—can be messy, especially when intense passions and partisanship are involved. Hence the episode we recounted at the start of this chapter, in which the Wikipedia article about the death of Meredith Kercher was hijacked by “haters” of Amanda Knox who were determined to make sure the page should assert her guilt and were prepared to eradicate any signs of dissension.


pages: 216 words: 115,870

The Player of Games by Iain M. Banks

always be closing, fake news, ghettoisation, gravity well, invisible hand, Network effects, New Journalism

The hall emptied as a last few wounded people staggered through the doors. Flere-Imsaho hung in the air; it glowed orange, yellow, white; it started to rise, dripping blobs of molten material on to the board as it went, enveloped suddenly in flames and smoke. Suddenly, it accelerated across the hall as if pulled by some huge, invisible hand. It slammed into a far wall and exploded in a blinding flash and a blast that almost blew Gurgeh off his stoolseat. The guards around the Emperor left the board and climbed over the benches and galleries, killing the wounded. They ignored Gurgeh. The sound of firing echoed through the doors leading to the rest of the castle, where the dead lay in their bright clothes like some obscene carpet.


pages: 360 words: 110,929

Saturn's Children by Charles Stross

augmented reality, British Empire, business process, false flag, gravity well, indoor plumbing, invisible hand, Isaac Newton, Kuiper Belt, loose coupling, phenotype, Pluto: dwarf planet, plutocrats, theory of mind

I rub the back of my neck and feel no inhibition about fingering the top of the soul chip. Okay, so I’m on Eris, and somehow nobody’s noticed I’ve been—what? Asleep? Suffering from a split personality? That might make sense if . . . I try to touch the other soul chip nestling above my hairline, and it’s as if an invisible hand swats my wrist away. Fingers, sis, Juliette admonishes me. Where’s Granita? I ask my ghostly sister. It feels disconcertingly as if she’s standing right behind my left shoulder—even though I know if I look around I won’t see her. What happened? Granita asked me to check out the biome in person.


pages: 401 words: 112,784

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

Affordable Care Act / Obamacare, Alan Greenspan, British Empire, business cycle, Carmen Reinhart, classic study, credit crunch, Daniel Kahneman / Amos Tversky, debt deflation, deindustrialization, Etonian, eurozone crisis, falling living standards, full employment, Gini coefficient, Greenspan put, growth hacking, hedonic treadmill, hiring and firing, income inequality, interest rate swap, invisible hand, It's morning again in America, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Rogoff, labour market flexibility, low interest rates, low skilled workers, MITM: man-in-the-middle, mortgage debt, new economy, Northern Rock, obamacare, oil shock, plutocrats, price stability, quantitative easing, Right to Buy, Ronald Reagan, science of happiness, statistical model, The Wealth of Nations by Adam Smith, unconventional monetary instruments, War on Poverty, We are the 99%, women in the workforce, working poor

But in the present times … a creditable day-labourer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty. Linen is thus rendered essential for Smith, not because of nature, but by ‘the established rules of decency’.6 Here, then, we have the father of invisible-hand economics recognising that the conditions required to avoid serious hardship are not fixed for all time, but are rather something that depends on the community, the standards – and, by implication, the average affluence – of the day. As social animals, people left too far behind their fellows in material terms will be ashamed and excluded, and so will be unable to flourish.


pages: 349 words: 114,038

Culture & Empire: Digital Revolution by Pieter Hintjens

4chan, Aaron Swartz, airport security, AltaVista, anti-communist, anti-pattern, barriers to entry, Bill Duvall, bitcoin, blockchain, Boeing 747, bread and circuses, business climate, business intelligence, business process, Chelsea Manning, clean water, commoditize, congestion charging, Corn Laws, correlation does not imply causation, cryptocurrency, Debian, decentralized internet, disinformation, Edward Snowden, failed state, financial independence, Firefox, full text search, gamification, German hyperinflation, global village, GnuPG, Google Chrome, greed is good, Hernando de Soto, hiring and firing, independent contractor, informal economy, intangible asset, invisible hand, it's over 9,000, James Watt: steam engine, Jeff Rulifson, Julian Assange, Kickstarter, Laura Poitras, M-Pesa, mass immigration, mass incarceration, mega-rich, military-industrial complex, MITM: man-in-the-middle, mutually assured destruction, Naomi Klein, national security letter, Nelson Mandela, new economy, New Urbanism, no silver bullet, Occupy movement, off-the-grid, offshore financial centre, packet switching, patent troll, peak oil, power law, pre–internet, private military company, race to the bottom, real-name policy, rent-seeking, reserve currency, RFC: Request For Comment, Richard Feynman, Richard Stallman, Ross Ulbricht, Russell Brand, Satoshi Nakamoto, security theater, selection bias, Skype, slashdot, software patent, spectrum auction, Steve Crocker, Steve Jobs, Steven Pinker, Stuxnet, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, trade route, transaction costs, twin studies, union organizing, wealth creators, web application, WikiLeaks, Y2K, zero day, Zipf's Law

When a successful natural monopoly emerges thanks to luck, regulation, or market forces, it eliminates a lot of waste -- also called "friction costs," "transaction costs," or perhaps "excess profits." Natural monopolies can create huge value. Vendors (those selling stuff) have a corresponding incentive to try to capture that value, restoring profits that would be lost by too much of Adam Smith's invisible hand. The natural monopoly can benefit users by releasing value. A good example: the Internet. It can also punish them by capturing users and then taxing them without mercy. Your mobile phone bill is a case in point. The dream of every self-respecting patent troll is to get patents on a widely used standard, CSIRO-style.


pages: 354 words: 118,970

Transaction Man: The Rise of the Deal and the Decline of the American Dream by Nicholas Lemann

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Abraham Maslow, Affordable Care Act / Obamacare, Airbnb, airline deregulation, Alan Greenspan, Albert Einstein, augmented reality, basic income, Bear Stearns, behavioural economics, Bernie Sanders, Black-Scholes formula, Blitzscaling, buy and hold, capital controls, Carl Icahn, computerized trading, Cornelius Vanderbilt, corporate governance, cryptocurrency, Daniel Kahneman / Amos Tversky, data science, deal flow, dematerialisation, diversified portfolio, Donald Trump, Elon Musk, Eugene Fama: efficient market hypothesis, Fairchild Semiconductor, financial deregulation, financial innovation, fixed income, future of work, George Akerlof, gig economy, Glass-Steagall Act, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Ida Tarbell, index fund, information asymmetry, invisible hand, Irwin Jacobs, Joi Ito, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kickstarter, life extension, Long Term Capital Management, Mark Zuckerberg, Mary Meeker, mass immigration, means of production, Metcalfe’s law, Michael Milken, money market fund, Mont Pelerin Society, moral hazard, Myron Scholes, Neal Stephenson, new economy, Norman Mailer, obamacare, PalmPilot, Paul Samuelson, Performance of Mutual Funds in the Period, Peter Thiel, price mechanism, principal–agent problem, profit maximization, proprietary trading, prudent man rule, public intellectual, quantitative trading / quantitative finance, Ralph Nader, Richard Thaler, road to serfdom, Robert Bork, Robert Metcalfe, rolodex, Ronald Coase, Ronald Reagan, Sand Hill Road, Savings and loan crisis, shareholder value, short selling, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, Snow Crash, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, TaskRabbit, TED Talk, The Nature of the Firm, the payments system, the strength of weak ties, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, too big to fail, transaction costs, universal basic income, War on Poverty, white flight, working poor

During the years when the financial economists were developing their formulas, Alfred Chandler, the premier historian of American business, was working on a landmark book, published in 1977, The Visible Hand, which placed itself in the line of descent from Berle and declared that “the visible hand of management replaced what Adam Smith referred to as the invisible hand of market forces.” * * * What made the work of the financial economists so insurrectionary was that everybody but them seemed to believe that corporate managers were both economically puissant and socially wise. Much of the best-known financial activity during Michael Jensen’s early career had to do with excitement over the rising stock prices of such young technology corporations of the day as IBM and Xerox, and with the creation of business conglomerates—groups of unrelated companies that had been assembled into a single corporation—such as ITT, Ling-Temco-Vought, and Gulf and Western.


pages: 446 words: 117,660

Arguing With Zombies: Economics, Politics, and the Fight for a Better Future by Paul Krugman

affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, Andrei Shleifer, antiwork, Asian financial crisis, bank run, banking crisis, basic income, behavioural economics, benefit corporation, Berlin Wall, Bernie Madoff, bitcoin, blockchain, bond market vigilante , Bonfire of the Vanities, business cycle, capital asset pricing model, carbon footprint, carbon tax, Carmen Reinhart, central bank independence, centre right, Climategate, cognitive dissonance, cryptocurrency, David Ricardo: comparative advantage, different worldview, Donald Trump, Edward Glaeser, employer provided health coverage, Eugene Fama: efficient market hypothesis, fake news, Fall of the Berlin Wall, fiat currency, financial deregulation, financial innovation, financial repression, frictionless, frictionless market, fudge factor, full employment, green new deal, Growth in a Time of Debt, hiring and firing, illegal immigration, income inequality, index fund, indoor plumbing, invisible hand, it is difficult to get a man to understand something, when his salary depends on his not understanding it, job automation, John Snow's cholera map, Joseph Schumpeter, Kenneth Rogoff, knowledge worker, labor-force participation, large denomination, liquidity trap, London Whale, low interest rates, market bubble, market clearing, market fundamentalism, means of production, Modern Monetary Theory, New Urbanism, obamacare, oil shock, open borders, Paul Samuelson, plutocrats, Ponzi scheme, post-truth, price stability, public intellectual, quantitative easing, road to serfdom, Robert Gordon, Robert Shiller, Ronald Reagan, secular stagnation, Seymour Hersh, stock buybacks, The Chicago School, The Great Moderation, the map is not the territory, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, universal basic income, very high income, We are all Keynesians now, working-age population

INTELLECTUAL INSTABILITY The brand of economics I use in my daily work—the brand that I still consider by far the most reasonable approach out there—was largely established by Paul Samuelson back in 1948, when he published the first edition of his classic textbook. It’s an approach that combines the grand tradition of microeconomics, with its emphasis on how the invisible hand leads to generally desirable outcomes, with Keynesian macroeconomics, which emphasizes the way the economy can develop magneto trouble, requiring policy intervention. In the Samuelsonian synthesis, one must count on the government to ensure more or less full employment; only once that can be taken as given do the usual virtues of free markets come to the fore.


pages: 1,172 words: 114,305

New Laws of Robotics: Defending Human Expertise in the Age of AI by Frank Pasquale

affirmative action, Affordable Care Act / Obamacare, Airbnb, algorithmic bias, Amazon Mechanical Turk, Anthropocene, augmented reality, Automated Insights, autonomous vehicles, basic income, battle of ideas, Bernie Sanders, Big Tech, Bill Joy: nanobots, bitcoin, blockchain, Brexit referendum, call centre, Cambridge Analytica, carbon tax, citizen journalism, Clayton Christensen, collective bargaining, commoditize, computer vision, conceptual framework, contact tracing, coronavirus, corporate social responsibility, correlation does not imply causation, COVID-19, critical race theory, cryptocurrency, data is the new oil, data science, decarbonisation, deep learning, deepfake, deskilling, digital divide, digital twin, disinformation, disruptive innovation, don't be evil, Donald Trump, Douglas Engelbart, driverless car, effective altruism, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Evgeny Morozov, fake news, Filter Bubble, finite state, Flash crash, future of work, gamification, general purpose technology, Google Chrome, Google Glasses, Great Leap Forward, green new deal, guns versus butter model, Hans Moravec, high net worth, hiring and firing, holacracy, Ian Bogost, independent contractor, informal economy, information asymmetry, information retrieval, interchangeable parts, invisible hand, James Bridle, Jaron Lanier, job automation, John Markoff, Joi Ito, Khan Academy, knowledge economy, late capitalism, lockdown, machine readable, Marc Andreessen, Mark Zuckerberg, means of production, medical malpractice, megaproject, meta-analysis, military-industrial complex, Modern Monetary Theory, Money creation, move fast and break things, mutually assured destruction, natural language processing, new economy, Nicholas Carr, Nick Bostrom, Norbert Wiener, nuclear winter, obamacare, One Laptop per Child (OLPC), open immigration, OpenAI, opioid epidemic / opioid crisis, paperclip maximiser, paradox of thrift, pattern recognition, payday loans, personalized medicine, Peter Singer: altruism, Philip Mirowski, pink-collar, plutocrats, post-truth, pre–internet, profit motive, public intellectual, QR code, quantitative easing, race to the bottom, RAND corporation, Ray Kurzweil, recommendation engine, regulatory arbitrage, Robert Shiller, Rodney Brooks, Ronald Reagan, self-driving car, sentiment analysis, Shoshana Zuboff, Silicon Valley, Singularitarianism, smart cities, smart contracts, software is eating the world, South China Sea, Steve Bannon, Strategic Defense Initiative, surveillance capitalism, Susan Wojcicki, tacit knowledge, TaskRabbit, technological solutionism, technoutopianism, TED Talk, telepresence, telerobotics, The Future of Employment, The Turner Diaries, Therac-25, Thorstein Veblen, too big to fail, Turing test, universal basic income, unorthodox policies, wage slave, Watson beat the top human players on Jeopardy!, working poor, workplace surveillance , Works Progress Administration, zero day

The answer lies in peculiar aspects of twenty-first-century political economy, which are putting pressure on sectors of the economy that serve real human needs, while hypertrophying those that simply involve establishing one’s person’s or corporation’s dominance or wealth relative to others. Planning could reverse both trends, but drift reigns now, masquerading as an ideology of progress via an “invisible hand.” Literature on automation—whether sociological, economic, or legal—needs to be sensitive to the lure of that drift, how it became “second nature” in policy discourse. THE ULTIMATE DISRUPTION Ex Machina breaks out of the techno-thriller straitjacket by inviting us to reflect on the non-propositional aspects of language: strategies of manipulation, clues about vulnerability, and markers of dominance.


pages: 342 words: 114,118

After the Fall: Being American in the World We've Made by Ben Rhodes

Affordable Care Act / Obamacare, Alan Greenspan, Asian financial crisis, Berlin Wall, Bernie Sanders, Big Tech, British Empire, centre right, COVID-19, Deng Xiaoping, disinformation, Dissolution of the Soviet Union, Donald Trump, drone strike, Edward Snowden, fake news, Fall of the Berlin Wall, gentrification, geopolitical risk, George Floyd, Glass-Steagall Act, global pandemic, global supply chain, Great Leap Forward, illegal immigration, independent contractor, invisible hand, late capitalism, lockdown, Mark Zuckerberg, Mikhail Gorbachev, Nelson Mandela, new economy, obamacare, open economy, Ponzi scheme, profit motive, QAnon, quantitative easing, Ralph Waldo Emerson, Ronald Reagan, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, social distancing, South China Sea, the long tail, too big to fail, trade route, Washington Consensus, young professional, zero-sum game

My British friend in Singapore—the one who described the “elongated reason cycle”—recalled to me the moment when he believes the seams finally popped. It was a few weeks after the Beijing Olympics, when Alan Greenspan testified before Congress as the American financial system was melting down. Here was the man who presided over the massive economic growth in the two decades after the end of the Cold War, the maestro who was the invisible hand behind the Federal Reserve for much of that time, the steady, competent force who could be depended upon in financial capitals around the world even when American politics resembled a playground of dysfunction. Even the Chinese implicitly accepted the premise that they had to defer to Americans of Greenspan’s stature on the basic operation of the global financial system.


Human Frontiers: The Future of Big Ideas in an Age of Small Thinking by Michael Bhaskar

"Margaret Hamilton" Apollo, 3D printing, additive manufacturing, AI winter, Albert Einstein, algorithmic trading, AlphaGo, Anthropocene, artificial general intelligence, augmented reality, autonomous vehicles, backpropagation, barriers to entry, basic income, behavioural economics, Benoit Mandelbrot, Berlin Wall, Big bang: deregulation of the City of London, Big Tech, Bletchley Park, blockchain, Boeing 747, brain emulation, Brexit referendum, call centre, carbon tax, charter city, citizen journalism, Claude Shannon: information theory, Clayton Christensen, clean tech, clean water, cognitive load, Columbian Exchange, coronavirus, cosmic microwave background, COVID-19, creative destruction, CRISPR, crony capitalism, cyber-physical system, dark matter, David Graeber, deep learning, DeepMind, deindustrialization, dematerialisation, Demis Hassabis, demographic dividend, Deng Xiaoping, deplatforming, discovery of penicillin, disruptive innovation, Donald Trump, double entry bookkeeping, Easter island, Edward Jenner, Edward Lorenz: Chaos theory, Elon Musk, en.wikipedia.org, endogenous growth, energy security, energy transition, epigenetics, Eratosthenes, Ernest Rutherford, Eroom's law, fail fast, false flag, Fellow of the Royal Society, flying shuttle, Ford Model T, Francis Fukuyama: the end of history, general purpose technology, germ theory of disease, glass ceiling, global pandemic, Goodhart's law, Google Glasses, Google X / Alphabet X, GPT-3, Haber-Bosch Process, hedonic treadmill, Herman Kahn, Higgs boson, hive mind, hype cycle, Hyperloop, Ignaz Semmelweis: hand washing, Innovator's Dilemma, intangible asset, interchangeable parts, Internet of things, invention of agriculture, invention of the printing press, invention of the steam engine, invention of the telegraph, invisible hand, Isaac Newton, ITER tokamak, James Watt: steam engine, James Webb Space Telescope, Jeff Bezos, jimmy wales, job automation, Johannes Kepler, John von Neumann, Joseph Schumpeter, Kenneth Arrow, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, Large Hadron Collider, liberation theology, lockdown, lone genius, loss aversion, Louis Pasteur, Mark Zuckerberg, Martin Wolf, megacity, megastructure, Menlo Park, Minecraft, minimum viable product, mittelstand, Modern Monetary Theory, Mont Pelerin Society, Murray Gell-Mann, Mustafa Suleyman, natural language processing, Neal Stephenson, nuclear winter, nudge unit, oil shale / tar sands, open economy, OpenAI, opioid epidemic / opioid crisis, PageRank, patent troll, Peter Thiel, plutocrats, post scarcity, post-truth, precautionary principle, public intellectual, publish or perish, purchasing power parity, quantum entanglement, Ray Kurzweil, remote working, rent-seeking, Republic of Letters, Richard Feynman, Robert Gordon, Robert Solow, secular stagnation, shareholder value, Silicon Valley, Silicon Valley ideology, Simon Kuznets, skunkworks, Slavoj Žižek, sovereign wealth fund, spinning jenny, statistical model, stem cell, Steve Jobs, Stuart Kauffman, synthetic biology, techlash, TED Talk, The Rise and Fall of American Growth, the scientific method, The Wealth of Nations by Adam Smith, Thomas Bayes, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, TikTok, total factor productivity, transcontinental railway, Two Sigma, Tyler Cowen, Tyler Cowen: Great Stagnation, universal basic income, uranium enrichment, We wanted flying cars, instead we got 140 characters, When a measure becomes a target, X Prize, Y Combinator

On the other hand, there was evidence that efficiencies produced by increasing scale could, against the idea of open competition, maintain growth. Both strands go back to Adam Smith's foundational work: on the one hand his pin factory, which, as it grows and creates new specialisations, produces ever more pins. And on the other the invisible hand, working its magic, leading markets towards the nirvana of equilibrium. While on the ground there seemed to be evidence that returns were increasing, in that big companies tended to get bigger, the mathematics of markets indicated that they should tend towards an equilibrium where profit evaporated in the face of sheer competitive force.


pages: 370 words: 112,809

The Equality Machine: Harnessing Digital Technology for a Brighter, More Inclusive Future by Orly Lobel

2021 United States Capitol attack, 23andMe, Ada Lovelace, affirmative action, Airbnb, airport security, Albert Einstein, algorithmic bias, Amazon Mechanical Turk, augmented reality, barriers to entry, basic income, Big Tech, bioinformatics, Black Lives Matter, Boston Dynamics, Charles Babbage, choice architecture, computer vision, Computing Machinery and Intelligence, contact tracing, coronavirus, corporate social responsibility, correlation does not imply causation, COVID-19, crowdsourcing, data science, David Attenborough, David Heinemeier Hansson, deep learning, deepfake, digital divide, digital map, Elon Musk, emotional labour, equal pay for equal work, feminist movement, Filter Bubble, game design, gender pay gap, George Floyd, gig economy, glass ceiling, global pandemic, Google Chrome, Grace Hopper, income inequality, index fund, information asymmetry, Internet of things, invisible hand, it's over 9,000, iterative process, job automation, Lao Tzu, large language model, lockdown, machine readable, machine translation, Mark Zuckerberg, market bubble, microaggression, Moneyball by Michael Lewis explains big data, natural language processing, Netflix Prize, Network effects, Northpointe / Correctional Offender Management Profiling for Alternative Sanctions, occupational segregation, old-boy network, OpenAI, openstreetmap, paperclip maximiser, pattern recognition, performance metric, personalized medicine, price discrimination, publish or perish, QR code, randomized controlled trial, remote working, risk tolerance, robot derives from the Czech word robota Czech, meaning slave, Ronald Coase, Salesforce, self-driving car, sharing economy, Sheryl Sandberg, Silicon Valley, social distancing, social intelligence, speech recognition, statistical model, stem cell, Stephen Hawking, Steve Jobs, Steve Wozniak, surveillance capitalism, tech worker, TechCrunch disrupt, The Future of Employment, TikTok, Turing test, universal basic income, Wall-E, warehouse automation, women in the workforce, work culture , you are the product

This means that around the world, in slide shows, PowerPoint presentations, HR meetings, brochures, commercials, and educational materials, diverse women are finally being represented as coders and executives, rejecting the paradigm of white men commanding these roles. You Can’t Be What You Can’t See Cultural innovation comes with social progress, but there is no invisible hand that will push communities to change their collective perceptions. With a smartphone in hand and an expanded range of digital capacities, everyone is a photographer and an artist. Getty has been deliberate in nudging the choices of image seekers. In 2014, the Getty Foundation—with the help of Facebook COO and Lean In author Sheryl Sandberg—developed a collection of diverse, empowering images of women, as well as same-sex families and men performing non-traditional gender roles.


pages: 405 words: 130,840

The Happiness Hypothesis: Finding Modern Truth in Ancient Wisdom by Jonathan Haidt

Abraham Maslow, classic study, coherent worldview, crack epidemic, delayed gratification, do well by doing good, feminist movement, hedonic treadmill, Ignaz Semmelweis: hand washing, invisible hand, job satisfaction, Lao Tzu, longitudinal study, meta-analysis, Paradox of Choice, Peter Singer: altruism, PIHKAL and TIHKAL, placebo effect, prisoner's dilemma, Ralph Waldo Emerson, selective serotonin reuptake inhibitor (SSRI), social intelligence, stem cell, tacit knowledge, telemarketer, the scientific method, twin studies, ultimatum game, Walter Mischel, zero-sum game

C h o o s e your own gratifying activities, do them regularly (but not to the point of te-dium), and raise your overall level of h a p p i n e s s . M I S G U I D E D P U R S U I T S An axiom of economics is that people p u r s u e their interests more or less rationally, and that's what makes markets w o r k — A d a m Smith's "invisible hand" of self-interest. But in the 1980s, a few economists began studying psychology and messing up the prevailing models. Leading the way was the Cornell economist Robert Frank, whose 1987 book Passions Within Reason analyzed some of the things people do that just don't fit into e c o n o m i c models of pure self-interest—such as tipping in restaurants when far from h o m e , seeking costly revenge, and staying loyal to friends and s p o u s e s when better opportunities c o m e along.


pages: 476 words: 125,219

Digital Disconnect: How Capitalism Is Turning the Internet Against Democracy by Robert W. McChesney

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, access to a mobile phone, Alan Greenspan, Albert Einstein, American Legislative Exchange Council, American Society of Civil Engineers: Report Card, AOL-Time Warner, Automated Insights, barriers to entry, Berlin Wall, Big Tech, business cycle, Cass Sunstein, citizen journalism, classic study, cloud computing, collaborative consumption, collective bargaining, company town, creative destruction, crony capitalism, David Brooks, death of newspapers, declining real wages, digital capitalism, digital divide, disinformation, Double Irish / Dutch Sandwich, Dr. Strangelove, Erik Brynjolfsson, Evgeny Morozov, failed state, fake news, Filter Bubble, fulfillment center, full employment, future of journalism, George Gilder, Gini coefficient, Google Earth, income inequality, informal economy, intangible asset, invention of agriculture, invisible hand, Jaron Lanier, Jeff Bezos, jimmy wales, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Perry Barlow, Joseph Schumpeter, Julian Assange, Kickstarter, Mark Zuckerberg, Marshall McLuhan, means of production, Metcalfe’s law, military-industrial complex, mutually assured destruction, national security letter, Nelson Mandela, Network effects, new economy, New Journalism, Nicholas Carr, Occupy movement, ocean acidification, offshore financial centre, patent troll, Peter Thiel, plutocrats, post scarcity, Post-Keynesian economics, power law, price mechanism, profit maximization, profit motive, public intellectual, QWERTY keyboard, Ralph Nader, Richard Stallman, road to serfdom, Robert Metcalfe, Saturday Night Live, sentiment analysis, Silicon Valley, Silicon Valley billionaire, single-payer health, Skype, spectrum auction, Steve Jobs, Steve Wozniak, Steven Levy, Steven Pinker, Stewart Brand, technological determinism, Telecommunications Act of 1996, the long tail, the medium is the message, The Spirit Level, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transfer pricing, Upton Sinclair, WikiLeaks, winner-take-all economy, yellow journalism, Yochai Benkler

The PEC has two general lines of inquiry. First, it examines the institutions, subsidies, market structures, firms, support mechanisms, and labor practices that define a media or communication system. The way media markets actually operate has little in common with the free-market catechism, so bromides about competition and the invisible hand are of mostly ideological value. The PEC strives to provide a more accurate understanding of media markets and the true role of the government. It examines how these structural and institutional factors shape the content of media and how communication systems function in society. Political economists of communication take a keen interest in evaluating the caliber of journalism produced by the commercial news media system.


pages: 654 words: 120,154

The Firm by Duff McDonald

"World Economic Forum" Davos, Alan Greenspan, AOL-Time Warner, Asian financial crisis, asset light, Bear Stearns, benefit corporation, book value, borderless world, collective bargaining, commoditize, conceptual framework, corporate governance, creative destruction, credit crunch, family office, financial independence, Frederick Winslow Taylor, Glass-Steagall Act, income inequality, invisible hand, Jeff Bezos, Joseph Schumpeter, Ken Thompson, Kickstarter, laissez-faire capitalism, Mahatma Gandhi, Nelson Mandela, new economy, pets.com, Ponzi scheme, Ralph Nader, risk tolerance, risk-adjusted returns, Robert Solow, scientific management, shareholder value, Sheryl Sandberg, Silicon Valley, Steve Jobs, supply-chain management, The Nature of the Firm, vertical integration, young professional

This was the beginning of a decades-long separation of ownership from control in corporate America, and the consultant was an able ally to the professional manager in this tug-of-war—an ally who wasn’t gunning for the manager’s job. Thus began the era of managerial capitalism. For more than two centuries, economists had argued that companies operated in some sense at the mercy of Adam Smith’s “invisible hand” of the market. But the revolution in management thinking in the United States offered up an alternative idea: the “visible hand” of management, which made things happen, as opposed to merely responding to external market forces. The academy helped move this ideology along. Before 1900, there was only one undergraduate business school in the country, the University of Pennsylvania’s Wharton School of Finance and Economy, founded in 1881 with a $100,000 donation from financier Joseph Wharton.


pages: 288 words: 16,556

Finance and the Good Society by Robert J. Shiller

Alan Greenspan, Alvin Roth, bank run, banking crisis, barriers to entry, Bear Stearns, behavioural economics, benefit corporation, Bernie Madoff, buy and hold, capital asset pricing model, capital controls, Carmen Reinhart, Cass Sunstein, cognitive dissonance, collateralized debt obligation, collective bargaining, computer age, corporate governance, Daniel Kahneman / Amos Tversky, democratizing finance, Deng Xiaoping, diversification, diversified portfolio, Donald Trump, Edward Glaeser, eurozone crisis, experimental economics, financial engineering, financial innovation, financial thriller, fixed income, full employment, fundamental attribution error, George Akerlof, Great Leap Forward, Ida Tarbell, income inequality, information asymmetry, invisible hand, John Bogle, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, land reform, loss aversion, Louis Bachelier, Mahatma Gandhi, Mark Zuckerberg, market bubble, market design, means of production, microcredit, moral hazard, mortgage debt, Myron Scholes, Nelson Mandela, Occupy movement, passive investing, Ponzi scheme, prediction markets, profit maximization, quantitative easing, random walk, regulatory arbitrage, Richard Thaler, Right to Buy, road to serfdom, Robert Shiller, Ronald Reagan, selection bias, self-driving car, shareholder value, Sharpe ratio, short selling, Simon Kuznets, Skype, social contagion, Steven Pinker, tail risk, telemarketer, Thales and the olive presses, Thales of Miletus, The Market for Lemons, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, Vanguard fund, young professional, zero-sum game, Zipcar

Goetzmann, William, Roger Ibbotson, Matthew Spiegel, and Ivo Welch. 2002. “Sharpening Sharpe Ratios.” National Bureau of Economic Research Working Paper 9116. Gollier, Christian. 2008. “Intergenerational Risk-Sharing and Risk-Taking of a Pension Fund.” Journal of Public Economics 92:1463–85. Gorton, Gary. 2010. Slapped by the Invisible Hand: The Panic of 2007. Oxford: Oxford University Press. ———. 2011. “Review [of books by Michael Lewis and Gregory Zuckerman].” Journal of Economic Literature 49:450–53. Gorton, Gary, and Guillermo Ordoñez. 2012. “Collateral Crises.” Unpublished paper, Department of Finance, Yale University. Gorton, Gary, and Andrew Winton. 1995.


pages: 494 words: 116,739

Geek Heresy: Rescuing Social Change From the Cult of Technology by Kentaro Toyama

Abraham Maslow, Albert Einstein, Apollo 11, behavioural economics, Berlin Wall, Bernie Madoff, blood diamond, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, cognitive dissonance, commoditize, computer vision, conceptual framework, delayed gratification, digital divide, do well by doing good, Edward Glaeser, Edward Jenner, en.wikipedia.org, end world poverty, epigenetics, Erik Brynjolfsson, Evgeny Morozov, Francis Fukuyama: the end of history, fundamental attribution error, gamification, germ theory of disease, global village, Hans Rosling, happiness index / gross national happiness, income inequality, invention of the printing press, invisible hand, Isaac Newton, Khan Academy, Kibera, knowledge worker, Larry Ellison, Lewis Mumford, liberation theology, libertarian paternalism, longitudinal study, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, means of production, microcredit, mobile money, Neil Armstrong, Nelson Mandela, Nicholas Carr, North Sea oil, One Laptop per Child (OLPC), Panopticon Jeremy Bentham, pattern recognition, Peter Singer: altruism, Peter Thiel, post-industrial society, Powell Memorandum, randomized controlled trial, rent-seeking, RFID, Richard Florida, Richard Thaler, school vouchers, self-driving car, Sheryl Sandberg, Silicon Valley, Simon Kuznets, Stanford marshmallow experiment, Steve Jobs, Steven Pinker, technological determinism, technological solutionism, technoutopianism, TED Talk, The Fortune at the Bottom of the Pyramid, the long tail, Twitter Arab Spring, Upton Sinclair, Walter Mischel, War on Poverty, winner-take-all economy, World Values Survey, Y2K

How could something so good have gone so wrong? Essentially, we took the progressive ideas of the Enlightenment and forged them into a rigid technocratic orthodoxy. We are unable to entertain alternatives to tech-driven, capitalist, liberal democracy, so we pronounce it the ultimate salvation. But if Adam Smith’s invisible hand spurs economic growth, it also pickpockets from the commons. Moral relativism permits plural virtues but also plural vices. Meritocracy rewards talent and diligence but neglects the collective responsibility to nurture those traits in everyone. We rationalize our faith on the basis that it leads to the common good, all the while winking at the foibles it indulges.


pages: 423 words: 126,096

Our Own Devices: How Technology Remakes Humanity by Edward Tenner

A. Roger Ekirch, Apple Newton, Bonfire of the Vanities, card file, Douglas Engelbart, Douglas Engelbart, Frederick Winslow Taylor, future of work, indoor plumbing, informal economy, invention of the telephone, invisible hand, Johannes Kepler, John Markoff, Joseph-Marie Jacquard, Lewis Mumford, Multics, multilevel marketing, Network effects, optical character recognition, PalmPilot, QWERTY keyboard, safety bicycle, scientific management, Shoshana Zuboff, Stewart Brand, tacit knowledge, women in the workforce

Later the economist Paul David called such pressures for standardization “network externalities” and cited the QWERTY keyboard in an influential paper arguing that historical contingency can, paradoxically lock inferior technology into place.29 During the early twentieth century those who challenged the QWERTY design came from outside the office machine business. Apostles of industrial rationality they would have found it inconceivable that the dead hand of the past could constrain the invisible hand of the marketplace. Frank and Lillian Gilbreth, who developed new methods for analyzing human skills, took an interest in the typewriter, producing equipment and techniques for people with disabilities. They also took notes on the sequence of motions in typing and made slow-motion study films of championship typists at work.


pages: 421 words: 120,332

The World in 2050: Four Forces Shaping Civilization's Northern Future by Laurence C. Smith

Boeing 747, Bretton Woods, BRICs, business cycle, clean water, climate change refugee, Climategate, colonial rule, data science, deglobalization, demographic transition, Deng Xiaoping, Easter island, electricity market, energy security, flex fuel, G4S, global supply chain, Google Earth, Great Leap Forward, guest worker program, Hans Island, hydrogen economy, ice-free Arctic, informal economy, Intergovernmental Panel on Climate Change (IPCC), invention of agriculture, invisible hand, land tenure, Martin Wolf, Medieval Warm Period, megacity, megaproject, Mikhail Gorbachev, New Urbanism, oil shale / tar sands, oil shock, peak oil, Pearl River Delta, purchasing power parity, Ronald Reagan, Ronald Reagan: Tear down this wall, side project, Silicon Valley, smart grid, sovereign wealth fund, special economic zone, standardized shipping container, The Wealth of Nations by Adam Smith, Thomas Malthus, trade liberalization, trade route, Tragedy of the Commons, UNCLOS, UNCLOS, urban planning, Washington Consensus, Y2K

Bush stated that global trade expansion had been one of the “highest priorities of his administration.”32 Notice that the origins of today’s great global integration are at odds with one of its most widely promulgated myths: that globalization has emerged organically, born from fast Internet technology and the “invisible hand” of free markets. In truth, this global force owes its existence to a long history of entirely purposeful policy decisions, championed especially by the United States and Britain, dating to the waning days of World War II. Many who write about globalization see it as exploding suddenly in the 1970s or 1980s, thus missing the institutional groundwork laid first under Bretton Woods, pressed upon the developing world by its daughter institutions the IMF, WTO, and World Bank, and subsequently advanced by U.S. presidential administrations of both political parties ever since.


pages: 637 words: 128,673

Democracy Incorporated by Sheldon S. Wolin

affirmative action, Berlin Wall, British Empire, centre right, coherent worldview, collective bargaining, colonial rule, corporate governance, creative destruction, cuban missile crisis, David Ricardo: comparative advantage, dematerialisation, Donald Trump, Fall of the Berlin Wall, full employment, illegal immigration, invisible hand, It's morning again in America, mass incarceration, money market fund, mutually assured destruction, new economy, offshore financial centre, Plato's cave, public intellectual, radical decentralization, Ralph Nader, Ronald Reagan, school vouchers, single-payer health, stem cell, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen

The decisions of countless individual actors, each acting for his own self-interest, would nonetheless produce the well-being of the society, a state of affairs that the actors had not intended. How to explain that remarkable result, an outcome unrelated to the actors’ intentions? How is it possible to have a “natural harmony” of selfish interests? Smith’s answer: an “invisible hand” guided the individual selfish actor “to promote an end which was no part of his intention.” “It is his own advantage, indeed, and not that of society which [the individual] has in view. But the study of his own advantage naturally, or rather necessarily leads him to prefer that employment which is most advantageous to society.”16 In spite of its worldly concerns, Smith’s economy required a theological sleight of hand—whose but the sure hand of an all-seeing god?


pages: 460 words: 122,556

The End of Wall Street by Roger Lowenstein

"World Economic Forum" Davos, Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Bear Stearns, benefit corporation, Berlin Wall, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, break the buck, Brownian motion, Carmen Reinhart, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversified portfolio, eurozone crisis, Fall of the Berlin Wall, fear of failure, financial deregulation, financial engineering, fixed income, geopolitical risk, Glass-Steagall Act, Greenspan put, high net worth, Hyman Minsky, interest rate derivative, invisible hand, junk bonds, Ken Thompson, Kenneth Rogoff, London Interbank Offered Rate, Long Term Capital Management, low interest rates, margin call, market bubble, Martin Wolf, Michael Milken, money market fund, moral hazard, mortgage debt, negative equity, Northern Rock, Ponzi scheme, profit motive, race to the bottom, risk tolerance, Ronald Reagan, Rubik’s Cube, Savings and loan crisis, savings glut, short selling, sovereign wealth fund, statistical model, the payments system, too big to fail, tulip mania, Y2K

Indeed, almost all the growth in mortgage volume was accounted for by loans that the Street securitized. 21 It is a dictum of classical economics that people respond to incentives and that, therefore, bouts of otherwise foolish lending must have a rational basis. Orthodox free marketers cannot explain why bankers would throw money away. But if they are losing money for other people (in this case, for investors in mortgage securities), the theory of the invisible hand remains untarnished .22 Plainly, though, more than rational incentive was fueling this spree. After all, no bank could hope to sell its entire portfolio. Golden West Savings and Loan was a prime example. Golden West was an Oakland-based California thrift long thought of as a model of prudent lending practices.


pages: 538 words: 121,670

Republic, Lost: How Money Corrupts Congress--And a Plan to Stop It by Lawrence Lessig

air traffic controllers' union, Alan Greenspan, asset-backed security, banking crisis, carbon tax, carried interest, circulation of elites, cognitive dissonance, corporate personhood, correlation does not imply causation, crony capitalism, David Brooks, Edward Glaeser, Filter Bubble, financial deregulation, financial innovation, financial intermediation, Glass-Steagall Act, Greenspan put, invisible hand, jimmy wales, low interest rates, Martin Wolf, meta-analysis, Mikhail Gorbachev, moral hazard, Pareto efficiency, place-making, profit maximization, public intellectual, Ralph Nader, regulatory arbitrage, rent-seeking, Ronald Reagan, Sam Peltzman, Savings and loan crisis, Silicon Valley, single-payer health, The Wealth of Nations by Adam Smith, too big to fail, TSMC, Tyler Cowen, upwardly mobile, WikiLeaks, Yochai Benkler, Zipcar

In none of the cases did some professional body, such as the Bar Association or the AMA, need to intervene to force the companies to do what was “right.” “What was right” coincided perfectly with what was in the best interest of these entities. As Adam Smith famously said, they were “in this, as in many other cases, led by an invisible hand to promote an end which was no part of [their] intention.”32 That’s not always true of course. Indeed, as we’ll see, pursuing self-interest alone, without the proper regulatory structure, is often fatal to the public interest. But here, private interests coincide with a public good. Government intervention was therefore not necessary.


pages: 421 words: 125,417

Common Wealth: Economics for a Crowded Planet by Jeffrey Sachs

agricultural Revolution, air freight, Anthropocene, back-to-the-land, biodiversity loss, British Empire, business process, carbon credits, carbon footprint, carbon tax, clean water, colonial rule, corporate social responsibility, correlation does not imply causation, creative destruction, demographic transition, Diane Coyle, digital divide, Edward Glaeser, energy security, failed state, Garrett Hardin, Gini coefficient, global pandemic, Global Witness, Haber-Bosch Process, impact investing, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), intermodal, invention of agriculture, invention of the steam engine, invisible hand, Joseph Schumpeter, knowledge worker, labor-force participation, low skilled workers, mass immigration, microcredit, ocean acidification, oil shale / tar sands, old age dependency ratio, peak oil, profit maximization, profit motive, purchasing power parity, road to serfdom, Ronald Reagan, Simon Kuznets, Skype, statistical model, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, Tragedy of the Commons, transaction costs, unemployed young men, War on Poverty, women in the workforce, working-age population, zoonotic diseases

Earth has the energy, land, biodiversity, and water resources needed to feed humanity and support long-term economic prosperity for all. The problem is that markets might not lead to their wise and sustainable use. There is no economic imperative that will condemn us to deplete our vital resource base, but neither is there an invisible hand that will prevent us from doing so. The choice will be ours to make through public policy and global cooperation. Resource Scramble or Systematic Innovation? Despite the vast stores of energy, including nonconventional fossil fuels, solar power, geothermal power, nuclear power, and more, there is a pervasive fear of an imminent energy crisis resulting from the depletion of oil.


pages: 482 words: 122,497

The Wrecking Crew: How Conservatives Rule by Thomas Frank

"Hurricane Katrina" Superdome, affirmative action, Alan Greenspan, anti-communist, barriers to entry, Berlin Wall, Bernie Madoff, British Empire, business cycle, classic study, collective bargaining, corporate governance, Credit Default Swap, David Brooks, disinformation, edge city, financial deregulation, full employment, George Gilder, guest worker program, Ida Tarbell, income inequality, invisible hand, job satisfaction, Michael Milken, Mikhail Gorbachev, Mont Pelerin Society, mortgage debt, Naomi Klein, Nelson Mandela, new economy, P = NP, plutocrats, Ponzi scheme, Ralph Nader, rent control, Richard Florida, road to serfdom, rolodex, Ronald Reagan, school vouchers, shareholder value, Silicon Valley, stem cell, stock buybacks, Strategic Defense Initiative, Telecommunications Act of 1996, the scientific method, too big to fail, Triangle Shirtwaist Factory, union organizing, War on Poverty

This was not what the well-meaning centrists of the nineties had in mind when they used to sing about how the “entrepreneurial spirit is transforming the public sector,” but this was what the transformation looked like nonetheless. It was no well-meaning centrist affair. It was industry conservatism, constantly seething and effervescing; tens of thousands of individuals coming and going, each avidly piling up their own tiny pile; but collectively, and with the guidance of the market’s invisible hand, engaged in the common project of reconfiguring the state. * * * *Conservatives have always favored the Virginia suburbs over those located in Maryland, I believe, because of their residual southernness and their reassuring proximity to the Pentagon. *Phillips believes that the nation needs a strong dose of “biblical law” and so admires former Alabama chief justice Roy Moore for his famous Ten Commandments provocation that he tried to get Moore appointed to the Supreme Court.


pages: 482 words: 121,672

A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing (Eleventh Edition) by Burton G. Malkiel

accounting loophole / creative accounting, Alan Greenspan, Albert Einstein, asset allocation, asset-backed security, beat the dealer, Bernie Madoff, bitcoin, book value, butter production in bangladesh, buttonwood tree, buy and hold, capital asset pricing model, compound rate of return, correlation coefficient, Credit Default Swap, Daniel Kahneman / Amos Tversky, Detroit bankruptcy, diversification, diversified portfolio, dogs of the Dow, Edward Thorp, Elliott wave, equity risk premium, Eugene Fama: efficient market hypothesis, experimental subject, feminist movement, financial engineering, financial innovation, financial repression, fixed income, framing effect, George Santayana, hindsight bias, Home mortgage interest deduction, index fund, invisible hand, Isaac Newton, Japanese asset price bubble, John Bogle, junk bonds, Long Term Capital Management, loss aversion, low interest rates, margin call, market bubble, Mary Meeker, money market fund, mortgage tax deduction, new economy, Own Your Own Home, PalmPilot, passive investing, Paul Samuelson, pets.com, Ponzi scheme, price stability, profit maximization, publish or perish, purchasing power parity, RAND corporation, random walk, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Salesforce, short selling, Silicon Valley, South Sea Bubble, stock buybacks, stocks for the long run, sugar pill, survivorship bias, Teledyne, the rule of 72, The Wisdom of Crowds, transaction costs, Vanguard fund, zero-coupon bond, zero-sum game

The wisdom of crowd behavior is perhaps best illustrated in the economy as a whole by the free-market price system. A variety of individual decisions by consumers and producers leads the economy to produce the goods and services that people want to buy. Responding to the forces of demand and supply, the price system guides the economy through Adam Smith’s invisible hand to produce the correct quantity of products. As communist economies have discovered to their dismay, an all-powerful central planner cannot possibly achieve any semblance of market efficiency in deciding what goods to produce and how resources should be allocated. Similarly, millions of individual and institutional investors by their collective buying and selling decisions produce a tableau of stock-market prices that appear to make one stock just as good a buy as another.


pages: 424 words: 119,679

It's Better Than It Looks: Reasons for Optimism in an Age of Fear by Gregg Easterbrook

affirmative action, Affordable Care Act / Obamacare, air freight, Alan Greenspan, Apollo 11, autonomous vehicles, basic income, Bernie Madoff, Bernie Sanders, Black Lives Matter, Boeing 747, Branko Milanovic, Brexit referendum, business cycle, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, clean tech, clean water, coronavirus, Crossrail, David Brooks, David Ricardo: comparative advantage, deindustrialization, Dissolution of the Soviet Union, Donald Trump, driverless car, Elon Musk, Exxon Valdez, factory automation, failed state, fake news, full employment, Gini coefficient, Google Earth, Home mortgage interest deduction, hydraulic fracturing, Hyperloop, illegal immigration, impulse control, income inequality, independent contractor, Indoor air pollution, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), invisible hand, James Watt: steam engine, labor-force participation, liberal capitalism, longitudinal study, Lyft, mandatory minimum, manufacturing employment, Mikhail Gorbachev, minimum wage unemployment, Modern Monetary Theory, obamacare, oil shale / tar sands, Paul Samuelson, peak oil, plant based meat, plutocrats, Ponzi scheme, post scarcity, purchasing power parity, quantitative easing, reserve currency, rising living standards, Robert Gordon, Ronald Reagan, self-driving car, short selling, Silicon Valley, Simon Kuznets, Slavoj Žižek, South China Sea, Steve Wozniak, Steven Pinker, supervolcano, The Chicago School, The Rise and Fall of American Growth, the scientific method, There's no reason for any individual to have a computer in his home - Ken Olsen, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, transaction costs, Tyler Cowen, uber lyft, universal basic income, War on Poverty, Washington Consensus, We are all Keynesians now, WikiLeaks, working poor, Works Progress Administration

But we’re all better off if no single person or entity is in charge either of the economy or of economic law. This formula accepts uncertainty in exchange for prosperity; higher living standards are likely, while collapse anxiety is guaranteed. The functioning of market economies traditionally is attributed to an invisible hand, but that’s the wrong analogy—implying an amorphous intelligence directing events toward a specific goal. The economy has no goal, simply reacts to changes in circumstances, including discoveries, inventions, shortages, shifts in consumer needs, and shifts in society’s whims. Most of the time the result is most people better off.


pages: 402 words: 126,835

The Job: The Future of Work in the Modern Era by Ellen Ruppel Shell

"Friedman doctrine" OR "shareholder theory", 3D printing, Abraham Maslow, affirmative action, Affordable Care Act / Obamacare, Airbnb, airport security, Albert Einstein, AlphaGo, Amazon Mechanical Turk, basic income, Baxter: Rethink Robotics, big-box store, blue-collar work, Buckminster Fuller, call centre, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, cloud computing, collective bargaining, company town, computer vision, corporate governance, corporate social responsibility, creative destruction, crowdsourcing, data science, deskilling, digital divide, disruptive innovation, do what you love, Donald Trump, Downton Abbey, Elon Musk, emotional labour, Erik Brynjolfsson, factory automation, follow your passion, Frederick Winslow Taylor, future of work, game design, gamification, gentrification, glass ceiling, Glass-Steagall Act, hiring and firing, human-factors engineering, immigration reform, income inequality, independent contractor, industrial research laboratory, industrial robot, invisible hand, It's morning again in America, Jeff Bezos, Jessica Bruder, job automation, job satisfaction, John Elkington, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kickstarter, knowledge economy, knowledge worker, Kodak vs Instagram, labor-force participation, low skilled workers, Lyft, manufacturing employment, Marc Andreessen, Mark Zuckerberg, means of production, move fast and break things, new economy, Norbert Wiener, obamacare, offshore financial centre, Paul Samuelson, precariat, Quicken Loans, Ralph Waldo Emerson, risk tolerance, Robert Gordon, Robert Shiller, Rodney Brooks, Ronald Reagan, scientific management, Second Machine Age, self-driving car, shareholder value, sharing economy, Silicon Valley, Snapchat, Steve Jobs, stock buybacks, TED Talk, The Chicago School, The Theory of the Leisure Class by Thorstein Veblen, Thomas L Friedman, Thorstein Veblen, Tim Cook: Apple, Uber and Lyft, uber lyft, universal basic income, urban renewal, Wayback Machine, WeWork, white picket fence, working poor, workplace surveillance , Y Combinator, young professional, zero-sum game

Milton Friedman, the leading monetary economist of the twentieth century, famously declared that companies that invested in their employees and communities beyond the absolute minimum were derelict in their duty to provide investors with income and customers with good deals. He and his contemporaries in the Chicago school of economics forged an indelible link in the public mind between free markets and freedom itself. But Friedman did not mistake the invisible hand for a perfect legal instrument. In his writings he outlined the nation’s responsibility to “establish a framework of law” by which business would be held accountable, and he insisted that people harmed by the externalized costs of doing business be compensated, arguing that market forces, though powerful tools of progress, cannot ensure a distribution of income that guarantees all citizens a decent life.


pages: 480 words: 122,663

The Art of SQL by Stephane Faroult, Peter Robson

business intelligence, business logic, business process, constrained optimization, continuation of politics by other means, database schema, full text search, invisible hand, it's over 9,000, leftpad, SQL injection, technological determinism

But it may make a very significant difference in other cases—and anyway from a semantic point of view there is no reason to say this: and 0 = (select count(*) ...) when we mean this: and not exists (select 1 ...) If we use count(*) as a test for existence, we may be lucky enough to benefit from the "invisible hand" of a smart optimizer, which will turn our query into something more suitable. But this will not necessarily be the case, and it will never be the case if the rows are counted into some variable as an independent step, because then even the smartest of optimizers cannot guess for which purpose we are counting: the result of the count( ) could be a critical value that absolutely has to be displayed to the end user!


pages: 550 words: 124,073

Democracy and Prosperity: Reinventing Capitalism Through a Turbulent Century by Torben Iversen, David Soskice

Andrei Shleifer, assortative mating, augmented reality, barriers to entry, Big Tech, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, centre right, clean tech, cloud computing, collateralized debt obligation, collective bargaining, colonial rule, confounding variable, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, deindustrialization, deskilling, Donald Trump, first-past-the-post, full employment, general purpose technology, gentrification, Gini coefficient, hiring and firing, implied volatility, income inequality, industrial cluster, inflation targeting, invisible hand, knowledge economy, labor-force participation, liberal capitalism, low skilled workers, low-wage service sector, means of production, middle-income trap, mirror neurons, mittelstand, Network effects, New Economic Geography, new economy, New Urbanism, non-tariff barriers, Occupy movement, offshore financial centre, open borders, open economy, passive investing, precariat, race to the bottom, radical decentralization, rent-seeking, RFID, road to serfdom, Robert Bork, Robert Gordon, Silicon Valley, smart cities, speech recognition, tacit knowledge, The Future of Employment, The Great Moderation, The Rise and Fall of American Growth, the strength of weak ties, too big to fail, trade liberalization, union organizing, urban decay, vertical integration, Washington Consensus, winner-take-all economy, working-age population, World Values Survey, young professional, zero-sum game

“Support for the Welfare State In Western Democracies: The Two Dimensions of Redistributive Attitudes.” Journal of Politics 77 (1): 146–60. Chandler, Alfred D. 1967. Strategy and Structure: Chapters in the History of the Industrial Enterprise. Cambridge, MA: MIT Press. Chandler, Alfred D. 1977. The Invisible Hand: The Managerial Revolution in American Business. Cambridge, MA: Belknap Press of Harvard University Press. Chang, Ha-Joon. 2011. 23 Things They Don’t Tell You about Capitalism. New York: Bloomsbury. Chinn, Menzie D. 2006. “What Matters for Financial Development? Capital Controls, Institutions, and Interactions.”


pages: 432 words: 124,635

Happy City: Transforming Our Lives Through Urban Design by Charles Montgomery

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Abraham Maslow, accelerated depreciation, agricultural Revolution, American Society of Civil Engineers: Report Card, Apollo 11, behavioural economics, Bernie Madoff, Boeing 747, British Empire, Buckminster Fuller, car-free, carbon credits, carbon footprint, centre right, City Beautiful movement, clean water, congestion charging, correlation does not imply causation, data science, Donald Shoup, East Village, edge city, energy security, Enrique Peñalosa, experimental subject, food desert, Frank Gehry, General Motors Futurama, gentrification, Google Earth, happiness index / gross national happiness, hedonic treadmill, Home mortgage interest deduction, housing crisis, income inequality, income per capita, Induced demand, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jane Jacobs, license plate recognition, McMansion, means of production, megacity, Menlo Park, meta-analysis, mortgage tax deduction, New Urbanism, Panopticon Jeremy Bentham, peak oil, Ponzi scheme, power law, rent control, restrictive zoning, ride hailing / ride sharing, risk tolerance, science of happiness, Seaside, Florida, Silicon Valley, starchitect, streetcar suburb, the built environment, The Death and Life of Great American Cities, the High Line, The Spirit Level, The Wealth of Nations by Adam Smith, trade route, transit-oriented development, upwardly mobile, urban planning, urban sprawl, wage slave, white flight, World Values Survey, zero-sum game, Zipcar

If you want to keep poor people out of your community, all you really need to do is ban duplexes and apartment buildings—which is exactly what new suburbs were permitted to do. The urban strategist Todd Litman summed up zoning’s effect thus: “It seemed that segregation was just the natural working of the free market, the result of the sum of countless individual choices about where to live. But the houses were single—and their residents white—because of the invisible hand of government.” What’s amazing is how, despite their love of liberty, Americans have embraced the massive restriction of private property rights that the separated city demands. Once a neighborhood is zoned and built, it gets frozen like a Polaroid from the day everyone moves in. As if the power of municipal zoning wasn’t enough, suburban developers in the last few decades have set up homeowner associations that encourage residents to exert even more control over one another.


pages: 404 words: 124,705

The Village Effect: How Face-To-Face Contact Can Make Us Healthier, Happier, and Smarter by Susan Pinker

assortative mating, Atul Gawande, autism spectrum disorder, behavioural economics, Bernie Madoff, call centre, caloric restriction, caloric restriction, cognitive dissonance, David Brooks, delayed gratification, digital divide, Edward Glaeser, epigenetics, Erik Brynjolfsson, estate planning, facts on the ground, fixed-gear, game design, happiness index / gross national happiness, indoor plumbing, intentional community, invisible hand, Kickstarter, language acquisition, longitudinal study, Mark Zuckerberg, medical residency, Menlo Park, meta-analysis, mirror neurons, neurotypical, Occupy movement, old-boy network, One Laptop per Child (OLPC), place-making, Ponzi scheme, Ralph Waldo Emerson, randomized controlled trial, Ray Oldenburg, Silicon Valley, Skype, social contagion, social intelligence, Stanford marshmallow experiment, Steven Pinker, tacit knowledge, The Great Good Place, the strength of weak ties, The Wisdom of Crowds, theory of mind, tontine, Tony Hsieh, Twitter Arab Spring, urban planning, Yogi Berra

With a few phone calls, I could establish for any city which hospital to apply to, which hospital to not bother with because they never took foreign graduates, and which hospital took foreign graduates for the first year, used them for scut work, but never promoted them to the second year—the infamous “pyramid” residencies. And the network invariably provided me with the name of someone to stay with. A few pages later he describes how weak bonds can act as an invisible hand that brings far-flung people with similar backgrounds together in places as unlikely as a town in the Smoky Mountains of eastern Tennessee: The effect of having so many foreign doctors in one area was at times comical. I had once tried to reach Dr. Patel, a cardiologist, to see a tough old lady in the ER whose heart failure was not yielding to my diuretics and cardiotonics.


pages: 381 words: 120,361

Sunfall by Jim Al-Khalili

airport security, artificial general intelligence, augmented reality, Bletchley Park, Carrington event, cosmological constant, cryptocurrency, dark matter, David Attenborough, Fellow of the Royal Society, Higgs boson, imposter syndrome, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, Kickstarter, lockdown, mass immigration, megacity, MITM: man-in-the-middle, off grid, pattern recognition, quantum cryptography, quantum entanglement, Silicon Valley, smart cities, sorting algorithm, South China Sea, stem cell, Stephen Hawking, Turing test

Captain Rahman was more than happy to hand over his plane on this occasion: his aircraft’s AI system, more powerful than old-fashioned autopilots, could not function without GPS. Still, he promised himself he’d get to the bottom of the problem once he was on the ground. GPS had only ever failed him on one previous occasion; and that time he’d at least been able to see outside and watch as the invisible hands of the airport’s AI system had guided the plane down safely. Then, just as suddenly as the satellite signal had dropped out, so now did the aircraft’s entire communication system. There was a sudden jolt as it was released from the hold of the control tower. OK, now he would have something to do.


User Friendly by Cliff Kuang, Robert Fabricant

A Pattern Language, Abraham Maslow, Airbnb, anti-communist, Any sufficiently advanced technology is indistinguishable from magic, Apple II, augmented reality, autonomous vehicles, behavioural economics, Bill Atkinson, Brexit referendum, Buckminster Fuller, Burning Man, business logic, call centre, Cambridge Analytica, Chuck Templeton: OpenTable:, cognitive load, computer age, Daniel Kahneman / Amos Tversky, dark pattern, data science, Donald Trump, Douglas Engelbart, Douglas Engelbart, driverless car, Elaine Herzberg, en.wikipedia.org, fake it until you make it, fake news, Ford Model T, Frederick Winslow Taylor, frictionless, Google Glasses, Internet of things, invisible hand, James Dyson, John Markoff, Jony Ive, knowledge economy, Kodak vs Instagram, Lyft, M-Pesa, Mark Zuckerberg, mobile money, Mother of all demos, move fast and break things, Norbert Wiener, Paradox of Choice, planned obsolescence, QWERTY keyboard, randomized controlled trial, replication crisis, RFID, scientific management, self-driving car, seminal paper, Silicon Valley, skeuomorphism, Skinner box, Skype, smart cities, Snapchat, speech recognition, Steve Jobs, Steve Wozniak, tacit knowledge, Tesla Model S, three-martini lunch, Tony Fadell, Uber and Lyft, Uber for X, uber lyft, Vannevar Bush, women in the workforce

She called it a “moral responsibility” for women to demand improvements in their tools, for the betterment of all—“molding the future conditions under which purchasing must be done.”23 Women were on the leading edge of consumers using things they bought, using their dollars to demand that products be more thoughtful. Even as American women were cottoning to the idea that their purchasing power was an invisible hand for the greater good, businessmen were realizing that they had been missing a greater opportunity. In 1929, the American Management Association held its annual conference at which the keynote speaker, a merchandising consultant, declared, “There was a time when our best things were hand-made, our poorest made in mass production.


pages: 424 words: 123,180

Democracy's Data: The Hidden Stories in the U.S. Census and How to Read Them by Dan Bouk

Black Lives Matter, card file, COVID-19, dark matter, data science, desegregation, digital map, Donald Trump, George Floyd, germ theory of disease, government statistician, hiring and firing, illegal immigration, index card, invisible hand, Jeff Bezos, linked data, Mahatma Gandhi, mass incarceration, public intellectual, pull request, Ralph Waldo Emerson, Scientific racism, Shoshana Zuboff, Silicon Valley, social distancing, surveillance capitalism, transcontinental railway, union organizing, W. E. B. Du Bois, Works Progress Administration, zero-sum game

These items all appear in the 1940 Sears Catalog, as it can be viewed here: https://christmas.musetechnical.com/ShowCatalog/1940-Sears-Fall-Winter-Catalog. 11.  Justus D. Doenecke, “General Robert E. Wood: The Evolution of a Conservative,” Journal of the Illinois State Historical Society 71, no. 3 (1978): 162–75 at 164. 12.  Kim Phillips-Fein, Invisible Hands: The Businessmen’s Crusade Against the New Deal (New York: W. W. Norton, 2010). 13.  Doenecke, “General Robert E. Wood,” 164–67. 14.  Vergil D. Reed, “New Marketing Dividends for 1940,” Eleventh Annual Boston Conference on Distribution, Boston, MA, October 3, 1939, in Folder Census, Exhibit K—Public Speeches, Box 111, Papers of Harry L.


pages: 309 words: 121,279

Wasteland: The Dirty Truth About What We Throw Away, Where It Goes, and Why It Matters by Oliver Franklin-Wallis

air freight, airport security, Anthropocene, Any sufficiently advanced technology is indistinguishable from magic, barriers to entry, big-box store, bitcoin, British Empire, carbon footprint, circular economy, clean water, climate anxiety, coronavirus, COVID-19, Crossrail, decarbonisation, deindustrialization, Elon Musk, epigenetics, Ford Model T, fulfillment center, global pandemic, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jeff Bezos, John Snow's cholera map, Kintsugi, lockdown, meta-analysis, microplastics / micro fibres, oil shale / tar sands, planned obsolescence, refrigerator car, sharing economy, social distancing, space junk, Suez canal 1869, Tim Cook: Apple

There are stories in all our discarded things: who made them, what they meant to a person before they were thrown away. The economist Leonard E. Read once wrote that no single person alive could make a pencil from start to finish; every step, from logging the timber, mining the graphite, machining the thing – hell, machining the machine – is built upon countless invisible hands. You could never visit every mine, every farm, every factory. But in the end, it all ends up in the same place – the endless ingenuity of humanity in one filthy, fascinating mass. It’s also easy to be disheartened by the waste crisis. Like climate change, it feels like a problem that individual action alone can do little to prevent.


The America That Reagan Built by J. David Woodard

"Hurricane Katrina" Superdome, affirmative action, Alan Greenspan, anti-communist, Ayatollah Khomeini, Berlin Wall, Black Monday: stock market crash in 1987, Boeing 747, Bonfire of the Vanities, business cycle, colonial rule, Columbine, corporate raider, cuban missile crisis, Deng Xiaoping, friendly fire, glass ceiling, global village, Gordon Gekko, gun show loophole, guns versus butter model, income inequality, invisible hand, It's morning again in America, Jeff Bezos, junk bonds, Korean Air Lines Flight 007, laissez-faire capitalism, late capitalism, Live Aid, Marc Andreessen, Michael Milken, Mikhail Gorbachev, mutually assured destruction, Neil Kinnock, Nelson Mandela, new economy, no-fly zone, Oklahoma City bombing, Parents Music Resource Center, postindustrial economy, Ralph Nader, Robert Bork, Ronald Reagan, Ronald Reagan: Tear down this wall, Rubik’s Cube, Savings and loan crisis, Silicon Valley, South China Sea, stem cell, Strategic Defense Initiative, Ted Kaczynski, The Predators' Ball, Timothy McVeigh, Tipper Gore, trickle-down economics, women in the workforce, Y2K, young professional

New York had only a handful of galleries in 1945, and no more than a score of known artists; by the 1980s the city had some 680 galleries and more than 150,000 artists.18 Add to these artists producers of books, printers, serious music recordings, writers, editors, movie makers, musicians, and so forth and the size of just one part of the mass culture was exposed. Bell argued that the postindustrial society would change politics, as well as culture and economics. In his view, government would increasingly become instrumental in the management of the economy; less control would be left to market forces. Instead of relying on the invisible hand, Bell saw that the postindustrial society would work toward directing and engineering society.19 He could not have been more wrong. The spirit of the 1980s was against the command decision views of Daniel Bell. Conservatives had long denounced Keynesian economics as a fraud, and expanding government as a threat, but their ideas were unpopular in the period of post–World War II prosperity.


pages: 431 words: 129,071

Selfie: How We Became So Self-Obsessed and What It's Doing to Us by Will Storr

Abraham Maslow, Adam Curtis, Alan Greenspan, Albert Einstein, autonomous vehicles, banking crisis, bitcoin, classic study, computer age, correlation does not imply causation, Donald Trump, Douglas Engelbart, Douglas Engelbart, Elon Musk, en.wikipedia.org, gamification, gig economy, greed is good, intentional community, invisible hand, job automation, John Markoff, Kevin Roose, Kickstarter, Lewis Mumford, longitudinal study, low interest rates, Lyft, Menlo Park, meta-analysis, military-industrial complex, Mont Pelerin Society, mortgage debt, Mother of all demos, Nixon shock, Peter Thiel, prosperity theology / prosperity gospel / gospel of success, QWERTY keyboard, Rainbow Mansion, rising living standards, road to serfdom, Robert Gordon, Ronald Reagan, selective serotonin reuptake inhibitor (SSRI), Sheryl Sandberg, Silicon Valley, Silicon Valley startup, Steve Bannon, Steve Jobs, Steven Levy, Stewart Brand, synthetic biology, tech bro, tech worker, The Future of Employment, The Rise and Fall of American Growth, Tim Cook: Apple, Travis Kalanick, twin studies, Uber and Lyft, uber lyft, War on Poverty, We are as Gods, Whole Earth Catalog

There are only individual men and women and families,’ the two world leaders took up their mission to liberate the individual from the shackles of the oversized state and turn society into a game of warring individuals. They would increase competition as much as and wherever possible. Everyone would compete in self-correcting, wealth-creating free markets (after all, just as humans required freedom to fully actualize, so too did markets) whose ‘invisible hand’ could be relied upon to raise us all into a stable and wealthy future. In June 1987, Ronald Reagan gladly announced the appointment of his new Chairman of the Federal Reserve – Alan Greenspan. This position, writes economist Dr E. Ray Bradbury, made Greenspan ‘the single most powerful figure affecting the global economy’.


pages: 428 words: 134,832

Straphanger by Taras Grescoe

active transport: walking or cycling, Affordable Care Act / Obamacare, airport security, Albert Einstein, big-box store, bike sharing, Boeing 747, Boris Johnson, British Empire, call centre, car-free, carbon credits, carbon footprint, carbon tax, City Beautiful movement, classic study, company town, congestion charging, congestion pricing, Cornelius Vanderbilt, correlation does not imply causation, David Brooks, deindustrialization, Donald Shoup, East Village, edge city, Enrique Peñalosa, extreme commuting, financial deregulation, fixed-gear, Frank Gehry, gentrification, glass ceiling, Golden Gate Park, Great Leap Forward, high-speed rail, housing crisis, hydraulic fracturing, indoor plumbing, intermodal, invisible hand, it's over 9,000, Jane Jacobs, Japanese asset price bubble, jitney, Joan Didion, Kickstarter, Kitchen Debate, laissez-faire capitalism, Marshall McLuhan, mass immigration, McMansion, megacity, megaproject, messenger bag, mortgage tax deduction, Network effects, New Urbanism, obamacare, oil shale / tar sands, oil shock, Own Your Own Home, parking minimums, peak oil, pension reform, Peter Calthorpe, Ponzi scheme, Ronald Reagan, Rosa Parks, sensible shoes, Silicon Valley, Skype, streetcar suburb, subprime mortgage crisis, the built environment, The Death and Life of Great American Cities, the High Line, transit-oriented development, union organizing, urban planning, urban renewal, urban sprawl, walkable city, white flight, working poor, young professional, Zipcar

His books, from City Life through Home and The Last Harvest, have consistently made the case for the detached single-family suburban house as a kind of British and American manifest destiny, and he believes suburbs have spread for one reason: because people like them. “Sprawl is and always has been inherent to urbanization,” he has written. “It is driven less by the regulations of legislators, the actions of developers, and the theories of city planners than by the decisions of millions of individuals—Adam Smith’s ‘Invisible Hand.’ “ To say that the spread of the single-family home on the urban fringe was solely the result of personal choice is to ignore the fact that for a couple of generations after the war government policies made it the only practical choice. And, in his writing, Rybczynski has been silent about the negative forces that formed the American suburb: the freeway-building that gutted so many viable neighborhoods and the redlining of poorer districts that fostered urban decline.


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

Aaron Swartz, American ideology, animal electricity, barriers to entry, borderless world, Californian Ideology, Charles Babbage, Chelsea Manning, Compatible Time-Sharing System, computer age, Computer Lib, creative destruction, digital divide, disruptive innovation, Donald Davies, Dr. Strangelove, Edward Snowden, Evgeny Morozov, Frederick Winslow Taylor, Hacker Ethic, Herbert Marcuse, Howard Rheingold, Hush-A-Phone, interchangeable parts, invisible hand, Ivan Sutherland, John Markoff, John Perry Barlow, Joseph Schumpeter, Leonard Kleinrock, Lewis Mumford, means of production, Menlo Park, Network effects, new economy, Norbert Wiener, open economy, OSI model, packet switching, pre–internet, radical decentralization, RAND corporation, RFC: Request For Comment, Richard Stallman, Ronald Coase, Ronald Reagan, scientific management, Silicon Valley, Steve Crocker, Steven Levy, Stewart Brand, systems thinking, technological determinism, technoutopianism, Ted Nelson, The Nature of the Firm, Thomas L Friedman, Thorstein Veblen, transaction costs, vertical integration, web of trust, work culture

., have tended to emphasize large, vertically integrated enterprises that were directed by layers of managerial hierarchies. Such hierarchies emerged, in Chandler’s view, in situations where managers believed that hierarchies would provide more efficient coordination mechanisms than one-time exchanges guided only by the invisible hand of the market. In response to Chandler, the historians Naomi Lamoreaux, Daniel Raff, and Peter Temin have sought to “move beyond the simple markets versus hierarchies dichotomy that undergirds Chandler’s analysis,” and bring more attention to coordination mechanisms that exist in a conceptual middle ground between markets and hierarchies.


pages: 436 words: 141,321

Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness by Frederic Laloux, Ken Wilber

Abraham Maslow, Albert Einstein, augmented reality, blue-collar work, Boeing 747, Buckminster Fuller, call centre, carbon footprint, conceptual framework, corporate social responsibility, crowdsourcing, different worldview, driverless car, Easter island, failed state, fulfillment center, future of work, hiring and firing, holacracy, index card, interchangeable parts, invisible hand, job satisfaction, Johann Wolfgang von Goethe, Kenneth Rogoff, meta-analysis, ocean acidification, pattern recognition, post-industrial society, quantitative trading / quantitative finance, radical decentralization, randomized controlled trial, selection bias, shareholder value, Silicon Valley, systems thinking, the market place, the scientific method, Tony Hsieh, warehouse automation, zero-sum game

He heads a large staff that orchestrates substantial investments into employee-centric processes like training, culture initiatives, 360-degree feedback, succession planning and staff morale surveys. Green breakthrough 3: Multiple stakeholder perspective Orange holds that for-profit companies should operate with a shareholder perspective. Management’s primary (some people claim its sole) obligation is to maximize profits for investors. Adam Smith‘s “invisible hand” is often invoked to explain how this benefits all stakeholders in the long run. Green Organizations insist that there should be no such hierarchy among stakeholders. Businesses have a responsibility not only to investors, but also to management, employees, customers, suppliers, local communities, society at large, and the environment.


pages: 538 words: 141,822

The Net Delusion: The Dark Side of Internet Freedom by Evgeny Morozov

"World Economic Forum" Davos, A Declaration of the Independence of Cyberspace, Alvin Toffler, Ayatollah Khomeini, Berlin Wall, borderless world, Buckminster Fuller, Californian Ideology, Cass Sunstein, citizen journalism, cloud computing, cognitive dissonance, Columbine, computer age, conceptual framework, crowdsourcing, digital divide, disinformation, Dissolution of the Soviet Union, don't be evil, Evgeny Morozov, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, global village, Google Earth, Herbert Marcuse, illegal immigration, invention of radio, invention of the printing press, invisible hand, John Markoff, John Perry Barlow, John von Neumann, lolcat, Marshall McLuhan, Mitch Kapor, Naomi Klein, Network effects, new economy, New Urbanism, off-the-grid, Panopticon Jeremy Bentham, peer-to-peer, pirate software, pre–internet, Productivity paradox, public intellectual, RAND corporation, Robert Solow, Ronald Reagan, Ronald Reagan: Tear down this wall, Silicon Valley, Silicon Valley startup, Sinatra Doctrine, Skype, Slavoj Žižek, social graph, Steve Jobs, Streisand effect, technological determinism, technoutopianism, TED Talk, The Wisdom of Crowds, urban planning, Washington Consensus, WikiLeaks, women in the workforce

Maybe, but there is little indication that it poses any threat to the Chinese government. If anyone is “lost,” it’s the citizens, not the authorities. Even authoritarian governments have discovered that the best way to marginalize dissident books and ideas is not to ban them—this seems only to boost interest in the forbidden fruit—but to let the invisible hand flood the market with trashy popular detective stories, self-help manuals, and books on how to get your kids into Harvard (texts like You Too Can Go to Harvard: Secrets of Getting into Famous U.S. Universities and Harvard Girl are best sellers in China). Feeling that resistance would be counterproductive, even the Burmese government has grudgingly allowed hip-hop artists to perform at state functions.


pages: 556 words: 141,069

The Profiteers by Sally Denton

Albert Einstein, anti-communist, Ayatollah Khomeini, Bay Area Rapid Transit, Berlin Wall, Boycotts of Israel, clean water, company town, corporate governance, crony capitalism, disinformation, Donald Trump, Edward Snowden, energy security, Fall of the Berlin Wall, G4S, invisible hand, James Watt: steam engine, Joan Didion, Kitchen Debate, laissez-faire capitalism, Lewis Mumford, megaproject, Mikhail Gorbachev, military-industrial complex, mutually assured destruction, Naomi Klein, new economy, nuclear winter, power law, profit motive, Robert Hanssen: Double agent, Ronald Reagan, Seymour Hersh, Silicon Valley, trickle-down economics, uranium enrichment, urban planning, vertical integration, WikiLeaks, wikimedia commons, William Langewiesche

Confessions of an Economic Hit Man: The Shocking Inside Story of How America Really Took Over the World. London: Ebury Press, 2005. _____. Hoodwinked: An Economic Hit Man Reveals Why the World Financial Markets Imploded—and What We Need to Do to Remake Them. New York: Broadway Books, 2009. Phillips-Fein, Kim. Invisible Hands. New York: W. W. Norton, 2009. Powaski, Ronald E. March to Armageddon: The United States and the Nuclear Arms Race, 1939 to the Present. Oxford: Oxford University Press, 1989. Prouty, L. Fletcher. JFK: The CIA, Vietnam, and the Plot to Assassinate John F. Kennedy. New York: Skyhorse, 2009. _____.


pages: 502 words: 128,126

Rule Britannia: Brexit and the End of Empire by Danny Dorling, Sally Tomlinson

3D printing, Ada Lovelace, Alfred Russel Wallace, anti-communist, anti-globalists, Big bang: deregulation of the City of London, Boris Johnson, Brexit referendum, British Empire, Bullingdon Club, Cambridge Analytica, centre right, colonial rule, Corn Laws, correlation does not imply causation, David Ricardo: comparative advantage, deindustrialization, disinformation, Dominic Cummings, Donald Trump, Edward Snowden, electricity market, en.wikipedia.org, epigenetics, Etonian, falling living standards, Flynn Effect, gentrification, housing crisis, illegal immigration, imperial preference, income inequality, inflation targeting, invisible hand, Jeremy Corbyn, knowledge economy, market fundamentalism, mass immigration, megacity, New Urbanism, Nick Leeson, North Sea oil, offshore financial centre, out of africa, Right to Buy, Ronald Reagan, Silicon Valley, South China Sea, sovereign wealth fund, spinning jenny, Steven Pinker, Suez canal 1869, Suez crisis 1956, The Wealth of Nations by Adam Smith, Thomas Malthus, University of East Anglia, Wayback Machine, We are the 99%, wealth creators

What are the British actually good at? One thing the British produce is an unusual number of economists, including those who later came, through their work, to define the academic subject. Adam Smith, Thomas Malthus and James Mill are remembered now, perhaps unfairly, for talking about the magical invisible hand of the market (Smith), the problem of poor people having too much sex (Malthus), and how India was a basket case until the British arrived (Mill).5 Their ideas all had great influence, but none of those ideas have actually survived the test of time as much as those of their contemporary David Ricardo and his theories about free trade.6 David Ricardo, son of a Dutch stockbroker, was born in London in 1772.


pages: 518 words: 143,914

God Is Back: How the Global Revival of Faith Is Changing the World by John Micklethwait, Adrian Wooldridge

affirmative action, anti-communist, Ayatollah Khomeini, barriers to entry, battle of ideas, Bonfire of the Vanities, Boris Johnson, correlation does not imply causation, credit crunch, David Brooks, Dr. Strangelove, Francis Fukuyama: the end of history, full employment, ghettoisation, global supply chain, God and Mammon, Great Leap Forward, hiring and firing, industrial cluster, intangible asset, invisible hand, Iridium satellite, Jane Jacobs, joint-stock company, knowledge economy, liberation theology, low skilled workers, mass immigration, McMansion, megacity, Mikhail Gorbachev, Nelson Mandela, new economy, oil shock, Peace of Westphalia, public intellectual, Robert Bork, rolodex, Ronald Reagan, Scientific racism, Silicon Valley, stem cell, supply-chain management, The Wealth of Nations by Adam Smith, Thomas Malthus, upwardly mobile, W. E. B. Du Bois, Washington Consensus

On the contrary, they were fraternal twins that grew up together: the more modern America became, the more likely people were to go to church. And third, the key to America’s religious life was its “extreme division of sects,” as Tocqueville had it. Evangelical historians make much of the Holy Spirit working in mysterious ways; the real unseen presence in American religion, however, has been Adam Smith’s invisible hand. THE NOT-SO-SHINING CITΥ From the very beginning America was an unusual mixture of the religious and the secular. Some of the first settlers were religious zealots, fleeing from persecution; some were businessmen, bent on making money; and still others were a combination of the two, worshipping God and Mammon at the same time (and, in Max Weber’s view, worshipping Mammon all the more successfully because they worshipped God).


pages: 466 words: 127,728

The Death of Money: The Coming Collapse of the International Monetary System by James Rickards

"World Economic Forum" Davos, Affordable Care Act / Obamacare, Alan Greenspan, Asian financial crisis, asset allocation, Ayatollah Khomeini, bank run, banking crisis, Bear Stearns, Ben Bernanke: helicopter money, bitcoin, Black Monday: stock market crash in 1987, Black Swan, Boeing 747, Bretton Woods, BRICs, business climate, business cycle, buy and hold, capital controls, Carmen Reinhart, central bank independence, centre right, collateralized debt obligation, collective bargaining, complexity theory, computer age, credit crunch, currency peg, David Graeber, debt deflation, Deng Xiaoping, diversification, Dr. Strangelove, Edward Snowden, eurozone crisis, fiat currency, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, Flash crash, floating exchange rates, forward guidance, G4S, George Akerlof, global macro, global reserve currency, global supply chain, Goodhart's law, Growth in a Time of Debt, guns versus butter model, Herman Kahn, high-speed rail, income inequality, inflation targeting, information asymmetry, invisible hand, jitney, John Meriwether, junk bonds, Kenneth Rogoff, labor-force participation, Lao Tzu, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, Long Term Capital Management, low interest rates, mandelbrot fractal, margin call, market bubble, market clearing, market design, megaproject, Modern Monetary Theory, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mutually assured destruction, Nixon triggered the end of the Bretton Woods system, obamacare, offshore financial centre, oil shale / tar sands, open economy, operational security, plutocrats, Ponzi scheme, power law, price stability, public intellectual, quantitative easing, RAND corporation, reserve currency, risk-adjusted returns, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Satoshi Nakamoto, Silicon Valley, Silicon Valley startup, Skype, Solyndra, sovereign wealth fund, special drawing rights, Stuxnet, The Market for Lemons, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, too big to fail, trade route, undersea cable, uranium enrichment, Washington Consensus, working-age population, yield curve

Lately, so-called markets have become a venue for trading ahead of the next Fed policy announcement, or piggybacking on its stubborn implementation. Since 2008, markets have become a venue for wealth extraction rather than wealth creation. Markets no longer perform true market functions. In markets today, the dead hands of the academic and the rentier have replaced the invisible hand of the merchant or the entrepreneur. This critique is not new; it is as old as free markets themselves. Adam Smith, in The Theory of Moral Sentiments, a philosophical work from 1759, the dawn of the modern capitalist system, makes the point that no planner can direct a system of arrayed components that are also systems with unique properties beyond the planner’s purview.


The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good by William Easterly

"World Economic Forum" Davos, airport security, anti-communist, Asian financial crisis, bank run, banking crisis, Bob Geldof, Bretton Woods, British Empire, call centre, clean water, colonial exploitation, colonial rule, Edward Glaeser, end world poverty, European colonialism, failed state, farmers can use mobile phones to check market prices, George Akerlof, Gunnar Myrdal, guns versus butter model, Hernando de Soto, income inequality, income per capita, Indoor air pollution, intentional community, invisible hand, Kenneth Rogoff, laissez-faire capitalism, land bank, land reform, land tenure, Live Aid, microcredit, moral hazard, Naomi Klein, Nelson Mandela, publication bias, purchasing power parity, randomized controlled trial, Ronald Reagan, Scramble for Africa, structural adjustment programs, The Fortune at the Bottom of the Pyramid, the scientific method, The Wealth of Nations by Adam Smith, Tragedy of the Commons, transaction costs, TSMC, War on Poverty, Xiaogang Anhui farmers

The problem with praise of markets is that it overlooked all the bottom-up searches necessary to make markets work well. One of the main things that social institutions and norms must do is find ways to prevent market participants from “opportunistic behavior,” more commonly known as “cheating.” While the theory of the invisible hand celebrates self-interest as socially beneficial, this is true only if there are norms that make possible mutually beneficial transactions between parties. Lack of checks and balances on greed can prevent economic development just as a lack of markets can. One type of cheating occurs when you cannot observe the quality of the good I am offering you.


pages: 411 words: 136,413

The Voice of Reason: Essays in Objectivist Thought by Ayn Rand, Leonard Peikoff, Peter Schwartz

affirmative action, Alan Greenspan, Apollo 11, Berlin Wall, British Empire, business process, cuban missile crisis, haute cuisine, invisible hand, Isaac Newton, laissez-faire capitalism, means of production, medical malpractice, Neil Armstrong, Plato's cave, profit motive, Ralph Nader, Recombinant DNA, Ronald Reagan, source of truth, The Wealth of Nations by Adam Smith, trade route, transcontinental railway, urban renewal, War on Poverty

The point is that those seeking a strategy for revolutionary change had nowhere else to go but toward Marxism.”21 Isn’t the lesson, then, that radical change requires a philosophical alternative to Marxism? No, he says: Wherever and whenever there have been masses of people desirous of change—oppressed people, idealists, intellectuals—they have been drawn to Marxism as if by an invisible hand. I do not think that this can be explained fully by assuming that the people involved were statist, authoritarian, or collectivist. The drift to Marxism can be better explained by noting that, in the words of [the leader of the New Left’s major campus organization], “there was—and is—no other coherent, integrative, and explicit philosophy of revolution.”...


pages: 422 words: 131,666

Life Inc.: How the World Became a Corporation and How to Take It Back by Douglas Rushkoff

Abraham Maslow, Adam Curtis, addicted to oil, affirmative action, Alan Greenspan, Amazon Mechanical Turk, An Inconvenient Truth, anti-globalists, AOL-Time Warner, banks create money, Bear Stearns, benefit corporation, big-box store, Bretton Woods, car-free, Charles Lindbergh, colonial exploitation, Community Supported Agriculture, complexity theory, computer age, congestion pricing, corporate governance, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, death of newspapers, digital divide, don't be evil, Donald Trump, double entry bookkeeping, easy for humans, difficult for computers, financial innovation, Firefox, full employment, General Motors Futurama, gentrification, Glass-Steagall Act, global village, Google Earth, greed is good, Herbert Marcuse, Howard Rheingold, income per capita, invention of the printing press, invisible hand, Jane Jacobs, John Nash: game theory, joint-stock company, Kevin Kelly, Kickstarter, laissez-faire capitalism, loss aversion, market bubble, market design, Marshall McLuhan, Milgram experiment, military-industrial complex, moral hazard, multilevel marketing, mutually assured destruction, Naomi Klein, negative equity, new economy, New Urbanism, Norbert Wiener, peak oil, peer-to-peer, place-making, placebo effect, planned obsolescence, Ponzi scheme, price mechanism, price stability, principal–agent problem, private military company, profit maximization, profit motive, prosperity theology / prosperity gospel / gospel of success, public intellectual, race to the bottom, RAND corporation, rent-seeking, RFID, road to serfdom, Ronald Reagan, scientific management, short selling, Silicon Valley, Simon Kuznets, social software, Steve Jobs, Telecommunications Act of 1996, telemarketer, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, trade route, trickle-down economics, union organizing, urban decay, urban planning, urban renewal, Vannevar Bush, vertical integration, Victor Gruen, white flight, working poor, Works Progress Administration, Y2K, young professional, zero-sum game

“By preferring the support of domestic to that of foreign industry,” Smith explains of the average person, “he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.” Smith assumes that people would be biased against international trade, naturally preferring the security offered by sourcing goods locally—and that his readers would agree with him on this point. Like the founders of America, who may have differed on almost everything else but this, Smith saw economics as characterized by small, scaled, local economies working in interaction with one another and guided by the enlightened self-interest of individuals.


pages: 607 words: 133,452

Against Intellectual Monopoly by Michele Boldrin, David K. Levine

accounting loophole / creative accounting, agricultural Revolution, barriers to entry, business cycle, classic study, cognitive bias, cotton gin, creative destruction, David Ricardo: comparative advantage, Dean Kamen, Donald Trump, double entry bookkeeping, en.wikipedia.org, endogenous growth, Ernest Rutherford, experimental economics, financial innovation, Great Leap Forward, Gregor Mendel, Helicobacter pylori, independent contractor, informal economy, interchangeable parts, invention of radio, invention of the printing press, invisible hand, James Watt: steam engine, Jean Tirole, John Harrison: Longitude, Joseph Schumpeter, Kenneth Arrow, linear programming, market bubble, market design, mutually assured destruction, Nash equilibrium, new economy, open economy, PalmPilot, peer-to-peer, pirate software, placebo effect, price discrimination, profit maximization, rent-seeking, Richard Stallman, Robert Solow, seminal paper, Silicon Valley, Skype, slashdot, software patent, the market place, total factor productivity, trade liberalization, Tragedy of the Commons, transaction costs, Y2K

The difference between the price and marginal cost is called competitive rent.5 This amount can be used by shoe producers to cover the cost of building their factories. And indeed, in the competition to build factories, shoe producers will build just enough capacity that their competitive rents cover the cost of building the factories. This is Adam Smith’s invisible hand – just the right number of factories of the appropriate size are built, and social surplus is maximized. What is true for shoes is also true for ideas. It is no more possible to flood the world instantaneously with copies of an idea than it is to produce an infinite number of shoes from a finite-sized factory.


pages: 501 words: 134,867

A Line in the Tar Sands: Struggles for Environmental Justice by Tony Weis, Joshua Kahn Russell

addicted to oil, Bakken shale, bilateral investment treaty, call centre, carbon footprint, clean water, colonial exploitation, conceptual framework, corporate social responsibility, decarbonisation, Deep Water Horizon, en.wikipedia.org, energy security, energy transition, Exxon Valdez, failed state, gentrification, global village, green new deal, guest worker program, happiness index / gross national happiness, high-speed rail, hydraulic fracturing, immigration reform, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, invisible hand, Jevons paradox, liberal capitalism, LNG terminal, market fundamentalism, means of production, megaproject, military-industrial complex, Naomi Klein, new economy, Occupy movement, off-the-grid, oil shale / tar sands, peak oil, profit maximization, public intellectual, race to the bottom, smart grid, special economic zone, WikiLeaks, working poor

Terry Lynn Karl, The Paradox of Plenty: Oil Booms and Petro-States (Berkeley: University of California Press, 1997), 16. 8. Minqi Li, “The 21st Century Crisis: Climate Catastrophe or Socialism,” Review of Radical Political Economics, 43 (2011); Servass Storm, “Capitalism and Climate Change: Can the Invisible Hand Adjust the Natural Thermostat?” Development and Change, 40 (2009). 9. International Energy Agency (IEA), “World Energy Outlook 2010” (2010). 10. IEA, “Oil Market Report” (2013). 11. Li, “The 21st Century Crisis.” 12. Stephen Harper, “Reviving Canadian Leadership in the World” (speech, Ottawa, October 5, 2006), pm.gc.ca/eng/media.asp?


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

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

By finding ‘a new use for old government land’, Matthew Hancock, minister for the Cabinet Office, said in mid 2015, ‘we are helping local communities to spring to life’.1 Third, these, mainly local, benefits would include increased job creation and economic growth. Fourth, much-needed new housing would also be delivered. Fifth and finally, selling public land would make overall land allocation and use more efficient; freeing land from the dead hand of the state, and instead subjecting it to the invisible hand of the market, would see more land put to its ‘highest and best use’.2 Regarding the third of these objectives, whether or not the privatization of land has in fact stimulated local employment and economic growth is frankly impossible to judge. We do not know enough about the detailed history and geography of what land has been sold, and where; and, even if we did, I cannot imagine any reliable way of isolating land privatization from the wide array of other factors – both local and non-local – that potentially have an impact on local employment and output dynamics.


pages: 444 words: 128,701

The Meat Racket: The Secret Takeover of America's Food Business by Christopher Leonard

agricultural Revolution, barriers to entry, commoditize, estate planning, facts on the ground, invisible hand, longitudinal study, mortgage debt, payday loans, price discovery process, price stability, Ralph Nader, vertical integration, women in the workforce, zero-sum game

Like Jerry Yandell in the late 1990s, Boonau was a man who did well by the chicken business. But because of the way the tournament system was structured, his success came at his neighbors’ expense. * * * Greg and Donna Owens had done well in Tyson’s tournament system for nearly a decade, placing at the top sometimes, or more commonly toward the middle. Then some invisible hand seemed to grab hold of their operation, dragging them lower in the competition. They started placing last and couldn’t seem to break the average mark. And for the life of her, Donna couldn’t figure out why. It didn’t seem to be a problem with the farm. The Owenses ran a small place, two chicken houses off a winding gravel lane called Lick Skillet Road.


pages: 505 words: 138,917

Open: The Story of Human Progress by Johan Norberg

Abraham Maslow, additive manufacturing, affirmative action, Albert Einstein, anti-globalists, basic income, Berlin Wall, Bernie Sanders, Bletchley Park, Brexit referendum, British Empire, business cycle, business process, California gold rush, carbon tax, citizen journalism, classic study, Clayton Christensen, clean water, cognitive dissonance, collective bargaining, Corn Laws, coronavirus, COVID-19, creative destruction, crony capitalism, decarbonisation, deindustrialization, Deng Xiaoping, digital map, Donald Trump, Edward Jenner, fake news, Fall of the Berlin Wall, falling living standards, Filter Bubble, financial innovation, flying shuttle, Flynn Effect, Francis Fukuyama: the end of history, future of work, Galaxy Zoo, George Gilder, Gini coefficient, global pandemic, global supply chain, global village, green new deal, humanitarian revolution, illegal immigration, income per capita, Indoor air pollution, indoor plumbing, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Islamic Golden Age, James Watt: steam engine, Jane Jacobs, Jeff Bezos, job automation, John von Neumann, joint-stock company, Joseph Schumpeter, Kickstarter, knowledge economy, labour mobility, Lao Tzu, liberal capitalism, manufacturing employment, mass immigration, negative emissions, Network effects, open borders, open economy, Pax Mongolica, place-making, profit motive, RAND corporation, regulatory arbitrage, rent control, Republic of Letters, road to serfdom, Ronald Reagan, Schrödinger's Cat, sharing economy, side project, Silicon Valley, Solyndra, spice trade, stem cell, Steve Bannon, Steve Jobs, Steve Wozniak, Steven Pinker, tacit knowledge, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, trade liberalization, trade route, transatlantic slave trade, Tyler Cowen, Uber for X, ultimatum game, universal basic income, World Values Survey, Xiaogang Anhui farmers, zero-sum game

This chronically entrepreneurial market would not be able to sustain the large-scale investments needed, or be able to compete with Japanese and German ‘huge, industrial complexes embedded in stable, strategically coordinated alliances often supported by protectionist governments’. In the context of global markets, then, US entrepreneurs were of ‘minor and declining importance’, concluded the author, Charles Ferguson, and ‘only economists moved by the invisible hand have failed to apprehend the problem’.48 This is the technocratic impulse. We are in no mood for surprises because we know what the future is like, and we will carry you there. Such thinking usually fails because it is really the element of surprise that gives open societies the edge, as the American economist George Gilder argued in an exchange with Ferguson.


pages: 909 words: 130,170

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

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

Even so, it is clear that he was convinced that there were certain mysteries one could describe and analyse, but not fully explain. Smith took the view that people were ultimately selfish creatures. He believed that ‘Man intends only his own gain’. But he also believed that when people acted in their own self-interest somehow everybody benefited, as if they were guided in their actions by ‘an invisible hand’ to promote the interests of society more effectively than ‘man’ could, even if he had intended to. Smith’s points of reference for this were the market towns of eighteenth-century Europe, where the traders, manufacturers and merchants all worked to make their own personal fortunes, but where collectively their effort had helped to enrich their towns and communities.


pages: 476 words: 139,761

Kleptopia: How Dirty Money Is Conquering the World by Tom Burgis

active measures, Anton Chekhov, banking crisis, Bear Stearns, Bernie Madoff, Big bang: deregulation of the City of London, Boris Johnson, Brexit referendum, British Empire, collapse of Lehman Brothers, coronavirus, corporate governance, COVID-19, credit crunch, Credit Default Swap, cryptocurrency, disinformation, do-ocracy, Donald Trump, energy security, Etonian, failed state, fake news, Gordon Gekko, high net worth, Honoré de Balzac, illegal immigration, invisible hand, Julian Assange, liberal capitalism, light touch regulation, lockdown, Mark Zuckerberg, Martin Wolf, Michael Milken, Mikhail Gorbachev, Mohammed Bouazizi, Northern Rock, offshore financial centre, Right to Buy, Ronald Reagan, Skype, sovereign wealth fund, trade route, WikiLeaks

The British detectives’ haul was enough to obtain a warrant for the arrest on the charge of conspiracy to handle stolen goods of Seva himself, should he set foot in their jurisdiction. To convict him and his solicitors they would not have to prove his every last criminal endeavour. One crime would do. But the longer they waited for the Moscow police to hand over the evidence, the clearer it became that they were never going to. There was an invisible hand restraining Russian law enforcement from helping the detectives in London convict the Brainy Don and his associates. The charge against Seva was dropped, even though the report of Operation Sword had concluded he was ‘one of the world’s top criminals who has a personal wealth of $100 million’.


pages: 418 words: 134,401

First Friends: The Powerful, Unsung (And Unelected) People Who Shaped Our Presidents by Gary Ginsberg

affirmative action, anti-communist, cuban missile crisis, desegregation, forensic accounting, gentleman farmer, invisible hand, Kitchen Debate, Ralph Waldo Emerson, rolodex, Ronald Reagan, Rosa Parks, Seymour Hersh, SoftBank, Ted Sorensen, traveling salesman, two and twenty, urban planning

In moving from the front lines of the civil rights movement to the front of the white corporate boardroom, Vernon became the first “crossover artist,” providing an example to a generation of Black businesspeople that they could not only succeed but also thrive in the world of big business. “He didn’t just open up doors for Blacks in business; he guided them to success,” American Express CEO Ken Chenault remembered. “His invisible hand was always there, mentoring people from all walks of life. So many people today will say it was ‘Vernon who made the difference’ in their [lives].” Chenault added: “And when white CEOs started asking him to introduce them to other white CEOs, that’s when I knew Vernon arrived.” But amidst all his new success, Jordan suffered a deep personal loss.


pages: 454 words: 134,482

Money Free and Unfree by George A. Selgin

Alan Greenspan, asset-backed security, bank run, banking crisis, barriers to entry, Bear Stearns, break the buck, Bretton Woods, business cycle, capital controls, central bank independence, centralized clearinghouse, Charles Lindbergh, credit crunch, Credit Default Swap, crony capitalism, disintermediation, Dutch auction, fear of failure, fiat currency, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, foreign exchange controls, Fractional reserve banking, German hyperinflation, Glass-Steagall Act, Hyman Minsky, incomplete markets, inflation targeting, information asymmetry, invisible hand, Isaac Newton, Joseph Schumpeter, large denomination, liquidity trap, Long Term Capital Management, low interest rates, market microstructure, Money creation, money market fund, moral hazard, Network effects, Northern Rock, oil shock, Paul Samuelson, Phillips curve, plutocrats, price stability, profit maximization, purchasing power parity, quantitative easing, random walk, rent-seeking, reserve currency, Robert Gordon, Robert Solow, Savings and loan crisis, savings glut, seigniorage, special drawing rights, The Great Moderation, the payments system, too big to fail, transaction costs, Tyler Cowen, unorthodox policies, vertical integration, Y2K

. ——— (2003) “Adaptive Learning and the Transition to Fiat Money.” Economic Journal 113 (484): 147–65. Selgin, G., and White, L. H. (1987) “The Evolution of a Free Banking System.” Economic Inquiry 25 (3): 439–57. ——— (1992) “National Bank Notes as a Quasi-High-Powered Money.” Manuscript, University of Georgia. ——— (1994) “How Would the Invisible Hand Handle Money?” Journal of Economic Literature 32 (4): 1718–49. ——— (1997) “The Option Clause in Scottish Banking.” Journal of Money, Credit, and Banking 29 (2): 270–73. ——— (2005) “Credible Currency: A Constitutional Perspective.” Constitutional Political Economy 16 (1): 71–83. Selgin, G.; Beckworth, D.; and Bahadir, B. (2015) “The Productivity Gap: Monetary Policy, the Subprime Boom, and the Post-2001 Productivity Surge.”


pages: 407 words: 135,242

The Streets Were Paved With Gold by Ken Auletta

benefit corporation, British Empire, business climate, business logic, clean water, collective bargaining, full employment, Gunnar Myrdal, guns versus butter model, hiring and firing, invisible hand, Jane Jacobs, job satisfaction, Joseph Schumpeter, Lewis Mumford, military-industrial complex, mortgage debt, Norman Mailer, North Sea oil, offshore financial centre, Parkinson's law, Ponzi scheme, price stability, profit motive, Ralph Nader, RAND corporation, rent control, rent stabilization, Ronald Reagan, social contagion, The Death and Life of Great American Cities, union organizing, Upton Sinclair, upwardly mobile, urban decay, urban renewal, War on Poverty, working-age population

Obviously, these decisions can be attributed to such nonideological truisms as “politics,” weak leadership, a docile electorate or human nature. As noted, New York was the victim of forces and decisions beyond its control. But we learn something about what happened to New York when we also view past local decisions as violations of fiscal and legal restraints—of “the process.” New York forgot about Adam Smith’s “invisible hand” that guides a free market and turned it away from city bonds to more secure investments; forgot that expedient means (excessive borrowing and taxation) would inevitably lead to a bad end (deep debt and loss of jobs); that each city is not an island; that the social contract is violated when leaders lie, be it about budgets or Vietnam body counts.


pages: 565 words: 134,138

The World for Sale: Money, Power and the Traders Who Barter the Earth’s Resources by Javier Blas, Jack Farchy

accounting loophole / creative accounting, airport security, algorithmic trading, Asian financial crisis, Ayatollah Khomeini, banking crisis, book value, BRICs, business climate, business cycle, collapse of Lehman Brothers, commodity super cycle, coronavirus, corporate raider, COVID-19, Deng Xiaoping, Donald Trump, electricity market, energy security, European colonialism, failed state, financial innovation, Ford Model T, foreign exchange controls, Great Grain Robbery, invisible hand, John Deuss, junk bonds, Kickstarter, light touch regulation, lockdown, low interest rates, margin call, new economy, North Sea oil, offshore financial centre, oil shale / tar sands, oil shock, oil-for-food scandal, Oscar Wyatt, price anchoring, proprietary trading, purchasing power parity, Ronald Reagan, Scramble for Africa, sovereign wealth fund, special economic zone, stakhanovite, Suez crisis 1956, trade route, vertical integration, WikiLeaks, Yom Kippur War, éminence grise

What matters to them is the price disparity – between different locations, different qualities or forms of a product, and different delivery dates. By exploiting these price differences, they help to make markets more efficient, directing resources to their highest value uses in response to price signals. They are, in the words of one academic, the visible manifestation of Adam Smith’s invisible hand. 23 As they have grown, they’ve also become important conduits of finance for global trade – a kind of shadow banking sector that is willing to pay oil producers up front for their crude, or supply copper to manufacturers on credit. As Jim Daley, a former head of oil trading at Marc Rich + Co, puts it: ‘Oil is just a form of money.’ 24 But while this book is about the rise of the commodity traders in the second half of the twentieth century, it also tells a wider story.


pages: 592 words: 133,460

Worn: A People's History of Clothing by Sofi Thanhauser

Airbnb, back-to-the-land, big-box store, business process, business process outsourcing, call centre, Caribbean Basin Initiative, colonial rule, Community Supported Agriculture, corporate social responsibility, cotton gin, COVID-19, deindustrialization, Deng Xiaoping, Dmitri Mendeleev, Donald Trump, export processing zone, facts on the ground, flying shuttle, global supply chain, Great Leap Forward, haute couture, Honoré de Balzac, indoor plumbing, invention of the sewing machine, invisible hand, microplastics / micro fibres, moral panic, North Ronaldsay sheep, off-the-grid, operation paperclip, out of africa, QR code, Rana Plaza, Ronald Reagan, sheep dike, smart cities, special economic zone, strikebreaker, The Wealth of Nations by Adam Smith, trade liberalization, trade route, transatlantic slave trade, Triangle Shirtwaist Factory, union organizing, upwardly mobile, Whole Earth Catalog, women in the workforce

Reckless water withdrawals tend to point toward power imbalances, and to regions where the local population is being sacrificed for the benefit of some other party, who has less to lose when the aquifer, lake, or river disappears, or the oasis becomes a desert. More and more, this water is coming from an area of the world where a twenty-first-century colonizing process is under way: in the far western state of China, known as Xinjiang. Skip Notes *1 Proponents of the free market and the “invisible hand” painstakingly justified making an exception in the case of Indian cotton. Although “we are strongly impressed with the belief, that, as a general rule, it is not judicious to interfere by legislative enactments in matters connected with trade,” wrote the superintendent of the Cotton Gin Factory in the Dharwar Collectorate in 1862, in the matter of forcing Indian peasants to grow cotton for the world market, “we are forced to the conviction that exceptional and more stringent legislation is necessary


pages: 485 words: 133,655

Water: A Biography by Giulio Boccaletti

active transport: walking or cycling, Anthropocene, Asian financial crisis, Bretton Woods, British Empire, business cycle, clean water, conceptual framework, Corn Laws, deindustrialization, demographic transition, Deng Xiaoping, energy transition, financial engineering, Great Leap Forward, invisible hand, John Snow's cholera map, joint-stock company, land reform, land tenure, linear programming, loose coupling, market fundamentalism, mass immigration, means of production, Medieval Warm Period, megaproject, Mohammed Bouazizi, new economy, Nixon triggered the end of the Bretton Woods system, oil shock, opioid epidemic / opioid crisis, Peace of Westphalia, phenotype, scientific management, South China Sea, Suez crisis 1956, text mining, the long tail, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, trade route, Washington Consensus, Works Progress Administration, Yom Kippur War, zero-sum game

This was partly a legacy of the nineteenth century: while there was no expectation of mass social mobility and enfranchisement, the landed aristocracies were generally unconcerned with how to increase the size of the pie for all. After the First World War, the most pressing issue was how to use economic instruments to maintain employment through recessions and booms. Keynes had convincingly argued that the invisible hand of markets was not always a stabilizing force in labor markets, which opened the door to a far more interventionist state. Then, two economists, the English Roy Harrod and the Polish-American Evsey Domar, independently proposed a theory for why income growth happened in the first place.


pages: 453 words: 132,400

Flow by Mihaly Csikszentmihalyi

Abraham Maslow, Albert Einstein, Bonfire of the Vanities, centralized clearinghouse, Charles Lindbergh, conceptual framework, correlation does not imply causation, double helix, fear of failure, Gregor Mendel, Herbert Marcuse, Ignaz Semmelweis: hand washing, invisible hand, Isaac Newton, job satisfaction, longitudinal study, Mahatma Gandhi, meta-analysis, Necker cube, pattern recognition, place-making, Ralph Waldo Emerson, the scientific method, Thomas Kuhn: the structure of scientific revolutions, Vilfredo Pareto

In modern times art, play, and life in general have lost their supernatural moorings. The cosmic order that in the past helped interpret and give meaning to human history has broken down into disconnected fragments. Many ideologies are now competing to provide the best explanation for the way we behave: the law of supply and demand and the “invisible hand” regulating the free market seek to account for our rational economic choices; the law of class conflict that underlies historical materialism tries to explain our irrational political actions; the genetic competition on which sociobiology is based would explain why we help some people and exterminate others; behaviorism’s law of effect offers to explain how we learn to repeat pleasurable acts, even when we are not aware of them.


pages: 479 words: 140,421

Vanishing New York by Jeremiah Moss

activist lawyer, back-to-the-city movement, Bernie Sanders, big-box store, Black Lives Matter, Bonfire of the Vanities, bread and circuses, Broken windows theory, complexity theory, creative destruction, David Brooks, deindustrialization, Donald Trump, East Village, food desert, gentrification, global pandemic, housing crisis, illegal immigration, invisible hand, Jane Jacobs, junk bonds, late capitalism, Lewis Mumford, market fundamentalism, Mason jar, McMansion, means of production, megaproject, military-industrial complex, mirror neurons, Naomi Klein, neoliberal agenda, New Economic Geography, new economy, New Urbanism, Occupy movement, place-making, plutocrats, Potemkin village, RAND corporation, rent control, rent stabilization, Richard Florida, Ronald Reagan, Skype, starchitect, the built environment, The Death and Life of Great American Cities, the High Line, The Spirit Level, trickle-down economics, urban decay, urban renewal, W. E. B. Du Bois, white flight, young professional

They had also long been identified as enemies of the more conservative elites. So what are we really talking about when we talk about gentrification in the twenty-first century? In many ways, the term itself is a diversion. It’s the bright green face of Oz that distracts from the man behind the curtain, the invisible hands pulling all the levers. Those hands belong to the globalized world order of the so-called free market, the neoliberal agenda launched in the late 1970s to destroy socioeconomic progressivism, the stuff that made New York so New York. In cities across America and the world, those hands pull the levers on hyper-gentrification.


Braiding Sweetgrass by Robin Kimmerer

back-to-the-land, clean water, commoditize, double helix, food desert, invisible hand, music of the spheres, oil shale / tar sands, p-value, Pepto Bismol, Potemkin village, rewilding, scientific worldview, the built environment, the scientific method

I paddled hard and strong out to the deep water, pulling against the weight of the restraining vegetation, eventually breaking free. When I had exhausted my shoulders so they were as empty as my heart, I rested on the water, closed my eyes, and let the sadness come, adrift. Maybe a little breeze came up, maybe a hidden current, or the earth tilting on its axis to slosh the pond, but whatever the invisible hand, my little boat began to rock gently, like a cradle on the water. Held by the hills and rocked by the water, the hand of the breeze against my cheek, I gave myself over to the comfort that came, unbidden. I don’t know how long I floated, but my little red boat drifted the length of the lake.


pages: 1,106 words: 335,322

Titan: The Life of John D. Rockefeller, Sr. by Ron Chernow

business cycle, California gold rush, classic study, collective bargaining, Cornelius Vanderbilt, death of newspapers, delayed gratification, double entry bookkeeping, endowment effect, family office, financial independence, Ford Model T, Frederick Winslow Taylor, George Santayana, God and Mammon, Gregor Mendel, Ida Tarbell, income inequality, invisible hand, Joseph Schumpeter, Louis Pasteur, low interest rates, Mahatma Gandhi, Menlo Park, New Journalism, oil rush, oil shale / tar sands, passive investing, plutocrats, price discrimination, profit motive, prosperity theology / prosperity gospel / gospel of success, Ralph Waldo Emerson, refrigerator car, Suez canal 1869, The Chicago School, The Theory of the Leisure Class by Thorstein Veblen, Thorstein Veblen, transcontinental railway, traveling salesman, union organizing, Upton Sinclair, vertical integration, W. E. B. Du Bois, white picket fence, yellow journalism

Alexander, offered to sell his interest to William Rockefeller at ten cents on the dollar, as the entire industry faced ruin. Worse, the oil market wasn’t correcting itself according to the self-regulating mechanism dear to neoclassical economists. Producers and refiners didn’t shut down operations in the expected numbers, causing Rockefeller to doubt the workings of Adam Smith’s theoretical invisible hand: “So many wells were flowing that the price of oil kept falling, yet they went right on drilling.”3 The industry was trapped in a full-blown crisis of overproduction with no relief in sight. Thus, in 1869, one year after his stellar railroad coup, Rockefeller feared that his wealth might be snatched away from him.

But the oil market didn’t correct itself in this manner because refiners carried heavy bank debt and other fixed costs, and they discovered that, by operating at a loss, they could still service some debt. Obviously, they couldn’t lose money indefinitely, but as they soldiered on to postpone bankruptcy, their output dragged oil prices down to unprofitable levels for everybody. Hence, a perverse effect of the invisible hand: Each refiner, pursuing his own self-interest, generated collective misery. As Rockefeller phrased it, “Every man assumed to struggle hard to get all of the business . . . even though in so doing he brought to himself and the competitors in the business nothing but disaster.”85 In a day of primitive accounting systems, many refiners had only the haziest notion of their profitability or lack thereof.


The Great Turning: From Empire to Earth Community by David C. Korten

Abraham Maslow, Albert Einstein, banks create money, big-box store, Bretton Woods, British Empire, business cycle, clean water, colonial rule, Community Supported Agriculture, death of newspapers, declining real wages, different worldview, digital divide, European colonialism, Francisco Pizarro, full employment, George Gilder, global supply chain, global village, God and Mammon, Hernando de Soto, Howard Zinn, informal economy, intentional community, Intergovernmental Panel on Climate Change (IPCC), invisible hand, joint-stock company, land reform, market bubble, market fundamentalism, Monroe Doctrine, Naomi Klein, neoliberal agenda, new economy, peak oil, planetary scale, plutocrats, Project for a New American Century, Ronald Reagan, Rosa Parks, sexual politics, shared worldview, social intelligence, source of truth, South Sea Bubble, stem cell, structural adjustment programs, The Chicago School, trade route, Washington Consensus, wealth creators, World Values Survey

Korten The Post-Corporate World: Life After Capitalism When Corporations Rule the World Alternatives to Economic Globalization: A Better World Is Possible John Cavanagh and Jerry Mander The People’s Business: Controlling Corporations and Restoring Democracy Lee Drutman and Charlie Cray Confessions of an Economic Hit Man John Perkins The Fox in the Henhouse: How Privatization Threatens Democracy Gangs of America: The Rise of Corporate Power and the Disabling of Democracy Ted Nace Si Kahn and Elizabeth Minnich Affluenza: The All-Consuming Epidemic Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation John De Graaf, David Wann, and Thomas H. Naylor Greg LeRoy Corporations and the Public Interest: Guiding the Invisible Hand Hidden Power: What You Need to Know to Save Our Democracy Steve Lydenberg Charles Derber All titles are available at your favorite bookseller or directly from Berrett-Koehler: Call 800-929-2929, or order online at bkconnection.com Be Connected Go to www.bkconnection.com to read exclusive previews and excerpts of new books.


pages: 380 words: 153,701

Class Acts: Service and Inequality in Luxury Hotels by Rachel Sherman

Abraham Maslow, deskilling, emotional labour, income inequality, indoor plumbing, invisible hand, knowledge worker, means of production, move 37, new economy, pink-collar, Savings and loan crisis, The Theory of the Leisure Class by Thorstein Veblen, Thorstein Veblen, union organizing, upwardly mobile, work culture , yield management

Even objects in the room are indicators of labor, giving the sense that an invisible (caring) hand is constantly replacing bathrobes, slippers, ten or more different bathroom amenities, mountains of towels, fruit, fresh flowers, and so on. Turndown service is an especially striking display of labor. Literally folding the corner of the bedding down, of course, serves no useful purpose; the gesture indicates, rather, that an invisible hand has been at UC_Sherman (O).qxd 10/3/2006 2:01 PM Page 41 “Better Than Your Mother” 41 work. Other elements of the elaborate turndown service in luxury hotels include switching on lights, turning on the radio, closing drapes, emptying trash baskets, cleaning the bathroom, replacing used towels, arranging the laundry bag and room service menu on the bed, and filling the ice bucket.


pages: 519 words: 148,131

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

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

—James Bryce, Viscount Bryce The American Commonwealth, 1894 The rich only select from the heap what is most precious and agreeable. They consume little more than the poor, and in spite of their natural selfishness and rapacity…they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life which would have been made, had the earth been divided into equal portions among all its inhabitants. —Adam Smith The Theory of Moral Sentiments, 1759 Transition THE CIVIL WAR THE AMERICAN CIVIL WAR was the largest war fought in the Western world in the century between the Battle of Waterloo, fought on June 18, 1815, and the outbreak of World War I on August 1, 1914.


pages: 562 words: 146,544

Daemon by Daniel Suarez

Berlin Wall, Burning Man, call centre, digital map, disruptive innovation, double helix, failed state, Fall of the Berlin Wall, game design, high net worth, invisible hand, McMansion, offshore financial centre, optical character recognition, peer-to-peer, plutocrats, RFID, satellite internet, SQL injection, Stewart Brand, tech worker, telemarketer, web application

“Anyone have anything on the media’s current fascination with cyber security? Does anyone know what’s driving it?” “Sebeck’s trial?” The FBI analyst began to hold court on the topic. “The government has few real controls over either the Internet or private data networks. This manufactured panic is addressing an actual deficiency in the cyber infrastructure. It’s the invisible hand of the market in action.” Philips looked impassively at him. “Unless it’s already too late.” The NSA section chief raised an eyebrow. “Is your copycat Daemon up to something more than demanding tribute from pornographers, Dr. Philips?” She revealed no emotion. “For one, I believe it is Sobol’s Daemon.”


Wool Omnibus Edition by Hugh Howey

back-to-the-land, clean tech, confounding variable, hydroponic farming, invisible hand, long peace

Juliette felt lost in this void between the two doors, trapped in this airlock full of its brightly colored pipes all jutting from the walls and ceiling, everything shimmering behind plastic-wrapped shrouds. The hiss of Argon being pumped into the room sounded distant through her helmet. It let her know the end was near. Pressure built against the plastic, crinkling it across the bench and walls, wrapping it tightly around the pipes. She could feel the pressure against her suit, like an invisible hand gently squeezing. She knew what was to happen next. And part of her wondered how she had gotten here, a girl from Mechanical who had never cared one whit about the outside, who had only ever broken minor laws, and who would’ve been content for the rest of her life to live in the deepest bowels of the earth, covered in grease and fixing the broken things, little concern for the wider world of the dead that surrounds her— 2 Days Earlier Juliette sat on the floor of the holding cell, her back against the tall rows of steel bars, a mean world displayed on the wallscreen before her.


pages: 535 words: 147,528

1948. A Soldier's Tale – the Bloody Road to Jerusalem by Uri Avnery, Christopher Costello

invisible hand, Suez canal 1869, Suez crisis 1956, Yom Kippur War

Some have taken off their shirts and are baking half naked in the sun. Drinking is, of course, forbidden. Water is valuable. All that remains is dreaming – nebulous, short-lived, meaningless. Far away, on the horizon, we can see Arabs tending their fields. The look like miniature chess pieces moved by invisible hands. I am lying behind a machine gun and aiming. Of course you are not allowed to shoot. We have to maintain the illusion that no one knows about our ambush. The bullets couldn’t reach anyone. The distance is over two kilometers. Or is it less than that? I change the weapon’s setting to one and a half kilometers.


pages: 632 words: 159,454

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

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

The type of capitalism which China adopted was distinctive and, in many of its features, differed widely from the capitalism preached by the neo-liberals who dominated US and British administrations in the 1980s. The key to understanding China’s impressive economic growth in the 1980s and 1990s starts inevitably with the state. China did not grow like neighbouring Hong Kong, as a free-market trading area, whose political economy was governed by the ‘invisible hand’ of Adam Smith. While free-market impulses were given some leeway, China’s path to success was dictated by the state. In this way, China represented a triumph of ‘mercantilism’, a concept which needs to be understood fully to grasp what happened in that country in the last quarter of the twentieth century.


pages: 552 words: 143,074

Without Copyrights: Piracy, Publishing, and the Public Domain (Modernist Literature and Culture) by Robert Spoo

invisible hand, Network effects, New Journalism, peer-to-peer, Ronald Reagan, tragedy of the anticommons, transaction costs

The Anglo-American theory of copyright holds that the prospect of an enforceable property right encourages authors to trouble themselves to produce because they know they will not be giving their creative offspring as hostages to free riders. This is the incentive theory of copyright, and it requires us to think of an author as a rational actor who responds with dutiful scribbling when the invisible hand of interest beckons. People get down to creating, the theory says, when they can descry a monetary carrot in the offing; if you promise to build their bank account, they will come. Abraham Lincoln encapsulated the idea when he remarked of patents that they add “the fuel of interest to the fire of genius, in the discovery and production of new and useful things.”13 Yet even lawyers know this is only a partial account of creativity.


pages: 371 words: 36,271

Libertarian Idea by Jan Narveson

centre right, invisible hand, means of production, Menlo Park, night-watchman state, Pareto efficiency, Peter Singer: altruism, prisoner's dilemma, psychological pricing, rent-seeking, zero-sum game

There are, by definition in this ideal market, no “externalities”—in every transaction, all costs and benefits accrue only to the parties to the transaction; all of the goods and services produced and consumed, and all of the factors of production, are the property of individuals without remainder; the technology is known and fixed; information about products and prices is complete and costless to each actor, who is also indifferent regarding the origin of the products (the consumer cares only about its utility qua product, not qua manifestation of a certain ideology, for instance); and there is perfect competition in the sense that no one producer can significantly influence prices unilaterally. In such a situation each agent simply aims to maximize her utility from her own production and exchange activities, and the result will be terrific for everybody: the Invisible Hand lives! Several very nicesounding things are provable3 about a market so characterized, notably, that the society thus blessed maximizes its utility—a result not to be confused, however, with what utilitarians mean by that expression. Given this ideal market, all changes are Pareto-optimal. What is meant by “the market society maximizes its utility” is that at any particular time no one can do better than has been done without someone else‟s doing worse.


pages: 487 words: 151,810

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

"World Economic Forum" Davos, Abraham Maslow, Albert Einstein, asset allocation, assortative mating, Atul Gawande, behavioural economics, Bernie Madoff, business process, Cass Sunstein, choice architecture, classic study, clean water, cognitive load, creative destruction, Daniel Kahneman / Amos Tversky, David Brooks, delayed gratification, deliberate practice, disintermediation, Donald Trump, Douglas Hofstadter, Emanuel Derman, en.wikipedia.org, fake it until you make it, fear of failure, financial deregulation, financial independence, Flynn Effect, George Akerlof, Henri Poincaré, hiring and firing, impulse control, invisible hand, Jeff Hawkins, Joseph Schumpeter, labor-force participation, language acquisition, longitudinal study, loss aversion, medical residency, meta-analysis, mirror neurons, Monroe Doctrine, Paul Samuelson, power law, Richard Thaler, risk tolerance, Robert Shiller, school vouchers, six sigma, social intelligence, Stanford marshmallow experiment, Steve Jobs, Steven Pinker, tacit knowledge, the scientific method, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, Tyler Cowen, Walter Mischel, young professional

Both sides assumed there was a direct relationship between improving material conditions and solving problems. Both sides neglected matters of character, culture, and morality. In other words, they split Adam Smith down the middle. Smith wrote one book, The Wealth of Nations, in which he described economic activity and the invisible hand. But he wrote another book, The Theory of Moral Sentiments, in which he described how sympathy and the unconscious desire for esteem molded individuals. Smith believed that the economic activity described in The Wealth of Nations rested upon the bedrock described in The Theory of Moral Sentiments.


pages: 485 words: 148,662

Farewell by Sergei Kostin, Eric Raynaud

active measures, car-free, cuban missile crisis, disinformation, Dr. Strangelove, index card, invisible hand, kremlinology, Lao Tzu, Mikhail Gorbachev, military-industrial complex, Ronald Reagan, Strategic Defense Initiative, Vladimir Vetrov: Farewell Dossier

Would Vetrov’s actions have had the same impact had he chosen to begin his betrayal a few years earlier, during détente, instead of the very month when a new American president, determined to put an end to the Cold War, was elected? In that regard, the end of the Soviet Bloc seems to have been written by an invisible hand. Many will consider that this affair is just one aspect of the end of the Cold War, and they will be probably right. “Reagan himself did not consider that he won the Cold War,” reminds Richard Allen. “He believed that it was linked to a correlation of widely different factors, including people protests in Eastern Europe, and, above all, the fundamental corruption of the communist system.”10 It is more than likely that the corruption Vetrov intended to avenge by giving himself to the DST was less fundamental and more concrete than the one Reagan was talking about.


pages: 541 words: 146,445

Spin by Robert Charles Wilson

airport security, Colonization of Mars, Great Leap Forward, invention of writing, invisible hand, John von Neumann, lateral thinking, Mahatma Gandhi, megacity, oil shale / tar sands, rolodex, Stephen Hawking, synthetic biology

We had made the trip a hundred, a thousand times before. The twins were already getting a little old for it, but in the seven years we had all lived on the property of the Big House it had become a ritual, the summer-Saturday inevitable. We skipped it on rainy or swelteringly hot weekends, but when the weather was fine we were drawn as if by an invisible hand to our meeting point at the end of the long Lawton driveway. Today the air was gentle and breezy and the sunlight infused everything it touched with a deep organic warmth. It was as if the climate wanted to reassure us: the natural world was doing all right, thank you, almost ten months after the Event… even if we were (as Jase occasionally said) a cultivated planet now, a garden tended by unknown forces rather than a patch of cosmic wildwood.


pages: 511 words: 148,310

Winning the War on War: The Decline of Armed Conflict Worldwide by Joshua S. Goldstein

Albert Einstein, Ayatollah Khomeini, Bartolomé de las Casas, Berlin Wall, Black Swan, blood diamond, business cycle, colonial rule, cuban missile crisis, death from overwork, Doomsday Clock, failed state, immigration reform, income inequality, invention of writing, invisible hand, land reform, long peace, microcredit, Mikhail Gorbachev, Nelson Mandela, no-fly zone, Oklahoma City bombing, purchasing power parity, RAND corporation, selection bias, Steven Pinker, Suez canal 1869, Suez crisis 1956, Tobin tax, unemployed young men, Winter of Discontent, work culture , Y2K

Amsterdam: Gordon & Breach, 1997. Mazurana, Dyan, Angela Raven-Roberts, and Jane Parpart, eds. Gender, Conflict, and Peacekeeping . Lanham, Md.: Rowman & Littlefield, 2005. McCrummen, Stephanie. “Congo’s Rape Epidemic Worsens during U.S.-Backed Military Operation.” Washington Post, August 10, 2009. McDonald, Patrick J. The Invisible Hand of Peace: Capitalism, the War Machine, and International Relations Theory. Cambridge, UK: Cambridge University Press, 2009. McEvedy, Colin, and Richard Jones. Atlas of World Population History. London: Penguin, 1978. Mearsheimer, John J. “Back to the Future: Instability in Europe after the Cold War.”


pages: 498 words: 145,708

Consumed: How Markets Corrupt Children, Infantilize Adults, and Swallow Citizens Whole by Benjamin R. Barber

"World Economic Forum" Davos, Abraham Maslow, addicted to oil, AltaVista, American ideology, An Inconvenient Truth, AOL-Time Warner, Berlin Wall, Bertrand Russell: In Praise of Idleness, Bill Gates: Altair 8800, bread and circuses, business cycle, Celebration, Florida, collective bargaining, creative destruction, David Brooks, delayed gratification, digital divide, do well by doing good, Donald Trump, double entry bookkeeping, Dr. Strangelove, G4S, game design, George Gilder, Gordon Gekko, greed is good, Herbert Marcuse, Hernando de Soto, illegal immigration, informal economy, invisible hand, John Perry Barlow, Joseph Schumpeter, laissez-faire capitalism, late capitalism, liberal capitalism, Marc Andreessen, McJob, microcredit, Naomi Klein, new economy, New Journalism, Norbert Wiener, nuclear winter, Panopticon Jeremy Bentham, Paradox of Choice, pattern recognition, presumed consent, profit motive, race to the bottom, Ralph Nader, retail therapy, road to serfdom, Robert Bork, Ronald Reagan, Saturday Night Live, Silicon Valley, SimCity, spice trade, Steve Jobs, telemarketer, The Fortune at the Bottom of the Pyramid, the market place, The Wisdom of Crowds, Thomas L Friedman, Thorstein Veblen, trade route, Tyler Cowen, vertical integration, Virgin Galactic, X Prize

It enthuses about consumers as the new citizens who can do more with their dollars and euros and yen than they ever did with their votes. It associates the privileged market sector with liberty as private choice while it condemns democratic government as coercive. It promotes a new and malevolent variation on the eighteenth-century laissez-faire doctrine of the “invisible hand” by which Enlightenment economists once postulated that the pursuit of private desire by selfish individuals would result in the greater good of all. Privatization ideology today encourages us to believe that the market is not only efficient and flexible but can somehow turn its regressive impulses to the service of what is left of the idea of the public good.


The-General-Theory-of-Employment-Interest-and-Money by John Maynard Keynes

bank run, behavioural economics, business cycle, collective bargaining, declining real wages, delayed gratification, full employment, invisible hand, laissez-faire capitalism, low interest rates, marginal employment, means of production, moral hazard, Paul Samuelson, price stability, profit motive, quantitative easing, secular stagnation, The Wealth of Nations by Adam Smith, We are all Keynesians now, working-age population

The Economist as Saviour As an intellectual achievement, The General Theory ranks with only a handful of other works in economics—the tiny set of books that transformed our perception of the world, so that once people became aware of what those books had to say they saw everything differently. Adam Smith did that in The Wealth of Nations: suddenly the economy was not just a collection of people getting and spending, it was a self-regulating system in which each individual “is led by an invisible hand to promote an end which was no part of his intention”. The General Theory is in the same league: suddenly the idea that mass unemployment is the result of inadequate demand, long a fringe heresy, became completely comprehensible, indeed obvious. What makes The General Theory truly unique, however, is that it combined towering intellectual achievement with immediate practical relevance to a global economic crisis.


pages: 653 words: 155,847

Energy: A Human History by Richard Rhodes

Albert Einstein, animal electricity, California gold rush, Cesare Marchetti: Marchetti’s constant, Copley Medal, dark matter, David Ricardo: comparative advantage, decarbonisation, demographic transition, Dmitri Mendeleev, Drosophila, Edmond Halley, energy transition, Ernest Rutherford, Fellow of the Royal Society, flex fuel, Ford Model T, Garrett Hardin, gentrification, Great Leap Forward, Ida Tarbell, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of the steam engine, invisible hand, Isaac Newton, James Watt: steam engine, joint-stock company, Menlo Park, Michael Shellenberger, Mikhail Gorbachev, new economy, nuclear winter, off-the-grid, oil rush, oil shale / tar sands, oil shock, peak oil, Ralph Nader, Richard Feynman, Ronald Reagan, selection bias, Simon Kuznets, tacit knowledge, Ted Nordhaus, The Rise and Fall of American Growth, Thomas Malthus, Thorstein Veblen, tontine, Tragedy of the Commons, uranium enrichment, urban renewal, Vanguard fund, working poor, young professional

Further research, however, found the EKC model strangely inconsistent, applying most evidently to air pollution but not, say, to water quality or increasing levels of carbon dioxide, the greenhouse gas.36 Despite its inconsistencies, the EKC model has been the darling of capitalist conservatives, who like to claim it proves that economic growth unfettered by government regulation will sweep away pollution with a broom worked by invisible hands. A partly overlapping model of environmental improvement conceives such improvement to be a luxury good: elites buying cleaner air and water and less crowded spaces (“environmental amenities” in economist-speak). In this model, necessities remain affordable as production becomes more efficient and material substitutions replace depleting natural resources, while environmental amenities become more expensive: electricity stays cheap, but there’s only one Grand Canyon, where more people means less access.


pages: 547 words: 160,071

Underground by Suelette Dreyfus

airport security, Free Software Foundation, invisible hand, John Markoff, Julian Assange, Loma Prieta earthquake, military-industrial complex, packet switching, PalmPilot, pirate software, profit motive, publish or perish, RFC: Request For Comment, Ronald Reagan, Stephen Hawking, Steven Levy, Strategic Defense Initiative, Stuxnet, uranium enrichment, urban decay, WikiLeaks, zero day

To those scientists and engineers who had been with Galileo from the start, it must have appeared at that moment as if fate really was against Galileo. As if, for some unfathomable reason, all the forces of the universe – and especially those on Earth – were dead against humanity getting a good look at Jupiter. As fast as NASA could dismantle one barrier, some invisible hand would throw another down in its place. Monday, 16 October, 1989 NASA’s Goddard Space Flight Center, Greenbelt, Maryland Across the vast NASA empire, reaching from Maryland to California, from Europe to Japan, NASA workers greeted each other, checked their in-trays for mail, got their cups of coffee, settled into their chairs and tried to login to their computers for a day of solving complex physics problems.


The Greatest Show on Earth: The Evidence for Evolution by Richard Dawkins

Alfred Russel Wallace, Andrew Wiles, Arthur Eddington, back-to-the-land, Claude Shannon: information theory, correlation does not imply causation, Craig Reynolds: boids flock, Danny Hillis, David Attenborough, discovery of DNA, Dmitri Mendeleev, domesticated silver fox, double helix, en.wikipedia.org, epigenetics, experimental subject, Gregor Mendel, heat death of the universe, if you see hoof prints, think horses—not zebras, invisible hand, Large Hadron Collider, Louis Pasteur, out of africa, phenotype, precautionary principle, Thomas Malthus

Natural selection can drive a population to extinction, while constantly favouring, to the bitter end, those competitive genes that are destined to be the last to go extinct. The hypothetical planner that I have imagined is a certain kind of economist, a welfare economist calculating an optimum strategy for a whole population, or an entire ecosystem. If we must make economic analogies, we should think instead of Adam Smith’s ‘invisible hand’. EVOLUTIONARY THEODICY? But now I want to leave economics altogether. We shall stay with the idea of a planner, a designer, but our planner will be a moral philosopher rather than an economist. A beneficent designer might – you’d idealistically think – seek to minimize suffering. This is not incompatible with economic welfare, but the system created will differ in detail.


pages: 566 words: 144,072

In the Graveyard of Empires: America's War in Afghanistan by Seth G. Jones

belling the cat, business climate, clean water, colonial rule, cuban missile crisis, disinformation, drone strike, failed state, friendly fire, invisible hand, Khyber Pass, Mikhail Gorbachev, Murray Gell-Mann, open borders, purchasing power parity, RAND corporation, Ronald Reagan, Seymour Hersh, trade route, zero-sum game

Following Max Weber, any government that cannot control a monopoly on physical force will be unable to force people to comply with the state’s laws.22 Since the Enlightenment, philosophers in the tradition of Hobbes and Kant have seen a link between strong and responsible governments with peace and order. Even Adam Smith, the English economist and philosopher famous for advocating a minimal government role and the invisible hand of the market, supported a strong and competent security force to establish domestic order. So how does weak governance contribute to the outbreak of an insurgency? By definition, weak states cannot meet the basic needs of their population.23 They cannot consolidate authority over all their territory and they often do not succeed in maintaining order within the territory they do control.24 They fail to use state resources to promote security or serve the public interest.25 Weak states lack sufficient bureaucratic and institutional structures to ensure the functioning of government.


pages: 339 words: 57,031

From Counterculture to Cyberculture: Stewart Brand, the Whole Earth Network, and the Rise of Digital Utopianism by Fred Turner

"World Economic Forum" Davos, 1960s counterculture, A Declaration of the Independence of Cyberspace, Alan Greenspan, Alvin Toffler, Apple's 1984 Super Bowl advert, back-to-the-land, Bill Atkinson, bioinformatics, Biosphere 2, book value, Buckminster Fuller, business cycle, Californian Ideology, classic study, Claude Shannon: information theory, complexity theory, computer age, Computer Lib, conceptual framework, Danny Hillis, dematerialisation, distributed generation, Douglas Engelbart, Douglas Engelbart, Dr. Strangelove, Dynabook, Electric Kool-Aid Acid Test, Fairchild Semiconductor, Ford Model T, From Mathematics to the Technologies of Life and Death, future of work, Future Shock, game design, George Gilder, global village, Golden Gate Park, Hacker Conference 1984, Hacker Ethic, Haight Ashbury, Herbert Marcuse, Herman Kahn, hive mind, Howard Rheingold, informal economy, intentional community, invisible hand, Ivan Sutherland, Jaron Lanier, John Gilmore, John Markoff, John Perry Barlow, John von Neumann, Kevin Kelly, knowledge economy, knowledge worker, Lewis Mumford, market bubble, Marshall McLuhan, mass immigration, means of production, Menlo Park, military-industrial complex, Mitch Kapor, Mondo 2000, Mother of all demos, new economy, Norbert Wiener, peer-to-peer, post-industrial society, postindustrial economy, Productivity paradox, QWERTY keyboard, Ralph Waldo Emerson, RAND corporation, reality distortion field, Richard Stallman, Robert Shiller, Ronald Reagan, Shoshana Zuboff, Silicon Valley, Silicon Valley ideology, South of Market, San Francisco, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, systems thinking, technoutopianism, Ted Nelson, Telecommunications Act of 1996, The Hackers Conference, the strength of weak ties, theory of mind, urban renewal, Vannevar Bush, We are as Gods, Whole Earth Catalog, Whole Earth Review, Yom Kippur War

Like the New Communalists thirty years earlier, Kelly turned away from any notion of political struggle and toward the commercial sphere as a site of social change. That sphere, he argued, was itself already a model of the natural Networking the New Economy [ 203 ] world. Like hives of bees or anthills or computers, the economy was governed by an “Invisible Hand.” Like the vivisystems of nature, the ideal corporation should be “distributed, decentralized, collaborative, and adaptive.”59 The firm, he explained, had become an organism, and through the proper deployment of technology, and especially information technology, it could return both workers and machines to a more natural way of being: Industrial ecology must grow into a networked just-in-time system that dynamically balances the flow of materials so that local overflows and shortages are shuttled around to minimize variable stocks.


pages: 651 words: 161,270

Global Spin: The Corporate Assault on Environmentalism by Sharon Beder

American Legislative Exchange Council, battle of ideas, benefit corporation, Black Monday: stock market crash in 1987, business climate, centre right, clean water, corporate governance, Exxon Valdez, Gary Taubes, global village, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Elkington, laissez-faire capitalism, military-industrial complex, oil shale / tar sands, Oklahoma City bombing, old-boy network, planned obsolescence, precautionary principle, price mechanism, profit maximization, Ralph Nader, RAND corporation, Ronald Reagan, scientific management, shareholder value, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, the market place, The Wealth of Nations by Adam Smith, two and twenty, urban planning

However the influence of think-tanks has been so pervasive that free-market environmentalism is no longer confined to the Republican party in the US, the Tories in the UK and the Liberal Party in Australia. Prior to becoming President, Democrat Bill Clinton said in 1992 that he believed it was “time for a new era in environmental protection which used the market to help us get our environment on track—to recognize that Adam Smith’s invisible hand can have a green thumb. . .”57 In 1991 the OECD issued guidelines for applying economic instruments, and an Economic Incentives Task force was established by the US EPA “to identify new areas in which to apply market-based approaches”.58 Similar units have been established in regulatory agencies in other countries, including Australia.


pages: 543 words: 147,357

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

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

See also Thomas Lee Hazen (2009) ‘Filling a Regulatory Gap: It is Time to Regulate Over-the-Counter Derivatives’, University of North Carolina Legal Studies Research Paper No. 1338339. 28 Satyajit Das (2006) Traders, Guns and Money: Knowns and Unknowns in the Dazzling World of Derivatives, Prentice-Hall. 29 Committee on Homeland Security and Governmental Affairs, Permanent Subcommittee on Investigations (2010) ‘Wall Street and the Financial Crisis: The Role of Investment Banks’, at http://hsgac.senate.gov/public/_files/ Financial_Crisis/042710Exhibits.pdf. 30 Joseph Stiglitz, ‘The Insider: What I Learned at the World Economic Crisis’, New Republic, 17 April 2000. 31 David Jones (2000) ‘Emerging Problems with the Basel Capital Accord: Regulatory Capital Arbitrage and Related Issues’, Journal of Banking & Finance 24: 35–58. 32 Roger Lowenstein (2001) When Genius Failed: The Rise and Fall of Long-Term Capital Management, Random House. 33 Allen Berger, Richard Herring and Giorgio Szego (1995) ‘The Role of Capital in Financial Institutions’, Journal of Banking and Finance 19 (3–4): 393–430. 34 Gary Gorton (2010) Slapped by the Invisible Hand: The Panic of 2007, Oxford University Press. Chapter Seven: Communism for the Rich 1 Thomas Philippon and Ariell Reshef (2009) ‘Wages and Human Capital in the US Financial Industry: 1909–2006’, NBER Working Paper No. 14644. 2 See also Viral Acharya, Jennifer Carpenter, Xavier Gabaix, Kose John, Matthew Richardson, Marti Subrahmanyam, Rangarajan Sundaram and Eitan Zemel, ‘Corporate Governance in the Modern Financial Sector’, and Gian Luca Clementi, Thomas F.


pages: 496 words: 154,363

I'm Feeling Lucky: The Confessions of Google Employee Number 59 by Douglas Edwards

"World Economic Forum" Davos, Albert Einstein, AltaVista, Any sufficiently advanced technology is indistinguishable from magic, AOL-Time Warner, barriers to entry, book scanning, Build a better mousetrap, Burning Man, business intelligence, call centre, commoditize, crowdsourcing, don't be evil, Dutch auction, Elon Musk, fault tolerance, Googley, gravity well, invisible hand, Jeff Bezos, job-hopping, John Markoff, Kickstarter, machine translation, Marc Andreessen, Menlo Park, microcredit, music of the spheres, Network effects, PageRank, PalmPilot, performance metric, pets.com, Ralph Nader, risk tolerance, second-price auction, Sheryl Sandberg, side project, Silicon Valley, Silicon Valley startup, slashdot, stem cell, Superbowl ad, Susan Wojcicki, tech worker, The Turner Diaries, Y2K

In February 1998, a small Pasadena company named GoTo started auctioning placement in search results they bought from other providers. Six months later, they claimed to have more than a thousand paying customers. According to GoTo, you didn't need fancy algorithms to determine relevance, just the invisible hand of the free market. Any company bidding for placement at the top of the results must be a good match for the term being searched. At Google, we found that concept ridiculous. Bidding-based ranking was clearly inferior to results based on an algorithm. Bidding was driven by imprecise humans. Humans bad.


pages: 524 words: 143,993

The Shifts and the Shocks: What We've Learned--And Have Still to Learn--From the Financial Crisis by Martin Wolf

air freight, Alan Greenspan, anti-communist, Asian financial crisis, asset allocation, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, Basel III, Bear Stearns, Ben Bernanke: helicopter money, Berlin Wall, Black Swan, bonus culture, break the buck, Bretton Woods, business cycle, call centre, capital asset pricing model, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collateralized debt obligation, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, currency risk, debt deflation, deglobalization, Deng Xiaoping, diversification, double entry bookkeeping, en.wikipedia.org, Erik Brynjolfsson, Eugene Fama: efficient market hypothesis, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial deregulation, financial innovation, financial repression, floating exchange rates, foreign exchange controls, forward guidance, Fractional reserve banking, full employment, Glass-Steagall Act, global rebalancing, global reserve currency, Growth in a Time of Debt, Hyman Minsky, income inequality, inflation targeting, information asymmetry, invisible hand, Joseph Schumpeter, Kenneth Rogoff, labour market flexibility, labour mobility, Les Trente Glorieuses, light touch regulation, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, Long Term Capital Management, low interest rates, mandatory minimum, margin call, market bubble, market clearing, market fragmentation, Martin Wolf, Mexican peso crisis / tequila crisis, Minsky moment, Modern Monetary Theory, Money creation, money market fund, moral hazard, mortgage debt, negative equity, new economy, North Sea oil, Northern Rock, open economy, paradox of thrift, Paul Samuelson, price stability, private sector deleveraging, proprietary trading, purchasing power parity, pushing on a string, quantitative easing, Real Time Gross Settlement, regulatory arbitrage, reserve currency, Richard Feynman, risk-adjusted returns, risk/return, road to serfdom, Robert Gordon, Robert Shiller, Ronald Reagan, savings glut, Second Machine Age, secular stagnation, shareholder value, short selling, sovereign wealth fund, special drawing rights, subprime mortgage crisis, tail risk, The Chicago School, The Great Moderation, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, The Wealth of Nations by Adam Smith, too big to fail, Tyler Cowen, Tyler Cowen: Great Stagnation, vertical integration, very high income, winner-take-all economy, zero-sum game

Each of these assumptions is now subject to extensive challenge on both theoretical and empirical grounds, with potential implications for the appropriate design of regulation and for the role of regulatory authorities.58 Behind all this was the assumption that self-interest would, via Adam Smith’s invisible hand, ensure a stable, dynamic and efficient financial system. This is the view that Alan Greenspan, probably the most influential spokesman for that point of view, recanted, when he told a congressional committee in October 2008 that he had found a ‘flaw’ in his thinking on markets.59 He then accepted that the pursuit of self-interest, however beneficial in the economy as a whole, does not necessarily lead to financial stability, because shareholders of financial institutions are either unaware of the risks their institutions are running or are prepared to let management make big gambles.


pages: 532 words: 141,574

Bleeding Edge: A Novel by Thomas Pynchon

addicted to oil, AltaVista, anti-communist, Anton Chekhov, Bernie Madoff, big-box store, Burning Man, carried interest, deal flow, Donald Trump, double entry bookkeeping, East Village, eternal september, false flag, fixed-gear, gentrification, Hacker Ethic, index card, invisible hand, jitney, Larry Ellison, late capitalism, margin call, messenger bag, Network effects, Ponzi scheme, prediction markets, pre–internet, QWERTY keyboard, RAND corporation, rent control, rolodex, Ronald Reagan, Sand Hill Road, Silicon Valley, telemarketer, Y2K

“Twin Buddhas, twin towers, interesting coincidence, so what.” “The Trade Center towers were religious too. They stood for what this country worships above everything else, the market, always the holy fuckin market.” “A religious beef, you’re saying?” “It’s not a religion? These are people who believe the Invisible Hand of the Market runs everything. They fight holy wars against competing religions like Marxism. Against all evidence that the world is finite, this blind faith that resources will never run out, profits will go on increasing forever, just like the world’s population—more cheap labor, more addicted consumers.”


pages: 1,132 words: 156,379

The Ape That Understood the Universe: How the Mind and Culture Evolve by Steve Stewart-Williams

Albert Einstein, battle of ideas, carbon-based life, David Attenborough, European colonialism, feminist movement, financial independence, Garrett Hardin, gender pay gap, invisible hand, Jeff Bezos, Menlo Park, meta-analysis, moral panic, out of africa, Paul Graham, Peter Pan Syndrome, phenotype, post-industrial society, Richard Feynman, Stephen Hawking, Steven Pinker, the scientific method, theory of mind, Tragedy of the Commons, twin studies

In contrast, those that copy themselves less rapidly and less reliably tend to decrease in frequency and ultimately to disappear – they tend to be selected against. Natural selection, from a Dawkinsian perspective, happens whenever a replicator increases or decreases in frequency, as a result of its intrinsic skill at copying itself (rather than just by chance). Through the relentless winnowing of replicator populations by selection’s invisible hand, replicators evolve over time to get better and better at copying themselves. When people first hear natural selection described this way, their immediate assumption is usually that the replicators in question are organisms: Organisms make copies of themselves, and organisms evolve to get better at doing so.


pages: 535 words: 149,752

After Steve: How Apple Became a Trillion-Dollar Company and Lost Its Soul by Tripp Mickle

"World Economic Forum" Davos, Airbnb, airport security, Apple II, Apple's 1984 Super Bowl advert, augmented reality, autonomous vehicles, banking crisis, Boeing 747, British Empire, business intelligence, Carl Icahn, Clayton Christensen, commoditize, coronavirus, corporate raider, COVID-19, desegregation, digital map, disruptive innovation, Donald Trump, Downton Abbey, driverless car, Edward Snowden, Elon Musk, Frank Gehry, General Magic , global pandemic, global supply chain, haute couture, imposter syndrome, index fund, Internet Archive, inventory management, invisible hand, John Markoff, Jony Ive, Kickstarter, Larry Ellison, lateral thinking, Mark Zuckerberg, market design, megacity, Murano, Venice glass, Ralph Waldo Emerson, self-driving car, Sheryl Sandberg, Silicon Valley, skeuomorphism, Stephen Fry, Steve Jobs, Steve Wozniak, Steven Levy, stock buybacks, Superbowl ad, supply-chain management, thinkpad, Tim Cook: Apple, Tony Fadell, Travis Kalanick, turn-by-turn navigation, Wayback Machine, WikiLeaks, Y2K

He had spent a decade building a business in China and was now being told by his people on the ground that his vision for the future there may be unrealistic. Advisers warned him that the government was preparing to attack Apple. The Chinese Communist Party was known to punish foreign companies it deemed too large or powerful. Often it did so with an invisible hand by unleashing China’s shuijun, or “water army,” a group of government-backed influencers who shaped public opinion about brands on Chinese social media. Equally important, China contained a workforce of more than 3 million people who toiled to crank out Macs, iPads, and iPhones. At Cook’s direction, Apple had concentrated its manufacturing in the country and needed the government’s support to make and export products.


pages: 506 words: 151,753

The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze by Laura Shin

"World Economic Forum" Davos, 4chan, Airbnb, altcoin, bike sharing, bitcoin, blockchain, Burning Man, cloud computing, complexity theory, Credit Default Swap, cryptocurrency, DevOps, digital nomad, distributed ledger, Dogecoin, Donald Trump, Dutch auction, Edward Snowden, emotional labour, en.wikipedia.org, Ethereum, ethereum blockchain, fake news, family office, fiat currency, financial independence, Firefox, general-purpose programming language, gravity well, hacker house, Hacker News, holacracy, independent contractor, initial coin offering, Internet of things, invisible hand, Johann Wolfgang von Goethe, Julian Assange, Kickstarter, litecoin, low interest rates, Mark Zuckerberg, minimum viable product, off-the-grid, performance metric, Potemkin village, prediction markets, QR code, ride hailing / ride sharing, risk tolerance, risk/return, Satoshi Nakamoto, sharing economy, side project, Silicon Valley, Skype, smart contracts, social distancing, software as a service, Steve Jobs, Turing complete, Vitalik Buterin, Wayback Machine, WikiLeaks

They decided to make a Swiss proxy called DAO.link, whose VAT number could be put on German tax documents. If Slock.it’s proposal to the DAO was approved, then the DAO could pay the funds to DAO.link, which would in turn pay Slock.it. ON APRIL 21, the DAO’s website, at daohub.org, launched.12 The homepage read, “THE DAO IS,” followed by an electric-tangerine cursor. Moved by an invisible hand, it finished the thought: THE DAO IS REVOLUTIONARY. THE DAO IS AUTONOMOUS. THE DAO IS REWARDING. THE DAO IS CODE. Underneath sat a line graph showing an overall trend: up and to the right. The homepage said, “The DAO’s Mission: To blaze a new path in business organization for the betterment of its members, existing simultaneously nowhere and everywhere and operating solely with the steadfast iron will of unstoppable code.”13 By the time of launch, the fine print at the bottom would read, “This website is owned by the DAO community, it is managed by the DAOhub team and hosting is generously offered by dao.link Sarl, Switzerland.”


pages: 523 words: 154,042

Fancy Bear Goes Phishing: The Dark History of the Information Age, in Five Extraordinary Hacks by Scott J. Shapiro

3D printing, 4chan, active measures, address space layout randomization, air gap, Airbnb, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, availability heuristic, Bernie Sanders, bitcoin, blockchain, borderless world, Brian Krebs, business logic, call centre, carbon tax, Cass Sunstein, cellular automata, cloud computing, cognitive dissonance, commoditize, Compatible Time-Sharing System, Computing Machinery and Intelligence, coronavirus, COVID-19, CRISPR, cryptocurrency, cyber-physical system, Daniel Kahneman / Amos Tversky, Debian, Dennis Ritchie, disinformation, Donald Trump, double helix, Dr. Strangelove, dumpster diving, Edward Snowden, en.wikipedia.org, Evgeny Morozov, evil maid attack, facts on the ground, false flag, feminist movement, Gabriella Coleman, gig economy, Hacker News, independent contractor, information security, Internet Archive, Internet of things, invisible hand, John Markoff, John von Neumann, Julian Assange, Ken Thompson, Larry Ellison, Laura Poitras, Linda problem, loss aversion, macro virus, Marc Andreessen, Mark Zuckerberg, Menlo Park, meta-analysis, Minecraft, Morris worm, Multics, PalmPilot, Paul Graham, pirate software, pre–internet, QWERTY keyboard, Ralph Nader, RAND corporation, ransomware, Reflections on Trusting Trust, Richard Stallman, Richard Thaler, Ronald Reagan, Satoshi Nakamoto, security theater, Shoshana Zuboff, side hustle, Silicon Valley, Skype, SoftBank, SQL injection, Steve Ballmer, Steve Jobs, Steven Levy, Stuxnet, supply-chain attack, surveillance capitalism, systems thinking, TaskRabbit, tech billionaire, tech worker, technological solutionism, the Cathedral and the Bazaar, the new new thing, the payments system, Turing machine, Turing test, Unsafe at Any Speed, vertical integration, Von Neumann architecture, Wargames Reagan, WarGames: Global Thermonuclear War, Wayback Machine, web application, WikiLeaks, winner-take-all economy, young professional, zero day, éminence grise

Users adopted DOS because it was one of the few operating systems that existed at the time. Developers wrote their applications for DOS because users were adopting it. Second, the market for operating systems is “sticky.” Once an operating system has been adopted, it is difficult, verging on impossible, to dislodge. Even the invisible hand of the market may be powerless to dethrone the winner. Microsoft can charge monopolistic prices, and engage in other anti- competitive practices, because it knows that most users are locked into its product. Frank and Cook argued that Winner Take All markets exacerbate inequalities. When only a few winners get the lion’s share, the rest fight over the scraps.


pages: 524 words: 154,652

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

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

The most vociferous opposition so far had come not from the conservative Tories, who had pushed the draconian bill casting frame-breaking as a capital offense, but from the advocates of Adam Smith and laissez-faire, men like Joseph Hume, and even Lord Holland, Byron’s mentor. “We have only Dr. A Smiths Disciples to contend with, whose principles are execrated all over the Kingdom,” Henson wrote. He was right that, particularly now, the idea that an invisible hand should be left to guide the economy was immensely unpopular, even “execrated” among most Britons, with poverty rates and inequality sky high and desperate pleas for assistance pouring into Parliament from across the nation. The ringing cheers in the House, the assurances from Lord Sidmouth, and the proxy backing of the Prince Regent eased Henson’s mind.


pages: 522 words: 162,310

Fantasyland: How America Went Haywire: A 500-Year History by Kurt Andersen

affirmative action, Alan Greenspan, Albert Einstein, animal electricity, anti-communist, Any sufficiently advanced technology is indistinguishable from magic, augmented reality, back-to-the-land, Bernie Sanders, British Empire, Burning Man, California gold rush, Celebration, Florida, centre right, cognitive dissonance, Columbine, corporate governance, cotton gin, Credit Default Swap, David Brooks, delayed gratification, dematerialisation, disinformation, disintermediation, disruptive innovation, Donald Trump, Donner party, Downton Abbey, Easter island, Edward Snowden, Electric Kool-Aid Acid Test, failed state, fake news, Ferguson, Missouri, God and Mammon, Gordon Gekko, greed is good, Herman Kahn, high net worth, illegal immigration, invisible hand, Isaac Newton, John von Neumann, Kickstarter, large denomination, Mark Zuckerberg, market fundamentalism, McMansion, Mikhail Gorbachev, military-industrial complex, Minecraft, moral panic, mutually assured destruction, new economy, New Urbanism, Norman Mailer, off-the-grid, Oklahoma City bombing, placebo effect, post-truth, pre–internet, prosperity theology / prosperity gospel / gospel of success, Ralph Waldo Emerson, RAND corporation, reality distortion field, Ronald Reagan, Silicon Valley, smart meter, Snapchat, South Sea Bubble, Steve Jobs, sugar pill, Ted Kaczynski, the scientific method, Thomas Kuhn: the structure of scientific revolutions, Timothy McVeigh, trade route, transcontinental railway, urban renewal, We are all Keynesians now, Whole Earth Catalog, WikiLeaks, Y2K, young professional

It wasn’t grown-ups in charge stepping up and announcing it was crazy and doomed, that enough was enough. Rather, we finally ran through the supply of greater fools willing to pay a premium for the houses and other things the last group of fools had just bought. When America and the rest of the world were spanked by reality’s invisible hand, we got the meltdown and crash and Great Recession, the inevitable results of Fantasyland economics. In 2009, I sincerely argued that our national near-death experience, in which we glimpsed the economic abyss, could sober us up and put us back on the reality-based straighter and narrower—a national reset!


pages: 512 words: 165,704

Traffic: Why We Drive the Way We Do (And What It Says About Us) by Tom Vanderbilt

Albert Einstein, autonomous vehicles, availability heuristic, Berlin Wall, Boeing 747, call centre, cellular automata, Cesare Marchetti: Marchetti’s constant, cognitive dissonance, computer vision, congestion charging, congestion pricing, Daniel Kahneman / Amos Tversky, DARPA: Urban Challenge, Donald Shoup, endowment effect, extreme commuting, fundamental attribution error, Garrett Hardin, Google Earth, hedonic treadmill, Herman Kahn, hindsight bias, hive mind, human-factors engineering, if you build it, they will come, impulse control, income inequality, Induced demand, invisible hand, Isaac Newton, Jane Jacobs, John Nash: game theory, Kenneth Arrow, lake wobegon effect, loss aversion, megacity, Milgram experiment, Nash equilibrium, PalmPilot, power law, Sam Peltzman, Silicon Valley, SimCity, statistical model, the built environment, The Death and Life of Great American Cities, Timothy McVeigh, traffic fines, Tragedy of the Commons, traumatic brain injury, ultimatum game, urban planning, urban sprawl, women in the workforce, working poor

Instead, time seemed to slow, space compressed like an accordion, and in that small cluster the various parties worked a way through. Then the accordion expanded again, the space opened up, and the speed increased as all the parties went on their way. It seemed to be orchestrated by some giant invisible hand. But the sheer range of ways for things to go wrong was staggering. Cars moving down Weihai Lu will use the oncoming left-turn lane to pass cars moving in the same direction. Bikes coming down Shimen Yilu and wanting to turn left onto Weihai Lu will park themselves in the middle of the big intersection, waiting to find an opening in three lanes of oncoming traffic.


pages: 692 words: 167,950

The Ripple Effect: The Fate of Fresh Water in the Twenty-First Century by Alex Prud'Homme

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, activist fund / activist shareholder / activist investor, American Society of Civil Engineers: Report Card, big-box store, bilateral investment treaty, carbon credits, carbon footprint, clean water, commoditize, company town, corporate raider, Deep Water Horizon, en.wikipedia.org, Exxon Valdez, Garrett Hardin, hydraulic fracturing, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Joan Didion, John Snow's cholera map, Louis Pasteur, mass immigration, megacity, oil shale / tar sands, oil-for-food scandal, peak oil, remunicipalization, renewable energy credits, Report Card for America’s Infrastructure, rolling blackouts, Ronald Reagan, seminal paper, Silicon Valley, The Wealth of Nations by Adam Smith, Tragedy of the Commons, urban sprawl, William Langewiesche

Then my grandfather Charles Child tried it. Within a few paces, he recalled, “The fork plunged so hard in my [hands] it tore the bark off the twigs. It was a strange, rather compelling sensation…. I didn’t quite believe it even when it happened … but one must leave the door open to mystery…. The sensation is one of having an invisible hand reach up suddenly and pull the stick toward the ground as you pass over certain areas.” Mrs. Willis was satisfied with the spot my grandfather found. Soon, a drill rig arrived and spent several days boring a hole into the granite. My grandparents hovered expectantly as the rig drilled 50 feet down, 75 feet down, then 100 feet down.


pages: 497 words: 161,742

The Enemy Within by Seumas Milne

active measures, anti-communist, Berlin Wall, Boris Johnson, collective bargaining, corporate governance, disinformation, Edward Snowden, electricity market, Etonian, fake news, Fall of the Berlin Wall, invisible hand, Kickstarter, Leo Hollis, market fundamentalism, Mikhail Gorbachev, Naomi Klein, Neil Kinnock, Nelson Mandela, New Journalism, Ronald Reagan, Seymour Hersh, strikebreaker, union organizing, Washington Consensus, Winter of Discontent, éminence grise

For the Mirror and Cook Report, the main target had been Scargill, Heathfield and their respective housing arrangements, with the mysteries of Muscovite and North African gold thrown in for added glamour. Now the entire funding operation behind the 1984–5 miners’ strike would be brought into the frame – and with it, the legitimacy of the strike itself.48 CHAPTER TWO A HIDDEN HAND Every individual … is in this, as in many other cases, led by an invisible hand. Adam Smith, WEALTH OF NATIONS, 17761 If Maxwell’s ‘spring offensive’ had been gruelling enough for the miners’ leaders, the torrent of press abuse, legal actions and official investigations unleashed by the publication of the Lightman Report four months later was to prove a veritable immolation.


Debtor Nation: The History of America in Red Ink (Politics and Society in Modern America) by Louis Hyman

Alan Greenspan, asset-backed security, bank run, barriers to entry, Bretton Woods, business cycle, business logic, card file, central bank independence, computer age, corporate governance, credit crunch, declining real wages, deindustrialization, diversified portfolio, financial independence, financial innovation, fixed income, Gini coefficient, Glass-Steagall Act, Home mortgage interest deduction, housing crisis, income inequality, invisible hand, It's morning again in America, late fees, London Interbank Offered Rate, low interest rates, market fundamentalism, means of production, mortgage debt, mortgage tax deduction, p-value, pattern recognition, post-Fordism, profit maximization, profit motive, risk/return, Ronald Reagan, Savings and loan crisis, Silicon Valley, statistical model, Tax Reform Act of 1986, technological determinism, technology bubble, the built environment, transaction costs, union organizing, white flight, women in the workforce, working poor, zero-sum game

The government made the resale of debt possible, not just through the enforcement of contracts, but in many instances by actually creating the basic institutions for buying and selling loans—making markets—like the government-made quasi-corporation Fannie Mae.2 Government regulators sought to control economic life by regulating positively and negatively, creating incentives for businesses or punishing them for defiance. Allocating capital to invest in consumer debt was neither natural nor inevitable and the state had the power, within limits set by profit, to guide the INTRODUCTION 3 economy. Frequently in Debtor Nation, it was not by the invisible hands of the market but by the visible minds of policymakers that new financial instruments and institutions were invented, causing these moments of rapid change. These two features—regulation and resale—combined in some unexpected ways to radically expand American borrowing. Debtor Nation begins in that heady period after World War I, when installment credit and legalized personal loans first became big business.


pages: 584 words: 170,388

Hyperion by Dan Simmons

classic study, gravity well, hallucination problem, invisible hand, New Journalism, Norbert Wiener, Plato's cave

The others stayed awhile, feeling the slight surge and rumble through the soles of their feet and watching darkness pass. The Sea of Grass was visible only as the place where stars ended and flat blackness began. Kassad used a handbeam to illuminate glimpses of canvas and rigging, lines being pulled tight by invisible hands, and then he checked all the corners and shadowed places from stern to bow. The others watched in silence. When he clicked the light off, the darkness seemed less oppressive, the starlight brighter. A rich, fertile smell – more of a farm in springtime than of the sea – came to them on a breeze which had swept across a thousand kilometers of grass.


pages: 547 words: 172,226

Why Nations Fail: The Origins of Power, Prosperity, and Poverty by Daron Acemoglu, James Robinson

Admiral Zheng, agricultural Revolution, Albert Einstein, Andrei Shleifer, Atahualpa, banking crisis, Bartolomé de las Casas, Berlin Wall, blood diamond, bread and circuses, BRICs, British Empire, central bank independence, clean water, collective bargaining, colonial rule, conceptual framework, Corn Laws, Cornelius Vanderbilt, creative destruction, crony capitalism, Deng Xiaoping, desegregation, discovery of the americas, en.wikipedia.org, European colonialism, failed state, Fall of the Berlin Wall, falling living standards, financial independence, financial innovation, financial intermediation, flying shuttle, Francis Fukuyama: the end of history, Francisco Pizarro, full employment, Great Leap Forward, household responsibility system, Ida Tarbell, income inequality, income per capita, indoor plumbing, invention of movable type, invisible hand, James Hargreaves, James Watt: steam engine, Jeff Bezos, joint-stock company, Joseph Schumpeter, Kickstarter, land reform, low interest rates, mass immigration, Mikhail Gorbachev, minimum wage unemployment, Mohammed Bouazizi, Paul Samuelson, price stability, profit motive, Robert Solow, Rosa Parks, Scramble for Africa, seminal paper, Simon Kuznets, spice trade, spinning jenny, Steve Ballmer, Steve Jobs, Suez canal 1869, trade liberalization, trade route, transatlantic slave trade, union organizing, upwardly mobile, W. E. B. Du Bois, Washington Consensus, working poor

The fact that bonuses were paid monthly also kept everyone focused on the present, while innovation is about making sacrifices today in order to have more tomorrow. Even when bonuses and incentives were effective in changing behavior, they often created other problems. Central planning was just not good at replacing what the great eighteenth-century economist Adam Smith called the “invisible hand” of the market. When the plan was formulated in tons of steel sheet, the sheet was made too heavy. When it was formulated in terms of area of steel sheet, the sheet was made too thin. When the plan for chandeliers was made in tons, they were so heavy, they could hardly hang from ceilings. By the 1940s, the leaders of the Soviet Union, even if not their admirers in the West, were well aware of these perverse incentives.


pages: 561 words: 163,916

The History of the Future: Oculus, Facebook, and the Revolution That Swept Virtual Reality by Blake J. Harris

"World Economic Forum" Davos, 4chan, airport security, Anne Wojcicki, Apollo 11, Asian financial crisis, augmented reality, barriers to entry, Benchmark Capital, Bernie Sanders, bitcoin, call centre, Carl Icahn, company town, computer vision, cryptocurrency, data science, disruptive innovation, Donald Trump, drone strike, Elon Musk, fake news, financial independence, game design, Grace Hopper, hype cycle, illegal immigration, invisible hand, it's over 9,000, Ivan Sutherland, Jaron Lanier, Jony Ive, Kickstarter, Marc Andreessen, Mark Zuckerberg, Menlo Park, Minecraft, move fast and break things, Neal Stephenson, Network effects, Oculus Rift, off-the-grid, Peter Thiel, QR code, sensor fusion, Sheryl Sandberg, side project, Silicon Valley, SimCity, skunkworks, Skype, slashdot, Snapchat, Snow Crash, software patent, stealth mode startup, Steve Jobs, unpaid internship, white picket fence

Because, frankly, it provided a pretty ugly answer to the question people continued to ask more and more: What is Facebook? Well, according to the founder of “Refocusing Our Mission” and the hundreds of employees who quickly joined and engaged, Facebook was basically some sort of social engineering tool—an invisible hand meant to guide its users toward the “correct” political beliefs. Or to put it another way: since Zuckerberg often described Facebook as “like a utility,” then this reaction was the equivalent of AT&T declaring that Mondale losing to Reagan meant it was time for them to rethink the mission of this whole phone line network thing.


The Origins of the Urban Crisis by Sugrue, Thomas J.

affirmative action, business climate, classic study, collective bargaining, correlation coefficient, creative destruction, Credit Default Swap, deindustrialization, desegregation, Detroit bankruptcy, Ford paid five dollars a day, gentrification, George Gilder, ghettoisation, Gunnar Myrdal, hiring and firing, housing crisis, income inequality, indoor plumbing, informal economy, invisible hand, job automation, jobless men, Joseph Schumpeter, labor-force participation, low-wage service sector, manufacturing employment, mass incarceration, military-industrial complex, New Urbanism, oil shock, pink-collar, postindustrial economy, Quicken Loans, rent control, restrictive zoning, Richard Florida, Ronald Reagan, side project, Silicon Valley, strikebreaker, technological determinism, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, union organizing, upwardly mobile, urban planning, urban renewal, War on Poverty, white flight, working-age population, Works Progress Administration

“These conditions result in a situation where properties in older neighborhoods tend to command a higher price from Negro buyers than from white.”32 Black buyers faced large down payments, difficulties in financing, and high-interest land contracts, as well as the expensive maintenance costs of old houses, all of which added to their housing expenditures.33 Private-sector discrimination was neither the reflection of the invisible hand of the free market, nor the consequence of blacks acting in accordance with a preference to live in segregated neighborhoods. Rather, it was a direct consequence of a partnership between the federal government and local bankers and real estate brokers. In fact the boundaries between the public and private sectors in housing were blurry in the postwar period.


pages: 581 words: 162,518

We the Corporations: How American Businesses Won Their Civil Rights by Adam Winkler

"Friedman doctrine" OR "shareholder theory", 1960s counterculture, affirmative action, Affordable Care Act / Obamacare, anti-communist, Bernie Sanders, British Empire, Cass Sunstein, clean water, collective bargaining, company town, Cornelius Vanderbilt, corporate governance, corporate personhood, corporate social responsibility, desegregation, Donald Trump, financial innovation, Ford Model T, glass ceiling, income inequality, invisible hand, joint-stock company, laissez-faire capitalism, land reform, obamacare, offshore financial centre, plutocrats, Powell Memorandum, profit maximization, profit motive, race to the bottom, Ralph Nader, Ralph Waldo Emerson, refrigerator car, Robert Bork, Ronald Reagan, Rosa Parks, shareholder value, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, the scientific method, too big to fail, trade route, transcontinental railway, Unsafe at Any Speed, Upton Sinclair, vertical integration, yellow journalism

“Meet Ralph Nader,” Newsweek, January 22, 1968, cover, 65; “The U.S.’s Toughest Customer,” Time, December 12, 1969, cover, 89. 4. On the Powell Memorandum and its impact, see Benjamin C. Waterhouse, Lobbying America: The Politics of Business From Nixon to NAFTA (2013), 58–60; Kim Phillips-Fein, Invisible Hands: The Businessmen’s Crusade Against the New Deal (2010), 156–160. A copy of the memorandum can be found at http://law.wlu.edu/deptimages/Powell%20Archives/PowellMemorandumPrinted.pdf. On the reform movement led by Nader, see Edsall, The New Politics of Inequality, 107–114; Vogel, “The ‘New’ Social Regulation,” 170–173. 5.


pages: 726 words: 172,988

The Bankers' New Clothes: What's Wrong With Banking and What to Do About It by Anat Admati, Martin Hellwig

Alan Greenspan, Andrei Shleifer, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, bonus culture, book value, break the buck, business cycle, Carmen Reinhart, central bank independence, centralized clearinghouse, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, diversified portfolio, en.wikipedia.org, Exxon Valdez, financial deregulation, financial engineering, financial innovation, financial intermediation, fixed income, George Akerlof, Glass-Steagall Act, Growth in a Time of Debt, income inequality, information asymmetry, invisible hand, Jean Tirole, joint-stock company, joint-stock limited liability company, junk bonds, Kenneth Rogoff, Larry Wall, light touch regulation, London Interbank Offered Rate, Long Term Capital Management, margin call, Martin Wolf, Money creation, money market fund, moral hazard, mortgage debt, mortgage tax deduction, negative equity, Nick Leeson, Northern Rock, open economy, Paul Volcker talking about ATMs, peer-to-peer lending, proprietary trading, regulatory arbitrage, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Satyajit Das, Savings and loan crisis, shareholder value, sovereign wealth fund, subprime mortgage crisis, technology bubble, The Market for Lemons, the payments system, too big to fail, Upton Sinclair, Yogi Berra

“Clearinghouses and the Origin of Central Banking in the United States.” Journal of Economic History 45 (2): 277–283. ———. 1988. “Banking Panics and Business Cycles.” Oxford Economic Papers 40 (4): 751–781. ———. 1994. “Bank Regulation When ‘Banks’ and ‘Banking’ Are Not the Same.” Oxford Review of Economic Policy 10: 106–119. ———. 2010. Slapped by the Invisible Hand: The Panic of 2007. Oxford, England: Oxford University Press. Gorton, Gary, and Andrew Metrick. 2010. “Regulating the Shadow Banking System.” Brookings Papers on Economic Activity 41 (2): 261–312. Greenspan, Alan. 2010. “The Crisis.” Brookings Papers on Economic Activity, Spring, 201–246. Greenwald, Bruce C., and Robert R.


pages: 670 words: 169,815

Ghosts of Empire: Britain's Legacies in the Modern World by Kwasi Kwarteng

Ayatollah Khomeini, banking crisis, British Empire, classic study, colonial rule, Corn Laws, corporate governance, Deng Xiaoping, discovery of penicillin, Etonian, illegal immigration, imperial preference, invisible hand, Khartoum Gordon, land reform, sceptred isle, Scientific racism, Scramble for Africa, Suez canal 1869, Suez crisis 1956, trade route, urban planning, Yom Kippur War

Cowperthwaite, by background and inclination, was the ultimate conservative bureaucrat, giving – with a slight air of superiority – a controlled display of measured efficiency. He was naturally sceptical about all human ability to improve society as a whole and, during his administration, Adam Smith’s invisible hand was a far better guide to policy than the more direct approaches favoured by most states in the twentieth century. Milton Friedman, the Nobel Prize-winning champion of free-market capitalism, remembered with affection a visit which he and his wife made to Hong Kong in 1963. While enjoying his stay in Hong Kong’s finest hotel, the Peninsula, and while his wife Rose indulged her tastes in what she described as ‘a shopper’s paradise’, Friedman got a chance to meet Cowperthwaite.


pages: 506 words: 167,034

Riding Rockets: The Outrageous Tales of a Space Shuttle Astronaut by Mike Mullane

affirmative action, Berlin Wall, blue-collar work, Boeing 747, dark matter, disinformation, Donald Trump, Donner party, Easter island, feminist movement, financial independence, Gene Kranz, invisible hand, Magellanic Cloud, Neil Armstrong, orbital mechanics / astrodynamics, Pepto Bismol, placebo effect, Potemkin village, publish or perish, rolodex, Ronald Reagan, space junk, space pen, Stephen Hawking, urban sprawl, Winter of Discontent, your tax dollars at work

Had our leak continued moments longer, the primary and backup O-rings would have been consumed and history would have recorded theDiscovery disaster instead ofChallenger. It would have been Zoo Crew’s names etched in an Arlington Cemetery monument. But the leak hadn’t continued. Inexplicably the primary O-rings had resealed. The clock was approaching T+2 minutes and the Gs rose to 2.5. An invisible hand pushed me deeper into the seat. I reached forward, drew my hand back, then reached forward again. The veterans had warned it was tough to maneuver an arm under G-loads and it was a good idea to practice in case an ascent emergency later required a reach for a switch. “You see that?” At Hank’s question I was reminded of Judy’s warning about not ending any sentence with the wordthat.


pages: 526 words: 160,601

A Generation of Sociopaths: How the Baby Boomers Betrayed America by Bruce Cannon Gibney

1960s counterculture, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, AlphaGo, American Society of Civil Engineers: Report Card, Bear Stearns, Bernie Madoff, Bernie Sanders, Black Lives Matter, bond market vigilante , book value, Boston Dynamics, Bretton Woods, business cycle, buy and hold, carbon footprint, carbon tax, Charles Lindbergh, classic study, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, corporate personhood, Corrections Corporation of America, currency manipulation / currency intervention, Daniel Kahneman / Amos Tversky, dark matter, DeepMind, Deng Xiaoping, Donald Trump, Downton Abbey, Edward Snowden, Elon Musk, ending welfare as we know it, equal pay for equal work, failed state, financial deregulation, financial engineering, Francis Fukuyama: the end of history, future of work, gender pay gap, gig economy, Glass-Steagall Act, Haight Ashbury, Higgs boson, high-speed rail, Home mortgage interest deduction, Hyperloop, illegal immigration, impulse control, income inequality, Intergovernmental Panel on Climate Change (IPCC), invisible hand, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Jane Jacobs, junk bonds, Kitchen Debate, labor-force participation, Long Term Capital Management, low interest rates, Lyft, Mark Zuckerberg, market bubble, mass immigration, mass incarceration, McMansion, medical bankruptcy, Menlo Park, Michael Milken, military-industrial complex, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, Neil Armstrong, neoliberal agenda, Network effects, Nixon triggered the end of the Bretton Woods system, obamacare, offshore financial centre, oil shock, operation paperclip, plutocrats, Ponzi scheme, price stability, prosperity theology / prosperity gospel / gospel of success, quantitative easing, Ralph Waldo Emerson, RAND corporation, rent control, ride hailing / ride sharing, risk tolerance, Robert Shiller, Ronald Reagan, Rubik’s Cube, Savings and loan crisis, school choice, secular stagnation, self-driving car, shareholder value, short selling, side project, Silicon Valley, smart grid, Snapchat, source of truth, stem cell, Steve Jobs, Stewart Brand, stock buybacks, survivorship bias, TaskRabbit, The Wealth of Nations by Adam Smith, Tim Cook: Apple, too big to fail, War on Poverty, warehouse robotics, We are all Keynesians now, white picket fence, Whole Earth Catalog, women in the workforce, Y2K, Yom Kippur War, zero-sum game

The Wealth of Nations (note, however, that Smith, while favoring a limited role for government and emphasizing the market’s superior ability to organize itself, did endorse certain specific roles for the government, like the post, and the encouragement of certain industries—these specifics have now been lost to the generality of Smith’s Invisible Hand). 5. Harris, Ethan S. Ben Bernanke’s Fed: The Federal Reserve After Greenspan. Harvard Business Review Press. 15 July 2008, ch. 12. There are several similar, but slightly different versions of this quote floating around, but the substance is always the same. 6. “Statement of Aims.” The Mont Pelerin Society. www.montpelerin.org/statement-of-aims/. 7.


Alpha Trader by Brent Donnelly

Abraham Wald, algorithmic trading, Asian financial crisis, Atul Gawande, autonomous vehicles, backtesting, barriers to entry, beat the dealer, behavioural economics, bitcoin, Boeing 747, buy low sell high, Checklist Manifesto, commodity trading advisor, coronavirus, correlation does not imply causation, COVID-19, crowdsourcing, cryptocurrency, currency manipulation / currency intervention, currency risk, deep learning, diversification, Edward Thorp, Elliott wave, Elon Musk, endowment effect, eurozone crisis, fail fast, financial engineering, fixed income, Flash crash, full employment, global macro, global pandemic, Gordon Gekko, hedonic treadmill, helicopter parent, high net worth, hindsight bias, implied volatility, impulse control, Inbox Zero, index fund, inflation targeting, information asymmetry, invisible hand, iterative process, junk bonds, Kaizen: continuous improvement, law of one price, loss aversion, low interest rates, margin call, market bubble, market microstructure, Market Wizards by Jack D. Schwager, McMansion, Monty Hall problem, Network effects, nowcasting, PalmPilot, paper trading, pattern recognition, Peter Thiel, prediction markets, price anchoring, price discovery process, price stability, quantitative easing, quantitative trading / quantitative finance, random walk, Reminiscences of a Stock Operator, reserve currency, risk tolerance, Robert Shiller, secular stagnation, Sharpe ratio, short selling, side project, Stanford marshmallow experiment, Stanford prison experiment, survivorship bias, tail risk, TED Talk, the scientific method, The Wisdom of Crowds, theory of mind, time dilation, too big to fail, transaction costs, value at risk, very high income, yield curve, you are the product, zero-sum game

The more people or algorithms discover a popular trading method, the less likely it is to work going forward. Do not form a strong bias toward a particular trading style. Adapt to what the market is rewarding. Markets are forever evolving and traders that cannot adapt are eventually pushed over the cliff by an invisible hand. Flexible, open-minded, creative and humble traders understand the fact that just because they are making money today, that does not entitle them to make money tomorrow. They must earn tomorrow’s money by thinking harder, working smarter and discovering new and untapped sources of inefficiency or low-hanging alpha in the market.


pages: 651 words: 162,060

The Climate Book: The Facts and the Solutions by Greta Thunberg

"World Economic Forum" Davos, accounting loophole / creative accounting, air freight, Alfred Russel Wallace, Anthropocene, basic income, Bernie Sanders, biodiversity loss, BIPOC, bitcoin, British Empire, car-free, carbon credits, carbon footprint, carbon tax, circular economy, clean water, cognitive dissonance, coronavirus, COVID-19, David Attenborough, decarbonisation, degrowth, disinformation, energy transition, Extinction Rebellion, Food sovereignty, global pandemic, global supply chain, Global Witness, green new deal, green transition, Greta Thunberg, housing crisis, Indoor air pollution, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jeff Bezos, land tenure, late capitalism, lockdown, mass immigration, megacity, meta-analysis, microplastics / micro fibres, military-industrial complex, Naomi Klein, negative emissions, ocean acidification, offshore financial centre, oil shale / tar sands, out of africa, phenotype, planetary scale, planned obsolescence, retail therapy, rewilding, social distancing, supervolcano, tech billionaire, the built environment, Thorstein Veblen, TikTok, Torches of Freedom, Tragedy of the Commons, universal basic income, urban sprawl, zoonotic diseases

It also threatens the prosperity that it was intended to create. Challenging 250 years of dominant economic thinking, the climate crisis has shown that the unrestrained pursuit of self-interest does not serve the common good. It has shown, in the words of economist Joseph Stiglitz, that Adam Smith’s invisible hand – the idea that free markets lead to efficiency as if consciously guided – is invisible ‘because it is not there’. And it has proved, in the words of Pope Francis, that ‘technological products are not neutral, for they create a framework which ends up conditioning lifestyles and shaping social possibilities along the lines dictated by the interests of certain powerful groups’.


pages: 708 words: 176,708

The WikiLeaks Files: The World According to US Empire by Wikileaks

affirmative action, anti-communist, banking crisis, battle of ideas, Boycotts of Israel, Bretton Woods, British Empire, capital controls, central bank independence, Chelsea Manning, colonial exploitation, colonial rule, corporate social responsibility, credit crunch, cuban missile crisis, Deng Xiaoping, drone strike, Edward Snowden, energy security, energy transition, European colonialism, eurozone crisis, experimental subject, F. W. de Klerk, facts on the ground, failed state, financial innovation, Food sovereignty, Francis Fukuyama: the end of history, full employment, future of journalism, high net worth, invisible hand, Julian Assange, Kickstarter, liberal world order, Mikhail Gorbachev, millennium bug, Mohammed Bouazizi, Monroe Doctrine, Nelson Mandela, no-fly zone, Northern Rock, nuclear ambiguity, Philip Mirowski, post-war consensus, RAND corporation, Ronald Reagan, Seymour Hersh, Silicon Valley, South China Sea, statistical model, Strategic Defense Initiative, structural adjustment programs, too big to fail, trade liberalization, trade route, UNCLOS, UNCLOS, uranium enrichment, vertical integration, Washington Consensus, WikiLeaks, zero-sum game, éminence grise

This is a “thin Darwinism” that does not necessarily describe how markets really work, but the belief that “free market” orthodoxy had been undermined so scandalized American politicians that it produced a congressional revolt that almost prevented the bailouts from taking place. But what we discover from the WikiLeaks documents is that there is no such thing as “free markets” without strong states—that nowhere does the “invisible hand” work without the mailed fist of government. For example, one batch of documents depicts the US government’s attempt to support its GM technology giants in overseas markets. The US ambassador to France went so far as to urge the Bush administration to embark on a “trade war” with the country in order to penalize it if it did not support the use of GM crops.


Economic Origins of Dictatorship and Democracy by Daron Acemoğlu, James A. Robinson

Andrei Shleifer, British Empire, business cycle, colonial rule, conceptual framework, constrained optimization, Corn Laws, declining real wages, Edward Glaeser, European colonialism, Gunnar Myrdal, income inequality, income per capita, invisible hand, Jean Tirole, John Markoff, Kenneth Rogoff, land reform, minimum wage unemployment, Nash equilibrium, Nelson Mandela, oil shock, open economy, Pareto efficiency, rent-seeking, seminal paper, strikebreaker, total factor productivity, transaction costs, Washington Consensus, William of Occam, women in the workforce

Most important, repression and coups are costly because they disrupt economic life. Production in a modern capitalist economy requires input from many diverse firms, and much of 287 288 Economic Structure and Democracy this is not coordinated centrally or consciously but rather organized by the invisible hand of the market, as well as the visible hand of established firms. Moreover, most of these economic relationships are based on some type of implicit trust. At the simplest level, the employer knows that the workers will show up the following day and the workers know that when they show up, there will be work for them and they will be paid.


pages: 877 words: 182,093

Wealth, Poverty and Politics by Thomas Sowell

affirmative action, Alan Greenspan, Albert Einstein, British Empire, Capital in the Twenty-First Century by Thomas Piketty, colonial exploitation, colonial rule, Cornelius Vanderbilt, correlation does not imply causation, cotton gin, Deng Xiaoping, desegregation, European colonialism, full employment, government statistician, Great Leap Forward, Gunnar Myrdal, Herman Kahn, income inequality, income per capita, invention of the sewing machine, invisible hand, low skilled workers, mass immigration, means of production, minimum wage unemployment, New Urbanism, profit motive, rent control, Scramble for Africa, Simon Kuznets, Steve Jobs, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, transatlantic slave trade, transcontinental railway, trickle-down economics, vertical integration, very high income, W. E. B. Du Bois, War on Poverty

Woodrow Wilson, The New Freedom: A Call for the Emancipation of the Energies of a People (New York: Doubleday, Page & Company, 1913). 62. Angus Deaton, The Great Escape: Health, Wealth, and the Origins of Inequality (Princeton: Princeton University Press, 2013), p. 2. 63. Deepak Lal, Reviving the Invisible Hand: The Case for Classical Liberalism in the Twenty-First Century (Princeton: Princeton University Press, 2006), p. 136. 64. Angus Deaton, The Great Escape, pp. 267–268. 65. “Here, There and Everywhere,” The Economist, January 19, 2013, pp. 3, 16, 17 of a special report “Outsourcing and Offshoring.” 66.


Evidence-Based Technical Analysis: Applying the Scientific Method and Statistical Inference to Trading Signals by David Aronson

Albert Einstein, Andrew Wiles, asset allocation, availability heuristic, backtesting, Black Swan, book value, butter production in bangladesh, buy and hold, capital asset pricing model, cognitive dissonance, compound rate of return, computerized trading, Daniel Kahneman / Amos Tversky, distributed generation, Elliott wave, en.wikipedia.org, equity risk premium, feminist movement, Great Leap Forward, hindsight bias, index fund, invention of the telescope, invisible hand, Long Term Capital Management, managed futures, mental accounting, meta-analysis, p-value, pattern recognition, Paul Samuelson, Ponzi scheme, price anchoring, price stability, quantitative trading / quantitative finance, Ralph Nelson Elliott, random walk, retrograde motion, revision control, risk free rate, risk tolerance, risk-adjusted returns, riskless arbitrage, Robert Shiller, Sharpe ratio, short selling, source of truth, statistical model, stocks for the long run, sugar pill, systematic trading, the scientific method, transfer pricing, unbiased observer, yield curve, Yogi Berra

Enter the price trend speculator who is willing to buy during uptrends to meet the unfilled needs of commercial hedge sellers and willing to sell 382 METHODOLOGICAL, PSYCHOLOGICAL, PHILOSOPHICAL, STATISTICAL FOUNDATIONS short during falling price trends, to meet the unmet needs of the commercial hedge buyers. In other words the futures markets need speculators to be trend followers. And it is the invisible hand of the marketplace that creates the trends to compensate them for filling this need. However, trend followers are exposed to significant risks. For example, most trend-following systems generate unprofitable signals 50 to 65 percent of the time. These occur when markets are trendless, which is the case a majority of the time.


pages: 709 words: 191,147

White Trash: The 400-Year Untold History of Class in America by Nancy Isenberg

A. Roger Ekirch, back-to-the-land, British Empire, California gold rush, colonial rule, Copley Medal, desegregation, Donald Trump, feminist movement, full employment, gentleman farmer, indoor plumbing, invisible hand, joint-stock company, land reform, land tenure, Lewis Mumford, low interest rates, mass immigration, New Urbanism, Norman Mailer, off-the-grid, plutocrats, prosperity theology / prosperity gospel / gospel of success, Republic of Letters, Ronald Reagan, Scientific racism, The Wealth of Nations by Adam Smith, theory of mind, trade route, transcontinental railway, trickle-down economics, upwardly mobile, urban renewal, W. E. B. Du Bois, War on Poverty, working poor, Works Progress Administration

Wilson, Wallace, and Corbin all agreed that the old laissez-faire doctrines could no longer be sustained, and that the frontier thesis—which presumed that western migration had alleviated poverty—no longer worked. For Wilson, the “great disorganizing force of the depression” was “a great, magic dark hand.” Unlike Adam Smith’s invisible hand of the free market, Wilson’s dark hand represented the dangers of an unregulated economy: downward mobility and the ruin of countless lives.26 If for poor rural tenants and sharecroppers class was an inescapable cage or a prison, it was equally a source of what Henry Wallace labeled “human erosion.”


pages: 603 words: 182,781

Aerotropolis by John D. Kasarda, Greg Lindsay

3D printing, air freight, airline deregulation, airport security, Akira Okazaki, Alvin Toffler, An Inconvenient Truth, Asian financial crisis, back-to-the-land, barriers to entry, Bear Stearns, Berlin Wall, big-box store, blood diamond, Boeing 747, book value, borderless world, Boris Johnson, British Empire, business cycle, call centre, carbon footprint, Cesare Marchetti: Marchetti’s constant, Charles Lindbergh, Clayton Christensen, clean tech, cognitive dissonance, commoditize, company town, conceptual framework, credit crunch, David Brooks, David Ricardo: comparative advantage, Deng Xiaoping, deskilling, digital map, disruptive innovation, Dr. Strangelove, Dutch auction, Easter island, edge city, Edward Glaeser, Eyjafjallajökull, failed state, financial engineering, flag carrier, flying shuttle, food miles, Ford Model T, Ford paid five dollars a day, Frank Gehry, fudge factor, fulfillment center, full employment, future of work, Future Shock, General Motors Futurama, gentleman farmer, gentrification, Geoffrey West, Santa Fe Institute, George Gilder, global supply chain, global village, gravity well, Great Leap Forward, Haber-Bosch Process, Hernando de Soto, high-speed rail, hive mind, if you build it, they will come, illegal immigration, inflight wifi, intangible asset, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), intermodal, invention of the telephone, inventory management, invisible hand, Jane Jacobs, Jeff Bezos, Jevons paradox, Joan Didion, Kangaroo Route, Kickstarter, Kiva Systems, knowledge worker, kremlinology, land bank, Lewis Mumford, low cost airline, Marchetti’s constant, Marshall McLuhan, Masdar, mass immigration, McMansion, megacity, megaproject, Menlo Park, microcredit, military-industrial complex, Network effects, New Economic Geography, new economy, New Urbanism, oil shale / tar sands, oil shock, One Laptop per Child (OLPC), peak oil, Pearl River Delta, Peter Calthorpe, Peter Thiel, pets.com, pink-collar, planned obsolescence, pre–internet, RFID, Richard Florida, Ronald Coase, Ronald Reagan, Rubik’s Cube, savings glut, Seaside, Florida, Shenzhen special economic zone , Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, SimCity, Skype, smart cities, smart grid, South China Sea, South Sea Bubble, sovereign wealth fund, special economic zone, spice trade, spinning jenny, starchitect, stem cell, Steve Jobs, Suez canal 1869, sunk-cost fallacy, supply-chain management, sustainable-tourism, tech worker, telepresence, the built environment, The Chicago School, The Death and Life of Great American Cities, the long tail, The Nature of the Firm, thinkpad, Thomas L Friedman, Thomas Malthus, Tony Hsieh, trade route, transcontinental railway, transit-oriented development, traveling salesman, trickle-down economics, upwardly mobile, urban planning, urban renewal, urban sprawl, vertical integration, Virgin Galactic, walkable city, warehouse robotics, white flight, white picket fence, Yogi Berra, zero-sum game

Last spring, Fairfax County passed a forty-year plan to double Tysons in both size and density, adding two hundred thousand jobs and half as many residents in a bid to transform the sprawling edge city into a vertical, walkable one above an extension of the D.C. Metro out to the airport. Dulles offers hope that given room to breathe, aerotropoli make so much sense that they can and will be born by the invisible hand of market forces alone. But it also demonstrates the hard limits of what unplanned, unintended, and purely private growth can do. Chicago: Bulldozing the Airport in Order to Save It Chicago mayor Richard J. Daley was the last of the big-city bosses, the mayor-for-life who delivered the city—and thus the state of Illinois and the nation—for John F.


pages: 604 words: 177,329

The Looming Tower: Al-Qaeda and the Road to 9/11 by Lawrence Wright

airport security, anti-communist, Ayatollah Khomeini, Berlin Wall, British Empire, Fall of the Berlin Wall, invisible hand, Khyber Pass, lone genius, Mahatma Gandhi, Mikhail Gorbachev, no-fly zone, PalmPilot, rolodex, Silicon Valley, uranium enrichment, urban planning, Y2K, Yom Kippur War

In his renderings, the war was primeval, metaphysical, fought in a landscape of miracles. The Afghans, in his tableau, represented humanity in a pristine state—a righteous, pious, pre-industrial people—struggling against the brutal, soulless, mechanized force of modernity. In this war, the believers were aided by the invisible hands of angels. Azzam spoke of Russian helicopters being snared by ropes, and he claimed that flocks of birds functioned as an early-warning radar system by taking wing when Soviet jets were still over the horizon. Repeatedly in his stories mujahideen discover bullet holes in their clothes when they themselves are not injured, and the bodies of those who are martyred do not putrefy but remain pure and sweet-smelling.


pages: 607 words: 185,487

Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed by James C. Scott

agricultural Revolution, Boeing 747, business cycle, classic study, clean water, colonial rule, commoditize, company town, deskilling, facts on the ground, germ theory of disease, Great Leap Forward, informal economy, invention of writing, invisible hand, Jane Jacobs, Kenneth Arrow, land reform, land tenure, Lewis Mumford, Louis Pasteur, megaproject, new economy, New Urbanism, post-Fordism, Potemkin village, price mechanism, profit maximization, Recombinant DNA, road to serfdom, scientific management, Silicon Valley, stochastic process, Suez canal 1869, the built environment, The Death and Life of Great American Cities, the scientific method, Thorstein Veblen, urban decay, urban planning, urban renewal, vertical integration, working poor

The subsystem relies on a variety of processes-frequently informal or antecedent-which alone it cannot create or maintain. The more schematic, thin, and simplified the formal order, the less resilient and the more vulnerable it is to disturbances outside its narrow parameters. This analysis of high modernism, then, may appear to be a case for the invisible hand of market coordination as opposed to centralized economies. An important caution, however, is in order. The market is itself an instituted, formal system of coordination, despite the elbow room that it provides to its participants, and it is therefore similarly dependent on a larger system of social relations which its own calculus does not acknowledge and which it can neither create nor maintain.


Never Bet Against Occam: Mast Cell Activation Disease and the Modern Epidemics of Chronic Illness and Medical Complexity by Lawrence B. Afrin M. D., Kendra Neilsen Myles, Kristi Posival

Affordable Care Act / Obamacare, Albert Einstein, autism spectrum disorder, epigenetics, Helicobacter pylori, invisible hand, Isaac Newton, megacity, microbiome, mouse model, obamacare, pattern recognition, personalized medicine, phenotype, pre–internet, selective serotonin reuptake inhibitor (SSRI), stem cell

Similarly, when no other cause is apparent, MCAS patients who show decreased platelets often are diagnosed as having “autoimmune thrombocytopenic purpura” (“ITP”). It is interesting that anti-platelet antibodies can’t be found in a large portion of patients diagnosed with ITP. Perhaps some of those patients actually are MCAS patients. Chapter 21: Effects of MCAS on the Coagulation System An Invisible Hand on the Teeter-Totter In my 10 years of medical training, and in my 13 years of practice before beginning to recognize MCAS, nobody ever told me – and I certainly never read anywhere – that mast cell disease was a potential cause of abnormalities in the clotting system. (Given that heparin was the first mast cell mediator to be discovered, one would think the disease would at least have the potential to cause bleeding, but no, the five minutes of lecturing I got on mast cell disease in my 10 years of training never mentioned bleeding, nor did the mast-cell-disease parts of the textbooks that I read ever mention it.)


pages: 583 words: 182,990

The Ministry for the Future: A Novel by Kim Stanley Robinson

"World Economic Forum" Davos, agricultural Revolution, airport security, Anthropocene, availability heuristic, basic income, bitcoin, blockchain, Bretton Woods, cakes and ale, carbon tax, centre right, clean tech, clean water, cryptocurrency, dark matter, decarbonisation, degrowth, distributed ledger, drone strike, European colonialism, failed state, fiat currency, Food sovereignty, full employment, Gini coefficient, global village, green new deal, happiness index / gross national happiness, High speed trading, high-speed rail, income per capita, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, Jevons paradox, Kim Stanley Robinson, land reform, liberation theology, liquidity trap, Mahbub ul Haq, megacity, megastructure, Modern Monetary Theory, mutually assured destruction, nuclear winter, ocean acidification, off grid, off-the-grid, offshore financial centre, place-making, plutocrats, Ponzi scheme, post-oil, precariat, price stability, public intellectual, quantitative easing, rewilding, RFID, Robert Solow, seigniorage, Shenzhen special economic zone , Silicon Valley, special economic zone, structural adjustment programs, synthetic biology, time value of money, Tragedy of the Commons, universal basic income, wage slave, Washington Consensus

No one on the planet is ignorant of the real conditions of our shared social existence. That’s one real thing those stupid smartphones have done; you can be illiterate, many are, and still have an excellent idea of how the world works. You know the world is spinning toward catastrophe. You know it’s time to act. Everyone knows everything. The invisible hand never picks up the check. The money is already here, it just isn’t evenly distributed. Which is to say properly distributed. So now things have broken. We broke them; we broke them on purpose! Riot, occupation, non-compliance, general strike: breakdown. Now it’s time for Plan B. Time to act— as in, act of parliament.


pages: 651 words: 186,130

This Is How They Tell Me the World Ends: The Cyberweapons Arms Race by Nicole Perlroth

4chan, active measures, activist lawyer, air gap, Airbnb, Albert Einstein, Apollo 11, barriers to entry, Benchmark Capital, Bernie Sanders, Big Tech, bitcoin, Black Lives Matter, blood diamond, Boeing 737 MAX, Brexit referendum, Brian Krebs, Citizen Lab, cloud computing, commoditize, company town, coronavirus, COVID-19, crony capitalism, crowdsourcing, cryptocurrency, dark matter, David Vincenzetti, defense in depth, digital rights, disinformation, don't be evil, Donald Trump, driverless car, drone strike, dual-use technology, Edward Snowden, end-to-end encryption, failed state, fake news, false flag, Ferguson, Missouri, Firefox, gender pay gap, George Floyd, global pandemic, global supply chain, Hacker News, index card, information security, Internet of things, invisible hand, Jacob Appelbaum, Jeff Bezos, John Markoff, Ken Thompson, Kevin Roose, Laura Poitras, lockdown, Marc Andreessen, Mark Zuckerberg, mass immigration, Menlo Park, MITM: man-in-the-middle, moral hazard, Morris worm, move fast and break things, mutually assured destruction, natural language processing, NSO Group, off-the-grid, offshore financial centre, open borders, operational security, Parler "social media", pirate software, purchasing power parity, race to the bottom, RAND corporation, ransomware, Reflections on Trusting Trust, rolodex, Rubik’s Cube, Russian election interference, Sand Hill Road, Seymour Hersh, Sheryl Sandberg, side project, Silicon Valley, Skype, smart cities, smart grid, South China Sea, Steve Ballmer, Steve Bannon, Steve Jobs, Steven Levy, Stuxnet, supply-chain attack, TED Talk, the long tail, the scientific method, TikTok, Tim Cook: Apple, undersea cable, unit 8200, uranium enrichment, web application, WikiLeaks, zero day, Zimmermann PGP

At 3:30 P.M., December 23, in the Ivano-Frankivsk region of western Ukraine, residents were just starting to pack up their desks and head home for the holidays when an engineer inside Prykarpattyaoblenergo’s control center noticed his cursor gliding across his computer screen, as if pushed by an invisible hand. The cursor moved to the dashboard that controlled Prykarpattyaoblenergo’s circuit breakers at substations around the region. One by one, the cursor double-clicked on the box to open the breakers and take the substations offline. The engineer watched in horror as a pop-up window suddenly appeared, confirming one last time that he wanted to cut heat and power to thousands of his countrymen.


Big Data and the Welfare State: How the Information Revolution Threatens Social Solidarity by Torben Iversen, Philipp Rehm

23andMe, Affordable Care Act / Obamacare, algorithmic bias, barriers to entry, Big Tech, business cycle, centre right, collective bargaining, COVID-19, crony capitalism, data science, DeepMind, deindustrialization, full employment, George Akerlof, income inequality, information asymmetry, invisible hand, knowledge economy, land reform, lockdown, loss aversion, low interest rates, low skilled workers, microbiome, moral hazard, mortgage debt, Network effects, new economy, obamacare, personalized medicine, Ponzi scheme, price discrimination, principal–agent problem, profit maximization, Robert Gordon, speech recognition, subprime mortgage crisis, tail risk, The Market for Lemons, The Rise and Fall of American Growth, union organizing, vertical integration, working-age population

Brookings Institute. www.brookings.edu/research/algorithmic-bias-det ection-and-mitigation-best-practices-and-policies-to-reduce-consumer-harms/. Leeuwen, Marco H. D. Van. 2016. Mutual Insurance 1550-2015: From Guild Welfare and Friendly Societies to Contemporary Micro-Insurers. Springer. LeGrand, Julian. 2009. The Other Invisible Hand: Delivering Public Services through Choice and Competition. Princeton University Press. Li, Guoying. 1985. “Robust Regression.” In Exploring Data Tables, Trends, and Shapes, eds. David Caster Hoaglin, Frederick Mosteller, and John Wilder Tukey. Wiley Online Library, 281–340. Liebig, Stefan et al. 2019.


pages: 1,336 words: 415,037

The Snowball: Warren Buffett and the Business of Life by Alice Schroeder

affirmative action, Alan Greenspan, Albert Einstein, anti-communist, AOL-Time Warner, Ayatollah Khomeini, barriers to entry, Bear Stearns, Black Monday: stock market crash in 1987, Bob Noyce, Bonfire of the Vanities, book value, Brownian motion, capital asset pricing model, card file, centralized clearinghouse, Charles Lindbergh, collateralized debt obligation, computerized trading, Cornelius Vanderbilt, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, desegregation, do what you love, Donald Trump, Eugene Fama: efficient market hypothesis, Everybody Ought to Be Rich, Fairchild Semiconductor, Fillmore Auditorium, San Francisco, financial engineering, Ford Model T, Garrett Hardin, Glass-Steagall Act, global village, Golden Gate Park, Greenspan put, Haight Ashbury, haute cuisine, Honoré de Balzac, If something cannot go on forever, it will stop - Herbert Stein's Law, In Cold Blood by Truman Capote, index fund, indoor plumbing, intangible asset, interest rate swap, invisible hand, Isaac Newton, it's over 9,000, Jeff Bezos, John Bogle, John Meriwether, joint-stock company, joint-stock limited liability company, junk bonds, Larry Ellison, Long Term Capital Management, Louis Bachelier, low interest rates, margin call, market bubble, Marshall McLuhan, medical malpractice, merger arbitrage, Michael Milken, Mikhail Gorbachev, military-industrial complex, money market fund, moral hazard, NetJets, new economy, New Journalism, North Sea oil, paper trading, passive investing, Paul Samuelson, pets.com, Plato's cave, plutocrats, Ponzi scheme, proprietary trading, Ralph Nader, random walk, Ronald Reagan, Salesforce, Scientific racism, shareholder value, short selling, side project, Silicon Valley, Steve Ballmer, Steve Jobs, supply-chain management, telemarketer, The Predators' Ball, The Wealth of Nations by Adam Smith, Thomas Malthus, tontine, too big to fail, Tragedy of the Commons, transcontinental railway, two and twenty, Upton Sinclair, War on Poverty, Works Progress Administration, Y2K, yellow journalism, zero-coupon bond

Joy Ruane was so intimidated by this new hauteur that she showed up with seventeen suitcases.51 The food onboard the ship was “second rate,” said one member, and the agenda a mix of the typical and the unusual: Wyndham Robertson, another Fortune reporter who was a member of the group, on investing during inflation; a session on stock options; George Gillespie and Roy Tolles on splitting up assets in a divorce—a subject on which views ran hot; Tom Murphy on the race between television networks CBS and Cap Cities; and Charlie Munger on Benjamin Franklin. Buffett spoke on using “game theory” to solve economic problems, based on pioneering economist Adam Smith’s “invisible hand,”52 in which people laboring to further their own interests acted collectively for the good of everyone. All the while, Buffett delighted in telling his friends about the immigrant saga of Mrs. B and her wonderful Furniture Mart, the new money-churning prize he had just bought himself. However, he was almost upstaged by Ed Anderson, who made the prudish members of the group—the majority—fall out of their chairs when he explained his funding of human sexuality research and told with perfect earnestness the touching story of someone who had had a sex-change operation and kept his severed organ in a jar.

From the days of the earliest philosophers, mankind has been debating whether free will exists. Philosophers also debate whether it exists on a scale or is irreconcilable with determinism. Critic Robert Nozick, in Anarchy, State, and Utopia, gives the case for irreconcilability in a critique of Rawls that more or less says that economist Adam Smith’s invisible hand gives people what they have earned and deserved (Anarchy, State and Utopia. New York: Basic Books, 1974). All true libertarians believe in free will and deny absolutely that determinism exists. Since economic policy is so influenced by these ideas, the topic is worth understanding; for example, it sheds light on the debate over how Alan Greenspan’s libertarian leanings influenced Federal Reserve policy that led to recent debt-fueled asset bubbles.


pages: 686 words: 201,972

Drink: A Cultural History of Alcohol by Iain Gately

barriers to entry, British Empire, California gold rush, corporate raider, Day of the Dead, delayed gratification, Deng Xiaoping, Edward Lloyd's coffeehouse, Fellow of the Royal Society, gentleman farmer, Gordon Gekko, greed is good, Haight Ashbury, Hernando de Soto, imperial preference, invisible hand, joint-stock company, Jones Act, Louis Pasteur, megacity, music of the spheres, Norman Mailer, Peace of Westphalia, post-work, refrigerator car, Ronald Reagan, South Sea Bubble, spice trade, strikebreaker, the scientific method, Tim Cook: Apple, trade route, traveling salesman, Upton Sinclair, V2 rocket, vertical integration, working poor

While the debate raged between gourmands and decadents as to the true purpose of wine, the single most important breakthrough in humanunderstanding of alcoholic drinks—a complete and accurate scientific explanation of why they are alcoholic—was achieved in France. The genius responsible for the advance was Louis Pasteur. Prior to his definitive studies, no one in history had been able to describe precisely how grape juice turned into wine. For all they knew, it might have been the invisible hand of Bacchus or some other form of divine intervention. Pasteur made his breakthrough by building on the work of Antoine-Laurent Lavoisier, the father of modern chemistry, who had discovered that the process of fermentation consisted of the conversion of carbohydrates to carbon dioxide and ethanol, which he named alcohol, thereby introducing the Arabic name for the substance to the West.


pages: 659 words: 203,574

The Collected Stories of Vernor Vinge by Vernor Vinge

anthropic principle, Asilomar, back-to-the-land, dematerialisation, gravity well, invisible hand, Ivan Sutherland, low earth orbit, Machinery of Freedom by David Friedman, MITM: man-in-the-middle, source of truth, technological singularity, unbiased observer, Vernor Vinge

It sounded like all the Villagers had thrown themselves into the fight. They could never get past such a mob! He had underestimated the Printmaster. From out of the smoke and shouting came Brailly’s voice. “Down! We’re gonna blast!” Rey tucked his head in his arms. A second later there was a flash of light and invisible hands crashed upon both sides of his head. He looked up. There was blue light ahead! Tounse had knocked the barricade over. Rey came to his knees. If he could move while the locals lay stunned … . His poor ears couldn’t hear the rumbling; it came through his knees and palms. All around them, the hive was shaking.


pages: 650 words: 203,191

After Tamerlane: The Global History of Empire Since 1405 by John Darwin

agricultural Revolution, Atahualpa, Berlin Wall, Bretton Woods, British Empire, Cape to Cairo, classic study, colonial rule, Columbian Exchange, cuban missile crisis, deglobalization, deindustrialization, European colonialism, failed state, Francisco Pizarro, Great Leap Forward, invisible hand, Isaac Newton, joint-stock company, Khartoum Gordon, laissez-faire capitalism, land reform, Mahatma Gandhi, Malacca Straits, military-industrial complex, mutually assured destruction, new economy, New Urbanism, oil shock, open economy, price mechanism, reserve currency, Ronald Reagan, Scramble for Africa, South China Sea, South Sea Bubble, spice trade, Suez canal 1869, Suez crisis 1956, The Wealth of Nations by Adam Smith, trade route, transaction costs, transatlantic slave trade

Stalin pressed the case for incorporating all the new soviet republics into a Russian federation. Lenin refused. The new Soviet constitution of 1924 preserved the legal fiction of a Soviet ‘union’ made up of equal states. The real guarantee of Moscow’s authority over the member republics would be the invisible hand of the party’s power. But the nationality principle, the child of a desperate crisis, was inscribed indelibly on the Soviet system. A FRACTURED WORLD ORDER By the mid-1920s, after the great phase of upheaval, much of the world seemed to be moving towards a more settled state. Those who looked back to the pre-war years as a form of ‘international anarchy’, or were scandalized by the predatory excesses of European imperialism, sawthe League of Nations as a new beginning.


Patriot Games by Tom Clancy

British Empire, disinformation, invisible hand, orbital mechanics / astrodynamics, pattern recognition, place-making, price mechanism

The engine sounds increased markedly, and Speedbird started to roll. A few seconds later the engine noise appeared to pick up even more, and Ryan was pressed back into the fabric and vinyl chair. Damn, he told himself. The acceleration was impressive, about double anything he'd experienced before. He had no way of measuring it, but an invisible hand was pressing him backward while another pushed at his cast and tried to turn him sideways. The stew had been right. It was a thrill. The grass was racing by his window, then the nose came up sharply. A final bump announced that the main gear was off the ground. Jack listened for its retraction into the airframe, but the sheer power of the takeoff blocked it out.


The Cardinal of the Kremlin by Tom Clancy

active measures, airport security, cuban missile crisis, false flag, invisible hand, low earth orbit, military-industrial complex, mutually assured destruction, space junk, Stephen Hawking, Strategic Defense Initiative

Twenty minutes later Misha emerged from the front of his building. His eyes were already watering, and he squinted painfully into the cold northwest wind that tried to sweep him back through the doors. The sergeant thought to reach out and steady his Colonel, but Filitov shifted his weight slightly to fight against the invisible hand of nature that held him back and got into the car as he always did, as though he were boarding his old T-34 for combat. "The baths, Comrade Colonel?" the driver asked after getting back in front. "Did you sell the vodka I gave you?" "Why, yes, Comrade Colonel," the youngster answered. "Good for you, that's healthier than drinking it.


pages: 537 words: 200,923

City: Urbanism and Its End by Douglas W. Rae

agricultural Revolution, barriers to entry, business climate, City Beautiful movement, classic study, complexity theory, creative destruction, desegregation, edge city, Ford Model T, gentrification, ghettoisation, Glass-Steagall Act, Gunnar Myrdal, income per capita, informal economy, information asymmetry, interchangeable parts, invisible hand, James Watt: steam engine, Jane Jacobs, joint-stock company, Joseph Schumpeter, Kickstarter, Lewis Mumford, manufacturing employment, New Economic Geography, new economy, New Urbanism, open immigration, Peter Calthorpe, plutocrats, public intellectual, Saturday Night Live, streetcar suburb, the built environment, The Death and Life of Great American Cities, the market place, urban planning, urban renewal, vertical integration, War on Poverty, white flight, Works Progress Administration

Churches and temples stood in their traditional places, and new ones appeared yearly to organize the lives of congregations living nearby. The city’s economic and social strength was an inherited fortune. Frank Rice and City Hall did not create all this, and the city fathers did not worry overmuch 209 U R B A N I S M about sustaining it. But no benign “invisible hand” would tend this inheritance following Rice’s death. Centering forces would press with a lighter touch in every passing month in the decades to come. On August 25, 1916, less than a week after Rice’s illness began, a full-page ad ran in the Register.33 It began, in seventytwo-point type, thus: 300 Lots Have Been Sold in New Haven’s Beautiful New Suburb in Six Days.


The Outlaw Ocean: Journeys Across the Last Untamed Frontier by Ian Urbina

9 dash line, Airbnb, British Empire, clean water, Costa Concordia, crowdsourcing, disinformation, Exxon Valdez, failed state, Filipino sailors, forensic accounting, Garrett Hardin, gentrification, global value chain, Global Witness, illegal immigration, independent contractor, invisible hand, Jessica Bruder, John Markoff, Jones Act, Julian Assange, Malacca Straits, Maui Hawaii, Neal Stephenson, New Journalism, ocean acidification, offshore financial centre, Patri Friedman, pattern recognition, Peter Thiel, Silicon Valley, Skype, South China Sea, standardized shipping container, statistical arbitrage, Tragedy of the Commons, UNCLOS, UNCLOS, union organizing, Upton Sinclair, WikiLeaks, William Langewiesche

Lawlessness at sea and the willingness of consumers and governments to ignore these hidden costs were a kind of subsidy helping keep many of these fishing fleets financially afloat. Such is the inconvenient truth of globalization: it is based more on market sleight of hand than on Adam Smith’s invisible hand. By outsourcing this task to manning agencies, the people who work in the corporate responsibility and human resources offices of the grocery store chains and fish wholesalers further down the supply chain need not try to understand or explain how it is possible that the captains on these boats found workers willing to work for so little.


pages: 773 words: 220,140

A Fraction of the Whole by Steve Toltz

Berlin Wall, Fall of the Berlin Wall, fear of failure, invisible hand, Kickstarter, moral panic, nuclear winter, Own Your Own Home, Socratic dialogue

The wordless ceremony roused them from their own languid dying. I put my shoulder into it, flung his body over the edge and buried him in the roar of waves. He floated momentarily on the surface, bobbing up and down a little like a carrot thrown whole into a boiling stew. Then he went under, as if taken by invisible hands, and went off hurrying to greet himself in strange corners of the sea. That was it. Goodbye, Dad. I hope you knew how I felt. Ned put his hand on my shoulder. "He's with God now." "That's a terrible thing to say." "Your father never understood what it's like to be part of something bigger than himself."


pages: 913 words: 219,078

The Marshall Plan: Dawn of the Cold War by Benn Steil

Albert Einstein, Alistair Cooke, An Inconvenient Truth, anti-communist, Berlin Wall, Bretton Woods, Brexit referendum, British Empire, business cycle, Carmen Reinhart, centre right, currency manipulation / currency intervention, deindustrialization, democratizing finance, disintermediation, Dissolution of the Soviet Union, Donald Trump, eurozone crisis, facts on the ground, Fall of the Berlin Wall, foreign exchange controls, full employment, imperial preference, invisible hand, Kenneth Rogoff, kremlinology, land reform, Mikhail Gorbachev, Monroe Doctrine, new economy, open economy, Potemkin village, RAND corporation, Ronald Reagan, scientific management, structural adjustment programs, the market place, trade liberalization, Transnistria, Winter of Discontent, Works Progress Administration, éminence grise

Wisner used his new bounty to fund psychological warfare campaigns through European media, nongovernmental organizations, and cultural and educational institutions; bribes to labor officials and politicians; and even insurrection efforts in eastern Europe.55 In early 1949, Kennan was anxious to show that the Marshall Plan could work without visible muscular interventions, such as military pacts and the division of Germany. Still bitter that Lippmann had portrayed him as the misguided apostle of aggressive and limitless containment, he sought to become the invisible hand behind efforts to head off open militarization. “Operating in a personal capacity,” so that the State Department’s hand could “be denied by the Secretary,” as he explained his work to Lovett, Kennan became an eager and active source of inspiration and guidance for the OPC. Under his stewardship, the Policy Planning Staff would become the effective overseer of all U.S. covert activities.


pages: 695 words: 219,110

The Fabric of the Cosmos by Brian Greene

airport security, Albert Einstein, Albert Michelson, Arthur Eddington, Brownian motion, clockwork universe, conceptual framework, cosmic microwave background, cosmological constant, dark matter, dematerialisation, Eddington experiment, Hans Lippershey, Henri Poincaré, invisible hand, Isaac Newton, Large Hadron Collider, luminiferous ether, Murray Gell-Mann, power law, quantum entanglement, Richard Feynman, seminal paper, Stephen Hawking, time dilation, urban renewal

And just as a marble rolling on the warped floor travels along a curved path, Einstein showed that anything moving through warped space—such as the earth moving in the vicinity of the sun—will travel along a curved trajectory, as illustrated in Figure 3.11a and Figure 3.11b. It’s as if matter and energy imprint a network of chutes and valleys along which objects are guided by the invisible hand of the spacetime fabric. That, according to Einstein, is how gravity exerts its influence. The same idea also applies closer to home. Right now, your body would like to slide down an indentation in the spacetime fabric caused by the earth’s presence. But your motion is being blocked by the surface on which you’re sitting or standing.


pages: 897 words: 210,566

Shake Hands With the Devil: The Failure of Humanity in Rwanda by Romeo Dallaire, Brent Beardsley

airport security, colonial rule, disinformation, failed state, global village, invisible hand, Khartoum Gordon, Kickstarter, land reform, risk/return, Ronald Reagan

These elders determine a regiment's individual culture and character. One of their key responsibilities is to select the socalled streamers, the young men or women who the elders believe have the right stuff to become future generals. There is never any official announcement or acknowledgement of this process, but once you are chosen, it's as if an invisible hand is reaching out to guide you, nurturing your career through a carefully selected series of command and staff positions that test and prepare you for higher command. Becoming a streamer doesn't mean success is assured; on the contrary, if you blow any of the commands you are offered, your career is over, or at least stalled.


pages: 773 words: 214,465

The Dreaming Void by Peter F. Hamilton

battle of ideas, clean water, dematerialisation, disinformation, invisible hand, mass immigration, megastructure, quantum entanglement

An egg needed to be shaped no earlier than ten hours after fertilization and no later than twenty-five. How long it took depended on the nature of the genus required. Edeard often had spent half the night sitting in a stall’s deep-cushioned shaper chair with his mind focused on the egg. Eggshaping, as Akeem so often had described it, was like sculpting intangible clay with invisible hands. The ability was a gentle combination of farsight and telekinesis. His mind could see inside the egg, and only those who could do that with perfect clarity could become shapers. Not that he liked to boast, but Edeard’s mental vision was the most acute in the village. What he saw within the shell was like a small exemplar of a default genistar made of gray shadow substance.


Seeking SRE: Conversations About Running Production Systems at Scale by David N. Blank-Edelman

Affordable Care Act / Obamacare, algorithmic trading, AlphaGo, Amazon Web Services, backpropagation, Black Lives Matter, Bletchley Park, bounce rate, business continuity plan, business logic, business process, cloud computing, cognitive bias, cognitive dissonance, cognitive load, commoditize, continuous integration, Conway's law, crowdsourcing, dark matter, data science, database schema, Debian, deep learning, DeepMind, defense in depth, DevOps, digital rights, domain-specific language, emotional labour, en.wikipedia.org, exponential backoff, fail fast, fallacies of distributed computing, fault tolerance, fear of failure, friendly fire, game design, Grace Hopper, imposter syndrome, information retrieval, Infrastructure as a Service, Internet of things, invisible hand, iterative process, Kaizen: continuous improvement, Kanban, Kubernetes, loose coupling, Lyft, machine readable, Marc Andreessen, Maslow's hierarchy, microaggression, microservices, minimum viable product, MVC pattern, performance metric, platform as a service, pull request, RAND corporation, remote working, Richard Feynman, risk tolerance, Ruby on Rails, Salesforce, scientific management, search engine result page, self-driving car, sentiment analysis, Silicon Valley, single page application, Snapchat, software as a service, software is eating the world, source of truth, systems thinking, the long tail, the scientific method, Toyota Production System, traumatic brain injury, value engineering, vertical integration, web application, WebSocket, zero day

At the very least, try to design for the performance measured and documented in the historical record. Novelty Priority Inversion I have mentioned engineer promotions twice now, and not (merely) to be facetious. Because the human system and the computer system are isomorphic, the human incentive structure is the invisible hand that drives the change in the computer system over time. The desire of the hardware maintainers to optimize for MTTR is predictable because it will get them promoted. The desire of the storage operators to optimize the new safety margin away, and cut costs, is predictable because it will get them promoted.


pages: 901 words: 234,905

The Blank Slate: The Modern Denial of Human Nature by Steven Pinker

affirmative action, Albert Einstein, Alfred Russel Wallace, anti-communist, behavioural economics, belling the cat, British Empire, clean water, cognitive dissonance, Columbine, conceptual framework, correlation coefficient, correlation does not imply causation, cuban missile crisis, Daniel Kahneman / Amos Tversky, Defenestration of Prague, desegregation, disinformation, Dutch auction, epigenetics, Exxon Valdez, George Akerlof, germ theory of disease, ghettoisation, glass ceiling, Gregor Mendel, Hobbesian trap, income inequality, invention of agriculture, invisible hand, Joan Didion, language acquisition, long peace, meta-analysis, More Guns, Less Crime, Murray Gell-Mann, mutually assured destruction, Norman Mailer, Oklahoma City bombing, PalmPilot, Peter Singer: altruism, phenotype, plutocrats, Potemkin village, prisoner's dilemma, profit motive, public intellectual, QWERTY keyboard, Richard Feynman, Richard Thaler, risk tolerance, Robert Bork, Rodney Brooks, Saturday Night Live, Skinner box, social intelligence, speech recognition, Stanford prison experiment, stem cell, Steven Pinker, tacit knowledge, The Bell Curve by Richard Herrnstein and Charles Murray, the new new thing, theory of mind, Thomas Malthus, Thorstein Veblen, Timothy McVeigh, twin studies, Tyler Cowen, ultimatum game, urban renewal, War on Poverty, women in the workforce, Yogi Berra, zero-sum game

Property rights give people an incentive to work and produce; contracts allow them to enjoy gains in trade. Prices convey information about scarcity and demand to producers and consumers, so they can react by following a few simple rules—make more of what is profitable, buy less of what is expensive—and the “invisible hand” will do the rest. The intelligence of the system is distributed across millions of not-necessarily-intelligent producers and consumers, and cannot be articulated by anyone in particular. People with the Utopian Vision point to market failures that can result from having a blind faith in free markets.


pages: 801 words: 229,742

The Israel Lobby and U.S. Foreign Policy by John J. Mearsheimer, Stephen M. Walt

affirmative action, Ayatollah Khomeini, Boycotts of Israel, David Brooks, energy security, facts on the ground, failed state, invisible hand, low interest rates, oil shock, Project for a New American Century, Ralph Nader, Ronald Reagan, Seymour Hersh, Silicon Valley, Strategic Defense Initiative, Suez crisis 1956, Thomas L Friedman, uranium enrichment, Yom Kippur War

Also see Uzi Arad, “Swap Meet: Trading Land for Peace,” New Republic, November 28 and December 5, 2005; Amnon Barzilai, “More Israeli Jews Favor Transfer of Palestinians, Israeli Arabs—Poll Finds,” Ha’aretz, October 10, 2005; Arik Carmon, “A Blot on Israeli Democracy,” Ha’aretz, December 12, 2005; Evelyn Gordon, “No Longer the Political Fringe,” Jerusalem Post, September 14, 2006; Ben Lynfield, “Israeli Expulsion Idea Gains Steam,” Christian Science Monitor, February 6, 2002; Stern, “Poll: 50% of Israeli Jews”; Matthew Wagner, “New Proposal: Transfer-for-Cash Plan,” Jerusalem Post, January 21, 2007; and Steven I. Weiss, “Israeli Rightist Calls for Transfer of Arabs,” Forward, September 15, 2006. 50. B’Tselem, “The Scope of Israeli Control in the Gaza Strip,” www.btselem.org/english/Gaza_Strip/Gaza_Status.asp; David Sharrock, “Israel’s ‘Invisible Hand’ Still Controls Gaza, Says Report,” Times (London), January 15, 2007; and Scott Wilson, “For Gaza, a Question of Responsibility,” Washington Post, March 21, 2007. 51. Jan Egeland and Jan Eliasson, “La catastrophe humaine de Gaza est une bombe á retardement,” Figaro (online), September 28, 2006.


pages: 879 words: 233,093

The Empathic Civilization: The Race to Global Consciousness in a World in Crisis by Jeremy Rifkin

Abraham Maslow, agricultural Revolution, Albert Einstein, animal electricity, back-to-the-land, British Empire, carbon footprint, classic study, collaborative economy, death of newspapers, delayed gratification, distributed generation, emotional labour, en.wikipedia.org, energy security, feminist movement, Ford Model T, global village, Great Leap Forward, hedonic treadmill, hydrogen economy, illegal immigration, income inequality, income per capita, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), Internet Archive, invention of movable type, invention of the steam engine, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, Lewis Mumford, Mahatma Gandhi, Marshall McLuhan, means of production, megacity, meta-analysis, Milgram experiment, mirror neurons, Nelson Mandela, new economy, New Urbanism, Norbert Wiener, off grid, off-the-grid, out of africa, Peace of Westphalia, peak oil, peer-to-peer, planetary scale, Recombinant DNA, scientific management, scientific worldview, Simon Kuznets, Skype, smart grid, smart meter, social intelligence, supply-chain management, surplus humans, systems thinking, the medium is the message, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Tragedy of the Commons, transaction costs, upwardly mobile, uranium enrichment, working poor, World Values Survey

Each more sophisticated communications revolution brings together more diverse people in increasingly more expansive and dense social networks. By extending the central nervous system of each individual and the society as a whole, communications revolutions provide an ever more inclusive playing field for empathy to mature and consciousness to expand. If there is an “invisible hand” at work it is that empathy matures and consciousness expands to fill the temporal/spatial boundaries set by the new energy regime. Empathy becomes the thread that weaves an increasingly differentiated and individualized population into an integrated social tapestry, allowing the social organism to function as a whole.


pages: 1,014 words: 237,531

Escape From Rome: The Failure of Empire and the Road to Prosperity by Walter Scheidel

agricultural Revolution, barriers to entry, British Empire, classic study, colonial rule, conceptual framework, creative destruction, currency manipulation / currency intervention, dark matter, disruptive innovation, Easter island, Eratosthenes, European colonialism, financial innovation, financial intermediation, flying shuttle, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Johann Wolfgang von Goethe, Johannes Kepler, joint-stock company, Joseph Schumpeter, knowledge economy, low interest rates, mandelbrot fractal, means of production, Multics, Network effects, out of africa, Peace of Westphalia, peer-to-peer lending, plutocrats, principal–agent problem, purchasing power parity, rent-seeking, Republic of Letters, secular stagnation, South China Sea, spinning jenny, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, trade route, transaction costs, vertical integration, zero-sum game

Thus, when high real wages and growing work inputs in response to consumption incentives—the so-called Industrious Revolution—among a large segment of society created a growing consumer market, this process provided impetus for industrialization only in the very specific context of import substitution impelled by protectionist import restrictions.119 THE FISCAL-NAVAL-MERCANTILIST STATE AND ECONOMIC DEVELOPMENT In the end, the visible and often heavy hand of the fiscal-naval-mercantilist state that had emerged in Britain mattered as much as the invisible hand of the market. The economy benefited from mobilization effects: war required intensive use of resources. British cotton production tripled between the 1790s and 1813, while iron and steel output quadrupled. Massive demand for arms and uniforms lay behind this, coupled with a determined push for rationalization.120 During those years, capital fled war-torn Europe.


pages: 869 words: 239,167

The Story of Work: A New History of Humankind by Jan Lucassen

3D printing, 8-hour work day, affirmative action, agricultural Revolution, Albert Einstein, anti-work, antiwork, Asian financial crisis, banking crisis, basic income, Berlin Wall, Black Lives Matter, blue-collar work, bread and circuses, Bretton Woods, Capital in the Twenty-First Century by Thomas Piketty, Charles Babbage, collective bargaining, Columbian Exchange, commoditize, computer age, coronavirus, COVID-19, demographic transition, deskilling, discovery of the americas, domestication of the camel, Easter island, European colonialism, factory automation, Fall of the Berlin Wall, fixed income, Ford Model T, founder crops, Frederick Winslow Taylor, full employment, future of work, Great Leap Forward, hiring and firing, income inequality, income per capita, informal economy, invisible hand, James Watt: steam engine, joint-stock company, knowledge economy, labour mobility, land tenure, long peace, mass immigration, means of production, megastructure, minimum wage unemployment, money: store of value / unit of account / medium of exchange, new economy, New Urbanism, out of africa, pension reform, phenotype, post-work, precariat, price stability, public intellectual, reshoring, scientific management, Scramble for Africa, Second Machine Age, stakhanovite, tacit knowledge, Thales of Miletus, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transatlantic slave trade, two and twenty, universal basic income, W. E. B. Du Bois, women in the workforce, working poor

Ils voyageaient la France: Vie et traditions des Compagnons du Tour de France au XIXe siècle (Paris: Hachette, 1980). Barringer, Tim. Men at Work: Art and Labour in Victorian Britain (New Haven/London: Yale UP, 2005). Bar-Yosef, Ofer & Youping Wang. ‘Palaeolithic Archaeology in China’, Annual Review of Anthropology, 41 (2012), pp. 319–35. Bavel, Bas van. The Invisible Hand? How Market Economies Have Emerged and Declined since AD 500 (Oxford: OUP, 2016). Beaujard, Philippe. The Worlds of the Indian Ocean: A Global History, vol. I (Cambridge: CUP, 2019). Beck, Patrice, Philippe Bernardi & Lauren Feller (eds). Rémunérer le travail au Moyen Âge: Pour une histoire sociale du salariat (Paris: Picard, 2014).


pages: 827 words: 239,762

The Golden Passport: Harvard Business School, the Limits of Capitalism, and the Moral Failure of the MBA Elite by Duff McDonald

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Albert Einstein, Apollo 13, barriers to entry, Bayesian statistics, Bear Stearns, Bernie Madoff, Bob Noyce, Bonfire of the Vanities, business cycle, business process, butterfly effect, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, Carl Icahn, Clayton Christensen, cloud computing, collateralized debt obligation, collective bargaining, commoditize, compensation consultant, corporate governance, corporate raider, corporate social responsibility, creative destruction, deskilling, discounted cash flows, disintermediation, disruptive innovation, Donald Trump, eat what you kill, Fairchild Semiconductor, family office, financial engineering, financial innovation, Frederick Winslow Taylor, full employment, George Gilder, glass ceiling, Glass-Steagall Act, global pandemic, Gordon Gekko, hiring and firing, Ida Tarbell, impact investing, income inequality, invisible hand, Jeff Bezos, job-hopping, John von Neumann, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kickstarter, Kōnosuke Matsushita, London Whale, Long Term Capital Management, market fundamentalism, Menlo Park, Michael Milken, new economy, obamacare, oil shock, pattern recognition, performance metric, Pershing Square Capital Management, Peter Thiel, planned obsolescence, plutocrats, profit maximization, profit motive, pushing on a string, Ralph Nader, Ralph Waldo Emerson, RAND corporation, random walk, rent-seeking, Ronald Coase, Ronald Reagan, Sam Altman, Sand Hill Road, Saturday Night Live, scientific management, shareholder value, Sheryl Sandberg, Silicon Valley, Skype, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, Steve Jurvetson, survivorship bias, TED Talk, The Nature of the Firm, the scientific method, Thorstein Veblen, Tragedy of the Commons, union organizing, urban renewal, vertical integration, Vilfredo Pareto, War on Poverty, William Shockley: the traitorous eight, women in the workforce, Y Combinator

The professors who taught it didn’t teach a “great person” theory of history, according to McCraw, but took a Chandlerian approach instead: “[Our] real subject is the relentlessness of change—shifts in the external environment of business, in industrial and corporate structures, in technological possibilities, and in managerial prerogative.”7 Chandler’s next book, 1977’s The Visible Hand: The Managerial Revolution in American Business, was a direct result of that work. Essentially a prequel to Strategy and Structure, the book laid out Chandler’s argument of how the “visible” hand of management had replaced Adam Smith’s more fickle “invisible” hand of the market as the primary allocator of resources in the modern industrial economy. The book characterized the rise of the managerial class not as a power grab (although he did acknowledge the tension between managers and owners) but as an inevitability, the “rational economic response” to changes including the rise of the railroads and the spread of the telegraph.


pages: 903 words: 235,753

The Stack: On Software and Sovereignty by Benjamin H. Bratton

1960s counterculture, 3D printing, 4chan, Ada Lovelace, Adam Curtis, additive manufacturing, airport security, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, algorithmic trading, Amazon Mechanical Turk, Amazon Robotics, Amazon Web Services, Andy Rubin, Anthropocene, augmented reality, autonomous vehicles, basic income, Benevolent Dictator For Life (BDFL), Berlin Wall, bioinformatics, Biosphere 2, bitcoin, blockchain, Buckminster Fuller, Burning Man, call centre, capitalist realism, carbon credits, carbon footprint, carbon tax, carbon-based life, Cass Sunstein, Celebration, Florida, Charles Babbage, charter city, clean water, cloud computing, company town, congestion pricing, connected car, Conway's law, corporate governance, crowdsourcing, cryptocurrency, dark matter, David Graeber, deglobalization, dematerialisation, digital capitalism, digital divide, disintermediation, distributed generation, don't be evil, Douglas Engelbart, Douglas Engelbart, driverless car, Edward Snowden, Elon Musk, en.wikipedia.org, Eratosthenes, Ethereum, ethereum blockchain, Evgeny Morozov, facts on the ground, Flash crash, Frank Gehry, Frederick Winslow Taylor, fulfillment center, functional programming, future of work, Georg Cantor, gig economy, global supply chain, Google Earth, Google Glasses, Guggenheim Bilbao, High speed trading, high-speed rail, Hyperloop, Ian Bogost, illegal immigration, industrial robot, information retrieval, Intergovernmental Panel on Climate Change (IPCC), intermodal, Internet of things, invisible hand, Jacob Appelbaum, James Bridle, Jaron Lanier, Joan Didion, John Markoff, John Perry Barlow, Joi Ito, Jony Ive, Julian Assange, Khan Academy, Kim Stanley Robinson, Kiva Systems, Laura Poitras, liberal capitalism, lifelogging, linked data, lolcat, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, Masdar, McMansion, means of production, megacity, megaproject, megastructure, Menlo Park, Minecraft, MITM: man-in-the-middle, Monroe Doctrine, Neal Stephenson, Network effects, new economy, Nick Bostrom, ocean acidification, off-the-grid, offshore financial centre, oil shale / tar sands, Oklahoma City bombing, OSI model, packet switching, PageRank, pattern recognition, peak oil, peer-to-peer, performance metric, personalized medicine, Peter Eisenman, Peter Thiel, phenotype, Philip Mirowski, Pierre-Simon Laplace, place-making, planetary scale, pneumatic tube, post-Fordism, precautionary principle, RAND corporation, recommendation engine, reserve currency, rewilding, RFID, Robert Bork, Sand Hill Road, scientific management, self-driving car, semantic web, sharing economy, Silicon Valley, Silicon Valley ideology, skeuomorphism, Slavoj Žižek, smart cities, smart grid, smart meter, Snow Crash, social graph, software studies, South China Sea, sovereign wealth fund, special economic zone, spectrum auction, Startup school, statistical arbitrage, Steve Jobs, Steven Levy, Stewart Brand, Stuxnet, Superbowl ad, supply-chain management, supply-chain management software, synthetic biology, TaskRabbit, technological determinism, TED Talk, the built environment, The Chicago School, the long tail, the scientific method, Torches of Freedom, transaction costs, Turing complete, Turing machine, Turing test, undersea cable, universal basic income, urban planning, Vernor Vinge, vertical integration, warehouse automation, warehouse robotics, Washington Consensus, web application, Westphalian system, WikiLeaks, working poor, Y Combinator, yottabyte

This design needs to graduate from forms of practice that defer so much agency to authorities who claim but cannot defend incredible decisions over the arbitrage of exceptions, and needs to stop providing paramedic gestures that give them support. It is because there is no one governance format for climates and electrons that the space for design is open at all. A communitarian integration of local techniques of measurement and mitigation into a more immediate tapestry may be an attractive vision for some, but a singing chorus to the invisible hand of flat networks is not a scalable posture of resistance to the status quo; to the contrary, programmatic localism and the democracy of means is a play for weakness. Without strong force-of-law mechanisms (and machines) in place, it is doubtful that design can possibly intervene at the superhuman scale of an planetary ecology, which, however, then leads us back to the contradictions of full-spectrum geography (but necessarily a compulsion to omniscience) with all its attendant problems, gaps, and failures intact.


pages: 1,396 words: 245,647

The Strangest Man: The Hidden Life of Paul Dirac, Mystic of the Atom by Graham Farmelo

Albert Einstein, anti-communist, Arthur Eddington, Berlin Wall, Bletchley Park, cuban missile crisis, double helix, Dr. Strangelove, Eddington experiment, Ernest Rutherford, Fall of the Berlin Wall, Fellow of the Royal Society, financial independence, gravity well, Henri Poincaré, invention of radio, invisible hand, Isaac Newton, John von Neumann, Kevin Kelly, Large Hadron Collider, Murray Gell-Mann, Neil Armstrong, period drama, Richard Feynman, Simon Singh, Stephen Hawking, strikebreaker, Suez canal 1869, Suez crisis 1956, University of East Anglia

However, Kapitza will have shared his vision of society with Dirac, who had arrived in Cambridge a political innocent and so heard for the first time the claim that Marxism offered an all-embracing scientific theory that could do for society what Newton had done for science. According to this vision, every economy could be the test bed for a theory that promised a brighter future, with intelligent planning taking the place of the sometimes cruel, invisible hand of market forces. Dirac may have noted the strong support Marxists gave to education and industrialisation and the contempt they poured on religion – themes that emerged soon afterwards in his perspective on aspects of life he was discovering outside physics. During the General Strike, Dirac was absorbed in writing his Ph.


pages: 343 words: 41,228

Memoirs of Extraordinary Popular Delusions and the Madness of Crowds - the Original Classic Edition by Charles MacKay

clean water, invention of gunpowder, invisible hand, joint-stock company, land bank, railway mania, South Sea Bubble, the market place

Being again in darkness, they lighted a candle and placed it in the doorway, that it might throw a light upon the two chambers at once; but it was suddenly blown out, and one commissioner said that he had "seen the similitude of a horse's hoof striking the candle and candlestick into the middle of the chamber, and afterwards making three scrapes on the snuff to put it out." Upon this, the same person was so bold as to draw his sword; but he asserted positively that he had hardly withdrawn it from the scabbard before an invisible hand seized hold of it and tugged with him for it, and prevailing, struck him so violent a blow with the pommel that he was quite stunned. Then the noises began again; upon which, with one accord, they all retired into the presence-chamber, where they passed the night, praying and singing psalms. They were by this time convinced that it was useless to struggle any longer with the powers of evil, that seemed determined to make Woodstock their own.


The Dream Machine: J.C.R. Licklider and the Revolution That Made Computing Personal by M. Mitchell Waldrop

Ada Lovelace, air freight, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Albert Einstein, anti-communist, Apple II, battle of ideas, Berlin Wall, Bill Atkinson, Bill Duvall, Bill Gates: Altair 8800, Bletchley Park, Boeing 747, Byte Shop, Charles Babbage, Claude Shannon: information theory, Compatible Time-Sharing System, computer age, Computing Machinery and Intelligence, conceptual framework, cuban missile crisis, Dennis Ritchie, do well by doing good, Donald Davies, double helix, Douglas Engelbart, Douglas Engelbart, Dynabook, experimental subject, Fairchild Semiconductor, fault tolerance, Frederick Winslow Taylor, friendly fire, From Mathematics to the Technologies of Life and Death, functional programming, Gary Kildall, Haight Ashbury, Howard Rheingold, information retrieval, invisible hand, Isaac Newton, Ivan Sutherland, James Watt: steam engine, Jeff Rulifson, John von Neumann, Ken Thompson, Leonard Kleinrock, machine translation, Marc Andreessen, Menlo Park, Multics, New Journalism, Norbert Wiener, packet switching, pink-collar, pneumatic tube, popular electronics, RAND corporation, RFC: Request For Comment, Robert Metcalfe, Silicon Valley, Skinner box, Steve Crocker, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, Ted Nelson, The Soul of a New Machine, Turing machine, Turing test, Vannevar Bush, Von Neumann architecture, Wiener process, zero-sum game

Or perhaps it even resonated with Alan Kay's notion of software objects, which would present a standard interface to the world while doing their own thing inside. But wherever the idea came from, it was an exceedingly potent one-as po- tent, in its own way, as the idea of an open marketplace guided by Adam Smith's Invisible Hand, or the idea of an open democracy in which all human beings are created equal. If you wanted to be a part of the Internet, you could be: it would be open to anyone willing to deal in the common currency and/or speak the common language, as defined by the interface standard. It was this ar- chitecture of openness that would enable the Internet to undergo its explosive growth in the 1990s, when it would expand from a handful of users to un- counted tens of millions in less than half a decade.


pages: 1,042 words: 266,547

Security Analysis by Benjamin Graham, David Dodd

activist fund / activist shareholder / activist investor, asset-backed security, backtesting, barriers to entry, Bear Stearns, behavioural economics, book value, business cycle, buy and hold, capital asset pricing model, Carl Icahn, carried interest, collateralized debt obligation, collective bargaining, corporate governance, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, diversification, diversified portfolio, fear of failure, financial engineering, financial innovation, fixed income, flag carrier, full employment, Greenspan put, index fund, intangible asset, invisible hand, Joseph Schumpeter, junk bonds, land bank, locking in a profit, Long Term Capital Management, low cost airline, low interest rates, Michael Milken, moral hazard, mortgage debt, Myron Scholes, prudent man rule, Right to Buy, risk free rate, risk-adjusted returns, risk/return, secular stagnation, shareholder value, stock buybacks, The Chicago School, the market place, the scientific method, The Wealth of Nations by Adam Smith, transaction costs, two and twenty, zero-coupon bond

Introduction to Part V THE QUEST FOR RATIONAL INVESTING BY GLENN H. GREENBERG Copyright © 2009 by The McGraw-Hill Companies, Inc. Click here for terms of use. True confession: I never read Security Analysis while at Columbia Business School. Never even took a securities analysis course. Instead, some invisible hand guided me into stock research and later money management, where I have labored for the past 33 years. It wasn’t until perhaps the middle of my investment career that I decided it was time to pick up Graham and Dodd and see what all the buzz was about. The first 300 pages dealt with fixed income securities, which I have seldom owned and were of little interest to me.


George Marshall: Defender of the Republic by David L. Roll

anti-communist, Bletchley Park, British Empire, Charles Lindbergh, Cornelius Vanderbilt, David Brooks, Defenestration of Prague, Donald Trump, European colonialism, fear of failure, invisible hand, MITM: man-in-the-middle, Monroe Doctrine, mutually assured destruction, one-China policy, one-state solution, Ralph Waldo Emerson, Simon Kuznets, South China Sea, Steve Jobs, Suez canal 1869, trade liberalization, Works Progress Administration, yellow journalism

The rain had given way to a clear moonlit night. Flying in a Spad XIII fighter, Captain Eddie Rickenbacker of the 94th Aero Squadron, who would shoot down twenty-six German planes during the course of the war, observed that the battlefield below looked like a “giant switchboard which emitted thousands of electric flashes as invisible hands manipulated the plugs.”16 On Hill 290, about half a mile from a partially ruined stone church that would be used as a field hospital, Harry Truman’s Battery D was responsible for preparing the way for the 35th Division, rated as one of the weakest and least experienced of the frontline divisions.


pages: 1,145 words: 310,655

1967: Israel, the War, and the Year That Transformed the Middle East by Tom Segev

affirmative action, anti-communist, Ascot racecourse, Berlin Wall, Boycotts of Israel, British Empire, cuban missile crisis, distributed generation, friendly fire, full employment, ghettoisation, government statistician, illegal immigration, invisible hand, mass immigration, Mount Scopus, open borders, Ronald Reagan, Yom Kippur War, young professional

“Nothing was ever written down or recorded; I don’t think I had a tape recorder back then,” she stressed. “I suppose that during one of those meetings, Nehama sang that Basque lullaby for me, and it went in one ear and out the other. When I was writing ’Jerusalem of Gold,’ the song must have come to me without my realizing it.” But an “invisible hand” guided her to make changes to the original, although she was not conscious of this either, she said. “The transition to a major key in the fourth bar, third sequence . . . and the ending. It turns out that someone seemed to be protecting me and providing me with my eight bars, which give me the rights to my own version of the song.


pages: 1,037 words: 294,916

Before the Storm: Barry Goldwater and the Unmaking of the American Consensus by Rick Perlstein

"there is no alternative" (TINA), affirmative action, Alan Greenspan, Alvin Toffler, anti-communist, anti-work, antiwork, Berlin Wall, bread and circuses, Bretton Woods, business climate, card file, collective bargaining, company town, cuban missile crisis, desegregation, distributed generation, Dr. Strangelove, Electric Kool-Aid Acid Test, ending welfare as we know it, George Gilder, haute couture, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Herman Kahn, index card, indoor plumbing, invisible hand, Joan Didion, liberal capitalism, Marshall McLuhan, means of production, military-industrial complex, mortgage debt, New Journalism, Norman Mailer, plutocrats, Project Plowshare, road to serfdom, Robert Bork, rolodex, Ronald Reagan, Rosa Parks, school vouchers, the medium is the message, The Wealth of Nations by Adam Smith, transcontinental railway, union organizing, Upton Sinclair, upwardly mobile, urban renewal, War on Poverty, Watson beat the top human players on Jeopardy!, white picket fence, Works Progress Administration

Goldwater broke ground for Bill Baroody’s conservative utopia on the first stop of his first tour, Los Angeles, with the help of University of Chicago economist Milton Friedman. “Every individual endeavors to employ his capital so that its produce may be of greatest value,” Adam Smith famously wrote in The Wealth of Nations (1776), “led by an invisible hand to promote an end which has no part of his intentions. By pursuing his own interests he frequently promotes that of society more effectively than when he really intends to promote it.” At Chicago, the revolutionary economics department was applying the gleaming instruments of mathematical proof to remove the qualifying “frequently” from that formulation, taking on every Keynesian orthodoxy their profession had come to hold dear.


pages: 1,073 words: 314,528

Strategy: A History by Lawrence Freedman

Albert Einstein, anti-communist, Anton Chekhov, Ayatollah Khomeini, barriers to entry, battle of ideas, behavioural economics, Black Swan, Blue Ocean Strategy, British Empire, business process, butterfly effect, centre right, Charles Lindbergh, circulation of elites, cognitive dissonance, coherent worldview, collective bargaining, complexity theory, conceptual framework, Cornelius Vanderbilt, corporate raider, correlation does not imply causation, creative destruction, cuban missile crisis, Daniel Kahneman / Amos Tversky, defense in depth, desegregation, disinformation, Dr. Strangelove, Edward Lorenz: Chaos theory, en.wikipedia.org, endogenous growth, endowment effect, escalation ladder, Ford Model T, Ford paid five dollars a day, framing effect, Frederick Winslow Taylor, Gordon Gekko, greed is good, Herbert Marcuse, Herman Kahn, Ida Tarbell, information retrieval, interchangeable parts, invisible hand, John Nash: game theory, John von Neumann, Kenneth Arrow, lateral thinking, linear programming, loose coupling, loss aversion, Mahatma Gandhi, means of production, mental accounting, Murray Gell-Mann, mutually assured destruction, Nash equilibrium, Nelson Mandela, Norbert Wiener, Norman Mailer, oil shock, Pareto efficiency, performance metric, Philip Mirowski, prisoner's dilemma, profit maximization, race to the bottom, Ralph Nader, RAND corporation, Richard Thaler, road to serfdom, Ronald Reagan, Rosa Parks, scientific management, seminal paper, shareholder value, social contagion, social intelligence, Steven Pinker, strikebreaker, The Chicago School, The Myth of the Rational Market, the scientific method, theory of mind, Thomas Davenport, Thomas Kuhn: the structure of scientific revolutions, Torches of Freedom, Toyota Production System, transaction costs, Twitter Arab Spring, ultimatum game, unemployed young men, Upton Sinclair, urban sprawl, Vilfredo Pareto, W. E. B. Du Bois, War on Poverty, women in the workforce, Yogi Berra, zero-sum game

They also had discovered ways of preventing potential competitors from mounting effective challenges and of bargaining on almost equal terms with the state. Business success and failure depended less on market conditions and more on the organizational capacity of the large corporations. Arthur Chandler captured the claim neatly when he wrote of the role of management as the “visible hand” as a contrast with Adam Smith’s “invisible hand.”3 There was perhaps also another thought, which had been around since Plato, that there was something to be said for bright, educated people running things. The most mature formulation of the thesis came in 1967 with Galbraith’s The New Industrial State, at almost the last point when it could carry conviction.


Applied Cryptography: Protocols, Algorithms, and Source Code in C by Bruce Schneier

active measures, cellular automata, Claude Shannon: information theory, complexity theory, dark matter, Donald Davies, Donald Knuth, dumpster diving, Dutch auction, end-to-end encryption, Exxon Valdez, fault tolerance, finite state, heat death of the universe, information security, invisible hand, John von Neumann, knapsack problem, MITM: man-in-the-middle, Multics, NP-complete, OSI model, P = NP, packet switching, quantum cryptography, RAND corporation, RFC: Request For Comment, seminal paper, software patent, telemarketer, traveling salesman, Turing machine, web of trust, Zimmermann PGP

Finally, in the March 17, 1975 Federal Register, the NBS published both the details of the algorithm and IBM’s statement granting a nonexclusive, royalty-free license for the algorithm, and requested comment [536]. Another notice, in the August 1, 1975 Federal Register, again requested comments from agencies and the general public. And there were comments [721,497,1120]. Many were wary of the NSA’s “invisible hand” in the development of the algorithm. They were afraid that the NSA had modified the algorithm to install a trapdoor. They complained that the NSA reduced the key size from the original 128-bits to 56-bits (see Section 13.1). They complained about the inner workings of the algorithm. Much of NSA’s reasoning became clear in the early 1990s, but in the 1970s this seemed mysterious and worrisome.


pages: 1,242 words: 317,903

The Man Who Knew: The Life and Times of Alan Greenspan by Sebastian Mallaby

airline deregulation, airport security, Alan Greenspan, Alvin Toffler, Andrei Shleifer, anti-communist, Asian financial crisis, balance sheet recession, bank run, barriers to entry, Bear Stearns, behavioural economics, Benoit Mandelbrot, Black Monday: stock market crash in 1987, bond market vigilante , book value, Bretton Woods, business cycle, central bank independence, centralized clearinghouse, classic study, collateralized debt obligation, conceptual framework, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, Dr. Strangelove, energy security, equity premium, fiat currency, financial deregulation, financial engineering, financial innovation, fixed income, Flash crash, forward guidance, full employment, Future Shock, Glass-Steagall Act, Greenspan put, Hyman Minsky, inflation targeting, information asymmetry, interest rate swap, inventory management, invisible hand, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", junk bonds, Kenneth Rogoff, Kickstarter, Kitchen Debate, laissez-faire capitalism, Lewis Mumford, Long Term Capital Management, low interest rates, low skilled workers, market bubble, market clearing, Martin Wolf, Money creation, money market fund, moral hazard, mortgage debt, Myron Scholes, Neil Armstrong, new economy, Nixon shock, Nixon triggered the end of the Bretton Woods system, Northern Rock, paper trading, paradox of thrift, Paul Samuelson, Phillips curve, plutocrats, popular capitalism, price stability, RAND corporation, Reminiscences of a Stock Operator, rent-seeking, Robert Shiller, Robert Solow, rolodex, Ronald Reagan, Saturday Night Live, Savings and loan crisis, savings glut, secular stagnation, short selling, stock buybacks, subprime mortgage crisis, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, Tipper Gore, too big to fail, trade liberalization, unorthodox policies, upwardly mobile, We are all Keynesians now, WikiLeaks, women in the workforce, Y2K, yield curve, zero-sum game

Grain, fertilizers, and petroleum had shot up in price, hitting the poorest nations that were net importers of all three; as a result, developing countries were demanding a “New World Order.”25 Such tensions, Kissinger warned, “must be overcome, or we face not only an end to the growth of the last thirty years but a shattering of the hopes of all mankind for a better future.”26 Kissinger refused to contemplate such problems through a Thatcherite, free-market prism. The way he saw things, the miraculous growth of the postwar era was not the achievement of the invisible hand; rather, it was the result of the international architecture established at the end of World War II, with the United States at its center. “For thirty years, the modern economic system created at the Bretton Woods conference of 1944 has served us well,” Kissinger declared; by creating a framework of stability, it had allowed commerce to flourish.


The First Tycoon by T.J. Stiles

book value, British Empire, business cycle, business logic, buttonwood tree, buy and hold, buy low sell high, California gold rush, Cornelius Vanderbilt, credit crunch, Edward Glaeser, gentleman farmer, informal economy, invisible hand, Isaac Newton, James Watt: steam engine, joint-stock company, margin call, Monroe Doctrine, new economy, public intellectual, risk free rate, short selling, Snow Crash, strikebreaker, The Wealth of Nations by Adam Smith, three-masted sailing ship, tontine, transatlantic slave trade, transcontinental railway, vertical integration, working poor

To quote George Washington, they were decidedly a “monied gentry.”11 Those very activities, however, separated the commercial vision of aristocrats such as Livingston from the emerging ideals of rank-and-file Jeffersonians. He believed in economic development, but in an ordered manner, directed from above. After the Revolution, the seeds of a different notion began to sprout—of an individualistic, competitive economy where one could go as far as his ability and energy could take him. “Adam Smith's invisible hand,” writes historian Joyce Appleby “was warmly clasped by the Republicans.” They criticized the patricians for using their political power to grant themselves special privileges. Corporate charters usually went to the well-connected. Many early banks extended credit only to a closed network of relatives and cronies.


I You We Them by Dan Gretton

agricultural Revolution, anti-communist, back-to-the-land, British Empire, clean water, cognitive dissonance, colonial rule, conceptual framework, corporate social responsibility, Crossrail, Desert Island Discs, drone strike, European colonialism, financial independence, friendly fire, ghettoisation, Honoré de Balzac, IBM and the Holocaust, illegal immigration, invisible hand, Johann Wolfgang von Goethe, laissez-faire capitalism, Large Hadron Collider, liberation theology, Mikhail Gorbachev, Milgram experiment, military-industrial complex, Neil Kinnock, Nelson Mandela, New Journalism, Pier Paolo Pasolini, place-making, pre–internet, restrictive zoning, Stanford prison experiment, University of East Anglia, wikimedia commons

A work in the early 1990s called ‘Homeland’,fn1 which asked Londoners to consider how light, that most intangible of substances, came into their city – attempting to break down the constituent elements of the coal burned for electricity, the copper wire in their electric cables, even the glass of the light bulbs they used – to trace these materials back to their points of production (the colliery at Hirwaun in south Wales, the copper mine at Neves-Corvo in Alentejo, Portugal, the light-bulb factory in Nagykanizsa, Hungary); of course, most of these now owned by vast US and UK transnational corporations such as Rio Tinto and General Electric. The philosophical jumping-off point for the project was to go beyond Adam Smith’s concept of ‘the Invisible Hand’ – we attempted something more radical, asking the question whether it was possible to humanise vastly complex systems of international trade. To establish empathy between groups of people that capitalism had historically taught us to regard as ‘producers’ and ‘consumers’. If people in a city like London could see the faces of the copper miners in Portugal or the lives of the Hungarian light-bulb makers, actually recognise their shared humanity, then many of the assumptions behind the abstract nature of international trade would have to change.


pages: 1,544 words: 391,691

Corporate Finance: Theory and Practice by Pierre Vernimmen, Pascal Quiry, Maurizio Dallocchio, Yann le Fur, Antonio Salvi

"Friedman doctrine" OR "shareholder theory", accelerated depreciation, accounting loophole / creative accounting, active measures, activist fund / activist shareholder / activist investor, AOL-Time Warner, ASML, asset light, bank run, barriers to entry, Basel III, Bear Stearns, Benoit Mandelbrot, bitcoin, Black Swan, Black-Scholes formula, blockchain, book value, business climate, business cycle, buy and hold, buy low sell high, capital asset pricing model, carried interest, collective bargaining, conceptual framework, corporate governance, correlation coefficient, credit crunch, Credit Default Swap, currency risk, delta neutral, dematerialisation, discounted cash flows, discrete time, disintermediation, diversification, diversified portfolio, Dutch auction, electricity market, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, eurozone crisis, financial engineering, financial innovation, fixed income, Flash crash, foreign exchange controls, German hyperinflation, Glass-Steagall Act, high net worth, impact investing, implied volatility, information asymmetry, intangible asset, interest rate swap, Internet of things, inventory management, invisible hand, joint-stock company, joint-stock limited liability company, junk bonds, Kickstarter, lateral thinking, London Interbank Offered Rate, low interest rates, mandelbrot fractal, margin call, means of production, money market fund, moral hazard, Myron Scholes, new economy, New Journalism, Northern Rock, performance metric, Potemkin village, quantitative trading / quantitative finance, random walk, Right to Buy, risk free rate, risk/return, shareholder value, short selling, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, Steve Jobs, stocks for the long run, supply-chain management, survivorship bias, The Myth of the Rational Market, time value of money, too big to fail, transaction costs, value at risk, vertical integration, volatility arbitrage, volatility smile, yield curve, zero-coupon bond, zero-sum game

Section 1 Corporate strategies Corporate strategy can take a number of different forms (diversification, refocusing on a business line, upstream or downstream integration, winning market share, internationalisation, etc.) and leverages internal or external growth. It is one of the visible sides of the invisible hand. 1. A financial reading of strategy For a financial manager, these strategies, whatever they are, have a single goal – to enable the company to set itself apart on a competitive market in order to generate income, enabling it to generate higher earnings than its competitors, which in fact are no longer able to compete at the same level.


pages: 1,222 words: 385,226

Shantaram: A Novel by Gregory David Roberts

Ayatollah Khomeini, British Empire, Burning Man, clean water, colonial rule, financial independence, friendly fire, invisible hand, Khyber Pass, Kickstarter, Louis Pasteur, Mahatma Gandhi, mandelbrot fractal, trade route, unemployed young men, Yom Kippur War

I asked, probing my own chest above the nipple. Behind the screen, the niece probed at her aunt’s breast, asking my question. ‘No.’ ‘How about here?’ ‘No, not there.’ ‘What about here?’ ‘Yes. There it is hurting,’ she answered. ‘And here? Or here?’ ‘No, not there. A little bit here.’ With that pantomime, and through the invisible hands of her niece, I finally established that the elderly woman had two painful lumps in her breast. I also learned that she experienced some pain with deep breaths, and when lifting heavy objects. I wrote a note for Doctor Hamid, detailing my second-hand observations and my conclusions. I’d just finished explaining to the girl that she should take her aunt to Doctor Hamid’s surgery at once, and give him my note, when a voice spoke behind me.


pages: 1,060 words: 265,296

Wealth and Poverty of Nations by David S. Landes

Admiral Zheng, affirmative action, agricultural Revolution, Atahualpa, Ayatollah Khomeini, Bartolomé de las Casas, book value, British Empire, business cycle, Cape to Cairo, classic study, clean water, colonial rule, Columbian Exchange, computer age, David Ricardo: comparative advantage, deindustrialization, deskilling, European colonialism, Fellow of the Royal Society, financial intermediation, Francisco Pizarro, germ theory of disease, glass ceiling, high-speed rail, illegal immigration, income inequality, Index librorum prohibitorum, interchangeable parts, invention of agriculture, invention of movable type, invisible hand, Isaac Newton, it's over 9,000, James Watt: steam engine, John Harrison: Longitude, joint-stock company, Just-in-time delivery, Kenneth Arrow, land tenure, lateral thinking, Lewis Mumford, mass immigration, Mexican peso crisis / tequila crisis, MITM: man-in-the-middle, Monroe Doctrine, Murano, Venice glass, new economy, New Urbanism, North Sea oil, out of africa, passive investing, Paul Erdős, Paul Samuelson, Philip Mirowski, rent-seeking, Right to Buy, Robert Solow, Savings and loan crisis, Scramble for Africa, Simon Kuznets, South China Sea, spice trade, spinning jenny, Suez canal 1869, The Wealth of Nations by Adam Smith, trade route, transaction costs, transatlantic slave trade, Vilfredo Pareto, zero-sum game

They would compete for scarce labor and generate a discontented pro­ letariat. The Latin American countries had no program, then, no vision of economic development. Where Alexander Hamilton summoned a young America to develop industry and compete with Europe, the vis­ count of Cairu in Brazil "superstitiously believed in the 'invisible hand' and repeated: 'laissez faire, laissez passer, laissez vendre/ '* So the nations of South America remained, after independence as be­ fore, economic dependencies of the advanced industrial nations: Britain to begin with; then Germany toward the end of the nineteenth century, reflecting its scientific and technological gains; and from the twentieth century, the United States.


pages: 1,800 words: 596,972

The Great War for Civilisation: The Conquest of the Middle East by Robert Fisk

Albert Einstein, Ayatollah Khomeini, Berlin Wall, Boycotts of Israel, bread and circuses, British Empire, call centre, clean water, colonial rule, cuban missile crisis, disinformation, dual-use technology, Farzad Bazoft, friendly fire, Howard Zinn, IFF: identification friend or foe, invisible hand, Islamic Golden Age, Khartoum Gordon, Khyber Pass, land reform, Mahatma Gandhi, Mikhail Gorbachev, music of the spheres, no-fly zone, Oklahoma City bombing, Ronald Reagan, Seymour Hersh, Suez canal 1869, Suez crisis 1956, the market place, Thomas L Friedman, Timothy McVeigh, Transnistria, unemployed young men, uranium enrichment, Yom Kippur War

On board the escorting missile destroyer USS Kidd, the captain ordered armed seamen to the bow of his vessel to destroy any suspicious objects in the water by rifle-fire. Iranian fishing boats had been in the area before the Bridgeton was hit, but there was no way of identifying the mine. This permitted the Iranian prime minister, Mir-Hossein Moussavi, to praise the “invisible hands” which had proved the vulnerability of America’s “military expedition.” With her speed cut to a quarter and her port side number one compartment still taking water, the Bridgeton continued what was now a political rather than a commercial voyage towards Kuwait. It transpired that the Americans had no minesweepers in the area, had not even bothered to look for mines in the 30-kilometre-wide channel where the tanker was struck, and now feared that their own warships were more vulnerable to mines than the vessels they were supposed to protect.


The power broker : Robert Moses and the fall of New York by Caro, Robert A

Albert Einstein, American Society of Civil Engineers: Report Card, bank run, benefit corporation, British Empire, card file, centre right, East Village, Ford Model T, friendly fire, ghettoisation, high-speed rail, hiring and firing, housing crisis, Internet Archive, invisible hand, Isaac Newton, land reform, Lewis Mumford, Ralph Waldo Emerson, rent control, Right to Buy, scientific management, Southern State Parkway, The Death and Life of Great American Cities, Triangle Shirtwaist Factory, urban decay, urban planning, urban renewal, working poor, Works Progress Administration, young professional

Roulstone boarded a train to Buffalo, in a single day persuaded the Buffalo Council of Catholic Women, the Buffalo Civic Club and the Buffalo Central Labor Council to pass resolutions supporting Smith's stand—and then headed for Syracuse and a dozen other upstate cities and towns. The upstate park philanthropists were out working, too, old Judge Clearwater himself driving night after night to little villages to talk on their local radio stations, Franklin D. Roosevelt of Hyde Park assailing "the invisible hand behind the . . . Republican . . . policy." Then Smith and Mrs. Moskowitz conceived a master stroke: they told Moses to call a meeting of the seventy-three regional park commissioners and to hold it in the Executive Chamber at 2 p.m. June 22—just six hours before the opening of the special session—a move that insured that the influential commissioners would be on hand during the session, available to bring further pressure on wavering legislators, and to dramatize to press and public the contrast between the attitude of the Legislature and of men genuinely interested in parks.