joint-stock company

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pages: 196 words: 57,974

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

affirmative action, barriers to entry, Bonfire of the Vanities, borderless world, business process, Charles Lindbergh, Corn Laws, corporate governance, corporate raider, corporate social responsibility, creative destruction, credit crunch, crony capitalism, double entry bookkeeping, Etonian, hiring and firing, industrial cluster, invisible hand, James Watt: steam engine, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, knowledge worker, laissez-faire capitalism, manufacturing employment, market bubble, mittelstand, new economy, North Sea oil, race to the bottom, railway mania, Ronald Coase, Silicon Valley, six sigma, South Sea Bubble, Steve Jobs, Steve Wozniak, strikebreaker, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, tulip mania, wage slave, William Shockley: the traitorous eight

One of the themes of Utopia Limited, or The Flowers of Progress, was not an obvious rib-tickler: the limited-liability joint-stock company. That night’s operetta made fun of the idea that companies were sweeping all before them, enriching investors as they went. An English company promoter named Mr. Goldbury arrives in the exotic South Sea Island of Utopia and sets about turning the inhabitants into companies. Even babies issue company prospectuses. At one point in the final act, the King of Utopia demands, “And do I understand you that Great Britain/Upon this Joint Stock principle is governed?” And Mr. Goldbury replies, “We haven’t come to that, exactly—but/We’re tending rapidly in that direction/The date’s not distant.” Soon afterward, the Utopians join in one of the most improbable choruses ever set to music: “All hail, astonishing Fact!/All hail, Invention new/The Joint Stock Company’s Act/The Act of Sixty-Two!”

The first is merely as an organization engaged in business: this definition, as we shall see, includes everything from informal Assyrian trading arrangements to modern leveraged buyouts. The second is more specific: the limited-liability joint-stock company is a distinct legal entity (so distinct, in fact, that its shareholders can sue it), endowed by government with certain collective rights and responsibilities. This was the institution that the Utopians’ “Astonishing Fact,” the Companies Act of 1862, unleashed, and which is still spreading around the world, conquering such obstinate refuseniks as the Chinese Communist Party and the partners of Goldman Sachs. Though this is primarily a book about the joint-stock company, it unapologetically strays into broader territory. From the beginning of economic life, businesspeople have looked for ways to share the risks and rewards of their activities.

The pamphlet, entitled Memoirs of the Twentieth Century, predicted that two giant companies would dominate the world in that far-off time: the Royal Fishery and the Plantation Company (to be founded by Frederick I and George III respectively).1 As a prophecy of the influence of companies two centuries away, this was oddly prescient—all the more so because Madden was polemicizing against a declining economic organization. Set beside partnerships and various forms of unincorporated companies, incorporated joint-stock companies (i.e., ones recognized by state statute) fared badly for the next century. The British and the French treated them with suspicion. “They are behind the times,” thundered one governor of Pennsylvania, “they belong to an age that is past.”2 New companies were chartered, of course; but the process of doing so was cumbersome. It was not until a combination of legal and economic changes from the 1820s onward that the modern company began to take shape.3 SLAVERS AND INDUSTRIALISTS In Britain, the prejudice against joint-stock companies created by the South Sea Bubble was later reinforced by scandals involving both the Charitable Corporation and the York Building Company.


Investment: A History by Norton Reamer, Jesse Downing

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

Nevertheless, the beginning of democratization itself has been a dominant force in the history of investment, and we can trace its lineage to these developments. 64 Investment: A History THE EMERGENCE OF THE MODERN CORPORATE FORM The advent of the corporate form, as embodied in joint-stock companies, was a vital precursor to developing capitalism, greater economic progress, and widespread financing and ownership of commercial and industrial enterprises. While the focus of this chapter will be on the first Dutch and English joint-stock companies founded in the early seventeenth century, recall that the original precursor to the jointstock company appeared more than a millennium before—the Roman societas publicanorum. As mentioned in chapter 1, these entities were created to bid on and service the construction of public works, engage in tax farming (the government’s sale of the right to collect particular taxes to a private enterprise), and provide goods and services to the Roman government.

These sailors sought permission to engage in trade, and Ivan acquiesced, giving the sailors a missive to the English king as his official acceptance. Because King Edward VI died during the initial expedition, it was ultimately Mary I, Queen of England and Ireland, who issued a charter to the company in 1555.3 There are other early examples of joint-stock companies—for instance, one of the first investments by the European public in the natural bounty of the so-called New World was, in fact, a joint-stock company. On April 10, 1606, King James I granted a charter for the London Company. It was inspired by English envy of the Spanish, who found massive quantities of precious metals in the New World. As a condition of the charter, King James I sought to cash in on what he hoped would be abundant profits and stated that one-fifth of the metal discoveries be ceded to the throne.4 The company was composed of 145 men who sailed from England to the New World between December 1606 and May 1607, making port in Virginia (hence the company’s later name, the Virginia Company).

In the end, of course, the fraudulent activities of Enron and Bernie Madoff are echoes of this forerunner some three centuries earlier. Adam Smith, the oft-cited “father of modern economics,” took an entirely adversarial view of the structure of the joint-stock companies The Democratization of Investment 69 and the notion of investment management more broadly. Of course, Smith was highly influenced by the South Sea Bubble collapse, and in The Wealth of Nations he wrote, “Negligence and profusion, must always prevail, more or less, in the management of the affairs of such a [joint-stock] company.” He claimed that the fiduciaries could not possibly be fully dutiful and completely concerned about the welfare of shareholders because the money is not their own: “The directors of such companies, however, being the managers rather of other people’s money than of their own, it cannot well be expected that they should watch over it with the same anxious vigilance with which the partners in private copartner[ship] frequently watch over their own.”10 Adam Smith seemed to apply the famous principle of self-interest to the management of investment funds and, in so doing, deemed it a poor idea.


pages: 495 words: 136,714

Money for Nothing by Thomas Levenson

Albert Einstein, asset-backed security, bank run, British Empire, carried interest, clockwork universe, credit crunch, Edmond Halley, Edward Lloyd's coffeehouse, experimental subject, failed state, Fellow of the Royal Society, fiat currency, financial innovation, Fractional reserve banking, income inequality, Isaac Newton, joint-stock company, market bubble, open economy, price mechanism, quantitative easing, Republic of Letters, risk/return, side project, South Sea Bubble, The Wealth of Nations by Adam Smith

There, these latest in the line of England’s new men—including the infamous stockjobbers—dealt in a variety of the forms money was beginning to take, especially in the shares of one of the most fertile of these inventions, the joint-stock company. * * * — AT BOTTOM, THE joint-stock structure was simple: a group of investors provided capital to pay for some action—in the early days, usually a trading venture. In return they received shares in proportion to the amount each invested. This was more than a simple pooling of resources; partnerships and more temporary alliances existed long before the joint-stock company emerged. Unlike such arrangements, a joint-stock approach shifted what it meant to own a business. Instead of indicating part ownership of discrete chunks of actual stuff—a ship, a stand of timber, a machine—shares in a joint-stock company carried with them the right to claim some portion of profits to be earned over time.

* * * — FOR ALL THAT such techniques had emerged earlier, the Bubble year still marks a watershed in the formation of modern finance. It’s true that ideas like joint-stock companies and the quantification of myriad human actions both preceded and shaped the Bubble. Similarly, the development of financial technology—options, forward contracts, and even more complicated trades—occurred in the decades before the South Sea scheme hatched. But for all the individual developments that preceded it, it was only in the Bubble year that the cumulative impact of those inventions would become clear. Even if they weren’t conscious of it in the heat of the moment, jobbers shouting in coffee rooms relied on a concept of money that was becoming ever more abstract, ever more distant from any underlying actions in the real world that yield something to sell. Joint-stock companies embodied one kind of abstraction. Each share was a number that represented a slice of a profit stream generated by the South Sea Company, the Bank of England, or any other such enterprise.

The financial methods employed in its early version of a modern securities exchange could have been turned to all kinds of ends, a dizzying range of bets on the future. Instead, during the 1700s and well into the next century the British government limited who could use London’s capital market. By law, only a handful of joint-stock companies could play in that sandbox, almost exclusively familiar names: the Bank of England, the East India Company, a handful of insurance companies, and a few others. For the most part, the dominant institution that had ready access to the market for debt was the Treasury itself. This was due in part to the fevered politics at the peak of the South Sea season. The “Bubble Act,” which impeded the formation of new joint-stock companies, remained in effect until 1825. While plenty of clever people managed to find other ways, often partnerships, to organize business ventures, it still blocked the majority from the most obvious source of capital for private enterprise.


pages: 274 words: 66,721

Double Entry: How the Merchants of Venice Shaped the Modern World - and How Their Invention Could Make or Break the Planet by Jane Gleeson-White

Affordable Care Act / Obamacare, Bernie Madoff, Black Swan, British Empire, business cycle, carbon footprint, corporate governance, credit crunch, double entry bookkeeping, full employment, Gordon Gekko, income inequality, invention of movable type, invention of writing, Islamic Golden Age, Johann Wolfgang von Goethe, Johannes Kepler, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, means of production, Naomi Klein, Nelson Mandela, Ponzi scheme, shareholder value, Silicon Valley, Simon Kuznets, source of truth, spice trade, spinning jenny, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, traveling salesman, upwardly mobile

Huge amounts of capital expenditure were required at the outset and they were raised not through profits but from private investors on stock exchanges at a 10 per cent dividend, and managed by joint stock companies. This form of collective investment had been used in Britain from 1600 by enterprises such as the East India Company to finance long and dangerous sea voyages. But a rash of speculation and spectacular losses brought its growth to an abrupt halt with the passing in 1720 of the so-called ‘Bubble Act’, which prohibited all joint stock companies not authorised by royal charter. When the Bubble Act was eventually repealed in 1825, a second and abiding era of joint stock activity dawned in Britain—and with it came the metamorphosis of bookkeeping into a new profession: accounting. Economist Basil Yamey argues that this was accounting’s formative moment: ‘Indeed, it might be claimed that the joint stock company was responsible for the transformation of book-keeping into accounting and for the profession of accountancy.’

The concept of ‘limited liability’—which protected investors from the losses incurred by the organisations in which they had invested—was another accounting issue raised by the joint stock company. Limited liability soon became a legally required characteristic of the corporation and made the distinction between capital and income a legal necessity. It was specifically allowed for in France in the Commercial Code of 1807, and in Scotland and Ireland around the same time. But it did not exist in England. As one English Lord put it in 1788, ‘the law of England is otherwise, the rule being that if a partner shares in the advantages, he also shares in all disadvantages’. Because of its traumatic first experiences of joint stock companies, early British corporate law provided for the unlimited liability of associates. (That is, investors were liable for the debts and losses of the businesses they had invested in.)

Crusades 16, 17, 18 currencies 100 da Gama, Vasco 29 da Pisa, Leonardo see Fibonacci da Vinci, Leonardo 7, 27, 32, 47, 60, 65, 80–2, 84, 87–8 Dafforne, Richard 120–3 Dandolo, Enrico 52 Dark Ages dark arts 35, 83 Darwin, Charles 139, 165 Das Kapital (Marx) 165 Dasgupta, Sir Partha 231–2, 237, 238, 239 Datini, Francesco 23–6, 52, 96 de’ Barbari, Jacopo 79 de’ Belfolci, Folco 34, 44 De divina proportione (Pacioli) 66, 82, 84, 85–6 De ludo scacchorum (Pacioli) 87–8 De pictura (Alberti) 60, 117 De quinque corporibus (Piero) 66 De viribus quantitatis (Pacioli) 83 Dean, Graeme W. 203 debit and credit entries 13, 55, 93–4, 100 difficulties 101–2, 122–3 The Decline of the West (Spengler) 167 Defoe, Daniel 127–8 della Francesca, Piero 7, 32, 34, 44–5, 46, 47 mathematical treatises 45, 66, 75 perspective painting 60, 64, 76–7 della Rovere, Giuliano 59 Deloitte, William 145 Deloitte Touche Tohmatsu 217 demand management 185 democracy 15 depreciation 148, 149, 231 Der moderne Kapitalismus (Sombart) 161–2, 171 derivatives market 198, 200 Descartes, René 40 d’Este, Isabella 83, 84, 88 dividends 144, 146, 147, 148, 149, 202 Doge’s Palace 50, 56 Domenici, Pete V. 191 domestic accounts 15–16 double-entry bookkeeping 8, 115, 120, 166 Badoer’s system 55 and capitalism 159–60, 161–75 and decision-making 126–7 earliest surviving 20–1 to improve the mind 125 link with rhetoric 172–3 in modern era 135–6, 249 origins 6–7, 16, 21–2 Pacioli’s definition 92–3 six essential features 20–1 texts on 117, 136 use by Datini 24, 26 Venetian 55, 67, 97–100, 123–7, 131 see also Particularis de computis et scripturis du Pont, Irénée 156 ducats 50, 55 Dürer, Albrecht 79–80 earnings per share (EPS) 219 earth see planet Earth Earth Summit 2012 248–9 East India Company 142 Ebbers, Bernie 213 eco-accounting 249 economic growth 192–3, 225, 227, 233, 242, 245, 248 economics 185 political economy 171 ecosystems 239–40, 247 education 245 Euclid’s Elements 37–8 quadrivium 36, 38, 43 trivium 38, 43 Egypt 35, 36 Eisenstein, Elizabeth 116–17 Elements (Euclid) 37–8, 39, 67, 68, 84 Elgin Marbles 15 Engels, Friedrich 162, 164, 165 England 116, 121, 131, 133, 147 Enron 3, 173, 194–9, 201, 207, 212–13, 214–16, 222–3 environmental accounting 233–8, 245, 247 environmental damage 222–3, 224–5, 232–3, 240, 241–2, 248 equity 21, 243 Erasmus of Rotterdam 68, 84–5 Erlich, Everett 235 Ernst & Young 209, 210, 216, 217 Espeland, Wendy Nelson 172–3 Euclid, Elements 37–8, 39, 67, 68, 75, 84 Eugenius IV, Pope 34 Europe 17, 20, 21, 22–3, 40, 116, 156, 188 accounting associations 153 currencies 25 medieval 26, 70–1 universities 30, 40, 42 vernacular languages 41 European Environment Agency 247 Evans, John H. 173–5 exchange rates 55 externalities 236 factory system 136–7, 138, 139–41, 165, 166 Farolfi ledger 20–1 Fastow, Andrew 213 Fells, J.M. 140–1 Fibonacci 18–19, 75 Fibonacci numbers 19–20 Liber abaci 19–20, 22, 39–41, 63, 66, 67, 75 Financial Accounting Standards Board (US) 206, 213 financial information 203–6 financial statements 5, 143, 144, 146, 200, 205, 214, 215 Fitoussi, Jean-Paul 243–4 Florence 6, 17, 34, 61, 64, 84 abbaco schools 41 bank ledger 20 expansion of commerce 21 Flugel, Thomas 127 Fondaco dei Tedeschi 56 Ford Motor Company 250–1 forests 240, 241 Forster, E.M. 154–5 Forster, Nathaniel 137 France 147 Franciscans 62, 65, 88, 89 Frankfurt Book Fair 95 Frederick II 95 Freiburg 27 Friedman, Milton 221 fund transfers 54 G20 249 Galileo 116, 166 Geijsbeek, John B. 157–8 General Electric 204 The General Theory of Employment (Keynes) 177–8, 179, 183, 185–6 Genoa 6, 17 geometry 36, 37, 38, 63, 73, 75, 81 Germany 56, 68, 183 Gertner, Jon 244 Giovanni, Enrico 244 Giovanni Farolfi & Co. 20 Glitnir 5 Global Biodiversity Outlook 3 (Sukhdev) global financial crisis (2008) 3, 5, 197, 215, 242, 243–4 globalisation, of finance 206–7, 219, 221 Goethe, Johann W. von 128–31 golden ratio 66, 86 Goodwin, Sir Fred 197 governmental accounting 120 grammar 38, 43 Great Depression 177, 178, 179, 180, 227 Greece, ancient 15 mathematics 34–5, 37–8, 61 philosophers 37 green accounting 244 Green Economy Report (Sukhdev) 248–9 Greenspan, Alan 227–8 Gross Domestic Product (GDP) 3, 180–2, 225, 227–30, 232–3, 235, 237–8, 242–3, 246 alternatives to 243–7, 249 failings of 246 Gross National Product (GNP) 1–3, 181, 190, 231 Groves, Eddy 208–9 Guidobaldo, Duke of Urbino 66, 72, 79, 92 Gutenberg, Johann 68, 77 Hagen, Everett 186 Hamilton, Alexander 22 Hammurabi’s Code 14 Haq, Mahbub ul 245 Henry VIII 25 Herodotus 36 HIH 208, 209, 213, 215 Hindu–Arabic arithmetic 34, 41, 62, 67 Hindu–Arabic numerals 18–19, 21, 26–7, 38, 44, 52, 71, 75 Hoenig, Chris 246–7 honeybee pollination 237 Hoover, Herbert 177 Hopwood, Anthony housework, unpaid 229 How to Pay for the War (Keynes) 182–3 Hudson, George 142–3 human capital 231, 248 Human Development Index 245 Humanism (Florence) 43–4, 59–60, 68 Huxley, Aldous 32–3 income measurement 218–19, 226 income statements 5, 202, 203, 219 in ancient Rome 16–17 see also profit and loss accounts India 29, 238 trade/double entry 22 Indonesia 240 industrial revolution 131, 133, 139, 200, 226 inflation 182, 183 information processing 203 Institute of Accountants and Bookkeepers of New York (IABNY) 156, 157 Institute of Chartered Accountants in England and Wales (ICAEW) 153, 205–6 Insull, Samuel 202, 214 Insull Utility Investments 201–2 interest payments 25, 54, 96 international accounting 189, 207 International Accounting Standards Board 207, 214 International Monetary Fund 187 internet 204 inventory 97–9, 101 Islam 22, 39 Italy 6, 7, 16, 19, 28, 167–8 mathematics 34–42, 62 Jerusalem 17 joint stock companies 133, 136, 142, 147, 148 Joint Stock Companies Act 1844 144, 149 Jones, Edward T. 133–6 Jones’ English System of Book-keeping 133–6 journal 99, 100, 101, 103, 118, 203 Julius II, Pope 59 Kennedy, Robert F. 1–3, 229–30, 246 Keynes, John Maynard 8, 176, 177–80, 182–7, 190, 250 Klein, Naomi 221, 233 KPMG 210, 214, 217 Kreuger, Ivar 201 Kreuger & Toll 201 Kublai Khan 18 Kuznets, Simon 2, 177, 180–1, 189, 229 Lanchester, John 4, 198 Landefeld, Steven 228 Landsbanki 5 Latin 35, 41, 63, 71, 72, 73, 74, 116, 220 Lawrence, D.H. 154–5 Lay, Kenneth 195, 196, 197, 212–13, 214 ledgers 20, 93, 99–100, 103–4, 118, 203 14th century 24, 93 Badoer’s 52, 55 balancing 111 closing accounts 111–13 Farolfi 20–1 Lee, G.A. 20–1 Lee, Thomas A. 203 Lehman Brothers 5, 216 Liber abaci (Fibonacci) 19–20, 22, 39–41, 63, 66, 67, 75 limited liability 147–8, 149 Littleton, A.C. 17, 140, 146, 147, 158–9 Liverpool and Manchester Railway 141 Lives of the Most Eminent Painters (Vasari) 46 Living Planet Survey 241–2 Lloyds-HBOS 5 London and North Western Railway 141 Louis XII 82 Machiavelli 30 Mackinnon, Nick 79–80 Madoff, Bernie 142 Madonna and Child with Saints 47 magic 35, 40, 83, 220 Mair, John 118, 125, 130 Malatesta family 33–4, 43 Malthus, Thomas 171 Manchester cotton mill (Engels) 165 Mandela, Nelson 221 Mantua 83, 84 manufacturing 136–41 manuscripts 61, 70, 77 Manutius, Aldus 84 Manzoni, Domenico 118–19 maritime insurance 53 Mark the Evangelist 51–2 marketplace, 15th century 95 markets, impact on politics 221, 228 mark-to-model 213 Marshall Plan 188 Marx, Karl 162, 163–5, 171 mass production 138 mathematics 7, 22, 28, 47, 89–90 ancient Greek 34–5, 37–8, 63 Arab 18–19, 63 and art 85–6 Hindu 39–40 in Italy 34–42 and magic 35, 40, 220 medieval European 63, 251–2 taught as astrology 29–30, 42 universal application 73, 116–17 see also arithmetic Mattessich, Richard 12–13, 186 Maurice, Prince of Orange 120 Maxwell Communications 207 McDonald’s 224 Meade, James 183–4 measurement 23, 218–19 Medici of Florence 26, 64, 80, 168, 171 Mehmed II 57 Mellis, John 121 memorandum (waste book) 99, 101, 118 entering transactions 105–7, 118, 122 merchandise 104 merchant bankers 21, 26, 69 merchants 10, 23, 35, 41 Arab 18–19, 25 Indian 22 Italian 40, 42 Phoenician 36 Venetian 18, 27, 55–6, 69, 94–5, 149 Mesopotamia 12, 13, 14 metaphysics 36–7 Middle Ages 60, 251–2 Milan 30, 34, 47, 61, 80–3 Millennium Ecosystem Assessment 239 Monsanto 222 Monteage, Stephen 124, 126 Morgan, John Pierpont 156 multiplication 74, 75–6 music 36, 38 Naples 50, 61–2 Napoleonic War 145 national accounts 175, 179–88, 190–3, 226–7, 230, 242, 244 natural capital 230–1, 235–9 navigation charts 23 Neighborhood Tree Survey (NY) 241, 244 Netherlands 119, 120 New Deal (Roosevelt) 177, 202 New York Light Company 155 New York Stock Exchange 155, 176, 201 New Zealand 153, 230 Nicholas V, Pope 61 No Royal Road: Luca Pacioli and his times (Taylor) 46–7 Nordhaus, William D. 180, 191, 227 numbers 37, 218, 219–20, 249 Obama, Barack 215, 246 O’Grady, Oswald 208 Oldcastle, Hugh 121, 124 Olmert, Michael 168 One.Tel 208, 209, 213, 215 Organisation for Economic Co-operation and Development (OECD) 190, 242 Organisation for European Economic Co-operation (OEEC) 188 Ormerod, Paul 244 Ottoman Empire 29, 34, 50, 51, 56, 57, 116 Pacioli, Luca 7, 8, 27–8, 34, 35, 161, 219 abbaco mathematics 40, 41 as academic 65, 80, 84, 89 astrologer 42 birth 30 bookkeeping treatise see Particularis de computis and Piero della Francesca 45–6, 47–8 education 43–8 encyclopaedia see Summa de arithmetica on Euclid 84–5 games/tricks 83–4 itinerant teacher 61–6 last years 88–90 and Leonardo da Vinci 80–2, 84 in Milan 80–3 portrait 47, 79–80 and the printing press 66–72 remembered in Sansepolcro 31–2 in Rome 58–61 in Venice 49–58 Paganini, Paganino de 67–8, 71–2, 78, 85 painting 60, 64, 81 Pakistan 224, 245 Paris 23, 50 Particularis de computis et scripturis (Pacioli) 29–30, 78, 90–114, 117–18, 121 and capitalism 163 foundation of modern accounting 30, 75, 131, 157–9, 166 profit calculation 146–7 partnerships 108–9, 147 Patel, Raj 222, , 224 Patient Protection and Affordable Care Act 2010 (US) 246 patronage 59, 67, 70, 72 Paul II, Pope 59 Payen, Jean-Baptiste 139–40 Peking 18 Perspectiva (Witelo) 64 perspective 23, 42, 45, 60, 64, 76–7, 80, 82 Perugia 62–3, 64, 65 Petty, William 180 phi 86 Philip VI 23 philosophy 37, 40 Phoenicians 36 pi 36 Piazza San Marco 56 Pinto cars 250–1 Pisa 6, 17 Pitcher Partners 209, 210, 211–12 plagiarism 63 planet Earth 8–9, 248 accounting for 254 effects of cost-benefit approach 175 health of 224–5, 239 Plato 37 Platonic solids 45, 79, 86 Pliny the Elder 16 pollution 244 Polly Peck International 207 Polo, Marco 18 Ponzi scheme 142 Postlethwayt, Malachy 124 poverty 237, 246, 248, 249 Prato 23–4 Price, Samuel 145 Price Waterhouse 201, 207 PricewaterhouseCoopers 217 principlism 173–4 printing 29, 45, 60, 63, 66–72, 77–8, 90, 115–17 profit 21, 24, 97, 102–3, 127, 146–8, 159, 161, 167, 169 profit and loss accounts 55, 109–11, 112, 166 Pythagoras 35, 36–7 quadrivium 36, 38, 43 quant nerds 220 railways 141–3, 231 Ramsay, Ian 211 Ratdolt, Erhard 68, 116 record-keeping 15 Reformation 33 regulation 206–14, 215 Reid Murray Holdings 207–8 religion 24, 96, 116, 124–5, 220 see also Christian Church; Islam Renaissance 7, 8, 23, 26, 36, 59, 80, 86, 89, 168 art 6, 7, 44, 60, 86 Resurrection (Piero) 32, 33 retained-earnings statements 5, 219 rhetoric 172–3 Rialto 50, 55, 108 Ricardo, David 171 Rich, Jodee 213 Rinieri Fini & Brothers 20 Ripoli Press 70 Robert of Chester 39 Rockefeller, John D. 156 Roman numerals 19, 26–7, 38, 40, 71, 116 Romantic poets, English 131, 154 Rome 58–61, 64, 89 ancient 15–16 Rompiasi family 57, 58, 97 Roosevelt, Franklin D. 177, 178, 181, 202, 214, 215 Rose, Paul L. 71 Ross, Philip 209–10, 211 Rothschild banks 133 Royal Bank of Scotland 173, 197–8 royal estate management 16–17 Rule of Three 38, 41 Russia 153–4 salt 51 Samuelson, Paul A. 191, 227 Sansepolcro 30–4, 43–4, 48, 65, 77, 88–9, 168 Sanuto, Marco 66, 72 Sarbanes, Paul 191 Sarbanes-Oxley Act 2002 212, 215 Sarkozy, Nicolas 242–3, 245 satellite accounts 234–5 scandals/fraud 194–203, 206, 207–12, 215, 225 Schmandt-Besserat, Denise 11–12 Schumpeter, Joseph 169–70 science 35, 37, 40, 42, 67, 76, 116, 166–7 Scotland 27, 147, 150, 153 Scott, Sir Walter 150–1 Scuola di Rialto 58 Second World War 32, 181–5, 187, 227 Securities and Exchange Commission (US) 202–3, 213, 214 Sen, Amartya 243–4, 245 Sforza, Ludovico 80, 81–2, 85, 86, 168 Sikka, Prem 216, 217 Silberman, Mark 213 Simons, James 220 Sistine Chapel 65 Sixtus IV, Pope 59 Skidelsky, Robert 178, 182, 187 Skilling, Jeffrey K. 196, 197, 212, 214 Smith, Adam 171 social sciences 171, 175 socialism 171 Society of Accountants, Edinburgh 152 Sombart, Werner 161–2, 164, 165–6, 166–8, 169, 170, 171–2, 173 Spain 22, 39 Spengler, Oswald 167 Sri Lanka 232–3, 240 State of the USA 246 Stevin, Simon 120, 121, 166, 169 Stiglitz, Joseph 243–4 Stiglitz-Sen-Fitoussi Commission 243–4 stock markets 143 stocktaking 166 Stone, Sir Richard 183–5, 188–9, 190 sub-prime mortgages Sukhdev, Pavan Summa de arithmetica (Pacioli) 57, 61, 62–3, 64, 72–7, 80, 82 printing 66–8, 71–2 publication 32, 77–9 sustainability 232, 243, 249 System of Integrated Environmental and Economic Accounting (UN) 234 System of National Accounts (UN) 189–90, 247 tabulae rationum 16 Taleb, Nassim N. 220 tariffs 63 Tartaglia, Nicholas 76 Taylor, R.


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, Bob Noyce, Bretton Woods, British Empire, buttonwood tree, Claude Shannon: information theory, Corn Laws, Douglas Engelbart, Edward Lloyd's coffeehouse, fiat currency, fixed income, floating exchange rates, Fractional reserve banking, full employment, 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, Kickstarter, Leonard Kleinrock, Marc Andreessen, Maui Hawaii, Menlo Park, Metcalfe's law, Metcalfe’s law, Mitch Kapor, packet switching, price mechanism, probability theory / Blaise Pascal / Pierre de Fermat, profit motive, railway mania, RAND corporation, Robert Metcalfe, Silicon Valley, Small Order Execution System, South Sea Bubble, spice trade, spinning jenny, Steve Jobs, supply-chain management, supply-chain management software, trade route, transatlantic slave trade, tulip mania, Turing machine, Turing test, undersea cable, William Shockley: the traitorous eight

Think of this when you buy 100 shares of Amalgamated Mogul in your E*Trade account. What Hakluyt couldn’t have possibly imagined, but alluded to, was that the stock market would be the great allocator of capital to these joint stock companies in such a way to constantly propel society forward on a vector of progress that no King could do on his own. It’s odd that a tool of mercantilism, the ability to raise risk capital on the expectation of returns by selling shares in a company, is today the backbone of capitalism. Joint stock companies were an interesting turning point for England. In Spain and France, the monarchies owned everything. In England, joint stock companies were almost a form of stock options. They extended property rights to individuals, AND provided a big fat carrot for the company to succeed. Individuals were empowered to create value, not for God and Country, but for themselves, which was Hakluyt’s point.

The Royal Exchange was up and running and needed stocks to trade. Hakluyt and others suggested that funds could be raised from England’s wealthy class. Elizabeth agreed and the joint stock company was born. Rather than be funded by the Crown or just one individual, capital instead would be raised from a large group of wealthy individuals, minimizing the risk for each. Elizabeth provided the license, FUNDING BRITISH TRADE 63 so to speak, but the markets, which were nothing more than the pooled wealth of Elizabeth’s wealthy subjects, provided the capital. Liquidity would be provided as shares of these joint stock companies traded hands on the Royal Exchange, or in private transactions out on “the Street.” In 1607, Hakluyt was still pitching his ideas for a fund to cover the costs of creating colonies, this time to James I, son of Mary Queen of Scots, who had taken over the monarchy after the death of Elizabeth.

With flooded mines (market demand), Watt’s condenser (technology), Boulton’s money (capital), Parliament’s patent (intellectual property rights), a ready workforce (religious persecution), and Wilkinson’s precise cylinders (technology), they had just about everything. What they were missing was a successful business model. It was Matthew Boulton who came up with one. Boulton and Watt didn’t actually sell steam engines since no one could afford one. Most of the early customers were Cornish mines. Beyond a few Parliament-sponsored joint-stock companies, the stock market and banking system were not quite developed, especially for risky businesses. Limited liability for corporations wouldn’t be the law until 1860. Miners lived day to day and used a cost book system of accounting (I slept through accounting, too.) At the end of each quarter, all the partners in the mine would meet at the Count House to go over the numbers and split any profits.


pages: 97 words: 31,550

Money: Vintage Minis by Yuval Noah Harari

23andMe, agricultural Revolution, algorithmic trading, Anne Wojcicki, autonomous vehicles, British Empire, call centre, credit crunch, European colonialism, Flash crash, greed is good, job automation, joint-stock company, joint-stock limited liability company, lifelogging, pattern recognition, Ponzi scheme, self-driving car, telemarketer, The Future of Employment, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, Watson beat the top human players on Jeopardy!, zero-sum game

The English, for instance, wasted a lot of capital in fruitless attempts to discover a north-western passage to Asia through the Arctic. Many other expeditions didn’t return at all. Ships hit icebergs, foundered in tropical storms, or fell victim to pirates. In order to increase the number of potential investors and reduce the risk they incurred, Europeans turned to limited liability joint-stock companies. Instead of a single investor betting all his money on a single rickety ship, the joint-stock company collected money from a large number of investors, each risking only a small portion of his capital. The risks were thereby curtailed, but no cap was placed on the profits. Even a small investment in the right ship could turn you into a millionaire. Decade by decade, western Europe witnessed the development of a sophisticated financial system that could raise large amounts of credit on short notice and put it at the disposal of private entrepreneurs and governments.

Cautious investors who would never have given their money to the king of Spain, and who would have thought twice before extending credit to the Dutch government, happily invested fortunes in the Dutch joint-stock companies that were the mainstay of the new empire. If you thought a company was going to make a big profit but it had already sold all its shares, you could buy some from people who owned them, probably for a higher price than they originally paid. If you bought shares and later discovered that the company was in dire straits, you could try to unload your stock for a lower price. The resulting trade in company shares led to the establishment in most major European cities of stock exchanges, places where the shares of companies were traded. The most famous Dutch joint-stock company, the Vereenigde Oostindische Compagnie, or VOC for short, was chartered in 1602, just as the Dutch were throwing off Spanish rule and the boom of Spanish artillery could still be heard not far from Amsterdam’s ramparts.

Reluctantly, in 1789, Louis XVI convened the Estates General, the French parliament that had not met for a century and a half, in order to find a solution to the crisis. Thus began the French Revolution. While the French overseas empire was crumbling, the British Empire was expanding rapidly. Like the Dutch Empire before it, the British Empire was established and run largely by private joint-stock companies based in the London stock exchange. The first English settlements in North America were established in the early seventeenth century by joint-stock companies such as the London Company, the Plymouth Company, the Dorchester Company and the Massachusetts Company. The Indian subcontinent too was conquered not by the British state, but by the mercenary army of the British East India Company. This company outperformed even the VOC. From its headquarters in Leadenhall Street, London, it ruled a mighty Indian empire for about a century, maintaining a huge military force of up to 350,000 soldiers, considerably outnumbering the armed forces of the British monarchy.


pages: 225 words: 11,355

Financial Market Meltdown: Everything You Need to Know to Understand and Survive the Global Credit Crisis by Kevin Mellyn

asset-backed security, bank run, banking crisis, Bernie Madoff, bonus culture, Bretton Woods, business cycle, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cuban missile crisis, disintermediation, diversification, fiat currency, financial deregulation, financial innovation, financial intermediation, fixed income, Francis Fukuyama: the end of history, George Santayana, global reserve currency, Home mortgage interest deduction, Isaac Newton, joint-stock company, Kickstarter, liquidity trap, London Interbank Offered Rate, long peace, margin call, market clearing, mass immigration, money market fund, moral hazard, mortgage tax deduction, Northern Rock, offshore financial centre, paradox of thrift, pattern recognition, pension reform, pets.com, plutocrats, Plutocrats, Ponzi scheme, profit maximization, pushing on a string, reserve currency, risk tolerance, risk-adjusted returns, road to serfdom, Ronald Reagan, shareholder value, Silicon Valley, South Sea Bubble, statistical model, The Great Moderation, the new new thing, the payments system, too big to fail, value at risk, very high income, War on Poverty, Y2K, yield curve

England managed to put into use far greater sums of money than its rivals because it was far more credible at managing its public debt. As a result, it got to create the modern commercial and political world in its own image. JOINT-STOCK COMPANIES The global struggle for empire also caused the English and Dutch to develop the joint-stock company. Lou Dobbs informs us that ‘‘outsourcing’’ is a very bad thing. Actually, for most of history, governments outsourced just about everything, largely because of lack of money. The English, the Dutch, and the French got rich, private citizens to do things by selling them public offices and monopolies. Some things, however, were too big and risky for any individual to undertake. The first joint-stock companies were organized as trading companies to colonize the New World and Asia. Since the government wanted to control its colonies, such companies needed a charter from the crown.

Raising enough money to set up a colony was no small matter, but a monopoly charter helped close the sale with investors. The Virginian Company, the Dutch West India Company, the Dutch East India Company, the Hudson’s Bay Company, the East India Company, the Massachusetts Bay Company, and scores of other monopoly joint-stock companies were set up in the 1600s. A WORLD OF RISK European world domination was driven by joint-stock companies up to the middle of the nineteenth century. While not what we think of as a modern public company—i.e., the East India Company had its own ships, armies, and governed much of India—the early joint-stock company was the model for everything that followed. The investors swapped money for shares in the venture, shares they were free to sell to others. The investors were represented by a board of directors that 81 82 FINANCIAL MARKET MELTDOWN provided oversight to the paid managers who handled day-to-day business.

In the mean time, the board would periodically declare a dividend, so shares were also a source of income. Like government debt or ‘‘stock,’’ shares in the great English joint-stock companies soon came to be traded, again because their value went up and down with business and political conditions. In fact, they traded in the same place, the Royal Exchange. FINANCE LEARNS ENGLISH Stepping back, in the London of the 1690s, we can already see our modern financial ecology in embryo. A banking system based on bills of exchange was extending credit to merchants. Some merchants morphed into full-time bankers. There was an active market in government stock and the shares of joint-stock companies. Specialized middle men were starting to appear. Bill brokers took bills of exchange to the banks for discount. They traded bills among each other on the floor of the Royal Exchange, a great financial market hall built by Gresham.


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

Berlin Wall, Cass Sunstein, corporate governance, corporate personhood, corporate social responsibility, creative destruction, energy security, Exxon Valdez, IBM and the Holocaust, joint-stock company, laissez-faire capitalism, market fundamentalism, Naomi Klein, new economy, race to the bottom, Ralph Nader, Ronald Reagan, shareholder value, South Sea Bubble, The Wealth of Nations by Adam Smith, Triangle Shirtwaist Factory, urban sprawl

The genius of the corporation as a business form, and the reason for its remarkable rise over the last three centuries, was-and is-its capacity to combine the capital, and thus the economic power, of unlimited numbers of people. Joint-stock companies emerged in the sixteenth century, by which time it was clear that partnerships, limited to drawing capital from the relatively few people who could practicably run a business together, were inadequate for financing the new, though still rare, large-scale enterprises of nascent industrialization . In 1564 the Company of the Mines Royal was created as a joint- stock company, financed by twenty-four shares sold for 00 each; in 1565, the Company of Mineral and Battery Works raised its capital Page 9 HE CORPORATION 9 by making calls on thirty-six shares it had previously issued. The New River Company was formed as a joint-stock company in 1606 to transport fresh water to London, as were a number of other utilities.' Fifteen joint-stock companies were operating in England in 1688, though none with more than a few hundred members.

Fifteen joint-stock companies were operating in England in 1688, though none with more than a few hundred members. Corporations began to proliferate during the final decade of the seventeenth century , and the total amount of investment in joint-stock companies doubled as the business form became a popular vehicle for financing colonial enterprises. The partnership still remained the dominant form for organizing businesses, however, though the corporation would steadily gain on it and then overtake it. In 1712, Thomas Newcomen invented a steam-driven machine to pump water out of a coal mine and unwittingly started the industrial revolution. Over the next century, steam power fueled the development of large-scale industry in England and the United States, expanding the scope of operations in mines, textiles (and the associated trades of bleaching, calico printing, dyeing, and calendaring ), mills, breweries, and distilleries."'

Corporations multiplied as these new larger-scale undertakings demanded significantly more capital investment than partnerships could raise. In postrevolutionary America, between 1781 and 1790, the number of corporations grew tenfold, from 33 to 328." In England too, with the Bubble Act's repeal in 1825 and incorporation once again legally permitted, the number of corporations grew dramatically, and shady dealing and bubbles were once again rife in the business world. Joint-stock companies quickly became "the fashion of the age," as the novelist Sir Walter Scott observed at the time, and as such were fitting subjects for satire. Scott wryly pointed out that, as a shareholder in a corporation, an investor could make money by spending it (indeed, he likened the corporation to a machine that could fuel its operations with its own waste): Page 10 Page 11 ... needy clerks, poor tradesman's apprentices, discarded service men and bankrupts-all have entered the ranks of the great monied interest.""


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, Bretton Woods, Brownian motion, business cycle, capital asset pricing model, Cass Sunstein, collective bargaining, colonial exploitation, compound rate of return, conceptual framework, 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, 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, Louis Bachelier, 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, quantitative trading / quantitative finance, random walk, Richard Thaler, Robert Shiller, Robert Shiller, shareholder value, short selling, South Sea Bubble, sovereign wealth fund, spice trade, stochastic process, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, time value of money, too big to fail, trade liberalization, trade route, transatlantic slave trade, tulip mania, wage slave

See also market system iron industry, in eighteenth-century France, 381 iron mining: Chinese, 196; near Frobisher Bay, 314, 315 iron money, of Sichuan, 183–84 iron monopoly of Chinese state, 174 Irrational Exuberance (Shiller), 331–32 Ismail Pasha, 419–21 James II of England, 322 James River Company, 394 Jefferson, Peter, 389 Jiang Shang, 153, 154 Jiangsu Dasheng Group Company, 434 jiaozi, 184–85, 186 Jixia Academy, 155–57, 160–61 joint-stock companies: Age of Discovery and, 307; Bubble Act and, 380; in eighteenth-century England, 328, 338, 366, 380; Honor del Bazacle as, 300, 307; Muscovy company as, 309; in nineteenth-century China, 431–32, 437; Rotterdam insurance company as, 366. See also corporations Joint Stock Companies Act of 1856, 427 Jones, Alfred Winslow, 488–89 Jones, David, 117, 119 Jonker, Joost, 316 Jordan, Julius, 22–23 Jovanovic, Franck, 278, 279 J.P. Morgan: Chinese imperial government and, 435, 436; Wall Street crisis of 1907 and, 440; Wall Street’s image and, 470 Julian law, 107–8 Julius Caesar, 107–8, 124, 125 jurors, Athenian, 75, 85, 86, 90–91, 94, 95 Justinian (Byzantine emperor), 113 Justinian, Code of, 126, 127, 234–35 Kaifeng, 181, 183 kārum, 60, 61, 62–63 Kay, Philip, 128 Ketchum, Marshall, 504 Keynes, John Maynard: advocating investment in equities, 471, 473; on animal spirits, 404, 461–63, 464, 466; Bretton Woods Agreement and, 457–60; Crash of 1929 and, 485; Economic Consequences of the Peace, 454, 456–57, 461; The General Theory of Employment, Interest and Money, 460–63, 464, 466, 467; as investor, 463–65; portrait of, 455; sovereign debt problem and, 457–59; on state investment fund, 512; A Treatise on Probability, 464–65 knife coins, 158, 159, 185 Knights Templar.

One of the things that a charter might or might not foresee is a complete disaster. For example, the company experienced a severe setback in 1427, when its mills caught fire, and in 1709, the mill dam was destroyed by a flood. In these circumstances, shareholders were called on to contribute money to rebuild. In some cases, they did not have the funds. This is where two useful features of the joint-stock company become apparent. Shareholders could not be compelled to pay an unlimited amount. Instead, they had the option of surrendering their shares to the company and walking away. This is called “limited liability” and is a distinguishing feature of the modern corporation. It puts a floor on the downside risk that an investor faces. As such, it makes people willing to risk their capital in uncertain ventures.

Consider how different these companies were from the Honor del Bazacle, where investors could walk by their corporate assets every day. Toulouse shareholders of course knew there were risks of floods and fires, but these were at least probabilistically assessable, whereas trading ventures to the other side of the world—almost by definition—confronted the unknown. And yet, as we shall see, the joint-stock company corporate form, with tradable shares and separation between ownership and control, sufficed for both. The immediate question explored in this chapter is whether the corporate form made exploration possible, or whether the exigencies of exploration led to the independent development of the corporate form. Put another way, did financial innovation drive the Great Age of Discovery, or did the Great Age of Discovery drive financial innovation?


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, Andrei Shleifer, asset allocation, asset-backed security, bank run, banking crisis, barriers to entry, borderless world, Bretton Woods, British Empire, business cycle, capital asset pricing model, capital controls, central bank independence, computerized trading, corporate governance, corporate raider, correlation coefficient, correlation does not imply causation, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, dematerialisation, diversification, diversified portfolio, Donald Trump, equity premium, Eugene Fama: efficient market hypothesis, experimental subject, facts on the ground, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, George Akerlof, George Gilder, 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, kremlinology, labor-force participation, late capitalism, law of one price, liberal capitalism, liquidationism / Banker’s doctrine / the Treasury view, London Interbank Offered Rate, Louis Bachelier, market bubble, Mexican peso crisis / tequila crisis, microcredit, minimum wage unemployment, money market fund, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, oil shock, Paul Samuelson, payday loans, pension reform, plutocrats, Plutocrats, price mechanism, price stability, prisoner's dilemma, profit maximization, publication bias, Ralph Nader, random walk, reserve currency, Richard Thaler, risk tolerance, Robert Gordon, Robert Shiller, Robert Shiller, selection bias, shareholder value, short selling, Slavoj Žižek, South Sea Bubble, 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

Without the factory system that arises from the capitalist mode of production, cooperative factories could not develop. Nor could they do so without the credit system that develops from the same WALL STREET mode of production. This credit system, since it forms the principal basis for the gradual transformation of capitalist private enterprises into capitalist joint-stock companies, presents in the same way the means for the gradual extension of cooperative enterprises on a more or less national scale. Capitalist joint-stock companies as much as cooperative factories should be viewed as transition forms from the capitalist mode of production to the associated one, simply that in the one case the opposition is abolished in a negative way, and in the other in a positive way (Marx 1981, pp. 571-572) At the beginning of this excerpt, Marx seemed to be writing about the formation of modern corporations in the mid-19th century, a time of Robber Barons, scam artists, and financial panics — a process being repeated today in the so-called emerging markets of the Third World.

But furthermore, and quite apart from the class of idle rentiers thus created, the improvised wealth of the financiers who play the role of middlemen between the government and the nation, and the tax-farmers, merchants and private manufacturers, for whom a good part of every national loan performs the service of a capital fallen from heaven, apart from all these people, the national debt has given rise to joint-stock companies, to dealings in negotiable effects of all kinds, and to speculation: in a word, it has given rise to stock-exchange gambling and the modern bankocracy. trading Treasuries The market in U.S. government bonds is the biggest financial market in the world. At the center of the market are 38 major investment and commercial banks who are certified as primary dealers by the Federal Reserve INSTRUMENTS Bank of New York — the choice inner circle with which the Fed conducts its official monetary business.

[It appears] as a concentrated and organized mass, placed under the control of the bankers as representatives of the social capital in a quite different manner to real production (Marx 1981, pp. 490-491; emphasis in original). The modern owning class is formed in large part through the creation and trading of standardized claims on the wealth and labor of others. What do such owners contribute? In what Marx knew as a joint-stock company, and we know as the modern large corporation, not much. Unlike classical capitalists, who ran the operation and thus earned something like a wage of superintendence along with a share of the profits, today's managers are paid a (high) wage of superintendence, while the profits go mainly to outsiders. Of course that high managerial wage, even if it takes the form of a paycheck, still has to be considered mainly a share of profits.


pages: 447 words: 141,811

Sapiens: A Brief History of Humankind by Yuval Noah Harari

Admiral Zheng, agricultural Revolution, Albert Einstein, Alfred Russel Wallace, Atahualpa, British Empire, cognitive dissonance, correlation does not imply causation, credit crunch, David Graeber, Edmond Halley, European colonialism, Francisco Pizarro, glass ceiling, global village, greed is good, income per capita, invention of gunpowder, Isaac Newton, joint-stock company, joint-stock limited liability company, Kickstarter, liberal capitalism, life extension, Mahatma Gandhi, megacity, Mikhail Gorbachev, out of africa, personalized medicine, Ponzi scheme, Silicon Valley, South China Sea, stem cell, Steven Pinker, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, urban planning, zero-sum game

The English, for instance, wasted a lot of capital in fruitless attempts to discover a north-western passage to Asia through the Arctic. Many other expeditions didn’t return at all. Ships hit icebergs, foundered in tropical storms, or fell victim to pirates. In order to increase the number of potential investors and reduce the risk they incurred, Europeans turned to limited liability joint-stock companies. Instead of a single investor betting all his money on a single rickety ship, the joint-stock company collected money from a large number of investors, each risking only a small portion of his capital. The risks were thereby curtailed, but no cap was placed on the profits. Even a small investment in the right ship could turn you into a millionaire. Decade by decade, western Europe witnessed the development of a sophisticated financial system that could raise large amounts of credit on short notice and put it at the disposal of private entrepreneurs and governments.

Cautious investors who would never have given their money to the king of Spain, and who would have thought twice before extending credit to the Dutch government, happily invested fortunes in the Dutch joint-stock companies that were the mainstay of the new empire. If you thought a company was going to make a big profit but it had already sold all its shares, you could buy some from people who owned them, probably for a higher price than they originally paid. If you bought shares and later discovered that the company was in dire straits, you could try to unload your stock for a lower price. The resulting trade in company shares led to the establishment in most major European cities of stock exchanges, places where the shares of companies were traded. The most famous Dutch joint-stock company, the Vereenigde Oostindische Compagnie, or VOC for short, was chartered in 1602, just as the Dutch were throwing off Spanish rule and the boom of Spanish artillery could still be heard not far from Amsterdam’s ramparts.

Reluctantly, in 1789, Louis XVI convened the Estates General, the French parliament that had not met for a century and a half, in order to find a solution to the crisis. Thus began the French Revolution. While the French overseas empire was crumbling, the British Empire was expanding rapidly. Like the Dutch Empire before it, the British Empire was established and run largely by private joint-stock companies based in the London stock exchange. The first English settlements in North America were established in the early seventeenth century by joint-stock companies such as the London Company, the Plymouth Company, the Dorchester Company and the Massachusetts Company. The Indian subcontinent too was conquered not by the British state, but by the mercenary army of the British East India Company. This company outperformed even the VOC. From its headquarters in Leadenhall Street, London, it ruled a mighty Indian empire for about a century, maintaining a huge military force of up to 350,000 soldiers, considerably outnumbering the armed forces of the British monarchy.


pages: 490 words: 146,259

New World, Inc. by John Butman

Admiral Zheng, Atahualpa, Bartolomé de las Casas, British Empire, commoditize, currency manipulation / currency intervention, diversified portfolio, Etonian, Francisco Pizarro, Isaac Newton, joint-stock company, market design, Skype, spice trade, trade route, wikimedia commons

(London: The British Library, 2017; original edition 2006), 34–37. 5 Loades, John Dudley, ix; Sutton, The Mercery of London, 369–73. 6 John Munro, “Tawney’s Century, 1540–1640,” in The Invention of Enterprise. Entrepreneurship from Ancient Mesopotamia to Modern Times, ed. David S. Landes, Joel Mokyr, and William J. Baumol (Princeton, NJ: Princeton University Press, 2010), 107–55; 128–32. Munro calls the company the “first (historically verifiable) joint-stock company.” 7 W. R. Scott, The Constitution of English, Scottish and Irish Joint-Stock Companies to 1720, 3 vols (Cambridge: Cambridge University Press, 1910), 1:18. 8 John Mickelthwait and Adrian Wooldridge, The Company: A Short History of a Revolutionary Idea (London: Phoenix Books, 2005), 18. 9 Liza Picard, Elizabeth’s London, Everyday Life in Elizabethan London (London: Phoenix Books, 2004), 323. 10 Adams, “The newe Navigation,” in Hakluyt, Principal Navigations, 2:240–41. 11 “The copie of the letters missive, which the right noble Prince Edward the sixt sent to the Kings, Princes, and other Potentates, inhabiting the Northeast partes of the world…,” in Hakluyt, Principal Navigations, 2:209–11; 210. 12 The date of his birth is unknown, and his age is based on the evidence of a contemporary portrait, facing the title page in vol. 2 of Hakluyt’s Principal Navigations. 13 Adams, “The newe Navigation,” in Hakluyt, Principal Navigations, 2:240–41. 14 J.

The Mercers, for example, laid claim to the magnificent church, mansion, and associated lands that belonged to the order of Thomas Becket, a former archbishop of Canterbury, right in the heart of the City.5 As the merchants from the City and the courtiers from Westminster increased in wealth and enjoyed royal favors, they began to share power, and the Mysterie was one of the first ventures in which they worked together with a new unity of purpose. But what also distinguished the Mysterie was its corporate structure. It was established with what has been called “a revolutionary new form of business organization”—arguably the world’s first joint-stock company and certainly the first in England.6 Until then, English trading voyages—to Antwerp, Bordeaux, Lisbon, Seville, even the eastern Mediterranean—had been funded by individual merchants or small syndicates. Typically, the business was conducted on credit and exchange, requiring relatively little up-front capital. But the Mysterie’s proposed voyage to Cathay promised to be altogether more capital-intensive and risky.

If the subject of religion came up, the crew were advised to “pass it over in silence.” Even though investors had been assured that the venture would promote the enlargement of the Christian faith, the English wanted to avoid any subjects that might interrupt the peaceful, commercial aims of the voyage. To this point, Cabot added a stern reminder that the company was operating according to new rules: those of a joint-stock company. This meant, he said, that no individual was to conduct business privately, on his own behalf, for his own benefit. Each was only to do business for “the common stock of the company.” Above all, Willoughby and his crew were instructed to remember that they were on a mission for king and country. They were “not to give up,” Cabot wrote, “until it shall be accomplished, so far forth as possibility and life of man may serve or extend.” 4 A NEWE AND STRANGE NAVIGATION ON THE AFTERNOON of Thursday, May 20, 1553, the Mysterie’s flotilla of newly constructed ships prepared to set off from Ratcliffe, a village on the north bank of the Thames and about two miles downstream from the heart of London.


pages: 192

Kicking Awaythe Ladder by Ha-Joon Chang

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

That is why, despite its potential to create 'moral hazard', all societies have come to accept limited liability as a cornerstone of modern corporate governance.64 In many European countries, limited liability companies - or joint stock companies as they were known in those days - had existed under ad hoc royal charters since the sixteenth century.6S However, it was not until the mid-nineteenth century that it began to be granted as a matter of course, rather than as a privilege. Generalized limited liability was first introduced in Sweden in 1844. England followed this closely with the 1856 Joint Stock Company Act, although limited liabilities for banks and insurance companies were introduced somewhat later (1857 and 1862 respectively), reflecting the then widespread concern that they could pose serious 'moral hazard'.

During the 1850s in various German states, it was introduced in a restricted form, whereby the principal owners had unlimited liability but shares giving limited liability could be marketed. It was not until the 1860s that various German states scrapped or weakened traditional guild laws, thereby opening the door to the full institutionalization of limited liability (Saxony in 1861, Wiirttemberg in 1862 and Prussia in 1868-9). In France, limited liability only became generalized in 1867, but in Spain, while joint-stock companies (Sociedades Anonimas) began to emerge from as early as 1848, it was not fully established until 1951. It is interesting to note that in Portugal limited liability was generalized as early as in 1863, despite the country's economic backwardness at the time.67 In the USA, the first general limited liability law was introduced in the state of New York in 1811. However, this fell into disuse around 1816, due to general apathy towards limited liability companies, and other states did not permit limited liability companies until 1837.

Even then, however, we need to set the human and financial resource costs of developing these institutions against their benefits, especially in developing countries which lack such resources. Looking at the history of NDCs, we are struck by the fact that, even in these countries, institutions regulating company financial reporting and disclosure requirements were of still very poor quality well into the twentieth century. The UK made external audit of companies a requirement through the 1844 Company Act, but this was made optional again by the Joint Stock Company Act of 1856 against the recommendation of critics such as John Stuart Mill.76 Given that limited liability companies require more transparency to control opportunistic behaviour by their dominant shareholders and hired managers, this was a significant step backward. With the introduction of the 1900 Company Act, external audit was again made compulsory for British companies. However, there was still no direct requirement for firms to prepare and publish annual accounts for shareholders, although this was required implicitly as the auditor had a duty to report to shareholders.


pages: 365 words: 88,125

23 Things They Don't Tell You About Capitalism by Ha-Joon Chang

"Robert Solow", affirmative action, Asian financial crisis, bank run, banking crisis, basic income, Berlin Wall, Bernie Madoff, borderless world, 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, ending welfare as we know it, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, full employment, German hyperinflation, Gini coefficient, 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, 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

Unlike many of his contemporary free-market advocates (and Adam Smith before them), who opposed limited liability, Marx understood how it would enable the mobilization of large sums of capital that were needed for the newly emerging heavy and chemical industries by reducing the risk for individual investors. Writing in 1865, when the stock market was still very much a side-show in the capitalist drama, Marx had the foresight to call the joint-stock company ‘capitalist production in its highest development’. Like his free-market opponents, Marx was aware of, and criticized, the tendency for limited liability to encourage excessive risk-taking by managers. However, Marx considered it to be a side-effect of the huge material progress that this institutional innovation was about to bring. Of course, in defending the ‘new’ capitalism against its free-market critics, Marx had an ulterior motive. He thought the joint-stock company was a ‘point of transition’ to socialism in that it separated ownership from management, thereby making it possible to eliminate capitalists (who now do not manage the firm) without jeopardizing the material progress that capitalism had achieved.

Limited liability means that investors in the company will lose only what they have invested (their ‘shares’), should it go bank-rupt. However, you may not have realized that the L word, that is, limited liability, is what has made modern capitalism possible. Today, this form of organizing a business enterprise is taken for granted, but it wasn’t always like that. Before the invention of the limited liability company in sixteenth-century Europe – or the joint-stock company, as it was known in its early days – businessmen had to risk everything when they started a venture. When I say everything, I really mean everything – not just personal property (unlimited liability meant that a failed businessman had to sell all his personal properties to repay all the debts) but also personal freedom (they could go to a debtors’ prison, should they fail to honour their debts).

It was believed that those who were managing a limited liability company without owning it 100 per cent would take excessive risks, because part of the money they were risking was not their own. At the same time, the non-managing investors in a limited liability company would also become less vigilant in monitoring the managers, as their risks were capped (at their respective investments). Adam Smith, the father of economics and the patron saint of free-market capitalism, opposed limited liability on these grounds. He famously said that the ‘directors of [joint stock] companies … being the managers rather of other people’s money than of their own, it cannot well be expected that they would watch over it with the same anxious vigilance with which the partners in a private copartnery [i.e., partnership, which demands unlimited liability] frequently watch over their own’.1 Therefore, countries typically granted limited liability only to exceptionally large and risky ventures that were deemed to be of national interest, such as the Dutch East India Company set up in 1602 (and its arch-rival, the British East India Company) and the notorious South Sea Company of Britain, the speculative bubble surrounding which in 1721 gave limited liability companies a bad name for generations.


pages: 398 words: 105,917

Bean Counters: The Triumph of the Accountants and How They Broke Capitalism by Richard Brooks

accounting loophole / creative accounting, asset-backed security, banking crisis, Big bang: deregulation of the City of London, blockchain, BRICs, British Empire, business process, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Strachan, Deng Xiaoping, Donald Trump, double entry bookkeeping, Double Irish / Dutch Sandwich, energy security, Etonian, eurozone crisis, financial deregulation, forensic accounting, Frederick Winslow Taylor, G4S, intangible asset, Internet of things, James Watt: steam engine, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, light touch regulation, Long Term Capital Management, low cost airline, new economy, Northern Rock, offshore financial centre, oil shale / tar sands, On the Economy of Machinery and Manufactures, Ponzi scheme, post-oil, principal–agent problem, profit motive, race to the bottom, railway mania, regulatory arbitrage, risk/return, Ronald Reagan, savings glut, short selling, Silicon Valley, South Sea Bubble, statistical model, supply-chain management, The Chicago School, too big to fail, transaction costs, transfer pricing, Upton Sinclair, WikiLeaks

., 136 Griffith-Jones, John, 146, 149, 150 Grigsby, John, 39, 40–41 Grondona, Julio, 225, 227 Grosvenor Street, Mayfair, ix–x, x, 277–8 Guardian, 170, 213 Gupta, Atul, 250 Haddrill, Stephen, 143, 209, 210 Halet, Raphaël, 171–7, 176, 181 Halet, Sophie, 172, 173 Halifax, 140 Hamersley, Michael, 161 Hamilton, Lewis, 7 Hamilton, Robert, 70 Hanson, Walter, 64 Harley, Robert, 39 Harris, Steven, 264 Hartnett, David, 166, 207 Harvard University, 57, 75, 99 Haskins & Sells, 56, 58 Haskins, Charles Waldo, 56 Haughey, Charles, 163 Haute Comité de la Place Financière, 171 Havelange, João, 220, 221 HBOS, x, 13, 140–41, 142–3, 149, 150, 257 Healey, Denis, 184 HealthSouth, 109 hedge funds, 113, 115 hedging, 99 Heineken, 246 Heintz, Guy, 175 Her Majesty’s Revenue and Customs (HMRC), 179, 182 Hewitt, Patricia, 184 Hexham General Hospital, Northumbria, 191 HIH, 240 Hinchingbrooke hospital, Cambridgeshire, 193 Hinkley Point, Somerset, 204–6 Hippocratic oath, 276 Hodge, Margaret, 178 Hollinger, 154–5 Holocaust, 4 Holyland, William Hopkins, 49 Home Office, 201 Hong Kong, 240, 251–2 Hotel Baur au Lac, Zurich, 219, 224 House of Commons, 68 House of Lords, 68, 92, 93, 143, 146–7 Houston, Texas, 99–108 HS2, 197–9, 266 HSBC, 166, 215, 229–30, 231, 256 Hudson, George, 44–5 humanism, 28 Hungary, 213 hypothetical future value, 100 IBM, 82, 272 Iceland, 127 ICI, 69 IKEA, 166 Illinois, United States, 54, 72–4 Imperial College, London, 197 Imperial Tobacco, 202 income tax, 46, 67, 153 Income Tax Act (1842), 46 India, 233, 238, 242, 245, 249 Industrial Revolution, 18, 42–7 Inferno (Dante), 33 inflation, 85 Inglis, John, 78–9 Institute of Chartered Accountants in England and Wales (ICAEW), 49, 52, 93, 210 integrated reporting, 18 interest rates, 85 Internal Revenue Service (IRS), 159, 160 International Accounting Congress (1938), 234 International Accounting Standards Board, 123–5, 126, 127, 147 International Consortium of Investigative Journalists, 169, 230, 247 International Financial Services Centre, 163 International Fiscal Association, 245 International Integrated Reporting Council, 18 International Monetary Fund (IMF), 273 International Sport & Leisure (ISL), 220–21, 222 Internet, 95 Introduction to Merchandise (Hamilton), 70 Iran, 230 Iraq, 225, 240 Ireland, 127, 143–4, 163–5 Isle of Man, 247–8 Issuers’ and Investors’ Summit on CDOs/Credit Derivatives (2006), 121 Istace, Vinciane, 173 Italy, 3, 16, 21–2, 24–36, 37, 239 ITT Corporation, 59, 61 Ivy League, 68 J. P. Morgan, 54–5, 139, 149 James Bond, 2 James O. McKinsey & Co., 75 Japan, 2, 82, 230–31, 234–5, 240–41 Jennings, Andrew, 220, 224 Jerome, Saint, 35 Jersey, 89, 94–5, 158 job costing, 43 Johnson Matthey Bank, 91, 128 Johnson, Lyndon Baines, 63 joint stock companies, 41 Joint Stock Companies Act 1844: 47 1856: 50 Jones, Lewis Davies, 54, 55, 56 Jowell, Tessa, 196 junk bonds, 85 Kanebo, 240 Kapital, Das (Marx), 3 Kattner, Markus, 225 Keating, Charles, 85–6, 91 Kellaway, Lucy, 275 Kershaw, Sue, 199 Kgosana, Moses, 250 Khodorkovsky, Mikhail, 237 King, Mervyn, 273 Kirby, Paul, 208 Klynveld Kraayenhof, 235 Klynveld, Piet, ix KMG, 235 Knievel, Robert Craig ‘Evel’, 182 Koch Industries, 171 Kohl, Marius, 168, 174–7 KPMG, ix–x, 2, 10, 11, 48, 97, 116–19, 141–2, 149–50, 256–9, 264–7, 276 and Barnier proposals, 255 and Bradford & Bingley, 141–2, 149 and Brexit, 203, 204 and British Aerospace/BAE Systems, 213 Canary Wharf base, 256 Chelsea Flower Show, 200 in China, 244, 245, 251–2 and Civil Service Live conference, 201 Claridges conference (2007), 122 and Co-operative Bank, 142, 149, 150 and Comroad, 240 and collateralized debt obligations (CDOs), 121 and Countrywide Financial Corporation, 48, 118, 257 ‘Cutting Through Complexity’, 11–12 Data & Analytics (D&A), 272 and defence, 188, 189, 200, 202, 216, 217, 265 establishment of (1987), 235 and European Central Bank, 10 and Federal National Mortgage Association (‘Fannie Mae’), 118–19, 257 and FIFA, 220–28 and Financial Crisis Inquiry Commission, 145 and Financial Reporting Council, 144, 209 and General Electric, 5–6 governments, advice to, 186, 187, 188, 189, 191, 192–3, 197–9, 202–6, 249 and GPT, 216, 217 and HBOS, 141, 142–3, 149, 150, 257 and Hinkley Point, 204–6 and Hollinger, 154–5 and Hong Kong protests (2014), 251–2 and House of Lords committee (2010), 146 and HS2, 197–9 and HSBC, 229–30 and Imperial Tobacco, 202, 266–7 in India, 249 integrated reporting, 18 key performance indicators, 12 and Lockheed Martin, 202, 265 and Miller Energy, 261 and Ministry of Defence, 188, 189, 202, 216, 217, 265 and National Health Service (NHS), 192–3, 202, 266 and New Century Financial Corporation, 48, 116–18, 257 No. 20, Grosvenor Street, Mayfair, ix–x, x, 277–8 ‘One Firm’ philosophy, 275 and ‘patent box’ tax breaks, 180 Performance Club 1999 trips, 160 and Petrofac, 218 and private finance initiative (PFI), 186, 187, 188, 189, 191, 249 and Privy Purse, 68 revolving door, 206, 207, 208 and Saudi British Joint Business Council, 218 Scott London Rolex scandal (2013), 15 and securitization, 121, 122 and Siemens, 240 in South Africa, 249–50 and subprime mortgages, 10, 48, 116–19 and sustainable development, 200 and tax avoidance, 154–5, 157, 158, 159–62, 180–81, 182, 186 thought leadership, 12 and thrifts, 87 and Tier One, 257 and Wachovia, 257 and Xerox, 109–10 Kreuger, Ivar, 57 Kubena, Mike, 237 Labour Party, 66, 94, 114, 178, 179, 184–92, 194, 201, 209, 230 Lake Michigan, 73 Land, Nick, 144, 182 Lang, Ian, 95 Last Supper, The (Leonardo da Vinci), 33 Lateran Council, Third (1179), 24 Law Commission, 93 Lawson, Nigel, 146 Lay, Kenneth, 99–100, 104, 107, 108 Leary, Simon, 191 Lehman Brothers, 12, 13, 92, 119, 131–3, 138, 144, 145, 148–9 Leigh, Edward, 189 Lend-Lease programme, 60 Leonardo da Vinci, 33 Levin, Carl, 159, 161 Levitt, Arthur, 96–8, 104 Lewis, Leigh, 207 Lewis, Michael, 112, 118 Liber Abaci (Fibonacci), 21–2 Liberal party, 50, 52 Liechtenstein, 220 limited liability, 50, 52, 91–5, 114 Lincoln Savings and Loan, 85–7 Linklaters, 140 Little, Royal, 61 Liverpool, Merseyside, 49 LJM, 104–5 Lloyds Bank, 140 Lockheed Martin, 202, 212, 265 London, England Big Bang (1986), 156 Canary Wharf, 256 Chelsea Flower Show, 200 Claridges, 122 Gordon Riots (1780), 38 Imperial College, 197 ‘light touch’ regulation, 114, 131, 209 Medici Bank, 26, 30 Olympic Games (2012), 196 Price Waterhouse, 54 Royal London Hospital, 190 School of Economics, 197 St Bartholomew’s Hospital, London, 190 Tate Modern, 16 Long Term Capital Management, 113 Louis XI, king of France, 31 low-balling, 79, 91 Lowe, Robert, 50 Luce, Edward, 17 Lucerne, Switzerland, 220 Luthiger, Fredy, 222, 223, 227 Luxembourg, 165–77, 179, 180, 181, 182, 245, 267–71, 278 LuxLeaks, 169–77, 179, 181, 245, 268, 269, 278 Lybrand, Ross Bros & Montgomery, 87 Lybrand, William, 56 Lynch, Loretta, 219, 223 Lyons, 31 MacGregor, John, 128 Mair, John, 42, 53 Management Consultancies Association, 190 Mandelson, Peter, 95, 207 Mapping the Market, 193 mark-to-market, 99–102, 113, 123, 124, 129–31 mark-to-model, 124–5, 126, 127, 131 mark-to-myth, 124, 131 Marlborough, Duke of, see Churchill, John Martin, William, 122–3 Marwick, James, ix, 48–9, 56, 62, 119, 158, 217, 233, 277 Marx, Karl, 3 Masters Tournament, 104 Masters, Adrian, 191 matches, 57 Mauritius, 158 Maxwell, Robert, 66, 87–8, 91 May, George, 73, 78, 82, 277 May, Theresa, 203 McConnell, Jack, 207 McCreevy, Charles, 164 McDonald’s, 170 McFall, John, 207 McKenna, Francine, 145, 274 McKinsey, 17, 74–7, 79, 81, 99, 108, 183, 191, 226, 263 McKinsey, James, 74–7 McLean, Bethany, 101 Measelle, Richard, 103 Medici family, 16, 26–32, 36 Cosimo, 26, 27, 28, 29, 31 Giovanni, 26 Lorenzo, 28, 29, 30 Medvedev, Dmitry, 17 Melbourne, Victoria, 48 mergers and acquisitions, 11, 54, 59–69, 71, 87 Merrill Lynch, 121 Mesopotamia, 1 Messezentrum conference centre, Zurich, 228 Metcalf, Lee, 80 Metz, France, 172, 173, 176 Mexico, 229 Michael, Bill, 149–50 Microsoft, 271 Milburn, Alan, 184, 191, 194, 207 Mill, John Stuart, 50 Miller Energy, 261 Ministry of Defence, UK, 188–90, 202, 212, 215–19, 265 Missal, Michael, 115, 116–17 Missouri, United States, 74 Mitchell, Andrew, 206, 208 Mitchell, Austin, 94, 230 Mitchell, Roger, 48, 56 Model T Ford, 71 Modern Times, 71 Monde, Le, 169 monetarism, 84 money laundering, 229–31 Montagu, Nicholas, 207 Monty Python, 15–16 Moore, Paul, 141 Morgan, Henry, 39 Morgan, John Pierpont, 54–5 Morgan Stanley, 119, 148 Morse, Amyas, 206 mortgage-backed securities (MBS), 120–21 Moselle, France, 171 Mossack Fonseca, 247 Mouget, Didier, 170, 171, 173 Mumbai, Maharashtra, 242 Munger, Charlie, 18, 135, 147 Myners, Paul, 146 Nally, Dennis, 5, 148 Nassau, Bahamas, 222 National Aeronautics and Space Administration (NASA), 76 National Audit Office, 187, 189, 206 National Crime Agency (NCA), 272 National Health Service (NHS), 183–4, 187, 190, 191–5, 266 National Westminster Bank (NatWest), 136 Nazi Germany (1933–45), 4, 234, 251 Neoplatonism, 28 Netherlands ABN Amro, 138 Ballast Nedam, 218–19 Klynveld Kraayenhof, 235 Royal Ahold, 238–9 Spanish (1556–1714), 36 taxation, 163, 164–5 New Century Financial Corporation, 48, 115–18, 257 New Delhi, India, 245, 249 New Labour, 114, 184–92, 194, 209 New York, United States, 57 beer business, 54 Britnell’s ‘Reform Revolution’ speech (2011), 192–3 County Law Association, 153 Deloitte compensation case (2009), 239 FIFA indictment (2015), 219, 223 Harris’ advisory services speech (2014), 264 Issuers’ and Investors’ Summit on CDOs/Credit Derivatives (2006), 121 Levitt’s ‘Numbers Game’ speech (1998), 96, 98 Marwick & Mitchell, 48 Price Waterhouse, 54 Stock Exchange, 55, 115, 234 Wall Street, 54, 69, 96, 101, 120–21 New York Times, 118, 236 New Zealand, 256 Newton, Isaac, 22 Nicholson, Kevin, 178, 182 Nieuwe Instructie (Christoffels), 36 Nike, 163 No. 20, Grosvenor Street, Mayfair, ix–x, x, 277–8 Noncomformism, 42 Norte del Valle Cartel, 229 Northern Rock, 125–9, 142–3, 148 Norway, 72 nuclear power, 204–6 ‘Numbers Game’ speech (1998), 96, 98 O’Donnell, Augustine ‘Gus’, 207 O’Rourke, Feargal, 164, 165 off-balance-sheet financing, 101, 102, 104, 106 Office of Tax Simplification, 179 oil crisis (1973), 84 oil-for-food programme, 225, 240 Olympic Games (2012), 196 Olympus, 241 One Hundred Group, 254 OPIS (Offshore Portfolio Investment Strategy), 159, 162 Oppenheimer & Co., 112–13 Organization for Economic Cooperation and Development (OECD), 170, 181, 214 Osborne, George, 149, 182, 248 Oscars, 16 Overend & Gurney, 51, 126 Oxford University, 181, 184 Oxley, Michael, 114, 122 de Pacioli, Luca Bartolomeo, 32–6, 34, 100, 124 Page, Stephen, 272 Pain, Jon, 208 Palin, Michael, 15–16 Palo Alto, Silicon Valley, 82 Panama Papers scandal (2016), 247 Panorama, 169, 220 Paradise Papers scandal (2017), 7, 247 Parmalat, 239, 243 Parrett, William, 148 partners, 8 Pearson, 169, 270 Pearson, Ian, 207 Peat, Marwick, Mitchell & Co., 48, 60, 63, 64, 79, 82, 233, 235 Peat, Michael, 68 Peat, William Barclay, ix, 48, 49, 68, 233, 277 Penn Central Transport Company, 64, 79 pension funds, 67 Pepsi, 166 Pergamon, 66 Perrin, Edouard, 168, 169, 171–2, 173, 174, 175 Persson, Mats, 208 Perugia University, 32 Pessoa, Fernando, 1 Peston, Robert, 197 Peterborough hospital, Cambridgeshire, 191 Petits secrets des grandes enterprises, Les, 169 Petrofac, 218 Pfizer, 163 Piot, Wim, 173, 181, 182 Pisa, Italy, 21 place value’ system, 21 political donations, 98 Ponzi schemes, 89 ‘pooling-of-interest’ accounting, 61–2, 63, 67, 96 post-balance sheet events, 72 Powell, Ian, 128, 201–2 Poynter, Kieran, 148, 150 premiums, 45 Presbyterianism, 42 Price, Samuel Lowell, 49 Price Waterhouse & Co., 49, 53–6, 57, 65, 67, 72, 73, 78–9, 82 and conflicts of interest, 73, 277 consultancy, 78–9, 81, 82 Coopers & Lybrand, merger with (1998), 49, 95 in Germany, 233 and Great Crash (1929), 57 in India, 233 international co-ordinating company, 234 and limited liability partnerships, 94 Palo Alto technology centre, 82 and private finance initiative (PFI), 185 in Russia, 236 and tax avoidance, 164 and tax code (1954), 153–4 and United States Steel, 55, 62, 233 PricewaterhouseCoopers (PwC), 2, 5, 6, 49, 95, 97 and American International Group, 134–5, 144, 145, 148 and Bank of Tokyo-Mitsubishi, 230–31 and Barclays, 6 Booz & Co. acquisition (2013), 263–4 and Brexit, 203 and British Home Stores (BHS), 260 Building Public Trust Awards, 256 ‘Building Relationships, Creating Value’, 12 and Cattles plc., 142 cyber-security, 272–3 establishment of (1998), 49, 95 and Financial Crisis Inquiry Commission, 145 and Financial Reporting Council, 142, 144, 209, 210 global operations, 235–6 and Goldman Sachs, 134–5, 148 and Google, 271 and GPT, 217, 218 and Heineken, 246 and Hong Kong protests (2014), 251–2 in India, 242 integrated reporting, 18 and Kanebo, 240 and Labour Party, 201 and National Health Service (NHS), 192, 194, 200 and Northern Rock, 126, 127–9, 142–3, 148 and Olympic Games (2012), 196 presentation (2017), 16 and private finance initiative (PFI), 187, 188–91, 196, 249 profits, 5 revolving door, 207, 208 and RSM Tenon, 210, 261 in Russia, 236–8 and Saudi British Joint Business Council, 218 and securitization, 121, 122, 129 and tax avoidance, 157, 165–79, 180, 182, 237, 246, 267–71, 278 thought leadership, 12 total tax contribution survey, 179 and Tyco, 109 in Ukraine, 238 and Vodafone, 165–6 Prince of Wales’s charity, 181 principal/agent problem, 13 Prior, Nick, 190 Privatbank, 238 Private Eye, 169, 180, 215, 255 private finance initiative (PFI), 185–91, 196, 203, 249 Privy Council, 94 Privy Purse, 68 production-line system, 71 productivity growth, 262–3 professional scepticism, 112, 130, 214, 224 professional services, 11, 72, 150, 183, 204–5, 251, 275, 279 Professional Standards Group, 105–7 Project Braveheart, 106 Project Nahanni, 102 Protestant work ethic, 3 Protestantism, 3, 42, 43 Prudential, 157 Public Accounts Committee, 281 Public Company Accounting Oversight Board (PCAOB), 144–5, 242–3, 253, 261, 274 Puerto Rico, 163 Putin, Vladimir, 17, 237 Qatar, 228 Quakers, 42, 49 Railway Regulation Act (1844), 45 railways United Kingdom, 44–7, 49, 115 United States, 51, 52, 53, 70, 73 Rake, Michael, 144, 149, 150, 162, 181, 257 Raptors, 105 Rayonier, 59 Reagan, Ronald, 80, 84, 154, 184 Reckoning, The (Soll), 27 Redpath, Leopold, 46 regulation, UK, 13, 127, 209–10, 213–14, 259 and Brexit, 273 deregulation (1980s), 95 and financial crisis (2007–8), 127–8, 137–45 Financial Conduct Authority, 140, 149, 281 Financial Reporting Council, 138, 142, 144, 149, 182, 209–10, 213–14, 259, 261 Financial Services Authority, 127, 128, 137, 138, 140 ‘light touch’, 114, 131, 209–10 Railway Regulation Act (1844), 45 self-regulation, 88, 90 regulation, US, 91, 260 Bush administration (2001–2009), 114, 145, 253 Celler–Kefauver Act (1950), 59, 61 competition on price, 79–80 deregulation (1980s), 84–5, 95, 112 derivatives, 122 and Enron, 99 and Lincoln Savings and Loan, 85–7 mark to market, 99 numbers-game era (1990s), 110 Public Company Accounting and Oversight Board, 242–3, 253, 260 Roosevelt, Theodore administration (1901–9), 56–7 Sarbanes–Oxley Act (2002), 114, 122 self-regulation, 61 Trump administration (2017–), 273, 274 and Westec collapse (1966), 63 see also Securities and Exchange Commission Renaissance, 3, 16, 22, 24–37 Renjen, Punit, 275 ‘Repo 105’ technique, 131–3, 149 revolving door, 206–8, 272 Ripley, William Zebina, 57 Robson, Steve, 144, 207 Rockefeller, John Davison, 53, 71 Rolex, 15, 215 Rolls-Royce, 213 Roman numerals, 22 Rome, ancient, 24 Rome, Italy, 25, 27 Roosevelt, Franklin, 58 Roosevelt, Theodore, 56 de Roover, Raymond, 27 Rowland, Roland ‘Tiny’, 66 Royal African Company, 37 Royal Ahold, 238–9 Royal Bank of Scotland, 47, 90, 136–40, 142, 157, 241, 259 Royal London Hospital, 190 RSM Tenon, 210, 261 Russian Federation, 17, 236–8 Ryan, Tim, 134, 148 Saltwater Slavery (Smallwood), 37 Samek, Steve, 103 SANGCOM, 214–19 Sansepolcro, 32 Sarbanes, Paul, 114, 122 Sarbanes–Oxley Act (2002), 114, 122 Sassetti, Francesco, 16, 29, 30, 31, 41 Satyam, 242 Saudi Arabia, 212–19, 221 Saudi British Joint Business Council, 218 Saunders, Stuart, 64 Save South Africa, 250 savings-and-loan mutuals, 84–7, 91, 99 Sberbank, 237 Scarlett, John, 207, 272 Schlich, William, 149 Schumpeter, Joseph, 3 scientific management, 71, 76 Scotland, ix, 42, 47–9, 70, 224 Scuola di Rialto, Venice, 32 Second World War (1939–45), 59, 60, 77, 234 Secret Intelligence Service, 207, 272 Securities Act (1933), 58 Securities and Exchange Commission (SEC), 281 and consulting, 80, 104 and Enron, 99, 104, 108 and Hollinger, 154 Levitt’s ‘Numbers Game’ speech (1998), 96, 98, 104 and Lincoln Savings and Loan, 85, 86 and Penn Central Transport Company, 64 and ‘pooling-of-interest’ accounting, 61, 62 and Public Company Accounting Oversight Board (PCAOB), 144 PwC India fined (2011), 242 and Xerox, 109–10 securitization, 101–2, 116, 119–23, 125, 129–31, 133–40, 148, 265 Seidler, Lee, 68–9, 79 self-regulation, 6, 61, 88 Serious Fraud Office, 213, 216, 217, 218, 219 Sexton, Richard, 129, 268, 278 shadow banking system, 115 Shanghai, China, 17 Shaxson, Nicholas, 247 Sheraton, 59 Sherlock, Neil, 208 short selling, 112, 115, 116 Siemens, 240 Sikka, Prem, 94 Silicon Valley, California, 82 Simec International Ltd, 214, 215 Sinaloa Cartel, 229 Sinclair, Upton, 14 Singapore, 163 Sino-Forest, 244 Skilling, Jeff, 99–100, 101, 105, 108 Skinner, Paul, 208 Slater, James, 65 slave trade, 4, 37 Smallwood, Stephanie, 37 Smallwood, Trevor, 158 Smartest Guys in the Room, The (McLean and Elkind), 101 Smith, Adam, 13 Smith, Jacqui, 207 Snell, Charles, 40 Social Justice Commission, 184 Soll, Jacob, 27 Sombart, Werner, 3–4, 22 SOS (Short Option Strategy), 159, 162 South Africa, 213, 223–4, 249–50 South Sea Company, 39–41, 42, 44 Soviet Union (1922–91), 236 Spacek, Leonard, 62, 77–8 Spain, 36, 39, 241 special investment vehicles, 115 Spinwatch, 201 Sproul, David, 256, 258 St Bartholomew’s Hospital, London, 190 St Louis, Missouri, 56 Standard & Poor’s, 149 Standard Chartered Bank, 230, 231 Starbucks, 178 steam engine, 43 Stein, Jeffrey, 161 Stephenson, George, 44 Stevens, Mark, 82–3 Stevenson, James, 1st Baron Stevenson, 141 Stiglitz, Joseph, 114 stock market, 68, 69, 92, 96 ‘Go-Go’ years (1960s), 62, 65 and Great Crash (1929), 57, 58 and J.

One author reported that ‘at the Company’s governor’s birthday gala he was helped out of his coach by the Duke of Marlborough’.24 Like Sassetti’s at the Medici Bank, Grigsby’s head had been turned away from the books and ledgers towards more remunerative and glamorous possibilities. The bursting of the South Sea Bubble induced a British recession deeper than any until that following the 2008 financial crash.25 The affair had even farther-reaching consequences for business. So-called joint stock companies, which brought together investors as ‘shareholders’ and had sprung up in imitation of the South Sea Company, were banned. This, however, meant that a critical lesson for the long term was missed. Companies, especially monopolistic ones, will always be prone to abuse and corruption. The real message of the South Sea Bubble was the paramount importance of professional and, above all, independent accounting to expose and prevent such things.

The accounts and books in every department continue to be so satisfactorily kept, that we have simply to express our entire approval of them, and to present them to you for the information of the shareholders, with our usual certificate of correctness.’8 One hundred and fifty years later, a similar assurance would be given by the firm bearing Deloitte’s name to the Royal Bank of Scotland’s shareholders just before its £45bn bailout by the British taxpayer. Old William might well have spun in his grave once or twice. THE PROFESSIONALS Exposing railway finances to investigation wasn’t Gladstone’s only favour to the burgeoning business of accounting. His other major piece of legislation in 1844, the Joint Stock Companies Act, also gave it a boost. The idea was to enable everyday businesses to operate as legal companies, raising funds by selling shares to investors. But the corporate veil afforded by ‘Gladstone’s Act’ came at the price of greater accountability. In return for being allowed to incorporate a company with a handful of signatures (as opposed to an Act of Parliament), directors would have to report to shareholders with audited balance sheets giving a ‘full and fair’ view of the company’s affairs.


pages: 801 words: 209,348

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

activist fund / activist shareholder / activist investor, American ideology, Apple II, Apple's 1984 Super Bowl advert, bank run, barriers to entry, Berlin Wall, blue-collar work, Bob Noyce, Bonfire of the Vanities, British Empire, business cycle, buy and hold, California gold rush, Charles Lindbergh, collective bargaining, commoditize, corporate raider, cuban missile crisis, Deng Xiaoping, diversification, diversified portfolio, Douglas Engelbart, financial innovation, fixed income, Ford paid five dollars a day, global supply chain, Gordon Gekko, Haight Ashbury, hypertext link, income inequality, invisible hand, James Watt: steam engine, Jane Jacobs, Jeff Bezos, John Markoff, joint-stock company, joint-stock limited liability company, Kickstarter, laissez-faire capitalism, Louis Pasteur, Marc Andreessen, Menlo Park, mortgage debt, mutually assured destruction, Norman Mailer, oil rush, peer-to-peer, pets.com, popular electronics, profit motive, 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 Wealth of Nations by Adam Smith, trade route, transcontinental railway, traveling salesman, Upton Sinclair, Vannevar Bush, Works Progress Administration, zero-sum game

By the nature of the business, investors in England were often absent from exercising any voice in the affairs of remote ships and trading missions months or years away. This strengthened the need for the corporate form in that passive investors could be assured of not being liable for unknown debts. At the same time, their distance and duration meant that such enterprises required ample levels of capital, far beyond the risk appetite of any one investor, no matter how wealthy. The joint-stock company allowed multiple investors to buy in to a venture and hold the interest. The final push to the English joint-stock company occurred in 1553 with the Russia Company, in which adventurers committed £6,000 at £25 per share, marking the first use of the corporate form for overseas ventures. Starting then, even English privateers, state-sanctioned pirate ships looking to confiscate cargo, began using the joint-stock form to raise capital from adventurers.

One group, the Fellowship of the Merchants Adventurers of England, had been formally recognized as far back as 1505. Rather than act as a formal pool of money or resources, the adventurers had always been a loosely affiliated guild in which individual members participated in the ventures of their choosing. As the century progressed, the capital requirements of overseas ventures had coincided with and propelled development of the joint-stock company—“joint-stock” implying shareholders with transferable interests as opposed to the more intimate, closed nature of partnerships. In addition to transferability of shares, this ongoing legal evolution allowed for limiting the personal liability of any adventurer—the investor couldn’t lose any more than his initial investment. The idea of limited liability, a legal invention that does not exist automatically or organically in free markets, allowed investors to have unlimited upside potential while limiting the downside, thereby making speculation in exploratory voyages more attractive.

These English privateering syndicates were anything but swashbuckling men with parrots and eye patches; the accounting statements of individual ventures made careful note of ship tonnage, capital invested, men involved, and number of ships in each operation—from which Sir Francis Drake’s twenty-one ships and 1,932 men stood out with invested capital of £57,000. In his thorough examination of the era’s joint-stock companies, W. R. Scott suggested that the flexibility of the corporate structure lent itself to the virtues of diversification and spreading risk, particularly in matters of piracy. From privateering’s tolerance for large losses emerged the basic principle of modern venture capital. Suppose, for instance, a capitalist was prepared to adventure 2000 Pounds in privateering, he could only fit out one ship of about 200 tons or two smaller ones.


pages: 585 words: 165,304

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

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

Some societies early on built bridges to other forms of sociability beyond the family. Beginning in the sixteenth century, for example, England and Holland created legal arrangements permitting the vesting ownership in larger groups, such as joint proprietorships, joint-stock companies, or limited liability partnerships. Besides allowing owners to capture the social returns from their investments, legal structures such as these allowed unrelated people to cooperate in the creation of a business. The contract and its associated system of obligations and penalties, enforced through a legal system, could fill in the gap where the trust naturally found in families did not exist. Joint-stock companies, in particular, allowed enterprises to grow in scale beyond the means of a single family by pooling the resources of a large number of investors. Historians of economic development like Douglass North and Robert Thomas assert that the creation of a stable system of property rights was the crucial development that permitted the process of industrialization to begin.5 In some countries like the United States, a system of property rights was established early on, such that family businesses were usually also incorporated as legal entities.

The economic historians Douglass North and Robert Thomas put it bluntly: “Efficient economic organization is the key to growth; the development of an efficient economic organization in Western Europe accounts for the rise of the West.”17 The development of transoceanic commerce in the fifteenth century depended on invention of the carrack, which could sail beyond coastal waters. But it also depended on the creation of the joint-stock company, by which individuals could pool their resources and share the risks entailed in funding great voyages. The extension of railroads across the continental United States in the mid-nineteenth century required large, hierarchically organized companies with geographically dispersed managers. The kinds of businesses that had existed previously were owned and operated by families. Not only could family businesses not keep the trains running on time; they could not keep them from running into one another on the same track, as occurred in an infamous accident that took place in 1841 on a line between Massachusetts and New York.18 Henry Ford made possible the mass-produced automobile at the beginning of the twentieth century by putting the chassis on a moving conveyor belt and then subdividing the work into easy, repeatable steps.

Historians of economic development like Douglass North and Robert Thomas assert that the creation of a stable system of property rights was the crucial development that permitted the process of industrialization to begin.5 In some countries like the United States, a system of property rights was established early on, such that family businesses were usually also incorporated as legal entities. But in other places, such as China, where there was little security of property rights, family businesses grew quite large without legal protection. Although legal arrangements like joint-stock companies and limited liability partnerships permitted unrelated people to cooperate with one another in business, they did not automatically lead to that result or to the extinction of family businesses. In many cases, family businesses incorporated under these laws and enjoyed the protection of their property rights but in other respects operated much as before. Virtually all American businesses were family businesses until the 183Os, despite the existence of a rather well-developed system of commercial law and a fledgling stock market.


Manias, Panics and Crashes: A History of Financial Crises, Sixth Edition by Kindleberger, Charles P., Robert Z., Aliber

active measures, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Bernie Madoff, Black Swan, 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, currency peg, 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, Honoré de Balzac, Hyman Minsky, index fund, inflation targeting, information asymmetry, invisible hand, Isaac Newton, joint-stock company, large denomination, law of one price, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, 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, Robert Shiller, short selling, Silicon Valley, South Sea Bubble, special drawing rights, 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

Moreover there have been an impressive series of crises seven to ten years after the end of a war, long enough for expectations formed at the end of the original crisis to be falsified; these included 1720, 1772, 1792, 1825, 1873 in the United States, and 1929. Far-reaching political changes may also change expectations. The Glorious Revolution of 1688 gave rise to a boom in company promotion. By 1695 there were 140 joint stock companies with a total capital of £4.5 million; more than 80 percent had been formed in the previous seven years. By 1717 total capitalization had reached £21 million.57 In July 1720 the Bubble Act forbade formation of new joint-stock companies without explicit approval of parliament, a limitation that lasted until 1856. Although this regulation has normally been interpreted as a reaction against the South Sea Company speculation, Carswell asserts that it was undertaken to support the South Sea Company, as king and parliament sought to repress the development of rival companies that might attract cash that was intensely needed by the South Sea promoters.58 The events of the French Revolution, Terror, Directorate, Consulate, and Empire, along with incidents of the Napoleonic Wars themselves, set in motion large-scale specie movements in 1792–93 and 1797 and opening and closing markets in Europe and elsewhere for British and colonial goods.

Max Wirth, Geschichte der Handelskrisen, 4th edn (1890; reprint edn, New York: Burt Franklin, 1968), p. 510. 25. William Robert Scott, The Constitution and Finance of English, Scottish and Irish Joint-Stock Companies to 1720 (Cambridge: Cambridge University Press, 1911), vol. 3, pp. 449ff.; and D. Morier Evans, The Commercial Crisis, 1847–48, 2nd edn, rev. (1849; reprint edn, New York: Augustus M. Kelley, 1969), pp. 33–4. A separate list for the South Sea Bubble, prepared by a contemporary and less detailed, is set out in Wirth, Handelskrisen, pp. 67–79. 26. A. Andréadès, History of the Bank of England (London: P.S. King, 1909), p. 133. 27. Carswell, South Sea Bubble, p. 142. 28. Scott, Joint-Stock Companies, p. 450. 29. Hans Rosenberg, Die Weltwirtschaftskrise von 1857–59 (Stuttgart: W. Kohlhammer, 1934), p. 103. 30. Wirth, Handelskrisen, p. 480. 31.

The implication is that the US external payments position is not sustainable. This book is a study in financial history, not economic forecasting. But investors seem not to have learned from experience. 3 Speculative Manias Rationality of markets The word ‘mania’ suggests a loss of a connection with rationality, perhaps mass hysteria. Economic history is replete with canal manias, railroad manias, joint stock company manias, real estate manias and stock price manias – surges in investment in a particular activity. Economic theory assumes that men and women are rational – and hence manias would not occur. There is a disconnect between the observations that manias occur episodically, and the rationality assumption. This chapter focuses on the investor demand for a particular type of asset or security and the next chapter is centered on changes in the supply of credit.


pages: 812 words: 205,147

The Anarchy: The Relentless Rise of the East India Company by William Dalrymple

British Empire, colonial rule, crony capitalism, Dava Sobel, deindustrialization, European colonialism, Fellow of the Royal Society, global reserve currency, John Harrison: Longitude, joint-stock company, land reform, lone genius, megacity, offshore financial centre, reserve currency, spice trade, The Wealth of Nations by Adam Smith, too big to fail, upwardly mobile

The commodities they wished to buy were extremely expensive and they were carried in huge and costly ships that needed to be manned by large crews and protected by artillery masters and professional musket-men. Moreover, even if everything went according to plan, there would be no return on investment for several years. The idea of a joint stock company was one of Tudor England’s most brilliant and revolutionary innovations. The spark of the idea sprang from the flint of the medieval craft guilds, where merchants and manufacturers could pool their resources to undertake ventures none could afford to make individually. But the crucial difference in a joint stock company was that the latter could bring in passive investors who had the cash to subscribe to a project but were not themselves involved in the running of it. Such shares could be bought and sold by anyone, and their price could rise or fall depending on demand and the success of the venture.

Such a company would be ‘one body corporate and politick’ – that is, it would be a corporation, and so could have a legal identity and a form of corporate immortality that allowed it to transcend the deaths of individual shareholders, ‘in like manner’, wrote the legal scholar William Blackstone, ‘as the River Thames is still the same river, though the parts which compose it are changing every instance’.22 Forty years earlier, in 1553, a previous generation of London merchants had begun the process of founding the world’s first chartered joint stock company: the Muscovy Company, or to give it its full and glorious title, The Mysterie and Companie of the Merchant Adventurers for the Discoverie of Regions, Dominions, Islands and Places Unknown.23 The original aim was to explore an idea first mooted by classical geographers, who believed their world to be an island, surrounded by an ocean, which meant there had to be a northern route to the spices and gold of the Far East as well as that by the Cape – and that passage would be free from all Iberian rivalry.

This uprising very nearly ended British rule and might well have initiated a new phase of Mughal rule.168 For the Company, too, this was an historic occasion, the final denouement of its long struggle to defeat the Marathas and seize from them control of the erstwhile Mughal Empire. At the same time, it also represented the final act in the gradual penetration by the Company of the Mughal system, in which a joint stock company from the City of London slowly appropriated the power of the mighty Mughal Empire, and to some extent, under Wellesley, also took on the trappings of Mughal grandeur. In the end, the Company established its paramountcy by imposing itself on the Mughal Emperor as Regent, so finding a measure of legitimacy for itself in the eyes of India under the Mughal umbrella. As late as 1831, the Bengali reformer Raja Rammohan Roy dwelt ‘on the greater stability to the power of the British government attained by securing the grateful friendship of a monarch, who though without territorial possession, was still regarded by the nations of Hindustan as the only legitimate foundation of either honour or dominion’.169 The Company understood the importance of infiltrating the Mughal system rather than simply blowing it apart or abolishing it.


pages: 618 words: 160,006

Seapower States: Maritime Culture, Continental Empires and the Conflict That Made the Modern World by Andrew Lambert

British Empire, different worldview, Donald Trump, joint-stock company, Malacca Straits, megacity, Mikhail Gorbachev, open economy, rising living standards, South China Sea, spice trade, trade route, transatlantic slave trade, UNCLOS

As private trade waned the state became a major employer, finding work for the aristocracy in embassies, the Church, the navy and the administration of the cities of the terra firma and the sea empire. By the beginning of the seventeenth century, Venice had paid down the state debt: taxes declined, enabling many elite families to live off the state. Banking developed along lines pioneered elsewhere in Italy, although the chartered and joint stock companies so important to Dutch and British seapower imperialism would not be adopted for many years. During the thirteenth century Venice had deliberately created a maritime economy, blocking alternative outlets for capital, including land. The first capitalist economy would be sustained by consistent state intervention, which included measures to boost trade, including marine insurance, convoys and naval patrols.

The defeat of the Spanish Armada by Anglo-Dutch forces enabled the Republic to focus on reducing the threat of maritime predation by Flemish privateers, using aggressive patrolling, convoys and a developing insurance market. Blockading the Scheldt Estuary crushed the economy of Antwerp and the southern provinces; it also stopped Spain bringing troops by sea. Privateering flourished, exploiting investment opportunities and available capital. Relative security at sea focused attention on maritime trade, as did the cash-strapped Republic’s decision to delegate overseas naval operations to joint-stock companies that evolved into quasi-national empires.9 An obvious expression of the Dutch state, the navy reflected the complexity of domestic politics and a dynamically changing international context. Created in a market-oriented society that solved strategic and organisational problems by economic and contractual methods, the navy grew organically from pre-Revolt convoys and fishery patrols and the ‘Sea Beggar’ privateers of 1572.

After 1582 the States General also levied a standard import tax, which went directly to the five admiralties.30 The creation of public debt tied capitalists to the state, their proximity to the commercial sector ensuring that they recognised the interests of those without political representation.31 Local control of taxes and naval finances ensured that long-term trends in naval funding were neither arbitrary nor random. Merchant elites carefully balanced cost and benefit. Joint-stock companies and banks financed trade and war, while new credit mechanisms improved the flow of trade. The model for the Amsterdam Bank was Venetian, as was much else in the new state. It became the central clearing house for global finance: smaller banks served small traders and artisans.32 The joint-stock principle also applied to canal-building, drainage projects, harbour construction, ship-owning and marine insurance, spreading ownership, profit and risk among the merchant and working classes.


pages: 649 words: 181,179

Diamonds, Gold, and War: The British, the Boers, and the Making of South Africa by Martin Meredith

back-to-the-land, banking crisis, British Empire, Cape to Cairo, joint-stock company, Khartoum Gordon, liberation theology, Nelson Mandela, sceptred isle, Scramble for Africa, trade route

Buoyed up by their defeat of imperial Britain, the Transvaal Boers now set out to expand the borders of their state to the east and to the west, and to impose their will on African chiefdoms around them. PART III 10 THE DIAMOND BUBBLE A new bout of diamond fever struck southern Africa in 1881, prompted by the formation of a host of joint-stock companies in the diamond fields as the era of independent diggers came to an end. The rush to invest in joint-stock companies was as hectic as the original diamond rush of the 1870s. Speculators thronged the main diamond market in Ebden Street in Kimberley, where a new stock exchange was established to accommodate the huge increase in business: Ebden Street [wrote Dr Matthews] was filled from morning to night with a tumultuous and maddened crowd. The various offices of companies in formation were simply stormed, and those who could not get in at the door from the pressure of the crowd, threw their applications for shares (to which were attached cheques and bank notes) through the windows, trusting to chance that they might be picked up . . .

It was astonishing how the mania seized on all classes in Kimberley, from the highest to the lowest . . . how everyone, doctors and lawyers, masters and servants, shop-keepers and workmen, men of the pen and men of the sword, magistrates and I.D.B.s [illicit diamond buyers], Englishmen and foreigners, rushed wildly into the wonderful game of speculation. Following the launch of De Beers Mining Company in April 1880, more than seventy joint-stock companies made their debut on the market within a year. Claim-holders forming joint-stock companies made their own valuation of their assets, set the capital of the new enterprises, took shares equivalent to the value they claimed for their holdings and then offered the remainder to the public. As merchants and bankers in Cape Town and Port Elizabeth scrambled to join the buying frenzy, the competition for shares became so intense that stock in 1881 traded at premiums ranging as high as 300 per cent.

In the first four months of 1877, Jules Porges, a Paris-based diamond merchant, spent £90,000 buying up low-priced claims, giving him a 10 per cent interest in the Kimberley mine. Porges later teamed up with two Kimberley dealers, Sammy Marks and his brother-in-law, Isaac Lewis, who had turned their small trading business into a substantial mining company. In 1880 they merged their claims to form a joint-stock company, Compagnie Française des Mines des Diamants du Cap du Bon Espérance, otherwise known as the French Company. It controlled one-quarter of the Kimberley mine and was by far the largest mining operation on the diamond fields. Another major player was Joseph B. Robinson, a cold, cantankerous claim-owner notorious for his ill-temper, meanness, and proclivity for seducing other men’s wives and daughters.


The Ages of Globalization by Jeffrey D. Sachs

Admiral Zheng, British Empire, Cape to Cairo, colonial rule, Columbian Exchange, Commentariolus, coronavirus, COVID-19, Covid-19, cuban missile crisis, decarbonisation, demographic transition, Deng Xiaoping, domestication of the camel, Donald Trump, en.wikipedia.org, endogenous growth, European colonialism, global supply chain, 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, Louis Pasteur, low skilled workers, mass immigration, Nikolai Kondratiev, out of africa, packet switching, Pax Mongolica, precision agriculture, profit maximization, profit motive, purchasing power parity, South China Sea, spinning jenny, 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, Watson beat the top human players on Jeopardy!, wikimedia commons

Under the leadership of these three men [the first three Song rulers]—all lovers of learning—Song China came closer to the ideal of Confucian rule than any other dynasty in Chinese history…. Confucianism rooted in the classics offered an ethic based on humanness, righteousness, appropriateness, filial piety, loyalty, the civil principle over the military, and the performance of rites.5 The Song Dynasty might justly be considered the world’s first large-scale capitalist economy: land was privately owned, merchant families invested in joint-stock companies, international trade was open, harbors were improved, and Chinese ocean-based trade expanded throughout the Indian Ocean to East Africa and the Red Sea. A navy established in the twelfth century policed the seas. Agricultural productivity rose, supporting a doubling of the Song population, to an astounding peak of around 120 million, and a massive increase of the urban population. The cities of Kaifeng and Hangzhou hosted populations of more than 1 million each.

Under Soviet communism in the twentieth century, the lands of the Russian Empire were industrialized and urbanized via a brutal top-down one-party state that claimed tens of millions of lives in the course of forced industrialization and the collectivization of farmlands—a “second serfdom”—that was carried out by Joseph Stalin’s regime in the late 1920s and 1930s. Insatiable Greed of the Empire Builders The remarkable scramble by the European powers for riches, glory, and colonies in the New World and Asia, and the privatization of wealth-seeking via the new joint-stock companies, ushered in a new ethos of greed. It was one thing to exploit the native populations and grab their land; it was another to create an ethos that justified such actions. The Christian virtues of temperance and charity had long preached self-control over the passions for wealth and glory. A new morality was needed to justify the remarkable efforts toward conquest and the subjugation of whole populations.

In 1578, Drake captured a Spanish galleon with a phenomenal haul of gold, silver, jewels, porcelain, and other treasure. On Drake’s return, the pirated gains were shared with the queen, who used them to pay off the national debt. Drake became a national hero, and went on to serve as vice admiral in the defeat of the Spanish armada in 1588. In 1600, the launch of the East India Company marked an even more decisive breakthrough to modern capitalism. Here was a joint-stock company formed specifically to engage in multinational trade. Once again, the private investors could count on the power and beneficence of the state. Queen Elizabeth charted the East India Company as a monopoly to engage in all trade east of the Cape of Good Hope and west of the Straits of Magellan. From the start, the company paid bribes and gifts to the court and to leading politicians while acting as a state within a state in its dealings in India, complete with private army, the powers of bribery, and the protections of limited liability.


pages: 519 words: 148,131

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

accounting loophole / creative accounting, bank run, banking crisis, Bretton Woods, British Empire, business cycle, buttonwood tree, California gold rush, clean water, collective bargaining, Corn Laws, corporate governance, cuban missile crisis, disintermediation, double entry bookkeeping, failed state, financial independence, Frederick Winslow Taylor, full employment, global village, imperial preference, informal economy, interchangeable parts, invisible hand, Isaac Newton, Jacquard loom, James Hargreaves, James Watt: steam engine, joint-stock company, joint-stock limited liability company, lone genius, Louis Pasteur, margin call, Marshall McLuhan, means of production, Menlo Park, Mikhail Gorbachev, 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, spinning jenny, The Wealth of Nations by Adam Smith, trade route, transaction costs, transcontinental railway, undersea cable, Yom Kippur War

Thus an investor, by investing even a small sum, might find himself bankrupt if the enterprise failed. Few were willing to take on such risks, especially in an enterprise over which they would, necessarily, have very limited control. The joint-stock company solved the problem by limiting each investor’s liability to what he had invested. This, of course, shifted some of the risk to the corporation’s creditors but made it possible for large sums of capital to be amassed from many small investments. Next to the nation-state itself, the joint-stock company was the most important organizational development of the Renaissance and, like the nation-state, made the modern world possible. Several English joint-stock companies for purposes of facilitating trade in various areas were established in the latter half of the sixteenth century, the Moscow Company (1555), the Levant Company (1583), and the East India Company (1600) among them.

Double entry makes it much easier to detect errors and allows a far more dynamic financial picture of an enterprise to emerge from the raw numbers. Because of double-entry bookkeeping, it became possible for people to invest in distant enterprises and still keep track of how their investment was doing. Ferdinand and Isabella saw to it that an accountant sailed with Columbus on his first voyage, to ensure that they got their full share of the hoped-for profits. The joint-stock company proved equally important. Exploring far-distant lands in full-rigged ships was both hazardous—many ships simply never returned—and extremely capital-intensive by the standards of the sixteenth century. At first, it was largely done by expeditions funded by the crown in each country. But England was a small country with a small population and lacked the financial resources available to France and Spain.

And because families could be more easily established and the healthy climate allowed more children to reach maturity, New England’s population grew very quickly. Only about twenty-one thousand people immigrated to New England in the seventeenth century, but by the end of that century the population was ninety-one thousand, more than the white population in the Chesapeake, which had received many more immigrants. Both Plymouth and Massachusetts Bay colonies were founded by joint-stock companies. The members of these corporations who came to New England were known as planters. Those who remained in England and invested money in the enterprise were called adventurers, a word that is still echoed today in the term venture capitalist. These adventurers, while as anxious as any to build a New Jerusalem, were also hoping for a return on their investment as soon as possible. When the Mayflower returned to England in the spring of 1621 in ballast, the company directors wrote Governor Bradford a stinging letter admonishing him for not sending back a load of sellable goods.


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 process, colonial rule, commoditize, Corn Laws, creative destruction, cuban missile crisis, David Ricardo: comparative advantage, declining real wages, deindustrialization, double entry bookkeeping, European colonialism, financial independence, financial intermediation, floating exchange rates, income inequality, informal economy, invisible hand, joint-stock company, Joseph Schumpeter, late capitalism, London Interbank Offered Rate, means of production, money: store of value / unit of account / medium of exchange, new economy, offshore financial centre, oil shock, Peace of Westphalia, profit maximization, Project for a New American Century, RAND corporation, reserve currency, spice trade, 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, Yom Kippur War

A virtuous circle of expansion was thus established whereby the increasing commercial and financial centrality of Amsterdam made it imperative for all European business and governmental organizations of any importance to be represented at Amsterdam’s Bourse; and “[since] the important businessman and a host of intermediaries met here, business of every sort could be transacted: operations in commodities, currency exchange, shareholding, maritime insurance” (Braudel 1982: 100). This virtuous circle of expansion would never have got off the ground, let alone produce the spectacular results it did, were it not for a third policy which complemented and sustained the policies that promoted THE RISE OF CAPITAL 143 the transformation of Amsterdam into the central entrepot of world commerce and world finance. This consisted in launching large-scale joint-stock companies chartered by the Dutch government to exercise exclusive trading and sovereignty rights over huge overseas commercial spaces. These companies were business enterprises which were supposed to yield profits and dividends but also to carry out war-making and statemaking activities on behalf of the Dutch government. In this capacity, as Maurice Dobb (1963: 208-9, quoting Sombart) remarked, the chartered companies of the seventeenth century were not unlike the Genoese maone, associations of individuals established in view of a profit to undertake war-making and state-making functions, such as the conquest of Caffa and the colonization of Chios.

At the same time, chartered companies played a decisive role in the rise of Amsterdam to 144 THE LONG TWENTIETH CENTURY the status of world financial center. For investment and speculation in the shares of chartered companies — first and foremost of the VOC — were the single most important factor in the successful development of the Amsterdam Bourse into the first stock market in permanent session (Braudel 1982: 100-6; 1984: 224-7; Israel 1989: 75-6, 256-8). Without a large, profitable, and fast-growing joint-stock company like the VOC, such a development may never have taken place, or at least not in time to beat the old (Genoese) or the new (English) competition in high finance. But the VOC was an epochal success, and so was the strategy of accumulation to which it belonged. For more than a century, from circa 1610-20 to circa 1730-40, the upper strata of the Dutch merchant class remained the leaders and governors of the European capitalist engine.

But once England — already the most industrialized state of the European worldeconomy — turned into the central entrepot of world trade, and on a scale never seen before, the competitiveness of English business became unbeatable in a much wider range of industries than Dutch business ever was. It was at this time that, retrospectively, Elizabeth I’s investment of plunder seized from Spain in the stabilization of the pound and in the launching of joint-stock companies chartered to promote overseas commercial and territorial expansion appeared as the best investment she could have ever made. Although for almost a century the money so invested seemed to many to have been a waste in the face of insurmountable odds in competing with the Dutch, in the eighteenth century Elizabeth’s (or Gresham’s) foresight was fully vindicated. The reaffirmation and consolidation under William III of the tradition of sound money established by Elizabeth kept English surplus capital invested in the English national debt and, in addition, brought in Dutch capital in the most decisive moments of the interstate power struggle.


pages: 326 words: 91,559

Everything for Everyone: The Radical Tradition That Is Shaping the Next Economy by Nathan Schneider

1960s counterculture, Affordable Care Act / Obamacare, Airbnb, altcoin, Amazon Mechanical Turk, back-to-the-land, basic income, Berlin Wall, Bernie Sanders, bitcoin, blockchain, Brewster Kahle, Burning Man, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, Clayton Christensen, collaborative economy, collective bargaining, Community Supported Agriculture, corporate governance, creative destruction, crowdsourcing, cryptocurrency, Debian, disruptive innovation, do-ocracy, Donald Knuth, Donald Trump, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, Food sovereignty, four colour theorem, future of work, gig economy, Google bus, hydraulic fracturing, Internet Archive, Jeff Bezos, jimmy wales, joint-stock company, Joseph Schumpeter, Julian Assange, Kickstarter, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, mass immigration, means of production, multi-sided market, new economy, offshore financial centre, old-boy network, Peter H. Diamandis: Planetary Resources, post-work, precariat, premature optimization, pre–internet, profit motive, race to the bottom, Richard Florida, Richard Stallman, ride hailing / ride sharing, Sam Altman, Satoshi Nakamoto, self-driving car, shareholder value, sharing economy, Silicon Valley, Slavoj Žižek, smart contracts, Steve Jobs, Steve Wozniak, Stewart Brand, transaction costs, Turing test, Uber and Lyft, uber lyft, underbanked, undersea cable, universal basic income, Upton Sinclair, Vanguard fund, white flight, Whole Earth Catalog, WikiLeaks, women in the workforce, working poor, Y Combinator, Y2K, Zipcar

The International Ladies’ Garment Workers’ Union, for which she had also worked, pursued the commonwealth by organizing co-owned apartments for its members.7 Serious businesspeople nowadays tend to regard any alternative to the investor-owned corporation as aberrant or impossible. But the alternatives actually preceded the models that prevail today. In Britain, the first legislation for co-ops passed four years before joint-stock companies got their own law in 1856. Legal scholar Henry Hansmann has suggested that we regard investor-owned companies as a distorted kind of cooperative, bent in service of investor interests over anyone else’s.8 The kind of business that now seems normal was once strange; someday it might seem strange again. Perhaps the strangeness is creeping back. Surveys suggest that something like 85 percent of workers worldwide don’t feel engaged in their jobs.

The difference is that it lives on in one of the ways that mortal cooperators can: institutionally. The Rochdale store began producing offspring within a few years of its founding. New branches opened around town, with services from shoemaking to housing, and copycat co-ops appeared elsewhere. The British Parliament helped clear the legal pathway for this with the Industrial and Provident Societies Act of 1852—again, before the 1856 Joint Stock Companies Act, the founding legislation for public, investor-owned corporations. But, as a cooperative, the Rochdale store wasn’t set up to become a rapacious conglomerate, as investor-owners would demand. It would have to grow differently. What came to be called the Cooperative Wholesale Society began in Manchester, in 1863, through a conspiracy of several hundred local co-ops across northern England, with several Rochdale Pioneers among its leadership.14 Cooperative wholesales like this had been tried before, but now they had the firm foundation of the Rochdale model to build on.

Although the 1912 speech is frequently used as its source text, the phrase predated that occasion, as it had already inspired a poem by James Oppenheim in 1911. Minerva K. Brooks, “Votes for Women: Rose Schneiderman in Ohio,” Life and Labor (September 1912), 288; Margaret Dreier Robins, “Self-Government in the Workshop,” Life and Labor (April 1912), 108–110; for an account of US struggles over working hours, see Benjamin Kline Hunnicutt, Free Time: The Forgotten American Dream (Temple University Press, 2013). 8. The laws in question are the Joint Stock Companies Act of 1856 and the Industrial and Provident Societies Partnership Act of 1852; Henry Hansmann, “All Firms Are Cooperatives—and So Are Governments,” Journal of Entrepreneurial and Organizational Diversity 2, no. 2 (2013). 9. State of the Global Workplace (Gallup, 2017); Francesca Gino, “How to Make Employees Feel Like They Own Their Work,” Harvard Business Review (December 7, 2015); Jocko Willink and Leif Babin, Extreme Ownership: How U.S.


pages: 323 words: 92,135

Running Money by Andy Kessler

Andy Kessler, Apple II, bioinformatics, Bob Noyce, British Empire, business intelligence, buy and hold, buy low sell high, call centre, Corn Laws, Douglas Engelbart, family office, full employment, 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, knowledge worker, Leonard Kleinrock, Long Term Capital Management, mail merge, Marc Andreessen, margin call, market bubble, Maui Hawaii, Menlo Park, Metcalfe’s law, 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, Toyota Production System, zero-sum game

It had market demand (flooded mines), technology (Watt’s condenser and Wilkinson’s precise cylinders), capital (Boulton’s money), intellectual property rights (Parliament’s patent) and a ready workforce (ex-farmers). I was ready to invest—all that was missing was a business model. It was Matthew Boulton who came up with one. Boulton and Watt didn’t actually sell steam engines. No one could afford one. Most of the early customers were Cornish mines. Beyond Parliament-sponsored joint-stock companies, the stock market and banking were not quite developed, especially for risky businesses. Limited liability for corporations wouldn’t be the law until 1860. Miners lived day to day. They used a cost book system of accounting (I slept through accounting too). At the end of each 58 Running Money quarter, all the partners in the mine would meet at the countinghouse to go over the numbers and split any profits.

Stephenson and his son were asked to compete in a contest for the rights to design and operate the line. They won, and by 1835, they weren’t carrying just materials—a half a million passengers were recorded. Demand for railroads, for passengers and for industrial goods exploded. You could put in a 20-mile railroad for the equivalent of $650,000 and collect that much in fees every year, because it was cheaper than horses, a lot cheaper. Joint-stock companies became the rage, and the stock market was all too happy to step in and provide capital. Then more capital. And then too much capital. By the 1840s, a railroad mania was raging, stocks selling on multiples of passenger miles, a precursor for multiples of page views that Yahoo stock would trade on 150 years later. An inven- B&W IPO 93 tor named Charles Babbage complained that “the railroad mania withdrew from other pursuits the most intellectual and skilful draftsmen” and sought to invent a machine that might replace them, and make Yahoo possible.

But factory owners couldn’t raise wages because they were having trouble selling their manufactured goods overseas. Why? Because the French and Germans were paying for these goods with their wheat and corn, and the British taxed them out of affordability. How stupid—this almost killed the British Empire in its infancy. With any foresight, the landowners should have dumped their unprofitable farms and invested the proceeds in highly profitable joint stock companies making pottery, shirts and potbelly stoves. England should have gladly bought French wheat and Dutch flowers and German barley and hops so that consumers in these countries could have turned around with the money they received and bought British manufactured goods. There was no substitute. Once you go silky smooth, you never go back. The Corn Laws foolishly lasted until 1846. So, go ahead, buy that Beemer so that Germans can afford to buy our software.


pages: 355 words: 92,571

Capitalism: Money, Morals and Markets by John Plender

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

When the boom collapses, public outrage then prompts a political backlash in the shape of re-regulation. Consider the late seventeenth century. In Nicholas Barbon’s day, joint stock companies were a rarity, because incorporation required a Royal Charter or private Act of Parliament. Since incorporation was usually accompanied by the grant of privileges such as trading rights, monarchs and governments were very careful with their largesse. Yet, after the Glorious Revolution of 1688, when London was experiencing a big expansion of trade, especially with India, a more liberal attitude to incorporation prevailed. The formation of the South Sea Company in the new century, together with the stellar performance of its stock, accelerated an already powerful slew of incorporations, with 195 joint stock companies being formed in the year to August 1720. These were popularly known as ‘bubbles’.

A further difficulty with the way the banking system works is that the banks have become more dangerous over time. One reason is that, from the nineteenth century, banks began to abandon partnership and adopt limited liability. This was a big step because the unlimited liability associated with partnership acted as a tight control on imprudent behaviour. If a bank failed, creditors had recourse to all the personal assets of the individual partners. Once partnerships turned themselves into joint stock companies, the shareholders still enjoyed unlimited potential for gain but could never lose more than the amount they spent buying shares in the bank. This asymmetry was morally hazardous in that it encouraged greater risk taking. And in the nineteenth and twentieth centuries, commercial banks took more risks by extending their traditional deposit-taking and lending operations into investment banking and securities trading.

Scott Fitzgerald) 1 Great Illusion, The (Norman Angell) 1 Great Inflation (1970s) 1 Great Moderation 1, 2 Great Recession (2007–09) 1, 2, 3, 4, 5, 6, 7, 8 Greece (modern) 1, 2, 3, 4, 5 Greeks (ancient) 1, 2, 3 Green, David 1 Greenspan, Alan 1, 2, 3, 4, 5, 6, 7, 8 Greenwood, Robin 1 Grekova, Irina 1 Grice, Dylan 1 Griesinger, Georg August 1 Gulf of Mexico oil spill (2010) 1 Gusinsky, Vladimir 1 Gutenberg, Johannes 1 Haldane, Andrew 1, 2, 3, 4 Hamilton, Alexander 1, 2 Hamlet (Shakespeare) 1 Hammurabi 1, 2 Handel, George Frideric 1 Hard Times (Dickens) 1, 2, 3 Haydn, Joseph 1 Hayek, Friedrich 1 Healey, Denis 1 healthcare 1 Heaney, Seamus 1 Hegel 1, 2 Hinduism 1, 2 Hirsch, Fred 1 Hirschman, Albert O. 1 Hirst, Damien 1, 2 Holmes, Oliver Wendell 1 Hoover, Herbert 1 Hotel Manager, The (Irina Grekova) 1 Hudson, George 1 Hugh of Saint Victor 1, 2 Hughes, Robert 1, 2, 3 Hume, David 1, 2, 3 Hutcheson, Archibald 1 hyperinflation 1 IBM 1 Iceland 1 Impressionists 1 income tax 1 incorporation 1, 2 India 1, 2 indirect taxes 1 industrial shrinkage 1 industrial revolution 1, 2, 3, 4, 5, 6, 7, 8 inequality 1 Inferno (Dante) 1 inflation 1 institutional investors 1 intellectual property 1 International Monetary Fund 1 investment banking 1 Ireland 1, 2, 3 irrational exuberance 1 Islam 1 Italy 1, 2 art 1, 2 banking 1, 2 public debt 1, 2 taxation 1, 2 Ives, Charles 1 Jackson, Andrew 1, 2 Jackson Hole, Wyoming 1 James, Henry 1 Japan 1, 2 banks 1 bubble (1980s) 1, 2 industrialisation 1, 2 investment in China 1 manufacturing 1 Jefferson, Thomas 1, 2, 3 Jobs, Steve 1 Johnson, Ben 1 Johnson, Dr Samuel 1, 2, 3, 4, 5, 6, 7, 8 Johnson, Luke 1 joint stock companies 1 Joseph II, Emperor of Austria 1 JP Morgan 1 JPMorgan Chase 1 Judt, Tony 1 Jungle, The (Upton Sinclair) 1 Kafka, Franz 1 Kant, Immanuel 1 Katz, Richard 1 Kay, John 1, 2, 3 Kennedy, Paul 1 Kerr, Alex 1 Kerviel, Jérôme 1, 2 Keynes, John Maynard 1, 2, 3, 4, 5, 6 art 1, 2, 3, 4 debt 1, 2, 3, 4 family background and education 1, 2 gold standard 1, 2 speculation (participation) 1 speculation (views) 1, 2 Kindleberger, Charles 1, 2 King, Mervyn 1, 2 Knight, Eric 1 Knights Templar 1 knowledge 1 Koons, Jeff 1, 2 Krugman, Paul 1 Kuttner, Robert 1, 2 Kynaston, David 1 L’Argent (Zola) 1 L’Esprit Des Lois (Montesquieu) 1, 2 La Rochefoucauld 1 Laffer, Arthur 1 Lambert, Richard 1 Lanchester, John 1 Law, John 1 law of comparative advantage 1 Lawrence, D.


pages: 471 words: 124,585

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

Admiral Zheng, Andrei Shleifer, Asian financial crisis, asset allocation, asset-backed security, Atahualpa, bank run, banking crisis, banks create money, Black Swan, Black-Scholes formula, Bonfire of the Vanities, Bretton Woods, BRICs, British Empire, business cycle, capital asset pricing model, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, collateralized debt obligation, colonial exploitation, commoditize, Corn Laws, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, Daniel Kahneman / Amos Tversky, deglobalization, diversification, diversified portfolio, double entry bookkeeping, Edmond Halley, Edward Glaeser, Edward Lloyd's coffeehouse, financial innovation, financial intermediation, fixed income, floating exchange rates, Fractional reserve banking, Francisco Pizarro, full employment, German hyperinflation, Hernando de Soto, high net worth, hindsight bias, Home mortgage interest deduction, Hyman Minsky, income inequality, information asymmetry, interest rate swap, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, iterative process, John Meriwether, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labour mobility, Landlord’s Game, liberal capitalism, London Interbank Offered Rate, Long Term Capital Management, market bubble, market fundamentalism, means of production, Mikhail Gorbachev, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, Naomi Klein, negative equity, Nelson Mandela, Nick Leeson, Northern Rock, Parag Khanna, pension reform, price anchoring, price stability, principal–agent problem, probability theory / Blaise Pascal / Pierre de Fermat, profit motive, quantitative hedge fund, RAND corporation, random walk, rent control, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, seigniorage, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, spice trade, stocks for the long run, structural adjustment programs, technology bubble, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Bayes, Thomas Malthus, Thorstein Veblen, too big to fail, transaction costs, undersea cable, value at risk, Washington Consensus, Yom Kippur War

After the advent of banking and the birth of the bond market, the next step in the story of the ascent of money was therefore the rise of the joint-stock, limited-liability corporation: joint-stock because the company’s capital was jointly owned by multiple investors; limited-liability because the separate existence of the company as a legal ‘person’ protected the investors from losing all their wealth if the venture failed. Their liability was limited to the money they had used to buy a stake in the company. Smaller enterprises might operate just as well as partnerships. But those who aspired to span continents needed the company.1 However, the ability of companies to transform the global economy depended on another, related innovation. In theory, the managers of joint-stock companies are supposed to be disciplined by vigilant shareholders, who attend annual meetings, and seek to exert influence directly or indirectly through non-executive directors. In practice, the primary discipline on companies is exerted by stock markets, where an almost infinite number of small slices of companies (call them stocks, shares or equities, whichever you prefer) are bought and sold every day.

To finance their fight for independence against Spain in the late sixteenth century, as we saw in the previous chapter, the Dutch had improved on the Italian system of public debt (introducing, among other things, lottery loans which allowed people to gamble as they invested their savings in government debt). They had also reformed their currency by creating what was arguably the world’s first central bank, the Amsterdam Exchange Bank (Wisselbank), which solved the problem of debased coinage by creating a reliable form of bank money (see Chapter 1). But perhaps the single greatest Dutch invention of all was the joint-stock company. The story of the company had begun a century before Law’s arrival and had its origins in the efforts of Dutch merchants to wrest control of the lucrative Asian spice trade from Portugal and Spain. Europeans craved spices like cinnamon, cloves, mace, nutmeg and pepper not merely to flavour their food but also to preserve it. For centuries, these commodities had come overland from Asia to Europe along the Spice Road.

The only sop to shareholders was that in 1610 the Seventeen Lords agreed to make a dividend payment the following year, though at this stage the Company was so strapped for cash that the dividend had to be paid in spices. In 1612 it was announced that the VOC would not be liquidated, as originally planned. This meant that any shareholders who wanted their cash back had no alternative but to sell their shares to another investor.19 The joint-stock company and the stock market were thus born within just a few years of each other. No sooner had the first publicly owned corporation come into existence with the first-ever initial public offering of shares, than a secondary market sprang up to allow these shares to be bought and sold. It proved to be a remarkably liquid market. Turnover in VOC shares was high: by 1607 fully one third of the Company’s stock had been transferred from the original owners.20 Moreover, because the Company’s books were opened rather infrequently - purchases were formally registered monthly or quarterly - a lively forward market in VOC shares soon developed, which allowed sales for future delivery.


pages: 481 words: 120,693

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

activist fund / activist shareholder / activist investor, Albert Einstein, algorithmic trading, assortative mating, banking crisis, barriers to entry, Basel III, battle of ideas, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Boris Johnson, Branko Milanovic, Bretton Woods, BRICs, business climate, call centre, carried interest, Cass Sunstein, Clayton Christensen, collapse of Lehman Brothers, commoditize, conceptual framework, corporate governance, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Deng Xiaoping, disruptive innovation, don't be evil, double helix, energy security, estate planning, experimental subject, financial deregulation, financial innovation, Flash crash, Frank Gehry, Gini coefficient, global village, Goldman Sachs: Vampire Squid, Gordon Gekko, Guggenheim Bilbao, haute couture, high net worth, income inequality, invention of the steam engine, job automation, John Markoff, joint-stock company, Joseph Schumpeter, knowledge economy, knowledge worker, liberation theology, light touch regulation, linear programming, London Whale, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, Mikhail Gorbachev, Moneyball by Michael Lewis explains big data, NetJets, new economy, Occupy movement, open economy, Peter Thiel, place-making, plutocrats, Plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, postindustrial economy, Potemkin village, profit motive, purchasing power parity, race to the bottom, rent-seeking, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, self-driving car, short selling, Silicon Valley, Silicon Valley startup, Simon Kuznets, Solar eclipse in 1919, sovereign wealth fund, starchitect, stem cell, Steve Jobs, the new new thing, The Spirit Level, The Wealth of Nations by Adam Smith, Tony Hsieh, too big to fail, trade route, trickle-down economics, Tyler Cowen: Great Stagnation, wage slave, Washington Consensus, winner-take-all economy, zero-sum game

In The Wealth of Nations, Adam Smith compared the executives of a joint-stock company to “the stewards of a rich man” and warned that “being the managers rather of other people’s money than their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own. . . . Negligence and profusion, therefore, must always prevail.” Writing just over a hundred years later, Alfred Marshall bemoaned the feebleness of the staid British joint-stock company, compared to an America dominated by owner-entrepreneurs: “The area of America is so large and its condition so changeful, that the slow and steady-going management of a great joint-stock company on the English plan is at a disadvantage in competition with the vigorous and original scheming, the rapid and resolute force of a small group of wealthy capitalists, who are willing and able to apply their own resources in great undertakings.”

He emerged from his Omaha fastness to join the battle between capital and talent on Wall Street in the 1990s, when he briefly chaired struggling investment bank Salomon Brothers—a period he described in the next year’s letter to shareholders as “far from fun”—and slashed the bonus pool by $110 million. But here is the catch in management’s fight to rein in superstar salaries, and one institutional reason the super-elite continue to rise: in the age of the vast, publicly traded joint-stock company, where ownership is widely dispersed and boards lack the time, expertise, and gumption to weigh in on the specifics of how companies operate, the managers themselves are superstars, too. Entertainers and athletes are the most visible superstars, but they are hugely outnumbered by the army of business managers who in the past four decades have been transformed from salarymen to multimillionaires.

It is setting out for the river Don, for this is as far as our ships can sail on the Black Sea, but many of those on board will disembark and journey on, not stopping until they have crossed the Ganges and the Caucasus to India, then on to farthest China and the Eastern ocean. What is the source of this insatiable thirst for wealth that seizes men’s minds?” Venice owed its might and money to the super-elites of that age, and to an economic and political system that nurtured them. At the heart of the Venetian economy was the commenda, a basic form of joint-stock company that lasted for a single trading mission. The brilliance of the commenda was that it opened the economy to new entrants. It was a partnership between a “sedentary” investor, who financed the trip, and a traveler, who did the hard and risky work of making the journey. If the sedentary partner paid for the entire mission, he received 75 percent of the profits; if he financed two-thirds of the voyage, he got half.


pages: 316 words: 117,228

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

"Robert Solow", Andrei Shleifer, Asian financial crisis, asset-backed security, barriers to entry, Bernie Madoff, 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, Donald Trump, double helix, 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, Hernando de Soto, income inequality, 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, price mechanism, price stability, profit maximization, railway mania, regulatory arbitrage, reserve currency, Ronald Coase, Satoshi Nakamoto, secular stagnation, self-driving car, 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, transaction costs, Wolfgang Streeck

The year of this innovation was 1612, when the government of the Netherlands (the General Estates) imposed a charter change on the Dutch East India Company (also known under the acronym VOC) that denied shareholders their right to recall their investment at the 66 c h a P te r 3 end of the ten-year commitment period, to which they had agreed at the company’s founding. A ten-year commitment had already been a radical change when compared to earlier business practices that wound down a business after completing a single voyage. In the sixteenth century, merchants often pooled their stock prior to the journey (thus the term “joint stock company”) and upon return they divided the spoils and closed down the company. Of course, they could set up a new venture and repeat the cycle; but early joint stock companies were meant to pool resources and diversify risk, not to create durable asset pools that would produce wealth over long stretches of time. The ambitions of the Dutch East India Company, however, went way beyond a single journey; it was a joint venture between merchants and the government, the Estates General of the Netherlands.

In 1844, the UK opened the door to free incorporation after the country had tried with only limited success to keep a tap on the sprouting of all kinds of business organizations that resembled the corporation in all but name: they used the trust and pushed the limits of partnership law, they lobbied for special charters for industries that included limited liability, and they contracted with creditors of firms to ensure that they would not raise claims against the firm’s owners. These mutants may not have been as fool-proof as the corporate c Lo n i n g Lega L P e r so n s 61 form, but they went a long way toward giving owners the legal protection they craved.29 The 1844 Joint Stock Companies Act allowed businesses to establish themselves as corporate entities without government approval but did not include shareholder limited liability. This feature was introduced only with the Act’s revision in 1855 but was shortlived, as it was abused by unscrupulous shareholders; in response to a series of high-profile scandals, the Parliament reversed course and eliminated this legal feature only two years later.

And Citigroup received several capital 84 c h a P te r 4 injections, first from the sovereign wealth funds of foreign nations (Qatar and Singapore in particular) and eventually from the US government.15 So much for the basic structure of NC2, which is more complex than the trusts we encountered earlier, but the basic structure is still the same. But what about the assets in the pool? Here too we can see remarkable advances in the coding strategies that were meant to enhance the marketability of these assets. A basic securitization structure is rather simple and resembles the pooling of risks and resources of the early joint stock companies discussed in chapter 3. The claims to future payments on many home loans, all backed by mortgages, are placed behind a legal shield, like a trust. The trust then issues certificates to investors. They now hold a claim, not against an individual homeowner, but against a pool of loans to many homeowners that are backed by mortgages on their homes; what is more, by moving the assets to a trust, they become “bankruptcy remote” from their sponsor, in the case of NC2 from the Citi affiliate CMRC.


pages: 581 words: 162,518

We the Corporations: How American Businesses Won Their Civil Rights by Adam Winkler

1960s counterculture, affirmative action, Affordable Care Act / Obamacare, anti-communist, Bernie Sanders, British Empire, Cass Sunstein, clean water, collective bargaining, corporate governance, corporate personhood, corporate social responsibility, desegregation, Donald Trump, financial innovation, glass ceiling, income inequality, invisible hand, joint-stock company, laissez-faire capitalism, land reform, obamacare, offshore financial centre, plutocrats, 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, yellow journalism

See Alexander Brown, The Genesis of the United States (1891), 2:1049; Alexander Brown, “Sir Thomas West. Third Lord De La Warr,” 9 The Magazine of American History 18, 28, 30 (1883). 20. See William Robert Scott, The Constitution and Finance of English, Scottish, and Irish Joint-Stock Companies to 1720 (1951), 1:255; Wesley Frank Craven, The Virginia Company of London, 1606–1624 (1993), 31–34; Kupperman, The Jamestown Project, 261. 21. Scott, The Constitution and Finance of English, Scottish, and Irish Joint-Stock Companies, 1:255; Craven, The Virginia Company of London, 31–34; Kupperman, The Jamestown Project, 261; Miller, The First Frontier, 26. 22. See Jack Beatty, “The Corporate Roots of American Government,” in Colossus: How the Corporation Changed America, ed. Jack Beatty (2001), 17; Theodore K.

And what became known as the Boston Tea Party occurred because the East India Company, as they would later say about American financial institutions in the Great Recession of 2008, was “too big to fail.” Founded several years before the Virginia Company, the East India Company by the mid-eighteenth century had grown into the most powerful corporation in the world. In 1757, the company effectively took control of India, which it ruled for the next century. Although the Scottish economic philosopher Adam Smith called this exercise of sovereign power by a joint-stock company a “strange absurdity,” it was similar to what had happened in Virginia, Massachusetts, and several other American colonies, just on a far grander scale. The corporation had become a government, with all the power that entails. Exporting silk, salt, tea, and cotton, the East India Company was immensely profitable at first. One of its governors, Elihu Yale, made such a fortune that he thought little of the £500 he donated to endow a college in Connecticut; leaders of the college, however, were so overwhelmed by his abundant generosity they renamed the school in Yale’s honor.39 Soon after the takeover of India, the company ran into serious financial trouble.

Under RFRA, the federal government was prohibited from substantially burdening “a person’s exercise of religion.” The court held that business corporations were included, largely because of the Dictionary Act, another federal law that officially defined the terms used in federal statutes. The Dictionary Act provided that “unless the context indicates otherwise,” the word person should be read to apply to “corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals.” As a result, the court expansively read the law to protect the rights of corporations, which deployed those rights to overturn a regulation of their business practices. Yet, as with many previous Supreme Court cases invoking corporate personhood, the underlying logic of Hobby Lobby reflected instead piercing the corporate veil. “A corporation is simply a form of organization used by human beings to achieve desired ends,” Justice Alito explained.


Adam Smith: Father of Economics by Jesse Norman

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

The third is what has since become known as the principal–agent problem: the problem that someone charged with carrying out a task may have a conflict of interest, an agenda of their own which affects their judgement or performance. Smith comes to this by discussing the difference between ‘joint-stock’ companies such as the East India Company, whose shares could be traded and which often had many passive outside shareholders, and partnerships or ‘copartneries’, whose members or shareholders have unlimited liability and so an interest in the company that is far more closely tied to its fortunes. In theory, at least, the directors of a joint-stock company, then as now, were the trusted agents of the shareholders, but ‘being the managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own.’

He did not foresee the rapid industrialization of the nineteenth century, though he had the (lone) example of the massive Carron Iron Works in nearby Falkirk before him. He did not grasp the full importance of technological change, though he was a friend of James Watt and sponsored him to set up a workshop at Glasgow University. He would likely have been surprised, and perhaps dismayed, by the rapid subsequent growth of joint-stock companies. His speculations about the origins of money are interesting but mistaken. His remarks on value are confusing, and his cost-of-production theory and its cousin, the labour theory of value, proved to be a blind alley to most nineteenth-century theorists, and command little support today except among some Marxist economists. And there are central areas of modern economic theory—concerning demand, marginal utility, monetary policy, mass unemployment, the business cycle, to name a few—on which The Wealth of Nations has little if anything direct to say.

Furthermore, if we think of capitalism as the combination of open markets and of industrial corporations functioning as independent institutions and controlling autonomous pools of capital, then capitalism itself did not come into existence until the second half of the nineteenth century, eighty years or so after the publication of The Wealth of Nations. The term ‘capitalism’ appears nowhere in Smith’s writings. Indeed, it is a striking fact about Smith that he did not in any deep way foresee industrialization as an economic phenomenon, despite a few early signs of it around him, or indeed the rise of the joint-stock company, which prefigured the modern corporation. But in any case his interest runs wider even than capitalism was to stretch, to the nature and causes of commercial society. So we should hesitate to give too much credit either to Smith’s foresight or to our own hindsight. It would be absurd to blame or credit Smith for all the twists and turns that market economies, and market economics, have taken since his death.


pages: 265 words: 71,143

Empires of the Weak: The Real Story of European Expansion and the Creation of the New World Order by Jason Sharman

British Empire, cognitive dissonance, colonial rule, corporate social responsibility, death of newspapers, European colonialism, joint-stock company, joint-stock limited liability company, land tenure, offshore financial centre, passive investing, Peace of Westphalia, performance metric, profit maximization, Scramble for Africa, South China Sea, spice trade, trade route, transaction costs

Even the state-building military-fiscal component, which has more purchase than the technology-and-tactics aspect, faces the obvious problem that it was a private company, or at least a private-public hybrid, that eclipsed the states, both European (the Portuguese and French) and Asian. Neither the idea that the EIC was simply an extension of British state, or a state in its own right, holds water.161 The Company was simultaneously a privately owned joint-stock company, a vassal of the Mughal emperor, the suzerain of various South Asian tributaries, and a direct ruler of increasingly vast populations in its own right. Aside from its legal status, as a matter of practicality the large majority of troops and treasure committed to conquering South Asia in the eighteenth century were raised and controlled by the Company itself, not the Crown or Parliament. Although the British government vetoed or directed the EIC with respect to relations with France and other European powers, and contributed troops and ships to beat back these European competitors, it was much less likely to involve itself in matters involving Asian powers.

Solomon, and Mark Westerfield. 2016. “Looking for Someone to Blame: Delegation, Cognitive Dissonance, and the Disposition Effect.” Journal of Finance. 71 (1): 267–302. Charney, Michael W. 2004. Southeast Asian Warfare 1300–1900. Leiden: Brill. Chase, Kenneth. 2003. Firearms: A Global History to 1700. Cambridge: Cambridge University Press. Chaudhuri, K. N. 1965. The English East India Company: The Study of an Early Joint Stock Company. London: Frank Cass. Chaudhuri, K. N. 1985. Trade and Civilisation in the Indian Ocean: An Economic History from the Rise of Islam to 1750. Cambridge University Press. Chaudhuri, K. N. 1990. “Reflections on the Organizing Principle of Pre-Modern Trade.” In The Political Economy of Merchant Empires: State Power and World Trade 1350–1750, edited by James D. Tracy, 421–442. Cambridge: Cambridge University Press.

See also Mughal empire Indian “Mutiny” (1857), 89 Industrial Revolution, 15, 90, 120, 133–34, 139 institutional isomorphism, 24–26, 134–35 insurgency wars, 7–8, 133, 144–45 International Relations, 17, 136; Eurocentrism of, 124, 127–28; historians’ views of, 16–18, 37, 121, 146; on military competition, 21 international system, 2–3, 125, 151; anarchical nature of, 21; contemporary, 132; imperialism and, 133–35, 134–35, 143–44 investment managers, 33 Iraq, 144, 145 Ireland, 149, 150 Islamist insurgencies, 7–8, 145 Italy, 46, 104, 137, 140 James I, English king, 83 Janissaries, 107, 109, 112, 113 Japan, 3, 5, 60, 127; Chinese conflicts with, 148–49; Dutch East India Company and, 68, 79; imperialism of, 137; Korea and, 60 Java, 68, 71, 73–76, 80, 86 João I, Kongo king, 50 Johnston, Alastair Iain, 127 joint-stock companies, 70 Kamen, Henry, 40 Kang, David C., 127 Karlowitz, Treaty of, 110 Kenya, 29, 51–52, 54 Kharg Island, 80 Kongo kingdom, 50, 55 Korea, 56, 60 Laichen, Sun, 74 Lamarck, Jean-Baptiste de, 147 Lebanon, 144 Lee, Wayne E., 18 Lepanto, Battle (1571), 117, 118 Levy, Jack S., 124–25 Liberia, 29, 30 Libya, 118, 140 Liechtenstein, 22 Lockhart, James, 43 Lorge, Peter A., 75–76, 126, 128–29, 138, 149 Lynn, John, 24, 27 Macau, 77 MacDonald, Paul K., 11, 141 Madras, 84, 85, 88 magical beliefs: about bulletproofing, 27–33, 148; about healing diseases, 36, 72 Malabar Coast, 79–80, 87 Malacca, 57, 62, 72–74, 81, 118 Maldives, 58 Mamluks, 57–58, 101, 107, 117 Manchu dynasty.


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, Monroe Doctrine, Ronald Reagan, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, trade route, transcontinental railway

Had he succeeded, Philip would have required Elizabeth to end all English voyages to America.4 But from the moment his captains cut their anchor cables, Spain began a slow decline, and a new world order its gradual ascendancy. I. The English, at the time of the Armada, had barely begun overseas expansion. The word “colony” to them meant Ireland. “Newfoundland,” whose shores they’d visited, meant fish. “Exploration” meant joint-stock companies, the first of which had a grand title—“The Mystery, Company, and Fellowship of Merchant Adventurers for the Discovery of Unknown Lands &c”5—but an ill-conceived mission: it directed its energies, in an age of global cooling, toward finding trade routes to China through Hudson’s Bay and around northern Russia. Drake’s circumnavigation of 1577–80 signaled Elizabeth’s curiosity about wider worlds: by then, though, Spain had for half a century controlled the Caribbean, Mexico, and large portions of South America.

Resilience accommodates the unexpected. There can be reasons, therefore, for resisting uniformity, for respecting topography, even for dithering. Elizabeth ruled in this way, pioneering such innovations as reigning without marrying, tolerating (within limits) religious differences, and letting a language gloriously grow. Each arose in response to circumstances: none reflected grand designs. Joint-stock companies could be similarly flexible. “The absence of close control by the British crown in the early stages of colonization,” Elliott points out, left considerable latitude for the evolution of those forms of government that seemed most appropriate to the people actively involved in the process of overseas enterprise and settlement—the financial backers of the enterprise and the colonists themselves—as long as they operated within the framework of their royal charter.

Black, The Reign of Elizabeth, 1558–1603 (Oxford: Oxford University Press, 1959), p. 23. 40. Weir, The Life of Elizabeth I, p. 30. Somerset, Elizabeth I, pp. 72–88, provides a thorough analysis of Elizabeth’s religious policies. 41. Somerset, Elizabeth I, pp. 280–82; Kennedy, The Rise and Fall of the Great Powers, pp. 60–61. For a thorough discussion of Elizabethan finance, see William Robert Smith, The Constitution and Finance of the English, Scottish and Irish Joint-Stock Companies to 1720 (Cambridge: Cambridge University Press, 1911), pp. 493–99. 42. Somerset, Elizabeth I, pp. 70–71. 43. For a rousing account, see A. N. Wilson’s chapter on Sir Francis Drake in The Elizabethans, pp. 173–84. 44. Thought, by a few fools even now, to have written the plays of William Shakespeare. 45. Weir, The Life of Elizabeth I, p. 257. The story first appeared in John Aubrey, Brief Lives, compiled between 1669 and 1696 (Oxford: Clarendon Press, 1898), p. 305. 46.


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, Fellow of the Royal Society, full employment, invisible hand, Isaac Newton, joint-stock company, Kickstarter, New Journalism, oil shale / tar sands, On the Economy of Machinery and Manufactures, paper trading, South Sea Bubble

The company was cagey about it, but the recipe probably included sulphuric acid, guano, bones, charcoal dust and ammonia, possibly in the form of urine, or possibly from coal gasification.74 Whether or not they were having a positive impact on the environment, both manure and buttons were becoming increasingly difficult businesses to make a profit in, not helped by events. Meggitt’s sons managed different parts of the company in different parts of the country, unified in a joint stock company in 1893. A series of misfortunes afflicted the Meggitts thereafter. In 1896 a glue-boiler died after falling into a pan of boiling water.75 In 1902 Director and manager Joseph Bloom Meggitt went bankrupt. Liquidated, the company was split into two: one division concentrating on the button trade, the other on glues and manures.76 Joseph’s younger brother Arthur Cockayne Meggitt managed one of the company’s bone mills in Mexborough, but committed suicide in 1903.77 In July 1902, between Joseph’s bankruptcy, Arthur’s death and the formation of the new business, the Sheffield bone mill caught fire under ‘peculiar circumstances’.

For a while he had dabbled with dying cottons using Turkey red (a process using waste bullock’s blood73) but argued, unsuccessfully, that he was not liable to bankruptcy laws.74 Koops cropped up again in 1797 at the centre of a bizarre case of tampering with a bill of exchange, concerning the prince of Monaco. This bill had been reduced ‘to a blank’ using ‘Chaddick’s Solvent for the Stone’, an ink extractor.75 De-inking was in Koops’s blood. A further reason for Koops’s demise was the failure of the joint-stock company. Limited status did not protect his capital of £71,000 (as with Fritz Viëtor eighty years later).76 The creditors to whom two instalments were due successfully disputed the fractional shares sold in the company.77 By December 1802 the Straw Paper Manufactory was no longer a going concern (despite shares being advertised in late October). Koops’s ‘very obedient though distressed’ workers penned a joint appeal, but the mill ceased to operate.

The 1670s were marked by anti-Catholic hysteria, which saw the enactment of Test Acts – laws that limited public office to professionals who conformed to the established religion and so barred Catholics and nonconformists – and also the fictitious ‘Popish Plot’ (1678–81), for which Titus Oates, a clergyman, was found guilty of perjury after fabricating a plot to assassinate Charles II. The Bank of England was established in 1694, and there was a ‘Great Recoinage’ in 1696, which aimed to replace the hammered silver coins in circulation. A joint-stock company called the South Sea Company was founded as a public–private partnership in 1711 with the aim of reducing the national debt. The company was granted a monopoly to trade in the South Seas, but foreign conflict meant the company never gained any significant profit. Stock in the company rose as it focused more on the government debt, with a peak inflating the share price in 1720: this was ‘The South Sea Bubble’, followed by a collapse which burst the bubble.


pages: 288 words: 16,556

Finance and the Good Society by Robert J. Shiller

Alvin Roth, bank run, banking crisis, barriers to entry, 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, Deng Xiaoping, diversification, diversified portfolio, Donald Trump, Edward Glaeser, eurozone crisis, experimental economics, financial innovation, financial thriller, fixed income, full employment, fundamental attribution error, George Akerlof, income inequality, information asymmetry, invisible hand, 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, Robert Shiller, Ronald Reagan, selection bias, self-driving car, shareholder value, Sharpe ratio, short selling, Simon Kuznets, Skype, Steven Pinker, telemarketer, Thales and the olive presses, Thales of Miletus, The Market for Lemons, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, Vanguard fund, young professional, zero-sum game, Zipcar

The invention of the newspaper came soon after, and it was not long before the prices of the East India Company’s shares were reported regularly, spurring immense public interest in the investment. The issuance of shares in joint stock companies (companies owned jointly by a number of people through shares) was limited at rst. To mount an IPO, each corporation needed its own special charter, which was hard to get. The Bank of England was chartered as a joint-stock company in 1694, but at the same time it was given a monopoly on joint stock banking. No other bank could have more than six partners, making it virtually impossible to compete with the Bank of England. A quarter century later, in 1720, Parliament further restricted joint stock companies by mandating—in what later became known as the Bubble Act—that no joint stock company could ever be started without a royal charter. Perhaps this was an e ort to support the rise in the price of shares in the South Sea Company, which was at the time soaring in an obvious bubble.


To the Ends of the Earth: Scotland's Global Diaspora, 1750-2010 by T M Devine

agricultural Revolution, British Empire, deindustrialization, deskilling, full employment, ghettoisation, housing crisis, invention of the telegraph, invisible hand, joint-stock company, Khartoum Gordon, land tenure, manufacturing employment, mass immigration, new economy, New Urbanism, oil shale / tar sands, railway mania, Red Clydeside, rising living standards, Robert Gordon, Scramble for Africa, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transatlantic slave trade, transcontinental railway, women in the workforce

It was no coincidence, therefore, that lawyers were the prime factors in the formation of the trusts which played such a key role in the history of Scottish overseas investment in this period. Two institutional developments were also central to the overseas investment boom. The first was the mid-nineteenth-century legislation governing joint stock companies that culminated in the Joint Stock Companies Acts of 1856 and 1862. A previous constraint on individuals of modest wealth investing some of their assets in productive enterprises was the danger of losing all their possessions if the venture collapsed. The joint stock companies legislation came as a godsend because henceforth the investor would only be liable for the nominal shares in the business to which he subscribed. At a stroke, the savings of great and small individuals of means were liberated for investment purposes. By 1900, joint stock pervaded the Scottish economy but did not dominate it.49 The second key element was the evolution of the investment trust.

By 1913, the company owned 25 per cent of the land in that colony possessed by British agency houses, by far the greatest share.51 Especially impressive was the move of the great Scottish textile firm of James Finlay and Co. from specialization in cotton to investment in Indian tea and jute.52 Other famous names were also established in this period. Thomas Sutherland, chairman of P&O, founded the Hong Kong and Shanghai Bank in 1864, with the help of several fellow Scots. Predictably it was run on ‘Scottish principles’ with a heavy reliance on joint-stock company traditions, acting as a bank of issue through a broad network of branches and with the aspiration to attract both British and Chinese capital.53 At the time of writing, HSBC, long shorn of its Scottish roots, is both the world’s largest banking group and the world’s sixth largest business corporation.54 Another eminent name, the Burmah Oil Company, the parent of British Petroleum, developed out of the Rangoon Oil Company.


pages: 422 words: 131,666

Life Inc.: How the World Became a Corporation and How to Take It Back by Douglas Rushkoff

addicted to oil, affirmative action, Amazon Mechanical Turk, anti-globalists, banks create money, big-box store, Bretton Woods, car-free, Charles Lindbergh, colonial exploitation, Community Supported Agriculture, complexity theory, computer age, corporate governance, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, death of newspapers, don't be evil, Donald Trump, double entry bookkeeping, easy for humans, difficult for computers, financial innovation, Firefox, full employment, global village, Google Earth, greed is good, 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, moral hazard, mutually assured destruction, Naomi Klein, negative equity, new economy, New Urbanism, Norbert Wiener, peak oil, peer-to-peer, place-making, placebo effect, Ponzi scheme, price mechanism, price stability, principal–agent problem, private military company, profit maximization, profit motive, race to the bottom, RAND corporation, rent-seeking, RFID, road to serfdom, Ronald Reagan, 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, Victor Gruen, white flight, working poor, Works Progress Administration, Y2K, young professional, zero-sum game

As the operators of these huge projects sought to secure even more capital from a wider range of regions and social classes, they formed a more advanced form of limited partnership called the joint stock company, which could generate investment from shareholders on an open market. This broke business open, allowing for the creation of businesses by virtually anyone capable of getting investors. It almost heralded an era of business meritocracy, which would have generated unprecedented churn in the class structure. The wealthiest merchants were now as vulnerable to upstarts as the aristocracy. Finally, the monarchy had something it could offer the bourgeoisie who threatened to unseat them. A Child Is Born Although monarchs might have lacked the vast financial resources of joint stock companies, they still enjoyed a structural advantage over any of them: central legal authority. Taking a cue from the Church, which had a tradition of “incorporating” groups of monks into single entities, royals exercised their authority to sanction a new kind of chartered body: the corporation.

By granting a specific joint stock company a legal charter to do business, monarchs could give it a monopoly control of its business sector. So a shipping company that once competed with others for the resources of a set of islands now enjoyed exclusive, royally mandated control over that domain. No other corporation could do business in that region, and even locals or colonists would be prohibited by law from competing against the corporation extracting their resources or selling them goods. Another corporation would be granted monopoly control over glass production; another would win beer, and so on. By issuing corporate charters, kings could empower those most loyal to them with permanent control over their colonial regions or industries. The joint stock companies’ problem with competition from rising new businesses or local activity was solved.


pages: 582 words: 136,780

Krakatoa: The Day the World Exploded by Simon Winchester

Alfred Russel Wallace, British Empire, cable laying ship, global village, God and Mammon, Isaac Newton, joint-stock company, lateral thinking, Marshall McLuhan, mass immigration, Maui Hawaii, South China Sea, spice trade, trade route, undersea cable

The Hudson's Bay Company, set up half a century later solely to trade, remains today: the Bay, its flagship department stores, can be found in all of Canada's cities (and in not a few more isolated Arctic settlements), and its owner, a cheerfully eccentric peer called Ken Thomson, lives modestly and happily in a suburb of Toronto. But there was a difference about the VOC. Right from its beginnings, it was cleverly constructed as a joint-stock company. The good burghers of Holland who had initially sent out their own small fleets decided to band together to back a much larger, much more ambitious company, with each backer owning a ‘share’ of this company's value, with the value of each share depending on the amount by which each shareholder backed it. This new concept, of a joint-stock company, with in this case a start-up capital of six and a half million guilders, was to become the model for all the thousands upon thousands of publicly traded firms that are listed on the world's bourses and stock exchanges today, and whose raison d'être, the sharing of risk and sharing of reward, lies now at the beating heart of the modern capitalist system.

.: Tectonic Evolution of Southeast Asia 52 Halmahera 61 Hambantota, Ceylon 279 Hamburg, Mr (ship passenger) 174 Hammersley Range, western Australia 264 Handl, Johann 360–61 Handl's Bay, Krakatoa Island 356 Hapsburgs 29n Harmonie club, Batavia 147, 153, 172, 202–3 Hastings-on-Hudson, New York 274 Hatfield, Oscar 152, 234 Haughton, Mr (in Ceylon) 287 Hawaii Island (Big Island) 102, 103, 104 Hawaiian Islands 102–5, 121, 306, 354n Heims, Father 159–60 Helen (a square-rigger) 59 Her Majesty K II submarine 89 Her Majesty K XIII submarine 89 Hermak, Baluchistan 190 Hess, Professor Harry 90, 91, 92, 97–100 ‘ History of Ocean Basins’ 98n Hesse, Elias 49–50, 135 Hevea brasiliensis (Brazilian rubber) 224, 225 Hibernia (converted cargo ship) 189 High Court, London 263n Himalayan Mountains 74, 112 Hinduism 128, 332 Holland 29n, 44 see also Dutch; Netherlands Hollandsche Thuyn (long-rangepacket) 48 Hollmann, Captain 158–9 Hollwood 113, 393, 394 Holtan community 132 Holtum, John (‘Cannonball King’) 205–6 Holy War (perang sabil) 336, 337, 340, 342 Homo erectus 116 Hondius, Henricus 25 Hong Kong 220, 278 Honolulu 289 Hooghly River 276 Hooker, Sir Joseph 62, 63 Hoorn, Zuider Zee 20, 33 Hope (a barque) 175 Hopkins, Gerard Manley 288 Hôtel des Indes, Batavia 206, 207, 208–9 hotspots 103, 104, 347n House of Orange 151 Houtman, Cornelis de 15–18 Houtman, Frederik de 15 Huaynaputina volcano, Peru 308 Hudson, USA 283 Hudson River School 283 Hudson's Bay Company 30 human sacrifice 303 humongous explosion 309, 312 Hurgronje, Snouck 41, 333–4 Hutton, James 69 Huxley, Sir Thomas 63 hydrochloric acid 243 ice cores 129, 131, 133, 296, 308n Iceland 82, 96, 306 Illustrated London News 155n Imperial Beacons & Coastal Lighting Service 170 India 11, 13, 22, 24, 40, 44, 55, 74, 112, 144, 191, 197, 276, 280, 325, 326, 331, 332 India Rubber, Gutta Percha & Telegraph Works Company 187–8, 197 Indian Mutiny 326n Indian Ocean 2, 21, 53, 114, 161n, 182, 182, 231, 261, 264, 278, 280, 285 indigo 330 Indo-Australian Plate 111, 115, 116 Indonesia (formerly Dutch East Indies) xiv, 63, 68, 116, 137, 145–6, 308, 309, 325, 331 independence 38, 342 International Date Line 112, 219n International Meridian Conference (Washington, DC, 1884) 219n Io 302 Iran 112, 331 Ireland 188, 196, 264 Irian 55, 61 iron oxide compounds 84, 85 Isla de Pascua 308 Islam Sumatra and Java Islamicized 17 rigid formalisms 32 local form of 40–41, 332–3 orthodox 40, 41 birth of 133 and the 1883 eruption 321 becomes entwined with local political developments 325 power of 325 upsurge in Islamic zealotry in the East Indies 325 stand against colonialism 327 number of Muslims in Indonesia 331 an imperial religion 331 collision with the West 331 first comes to the East Indies 331–2 the haj 332, 333 threatened by Western imperialism 334 fundamentalism 339 Isonandra gutta 187 Istanbul 378 Italy 22, 242 I wo Jima 384n ‘s Jacob, Governor-General Frederik 148–9, 149, 150–53, 169, 172, 201, 215 ‘s Jacob, Leonie 151 Jakarta History Museum, Java 46n Jakarta (previously Jayakarta and Batavia) 2, 21, 38, 126, 137, 373, 379 Jakarta Radio 9 James I, King 12 Jammersley Range, New Guinea 264 Japan 34n, 42, 44, 196, 244, 308, 309 Java 1, 2, 6, 7, 66, 78, 242 coffee 10, 141 spice-trading 10, 11, 31 first treaty with the Dutch 16 colonization 16 Islamicized 17, 40 mapping 22, 24 British colonial intentions 34 described 40–41 and slavery 44 volcanic 83 and the Java Trench 89 volcanically unstable 114–15 splits from Sumatra 126, 155 anti-Chinese riots 91998) 138 earthquakes 154 response to impending eruption (1883) 164 and gutta-percha 188 explosion sounds not heard by all 266 number of active volcanoes 309, 326 attacks by white-robed figure 323–4, 325, 337 First Military Region 324 Islam 325, 342 mysticism 327 Java Bode 162, 255 Java Head 155, 161n, 182, 220, 231, 379n Java Major 25, 25, 26 Java Man 116 Java Minor 22 Java Pars. 27 Java Sea 45, 172 Java Trench 89, 111, 114 Javasche Courant 153 Jayabaya 128 Jayakarta (later Batavia, then Jakarta) 34, 38 Jeffreys, Sir Harold 76, 304 jetstream 290 Jogjakarta, Java 2, 153 joint-stock companies 30 jökulhlaups 244 Judd, John 315–16 Volcanoes 315 Julius II, Pope 13n Jupiter 302 Jurassic period 96 Kaimeni 347 Kamchatka Peninsula 309 Kamula volcano, Java (Gede) 126 kangaroos 65, 65, 116, 137n ‘Kapi, Mount’ (in Ranggawarsita's history) 125, 126, 129 Karachi 190, 280 Karim, Haji Abdul 334–5, 337, 338, 339, 341 Kartodirdjo, Sartono: The Peasants' Revolt of Bantenin 1888 322 Katmai, Mount, Alaska 5 Kauai Island 102–3, 104 Kaula 102 Kavachi 384n Kedirie (ship) 299, 313 Keith, Brian 394 Kennedy, Henry George 235, 272 Kerala 44 Kerm-an, Teheran 190 Kertsch, Crimea 190 Ketimbang, Sumatra 156, 164–5, 167, 226–30, 233, 245, 251, 259 Kew weather observatory, Surrey 270 Keys, David: Catastrophe 132, 133, 134,395–6 Kilauea: Halemaumau Crater, Hawaii 1093 Kinematics, Inc. 376, 378, 386 King of the Netherlands, The (steam-yacht) 323 Kiribati, Republic of 100 kites 72 Kittery Island 102 Knossos, Crete 244 Koeripan River 256, 257, 258 Kokkulai, Ceylon 287 Kosrae Island, Pacific Micronesia 298 Kowalski, Bernard 394 Krakatoa archipelago 379 Krakatoa Committee, Royal Society 272–3, 275, 276, 286–7 Krakatoa, East of Java (film) 2, 394–5 Krakatoa Iron & Steel Works 340n Krakatoa Island present remains of 1–2 van Linschoten describes 25–6 first mentioned by its current name 27 derivation of the name 27–8 cultivation 120–21 lush coastal jungle 122, 354–5 Schuurmann describes 173 Ferzenaar visits (August 1883) 176–8 disappearance of 178, 237, 239, 240, 260, 300, 337, 338 surrounded by small faults and zones of weakness 320 purity after the 1883 eruption 355–6 repopulation of 356–66, 372 Krakatoa Islands xv Krakatoa Problem 364, 366 Krakatoa Time 219, 248, 275 Krakatoa Volcanic Observatory 375, 376, 389 Krakatoa volcano (general refernces) see also Danan cone; Perboewatan cone; Rakata cone and the Wallace Line 57, 64 notoriety 68, 116, 286, 393 number of eruptions 117–18 ruins compared with Anak Krakatoa 353, 354 Krakatoa volcano ( possible eruption of AD 416) 123–9, 133 Krakatoa volcano (the confusions of AD 416 or AD 535) 129–31 Krakatoa volcano (the likely eruption of AD 535) 123, 131–4 Krakatoa volcano (the near-certain eruption of 1680) 123, 134–9 Batavians and seamen unaware of potential danger 45–6 first recorded eruption 46, 47 Vogel's report 48–9 Hesse's report 49–50 Schley's painting 138–9, 140 Krakatoa volcano (before the certain eruption of 1883) 139–49 Krakatoa volcano (eruption of 27 August 1883) 4–5, 28, 123, 134, 209 the event 210–39, 240 the effects 241–61 the experiences 261–321 death statistics 5, 313 telegraphy 5, 7, 28n, 146, 167,184–7, 192–4, 215 undersea cables 5, 6, 184, 187, 189 lack of geological knowledge at the time 5–6 religious fears 6 and birth of global village 6–7 impact on climate 7 a Plinian eruption 12 and subduction zones 111 Banten flood destruction 127 warnings of forthcoming eruption 154–63 Perboewatan erupts 167–9, 175, 176, 180, 184–5, 193–4 excursions to visit 172–4 Danan erupts 176, 177 statistics of deaths and injuries 242 the sound of 262–8 progress of the shock waves 273–5, 313 art and 282–5 and temperature 293–6 floating bodies 296–300 existed above a large chamber of magma 318–19 burial of the dead 321, 322 rebuilding after 321, 323 political and religious consequence 321, 342–3 reluctance to settle near the volcano 379 Kramat 260 Kultuurstelsel (Cultivation System) 328–9, 333 Kurile Islands 309 Kurrachee 276 Kyoto 297 Labuan, Java 337 lahars (volcanic mud and water slurry) 243 Lakagígar (Hekla), Iceland 294 Lamongan 155 Lampong Bay 166, 216, 219, 228, 234, 247, 249, 250, 251 Lancaster, James 34 Lang Island, Krakatoa (previously Panjang, now Rakata Kecil) xv, 118n, 158n, 314, 318, 354 Laos 34n Lascar volcano, Chile 308 Laurasia 73, 74, 75 lava flows 369 Laysan Island 102 Le Havre 282 Leicestershire 57, 58 Lemuria 53n Liciala spinosa 355 Lincoln, President Abraham 196, 219n Lindeman, Captain T.H. 173, 174, 216, 219, 230 Linnean Society, Burlington House, Piccadilly, London 52–3, 54, 62, 64, 65 Linschoten, Jan Huyghen van 23–6, 26 Itinerario 24, 25 Lippincott Gazetteer 190n Lisbon 14, 15, 191 Lisianski Island 102 lithosphere 109–10, 302 Llaima volcano 308 Lloyd's of London 161, 168, 180–83, 186, 193, 232, 261 Committee 182, 197 Foreign Intelligence Office 193 Lochart, Nanette 208, 209 Locomotive 151 Lodewijcksz, Willem 25, 26 Logan, Captain William 223–4 Lombok Island 61, 66, 69 Lomu, Jonah 384n London 19, 179–80, 189, 190, 191, 196, 197, 270, 284 London Station 193 Londonderry 196 long waves 278, 279–80 Los Angeles 200 Luzon 24 Lyell, Sir Charles 62, 63, 69 Macassar, Celebes, Macasserese 31, 44, 265, 326 Macau 19 McColl, Mr (Lloyd's agent) 181, 259–60 mace (aril) 11, 18 MacKenzie, Captain 157, 161 McLuhan, Marshall 184, 198 Madagascar 16, 53 Madras 190, 191, 280 Madura 17 Magellan, Ferdinand 23 Magellan Strait 19 magma 84, 103, 104, 305, 315, 316,318–20 magnetic airborne detector (MAD) 93n magnetism and basalts 84, 85 moon's surface 100 remanent 91–2, 96, 97, 102 underwater 93–5 magnetite 84–5, 85, 92n magnetometers 93–6, 97, 101, 107 Magpie, HMS 265, 272 Mahdi 322, 335, 336, 337, 342 Malabar Coast 11 Malacca 11, 18, 22, 29, 34, 44 Malaku 61 see also Moluccas Malay Archipelago 59, 60, 190 Australian (eastern) end of 55, 64, 65 Indian (western) end of 55, 64, 65 Wallace's preferred term 59 Malay language 59 Malaya peninsula 22, 24, 29, 31, 40, 53, 190, 326, 331 Maldives 23 Malta 191 Manchester Literary and Philosophical Society 294 Manchus 157n Manhattan, New York City 295 Manila 196, 264 Manley, Reverend W.R. 288 maps 21–7, 26, 155 Mardijkers 44 Marie (Danish salt-carrying barque) 219–20, 230, 234, 246 Mars 302 Mason, Ron 93–5 Massachusetts Bay Company 30 Mataram sultan of 40 Matuyama, Motonari 96 Maui Island 103 Mauk 260 Maurice of Nassau, Prince 16n Mauritius 16n, 34n, 261, 263n, 270 Maan civilization 133 Mayon, Mount 266 Mecca 332–5, 336, 337, 342 Mecca's Plain of Arafat 333n Medea (British ship) 216, 231 Mediterranean 14, 23, 191 Mediterranean region 133 Mekong 24 Melbourne 270 Merak, Java 160, 222, 225, 238, 246, 249n, 250, 252–3, 259, 260, 337 Merapi, Mount 48, 155 Merbapu, Mount 48, 155 Mercator, Gerardus 71 Merchant Adventurers 30 Merchant Staplers 30 Meteorological Council 270 meteorology 70, 76, 275, 290.

Silver & Company 187 swiftlets 21 Sydney 189, 264n Sydney Morning Herald 232 Symons, G.J. 272–3 Tabr-iz, Persia 190 Tachard, Guy 27–8 Tambora, Mount, Sumbawa 5, 48, 244, 283n, 294–5, 296, 308n, 312, 393 Tambora language 295 Tamils 44 Tangier 325 tapirs 68 tarekat (Abdel Karim's brotherhood) 337 Tasmania 289 Taupo, Mount, New Zealand 5, 312 Taylor, Frank 72n tea 141, 238–9, 330 Teheran 190 telegraph cable, submarine 5, 6, 146, 184, 187–92, 188 telegraph, electric 5, 7, 28n, 146, 167, 175, 179, 184, 186–7, 189–90, 192, 195, 215, 238, 246, 260 telegraph system 271 Telok Betong, Sumatra 166, 216, 219, 228, 234, 247, 249n, 250, 251, 253–9, 277 temperature 293–6 Tenison-Woods, Julian 232, 233n, 234n Tennyson, Alfred, Lord St Telemachus 286 ‘ The Deep-Sea Cables’ 191 tephra 242, 244 Tern Island 102 Ternate 56, 60, 61 Tertiary period 84, 87 Tethyan Ocean 73, 74 Texel 15, 19, 23 Thailand 21, 34n Thames River 284, 290 Theodore the Studite, St 10 Theosophy 53n thermometers, recording 267 Thiara carolitaciturni (a mollusc) 367n Thomas Cook guides 143 Thomson, Captain 216, 231 Thomson, Ken 30 Thor, Mr (in Batavia) 205 thorium isotopes 109 Thornton, Ian 369 Krakatau: The Destruction and Reassembly of an Island Ecosystem 396 thrushes 55, 65, 66, 116, 137n Thunderer, The 194 Thwart-the-Way Island 161n, 237, 260n, 278 Tidal Survey of India 276 tidal wave 242n, 313, 319 tide-gauges 276, 277, 278, 280, 282 tide-meter 252, 253–4, 277–8 Tiflis, Georgia 190 time zones 219, 248, 263 Times, The 179–80, 185, 185n, 186n, 187, 193–4, 197, 272, 291, 299 Timor 13n, 19, 23, 29, 55, 168 tin 148 Tjeringin, Java 238, 253, 260 Toba, Mount, Sumatra 5, 309, 312 tobacco 330 Tokyo 196, 200 Tonga 112, 384n Tordesillas Line 13n, 14 Toronto 103, 274 transcurrent fault 106, 107 transform fault 105, 106, 106 tree-ring samples 129, 131, 133, 296 trees 137, 148, 166, 298 repopulation of Krakatoa Island 359–60 Trenton, New Jersey 263 Treub, Melchior 364, 365 trilobites 73 Trincomalee, Ceylon 264 Trobriand Islands 55 troposphere 285 Troy, New York 319 Tsingtao, Shandong peninsula 157–8n tsunamis 113, 231, 242n, 244, 246, 249, 257, 275–8 Tunisia 295 Turkey 112, 290 Turkey Company 30 Turner, J.M.W. 283n Tuzo Wilson, J. 101–7, 106, 109, 306 ‘A New Class of Faults and Their Bearing on Continental Drift’ 105 Typhon 303 Tyringin, Java 246, 250, 259 Ujung Kulon National Park 379n United States Coast Guard 93 United States Geological Survey 207, 375 United States Government 93 United States Navy 93, 107, 107 United States of America 197 evidence of crustal movement 91, 93 makes peace with Britain 139n and Diego Garcia 263n high number of volcanoes 308 Universit of Auckland 290 University of Graz, Austria 76 University of Hawaii 290 University of Melbourne 290 University of Rhode Island 133, 290, 397 Universit of Toronto 101 Unzen, Mount 244, 266, 378 uranium isotopes 109 Usk, south Wales 57 Utrecht 37 Vail, Alfred 146 van den Broecke, Mr (storekeeper) 35 van der Stok, Dr J.P. 162–4, 216 van der Stok, Mrs 162 Varanus salvator (five-banded swimming monitor lizard) 389–91, 390 Vava'u Group 384n Venice 13, 34 Vening Meinesz, Felix 88–90 Verbeek, Dr Rogier Diederik Marius 170, 250n employment 169–70, 171 misses first part of eruption 171 sees Krakatoa in July 1883 176 and van der Stok 216 on renewed activity of Krakatoa 347, 348 the first on to Krakatoa Island after 1883 eruption 356 Krakatau 169, 266–7, 313–14, 315, 347, 367, 397 Vereenigde Oost-Indische Compagnie (VOC) 48, 50, 119, 138, 144 chartered by the Dutch government 30, 31 rights 30 and capitalism 30 joint-stock company 30 ‘Gentlemen Seventeen’ 31, 33 rules most of East Indies for two centuries 31 Coen and 35 corporate logo 38, 38 formative years 38–9 and Batavia 42, 47, 135, 139 hat rule 44n courts 45 harsh treatment by security officers 47 employee care 48 buildings reportedly damaged by earthquake (1681) 50 and naval blockades 139 collapse in 1799 31, 141, 143 Vereker, Captain Hon.


pages: 204 words: 53,261

The Tyranny of Metrics by Jerry Z. Muller

Affordable Care Act / Obamacare, Atul Gawande, Cass Sunstein, Checklist Manifesto, Chelsea Manning, collapse of Lehman Brothers, corporate governance, Credit Default Swap, crowdsourcing, delayed gratification, deskilling, Edward Snowden, Erik Brynjolfsson, Frederick Winslow Taylor, George Akerlof, Hyman Minsky, intangible asset, Jean Tirole, job satisfaction, joint-stock company, joint-stock limited liability company, Moneyball by Michael Lewis explains big data, performance metric, price mechanism, RAND corporation, school choice, Second Machine Age, selection bias, Steven Levy, total factor productivity, transaction costs, WikiLeaks

SOME ORIGINS OF PAYING FOR MEASURED PERFORMANCE The idea that organizations outside the free market would be more efficient if they were paid based on measured performance seems to have occurred first to policymakers in Victorian Britain. In 1862, Robert Lowe, a Liberal member of parliament who oversaw the committee on education, proposed a new method for government funding of schools, which would be based on “payment by results.” Lowe had distinguished himself in 1856 by shepherding through parliament a seminal piece of legislation in the history of capitalism. That was the Joint Stock Companies Act, which, together with legislation passed the previous year, the Limited Liability Act, set out a new law for corporations based on the principal of limited liability. From reforming the structure of business, Lowe turned to reforming government-supported schools. Lowe’s scheme was based on the premise that “the duty of a State in public education is … to obtain the greatest possible quantity of reading, writing, and arithmetic for the greatest number.”1 Schools were to be funded based on the performance of their students in the “3 Rs.”

., 41 human capital, 72, 98 impact factor measurement, 79 Improving America’s Schools Act, 90 information, distortion of, 23–24 innovation, 20; discouragement of, 140, 150–51, 171–72; employees moving to organizations that encourage, 173; unmeasurable risk for potential benefits of, 61–62 Institute of Medicine, 118–19 intimacy, 160 intrinsic rewards, 53–57, 119–20 Iraq War, 131–34 Johns Hopkins University, 109–10 Johnson, Lyndon, 98 Joint Commission, 115 Joint Stock Companies Act, 30 judgment, 6–7; distrust of, 39–42; measurement demanding, 176–77 “juking the stats,” 2 Kedourie, Elie, 62–63, 73 Kelvin, Lord, 17 Kennedy, Edward, 90 Keystone project, 109–10, 111–12, 176 Khurana, Rakesh, 12 Kilcullen, David, 131–34 Kiplinger, 76 Klarman, Seth, 47 Knight, Frank, 61–62, 151 knowledge: forms of, 59–60; practical, local, 62; pretense of, 60 Kohn, Alfie, 62 Kolberg, William, 90 Kozlowski, Dennis, 144 Lancelot, William, 33 leadership and organizational complexity, 44–47 Lehman Brothers, 146–47 Levy, Steven, 47 Limited Liability Act, 30 litigation, fear of, 42 London Business School, 138–39 Lowe, Robert, 29–30 Lumina Foundation, 67–68, 71 Luttwak, Edward, 35–37 luxury goods, 104 managerialism, 34–37 Manning, Bradley (later Chelsea),162–63 Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change, 172 Masters of Management, 13 materialist bias, 36 Mayer-Schönberger, Viktor, 35 McNamara, Robert, 34–37, 131 measurement and improvement, 16–17, 101, 107, 111, 119, 123, 132, 176, 183 measuring inputs rather than outcomes, 23–24 “Measuring Progress in Afghanistan,” 132 measuring the most easily measurable, 23 measuring the simple when the desired outcome is complex, 23 Medicaid, 104 Medicare, 104, 114–16, 120–23 medicine: broader picture on metrics, pay-for-performance, rankings, and report cards in, 112–20; case selection bias in, 117–18; Cleveland Clinic, 107–8, 110–11; conclusions from success in, 110–12; cost disease and, 44; discouraging cooperation and common purpose in, 172; financial push to control costs in, 103–4, 119–20; Geisinger Health System, 108–9, 110–11, 123; Keystone project, 109–10, 111–12, 176; measured performance metrics in, 2–5, 107, 123, 176; ranking the American system of, 105–7; reducing readmissions test case, 120–23; rise of metric fixation with increased critique of, 42–43; tales of success in, 107–10 Mercurio, Jed, 2–3 Merton, Robert K., 12, 170 metric fixation, 4–9, 13; in business and finance, 137–51; cost disease and, 44; critique of the professions and apotheosis of choice in, 42–44; defined, 18; distortion of information with, 23–24; distrust of judgment leading to, 39–42; in higher education, 9–14, 67–87, 175–76; innovation and creativity stifled by, 20; key components of, 18; leadership and organizational complexity and, 44–47; lure of electronic spreadsheets in, 47; managerialism and, 34–37; in medicine, 2–5, 42–44, 103–23, 172, 176; by the military, 35–37, 131–35, 176; negative transformations of nature of work with, 19; pay for performance and, 19; in philanthropy and foreign aid, 153–56; in policing, 125–29, 175; predicting and avoiding negative consequences of, 169–73; recurrent flaws in, 23–25; relationship between measurement and improvement in, 17–19; in schools, 11, 24, 89, 175–76; Taylorism and, 31–34; theory of motivation and, 19–20; and transparency as enemy of performance, 159–65 metrics: checklist for when and how to use, 175–83; corruption or goal diversion in gathering and using, 182; costs of acquiring, 180; development of measures for, 181; diagnostic, 92–93, 103, 110, 123, 126, 176; diminishing utility of, 170; gaming the, 3, 23–24, 149–50; kind of information measured by, 177; media depictions of, 1–4; philosophical critiques of, 59–64; purposes of specific measurements and, 178–79; reasons leaders ask for, 180–81; recognition that not all problems are solvable by, 182–83; transactional costs of, 170; used to replace judgment, 6–7; usefulness of information from, 177–78 Michigan Keystone ICU Project, 109–10, 111–12, 176 Middle States Commission on Higher Education, 10–11 Milgrom, Paul, 52, 169 military, American, 35–37, 131–35, 176 Minsky, Hyman, 148 Mintzberg, Henry, 52 Mitchell, Ted, 82 Moneyball, 7 Morieux, Yves, 45, 170 mortgage backed securities, 146–47 motivation: extrinsic and intrinsic rewards and, 53–57, 119–20, 137–38, 144; theory of, 19–20 Muller, Jerry Z., 79 Mylan, 140–42, 143 National Alliance of Business, 90 National Assessment of Educational Progress (NAEP), 91, 97, 99 National Center for Educational Statistics, 97 National Center on Performance Incentives, 95–96 National Health Service, 104, 114, 116–17 National Security Agency, 163 Natsios, Andrew, 155–56 New Public Management, 51–53 Newsweek, 76 No Child Left Behind Act of 2001, 11, 24, 89, 100; problem addressed by, 89–91, 96; Race to the Top after, 94–95; unintended consequences of, 92–94.


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, anti-communist, Asian financial crisis, asset-backed security, Atahualpa, balance sheet recession, bank run, banking crisis, Big bang: deregulation of the City of London, Bretton Woods, British Empire, 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 innovation, fixed income, floating exchange rates, Francisco Pizarro, full employment, German hyperinflation, hiring and firing, income inequality, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Rogoff, labour market flexibility, liberal capitalism, market bubble, money: store of value / unit of account / medium of exchange, moral hazard, new economy, oil shock, plutocrats, Plutocrats, Ponzi scheme, price mechanism, quantitative easing, rolodex, Ronald Reagan, South Sea Bubble, The 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

This means that the shares had been trading above that level for some months. At this point, the directors of the Company started selling shares to buy them back at a lower price. By the end of September the share price was below £200. This represented a fall of around 75 per cent in four weeks.32 This is a very bald account of the speculation which haunted London for decades, and which seriously damaged the reputation of the joint-stock company. There were, of course, human stories of tragedy and triumph during those fevered summer months of 1720. Thomas Guy, the philanthropist who founded Guy’s Hospital on his gains, started selling his shares on 22 April, and was out of the stock in six weeks. He had converted a £54,000 holding into £234,428. The already phenomenally rich Duke of Marlborough, the greatest general of the age, had, on the urging of his canny wife Sarah, sold his £27,000 holding for £100,000.33 The Duchess of Portland shrewdly instructed her broker to buy as much as he could with the money she gave him and to ‘sell it out again next week’.34 Many were ruined, however.

That spring, defeats followed in quick succession, and a full civil war broke out in the summer of that year. The fiscal resources of the French state were now at a low ebb. This was the prelude to the intense period of bloodshed and repression known as the Terror. Contrary to what one might expect, the Terror stopped the incipient runaway inflation, which the chaos of the summer months had set in train. The government imposed severe legal restrictions, closing the stock market, abolishing joint-stock companies and imposing very harsh measures on those who refused to take the assignat at par. The Jacobins, which was the name given to the French revolutionary extremists, resorted to authoritarian methods, perhaps the most efficient way of preserving the value of a paper currency. Grain prices, consumer prices and wages were all controlled by the so-called laws of the Maximum. These controls were a massive bureaucratic undertaking, but were rigorously enforced.

As Goschen, the Chancellor of the Exchequer, observed in a speech in Leeds Town Hall in January 1891, ‘the stock of bullion at the centre of this country is 24 millions, compared with 95 millions of gold and silver in the Bank of France’, while there were ‘142 millions in the United States’.17 On Friday 14 November, the day on which the fund was arranged, Lidderdale saw the Prime Minister, Lord Salisbury, to inform him of the solution and of the reserve fund which he had organized for Barings. The conclusion of the drama was that Barings ceased to be a partnership and was reconstituted as a joint-stock company, in which there would be limited liability. The whole transaction was conducted with admirable swiftness, and banks outside London were ‘hardly sensible of the crisis’. Remarkably, there were no failures among the county banks, either in the towns or in the countryside.18 On Monday 17 November, the City was beginning ‘to breathe again a little more freely’.19 Lidderdale, despite being widely praised, was asked to be Governor for only an extra year, but it meant a third year in office which was almost unprecedented in the history of the Bank of England up to that point.


pages: 524 words: 155,947

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

"Robert Solow", accounting loophole / creative accounting, Ada Lovelace, agricultural Revolution, Airbnb, airline deregulation, Andrei Shleifer, anti-communist, assortative mating, autonomous vehicles, bank run, banking crisis, banks create money, basic income, Berlin Wall, Bob Noyce, Branko Milanovic, Bretton Woods, British Empire, business cycle, call centre, capital controls, carbon footprint, Carmen Reinhart, Celtic Tiger, central bank independence, Charles Lindbergh, clean water, collective bargaining, Columbian Exchange, Columbine, Corn Laws, credit crunch, Credit Default Swap, crony capitalism, currency peg, debt deflation, Deng Xiaoping, discovery of the americas, Donald Trump, Erik Brynjolfsson, European colonialism, eurozone crisis, falling living standards, financial innovation, financial intermediation, floating exchange rates, Fractional reserve banking, Frederick Winslow Taylor, full employment, germ theory of disease, German hyperinflation, gig economy, Gini coefficient, global supply chain, global value chain, Gordon Gekko, greed is good, Haber-Bosch Process, Hans Rosling, Hernando de Soto, hydraulic fracturing, Ignaz Semmelweis: hand washing, income inequality, income per capita, indoor plumbing, industrial robot, inflation targeting, Isaac Newton, James Watt: steam engine, job automation, John Snow's cholera map, joint-stock company, joint-stock limited liability company, Kenneth Arrow, Kula ring, labour market flexibility, land reform, land tenure, Lao Tzu, large denomination, liquidity trap, Long Term Capital Management, Louis Blériot, low cost airline, low skilled workers, lump of labour, M-Pesa, Malcom McLean invented shipping containers, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Martin Wolf, McJob, means of production, Mikhail Gorbachev, mittelstand, moral hazard, Murano, Venice glass, Myron Scholes, Nelson Mandela, Network effects, Northern Rock, oil shale / tar sands, oil shock, Paul Samuelson, popular capitalism, popular electronics, price stability, principal–agent problem, profit maximization, purchasing power parity, quantitative easing, railway mania, Ralph Nader, regulatory arbitrage, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, Scramble for Africa, Second Machine Age, secular stagnation, Silicon Valley, Simon Kuznets, South China Sea, South Sea Bubble, special drawing rights, spice trade, spinning jenny, Steven Pinker, TaskRabbit, Thales and the olive presses, Thales of Miletus, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, transaction costs, transatlantic slave trade, transcontinental railway, Triangle Shirtwaist Factory, universal basic income, Unsafe at Any Speed, Upton Sinclair, V2 rocket, Veblen good, War on Poverty, Washington Consensus, Watson beat the top human players on Jeopardy!, women in the workforce, Yom Kippur War, zero-sum game

Cotton manufacturing played a huge part in Britain’s expansion, going from less than 3% of economic output in 1770 to more than 20% by 1830,31 but other economies managed to industrialise without such a dependence on the textile industry. Believers in free markets as the main driver of expansion need to explain why high British taxes (in relative terms) and restrictive legislation, such as the 1720 Bubble Act that made it difficult to form joint-stock companies, did not hold the country back. British institutions were far from perfect; property rights were just as good in France or China.32 And Britain suffered plenty of political turmoil, including a civil war in the mid-17th century. So it seems more likely that all of these factors had to come together for industrialisation to occur. Earlier societies either lacked the energy supplies, technical expertise, free labour force or institutional acceptance for change to take place.

This area deliberately excluded the Austrian Habsburg territories, part of a long battle for control of Germany between Prussia and Austria that ended with the former’s triumph in 1866. The entire country was united under the Prussian Kaiser after a war with France in 1870–71. Well before unification, parts of Germany were industrialising rapidly. The 1850s was the key decade, marked by a railway boom, the creation of joint-stock companies and banks, and the development of the iron and steel industry.48 Coal output rose from 2m tons in 1850 to 114m tons in 1913,49 by which stage the Ruhr region was supplying 60% of the country’s coal needs.50 With the help of fertilisers, the German grain harvest grew 3.7-fold between 1845 and 1914.51 That allowed the country to feed its growing population, which jumped from 41m in 1871 to 68m in 1913.

The powerful samurai or warrior class was abolished, with members receiving government bonds in compensation (the value of which was then eroded by inflation). The capital moved to Edo (renamed Tokyo), and the power of the emperor was boosted in 1868, events known as the Meiji restoration. A delegation journeyed to the US and Europe to study their societies. On its return, the Japanese adopted the Western calendar, metric weights, a new monetary system and joint-stock companies. Toshimichi Okubo, the finance minister, promoted road and railway building and set up state-run arms manufacturers, shipyards and textile mills.66 The first Japanese railway opened in 1872 and expansion was so fast that 5,370 miles had been constructed by 1910.67 The textile industry was Japan’s biggest success. Thanks to a combination of low costs and the rapid adoption of technology, Japan boosted its world share of the cotton textile market from 4% in 1877 to 36% in 1892.68 Between 1870 and 1913, exports as a share of Japanese GDP went from virtually nothing to 7%.69 Japan was a very quick adopter of electric power, and, by 1920, 52% of the power used in its manufacturing was electric, a higher proportion than in either the US or the UK.70 By the First World War, Japan had emerged as a very modern power, demonstrating its capabilities by defeating Russia in the war of 1904–05.


pages: 357 words: 110,017

Money: The Unauthorized Biography by Felix Martin

bank run, banking crisis, Basel III, 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, Goldman Sachs: Vampire Squid, Hyman Minsky, inflation targeting, invention of writing, invisible hand, Irish bank strikes, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, mobile money, moral hazard, mortgage debt, new economy, Northern Rock, Occupy movement, plutocrats, Plutocrats, private military company, Republic of Letters, Richard Feynman, Robert Shiller, Robert Shiller, 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

Not content with furnishing France with an all-new system of paper money, Law also began to attack the second part of France’s economic problem—its parasitic system of public finances and the unsustainable level of the public debt. The tried and tested solution was to take a scythe to the sovereign’s creditors’ claims by devaluing the monetary unit or announcing an outright default. But Law’s plan was to play not on creditors’ fears, but on their greed. In 1717, with his prestige buoyed by the success of his Bank, he had convinced the Regent to allow him to form a joint-stock company, the Company of the West, and to award it the rights to develop French North America, which had until then been held by the arch-bloodsucker Antoine Crozat. These vast and virgin territories were sure, Law publicly predicted, to yield gigantic profits for the new company—and all of it with the endorsement of the French crown. Holders of sovereign bonds were invited to swap their debt claims on the crown for equity shares in the Company of the West.

Each acquisition was funded in the same way. Investors turned in their sovereign bonds and bills at Law’s office in the Rue Quincampoix in return for equity shares in the ever-expanding Company. By the middle of 1719—now officially renamed the Company of the Indies, but known popularly after its most glamorous asset as the Mississippi Company—Law’s giant corporation had subsumed every major joint-stock company in France. In August 1719, Law put the final phase of his plan into action. The Company acquired the rights to collect all the indirect taxes in France. It no longer represented only the crown’s foreign interests; its revenues now derived from the French economy as a whole. At the same time, it announced its intention to buy up the entire remaining part of the sovereign debt. To finance these mammoth transactions, it issued huge new tranches of equity.

And in the subsequent century and a half, the Bank itself had struck the same marriage time and time again with an ever-widening harem of other private bankers. Just as the sovereign had lent its unique authority to the Bank, so the Bank had over time got into the practice of lending its authority to the universe of other banks; and, until the policy reversal of 1858 that had heralded the beginning of the end for Overends, to the bill brokers as well. The result was a modern monetary economy in which “[o]n the wisdom of the directors of one Joint Stock Company, it depends whether England is solvent or insolvent … [a]ll banks depend on the Bank of England, and all merchants depend on some banker.”46 Here was the reason, Bagehot explained, that Lombard Street was the money market of the entire global economy: the place where more banks were able to issue more money than ever before in the history of the world. Just as the Bank’s money had originally gained its currency from its settlement with the sovereign, so now the moneys issued by the banks and bill brokers of Lombard Street gained theirs from the Bank, and the moneys of the country banks gained their currency from the banks and brokers of Lombard Street.


pages: 370 words: 111,129

Inglorious Empire: What the British Did to India by Shashi Tharoor

affirmative action, barriers to entry, Boris Johnson, British Empire, colonial exploitation, colonial rule, corporate raider, deindustrialization, European colonialism, global village, informal economy, joint-stock company, land tenure, liberal capitalism, Mahatma Gandhi, Nelson Mandela, night-watchman state, Parkinson's law, trade route

Sterling companies tended to focus on utilities, tea and jute; this meant that there were significant barriers to entry for Indians in these markets, which the British reserved for themselves. Moreover, all sterling companies were required to have a British managing agent to oversee them before London-based investors would commit capital. Indian investors were simply kept out. Thus, of 385 joint stock companies in the tea industry in India as late as 1914, 376 were based in Calcutta; and all were owned by the British. Scholars have established that in 1915, 100 per cent of the jute mills in India were in British hands; by 1929 this was down to 78 per cent, still enshrining British dominance. British India occupied a unique position in the imperial trade and payments system. From 1910 to 1947, the Indian economy underwent a series of monetary and exchange rate experimentations.

Presiding over all of this was the governor-general of India, an executive appointed by the East India Company but, in effect, the monarch of all he surveyed. William Dalrymple quotes one contemporary observer as saying: ‘Of all human conditions, perhaps the most brilliant and at the same time the most anomalous, is that of the Governor-General of British India. A private English gentleman, and the servant of a joint-stock company, during the brief period of his government he is the deputed sovereign of the greatest empire in the world; the ruler of a hundred million men; while dependent kings and princes bow down to him with a deferential awe and submission. There is nothing in history analogous to this position…’ The ad hoc nature of the expansion of British power brought with it its own deinstitutionalization of India’s governance.

Yes, there may have been famines and epidemics in precolonial India, but Indians were acquiring the means to cope with them better, which they were unable to do under British rule, because the British had reduced them to poverty and destroyed their sources of sustenance other than living unsustainably on the land—in addition to which Victorian Britain’s ideological opposition to ‘indiscriminate’ charity denied many millions of Indians the relief that would have saved their lives. It may seem frivolous to confine my appreciation of British rule to cricket, tea and the English language. I do not mean to discount other accomplishments. In outlining the exploitation and looting of India by British commercial interests, for example, I should acknowledge that in the process the British gave India the joint stock company, long experience of commercial processes and international trade, and Asia’s oldest stock exchange, established in Bombay in 1875. Indians’ familiarity with international commerce and the stock market has proved a distinct advantage in the globalized world; India’s entrepreneurial capital and management skills are well able to control and manage assets in the sophisticated financial markets of the developed West today, as Tatas have demonstrated in Britain by making Jaguar profitable for the first time in years, and India’s businessmen and managers are familiar with the systems needed to operate a twenty-first-century economy in an open and globalizing world.


pages: 401 words: 115,959

Philanthrocapitalism by Matthew Bishop, Michael Green, Bill Clinton

Albert Einstein, anti-communist, barriers to entry, battle of ideas, Bernie Madoff, Bob Geldof, Bonfire of the Vanities, business process, business process outsourcing, Charles Lindbergh, clean water, cleantech, corporate governance, corporate social responsibility, Dava Sobel, David Ricardo: comparative advantage, don't be evil, family office, financial innovation, full employment, global pandemic, global village, God and Mammon, Hernando de Soto, high net worth, Intergovernmental Panel on Climate Change (IPCC), invisible hand, James Dyson, John Harrison: Longitude, joint-stock company, knowledge economy, knowledge worker, Live Aid, lone genius, Marc Andreessen, market bubble, mass affluent, microcredit, Mikhail Gorbachev, Nelson Mandela, new economy, offshore financial centre, old-boy network, peer-to-peer lending, performance metric, Peter Singer: altruism, plutocrats, Plutocrats, profit maximization, profit motive, Richard Feynman, risk tolerance, risk-adjusted returns, Ronald Coase, Ronald Reagan, shareholder value, Silicon Valley, Slavoj Žižek, South Sea Bubble, sovereign wealth fund, 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, wealth creators, winner-take-all economy, working poor, World Values Survey, X Prize

Rather, it was the series of religious and civil wars that devastated Europe in the seventeenth century that set back the development of capitalism, and with it, philanthropy. The second golden age of philanthropy followed the return of peace, stability, and economic growth at the start of the eighteenth century. The merchant classes could get back to making money. In the coffeehouses of London, a new financial capitalism blossomed, with increasingly sophisticated trading of securities and a big idea: the invention of the joint stock company. Not only did the success of the joint stock company make many people wealthier, so increasing the capital available for philanthropy, it also inspired a new way of giving, in which philanthropists pooled their resources to meet urgent social needs. The most popular object of this “joint stock philanthropy” was the collection of subscriptions to fund hospitals. Westminster (1719), St. George’s (1733), Winchester (1736), London (1740), and Middlesex (1746) were each funded by subscriptions—typically large sums of money that could be afforded only by the seriously rich.

But modern philanthropy was invented several centuries before that, in Europe, at the same time as the emergence of what we now call capitalism. The Buffetts and Gateses of this first golden age of philanthropy were the merchants of Tudor England and Renaissance Europe, who helped the poor in growing trading cities like London, Florence, and Bruges. Next, in the eighteenth century, philanthropy was embraced by the inventors of the joint stock company and the original hedge-fund-like speculators such as Thomas Guy, who sold at the top of the South Sea Bubble and used his profits to found Guy’s Hospital in London. This was also the age of the enlightened financiers who backed crusading activists such as William Wilberforce, destroyer of the slave trade. In the nineteenth century, philanthropy became a way of life for Britain’s newly wealthy Victorians, as reflected in the novels of Charles Dickens.


pages: 403 words: 119,206

Toward Rational Exuberance: The Evolution of the Modern Stock Market by B. Mark Smith

bank run, banking crisis, business climate, business cycle, buy and hold, capital asset pricing model, compound rate of return, computerized trading, credit crunch, cuban missile crisis, discounted cash flows, diversified portfolio, Donald Trump, Eugene Fama: efficient market hypothesis, financial independence, financial innovation, fixed income, full employment, income inequality, index arbitrage, index fund, joint-stock company, locking in a profit, Long Term Capital Management, Louis Bachelier, margin call, market clearing, merger arbitrage, money market fund, Myron Scholes, Paul Samuelson, price stability, random walk, Richard Thaler, risk tolerance, Robert Bork, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, short selling, stocks for the long run, the market place, transaction costs

It began trading at $105 per share, then declined steadily into the 60s, finally disappearing in 1817. But other industrial concerns soon followed, as mechanical power, in the form of steam engines, became available to factories. Businesses now often required more capital than a single individual could provide; hence the “joint stock” company (the forerunner of the modern corporation) over time became a popular form of business organization, replacing sole proprietorships and partnerships. And the stock market became the vehicle through which joint-stock companies could raise the capital they needed. In 1817 the New York Stock and Exchange Board (the predecessor of the New York Stock Exchange) was formed by brokers who felt the market needed more structure than was provided by the original Buttonwood Agreement and its subsequent modifications.

income taxation index arbitrage index funds Individual Retirement Accounts (IRAs) industrial revolution industrials inflation; Federal Reserve policies to control; growth investing and; OPEC oil price increases and Inland Steel insider trading; outlawed Institutional Investor institutional investors; and crash of 1962; Nifty Fifty and; portfolio insurance and; reduction in transaction costs for; see also mutual funds; pension funds insurance companies: investments by; stocks of Internal Revenue Service (IRS) International Business Machines (IBM) International Mercantile Marine Internet investment trusts Investors Overseas Services (IOS) ITT Izvestia Johnson, Edward Crosby, II Johnson, Lyndon B. Johnson & Johnson joint stock companies Journal of Business Journal of Finance Journal of the American Statistical Association Journal of the Royal Statistical Society junk bonds Justice Department, U.S. “just in time” corporate strategies Keene, James R. Kendall, Maurice Kennedy, John F. Kennedy, Joseph P. Kennedy, Robert F. Kentucky Fried Chicken Keogh plans Keynes, John Maynard King, Edward Knickerbocker Trust Company Knox, Philander C.


pages: 247 words: 68,918

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

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, global reserve currency, global supply chain, invisible hand, joint-stock company, Joseph Schumpeter, Kickstarter, laissez-faire capitalism, low skilled workers, mass immigration, means of production, megacity, Mikhail Gorbachev, mutually assured destruction, Naomi Klein, Nelson Mandela, new economy, offshore financial centre, open economy, race to the bottom, reserve currency, risk tolerance, shareholder value, 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

It was, after all, an Englishman, Henry Hudson, a protoglobal citizen working secretly for the Dutch, who sailed into New York harbor a little more than four hundred years ago and set in train the inclusion of what later became the United States into the early mercantilist imperial world. 13 There were other examples of the British crown or government giving privately owned joint-stock companies similar trade monopolies. For example, the Muscovy Company, perhaps the world’s first joint-stock company (formed in 1555), had a monopoly on trade with Muscovy and on whaling; the Hudson Bay Company (1670) had a monopoly on the “Indian trade,” mostly fur, in British Canada; and the South Sea Company (1711) had a monopoly on trade with Spanish South America. 14 “Defense of Great Britain depends very much upon the number of its sailors and shipping.


pages: 62 words: 13,939

Self-Reliance and Other Essays by Ralph Waldo Emerson

Johann Wolfgang von Goethe, joint-stock company, Mark Zuckerberg, Ralph Waldo Emerson

So we live the life of others, a program created by others, because of the fear of being wrong and outcast. My mission in life is to listen to my own voice as much as possible and follow my instincts. Whenever I do this, I always feel good about myself eventually and I get the glimpse of the freedom of being outside the Matrix. It’s a hard thing to do, but it’s worth it every time. I never lose when I trust myself. Ji Lee ● ● ● Society is a joint-stock company, in which the members agree, for the better securing of his bread to each shareholder, to surrender the liberty and culture of the eater. The virtue in most request is conformity. Self-reliance is its aversion. It loves not realities and creators, but names and customs. Whoso would be a man must be a nonconformist. He who would gather immortal palms must not be hindered by the name of goodness, but must explore if it be goodness.


pages: 481 words: 121,669

The Invisible Web: Uncovering Information Sources Search Engines Can't See by Gary Price, Chris Sherman, Danny Sullivan

AltaVista, American Society of Civil Engineers: Report Card, bioinformatics, Brewster Kahle, business intelligence, dark matter, Donald Davies, Douglas Engelbart, Douglas Engelbart, full text search, HyperCard, hypertext link, information retrieval, Internet Archive, joint-stock company, knowledge worker, natural language processing, pre–internet, profit motive, publish or perish, search engine result page, side project, Silicon Valley, speech recognition, stealth mode startup, Ted Nelson, Vannevar Bush, web application

Search Form URL: http://www.tornado-insider.com/radar/ comp AdvSearchForm.asp Federally Incorporated Companies Canada http://strategis.ic.gc.ca This database produced by the Canadian Government allows searching by corporation name, location, status, and more. It also allows results sets to be sorted by corporate name or corporate number. Search Form URL: http://strategis.ic.gc.ca/cgi-bin/sc_mrksv/ corpdir/dataOnline/corpns_se Related Resources: (Nova Scotia) Registry of Joint Stock Companies Database Search http://www.gov.ns.ca/snsmr/rjsc/search.stm Business and Investing 167 Fortune 500 http://www.fortune.com The well-known business list identifies the largest U.S. publicly traded companies. Search Form URL: http://www.fortune.com/fortune/fortune500/ Related Resources: Forbes Private 500 (Largest U.S. Privately Held Companies) http://www.forbes.com/private500/ Forbes International 800 http://www.forbes.com/international800/ Inc. 500 Database (1982-2000) http://www.inc.com/500/search/1,3762,,00.html Herringtown http://www.redherring.com The Red Herring, a respected publication providing coverage of the information technology business, provides this database of startup companies.

See also audio; images; multimedia; video coverage, 53–54 crawlers and, 66 indexing, 35 Invisible Web searches, 143 search engines and, 57–58 NoodleBib (Bibliography Creator), 333 Noodlequest (Search Tool Selection Aid), 333 North American Industry Classification System (NAICS), 182 SIC Correspondence Tables, 330 Northern Light maps, 97 News Search, 287 Special Collection, 47, 104 Northwest Territories Geographic Names Database, 336 NoteCards (Xerox), 10 Notess, Greg, 34 notifiable diseases, 243 Nova Scotia, Registry of Joint Stock Companies Database, 166 NSERC Awards Search Engine Canada, 363 NTIS (National Technical Information Service) Electronic Catalog, 158 Nua Internet Surveys, 204 Nuclear Explosions Database, 354 Nuclear Power Plant Databases, 354 Nunavut Environmental Database (NED), 351 Nursing Home Compare, 252–253 Nutrition Analysis Tool 2.0, 253 nutritional information resources, 253–254 428 The Invisible Web O obituaries, newspaper, 286 Occupational License Search (Alaska), 308 Occupational Safety and Health Administration (OSHA) Accident Investigation Search, 259 SIC search, 181–182, 330 Ocean Information Center, Research Ship Schedules, 364 oceanography information resources, 362–364 Ockerbloom, John Mark, 159 OCLC Participating Institution Search, 332 Oddens, Roelof P., 40 Odden’s Bookmarks, 40 Office of Assistant Secretary of Health (OASH), 257–258 Official Netscape Guide to Internet Research (Calishain), 110 oil, crude, 358 Oil Spills, Historical Incident Reports, 358 Olympic Winners Database, 322 192.Com (U.K.), 187, 297 OneLook, 99 O*Net, 186–187 Online Archive of California (OAC), 158–159 Online Books Page, The, 159 Online Calendar of Henry James’ Letters, 268 Online Distance Education Catalog, 212 Online Public Access Catalogs (OPACs), 98 Online Telephone Book Directory, 188, 297 OnTerm (Canada), 327 opaque Web, 70–72 Open Directory Project (ODP), 22–26, 25 OperaBase, 223 Oran’s Law Dictionary, 276 O’Reilly & Associates, 12 Organization for Nuclear Research (CERN), 9 orphan drugs, 244–245 Oscars, recipients of, 100 Oscars Database, 321 OSHA (Occupational Safety and Health Administration), 182 Oxford Companion to Wine, 328 P Pacific Film Archive, 219 package tracking, 314 PackTrack, 314 page capture utilities, 112 Papers of Thomas A.

., 316 real-time data, 60–61, 66–67, 102–103 real-time information resources, 311–317 Real-Time Streamflow Water Data, USGS, 312 Realtor.Com, 194 recall CPSC, 169 precision and, 94–95 recalls, products, 169, 324 ReCap Biotech Alliance Database, 179 Recent Advances in Manufacturing (RAM), 181 Recent Home Sale Purchase Prices, 194 Recent Marine Data, National Buoy Data Center, 313 recipes, 328 RECON-Regional Economic Conditions, 100, 172 Recording Industry Association of America (RIAA), 223 Records and Information Management System (RIMS), 274 Records Search: National Archives of Australia, 159–160 Recreational Opportunities on Federal Lands, 341 Red Cross Chapter Locator, 334 Red Herring Company and Persons Search, 168 redherring.com, 167, 168 Redlist (Threatened Species Database), 347 REEF Database (Marine Species Data), 362 ReefBase, 357 reference resources, 319–341 REFORGEN (forestry), 348 Refugee Caselaw Site, 282 Regional Economic Data, U.S., 172 Regional Economic Forecasts, 170 Regional Economic Information System, 170 Regional Gasoline Costs, U.S., 323 Registered Aircraft Databases, 383 Registered Identification Number Database, 181 Registry of Joint Stock Companies Database (NS), 166 REIT (Real Estate Investment Trusts) Directory, 194 relevance ranking calculations, 32 definition, 21 Invisible Web content, 142–143 manipulation of, 112 metasearch engines, 46 religion information resources, 378–379 Religious Centers, Directory of, 378–379 Remote Sensing Glossary, 352 reputation, directory resources, 141 resAnet, National Library of Canada, 157–158 Research Index search engine, 74 research resources, 193 Research Ship Schedules, 364 Research Ship Specifications, 364 ResearchBuzz, 110 432 The Invisible Web ResearchIndex, 67, 104, 202 resources collection goals, 153 customized collection of, 111, 113 discovery of, 78–79 Restaurant Health Inspection Reporting System (Denver), 308 Restaurant Inspection Search (Boston), 308 results maximum viewable, 72 speed of, 35 results-output format, 30 Reverse Telephone and Address Lookup, 188 Reverse Telephone Directory, 188, 298 RhymeZone, 327 RIAA Gold and Platinum Database, 223 Rice Bibliography, 348 Right-to-Know Network, 357 River Statistics, U.S., 385 rivers, 385 Roberts, Larry, 2 robots, 26 Robots Exclusion Protocol, 53, 72–73, 73, 89–90 robots.txt, 73 Roll Call U.S.


pages: 472 words: 117,093

Machine, Platform, Crowd: Harnessing Our Digital Future by Andrew McAfee, Erik Brynjolfsson

"Robert Solow", 3D printing, additive manufacturing, AI winter, Airbnb, airline deregulation, airport security, Albert Einstein, Amazon Mechanical Turk, Amazon Web Services, artificial general intelligence, augmented reality, autonomous vehicles, backtesting, barriers to entry, bitcoin, blockchain, British Empire, business cycle, business process, carbon footprint, Cass Sunstein, centralized clearinghouse, Chris Urmson, cloud computing, cognitive bias, commoditize, complexity theory, computer age, creative destruction, crony capitalism, crowdsourcing, cryptocurrency, Daniel Kahneman / Amos Tversky, Dean Kamen, discovery of DNA, disintermediation, disruptive innovation, distributed ledger, double helix, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Ethereum, ethereum blockchain, everywhere but in the productivity statistics, family office, fiat currency, financial innovation, George Akerlof, global supply chain, Hernando de Soto, hive mind, information asymmetry, Internet of things, inventory management, iterative process, Jean Tirole, Jeff Bezos, jimmy wales, John Markoff, joint-stock company, Joseph Schumpeter, Kickstarter, law of one price, longitudinal study, Lyft, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, Marc Andreessen, Mark Zuckerberg, meta analysis, meta-analysis, Mitch Kapor, moral hazard, multi-sided market, Myron Scholes, natural language processing, Network effects, new economy, Norbert Wiener, Oculus Rift, PageRank, pattern recognition, peer-to-peer lending, performance metric, plutocrats, Plutocrats, precision agriculture, prediction markets, pre–internet, price stability, principal–agent problem, Ray Kurzweil, Renaissance Technologies, Richard Stallman, ride hailing / ride sharing, risk tolerance, Ronald Coase, Satoshi Nakamoto, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Skype, slashdot, smart contracts, Snapchat, speech recognition, statistical model, Steve Ballmer, Steve Jobs, Steven Pinker, supply-chain management, TaskRabbit, Ted Nelson, The Market for Lemons, The Nature of the Firm, Thomas Davenport, Thomas L Friedman, too big to fail, transaction costs, transportation-network company, traveling salesman, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, ubercab, Watson beat the top human players on Jeopardy!, winner-take-all economy, yield management, zero day

These companies are trying to make it as easy as possible for some types of partners to enter and leave a business relationship with them, giving rise to the notion of an “on-demand economy.” Other companies are exploring how to deliver value with blockchains, smart contracts, and other technologies of extreme decentralization. But they’re almost all pursuing these radical goals within the highly traditional structure of a joint-stock company, an organizational form that has existed for well over four centuries.*** When we visit these companies, we’re struck by how normal they look. They all have employees, job titles, managers, and executives. They all have a CEO and a board of directors. Very few of them are purely virtual; instead, they have physical office space, desks, and meeting rooms. They might have bigger computer screens, more foosball and Ping-Pong tables, and better perks like free snacks and meals than a lot of the other companies we’ve seen in our careers, but are these major differences?

As Holmström and Paul Milgrom noted, the firm itself, including all its rules and norms, can be usefully thought of as an incentive system. Bengt Holmström and Paul Milgrom, “The Firm as an Incentive System,” American Economic Review 84, no. 4 (1994): 972–91, http://www.jstor.org/stable/2118041. ## These might include labor unions, local communities, central governments, powerful customers, or key suppliers. *** Joint-stock companies issue shares that can be bought and sold by people without affecting the operation of the company. They date back at least as far as 1602, when the Dutch East India Company issued shares on the Amsterdam Stock Exchange. Andrew Beattie, “What Was the First Company to Issue Stock?” Investopedia, accessed March 13, 2017, http://www.investopedia.com/ask/answers/08/first-company-issue-stock-dutch-east-india.asp.

., 168 curation of apps for, 165 demand curve for, 156 introduction of, 151–52 and multisided markets, 218 opening of platform to outside app builders, 163–64 user interface, 170 widespread adoption of, 18 iron mining, 100 Irving, Washington, 252 Isaac, Earl, 46 Isaacson, Walter, 152, 165 iteration, 173, 323; See also experimentation iTunes, 217–18 iTunes Store, 145, 165 Jackson, Michael, 131 Java, 204n Jelinek, Frederick, 84 Jeopardy! (TV show), 17 Jeppesen, Lars Bo, 259 Jobs, Steve curation of iPhone platform, 165 Dropbox acquisition offer, 162 and iPhone apps, 151–53, 157, 163 joint-stock company, 320 journalism, See newspapers Joyce, James, 178 judges, parole granted by, 39–40 judgment, human as complement to computer power, 35 in decision-making loop, 53–56 flaws in, 37–42 and justification, 45 “superforecasters” and, 60–61 System 1/System 2 reasoning, 35–46 justification, 45 Kadakia, Payal, 178, 179, 184 Kaggle, 261 Kahneman, Daniel, 35–36, 43, 44, 56, 325 Kalanick, Travis, 200 Kapor, Mitch, 142 Katz, Michael, 141n Kaushik, Avinash, 45 Kay, Alan, 61 Kazaa, 144 Kehoe, Patrick J., 21 Keirstead, Karl, 143 kernel, 240 Keynes, John Maynard, 278–79, 287, 309–10 Khosla, Vinod, 94 Kickstarter, 262 “killer app,” 157 Kim, Pauline, 40–41 Kimberley Process, 289–90 kinases, 116–17 kitchen, automated, 94 Kiva Systems, 103 Klein, Gary, 56 knowledge access to, in second machine age, 18 markets and, 332 prediction markets and, 238 knowledge differentials, See information asymmetries Kodak, 131, 132 Kohavi, Ronny, 45, 51 Kohl’s, 62–63 Koike, Makoto, 79–80 Komatsu, 99 Koum, Jan, 140 Krawisz, Daniel, 304 Kurzweil, Ray, 308 Lakhani, Karim, 252–55, 259 landline telecommunications, 134–35 land title registry, 291 language learning styles, 67–69 Lasker, Edward, 2 Lawee, David, 166 law of one price, 156 Lea, Ed, 170 leadership, geeky, 244–45, 248–49 lead users, 265 LeCun, Yann, 73, 80, 121 ledger, See blockchain Legg, Shane, 71 Lehman, Bastian, 184 Lei Jun, 203 Leimkuhler, John F., 182 “lemons,” 207 Lending Club, 263 level 5 autonomy, 82 leveraging of assets, O2O platforms for, 196–97 Levinovitz, Alan, 3 Levinson, Art, 152 libraries, 229–32 Library of Congress, 231 links, 233 Linq, 290–91 Linux, 240–45, 248, 249, 260 liquidity and network effects, 206 O2O platforms as engines of, 192–96 Livermore, Shaw, 22–23 locking in users, 217 lodging; See also Airbnb differences between Airbnb and hotels, 222–23 Priceline and, 223–24 “Logic Theorist” program, 69 Long, Tim, 204 Los Angeles, California hotel occupancy rates, 221–22 Postmates in, 185 Uber’s effect on taxi service, 201 LTE networks, 96 Luca, Michael, 209n Lyft, 186, 201, 208, 218 Ma, Jack, 7 machine age, See second machine age machine intelligence mind as counterpart to, 15 superiority to System 1 reasoning, 38–41 machine learning, 66–86; See also artificial intelligence AlphaGo and, 73 back-office work and, 82–83 early attempts, 67–74 in Obama’s 2012 presidential campaign, 48–51 O2O business data and, 194 statistical pattern recognition and, 72–74 machine(s); See also artificial intelligence; robotics; standard partnership and business process reengineering, 32–33 and creativity, 110–19 defined, 14 human connection in digitized world, 122–24 human judgment and, 34–45 new mind-machine partnership, 46–62 and uniquely human domains, 110–26 Mad Men (TV drama), 48 Madrigal, Alexis, 295–96 magazines ad revenue (late 1990s), 130 ad revenue (2013), 132–33 new content platforms’ effect on revenue, 139 MakerBot, 273 maker movement, 271–72 Makhijani, Vish, 324–25 malls, 131, 134 Malone, Tom, 311, 313 management/managers continued importance of, 320–23 and economics of the firm, 309 as portion of US workforce, 321 in post-standard partnership world, 323–26 manufacturing electricity’s effect on, 19–24 robotics in, 102 transition from molds to 3D printing, 104–7 Manyika, James, 332 Manzi, Jim, 62–63 Marchant, Jo, 66n Marcus, Gary, 5, 71 marginal costs bundling and, 147 of computer storage, 136 of digital copies, 136, 137 of perishing inventory, 180, 181 of platforms, 137 of platforms vs. products, 147, 220 and Uber’s market value, 219 marginal utility, 258–59 “Market for ‘Lemons,’ The” (Akerlof), 207 market research, 13–14, 261–63 market(s) centrally planned economies vs., 235–37 companies and, 309–11 costs inherent in, 310–11 as crowd, 235–39 information asymmetries and, 206–7 prediction markets, 237–39 production costs vs. coordination costs, 313–14 Markowitz, Henry, 268 Marshall, Matt, 62 Martin, Andrew, 40–41 Marx, Karl, 279 Masaka, Makoto, 79–80 “Mastering the Game of Go with Deep Neural Networks and Tree Search” (Nature article), 4 Maugham, Somerset, 110 Mazzella, Frédéric, 190 McCarthy, John, 67 McClatchy Company, 132 McDonald’s, 92 McElheren, Kristina, 42 McKinsey Global Institute, 332 Mechanical Turk, 260 Medallion Fund, 267 medical devices crowd-designed, 272–75 3D printing and, 106 medical diagnosis, 123–24 Meehl, Paul, 41–42, 53–54, 56, 81 MegaBLAST, 253, 254 Menger, Carl, 25 Men’s Fitness, 132 Merton, Robert K., 189 Metallica, 144 Microsoft core capabilities, 15 machine learning, 79 proprietary software, 240 as stack, 295 Windows Phone platform, 167–68 Microsoft Research, 84 Milgrom, Paul, 315n milking systems, 101 Mims, Christopher, 325 mind, human as counterpart to machine intelligence, 15 undetected biases in, 42–45 Minsky, Marvin, 73, 113 Mitchell, Alan, 11, 12 MIT Media Lab, 272 mobile telephones, 129–30, 134–35 Mocan, Naci, 40 molds, 104–5 Moley Robotics, 94 Momentum Machines, 94 Moody’s, 134 Moore, John, 315 Moore’s law, 308 and Cambrian Explosion of robotics, 97–98 defined, 35 neural networks and, 75 System 2 reasoning and, 46 and 3D printing, 107 Morozov, Evgeny, 297 Mt.


pages: 236 words: 77,735

Rigged Money: Beating Wall Street at Its Own Game by Lee Munson

affirmative action, asset allocation, backtesting, barriers to entry, Bernie Madoff, Bretton Woods, business cycle, buy and hold, buy low sell high, California gold rush, call centre, Credit Default Swap, diversification, diversified portfolio, estate planning, fiat currency, financial innovation, fixed income, Flash crash, follow your passion, German hyperinflation, High speed trading, housing crisis, index fund, joint-stock company, money market fund, moral hazard, Myron Scholes, passive investing, Ponzi scheme, price discovery process, random walk, risk tolerance, risk-adjusted returns, risk/return, stocks for the long run, stocks for the long term, too big to fail, trade route, Vanguard fund, walking around money

Forget blaming the French for socialism or Wall Street fat cats for financial meltdowns. It was the Dutch that got us into this mess more than 400 years ago. While trade and commerce is an ancient practice, the first stock didn’t spontaneously generate until 1602, when the Dutch East India Company was founded. Why was this important, outside of being the first stock? First of all, this was the first joint-stock company, meaning regular people like middle class merchants were able to invest in a public company. On September 1 the public subscription period was over. Five hundred thirty-eight subscribers, including craftsmen and small entrepreneurs, were given shares that were freely transferable.1 Before this there was a barrier to entry for investments. The idea of selling a piece of a company in order to lower the risk to any one person was not new, but allowing anybody with the money to buy shares was ground breaking.

See Home Mortgage Disclosure Act hold holding period home equity line of credit (HELOC) Home Mortgage Disclosure Act (HMDA) hyperinflation I idea flow income investor index index fund Indications of Interest (IOI) Individual Retirement Account (IRA) inflation information sheets The Intelligent Investor interest rates investment banking, stock sales and investment plan, tax-deferred investment scenarios investment, sustainability of investor returns investors, types of IOI. See Indications of Interest IRA. See Individual Retirement Account J joint-stock company junk bonds K Kinder, Gary L Lefèvre, Edwin Lehman Black Book liquidity liquidity providers Lo, Andrew London Gold Pool low-latency trading lower-risk environment M Malkiel, Burton market efficiency market maker market orders Market Participant Identifier (MPID) Market Wizards markets, sideways Markowitz, Harry master limited partnerships (MLPs) Master Settlement Agreement (MSA) May Day 1975 McClellan, Tom Meisler, Helene MLP.


Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages by Carlota Pérez

agricultural Revolution, Big bang: deregulation of the City of London, Bob Noyce, Bretton Woods, business cycle, capital controls, commoditize, Corn Laws, creative destruction, David Ricardo: comparative advantage, deindustrialization, distributed generation, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, full employment, Hyman Minsky, informal economy, joint-stock company, Joseph Schumpeter, knowledge economy, late capitalism, market fundamentalism, new economy, nuclear winter, offshore financial centre, post-industrial society, profit motive, railway mania, Robert Shiller, Robert Shiller, Sand Hill Road, Silicon Valley, Simon Kuznets, South Sea Bubble, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, trade route, tulip mania, Upton Sinclair, Washington Consensus

Soete (1985). 92 Technological Revolutions and Financial Capital in Britain, Landes109 has pointed out that the mechanization of the cotton industry did not require huge outlays of fixed capital. For this reason it was possible for family finance and previous accumulation in foreign trade (the famous ‘nabobs’) to fund the process. By contrast, the development of railways in the installation period of the second surge did need great quantities of investment from the beginning that were rarely available to a single firm. At that time the development of joint-stock companies concentrated capital, spread the risks and made the diffusion of that important innovation possible. Nevertheless, the stock market and the other elements of the financial system were still underdeveloped, so it was individual promoters who usually did the underwriting.110 It was during the third surge that investment banking and institutionalized financial capital became a powerful and indispensable part of the industrial system.

The power of data processing and the virtual and instantaneous nature of transactions have been rapidly transforming financial instruments and ways of functioning, while security problems have grown to serious proportions. There is surely much more to come. C. Institutional Innovations: From Old to New Economy Appropriate financial innovations need to be supported and regulated by adequate institutional innovations attuned to the same paradigm. Without their corresponding legal frameworks, neither local banks nor joint-stock companies would have been safe and reliable for participation to occur. Without welfare and unemployment insurance schemes, masses of consumer durable goods would have had to be returned due to consumer default with each economic downturn. Without recognized labor unions, salaries would not have been enough to serve as solvent demand much beyond food and basics. Without a massive tax system, government demand would not have been forthcoming.


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, Atul Gawande, augmented reality, banking crisis, basic income, Bayesian statistics, bitcoin, blockchain, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, Cass Sunstein, centralized clearinghouse, Checklist Manifesto, cloud computing, cognitive bias, conceptual framework, creative destruction, Daniel Kahneman / Amos Tversky, disruptive innovation, Donald Trump, double entry bookkeeping, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Ford paid five dollars a day, Frederick Winslow Taylor, fundamental attribution error, George Akerlof, gig economy, Google Glasses, 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, lone genius, low cost airline, low cost carrier, Marc Andreessen, market bubble, market design, market fundamentalism, means of production, meta analysis, meta-analysis, Moneyball by Michael Lewis explains big data, multi-sided market, natural language processing, Network effects, 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, random walk, recommendation engine, Richard Thaler, ride hailing / ride sharing, Sam Altman, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley startup, six sigma, smart grid, smart meter, Snapchat, statistical model, Steve Jobs, technoutopianism, The Future of Employment, The Market for Lemons, The Nature of the Firm, transaction costs, universal basic income, William Langewiesche, Y Combinator

Double-entry bookkeeping did not become the norm in most firms for the next several centuries. The generation of Medici after Cosimo, as well as other wealthy Italians, discarded the practice of accounting in favor of more “intellectual” pursuits, such as politics and the arts. Accounting was deemed to be below their elite status. The modern conception of a company was also still in its infancy, and many executives—including at the storied East India joint-stock companies set up under the auspices of Europe’s crowns—were more concerned with share prices and market speculation than with internal control, efficiency, and the steady generation of profits. Most firms might keep a set of basic books and ledgers, balancing them when required by law, but the accounts were often inaccurate; and in some cases, the books were “cooked,” obfuscating a company’s financial problems in order to keep investors’ money rolling in.

See progressive data-sharing mandate dating websites, 49, 82–84, 163 decentralization, 7, 11, 13, 32, 90, 121 automation and, 80 bad decisions mitigated by, 38–39 of communicative coordination, 26 dyadic information exchange and, 72 firms and, 125, 127 matching and, 74, 127 decentralization with coordinated control, 101 decision-making automation overextension in, 116–120 centralized vs. decentralized (see centralization; decentralization) in firms, 95–107 irrational, 42–44 in markets, 42–44, 49, 161, 169–171 money and price simplification of, 49 delegation, 97–101, 106, 117, 218–219 Deloitte, 75, 126 Descartes, René, 223 Didi Chuxing, 163 digital Taylorism, 89 Distillers, 42 distributive policy measures, 186–187, 189, 190, 193, 197–200 See also taxes Doriot, Georges, 216 dotcom bubble, 6, 142–143 double-entry bookkeeping, 92–93 driving systems, autonomous, 78, 181–183, 213 Durant, William, 98 East India joint-stock companies, 93 eBay, 9, 69, 70, 75, 209, 215 decline in, 1–3 network effects and, 163 worth of goods traded on, 1 Economist, 89 education sector, 6–7, 199, 214 Ek, Daniel, 122–123 Embark, 182 Emergency Economic Stabilization Act of 2008, 134 Encyclopédie, 21 energy markets, 213 enterprise resource planning (ERP), 100 ESPN, 67, 69 eToro, 152 Europe, 135, 136, 164, 196, 198 European Parliament, 187 European Union, 140 evolution, 20–21, 22 Expedia, 70 Expertmaker, 70 externalities, 73, 74 Ezrachi, Ariel, 166 Facebook, 30, 148, 178, 196 feedback effects and, 169 market concentration in, 161 network effects and, 163, 166 fair value, 172–173 feedback effects, 78–80, 104, 157–179, 210, 211 development of theory, 159–160 government control via, 175–179 market concentration and, 161–169, 171 regulatory measures proposed for, 171–175 threat posed by, 166–167 Ferguson, Niall, 45 Ferrucci, David, 115 finance capital.


pages: 253 words: 79,214

The Money Machine: How the City Works by Philip Coggan

activist fund / activist shareholder / activist investor, algorithmic trading, asset-backed security, Bernie Madoff, Big bang: deregulation of the City of London, bonus culture, Bretton Woods, call centre, capital controls, carried interest, central bank independence, collateralized debt obligation, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, disintermediation, diversification, diversified portfolio, Edward Lloyd's coffeehouse, endowment effect, financial deregulation, financial independence, floating exchange rates, Hyman Minsky, index fund, intangible asset, interest rate swap, Isaac Newton, joint-stock company, labour market flexibility, large denomination, London Interbank Offered Rate, Long Term Capital Management, merger arbitrage, money market fund, moral hazard, mortgage debt, negative equity, Nick Leeson, Northern Rock, pattern recognition, purchasing power parity, quantitative easing, reserve currency, Right to Buy, Ronald Reagan, shareholder value, South Sea Bubble, sovereign wealth fund, technology bubble, time value of money, too big to fail, tulip mania, Washington Consensus, yield curve, zero-coupon bond

You can’t have the first without the second; who would want to buy shares without knowing that they could be sold? But the main economic rationale for an exchange is that it is a place where industry can raise the long-term finance it needs. The Exchange’s origins lay in the seventeenth century, when merchants clubbed together to form joint-stock companies, like the East India Company, to conduct foreign trade. After a time, some merchants sold their holdings to others, and in the process there developed a secondary market for shares in the joint-stock companies. At first, the shares were traded in the coffee houses which were then fashionable, but in 1773 the different sites for trading were centralized for the first time. By 1801, the Stock Exchange was established in roughly its modern form. Exchange members built up some of the country’s most colourful traditions.


pages: 934 words: 135,736

The Divided Nation: A History of Germany, 1918-1990 by Mary Fulbrook

Albert Einstein, banking crisis, Berlin Wall, centre right, coherent worldview, collective bargaining, deindustrialization, Fall of the Berlin Wall, feminist movement, first-past-the-post, fixed income, full employment, joint-stock company, land reform, means of production, Mikhail Gorbachev, open borders, Peace of Westphalia, Sinatra Doctrine, union organizing, unorthodox policies

The structure of unions was simplified, with one union per industry, and the unified unions belonging to a single umbrella organization, the DGB. A myth soon grew up of 'social partnership' between employers and employees. 'Co-determination' in industry (Mitbestimmung) was in fact only introduced, against considerable employer opposition, in a limited fashion in 1951, so that all joint stock companies in the coal and steel industries with over a thousand employees had to have representation of workers' views at the managerial level. (It was extended, again against considerable employer opposition, in 1976 to cover all joint stock companies with over two thousand employees.) In 1952, the Works Constitution Law provided that there should be works councils for enterprises with more than twenty employees. West Germany had a relatively low strike record. It also uniquely benefited, in the first decade or so after its foundation, from a supply of cheap and mobile labour: the refugees from the German Democratic Republic.

Much of the equipment became rusty or was damaged during its transportation to the Soviet Union; and more complex equipment, once dismantled, could not be successfully reassembled in the USSR. One solution was to ship out German experts along with their machinery, in order to reassemble and operate it in the USSR. Another was to leave equipment in Germany but appropriate the product. In June 1946 twenty-five Soviet joint-stock companies (SAGs) were formed, with 213 firms, producing thirty-two per cent of the total production of the Soviet zone, taken over into Soviet ownership. These were gradually phased back into German state ownership in the period 194954. The Soviets also exacted considerable reparations and occupation costs. Up to 1953, about one quarter of the zone's national product was spent on occupation costs and reparations payments (compared with a figure for the west of perhaps 1115% in the period up to 1949).


pages: 489 words: 132,734

A History of Future Cities by Daniel Brook

Berlin Wall, British Empire, business process, business process outsourcing, call centre, carbon footprint, Celtic Tiger, collateralized debt obligation, collective bargaining, Credit Default Swap, credit default swaps / collateralized debt obligations, Deng Xiaoping, desegregation, Edward Glaeser, Fall of the Berlin Wall, financial innovation, glass ceiling, indoor plumbing, joint-stock company, land reform, Mikhail Gorbachev, New Urbanism, open economy, Parag Khanna, Pearl River Delta, Potemkin village, profit motive, rent control, sovereign wealth fund, special economic zone, starchitect, trade route, urban planning, urban renewal, working poor

Roychand was the leading booster for the Back Bay project, in particular, and the Bombay boom, more generally. Shifting easily between the official European world of the Bombay stock exchange and the informal Indian world of the Share Bazaar—a shaded spot under a banyan tree near Town Hall where each day a group of traders gathered to wheel and deal stock certificates—Roychand was nicknamed the “Supreme Pontiff of Share Speculation.” Always offering market tips on the sixty-two joint stock companies that had arisen since 1855, he was particularly fond of touting his own portfolio of a dozen banks and reclamation companies. As the most prominent businessman of the Bombay boom, Roychand was the de facto head of the government-chartered Bank of Bombay, entrusted with a blank book of promissory notes he could issue at will, often on the collateral of share certificates in one of his other companies.

Parsi business magnate Byramjee Hormusjee Cama was the first to be ruined. As the default of his business empire rippled through the Bombay markets, the entire speculative edifice collapsed. July 1, 1865, the designated day for “time bargain” futures contracts to be delivered, became known as “Black Day,” the day Share Mania died. The contracts were unsellable and those left holding the bag were ruined as the near-worthless cotton and joint stock company shares were delivered. As The Economist reported in its coverage of “The Crisis at Bombay,” “ ‘Woe to the last holder,’ is the motto of the panic.” As an eyewitness later recalled, “Men who had been reputed millionaires . . . were left penniless. [T]he lawyers swept up the débris.” In 1866, the Back Bay Reclamation Company was partially bailed out by the Bombay government, which bought out the shareholders at a fraction of its one-time trading price.

Maclean, Recollections of Westminster and India (Manchester: Sherratt & Hughes, 1902), 30. 112 the price of cotton surged fourfold: Rekha Ranade, Sir Bartle Frere and His Times: A Study of His Bombay Years, 1862–1867 (New Delhi: Mittal Publications, 1990), 64–65. 112 the city’s population more than doubled: Albuquerque, Urbs Prima in Indis, 174–175. 113 plots that went for less than five hundred rupees: Dwivedi and Mehrotra, Bombay: The Cities Within, 80. 113 sold for fifteen times: Albuquerque, Urbs Prima in Indis, 175. 113 “The whole community”: Maclean, Recollections of Westminster and India, 31. 114 “Supreme Pontiff of Share Speculation”: Albuquerque, Urbs Prima in Indis, 19. 114 sixty-two joint stock companies: Ranade, Sir Bartle Frere and His Times, 80. 114 “Everyone became suddenly a millionaire”: Maclean, Recollections of Westminster and India, 30–31. 115 price of Indian cotton immediately collapsed to a quarter of its wartime value: ibid., 32. 115 “ ‘Woe to the last holder’ ”: “The Crisis at Bombay,” The Economist, June 10, 1865, 686. 115 “Men who had been reputed millionaires”: Maclean, Recollections of Westminster and India, 32. 115 “the best abused man in Bombay”: Albuquerque, Urbs Prima in Indis, 26. 116 “To the present generation”: Ranganathan, Govind Narayan’s Mumbai, 3. 116 “His profession”: Rahul Mehrotra and Sharada Dwivedi, A City Icon: Victoria Terminus, Bombay, 1887, Now Chhatrapati Shivaji Terminus, Mumbai, 1996 (Mumbai: Eminence Designs, 2006), 93–95. 117 £45 million a year: Dwivedi and Mehrotra, Bombay: The Cities Within, 138. 118 “The viewer’s eye”: Mehrotra and Dwivedi, A City Icon, 168. 119 fourteen-foot-tall goddess: London, Bombay Gothic, 92. 120 “That there should be one law”: B.


pages: 261 words: 86,905

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

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

When the company loses all its money, it goes broke; before limited liability, the investors in the company would then be personally liable for any outstanding debts, and could end up bankrupt. The invention of limited liability was central to the creation of the joint stock company, which is the basis of modern capitalism: the company is a legal entity, like a person, in which shareholders have shares and exercise control in proportion to the number of shares they own. You can have a company without having limited liability; in the United States, a joint stock company in its modern sense is just that. In the UK, this structure is called unlimited liability. It obviously makes the shareholders a lot more careful, since they are on the hook for all losses, not just the losses up to the point where the company goes broke.


pages: 399 words: 155,913

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

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

All corporations are said to be ecclesiastical or lay: ecclesiastical are either regular, as abbeys, priories, chapters, &c. or secular, as bishoprics, deanries, archdeaconries, &c. lay, as those of cities, towns, companies, or communities of commerce, &c.43 There is nothing in this definition to indicate what the word would come to signify within a century. Today’s corporations trace their roots to the English “joint-stock companies,” organized in the 17th century to assemble capital and operate large-scale enterprises.44 These joint-stock companies were 26 “Corporations” and “Monopolies,” Part I: 1602–1870 granted royal charters—official permission to engage in a lucrative trade, which were monopolies by definition.45 Any person engaging in projects such as establishing colonies, or transporting and selling tea or other commodities, without this royal approval ran the risk of severe penalties.

Board of Trustees of Village of Barrington, 878 N.E.2d 723, 724 (Ill. App. 1st Dist. 2007). 44. Robert Hessen, In Defense of the Corporation (Stanford, CA: Hoover Institution Press, 1979), pp. 3–33; and Margaret M. Blair, “Locking in Capital: What Corporate Law Achieved for Business Organizers in the Nineteenth Century,” UCLA Law Review 51 (2003): 414–23. 45. “What frequently distinguished incorporated from unincorporated joint-stock companies [in the 18th century], therefore, was that the former were owned by politically well-connected merchants who had paid a handsome price to secure a monopoly, while the latter lacked the money or connections to gain similar privileges.” Paul G. Mahoney, “Contract or Concession? An Essay on the History of Corporate Law,” Georgia Law Review 34 (2000): 887. 46. Jefferson to George Logan, November 12, 1816, in The Works of Thomas Jefferson, ed.


pages: 51 words: 14,616

The Communist Manifesto by Karl Marx, Friedrich Engels

Anton Chekhov, Johann Wolfgang von Goethe, joint-stock company, means of production, Ralph Waldo Emerson, The Wealth of Nations by Adam Smith, Upton Sinclair

*This applies chiefly to Germany where the landed aristocracy and squirearchy have large portions of their estates cultivated for their own account by stewards, and are, moreover, extensive beetroot-sugar manufacturers and distillers of potato spirits. The wealthier British aristocracy are, as yet, rather above that: but they, too, know how to make up for declining rents by lending their names to floaters of more or less shady joint-stock companies. Return to text. * Phalanstères were Socialist colonies on the plan of Charles Fourier; Icaria was the name given by Cabet to his Utopia and, later on, to his American Communist colony. Return to text. * The party then represented in Parliament by Ledru-Rollin, in literature by Louis Blanc, in the daily press by the Réforme. The name of Social-Democracy signified, with these its inventors, a section of the Democratic or Republican party more or less tinged with Socialism.


pages: 79 words: 24,875

Are Trams Socialist?: Why Britain Has No Transport Policy by Christian Wolmar

active transport: walking or cycling, Beeching cuts, Berlin Wall, Boris Johnson, BRICs, congestion charging, Diane Coyle, financial independence, full employment, joint-stock company, Kickstarter, low cost airline, Network effects, railway mania, trade route, urban sprawl, wikimedia commons, Zipcar

The success of the Sankey Brook Navigation and, in particular, the Duke of Bridgewater’s canal linking Manchester and Liverpool led to the first of two ‘canal manias’, which resulted in the creation of a national network of waterways. By reducing the cost of transport by as much as 75%, the system of canals, navigable rivers and coastal shipping that emerged widened the market for manufactured goods and consequently began the economic take-off that was greatly accelerated by the advent of the railways. The key financial mechanism that enabled the canals to be financed and built was the joint stock company. The concept had been around for centuries (there are competing claims in several European countries to being the first such venture) but the canal age gave confidence to the small investor, given the comfortable returns on these pioneering projects. Consequently, it was private capital, with permission from parliament through the ‘Bill process’, that created this network. Some canals did carry passengers but the barges were slow, since they were towed by horses and legged through tunnels by men.


pages: 369 words: 94,588

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

accounting loophole / creative accounting, anti-communist, Asian financial crisis, bank run, banking crisis, Bernie Madoff, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business climate, call centre, capital controls, creative destruction, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, deskilling, equal pay for equal work, European colonialism, failed state, financial innovation, Frank Gehry, full employment, global reserve currency, Google Earth, Guggenheim Bilbao, Gunnar Myrdal, illegal immigration, indoor plumbing, interest rate swap, invention of the steam engine, Jane Jacobs, joint-stock company, Joseph Schumpeter, Just-in-time delivery, land reform, liquidity trap, Long Term Capital Management, market bubble, means of production, megacity, microcredit, moral hazard, mortgage debt, Myron Scholes, new economy, New Urbanism, Northern Rock, oil shale / tar sands, peak oil, Pearl River Delta, place-making, Ponzi scheme, precariat, reserve currency, Ronald Reagan, sharing economy, Silicon Valley, special drawing rights, special economic zone, statistical arbitrage, structural adjustment programs, the built environment, the market place, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, Thorstein Veblen, too big to fail, trickle-down economics, urban renewal, urban sprawl, white flight, women in the workforce

This becomes important because, as the eighteenth-century French utopian thinker Saint-Simon long ago argued, it takes the ‘association of capitals’ on a large scale to set in motion the kinds of massive works such as railroads that are required to sustain long-term capitalist development. This was what the nineteenth-century financiers the Péreire brothers, schooled in Saint-Simonian theory, effectively achieved through the new credit institutions they set up to help Baron Haussmann transform the built environment of Second Empire Paris in the 1850s. (The boulevards we see today date from this period.) In the case of limited and joint stock companies and other corporate organisational forms that came into their own in the nineteenth century, enormous quantities of money power are amassed and centralised (often out of myriad small amounts of personal savings) under the control of a few directors and managers. Acquisitions (both friendly and hostile), mergers and leveraged buy-outs have also long been big business. Activity of this kind can entail new rounds of accumulation by dispossession.

King 79, 80 hunger, world 80 I Icarian communes 130 Iceland bankrupt 6, 37 exposure of national banks to toxic assets 141 idealism 133 immigration 59, 131 anti-immigrant fervour 103 colonisation of urban neighbourhoods 247 encouraging 14 Immigration and Nationality Act (1965) 14 imperialism 108, 109, 113, 144, 171, 204, 207, 212 Inca gold 47, 144 India anti-land grab movement 257 British goods 108, 158 British-imperialist-controlled 144 caste distinctions 62 colonial occupation 205 democracy 200 growth 222 labour reserves 64 Maoist movements in rural India 226 and oil market 83 partition 208 plundering of wealth from 109, 113 rural uprisings in 38 Indian Supreme Court 179 individualism 131, 132, 150, 170, 175, 197, 199 Indonesia Asian Currency Crisis 271 excessive urban development 8 industrial development 256 ‘industrial reserve army’ 15, 58, 59 industrial revolution 160 industrialisation 6, 33, 35, 68, 92, 172, 209 infant mortality 137, 152 inflation 15, 108, 114, 222 accelerating 113 ‘grand inflation’ (16th century) 48 and oil prices 80 rapid 111 Weimar 141 ‘informal sector’ 145 infrastructure disasters 86 educational 93 investment in 86, 167, 222 payment for use of 86–7 social 93 inheritance taxes 44 innovation 89, 90 communications 42, 93 labour-saving 94 organisational 97, 101 product 95 technological 67, 96–7, 101, 103 transport 42, 93 waves of 92–3 insider trading 99 insurance companies 4–5 intellectual property rights 34, 40, 221, 245–6 interest rate swaps 262 interest rates and austerity programmes 246, 251 Fed cuts 5, 261 International Monetary Fund (IMF) 5, 28, 34, 36, 51, 69, 200, 223, 246, 247 and asset values 6 bail-outs in Asian Currency Crisis 261 ‘Fifty Years is Enough’ campaign 55 ‘structural adjustment programs’ 19, 261 internet 190 investment capital 93, 203 debt-fuelled 166 devaluation of prior investments 93 infrastructure 86, 167, 222 in production 114 profitable 19 spreading of investment risks 85 subsidies for 36 iPods 131, 150 Iran: US threats 210 Iraq: US interventionism 210 Ireland: property-led crisis (2007–10) 5–6, 261 Isaacs, William 8 Israel dispossession of Palestinian land 247 kibbutzim 130 ivory 73 J Jacobs, Jane 171, 177 Japan boom of 1980s 8 collapse of stock market 8 depression in economy 45 falling exports 6 industrialisation 68, 92 invasion of US auto market 15 negative population growth 146 plunging land prices 8, 9 property-market led bank crisis 261 reconstruction of economy after Second World War 202 rise in the 1960s 35 joint stock companies 49 J.P. Morgan 142, 173, 219 ‘just-in-time’ principle 68 K Kay, Kenneth 53 Kerala, India, and remittances 38 Keynes, John Maynard 32, 53, 55, 87, 111, 160, 226, 237, 238 General Theory 114 Keynesian, Keynesians 168, 238, 255, 261 Kohl, Helmut 64 ‘Kondratieff cycles’ 96 Krieger, Andy 24–5 Krugman, Paul 235–6 kulaks 250 L labour and capital 56, 88, 169–70 casual 242 competition 61 costs 15, 16, 88 disempowered 16 divisions of 196, 213 exploitation of 94 feminisation of the global labour force 258 ‘floating’ army of laid-off workers 60 geographical mobility of 59–60, 213 guild 160 import of 14 integration of peasant populations into 58 laws 59, 103 living standards 88–9 massive reserves 64 and new technologies 60 organisations 61 and politics of populist outrage 55–6 power of 12, 14, 15, 40–41, 103, 172 quality requirements 93 regulation of conditions of 59 rights 251 scarcity of 12, 59, 60 social divisions of 67 supply 47, 121 supply and demand for 60 surplus 5, 15, 215 ultimate power of the workforce 63, 101–2 unionised 108 unrest 66 labour markets geographically segmented 59 local 63 regulating dynamics of 60 labour power demand of 115 released as a commodity into the market place 58 and standard of living 62–3 supply of 63, 65, 115 value of 64 labour process 105 collective 104 resistance or inefficiencies in 47 labour unions 256 laissez faire 128 land capital embedded in the 191 enclosures 48 fertility 82 Israeli dispossession of Palestinian land 247 land use degradation 77 reform 249 rights 88 speculation 187–8 values 181, 182, 183, 234 landlords 40 laptops 131 Las Vegas, foreclosure crisis in 2 Latin America anti-neoliberal struggles 226 bilateral trade with China 173 and the Catholic Church 254 land bought up in 220 population growth 146 Latin American Southern Cone group (MERCOSUR) 200 Latvian government 37 Lazard’s 11 lead-based paints 74 ‘learned societies’ 91 Lebanon economic stimulus 140 rebuilding of 202 Leeson, Nicholas 37, 100, 190 Lefebvre, Henri 128 legitimation crises 217 Lehman Brothers 2, 5, 12, 21, 37, 132, 211 Leipzig, Germany 142 Lenin, Vladimir 46, 136, 227 Leningrad 243 Leninism 134 lesbians, and colonisation of urban neighbourhoods 247 leveraged buy-outs 50 leveraging 30, 31 Leverhulme foundation 44 life expectancy 137, 152, 250 limited companies 49 liquidity crisis in 206 liquidity injections vii, 261 liquidity trap 111 surplus 5, 28, 30 living standards 10, 46, 62–3, 72, 88–9, 96, 120 Locke, John 90, 233 London, territorial organisation of 196 London School of Economics vii, 235 Long Term Capital Management crash and bail-out (1998) 8, 100, 261 ‘long waves’ 96 Luddite movement 60, 96 Luxemburg, Rosa 108, 116–17 luxury goods 70, 110 M McCarthyism 169 machinery 66, 113, 114, 127 Mackinder, Sir Halford 209–10 macroeconomics 237 McVeigh, Timothy 248 Maddison, Angus 26 Mahan, A.T.: The Influence of Sea Power upon History 209 maintenance failures 86 Malaysia: resorts to capital controls 198 Malthus, Thomas 72, 94 Manchester 27 Mao Zedong 59 Cultural Revolution 137 dialectical sense of how contradictions worked 136 Great Leap Forward 137, 138, 250 health care 137 recognised that a revolution had to be permanent or nothing at all 136–7 Maoism 133 Maoists 253 Marcos, Imelda 43 Marcuse, Herbert 169 market laws 198 market share 43 markets credit 2, 5, 37 export 141, 218 free 10, 90, 100, 128, 131 internal 109 market connections 162–3 niches 131, 175 see also derivatives markets; futures markets; labour markets; options markets Marshall, Arthur 162 ‘Marshallian’ industrial production districts 162 Marx, Karl 46–7, 98, 110, 160, 232–3 and Bakunin 225 on barriers 84, 88 the capitalist creed 103 capitalist development 117 changing the world 119–20 on the cotton industry 67 and falling profitability 94 goal of 238 on an ‘industrial reserve army’58 and Keynes 111 and limitless money 47 and Luddite movement 96 on Malthus and Ricardo 72 on the power of the labourer 101–2 on ‘primitive accumulation’58, 249 and rent 81 and reproduction schemas 70 on the rise of capitalism 135, 250 systematic critique of capitalism and its crisis tendencies 237 understanding and transparency 99, 100 on the world of high finance 54–5 Capital 53–4, 70, 89, 119, 126, 237 Grundrisse der Kritik des Politischen Ökonomie 47, 155 Marx, Karl and Engels, Friedrich: The Communist Manifesto 89, 115, 127, 157, 237, 259 Marxian theory 56, 183 Marxists 253 Meadows, Donella h.: Limits to Growth 72 meat-based diets 73, 74 Medicare 28–9, 224 Mellon, Andrew 11, 98 mercantilism 206 merchant capitalists 40 mergers 49, 50 forced 261 Merrill Lynch 12 Merton, Robert 100 methane gas 73 Mexico debt crisis (1982) 10, 19 northern Miexico’s proximity to the US market 36 peso rescue 261 privatisation of telecommunications 29 and remittances 38 standard of living 10 Mexico City 243 microcredit schemes 145–6 microeconomics 237 microenterprises 145–6 microfinance schemes 145–6 Middle East, and oil issue 77, 170, 210 militarisation 170 ‘military-industrial complex’ 91 minorities: colonisation of urban neighbourhoods 247, 248 Mitterrand, François 198 modelling of markets 262 modernism 171 monarchy 249 monetarism 237 monetisation 244 money centralised money power 49–50, 52 a form of social power 43, 44 limitlessness of 43, 47 loss of confidence in the symbols/quality of money 114 universality of 106 monoculture 186 Monopolies Commission 52 monopolisation 43, 68, 95, 113, 116, 221 Monsanto 186 Montreal Protocol (1989) 76, 187 Morgan Stanley 19 Morishima, Michio 70 Morris, William 160 mortgages annual rate of change in US mortgage debt 7 mortgage finance for housing 170 mortgage-backed bonds futures 262 mortgage-backed securities 4, 262 secondary mortgage market 173, 174 securitisation of local 42 securitisation of mortgage debt 85 subprime 49, 174 Moses, Robert 169, 171, 177 MST (Brazil) 257 multiculturalism 131, 176, 231, 238, 258 Mumbai, India anti-Muslim riots (early 1990s) 247 redevelopment 178–9 municipal budgets 5 Museum of Modern Art, New York 21 Myrdal, Gunnar 196 N Nandigram, West Bengal 180 Napoleon III, Emperor 167, 168 national debt 48 National Economic Council (US) 11, 236 national-origin quotas 14 nationalisation 2, 4, 8, 224 nationalism 55–6, 143, 194, 204 NATO 203 natural gas 188 ‘natural limits’ 47 natural resources 30, 71 natural scarcity 72, 73, 78, 80, 83, 84, 121 nature and capital 88 ‘first nature’ 184 relation to 121, 122 ‘the revenge of nature’ 185 ‘second nature’ 184, 185, 187 as a social product 188 neocolonialism 208, 212 neoliberal counter-revolution 113 neoliberalism 10, 11, 19, 66, 131, 132, 141, 172, 175, 197, 208, 218, 224, 225, 233, 237, 243, 255 Nepal: communist rule in 226 Nevada, foreclosure wave in 1 New Deal 71 ‘new economy’ (1990s) 97 New Labour 45, 255 ‘new urbanism’ movement 175 New York City 11 September 2001 attacks 41 fiscal crisis (1975) 10, 172, 261 investment banks 19, 28 New York metropolitan region 169, 196 Nicaragua 189 Niger delta 251 non-governmental organisations (NGOs) 35, 253–4 non-interventionism 10 North Africa, French import of labour from 14 North America, settlement in 145 North American Free Trade Association (NAFTA) 200 Northern Ireland emergency 247 Northern Rock 2 Norway: Nordic cris (1992) 8 nuclear power 188 O Obama, Barack 11, 27, 34, 210 Obama administration 78, 121 O’Connor, Jim 77, 78 offshoring 131 Ogoni people 251 oil cheap 76–7 differential rent on oil wells 83 futures 83, 84 a non-renewable resource 82 ‘peak oil’ 38, 73, 78, 79, 80 prices 77–8, 80, 82–3, 261 and raw materials prices 6 rents 83 United States and 76–7, 79, 121, 170, 210, 261 OPEC (Organisation of Oil-Producing Countries) 83, 84 options markets currency 262 equity values 262 unregulated 99, 100 Orange County, California bankruptcy 100, 261 Organisation for Economic Cooperation and Development (OECD) 51 organisational change 98, 101 organisational forms 47, 101, 121, 127, 134, 238 Ottoman Empire 194 ‘over the counter’ trading 24, 25 overaccumulation crises 45 ozone hole 74 ozone layer 187 P Pakistan: US involvement 210 Palley, Thomas 236 Paris ‘the city of light’ 168 epicentre of 1968 confrontations 177, 243 Haussmann’s rebuilding of 49, 167–8, 169, 171, 176 municipal budget crashes (1868) 54 Paris Commune (1871) 168, 171, 176, 225, 243, 244 Partnoy, Frank: Ubfectious Greed 25 patents 221 patent laws 95 patriarchy 104 pensions pension funds 4, 5, 245 reneging on obligations 49 Péreire brothers 49, 54, 98, 174 pesticides 185, 186, 187 petty bourgeois 56 pharmaceutical sector 129, 245 philanthropy 44 Philippines: excessive urban development 8 Phillips, Kevin 206 Pinochet, General Augusto 15, 64 plant 58 Poland, lending to 19 political parties, radical 255–6 politics capitalist 76 class 62 co-revolutionary 241 commodified 219 depoliticised 219 energy 77 identity 131 labour organizing 255 left 255 transformative 207 pollution air 77 oceanic 74 rights 21 ‘Ponts et Chaussées’ organisation 92 Ponzi schemes 21, 114, 245, 246 pop music 245–6 Pope, Alexander 156 population growth 59, 72, 74, 121, 167 and capital accumulation 144–7 populism 55–6 portfolio insurance 262 poverty and capitalism 72 criminalisation and incarceration of the poor 15 feminisation of 15, 258 ‘Great Society’ anti-poverty programmes 32 Prague 243 prices commodity 37, 73 energy 78 food grain 79–80 land 8, 9, 182–3 oil 8, 28, 37–8, 77–8, 80, 82–3, 261 property 4, 182–3 raw material 37 reserve price 81–2 rising 73 share 7 primitive accumulation 58, 63–4, 108, 249 private consortia 50 private equity groups 50 private property and radical egalitarianism 233, 234 see also property markets; property rights; property values privatisation 10, 28, 29, 49, 251, 256, 257 pro-natal policies 59 production expansion of 112, 113 inadequate means of 47 investment in 114 liberating the concept 87 low-profit 29 offshore 16 production of urbanisation 87 reorganisation and relocation of 33 revolutionising of 89 surplus 45 technologies 101 productivity agreements 14, 60, 96 agricultural 119 cotton industry 67 gains 88, 89 Japan and West Germany 33 rising 96, 186 products development 95 innovation 95 new lines 94, 95 niches 94 profit squeeze 65, 66, 116 profitability constrains 30 falling 94, 131 of the financial sector 51 and wages 60 profits easy 15 excess 81, 90 falling 29, 72, 94, 116, 117 privatising 10 rates 70, 94, 101 realisation of 108 proletarianisation 60, 62 property markets crash in US and UK (1973–75) 8, 171–2, 261 overextension in 85 property market-led Nordic and Japanese bank crises 261 property-led crises (2007–10) 10, 261 real estate bubble 261 recession in UK (after 1987) 261 property rights 69, 81–2, 90, 122, 179, 198, 233, 244, 245 Property Share Price Index (UK) 7 property values 171, 181, 197, 248 prostitution 15 protectionism 31, 33, 43, 211 punctuated equilibrium theory of natural evolution 130 Putin, Vladimir 29, 80 Q Q’ing dynasty 194 quotas 16 R R&D (research and development) 92, 95–6 race issues 104 racism 61, 258 radical egalitarianism 230–34 railroads 42, 49, 191 Railwan, rise of (1970s) 35 rare earth metals 188 raw materials 6, 16, 37, 58, 77, 101, 113, 140, 144, 234 RBS 20 Reagan, Ronald 15, 64, 131, 141 Reagan-Thatcher counter revolution (early 1980s) 71 Reagan administration 1, 19 Reagan recession (1980–82) 60, 261 Real Estate Investment Trusts (US) 7 recession 1970s 171–2 language of 27 Reagan (1980–82) 60, 261 Red Brigade 254 reforestation 184 refrigeration 74 reinvestment 43, 45, 66–7, 110–12, 116 religious fundamentalism 203 religious issues 104 remittances 38, 140, 147 rentiers 40 rents differential rent 81, 82, 83 on intellectual property rights 221 land 182 monetisation of 48, 109 monopoly 51, 81–2, 83 oil 83 on patents 221 rising 181 reproduction schemas 70 Republican Party (US) 11, 141 reserve price 81 resource values 234 Ricardo, David 72, 94 risks, socialising 10 robbery 44 Robinson, Joan 238 robotisation 14, 136 Rockefeller, John D. 98 Rockefeller brothers 131 Rockefeller foundation 44, 186 Roman Empire 194 Roosevelt, Franklin D. 71 Rothschild family 98, 163 Royal Society 91, 156 royalties 40 Rubin, Robert 98 ‘rule of experts’ 99, 100–101 Russia bankruptcy (1998) 246, 261 capital flight crisis 261 defaults on its debt (1998) 6 oil and natural gas flow to Ukraine 68 oil production 6 oligarchs 29 see also Soviet Union S Saddam Hussein 210 Saint-Simon, Claude Henri de Rouvroy, Comte de 49 Saint-Simonians 87, 168 Salomon Brothers 24 Samuelson, Robert 235, 239 Sandino, Augusto 189 Sanford, Charles 98 satellites 156 savings 140 Scholes, Myron 100 Schumer, Charles 11 Schumpeter, Joseph 46 Seattle battle of (1999) 38, 227 general strike (1918) 243 software development in 195 Second World War 32, 168–70, 214 sectarianism 252 securitisation 17, 36, 42 Sejong, South Korea 124–6 service industries 41 sexism 61 sexual preferences issues 104, 131, 176 Shanghai Commune (1967) 243 shark hunting 73, 76 Shell Oil 79, 251 Shenzhen, China 36 shop floor organisers (shop stewards) 103 Silicon Valley 162, 195, 216 Singapore follows Japanese model 92 industrialisation 68 rise of (1970s) 35 slavery 144 domestic 15 slums 16, 151–2, 176, 178–9 small operators, dispossession of 50 Smith, Adam 90, 164 The Wealth of Nations 35 social democracy 255 ‘social democratic’ consensus (1960s) 64 social inequality 224 social relations 101, 102, 104, 105, 119, 121, 122, 123, 126, 127, 135–9, 152, 240 loss of 246 social security 224 social services 256 social struggles 193 social welfarism 255 socialism 136, 223, 228, 242, 249 compared with communism 224 solidarity economy 151, 254 Soros, George 44, 98, 221 Soros foundation 44 South Korea Asian Currency Crisis 261 excessive urban development 8 falling exports 6 follows Japanese model 92 rise of (1970s) 35 south-east Asia: crash of 1997–8 6, 8, 49, 246 Soviet Union in alliance with US against fascism 169 break-up of 208, 217, 227 collapse of communism 16 collectivisation of agriculture 250 ‘space race’ (1960s and 1970s) 156 see also Russia space domination of 156–8, 207 fixed spaces 190 ‘space race’ (1960s and 1970s) 156 Spain property-led crisis (2007–10) 5–6, 261 unemployment 6 spatial monopoly 164–5 special drawing rights 32, 34 special economic zones 36 special investment vehicles 36, 262 special purpose entities 262 speculation 52–3 speculative binges 52 speed-up 41, 42 stagflation 113 stagnation 116 Stalin, Joseph 136, 250 Standard Oil 98 state formation 196, 197, 202 state-corporate nexus 204 ‘space race’ (1960s and 1970s) 156 state-finance nexus 204, 205, 237, 256 blind belief in its corrective powers 55 ‘central nervous system’ for capital accumulation 54 characteristics of a feudal institution 55 and the current crisis 118 defined 48 failure of 56–7 forms of 55 fusion of state and financial powers 115 innovation in 85 international version of 51 overwhelmed by centralised credit power 52 pressure on 54 radical reconstruction of 131 role of 51 and state-corporate research nexus 97 suburbanisation 171 tilts to favour particular interests 56 statistical arbitrage strategies 262 steam engine, invention of 78, 89 Stiglitz, Joseph 45 stimulus packages 261 stock markets crash (1929) 211, 217 crashes (2001–02) 261 massive liquidity injections (1987) 236, 261 Stockton, California 2 ’structural adjustment’ programmes vii, 19, 261 subcontracting 131 subprime loans 1 subprime mortgage crisis 2 substance abuse 151 suburbanisation 73, 74, 76–7, 106–7, 169, 170, 171, 181 Summers, Larry 11, 44–5, 236 supermarket chains 50 supply-side theory 237 surveillance 92, 204 swaps credit 21 Credit Default 24, 262 currency 262 equity index 262 interest rate 24, 262 Sweden banking system crash (1992) 8, 45 Nordic crisis 8 Yugoslav immigrants 14 Sweezey, Paul 52, 113 ‘switching crises’ 93 systematic ‘moral hazard’ 10 systemic risks vii T Taipei: computer chips and household technologies in 195 Taiwan falling exports 6 follows Japanese model 92 takeovers 49 Taliban 226 tariffs 16 taxation 244 favouring the rich 45 inheritance 44 progressive 44 and the state 48, 145 strong tax base 149 tax rebates 107 tax revenues 40 weak tax base 150 ‘Teamsters for Turtles’ logo 55 technological dynamism 134 technologies change/innovation/new 33, 34, 63, 67, 70, 96–7, 98, 101, 103, 121, 127, 134, 188, 193, 221, 249 electronic 131–2 ‘green’ 188, 221 inappropriate 47 labour fights new technologies 60 labour-saving 14–15, 60, 116 ‘rule of experts’ 99, 100–101 technological comparative edge 95 transport 62 tectonic movements 75 territorial associations 193–4, 195, 196 territorial logic 204–5 Thailand Asian Currency Crisis 261 excessive urban development 8 Thatcher, Margaret, Baroness 15, 38, 64, 131, 197, 255 Thatcherites 224 ‘Third Italy’, Bologna 162, 195 time-space compression 158 time-space configurations 190 Toys ‘R’ Us 17 trade barriers to 16 collapses in foreign trade (2007–10) 261 fall in global international trade 6 increase in volume of trading 262 trade wars 211 trade unions 63 productivity agreements 60 and US auto industry 56 trafficking human 44 illegal 43 training 59 transport costs 164 innovations 42, 93 systems 16, 67 technology 62 Treasury Bill futures 262 Treasury bond futures 262 Treasury instruments 262 TRIPS agreement 245 Tronti, Mario 102 Trotskyists 253, 255 Tucuman uprising (1969) 243 Turin: communal ‘houses of the people’ 243 Turin Workers Councils 243 U UBS 20 Ukraine, Russian oil and natural gas flow to 68 ultraviolet radiation 187 UN Declaration of Human Rights 234 UN development report (1996) 110 Un-American Activities Committee hearings 169 underconsumptionist traditions 116 unemployment 131, 150 benefits 60 creation of 15 in the European Union 140 job losses 93 lay-offs 60 mass 6, 66, 261 rising 15, 37, 113 and technological change 14, 60, 93 in US 5, 6, 60, 168, 215, 261 unionisation 103, 107 United Fruit Company 189 United Kingdom economy in serious difficulty 5 forced to nationalise Northern Rock 2 property market crash 261 real average earnings 13 train network 28 United Nations 31, 208 United States agricultural subsidies 79 in alliance with Soviet Union against fascism 169 anti-trust legislation 52 auto industry 56 blockbusting neighbourhoods 248 booming but debt-filled consumer markets 141 and capital surplus absorption 31–2 competition in labour markets 61 constraints to excessive concentration of money power 44–5 consumerism 109 conumer debt service ratio 18 cross-border leasing with Germany 142–3 debt 158, 206 debt bubble 18 fiscal crises of federal, state and local governments 261 health care 28–9 heavy losses in derivatives 261 home ownership 3 housing foreclosure crises 1–2, 4, 38, 166 industries dependent on trade seriously hit 141 interventionism in Iraq and Afghanistan 210 investment bankers rescued 261 investment failures in real estate 261 lack of belief in theory of evolution 129 land speculation scheme 187–8 oil issue 76–7, 79, 80, 121, 170, 210, 261 population growth 146 proletarianisation 60 property-led crisis (2007–10) 261 pursuit of science and technology 129 radical anti-authoritarianism 199 Reagan Recession 261 rescue of financial institutions 261 research universities 95 the reversing origins of US corporate profits (1950–2004) 22 the right to the city movement 257 ‘right to work’ states 65 savings and loan crisis (1984–92) 8 secondary mortgage market 173 ‘space race’ (1960s and 1970s) 156 suburbs 106–7, 149–50, 170 train network 28 unemployment 5, 6, 60, 168, 215, 261 unrestricted capitalist development 113 value of US stocks and homes, as a percentage of GDP 22 and Vietnam War 171 wages 13, 62 welfare provision 141 ‘urban crisis’ (1960s) 170 urban ‘heat islands’ 77 urban imagineering 193 urban social movements 180 urbanisation 74, 85, 87, 119, 131, 137, 166, 167, 172–3, 174, 240, 243 US Congress 5, 169, 187–8 US Declaration of Independence 199 US National Intelligence Council 34–5 US Senate 79 US Supreme Court 179 US Treasury and Goldman Sachs 11 rescue of Continental Illinois Bank 261 V Vanderbilt family 98 Vatican 44 Veblen, Thorstein 181–2 Venezuela 256 oil production 6 Vietnam War 32, 171 Volcker, Paul 2, 236 Volcker interest rate shock 261 W wage goods 70, 107, 112, 162 wages and living standards 89 a living wage 63 national minimum wage 63 rates 13, 14, 59–64, 66, 109 real 107 repression 12, 16, 21, 107, 110, 118, 131, 172 stagnation 15 wage bargaining 63 Wal-Mart 17, 29, 64, 89 Wall Street, New York 35, 162, 200, 219, 220 banking institutions 11 bonuses 2 ‘Party of Wall Street’ 11, 20, 200 ‘War on Terror’ 34, 92 warfare 202, 204 Wasserstein, Bruce 98 waste disposal 143 Watt, James 89 wealth accumulation by capitalist class interests 12 centralisation of 10 declining 131 flow of 35 wealth transfer 109–10 weather systems 153–4 Weather Underground 254 Weill, Sandy 98 Welch, Jack 98 Westphalia, Treaty of (1648) 91 Whitehead, Alfred North 75 Wilson, Harold 56 wind turbines 188 women domestic slavery 15 mobilisation of 59, 60 prostitution 15 rights 176, 251, 258 wages 62 workers’ collectives 234 working hours 59 World Bank 36, 51, 69, 192, 200, 251 ‘Fifty Years is Enough’ campaign 55 predicts negative growth in the global economy 6 World Bank Development Report (2009) 26 World Trade Organisation (WTO) 200, 227 agreements 69 street protests against (Seattle, 1999) 55 TRIPS agreement 245 and US agricultural subsidies 79 WorldCom 8, 100, 261 worldwide web 42 Wriston, Walter 19 X X-rays 99 Y Yugoslavia dissolution of 208 ethnic cleansings 247 Z Zapatista revolutionary movement 207, 226, 252 Zola, Émile 53 The Belly of Paris 168 The Ladies’ Paradise 168


pages: 339 words: 95,270

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

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

These developments radically improved the banking system’s ability to collect and channel middle-class household savings into new investment projects. By the mid-1860s, Paris was beginning to rival London as a market for new international loans.21 Financial innovation was not limited to France and the United States. Germany also saw a similar expansion of its banking system and in the creation of joint-stock corporations. So many joint-stock companies were created in 1866–73 that still exist today that the period is known in Germany as the Gründerzeit, or founders’ era. Most of the new German banks had been created in the 1850s, but in a financially backward and fragmented market, it took nearly two decades for them to develop and unify the provincial money and credit markets. In Austria, similarly, bank capital, which had amounted to 190 million gulden in 1866, had exploded to 508 million gulden by the end of 1872.

See savings and investment Ireland: budget surpluses in, 170 external debt in, 163 German surpluses absorbed by, 4, 162, 229–30 as tax haven, 33, 35–37 U.S. corporation income in, 37 Isabella II (queen of Spain), 93 Italy: colonial territories of, 21 and European banking glut, 63 external debt in, 163 German surpluses absorbed by, 4, 162, 229–30 and global credit boom (1820s), 51 Internet access speeds in, 169 savings and investment in, 171 taxes in, 172 ITO (International Trade Organization), 21–22 Jackson, Andrew, 52, 53 Japan: colonial territories of, 18, 19, 21 corporate tax avoidance in, 33 development model in, 108 foreign exchange reserves in, 217 and global value chains, 28 and gold standard, 188 savings and investment in, 72, 74–75, 78, 180–81, 225 U.S. corporation income in, 37 in World War II, 21 Jay Cooke & Company, 55, 58 Jefferson, Thomas, 14 Johnson & Johnson, 34–35 joint-stock companies, 55–56 J. P. Morgan (bank), 63 Kennedy, James, 208 Kennedy, John F., 30–31, 192–93 Keynes, John Maynard, 22, 159, 189, 218–20 Kindleberger, Charles, 94 Kohl, Helmut, 135–43 Korea. See North Korea, savings and investment in; South Korea Krooss, Herman, 238n14 Kumhof, Michael, 81 labor unions. See unions Lafontaine, Oskar, 151 Landesbanken, 161, 164 Lane, Timothy, 197 Latin America: and Baring crisis, 61 Chinese exports to, 125 colonial interests in, 6, 19, 46, 48 and global credit boom (1820s), 48–51 and global financial crisis (1873), 56, 57 and List’s “National System” of economic development, 16 and less-developed-country lending boom, 62.


pages: 556 words: 46,885

The World's First Railway System: Enterprise, Competition, and Regulation on the Railway Network in Victorian Britain by Mark Casson

banking crisis, barriers to entry, Beeching cuts, British Empire, business cycle, combinatorial explosion, Corn Laws, corporate social responsibility, David Ricardo: comparative advantage, intermodal, iterative process, joint-stock company, joint-stock limited liability company, Kickstarter, knowledge economy, linear programming, Network effects, New Urbanism, performance metric, railway mania, rent-seeking, strikebreaker, the market place, transaction costs

The ever-shifting imperial frontier provided potentially ‘rich pickings’ for soldiers and bounty-hunters. Furthermore, many young men of great ability chose to enter the church in search of spiritual rather than material rewards, with the entrepreneurial risk-takers opting for missionary work overseas. The principle of partnership was extended during the Victorian period through a series of reforms to company law which made it much easier for large businesses to be incorporated as joint stock companies with limited liability for their shareholders. This in turn increased liquidity in stock markets by making it easier for ordinary people to buy and sell shares in small denominations. This in turn facilitated the growth of large firms. However, little trust was placed in the law as a means of resolving business disputes. The law had a bad reputation for being slow, complex, and extremely expensive.

The exhaustion of local coal deposits led to increasing amounts of haematite ore being consigned across the Pennines by rail to the north-east, where it was processed on Teesside and exported to continental Europe. Following the onset of the Great Depression in 1873, Wnancial diYculties arose in the Whitehaven area, and so it was natural for the company to look to larger and better capitalized companies to take it over. The LNWR was a natural candidate, as one of the country’s largest joint stock companies, and the owner of two railways into the Whitehaven area: the Whitehaven Junction (see Section 5.4.5) and the Cockermouth Keswisk and Penrith. The FR, whose main line ran south from Whitehaven to Barrow and Carnforth, had much stronger links with the local business community, however, and consequently better local knowledge. Although the FR had periodic squabbles with the LNWR, relations between the two companies were generally harmonious—for no better reason than that the FR had little option but to ‘toe the line’.

To obtain powers of compulsory purchase, a special Act of Parliament was required, as explained earlier. Land was expensive, and purchasing enough line to build a railway was normally beyond the means of any single person—including an aristocrat. Even a business partnership involving a small number of individuals (a common form of organization in Victorian Britain) would be Wnancially stretched. The solution was to form a joint stock company with the power to issue shares. Furthermore, in order to secure a wide market for these shares, limited liability had to be provided. Ordinary members of the public did not have the conWdence to purchase shares in companies over which they could not exert direct control unless their liability for losses was limited to the price that they had paid for their shares. Until the company law reforms of the mid-Victorian period, however, joint stock businesses with limited liability had to be authorized individually by Parliament.


pages: 540 words: 168,921

The Relentless Revolution: A History of Capitalism by Joyce Appleby

1919 Motor Transport Corps convoy, agricultural Revolution, anti-communist, Asian financial crisis, asset-backed security, Bartolomé de las Casas, Bernie Madoff, Bretton Woods, BRICs, British Empire, call centre, Charles Lindbergh, collateralized debt obligation, collective bargaining, Columbian Exchange, commoditize, corporate governance, 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 paid five dollars a day, Francisco Pizarro, Frederick Winslow Taylor, full employment, Gordon Gekko, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Hernando de Soto, hiring and firing, illegal immigration, informal economy, interchangeable parts, interest rate swap, invention of movable type, invention of the printing press, invention of the steam engine, invisible hand, Isaac Newton, James Hargreaves, James Watt: steam engine, Jeff Bezos, joint-stock company, Joseph Schumpeter, knowledge economy, land reform, Livingstone, I presume, Long Term Capital Management, Mahatma Gandhi, Martin Wolf, moral hazard, Parag Khanna, Ponzi scheme, profit maximization, profit motive, race to the bottom, Ralph Nader, refrigerator car, Ronald Reagan, Scramble for Africa, Silicon Valley, Silicon Valley startup, South China Sea, South Sea Bubble, special economic zone, spice trade, spinning jenny, strikebreaker, the built environment, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thorstein Veblen, total factor productivity, trade route, transatlantic slave trade, transcontinental railway, union organizing, Unsafe at Any Speed, Upton Sinclair, urban renewal, War on Poverty, working poor, Works Progress Administration, Yogi Berra, Yom Kippur War

Borrowed from the Italians, this form of corporate enterprise was unknown in Spain or Portugal. Unlike the merchant companies composed of active traders, members of a joint-stock trading company subscribed to a certain number of shares in the company. For the English gentleman or woman here was a chance to become a part of a profitable venture without taking an active part in it. Dozens of such joint-stock companies, with royal charters, were pushing out the boundaries of interregional trade. Members of the English aristocracy showed a decided preference for companies that established colonies or pioneered trades that would enhance England’s status in the world. Commerce had champions in the highest circles of society, and the House of Commons included merchants among its members. Because of this, English law changed faster than the glacial pace set elsewhere.

In the Muslim world Koranic injunctions hindered the formation of corporations and the inheritance of partnerships. Deaths could dissolve partnerships and pools of capital without the legal instrument of incorporation.33 Being unable to bequeath a firm’s shares often made it impossible to maintain businesses. Unlike Muslim countries, Europeans developed financial institutions especially for handling investment money. German banks began as private institutions, becoming joint-stock companies later. As so-called universal banks they offered a range of financial services from extending short-term credit to taking deposits, discounting bills, selling insurance, and handling mortgages while underwriting and trading in securities.34 Britain industrialized at the leisurely pace of a pathbreaker. Most of its financing came from personal savings and the shrewd reinvestment of profits.

Almost fifty million new vehicles roll out of auto plants worldwide every year, making it the number one industry.15 The Japanese were astute marketers of their cars, which helps explain how Toyota was able in 2008 to pass up General Motors after its seventy-seven-year run as the world’s largest automaker. The structure of European economies is corporate with the interests of labor and management worked on together through public and private organizations. That of the United States is more competitive than corporate, and we can characterize the Japanese economy as paternalistic. Its most prominent firms appear like an extended family with joint-stock companies running specific enterprises under the benevolent guidance of its holding company. This arrangement offered protection from hostile takeovers. Paternalism shouldn’t be confused with patriarchal, for unlike America’s hierarchical decision making, in Japanese companies, ideas percolate up from the bottom. Middle and local managers make many of the operational moves; all focus on cultivating skills and talent from within with eyes on long-term growth.16 Rather than members of a cartel for a single industry, Japanese firms belong to holding companies, but the competition among the parts of such a company can be fierce.


pages: 358 words: 104,664

Capital Without Borders by Brooke Harrington

banking crisis, Big bang: deregulation of the City of London, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, complexity theory, corporate governance, corporate social responsibility, diversified portfolio, estate planning, eurozone crisis, family office, financial innovation, ghettoisation, haute couture, high net worth, income inequality, information asymmetry, Joan Didion, job satisfaction, joint-stock company, Joseph Schumpeter, liberal capitalism, mega-rich, mobile money, offshore financial centre, race to the bottom, regulatory arbitrage, Robert Shiller, Robert Shiller, South Sea Bubble, the market place, Thorstein Veblen, transaction costs, upwardly mobile, wealth creators, web of trust, Westphalian system, Wolfgang Streeck, zero-sum game

The basis of wealth shifted decisively from land to capital—a more fungible source of wealth requiring a different kind of attention and maintenance than landed estates. In England, the nineteenth century saw the repeal of the Bubble Act, allowing corporations—and corporate investment—to flourish as never before.44 Suddenly trustees had tremendous amounts of cash to manage, and hundreds of joint stock companies in which to invest. Yet they did not have the right to invest in those securities unless specifically authorized to do so by the trust instrument. Most trust instruments, in the interests of protecting beneficiaries from “faithless feoffees,” gave no such powers, leaving the trustee to act simply as a passive title holder for real estate. A major step forward in the professionalization process occurred when the courts stepped in to expand trustees’ powers of investment.

Despite their breadth, the rules remain meaningful and enforceable, as evidenced by the many successful lawsuits brought against trustees for breach of fiduciary duty; for several interesting cases, see John Harper, “The Ethical Trustee,” STEP Journal, September 2010, 17. 40. Benjamin Cardozo, opinion in Meinhard v. Salmon, 164 N.E. 545 (N.Y. 1928), at 546. 41. Geoffrey Chaucer, Canterbury Tales (Mineola, NY: Dover, 1994 [1478]). 42. Langbein, “The Contractarian Basis,” 638. 43. Langbein, “Rise of the Management Trust,” 53. 44. The Bubble Act of 1720 forbade the creation of new joint-stock companies, except by royal charter. Passage of this law was intended to prevent the kind of speculation that that had led to the ruinous South Sea Bubble earlier that year. Brooke Harrington, “States and Financial Crises,” in Benedikte Brincker, ed., Introduction to Political Sociology, 267–282 (Copenhagen: Gyldendal Akademisk, 2013). 45. Michael Parkinson and Dai Jones, Trust Administration and Accounts, 4th ed.


pages: 356 words: 103,944

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

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

It didn’t hurt of course that Prince Rupert was family to Charles II. On May 2, 1670, the crown granted Prince Rupert and his partners a charter which established “the Governour and Company of Merchants-Adventurers Trading into Hudson’s Bay.” The company thereby created eventually came to be known as Hudson’s Bay Company. It survives to this day as HBC, Canada’s largest general retailer, which makes it also the world’s oldest joint stock company. The charter Charles II granted to Hudson’s Bay Company is an extraordinary document that confers enormous powers on the company. The king begins by commending his “beloved cousin” Prince Rupert and his associates for having led the expedition to Hudson’s Bay “at their own great cost” and for having discovered “considerable commodities,” which will produce “great advantage to us and our Kingdom.”

According to one estimate, international trade rose at more than double the rate of world incomes in this period.7 The companies that made this trade possible were mostly chartered trading monopolies organized along lines similar to Hudson’s Bay Company. Many have well-recognized names, such as the English East India Company and the Dutch East India Company, and many have left significant marks on history. The most famous among them, the English East India Company, or the “Governor and Company of Merchants of London Trading into the East Indies,” as it was originally called, was chartered in 1600 as a joint stock company. Its monopoly covered trade with the Indian subcontinent and China (including opium trade). As with the Hudson’s Bay Company, its powers extended considerably beyond trade. It had a standing army, could make war, enter into treaties, mint its currency, and administer justice. It expanded its control over India through a series of armed confrontations with the Mughal Empire and alliances with local rulers.


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, 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, 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, Ponzi scheme, Ralph Waldo Emerson, Scientific racism, South Sea Bubble, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, trade route

Even more, many classically trained elites resisted rules based on quantification. The relationships between corporations, the state, and professional accounting associations remained loosely defined. Sparked by financial fraud and failure, the British Parliament passed the Bankruptcy Act of 1831, which gave accountants a leading role as “Official Assignees” in managing bankruptcies, auctions, liquidations, and debt trials. In 1844, it passed the Joint Stock Companies Act, which aimed to regulate the finances of hundreds of companies. Trained accountants began trying to audit companies, but the job was arguably too big without an enormous bureaucracy of actuaries. The English baron, politician, and stockbroker Sir William Quilter testified to a parliamentary committee in 1849 that audits were based on personal judgment, not “dry arithmetical duty.” Attempting to predict earnings using probability was still in its infancy and, as today, was a speculative science.

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: 651 words: 180,162

Antifragile: Things That Gain From Disorder by Nassim Nicholas Taleb

Air France Flight 447, Andrei Shleifer, banking crisis, Benoit Mandelbrot, Berlin Wall, Black Swan, business cycle, Chuck Templeton: OpenTable:, commoditize, creative destruction, credit crunch, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, discrete time, double entry bookkeeping, Emanuel Derman, epigenetics, financial independence, Flash crash, Gary Taubes, George Santayana, Gini coefficient, Henri Poincaré, high net worth, hygiene hypothesis, Ignaz Semmelweis: hand washing, informal economy, invention of the wheel, invisible hand, Isaac Newton, James Hargreaves, Jane Jacobs, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Arrow, knowledge economy, Lao Tzu, Long Term Capital Management, loss aversion, Louis Pasteur, mandelbrot fractal, Marc Andreessen, meta analysis, meta-analysis, microbiome, money market fund, moral hazard, mouse model, Myron Scholes, Norbert Wiener, pattern recognition, Paul Samuelson, placebo effect, Ponzi scheme, 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, selection bias, Silicon Valley, six sigma, spinning jenny, statistical model, Steve Jobs, Steven Pinker, Stewart Brand, stochastic process, stochastic volatility, 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

Many right-wingers-in-love-with-large-corporations keep citing Adam Smith, famous patron saint of “capitalism,” a word he never uttered, without reading him, using his ideas in a self-serving selective manner—ideas that he most certainly did not endorse in the form they are presented.4 In Book IV of The Wealth of Nations, Smith was extremely chary of the idea of giving someone upside without downside and had doubts about the limited liability of joint-stock companies (the ancestor of the modern limited liability corporation). He did not get the idea of transfer of antifragility, but he came close enough. And he detected—sort of—the problem that comes with managing other people’s business, the lack of a pilot on the plane: The directors of such companies, however, being the managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own. Further, Smith is even suspicious of their economic performance as he writes: “Joint-stock companies for foreign trade have seldom been able to maintain the competition against private adventurers.”

Now, worse: Nokia, who used to be the top mobile phone maker, began as a paper mill (at some stage they were into rubber shoes). DuPont, now famous for Teflon nonstick cooking pans, Corian countertops, and the durable fabric Kevlar, actually started out as an explosives company. Avon, the cosmetics company, started out in door-to-door book sales. And, the strangest of all, Oneida Silversmiths was a community religious cult but for regulatory reasons they needed to use as cover a joint stock company. THE INVERSE TURKEY PROBLEM Now some plumbing behind what I am saying—epistemology of statistical statements. The following discussion will show how the unknown, what you don’t see, can contain good news in one case and bad news in another. And in Extremistan territory, things get even more accentuated. To repeat (it is necessary to repeat because intellectuals tends to forget it), evidence of absence is not absence of evidence, a simple point that has the following implications: for the antifragile, good news tends to be absent from past data, and for the fragile it is the bad news that doesn’t show easily.


pages: 603 words: 182,826

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

agricultural Revolution, anti-communist, Anton Chekhov, Ayatollah Khomeini, Big bang: deregulation of the City of London, British Empire, business cycle, colonial rule, Corn Laws, corporate governance, creative destruction, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, facts on the ground, Francis Fukuyama: the end of history, full employment, Gini coefficient, Google Earth, income inequality, invisible hand, James Hargreaves, James Watt: steam engine, 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, Plutocrats, Ponzi scheme, profit motive, quantitative easing, Ralph Waldo Emerson, refrigerator car, Right to Buy, road to serfdom, Robert Shiller, Robert Shiller, Ronald Reagan, spinning jenny, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, trade route, transatlantic slave trade, transcontinental railway, ultimatum game, wage slave, WikiLeaks, wikimedia commons, working poor

In 1602, the inner circle of bankers, traders, and guild masters in six of these cities used their political clout to create the United East India Company, in Dutch Vereenigde Oost-Indische Compagnie or VOC, by amalgamating those companies trading with the Orient and especially the spice islands of modern Indonesia. The behemoth that was set up, eight times larger than the English East India Company founded in London two years earlier in 1600, transformed the financial and corporate environment. Its funding brought into existence such innovations as the public sale of shares, the concept of the joint stock company where the owners’ liability for debt was limited to their shareholding, the issue of bonds backed by future earnings, a stock exchange for trading the company’s shares, and a board of directors responsible to the shareholders for running the enterprise. The phenomenal wealth generated by the VOC—for two centuries its dividends averaged almost 20 percent—lifted the development of commercial capitalism to a new level, but the company was not designed for free enterprise.

Just as powered looms had destroyed the usefulness of professional handloom weavers who had earlier displaced part-time cottage weavers, so railroads pushed aside the canals that had made wagon trains redundant. And deep-pocketed, publicly listed companies had bankrupted those private entrepreneurs who had only their own securities to fall back on. But these new industries, the chemical factories and advanced steel manufacturers of the second industrial revolution, were different, Wells pointed out. “Those engaged in great industrial enterprises,” he wrote, “whether they form joint-stock companies or are simply wealthy individuals, are invested with such economic powers that none of them can be easily pushed to the wall.” * * * The problem arose from the complexities of industrial production. At the end of the nineteenth century, a manufacturer of basic steel plate had to source iron ore with the right phosphorous content, coked coal with the right carbon content, alloys of copper and manganese in the right ratio, acquire land close to water and a railroad, build factories of the most efficient design, construct furnaces to withstand temperatures of 3,500 degrees fahrenheit, recruit and train scores of workers with skills ranging from accountancy to hammering, and find markets for the product.

The need had first been made apparent in Britain by the exceptionally high and long-term cost of building railways. A term of twenty years might be needed to pay off investment on this scale but the rewards—up to 15 percent annually for rail companies in densely populated areas—were attractive. In response to the need to bring in more investment, two pieces of legislation, the 1855 Limited Liability Act and 1856 Joint Stock Companies Act, offered protection to investors by restricting their liabilities, should a company fail, to the loss of their investment. The birth of the modern financial industry may be said to have begun in that decade. Hundreds of limited liability companies were launched and financed their operation by issuing shares. But railway companies and other high borrowers with a monopoly of operations in a particular area also chose to raise money through bonds, a method of funding once largely confined to the payment of government debt, as a way of financing their capital needs.


pages: 489 words: 111,305

How the World Works by Noam Chomsky, Arthur Naiman, David Barsamian

affirmative action, anti-communist, Ayatollah Khomeini, Berlin Wall, Bernie Sanders, Bretton Woods, British Empire, business climate, capital controls, clean water, corporate governance, deindustrialization, Fall of the Berlin Wall, feminist movement, glass ceiling, Howard Zinn, income inequality, interchangeable parts, Isaac Newton, joint-stock company, land reform, liberation theology, Monroe Doctrine, offshore financial centre, plutocrats, Plutocrats, race to the bottom, Ralph Nader, Ronald Reagan, Rosa Parks, single-payer health, strikebreaker, Telecommunications Act of 1996, transfer pricing, union organizing, War on Poverty, working poor

Those ideas, which run straight through to Dewey, are deeply anticapitalist in character. Adam Smith didn’t call himself an anticapitalist because, back in the eighteenth century, he was basically precapitalist, but he had a good deal of skepticism about capitalist ideology and practice—even about what he called “joint stock companies” (what we call corporations today, which existed in quite a different form in his day). He worried about the separation of managerial control from direct participation, and he also feared that these joint stock companies might turn into “immortal persons.” This indeed happened in the nineteenth century, after Smith’s death [under current law, corporations have even more rights than individuals, and can live forever]. It didn’t happen through parliamentary decisions—nobody voted on it in Congress.


pages: 453 words: 117,893

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

"Robert Solow", 3D printing, additive manufacturing, Asian financial crisis, augmented reality, bank run, banking crisis, basic income, Ben Bernanke: helicopter money, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, 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, Fall of the Berlin Wall, fear of failure, financial deregulation, financial innovation, Financial Instability Hypothesis, fixed income, forward guidance, full employment, Gini coefficient, global supply chain, 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-wage service sector, manufacturing employment, market bubble, means of production, mittelstand, 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 Shiller, Ronald Coase, Ronald Reagan, school vouchers, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, special economic zone, Steve Jobs, 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

Adam Smith may be the economist who named the ‘invisible hand’ that allowed the market to dictate what was produced and how it was priced, but he did not think highly of the services sector. A product of his time, he did not believe that services could produce output that was as valuable as that from a factory or a bakery. In fact, Smith didn’t condone much of what makes up the modern economy, for example he wasn’t in favour of joint-stock companies, which are the basis of modern-day corporations. His legacy continues to affect attitudes today. Even the way that national statistics are collected breaks down manufacturing data in great detail while aggregating much of services output. That’s probably also because it’s hard for statisticians to put a figure on what a consultant contributes while he sits at his computer or what a meeting adds to national output.

higher education Holland Hong Kong Hoover, Herbert housing market Huawei human capital Hume, David hyperinflation hysteresis imports inclusive growth income inequality Index Number Institute (INI) Index Visible Company indexation schemes India individualism Indonesia industrialization and agriculture in China Industrial Revolution reindustrialization Second Industrial Revolution and the workers’ movement see also deindustrialization inequality and capitalism in China drivers of and globalization growing Hayek and global inequality income inequality and Marshall reasons for rising inequality over past century and skill-biased technical change in South Africa and tax and technological change US and welfare systems inflation and central bank regimes and debt indexation hyperinflation and savings stagflation and wages information and communications technology (ICT) smartphones and improvements in technology see also smartphones/mobile phones Information Technology and Innovation Foundation (US) infrastructure investment innovation and challenge of staying on top China’s challenge as engine of economic growth industry-specific Schumpeterian ‘creative destruction’ and Institute of Economic Affairs (IEA) institutions and economic development Myanmar and North self-perpetuation of and technological progress Vietnam’s institutional challenge intangible investments interest rates and the 2008 financial crisis and the Great Depression investment and low rates negative and stocks International Labour Organization (ILO) International Monetary Fund (IMF) International Working Men’s Association (IWMA) internet investment and aggregate demand in economy capital investment with fixed returns foreign (direct) growth through in human capital infrastructure see infrastructure investment investment banks/banking Keynes’ view of investors and low interest rates low investment following financial crises private and productivity public see public investment R&D see research and development investment Robinson on capital accumulation from as share of GDP ‘socializing investment’ and tax UK foreign investment after Brexit Ireland UK exports to Israel iTunes Japan ‘Abenomics’ economic growth economic stagnation GDP ‘lost decades’ manufacturing national debt productivity real estate crash in 1990s robotics as second largest economy stagnant median wages temporary workers wage growth Jevons, W. Stanley Jobs, Steve Johnson, Lyndon B. joint-stock companies Jones, Homer Journal of Economic Perspectives Journal of Political Economy JPMorgan Juncker Plan Kahn, Richard Kant, Immanuel Keynes, John Maynard and the backlash against globalization and the Bloomsbury Group and Bretton Woods System and budget deficits counter-cyclical policies and crowding out on depression/recession The Economic Consequences of the Peace fiscal activism and Friedman The General Theory of Employment, Interest and Money and government spending on government’s role in economy and Hayek and investors Keynesian revolution legacy life and times of and Marshall and Niemeyer and paradox of thrift at Paris Peace Conference Prices and Production and public investment and Robbins Robinson and Keynes/Keynesian economics and Schumpeter and ‘socializing investment’ A Tract on Monetary Reform and the Treasury A Treatise on Money wealth Keynes, John Neville Khrushchev, Nikita Knight, Frank Kodak Korea North South Krugman, Paul Krupp Kuznets, Simon labour force growth labour productivity and work incentive laissez-faire landowners Lassalle, Ferdinand Latin America currency crisis (1981–82) see also specific countries League of Nations Lehman Brothers Lenin, Vladimir Leontief, Wassily Lewis, Arthur Lewis, Barbara (‘Bobby’) Life Extension Institute Linda for Congress BBC documentary London London School of Economics and Political Science London Stock Exchange Long Depression (1880s) Lopokova, Lydia Louis XIV LSE see London School of Economics and Political Science Lucas, Jr, Robert Ma, Jack (Ma Yun) Maastricht Treaty macroprudential policy see also central banks; financial stability Malaysia Malthus, Thomas Manchester Mandela, Nelson manufacturing additive (3D printing) automation in China and deindustrialization GDP contribution in UK German high-tech and industrialization see also industrialization Japan ‘manu-services’ ‘March of the Makers’ mass-manufactured goods and national statistics reshoring rolling back deindustrialization process and Smith trade patterns changed by advanced manufacturing US Mao Zedong Maoism ‘March of the Makers’ marginal utility analysis marginalism market forces/economy ‘Big Bang’ (1986) competition see competition and economic equilibrium see economic equilibrium emerging economies see emerging economies Hayek and the supremacy of market forces ‘invisible hand’ and laissez-faire and Marx 4 self-righting markets supply and demand see supply and demand Marshall, Alfred on approach to economics and the backlash against globalization and the Cambridge School and decentralization Economics of Industry and education’s role in reducing inequality and inequality and Keynes and laissez-faire legacy life and times of marginal utility analysis and Marx and poverty Principles of Economics and utility theory Marshall, Mary, née Paley Marx, Heinrich Marx, Henriette, née Pressburg Marx, Jenny, née von Westphalen Marx, Karl and agriculture and the backlash against globalization Capital and capitalism and China and class Communist Manifesto (with Engels) communist theories A Contribution to the Critique of Political Economy doctoral thesis The Eighteenth Brumaire of Louis Bonaparte and Engels journalism life and times of and Marshall and rate of profit and Ricardo and Russia on service sector workers surplus value theory and the Young Hegelians Marx, Laura Marx, Louise Marxism and the Austrian School and unemployment see also Marx, Karl Mason, Edward mathematical economics Mauritius May, Theresa Meade, James median income Menger, Carl mercantilist policies see also Corn Laws Merkel, Angela Mexico middle class China and economic growth and economic inequality and European revolutionaries income and industrialization and Keynes and Heinrich Marx as proportion of world population and Schumpeter social resentment US Mill, James Mill, John Stuart On Liberty Principles of Political Economy Minsky, Hyman Mises, Ludwig von Mitchell, Wesley mobile phones/smartphones monetarism see also Friedman, Milton monetary policy and Friedman tools see also quantitative easing (QE) see also central banks monopolies and Marx natural and Robinson and Schumpeter and Smith and Sraffa monopsony Mont Pelerin Society Morgenthau, Henry mortgage-backed securities (MBS) mortgage lending and the 2008 financial crisis sub-prime Myanmar Myrdal, Gunnar Napoleon I Napoleon III Napoleonic Wars national/official statistics China UK US national debt Austria and central banks China and creditors and debt forgiveness and deficits euro area and foreign exchange reserves and investment Japan major economies owed to foreigners and quantitative easing and Ricardian equivalent UK US Vietnam National Health Service (UK) National Infrastructure Commission (UK) Navigation Acts neoclassical economics convergence hypothesis ‘neoclassical synthesis’ New Neoclassical Synthesis see also Fisher, Irving; Marshall, Alfred; Solow, Robert Neoclassical Synthesis see also Samuelson, Paul New Classicists see also Lucas, Jr, Robert New Deal New Institutional Economics see also North, Douglass New Keynesians see also Stiglitz, Joseph New Neoclassical Synthesis New Rhineland News (Cologne) New Rhineland News: Review of Political Economy (London) new trade theory New York Herald New York Times New York Tribune Newcomb, Simon Newsweek Niemeyer, Sir Otto Nissan Nixon, Richard Nokia non-tariff barriers (NTBs) Nordhaus, William North, Douglass and the backlash against globalization and development challenges doctoral thesis The Economic Growth of the United States from 1790 to 1860 and institutions Institutions, Institutional Change and Economic Performance life and times of Nobel Prize path dependence theory and Smith North, Elizabeth, née Case North Korea Northern Rock Oak Ridge National Laboratory Obama, Barack Occupy movement oil industry Organisation for Economic Co-operation and Development (OECD) Osborne, George Overseas Development Institute (ODI) Oxford University Balliol College Paine, Thomas Paley, Mary Paris Peace Conference path dependence theory see also North, Douglass Peel Banking Act Philips, Lion Philips (electronics company) physical capital Physiocrats Pigou, Arthur Cecil Piketty, Thomas pin-making Pinochet, Augusto Ponzi finance populism Portugal poverty aid and development see economic development challenges eradication/reduction frictional and Marshall and Marx and median income people lifted from in South Africa productivity and agriculture ‘benign neglect’ of Britain’s productivity puzzle and computers and economic growth and education and factor reallocation and Germany and Hayek incentives and industry/industrial revolution and innovation and investment Japan and jobs labour see labour productivity and land low and Marshall moving into higher sectors of and pricing raising and Schumpeter and secular stagnation slow economic and productivity growth and the future and specialization and technology total factor productivity and trade and wages Prohibition protectionism agricultural see also Corn Laws Navigation Acts public-private partnerships public investment and Keynes public spending general government spending see government spending public investment see public investment squeeze see also austerity Puerto Rico quantitative easing (QE) Quantity Theory of Money see also Friedman, Milton; monetarism; Equation of Exchange Rand, Ayn RAND Corporation rate of profit rational expectations theory Reagan, Ronald recession/depression debt-deflation theory of depression Great Depression see Great Depression (1930s) Great Recession (2009) Greece ‘hangover theory’ of Hayek on and Keynes Long Depression (1880s) second recession (1937–38: recession within the Depression) in UK 1970s redistribution Regional Comprehensive Economic Partnership (RCEP) Reich, Robert reindustrialization Reisinger, Anna Josefina Remington Rand rent-seeking research and development (R&D) investment China Research in Motion (RIM) retail trade Rhineland News Ricardian equivalence Ricardo, David and the backlash against globalization and class comparative advantage theory and the Corn Laws Essay on the Influence of a Low Price of Corn on the Profits of Stock The High Price of Bullion international trade theory as a landlord life and times of as a loan contractor and Marx On the Principles of Political Economy and Taxation and Schumpeter and Smith wealth Ricardo, Priscilla Robbins, Lionel Robinson, Austin Robinson, James Robinson, Joan The Accumulation of Capital and the AEA and the backlash against globalization and communism Economic Philosophy The Economics of Imperfect Competition Essays in the Theory of Employment and imperfect competition Introduction to the Theory of Employment and Keynes and Keynesian economics life and times of and monopolies monopsony theory and Schumpeter and unemployment wage determination theory robotics Rodrik, Dani Rolls-Royce Roosevelt, Franklin D New Deal Russia 1905 Revolution and Lenin and Marx Samsung Samuelson, Paul and the backlash against globalization Economics factor-price equalization theorem Nobel Prize savings for capital investment and inflation and Keynes and the ‘paradox of thrift’ Say, Jean-Baptiste Schmoller, Gustav von Schumpeter, Anna, née Reisinger Schumpeter, Gladys, née Seaver Schumpeter, Joseph and the backlash against globalization as banker/investor Business Cycles and capitalism Capitalism, Socialism and Democracy ‘creative destruction’, innovation and ‘The Crisis of the Tax State’ and the Econometric Society economics and entrepreneurs on Fisher and Hayek History of Economic Analysis and Keynes legacy life and times of The Nature and Content of Theoretical Economics and perfect competition and Ricardo and Robinson Theory of Economic Development wealth Schumpeter, Romaine Elizabeth, née Boody Schumpeter Group of Seven Wise Men Schwartz, Anna Jacobson Schwarzenegger, Arnold Scottish Enlightenment Seaver, Gladys Ricarde see Schumpeter, Gladys secular stagnation self-interest services sector China and deindustrialization financial services see financial services global trade in services human capital investment invisibility of liberalization ‘manu-services’ and Marx move away from and national statistics output measurement productivity and innovation and Smith Trade in Services Agreement (TiSA) UK US shadow banking Shiller, Robert silver Singapore Skidelsky, Robert skill-biased technical change skills shortage small and medium-sized enterprises (SMEs) smartphones/mobile phones Smith, Adam and the backlash against globalization as Commissioner of Customs for Scotland economic freedom on ‘invisible hand’ of market forces and laissez-faire economics legacy life and times of and manufacturing and Marx and North and Physiocracy on rate of profit and rebalancing the economy and Ricardo and the services sector and state intervention The Theory of Moral Sentiments The Wealth of Nations social capital social networks social services socialism communist see communism vs welfare state capitalism Solow, Barbara (‘Bobby’), née Lewis Solow, Robert and the backlash against globalization with Council of Economic Advisers doctoral thesis economic growth model ‘How Economic Ideas Turn to Mush’ John Bates Clark Medal and Keynesian economics life and times of Nobel Prize Presidential Medal of Freedom and technological progress Sony Sorrell, Sir Martin South Africa South Korea Soviet Union and China Cold War collapse of see also Russia Spain specialization spontaneous order Sraffa, Piero stagflation Stanley Black & Decker state government regulation intervention in the economy laissez-faire STEM (science, technology, engineering and mathematics) workers sterling Stigler, George Stiglitz, Joseph stocks and Fisher and interest rates US railroad Strachey, Lytton Strahan, William Strong, Benjamin Sturzenegger, Federico Summers, Lawrence supply and demand see also market forces/economy: ‘invisible hand’ Sustainable Development Goals (SDGs) Taiwan Tanzania tariffs taxation and austerity devolved powers of flat for government deficit spending before Great Depression and inequality and investment Japan and Marshall negative income tax to pay off national debt Pigouvian tax progressive and Reagan redistribution through Schumpeter on Smith on Taylor, John Taylor, Overton H.


pages: 369 words: 121,161

Alistair Cooke's America by Alistair Cooke

Albert Einstein, Alistair Cooke, British Empire, Charles Lindbergh, double entry bookkeeping, full employment, Gunnar Myrdal, Hernando de Soto, imperial preference, interchangeable parts, joint-stock company, Maui Hawaii, Ralph Nader, Ralph Waldo Emerson, Spread Networks laid a new fibre optics cable between New York and Chicago, strikebreaker, The Wealth of Nations by Adam Smith, transcontinental railway, Triangle Shirtwaist Factory, urban sprawl, wage slave, Works Progress Administration

But life was bleak for the common man, and he must have been greatly taken with these hints of a country with no recruiting sergeants and bailiffs, no spies, magistrates, tithe gatherers, or other such badgering types. The men of substance who financed the colonies were not bemused by such fictions, but they saw the prospect of a breathtaking investment in a country that, unlike their own, had unbounded virgin land. Since all newly discovered lands belonged automatically to the Crown, the men who warmed to this enterprise had first to procure from James I a charter as a trading company. This was a joint-stock company, for individuals had learned to their cost in many lone trade ventures in Europe and the East that a private purse carried no authority abroad and was ‘cold comfort to adventures.’ So the men who jointly raised the money were such as Sir John Popham, a lord chief justice; Sir Thomas Smith, director of the East India Company; and Sir Ferdinando Gorges, governor of the fort at Plymouth. They were out to finance what they hoped would be profitable plantations in Virginia, guaranteed by the authority of the state.

As it happened, the forty-niners struck a remarkably docile period in the history of the Indian wars, and the Indians in the main appeared to act as guides, often to proffer mules and food and in other ways assist the survival of the white man. But the standby military organization was a godsend in other ways, providing as it did a roster for the daily chores and a firm discipline when hunger and exhaustion transformed family encampments into bear pits. Many seagoing Yankees formed joint stock companies before they left, and later improvised written constitutions for their mutual protection. The most famous and successful example of self-government was the Charlestown Company, formed in the East, which subscribed its equipment and expenses, formed a committee to study the metallurgy of mining, and drew up a remarkably farsighted constitution that held them unscathed through sore trials, provided for the pooling of such gold as they might dig, and an equal, audited distribution when the company returned East.


pages: 537 words: 200,923

City: Urbanism and Its End by Douglas W. Rae

agricultural Revolution, barriers to entry, business climate, City Beautiful movement, complexity theory, creative destruction, desegregation, edge city, ghettoisation, 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, manufacturing employment, New Economic Geography, new economy, New Urbanism, Peter Calthorpe, plutocrats, Plutocrats, Saturday Night Live, the built environment, The Death and Life of Great American Cities, the market place, urban planning, urban renewal, War on Poverty, white flight, Works Progress Administration

The old technology kept the firms small by making it very difficult to organize large plants around intensive energy consumption—and kept upriver energy consumption at a distance from easy and cheap means of distribution. Moreover, the going pattern of economic organization made it difficult to amass capital in quantities required by large-scale factories. The standard forms of ownership were sole proprietorship and partnership, both of which typically required that the direct operators of a firm also be its equity investors.36 The coming dominance of the joint stock company in the years after 1840 would change that irrevocably. Agriculture also limited centralization. Agricultural energy could beat either of two principal paths into the economy—either as work done by animal muscle or as vegetable foodstuffs consumed by those animals whose muscle-power would perform work. Neither could be generated without access to wide open spaces and good soil, either for grazing or for cultivation.

Even Mayor Rice was an immigrant of sorts, his family having moved from Vermont to rural Massachusetts to nearby Cheshire and thence (during his childhood) to New Haven. These immigrants—along with thousands more arriving from the American hinterlands—captured both manufacturing jobs and spin-off entrepreneurial niches created by the former. At the center of the urban economy were 143 fairly large manufacturing concerns organized as joint stock companies. These incorporated firms stood in sharp contrast to sole proprietorships and partnerships because many of them were capable of raising capital in increasing quantities and of operating large plants sending products to markets on a national and even international scale. The largest—Sargent Hardware, Winchester Repeating Arms, and New Haven Clock—operated almost as cities unto themselves.

The Bigelow family was living in New Haven in 1910. Sperry & Barnes was a meat-packing firm handling about 200,000 hogs per year. The firm was, by 1910, controlled by Armour & Company of Chicago. Peck Brothers & Company manufactured plumbers’ materials and fittings for the distribution of water, steam, and gas. Like Sargent, Peck Brothers operated sales offices in Chicago, New York, and Boston. This joint stock company had reached $720,000 in capitalization by 1897. A lesser number of major manufacturing operations were in fact branches of companies grounded in other cities. These were exceptions to the New Haven pattern of 1910–16: the plants were owned by corporations with no grounded connection with the city. Their top management was located elsewhere, and their ownership was generally outside Connecticut.


pages: 136 words: 42,864

The Cable by Gillian Cookson

British Empire, cable laying ship, joint-stock company, Monroe Doctrine, undersea cable

The idea was that a British company would attract a wider pool of investors, and deal more effectively with governments and cable-makers. The focus of the enterprise thus shifted decisively to London. The new company received an enthusiastic endorsement from The Times, whose leader writer had the utmost faith both in the directors and in the engineers involved: It is not our custom to come forward as the advocates of joint-stock companies, but surely this project constitutes an exception. The interests of this nation and of the civilised world are so closely bound up with its success that we feel justified in recommending it to the notice of our readers. It seemed to The Times that the scheme could not fail: ‘The enterprise must be badly carried out indeed if the revenue … is not sufficient to pay a handsome interest upon the outlay.’


pages: 427 words: 124,692

Empire: What Ruling the World Did to the British by Jeremy Paxman

British Empire, call centre, Cape to Cairo, colonial rule, conceptual framework, Etonian, European colonialism, Fellow of the Royal Society, imperial preference, joint-stock company, Khartoum Gordon, Kibera, land tenure, Livingstone, I presume, mass immigration, offshore financial centre, polynesian navigation, Scramble for Africa, transatlantic slave trade

The English purpose in Ireland, argued Sir Thomas Smith, was no different to that of the Romans when they first encountered the primitive ancient Britons. The Irish were culturally inferior to the English, and, he advised his son as he left for Ulster, the English should follow the models of Rome, Carthage and Venice. The principles of colonization in Ireland were applied in North America, too. Many of the financial mechanisms – the creation of joint-stock companies, for example – were similar. Attitudes towards the indigenous peoples also echoed: like the Irish, native Americans were considered lazy, unsophisticated and feckless – adjectives which the British used of natives in plenty of later colonies. But these settlements in the Americas were quite unlike most of the later colonies in Africa or the South Seas. Elsewhere, while English might be the formal language of government, it existed alongside local languages, customs and hierarchies.

I: The Origins of Empire, British Overseas Enterprise to the Close of the Seventeenth Century (Oxford and New York, 1998) ____, ‘To Establish a Common Wealthe: Captain John Smith as New World Colonist’, Virginia Magazine of History and Biography 96 (1988) Carlos, Ann M. and Stephen Nicholas, ‘ “Giants of an Earlier Capitalism”: The Chartered Trading Companies as Modern Multinationals’, Business History Review 62 (1988) ____, ‘Theory and History: Seventeenth-Century Joint-Stock Chartered Trading Companies’, Journal of Economic History 56 (1996) Cassell, John, John Frederick Smith and William Howitt, Cassell’s Illustrated History of England, 9 vols. (London, 1906) Chamberlain, Joseph, Mr Chamberlain’s Speeches, ed. Charles W. Boyd, 2 vols. (London, 1914) Chatterton, Edward Keble, Britain’s Record: What She Has Done for the World (London, 1911) Chaudhuri, K., The English East India Company: The Study of an Early Joint Stock Company, 1600–1640 (London, 1965) Chaudhuri, Sashi Bhusan, English Historical Writings on the Indian Mutiny (Calcutta, 1979) Chen, Jeng-Guo S., ‘Gendering India: Effeminacy and the Scottish Enlightenment’s Debates over Virtue and Luxury’, Eighteenth Century 51 (2010) Chesterton, G. K., The New Jerusalem (London 1920) Chitty, Susan, Playing the Game: A Biography of Sir Henry Newbolt (London, 1997) Churchill, Winston, Blood, Toil, Tears and Sweat: Winston Churchill’s Famous Speeches, ed.


pages: 504 words: 126,835

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

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

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

Strangelove character (i) driverless vehicles (i), (ii), (iii), (iv) drones, and regulation (i) Drucker, Peter (i), (ii) drugs see pharmaceutical sector dual class stock structures (i) Dutch disease (i) Dutch tulip mania (i) dynamism see discriminate dynamism theory; economic dynamism East Asia, trade and value chains (i) Ebenezer Scrooge character (i) eccentricity (i), (ii), (iii), (iv), (v) see also culture of individualism; dissent economic dynamism and capitalism (i), (ii), (iii) and innovation (i), (ii), (iii) and market contestability (i) economic growth compound growth (i) and productivity (i), (ii) and regulatory complexity/uncertainty (i) see also GDP (gross domestic product) Economic Policy Institute (Washington, DC) (i) The Economist on global corporations (i) on new technology and social dislocation (i) on pensioners vs. working-age households incomes (i) “Planet of the Phones” (i) on share buybacks (i) economy “bazaar economy” (Hans-Werner Sinn) (i) data economy (i) knowledge-based economy (i) “new economy” (i) and technology (i), (ii), (iii) see also economic dynamism; economic growth; financial economy; GDP (gross domestic product) EFAMA, on asset management industry (i) Einstein, Albert (i), (ii) electronic devices (i) electronic wallets (i) embedded liberalism (i) emerging markets (i), (ii), (iii), (iv), (v) employment protection legislation (i) see also labor; unemployment Energy Policy and Conservation Act (EPCA, US) (i) energy sector and antitrust laws (i) and innovation (i) and regulation (i), (ii) renewable/green energy: and regulation in Europe (i), (ii); and sunk costs (i) Engels, Friedrich, Communist Manifesto (Marx and Engels) (i), (ii) Enlightenment (i), (ii) Enron (i) entrepreneurs vs. bureaucrats (i), (ii) vs. managerialists (i) and passion vs. market complexity (i), (ii) Schumpeter on (i) tech entrepreneurs (i) see also entrepreneurship entrepreneurship aging trend (i), (ii) and capitalism (i), (ii) and dual class stock structures (i) and equity financing (i) and globalization (i), (ii) and innovation (i), (ii) and organizational diversification (i) vs. planning machines (i), (ii) and precautionary regulations (i) and size of firms (i) and strategy (i) and uncertainty (i) see also culture of experimentation; culture of individualism; entrepreneurs; start-ups equity vs. debt funding (i), (ii), (iii), (iv), (v), (vi), (vii) and institutional investors (i) and retirement savings (i), (ii) Ericsson (i), (ii) Ericsson, John (i) Europe asset management industry (i) big firms’ relative importance (i) capital expenditure (capex) (i), (ii)n39 corporate renewal levels (i) corporate savings (i) debt vs. equity financing (i) energy sector and antitrust laws (i) German-Central European supply chain (i) higher- vs. lower-income countries (i) labor, and tax (i) labor markets: low rates of flexibility (i); and lower productivity (i) mergers and acquisitions (i) pensions (i) productivity (i), (ii), (iii); total factor productivity (TFP) growth (i) R&D spending (i), (ii) regulation: compliance officers and Basel III (i); deregulation trend (i); index of regulatory freedom (i), (ii); index of regulatory trade barriers (i), (ii); medical devices (i); occupational/professional standards (i); technological platforms (i) services and globalization (i) trade: and big business (i); index of regulatory trade barriers (i), (ii); and value chains (i) see also eurozone; European Union European Food Safety Authority (EFSA) (i) European Union biofuels regulations (i) cadmium exemption issue (i), (ii) capitalist ownership and dual class stocks (i) chemicals regulations (i), (ii) exports to China (i) financial regulations (i), (ii); banks and Basel III rules (i), (ii) genetically modified organisms (GMOs) regulations (i), (ii), (iii) GM potato regulations (i) Leave campaign and older generation (UK) (i) nanotechnology regulations (i), (ii) precautionary principle (i) R&D scoreboards (i), (ii) Single Market (i) see also eurozone; Europe eurozone Germany and “sick man of the euro” label (i) pensions (i) see also Europe; European Union experimentation, culture of (i), (ii) see also entrepreneurs; entrepreneurship external capital markets (i), (ii), (iii), (iv), (v) Fabian Society (i) Facebook (i), (ii), (iii), (iv) failure failing companies and planning (i) formula of failure (i) and innovation process (i) Fairchild Semiconductor (i) FDI (foreign direct investment) (i), (ii), (iii) Federal Deposit Insurance Corporation (i) Federal Express (FedEx) (i), (ii) Feldstein, Martin (i) Fernald, John (i) fiduciary duties and laws (i) financial capitalism (i), (ii), (iii), (iv) see also financial economy financial crisis (2007) and aspirations (i) and financial regulations (i), (ii), (iii) and globalist worldview (i) and rich people vs. capitalists issue (i) and sovereign wealth funds (i) and stock markets (i) and Wall Street (i), (ii) see also Great Recession financial economy and gray capitalism (i), (ii), (iii) vs. real economy (i), (ii), (iii) financial institutions and financial regulations (i), (ii) and globalization (i) SIFIs (systemically important financial institutions) (i) see also banks financial regulations (i), (ii), (iii), (iv) financial sector growth of and productivity (i) financial services, and globalization (i) financial skills, vs. business-building skills (i) Financial Times on compliance officers (i) on French ban on Mercedes-Benz cars (i) Fink, Lawrence (i) Finland dependence on larger enterprises (i) Nokia story (i) firm boundaries and competition (i), (ii) and corporate managerialism (i), (ii), (iii), (iv), (v), (vi), (vii) and globalization (i) and innovation (i), (ii), (iii) and market concentration (i) and multinationals (i), (ii) and pharmaceutical sector (i) and R&D (i), (ii) and specialization (i), (ii), (iii), (iv), (v) see also firms firms entry-and-exit rates (i), (ii), (iii), (iv) high-growth firms (i) home-market firms vs. multinationals (i) interfirm vs. intrafirm trade (i) joint-stock companies (i), (ii) as logistics hubs (i), (ii) role of in the economy (i) start-ups (i), (ii), (iii), (iv), (v) unicorns (i) see also big firms; corporate size; firm boundaries; multinational (global) companies first-mover advantage (i) Food and Drug Administration (FDA, US) (i), (ii), (iii) food retailing, and globalization (i) Ford, Henry (i), (ii) Ford, Martin, The Rise of the Robots (i), (ii) foreign direct investment (FDI) (i), (ii), (iii) Fortune 500 companies (i) Foster, George (i) Foxconn (i) France ban on Mercedes-Benz cars (i) CAC 40 index (i) corporate renewal levels (i) dependence on larger enterprises (i) dirigisme (i) exports to China (i) and globalization (i) productivity, decline in and labor market rules (i) profit margins (i) public debt (i) R&D spending (i) regulation: index of regulatory freedom (i), (ii); index of regulatory trade barriers (i), (ii); medical devices (i); taxi services (i) trade: and big business (i); index of regulatory trade barriers (i), (ii) Fraser Institute, index of regulatory freedom (i), (ii) free-market capitalism (i) free speech, and academia (i) freedom (i), (ii), (iii) see also culture of individualism; dissent; eccentricity French Mississippi finance bubble (i) Frey, Carl Benedikt (i) Friedman, Milton (i) Fukuyama, Francis, The End of History and the Last Man (i) future, the (and how to prevent it) capitalist decline and pessimism (i) from corporate globalism to global corporatism (i) rise of regulatory uncertainty (i) “silver tsunami” for cash and pensions (i) state of Western economies and future imperfect (i) suggested steps to prevent the future: agency and economic history (i); boosting market contestability (i); nurturing culture of dissent and eccentricity (i); severing gray capital–corporate ownership link (i) Future Perfect, A (Micklethwait and Wooldridge) (i) G7 (Group of Seven) countries, labour productivity (i), (ii) Galbraith, John Kenneth, The New Industrial State (i), (ii), (iii), (iv), (v), (vi) Gallup, job satisfaction survey (i) Galston, William (i) Gates, Bill (i) GATT (General Agreement on Tariffs and Trade) (i) see also World Trade Organization (WTO) GDP (gross domestic product) and business investment (i), (ii), (iii) China’s (2014) (i), (ii) declining trend (i), (ii) and financial sector growth (i) GDP statistics issues (i) and global trade (i) and globalization (i) ICT hardware investment as share of (i), (ii) labor’s share of (i) and pensions (i) and R&D spending (i), (ii) and robots (i) Gekko character (Wall Street movie) (i) General Electric (GE) (i), (ii) generations boomer (or baby boomer) generation (i), (ii), (iii), (iv) The Clash of Generations (Kotlikoff and Burns) (i) EU Leave campaign and older generation (UK) (i) and income inequality (i) technology-frustrated generation (i) genetically modified (GM) potato, and EU regulation (i) genetically modified organisms (GMOs), and EU regulation (i), (ii), (iii) geographical zoning laws (i) Germany aging population (i) business investment declining trend (i) car industry: French ban on Mercedes-Benz cars (i); and value chains (i) corporate profit margins (1990–2014) (i), (ii), (iii), (iv) corporate renewal levels (i) DAX 30 index (i) dependence on larger enterprises (i) exports to China (i) German-Central European supply chain (i), (ii) and globalization (i), (ii), (iii), (iv) income inequality and generations (i) pensions (i) productivity: decline in and labor market rules (i); and wages (i) regulation: bureaucracy brake (i); deregulated vs. regulated sectors 148–9 index of regulatory freedom 151, (i); index of regulatory trade barriers 152, (i); medical devices (i); taxi services (i) “sick man of the euro” (i) trade: index of regulatory trade barriers (i), (ii); and value chains (i) Gerschenkron, Alexander (i), (ii) Gerstner, Louis (i) Ghosh, Shikhar (i) Gilder, George (i) global firms see multinational (global) companies global trade and containerization (i) expansion phases (i) and globalization, 2nd phase of (i) growth statistics (i) and market contestability (i) and multinationals (i), (ii) regionalization of Asia’s trade growth (i) regulatory trade barriers (i), (ii), (iii) see also mercantilism; protectionism; trade “Globalise or Fossilise!”


pages: 1,477 words: 311,310

The Rise and Fall of the Great Powers: Economic Change and Military Conflict From 1500 to 2000 by Paul Kennedy

agricultural Revolution, airline deregulation, anti-communist, banking crisis, Berlin Wall, Bretton Woods, British Empire, cuban missile crisis, deindustrialization, Deng Xiaoping, European colonialism, floating exchange rates, full employment, German hyperinflation, imperial preference, industrial robot, joint-stock company, laissez-faire capitalism, long peace, means of production, Monroe Doctrine, mutually assured destruction, night-watchman state, North Sea oil, nuclear winter, oil shock, open economy, Peace of Westphalia, Potemkin village, price mechanism, price stability, RAND corporation, reserve currency, Ronald Reagan, Silicon Valley, South China Sea, South Sea Bubble, spice trade, spinning jenny, stakhanovite, The Wealth of Nations by Adam Smith, trade route, University of East Anglia, upwardly mobile, zero-sum game

In addition, the steady increases in European commerce, especially in essential products such as cloth and naval stores, together with the tendency for the seasonal fairs of medieval Europe to be replaced by permanent centers of exchange, led to a growing regularity and predictability of financial settlements and thus to the greater use of bills of exchange and notes of credit. In Amsterdam especially, but also in London, Lyons, Frankfurt, and other cities, there arose a whole cluster of moneylenders, commodity dealers, goldsmiths (who often dealt in loans), bill merchants, and jobbers in the shares of the growing number of joint-stock companies. Adopting banking practices which were already in evidence in Renaissance Italy, these individuals and financial houses steadily created a structure of national and international credit to underpin the early modern world economy. Nevertheless, by far the largest and most sustained boost to the “financial revolution” in Europe was given by war. If the difference between the financial burdens of the age of the Philip II and that of Napoleon was one of degree, it still was remarkable enough.

Yet however natural all this may appear to later eyes, it is important to stress that the success of such a system depended on two critical factors: reasonably efficient machinery for raising loans, and the maintenance of a government’s “credit” in the financial markets. In both respects, the United Provinces led the way—not surprisingly, since the merchants there were part of the government and desired to see the affairs of state managed according to the same principles of financial rectitude as applied in, say, a joint-stock company. It was therefore appropriate that the States General of the Netherlands, which efficiently and regularly raised the taxes to cover governmental expenditures, was able to set interest rates very low, thus keeping down debt repayments. This system, superbly reinforced by the many financial activities of the city of Amsterdam, soon gave the United Provinces an international reputation for clearing bills, exchanging currency, and providing credit, which naturally created a structure—and an atmosphere—within which long-term funded state debt could be regarded as perfectly normal.

See also the two general surveys by Wernham, Before the Armada: The Growth of English Foreign Policy 1485–1588 (London, 1966), and The Making of Elizabethan Foreign Policy 1588–1603 (Berkeley/Los Angeles/London, 1980). 68. For these figures, see F. C. Dietz, “The Exchequer in Elizabeth’s Reign,” Smith College Studies in History, vol. 8, no. 2 (January 1923); idem, English Public Finance 1485–1641, vol. 2, 1558–1641, chs. 2–5; W. R. Scott, The Constitution and Finance of English, Scottish and Irish Joint Stock Companies to 1720, 3 vols. (Cambridge, 1912), vol. 3, pp. 485–544. 69. Loades, Politics and the Nation, pp. 301ff; R. Ashton, The Crown and the Money Market 1603–1640 (Oxford, 1960), passim, espec. chs. 2 and 7. 70. R. Ashton, The English Civil War: Conservatism and Revolution 1603–1649 (London, 1979); C. Hill, The Century of Revolution 1603–1714 (Edinburgh, 1961), pt. 1; C. Russell (ed.), The Origins of the English Civil War (London, 1973); L.


pages: 725 words: 221,514

Debt: The First 5,000 Years by David Graeber

Admiral Zheng, anti-communist, back-to-the-land, banks create money, Bretton Woods, British Empire, carried interest, cashless society, central bank independence, 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: store of value / unit of account / medium of exchange, moral hazard, oil shock, Panopticon Jeremy Bentham, Paul Samuelson, payday loans, place-making, Ponzi scheme, price stability, profit motive, reserve currency, Right to Buy, Ronald Reagan, seigniorage, sexual politics, short selling, Silicon Valley, South Sea Bubble, 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

Some even talk about “monastic capitalism.”171 Still, the ground was only really prepared for capitalism in the familiar sense of the term when the merchants began to organize themselves into eternal bodies as a way to win monopolies, legal or de facto, and avoid the ordinary risks of trade. An excellent case in point was the Society of Merchant Adventurers, charted by King Henry IV in London in 1407, who, despite the romantic-sounding name, were mainly in the business of buying up British woolens and selling them in the Flanders fairs. They were not a modern joint-stock company, but a rather old-fashioned Medieval merchant guild, but they provided a structure whereby older, more substantial merchants could simply provide loans to younger ones, and they managed to secure enough of an exclusive control over the woolen trade that substantial profits were pretty much guaranteed.172 When such companies began to engage in armed ventures overseas, though, a new era of human history might be said to have begun.

Its collapse was followed the next year by the collapse of John Law’s famous Banque Royale in France, another central-bank experiment—similar to the Bank of England—that grew so quickly that within a few years it had absorbed all the French colonial trading companies, and most of the French crown’s own debt, issuing its own paper money, before crashing into nothingness in 1721, sending its chief executive fleeing for his life. In each case, this was followed by legislation: in Britain, to forbid the creation of new joint-stock companies (other than for the building of turnpikes and canals), and in France, to eliminate paper money based in government debt entirely. It’s unsurprising, then, that Newtonian economics (if we may call it that)—the assumption that one cannot simply create money, or even, really, tinker with it—came to be accepted by almost everyone. There had to be some solid, material foundation to all this, or the entire system would go insane.

Charles MacKay has left us some immortal descriptions of the first of these, the famous “South Sea Bubble” of 1710. Actually, the South Sea Company itself (which grew so large that at one point it bought up most of the national debt) was just the anchor for what happened, a giant corporation, its stock constantly ballooning in value, that seemed, to put it in contemporary terms, “too big to fail.” It soon became the model for hundreds of new start-up offerings: Innumerable joint-stock companies started up everywhere. They soon received the name Bubbles, the most appropriate imagination could devise … Some of them lasted a week or a fortnight, and were no more heard of, while others could not even live out that span of existence. Every evening produced new schemes, and every morning new projects. The highest of the aristocracy were as eager in this hot pursuit of gain as the most plodding jobber in Cornhill.89 The author lists, as arbitrary examples, eighty-six schemes, ranging from the manufacture of soap or sailcloth, the provision of insurance for horses, to a method to “make deal-boards out of sawdust.”


Profit Over People: Neoliberalism and Global Order by Noam Chomsky

Bernie Sanders, Bretton Woods, declining real wages, deindustrialization, full employment, invisible hand, joint-stock company, land reform, liberal capitalism, manufacturing employment, means of production, Monroe Doctrine, Ronald Reagan, strikebreaker, structural adjustment programs, Telecommunications Act of 1996, The Wealth of Nations by Adam Smith, Thomas Malthus, union organizing, Washington Consensus

Rather than “corporate rights agreements,” these measures might be termed, more accurately, “corporate power agreements,” since it is hardly clear why such institutions should have any rights at all. When the corporatization of the state capitalist societies took place a century ago, in part in reaction to massive market failures, conservatives—a breed that now scarcely exists—objected to this attack on the fundamental principles of classical liberalism. And rightly so. One may recall Adam Smith’s critique of the “joint stock companies” of his day, particularly if management is granted a degree of independence; and his attitude toward the inherent corruption of private power, probably a “conspiracy against the public” when businessmen meet for lunch, in his acid view, let alone when they form collectivist legal entities and alliances among them, with extraordinary rights granted, backed, and enhanced by state power. With these provisos in mind, let us recall some of the intended features of the MAI, relying on what information has reached the concerned public, thanks to the “unholy alliance.”


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Blood, Iron, and Gold: How the Railways Transformed the World by Christian Wolmar

banking crisis, Beeching cuts, British Empire, Cape to Cairo, invention of the wheel, James Watt: steam engine, joint-stock company, Khartoum Gordon, Kickstarter, Mahatma Gandhi, railway mania, refrigerator car, side project, South China Sea, transcontinental railway, tulip mania, urban sprawl

Just as in Germany and before that in Great Britain, once the railways had reached a critical mass and began to prove their worth, a railway mania developed with a rush to build lines. There had already been much speculation in railway shares as schemes began to be promoted in the early 1840s and there were several other waves of speculation, especially as the absence of clear legislation on joint-stock companies allowed all kinds of fraudulent practices to thrive. In Lombardy, the drive to build more railways was led by the Rothschild company, which obtained the concession to build two major railway systems: the completion of the main east–west artery from Trieste across to the Piedmont border beyond Milan, and the construction of the Central Italy line heading south from Piacenza to Bologna in the Papal States and Pistoia in Tuscany, a total of more than 650 miles.

Dalhousie’s ‘minute’ had expressed a vision for a railway that was both strategically important but also profitable, stating that once opened, these railways ‘will, as a commercial undertaking, offer a fair remunerative return on the money which has been expended in their construction’. 17 That was an ambitious aim which he realized would only be possible with initial state aid. Therefore, most Indian railways were built through an arrangement combining the public and private sectors. Conventional joint stock companies, based in the UK, would raise capital, mostly from British investors, to fund the construction but, to ensure that the money could be raised, the government of India guaranteed a healthy 5 per cent rate of return. This was essential as it took many years, sometimes decades, for the companies to achieve profitability and the government had to be the financial backstop to pick up the shortfall.


pages: 493 words: 145,326

Fire and Steam: A New History of the Railways in Britain by Christian Wolmar

accounting loophole / creative accounting, Beeching cuts, carbon footprint, collective bargaining, computer age, Corn Laws, creative destruction, cross-subsidies, financial independence, hiring and firing, James Watt: steam engine, joint-stock company, low cost airline, railway mania, rising living standards, Silicon Valley, South Sea Bubble, strikebreaker, union organizing, upwardly mobile, working poor, yield management

With such well-heeled passengers, who would also use the railways for long-distance travel on business, the major train companies were doing their utmost to improve their services to meet the needs of this more prosperous, and consequently more demanding, market. They were spurred on by rivalry with each other, but despite their dominance their profitability waned as they struggled to pay for the improvements to their service. The London & North Western, for example, which for most of its thirty-year period under the chairmanship of Sir Richard Moon (who had replaced Mark Huish in 1861) had been the biggest joint stock company in the world, was now prepared to spend considerable sums to offer passengers what today would be known as a ‘more pleasant journey experience’. Moon had been a brilliant manager, developing the basic managerial concepts such as ‘executive responsibility’ first set out by Huish, but his very ethos – of providing the best possible service at minimum cost – meant that the company’s facilities were rather parsimonious.

., ref1 gramophone records, ref1 Grand Junction Railway, ref1, ref2, ref3, ref4, ref5, ref6, ref7; amalgamation, ref8, ref9 Grangemouth, ref1, ref2 Granite City, ref1 Grantham, ref1; accident, ref2 Granville Express, ref1 Gravesend, ref1 Gravesend & Rochester Railway, ref1 Gray, Thomas, ref1, ref2 Grayling, Chris, ref1 Great Central Railway, ref1, ref2, ref3, ref4; creation of, ref5; and cooperation, ref6; publicity, ref7; fish services, ref8; and wartime, ref9, ref10; closure, ref11 Great Eastern Railway, ref1, ref2, ref3, ref4, ref5, ref6, ref7; maps, ref8; and amalgamation, ref9, ref10; wine list, ref11 Great Exhibition, ref1, ref2 Great Heck accident, ref1 Great North of Scotland Railway, ref1 Great North Road, ref1 Great Northern Advertiser, ref1 Great Northern Cemetery, ref1 Great Northern Railway, ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8; route to Scotland and railway races, ref9, ref10, ref11; costs, ref12; track length, ref13; topography, ref14; enters price war, ref15; and Midland Railway, ref16, ref17; introduces third class, ref18; locomotive confiscated, ref19; begins selling coal, ref20; and amalgamation, ref21, ref22 Great Western Magazine, ref1 Great Western Railway, ref1, ref2, ref3, ref4, ref5, ref6; gauge, ref7, ref8, ref9; costs, ref10; speeds, ref11; and parliamentary trains, ref12; and royal travel, ref13; freight services, ref14; track length, ref15; time system, ref16; expansion, ref17; consolidation, ref18, ref19, ref20; and Welsh lines, ref21; and Irish services, ref22; treatment of poorer passengers, ref23; offers hunters’ tickets, ref24; financial difficulties, ref25; accidents, ref26, ref27; telegraph system, ref28; wages and bonuses, ref29, ref30; industrial relations, ref31, ref32, ref33; provident society, ref34; working hours, ref35; first corridor train, ref36; and railway races, ref37, ref38; modernization and improvements, ref39, ref40; and cooperation, ref41; publicity, ref42, ref43, ref44, ref45; loss-making services, ref46; and Helston line, ref47; compensation claim, ref48; and amalgamation, ref49, ref50, ref51; profitability, ref52, ref53, ref54; introduces warning system, ref55; livery, ref56, ref57; service improvements, ref58; hundredth anniversary, ref59; and wartime, ref60, ref61; workshops, ref62; and diesels, ref63 Greeks, ancient, ref1 Green, Chris, ref1 Greenwich, ref1 Greenwich Mean Time, ref1 Gresley, Nigel, ref1, ref2 Gretna Junction, ref1 Grey, Earl, ref1 Grimsby, ref1, ref2 ‘Grouse Traffic’, ref1 Guildford, ref1 Gunnislake, ref1 hackney cabs, ref1 Hackworth, Timothy, ref1, ref2, ref3 Halifax, ref1 Hall, Stanley, ref1 Hampshire, ref1 Hampton Court, ref1 Hardy, Thomas, ref1 Harford, Edward, ref1 Harrow, ref1; accident, ref2 Hartlepool, ref1 Harwich, ref1, ref2 Hastings, ref1, ref2, ref3 Hatfield, ref1; accident, ref2, ref3 Heath, Edward, ref1, ref2 Heathrow Express, ref1 Hedley, William, ref1 Helmsdale, ref1 Helston, ref1 Henry, Thomas, ref1 Henshaw, David, ref1, ref2, ref3 Herapath, John, ref1 Hereford, ref1, ref2 Hertfordshire, ref1, ref2, ref3, ref4 Hetton Colliery, ref1 Hewitt, John, ref1 High Speed One, ref1, ref2 High Speed Train (HST), ref1, ref2, ref3 High Street Kensington station, ref1 High Wycombe, ref1 Highbridge, ref1 Highland Railway, ref1; wartime service, ref2, ref3 Highlands, ref1, ref2, ref3, ref4, ref5 Hill, Rowland, ref1 Hitchin, ref1 Holborn Viaduct station, ref1 Holden, Michael, ref1 Holiday Haunts, ref1 holiday trains, ref1, ref2, ref3, ref4, ref5 Holland, ref1, ref2 Holyhead, ref1, ref2 hooliganism, ref1 Hopton incline, ref1 Hornsey, ref1 horses, ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8; on Swansea & Mumbles Railway, ref9; and railway gauge, ref10; and Stockton & Darlington Railway, ref11; and Liverpool & Manchester Railway, ref12, ref13; bolting, ref14, ref15; and trams, ref16; and railway amalgamation, ref17; under BR, ref18, ref19 hotels, ref1, ref2, ref3, ref4 Hounslow, ref1 Household Words, ref1 housing, ref1, ref2, ref3, ref4, ref5 Howson, Martha, ref1 Huddersfield, ref1 Hudson, George, ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8 Hughes, Henry, ref1 Huish, Captain Mark, ref1, ref2, ref3 Hull, ref1, ref2, ref3, ref4, ref5; Royal Station Hotel, ref6; Paragon station, ref7, ref8 Hull & Barnsley Railway, ref1, ref2 Hull Trains, ref1 Hundred of Manhood & Selsey Tramway, ref1 Hunterston, ref1 Huskisson, William, ref1, ref2, ref3, ref4 Hyde Park, ref1 Immingham, ref1 Imperial Airways, ref1 India, ref1, ref2, ref3 Ingleton, ref1 innkeepers, ref1 InterCity, ref1, ref2, ref3, ref4, ref5 InterCity ref1 trains, ref2 interlocking, ref1, ref2 International Exhibition, ref1, ref2 Invergarry & Fort Augustus branch line, ref1 Invergordon, ref1 Inverness, ref1, ref2, ref3, ref4, ref5 Ireland, ref1, ref2, ref3, ref4, ref5, ref6; first railways, ref7, ref8, ref9; potato famine, ref10, ref11; steamer services, ref12; railway network, ref13; railway gauge, ref14 Irish Mail, ref1, ref2, ref3 Irish Sea, ref1 Iron Times, ref1 Irwell, river, ref1, ref2 Isle of Wight, ref1, ref2 Italy, ref1 James, William, ref1, ref2, ref3, ref4 Japan, ref1, ref2, ref3; bullet trains, ref4 Jellicoe Specials, ref1, ref2, ref3 Jessop, William, ref1, ref2 John O’Groats, ref1 joint stock companies, ref1 junctions, ref1, ref2, ref3, ref4; flat, ref5 Kelly, Phil, ref1 Kelvedon & Tollesbury Light Railway, ref1 Kemble, Fanny, ref1 Kent, ref1, ref2, ref3, ref4, ref5, ref6; and wartime, ref7, ref8, ref9, ref10 Kent & East Sussex Railway, ref1 Kentish Town accident, ref1, ref2 Kenyon & Leigh Railway, ref1 Kete, John, ref1 Kew, ref1 Killingworth Colliery, ref1 Kilsby tunnel, ref1, ref2 King’s Cross station, ref1, ref2, ref3, ref4, ref5, ref6, ref7; Cambridge trains, ref8; access to, ref9; Great Northern Hotel, ref10, ref11; elegance, ref12, ref13; serves commuter lines, ref14; cemetery services, ref15; and railway races, ref16; and ‘Beer Trains’, ref17; smells, ref18; LNER services, ref19, ref20 Kinnaber Junction, ref1 Kitchener, Lord, ref1 Labour Party, ref1, ref2, ref3, ref4, ref5, ref6, ref7; and rail privatization, ref8, ref9, ref10, ref11 Ladbroke Grove accident, ref1, ref2 Laing, Samuel, ref1 laissez-faire, ref1, ref2, ref3, ref4, ref5 Lake District, ref1 lamps, ref1 Lancashire, ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8 Lancashire & Yorkshire Railway, ref1, ref2, ref3, ref4, ref5, ref6 Lancaster, ref1 Land’s End, ref1 landowners, ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9 Launceston, ref1 Lawson, Nigel, ref1 Lecount, Peter, ref1 Lee Navigation, ref1 Leeds, ref1, ref2; cotton industry, ref3; London services, ref4, ref5, ref6, ref7, ref8, ref9; excursions, ref10; investors, ref11; railway access, ref12; station refurbishment, ref13; and electrification, ref14 Leeds & Selby Railway, ref1 Leeds Institute, ref1 Leicester, ref1, ref2, ref3, ref4, ref5, ref6, ref7 Leigh & Bolton Railway, ref1 Letchworth Garden City, ref1 level crossings, ref1, ref2; keepers, ref3, ref4 Lewisham, ref1, ref2; accident, ref3 light railways, ref1 Light Railways Act, ref1, ref2 Lightfoot brothers, ref1 Lincoln, ref1 Lincolnshire, ref1, ref2, ref3, ref4, ref5, ref6 liners, ref1, ref2, ref3 liveries, ref1, ref2, ref3 Liverpool, ref1, ref2; and building of Liverpool & Manchester Railway, ref3, ref4, ref5, ref6; population, ref7; ban on locomotives, ref8, ref9; tunnel approach, ref10; cable-operated approach, ref11, ref12; and opening of Liverpool & Manchester Railway, ref13; railway connections, ref14, ref15, ref16, ref17, ref18; and horse-races, ref19, ref20; and postal service, ref21; suburban railways, ref22; workmen’s trains, ref23; viaduct bombed, ref24; and electrification, ref25 Liverpool & Manchester Railway, ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9, ref10; double track, ref11, ref12, ref13, ref14; surveys, ref15, ref16; costs, ref17, ref18; dividends and profits, ref19, ref20, ref21; gauge, ref22, ref23; choice of steam power and Rainhill trials, ref24; cable-operated section, ref25, ref26; opening, ref27, ref28, ref29; passenger services, ref30; tickets and fares, ref31; carriages, ref32; omnibus connections, ref33; goods services, ref34; mail services, ref35, ref36; track length, ref37, ref38, ref39; excursions, ref40; military transportation, ref41; amalgamation, ref42; telegraph system, ref43; working conditions, ref44; industrial relations, ref45 Liverpool Courier, ref1 Liverpool Mercury, ref1, ref2 Liverpool Overhead Railway, ref1 Liverpool Street station, ref1, ref2, ref3, ref4; Cambridge trains, ref5; building and cost, ref6, ref7; and electrification, ref8; collaboration with private sector, ref9; and Crossrail scheme, ref10 Liverpool Times, ref1 Llanelli, ref1 Llangynog-Llanrhaeadrym-Mochnant branch line, ref1 Lloyd George, David, ref1, ref2 Locke, Joseph, ref1, ref2, ref3, ref4; and Grand Junction Railway, ref5, ref6 Locomotion, ref1 Locomotion No. ref1, ref2 Locomotive Act (Red Flag Act), ref1 Locomotive Exchanges, ref1 locomotives: Duchess class, ref1; coal-burning, ref2; Crampton, ref3; captured by other companies, ref4; builders, ref5; care of, ref6; speed records, ref7, ref8; impact of war, ref9, ref10, ref11; Royal Scots class, ref12; Star and Saint classes, ref13; King and Castle classes, ref14, ref15; Southern, ref16; streamlining, ref17; Pacific class, ref18; investment in, ref19; post-war, ref20; private, ref21; diesel, ref22, ref23, ref24, ref25; survival of steam, ref26, ref27, ref28; electric, ref29, ref30, ref31; Deltic diesels, ref32 London: first railway, ref1; first railway connections, ref2, ref3, ref4; suburbs, ref5, ref6, ref7; termini, ref8, ref9, ref10, ref11, ref12, ref13; growth in railway connections, ref14, ref15, ref16, ref17, ref18, ref19, ref20; suburban and commuter railways, ref21, ref22, ref23, ref24, ref25, ref26, ref27, ref28, ref29, ref30, ref31, ref32, ref33; and postal service, ref34; time in, ref35; exhibition traffic, ref36, ref37, ref38; Midland Railway gains access, ref39; impact of railways, ref40, ref41; workmen’s trains, ref42; population growth, ref43; railway accidents, ref44; and Great Central connections, ref45; tramways, ref46; and wartime, ref47, ref48, ref49, ref50, ref51; and amalgamation, ref52, ref53; integrated transport system, ref54, ref55; wartime evacuation, ref56; and electrification, ref57 London & Birmingham Railway, ref1, ref2, ref3, ref4, ref5, ref6; surveys, ref7; stagecoach connections, ref8; fares, ref9; investors, ref10; and royal travel, ref11; freight services, ref12; amalgamation, ref13, ref14; departure times, ref15; railway cottages, ref16 London & Chatham Railway, ref1, ref2 London & Croydon Railway, ref1 London & Greenwich Railway, ref1; right-hand running, ref2 London & North Eastern Railway (LNER), ref1, ref2, ref3; network, ref4; hotels, ref5; livery, ref6, ref7; accidents, ref8; rugby specials, ref9; food and drink, ref10; service improvements, ref11; publicity, ref12, ref13; profitability, ref14, ref15; split at nationalization, ref16; electrification, ref17 London & North Western Railway (LNWR), ref1, ref2, ref3, ref4, ref5, ref6, ref7; dominant position, ref8; value and profitability, ref9; enters price war, ref10; and Midland Railway, ref11; and Welsh lines, ref12; and Irish services, ref13; sells coal, ref14; working hours, ref15; and route to Scotland, ref16; and railway races, ref17; braking system, ref18; Preston accident, ref19; modernization and improvements, ref20; Sunny South Special service, ref21; electrification, ref22; publicity, ref23; compensation claim, ref24; and amalgamation, ref25, ref26; livery, ref27 London & South Western Railway, ref1, ref2, ref3, ref4; and railway races, ref5, ref6; reputation, ref7; electrification, ref8, ref9; consolidation, ref10; wartime service, ref11; and amalgamation, ref12, ref13 London & Southampton Railway, ref1 London Bridge station, ref1, ref2, ref3, ref4 London, Brighton & South Coast Railway, ref1, ref2, ref3, ref4; collapse, ref5; Clayton tunnel accident, ref6; strike, ref7; Southern Belle service, ref8; electrification, ref9, ref10; and amalgamation, ref11, ref12 London, Chatham & Dover Railway, ref1, ref2, ref3 London Electric Railway, ref1, ref2 London, Midland & Scottish Railway (LMS), ref1, ref2, ref3, ref4, ref5; network and inventory, ref6; livery, ref7; service improvements, ref8, ref9; publicity, ref10; workforce and repair facilities, ref11; profitability, ref12, ref13; and wartime, ref14, ref15 London Midland Region, ref1, ref2 London Necropolis Railway, ref1 London Passenger Transport Board, see London Transport London Post Office, ref1 London, Tilbury & Southend Railway, ref1 London Transport, ref1, ref2, ref3, ref4; headquarters, ref5 London Underground, ref1, ref2, ref3, ref4, ref5, ref6; Metropolitan Line, ref7, ref8; District Line, ref9, ref10; Circle Line, ref11, ref12; impact on shopping habits, ref13; and electrification, ref14; public relations, ref15; and wartime, ref16, ref17, ref18, ref19, ref20; women on, ref21; Bakerloo Line, ref22; Piccadilly Line, ref23; increase in passengers, ref24; overcrowding, ref25; rails, ref26; see also Metropolitan District Railway; Metropolitan Railway London–York Direct Railway, ref1 Londonderry, ref1 looms, steam-powered, ref1 Lord’s cricket ground, ref1 lorries, ref1, ref2, ref3, ref4, ref5, ref6, ref7 Lossiemouth, ref1 Loughborough, ref1 Louis Philippe, King, ref1 Louis XIV, ref1 Ludgate Hill station, ref1 Luton, ref1 Lutterworth, ref1 Macadam, John, ref1, ref2 Macclesfield, ref1 MacDonald, Ramsay, ref1 McGrath, Thomas, ref1 MacGregor, John, ref1, ref2 Macmillan, Harold, ref1 Maglev trains, ref1 Maiden Lane station, ref1 Maidenhead, ref1 Maidenhead Bridge, ref1 Maidstone, ref1 mail order goods, ref1 mail services, ref1, ref2, ref3, ref4, ref5, ref6 Major, John, ref1, ref2, ref3 Mallaig, ref1 Mallard, ref1 Manchester, ref1, ref2, ref3, ref4, ref5, ref6; steam-powered looms, ref7; and building of Liverpool & Manchester Railway, ref8, ref9; population, ref10; indifference to railway, ref11; weavers, ref12; railway connections, ref13, ref14, ref15, ref16, ref17, ref18, ref19, ref20, ref21, ref22; investment in railways, ref23; and excursions, ref24, ref25; railway access, ref26; workmen’s trains, ref27; and railway races, ref28; Great Central connections, ref29, ref30; and electrification, ref31 Manchester & Birmingham Railway, ref1 Manchester & Leeds Railway, ref1, ref2 Manchester & Sheffield Railway, ref1 Manchester, Sheffield & Lincolnshire Railway, ref1, ref2, ref3, ref4, ref5 Marlborough, ref1 Marly, gardens of, ref1 Marples, Ernest, ref1, ref2, ref3 Marsh, Richard, ref1, ref2 marshalling yards, ref1, ref2 Marylebone Cricket Club, ref1 Marylebone station, ref1, ref2, ref3, ref4, ref5 Mayhew, Henry, ref1 Meakin, George, ref1 Mechanics’ Institutes, ref1 Mendips, ref1 Merchant Navy, ref1 Mercury, ref1 Merstham, ref1 Merthyr Tydfil, ref1 Metroland, ref1 Metropolitan District Railway, ref1, ref2, ref3, ref4 Metropolitan Railway, ref1, ref2, ref3, ref4, ref5, ref6; introduces Pullman service, ref7; profitability, ref8; and Great Central Railway, ref9; and amalgamation, ref10 middle classes, ref1, ref2, ref3, ref4, ref5, ref6, ref7 Middlesbrough, ref1, ref2, ref3, ref4 Middlesex, ref1, ref2, ref3 Middleton Colliery, ref1 Mid-Kent Railway, ref1 Midland Counties Railway, ref1, ref2 Midland Railway, ref1, ref2, ref3, ref4, ref5, ref6; enters price war, ref7; access to London, ref8; promotes third class, ref9, ref10; and Irish services, ref11; Pullman service, ref12; industrial relations, ref13; and Settle & Carlisle line, ref14, ref15, ref16; braking system, ref17; coal trains, ref18; and wartime, ref19, ref20; and amalgamation, ref21, ref22, ref23, ref24 Milford Haven, ref1 military trains, ref1, ref2, ref3, ref4, ref5 milk, ref1, ref2, ref3, ref4 Milne, Sir James, ref1 Milton Keynes, ref1 mines, ref1, ref2, ref3, ref4, ref5, ref6 Molesworth, Sir William, ref1 Monmouthshire, ref1 Monmouthshire Railway and Canal Company, ref1 monopolies, ref1; Huish and, ref2, ref3; Victorian fear of, ref4, ref5; privatization and, ref6 monorails, ref1, ref2 ‘monster trains’, ref1 Moon, Sir Richard, ref1, ref2 Morecambe Bay, ref1 Moretonhampstead, ref1 Moreton-in-the-Marsh, ref1 Morning Post, ref1 Morrison, Herbert, ref1 Morton, Sir Alastair, ref1 Motherwell, ref1 motorways, ref1, ref2, ref3, ref4, ref5 Mumbles, ref1 munitions trains, ref1, ref2, ref3 Myers Flat swamp, ref1, ref2 Napoleon Bonaparte, ref1 narrow gauge railways, ref1, ref2, ref3 National Rail Enquiry Service, ref1, ref2 National Union of Railwaymen (NUR), ref1, ref2, ref3, ref4, ref5, ref6 National Wages Board, ref1 nationalization, ref1, ref2, ref3, ref4, ref5, ref6; opposition to, ref7, ref8, ref9; and amalgamation, ref10, ref11, ref12; and industrial relations, ref13 navvies, ref1, ref2, ref3, ref4; deaths of, ref5, ref6, ref7; shipped to Crimea, ref8 Nesham’s Colliery, ref1 Network Rail, ref1, ref2, ref3, ref4 Network SouthEast, ref1, ref2, ref3 New Southgate, ref1 New Zealand, ref1 Newbury, ref1, ref2 Newcastle, ref1, ref2, ref3, ref4; London services, ref5, ref6, ref7, ref8, ref9, ref10; Tyne bridges, ref11; wartime evacuation, ref12 Newcastle & Carlisle Railway, ref1, ref2, ref3, ref4; freight services, ref5 Newcastle & Darlington Railway, ref1 Newcastle Courant, ref1 ‘Newcastle Roads’, ref1 Newcomen, John, ref1 Newington Green, ref1 Newport, ref1 newspaper specials, ref1 newspapers (press), ref1, ref2, ref3, ref4; and railway advertising, ref5, ref6; and railway races, ref7; and rail strike, ref8; Southern Railway campaign, ref9; opposition to nationalization, ref10; switch to road haulage, ref11; opposition to privatization, ref12 Newton, ref1, ref2 Newton Abbot, ref1, ref2 Newtown, ref1 night traffic, ref1 Nightall, Jim, ref1 Nock, O.


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The End of Alchemy: Money, Banking and the Future of the Global Economy by Mervyn King

"Robert Solow", Andrei Shleifer, Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, centre right, 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 innovation, financial intermediation, floating exchange rates, forward guidance, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, German hyperinflation, Hyman Minsky, inflation targeting, invisible hand, 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, manufacturing employment, market clearing, Martin Wolf, Mexican peso crisis / tequila crisis, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, Nick Leeson, North Sea oil, Northern Rock, oil shale / tar sands, oil shock, open economy, paradox of thrift, Paul Samuelson, Ponzi scheme, price mechanism, price stability, purchasing power parity, quantitative easing, rent-seeking, reserve currency, Richard Thaler, rising living standards, Robert Shiller, Robert Shiller, 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

The Economist magazine backed the legislation, citing the difficult position in which many innocent shareholders found themselves: ‘an examination of the share lists of most of our banks exhibits a very large – almost an incredible – number of spinsters and widows, a considerable sprinkling of Clergymen and Dissenting Ministers, professional men, and others, whose occupations do not appear likely to have enabled them to accumulate much wealth … Out of the whole number more than one third are women.’30 Admirable though such diversity might seem today, it was seen then as evidence of the vulnerability of small investors. Spinsters and widows, let alone dissenting ministers, could not be expected to monitor and control bank executives. By August 1879, with commendable speed, the Banking and Joint Stock Companies Act, covering little more than three pages, had been passed by Parliament, requiring the publication of audited accounts and permitting banks to take advantage of limited liability. It seems impossible to imagine now that unlimited liability could be restored. Yet limited liability in a bank with only a small margin of equity capital means that the owners have incentives to take risks – to ‘gamble for resurrection’ – because they receive all of the profits when the gamble pays off, whereas their downside exposure is limited.

., 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: 495 words: 138,188

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

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

His Industry-Houses, on the Panopticon plan—five stories in twelve sectors—for the exploitation of the labor of the assisted poor were to be ruled by a central board set up in the capital and modelled on the Bank of England’s board, all members with shares worth five or ten pounds having a vote. A text published a few years later ran: “(1) The management of the concerns of the poor throughout South Britain to be vested in one authority, and the expense to be charged upon one fund. (2) This Authority, that of a Joint-Stock Company under some such name as that of the National Charity Company.”* No less than 250 Industry-Houses were to be erected, with approximately 500,000 inmates. The plan was accompanied by a detailed analysis of the various categories of unemployed, in which Bentham anticipated by more than a century the results of other investigators in this field. His classifying mind showed its capacity for realism at its best.

He sponsored proposals as different as an improved system for patents; limited liability companies; a decennial census of population; the establishment of a Ministry of Health; interest-bearing notes to make savings general; a frigidarium for vegetables and fruit; armament factories on new technical principles, eventually run by convict labor, or alternatively, by the assisted poor; a Chrestomathic Day School to teach utilitarianism to the upper middle classes; a general register of real property; a system of public account keeping; reforms of public instruction; uniform registration; freedom from usury; the relinquishment of colonies; the use of contraceptives to keep the poor rate down; the junction of the Atlantic and the Pacific by means of a joint stock company; and others. Some of these projects harbored literally shoals of minor improvements as, for instance, that on Industry-Houses which were a congeries of innovations for the betterment and the exploitation of man based on the achievements of associationist psychology. While Townsend and Burke linked laissezfaire with legislative quietism, Bentham saw in it no obstacle to broadsides of reform.


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, European colonialism, Fall of the Berlin Wall, Francisco Pizarro, full employment, Hans Lippershey, haute couture, Hernando de Soto, income inequality, invention of movable type, invisible hand, Isaac Newton, James Hargreaves, James Watt: steam engine, John Harrison: Longitude, joint-stock company, Joseph Schumpeter, 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, probability theory / Blaise Pascal / Pierre de Fermat, profit maximization, purchasing power parity, quantitative easing, rent-seeking, reserve currency, road to serfdom, Ronald Reagan, savings glut, Scramble for Africa, Silicon Valley, South China Sea, sovereign wealth fund, special economic zone, spice trade, spinning jenny, Steve Jobs, Steven Pinker, The Great Moderation, the market place, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, Thorstein Veblen, total factor productivity, trade route, transaction costs, transatlantic slave trade, undersea cable, upwardly mobile, uranium enrichment, wage slave, Washington Consensus, women in the workforce, World Values Survey

Measured in terms of grams of silver per head, the rulers of England and France were able to collect far more in taxation than their Chinese counterpart throughout the period from 1520 to 1630.28 Beginning in thirteenth-century Italy, Europeans also began to experiment with unprecedented methods of government borrowing, planting the seeds of modern bond markets. Public debt was an institution wholly unknown in Ming China and only introduced under European influence in the late nineteenth century. Another fiscal innovation of world-changing significance was the Dutch idea of granting monopoly trading rights to joint-stock companies in return for a share of their profits and an understanding that the companies would act as naval subcontractors against rival powers. The Dutch East India Company, founded in 1602, and its eponymous English imitator were the first true capitalist corporations, with their equity capital divided into tradable shares paying cash dividends at the discretion of their directors. Nothing resembling these astoundingly dynamic institutions emerged in the Orient.

‘Old Corruption’ was how the radical polemicist William Cobbett characterized the way parliament, the Crown and the City interacted. In Bleak House (1852–3) Charles Dickens portrayed the Court of Chancery as a grotesquely inefficient hindrance to the resolution of property disputes, while in Little Dorrit (1855–7) the target of his satire was the ‘Circumlocution Office’, a government department dedicated to obstructing economic progress. Joint-stock companies remained illegal until the 1720 Bubble Act was repealed in 1824, while debtors’ prisons like the Marshalsea – so vividly depicted in Little Dorrit – continued to operate until the passage of the 1869 Bankruptcy Act. It is also worth remembering that much of the legislation passed by Victorian parliaments in connection with the textile industry was designed to limit the economic freedom of factory-owners, notably with respect to child labour.


pages: 487 words: 147,891

McMafia: A Journey Through the Global Criminal Underworld by Misha Glenny

anti-communist, Anton Chekhov, Berlin Wall, blood diamonds, BRICs, colonial rule, crony capitalism, Deng Xiaoping, Doha Development Round, failed state, Fall of the Berlin Wall, financial deregulation, Firefox, forensic accounting, friendly fire, glass ceiling, illegal immigration, joint-stock company, market bubble, Mikhail Gorbachev, Nelson Mandela, Nick Leeson, offshore financial centre, Pearl River Delta, place-making, rising living standards, Ronald Reagan, Skype, special economic zone, Stephen Hawking, trade liberalization, trade route, Transnistria, unemployed young men, upwardly mobile

Under pressure from Gorbachev, the Bulgarian Communist Party had passed Decree 56, which overnight allowed the creation of private enterprises in Bulgaria, known as joint-stock companies. Many in the party, still hard-liners, were shocked by this development, as it looked like the thin end of a capitalist wedge. But the state security services, which habitually subordinated ideology to the love of power, took it in their stride. “When I looked at the trade register for 1986, it struck me,” explained Stanimir Vaglenov, a Bulgarian journalist who specializes in corruption and organized crime, “the security services founded the first company a week after Decree 56 came into effect. And within the first year, members of the DS had founded 90 percent of the new joint-stock companies!” While the bulk of Bulgaria’s long-suffering population was still being force-fed the rhetoric about socialism’s bright and eternal future, the regime’s most senior representatives were teaching themselves how to make money.


pages: 543 words: 147,357

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

Andrei Shleifer, asset-backed security, bank run, banking crisis, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Blythe Masters, Boris Johnson, Bretton Woods, business cycle, capital controls, carbon footprint, Carmen Reinhart, Cass Sunstein, centre right, choice architecture, cloud computing, collective bargaining, conceptual framework, Corn Laws, corporate governance, creative destruction, credit crunch, Credit Default Swap, debt deflation, decarbonisation, Deng Xiaoping, discovery of DNA, discovery of the americas, discrete time, diversification, double helix, Edward Glaeser, financial deregulation, 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, George Akerlof, Gini coefficient, 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, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, knowledge worker, labour market flexibility, liberal capitalism, light touch regulation, Long Term Capital Management, Louis Pasteur, low cost airline, low-wage service sector, mandelbrot fractal, margin call, market fundamentalism, Martin Wolf, mass immigration, means of production, Mikhail Gorbachev, millennium bug, money market fund, moral hazard, moral panic, mortgage debt, Myron Scholes, Neil Kinnock, new economy, Northern Rock, offshore financial centre, open economy, plutocrats, Plutocrats, price discrimination, private sector deleveraging, 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, Robert Shiller, Ronald Reagan, Rory Sutherland, Satyajit Das, shareholder value, short selling, Silicon Valley, Skype, South Sea Bubble, Steve Jobs, 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, too big to fail, unpaid internship, value at risk, Vilfredo Pareto, Washington Consensus, wealth creators, working poor, zero-sum game, éminence grise

Then there is the three-masted sailing ship, which allowed large vessels to sail close to the wind, permitted the Portuguese and then their European imitators to sail around the world. Without this GPT, there would have been no circumnavigation of the globe; no discovery of the Americas, leading to new centres of power and productive capacity; no European colonisation; no long-distance sea trade; no rich European merchant class; no consequent financial innovations, such as joint stock companies and marine insurance, to deal with the risk and uncertainty of long voyages; and less possibility of the principles of magnetism being understood. Similarly, in the nineteenth century, the railway was much more than just a transport technology. It transformed companies, creating both mass consumption and mass production. It turned local, fragmented markets into powerful, national markets, and thereby enabled the United States to achieve previously unimaginable scale economies – with seismic ramifications for global industrial leadership.

The greatest scandal had occurred in 1720, when shares in a slave-trading monopoly – the South Sea Company – had departed far from economic reality. The result was the so-called South Sea Bubble. Even the Chancellor of the Exchequer speculated on it. Then the bubble popped. The losses and devastation were unprecedented. However, Parliament learned its lesson: in future it would be more circumspect to which joint stock companies it granted a monopoly – and whether they should have monopolies at all. After 1750, the pace of reform accelerated. The parliamentary system was relatively open, and the ‘Old Corruption’, for which the remedy was more and better parliament, was blamed for the traumatising loss of the thirteen American colonies. If Britain wanted to avoid such shattering defeats in future, best be more open still.


The Great Turning: From Empire to Earth Community by David C. Korten

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, European colonialism, Francisco Pizarro, full employment, George Gilder, global supply chain, global village, God and Mammon, Hernando de Soto, Howard Zinn, informal economy, 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, 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

Armed skirmishes with the rival North West Company were common until the British government forced their merger in 1821 into a single company with a monopoly over the fur trade in much of North America, including the Northwest Territories. The British South Sea Company, which was chartered primarily to sell African slaves to Spanish colonies in America, became the centerpiece of the “South Sea Bubble,” one of history’s most famous financial scams.13 The new corporate form, the joint stock company created to fulfill the above functions, combined two ideas from the Middle Ages: the sale of shares in public markets and the protection of owners from personal liability for the corporation’s obligations. These two features made it possible to amass virtually unlimited financial capital within a single firm, assured the continuity of the firm beyond the death of its founders, and absolved owners of personal liability for the firm’s losses or misdeeds beyond the amount of their holdings in the company.

PLUTOCRACY Foreshadowing the corporate rule of our own day, the colonial settlements were created more as economic than political jurisdictions — essentially company estates established by corporate charters issued by the Crown to be managed for the profit of their owners. Beginning in 1584, with the permission of Elizabeth I, Walter Raleigh made several unsuccessful attempts to establish the first English colony in America as a private investment on Roanoke Island off the North Carolina coast.1 Private entrepreneurs and joint stock companies established a dozen permanent English colonies on other sites along the coast of America during the reigns of James I (1603–25) and Charles I (1625–49). The technology of the time limited communication to letters or word of mouth via small sailing ships, which meant that administration and finance were necessarily in the hands of the individuals who held the charters, with virtually no governmental oversight.


pages: 482 words: 161,169

Corporate Warriors: The Rise of the Privatized Military Industry by Peter Warren Singer

barriers to entry, Berlin Wall, blood diamonds, borderless world, British Empire, colonial rule, conceptual framework, failed state, Fall of the Berlin Wall, financial independence, full employment, Jean Tirole, joint-stock company, Machinery of Freedom by David Friedman, market friction, moral hazard, Nelson Mandela, new economy, offshore financial centre, Peace of Westphalia, principal–agent problem, prisoner's dilemma, private military company, profit maximization, profit motive, RAND corporation, risk/return, rolodex, Ronald Coase, Ronald Reagan, Scramble for Africa, South China Sea, supply-chain management, The Nature of the Firm, The Wealth of Nations by Adam Smith

Frederick the Great's military may have been completely dependent on them, but he was of the opinion that soldiers for pay had "neither courage, nor loyalty, nor group spirit nor sacrifice, nor self-reliance."08 He also conceded that an army of patriotic citizens would be more effective and cheaper than his own. Like the rest of European rulers, however, he was unwilling to risk the redistribution of political power that conscription 34 THE RISE would force. THE CORPORATE FREE HAND: MILITARY BUSINESS VENTURES OUTSIDE THE STATE SYSTEM Private businesses also began to take on military roles outside of governments through the charter company system. In this arrangement, joint-stock companies were licensed to have monopoly power over all trade within a designated area, typically lands newly discovered by the Europeans. Such preference was given not only for political reasons (for rulers to reward domestic supporters or to give national ventures an advantage over foreign competitors) but also because a prior monopoly advantage was thought necessary to counter the uncertainties of engaging in risky, large-scale activity in distant lands.

See also Brown & Root Services (BRsV Hart Group, 11 Hessc-Kassel, 33 Hoare, Mike. 37. 40. 42 Humanitarian operations, 82. 85 Huntington, Samuel, 8, 191, 201-202. 204 Ibis Air, 105 equipment of, 106 ICI Oregon, 183 I-Defense, 100 IMF, 67, 182, 234 Information warfare (I\V), 62-3. 175 International Charter Inc. (ICI). 1 l International Defense and Security (IDAS), 9 International law, 220-221, 238-242 International War Crimes Tribunal, 122, 126 Internet, 84, 99 International Peace Operations Association (IPOA), viii, xi Israel FMFs in 13, 14, spearhead, 220, 223 Johnson, Lyndon. 139. 140 Joint-stock companies, 34 Kabbah. Ahmed Tejan. 1 14-1 15, 201 Kabila. I aurent, 10, 94. 226 Kosovo, 6, 44, 144, 145, 147 KFOR, 16,98 Kosovo Liberation Army (KLA). 11, 12, !7>43> 13^219,223,225 Kursk, 15 L-3 Communications. 85. 133. 134. 135 Landsknechts, 27, 28 I.es Affreux, 37, 44 Lewis. Vernon. 120 Lifeguard, I 1, 158 Light weapons. .So? Small arms LOGCAP146. 236 Mercenary. 27. 32. 85, 164, 165 armies, 23, 29, 38 decolonization, 37—38 information warfare. 63 meaning. 40-42 modern perceptions. 42 relation to FMFs, 40, 44-48 Mercenary revolt. 165 Mexico, 17 drug cartels, 13, 15. 170, 181 Military consultant firms. 91-97 definition, 95 tvpes of firms, 95-97 Military Professional Resources Incorporated (MPRI).vii. 10. 13. 85, 223 Angola. 131 Bosnia, 5, 11, 121, 122, 128-130, 152, I79, 210, 212, 2 18-219 characteristics of, 8, 73-75, 77- ^-1)5- 96, l19-123 Colombia, 132-133.207 Croatia, I 25-1 27, 212,213 domestic contracts, 16, 79. 123-124.


pages: 497 words: 153,755

The Power of Gold: The History of an Obsession by Peter L. Bernstein

Albert Einstein, Atahualpa, Bretton Woods, British Empire, business cycle, California gold rush, central bank independence, double entry bookkeeping, Edward Glaeser, Everybody Ought to Be Rich, falling living standards, financial innovation, floating exchange rates, Francisco Pizarro, German hyperinflation, Hernando de Soto, Isaac Newton, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, large denomination, liquidity trap, long peace, money: store of value / unit of account / medium of exchange, old-boy network, Paul Samuelson, price stability, profit motive, random walk, rising living standards, Ronald Reagan, seigniorage, the market place, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, trade route

The result of the shortfall was the establishment of the Bank of England, an unusual deal between the government and the men of "quality" who were shareholders of the Bank (that uppercase letter B for ever after identified that bank as the Bank). Under this arrangement, the Bank would lend the government f 1.2 million at the moderate interest rate of 8 percent, in return for which the institution would be established as the first private company to do business as a limited-liability corporation, or so-called joint stock company-in the rapidly growing field of banking just like the institutions of our own time.'" The founding of the Bank would turn out to be a momentous step in the history of Britain, as the institution over time would steadily increase its influence-even its power-over the banking system and the general economy, the gold stock, and Britain's financial relations with the rest of the world. In later years, the Bank came to be known familiarly as the Old Lady of Threadneedle Street, an expression whose meaning varied from a friendly nickname to a bitter expression of disdain, depending upon the circumstances.

*During the go-go days of the 1960s, some of the dubious debt issued by highly leveraged conglomerates was referred to facetiously as "Chinese paper." *The English Commonwealth was the government headed by Oliver Cromwell that assumed the rule of Britain after Charles I was beheaded at Whitehall on January 30, 1649. The monarchy, under Charles's son Charles II, was restored in 1660. *The Dutch East India Company, founded in 1602, was the first permanent joint stock company. Commercial banking firms with limited liability developed much more rapidly in the United States than in Britain during the first half of the nineteenth century. tSee Bernstein (1996), Chapter 5, for an extended discussion of English economic and financial development in the 1600s, including the establishment of Lloyd's insurance. *The discussion that follows is necessarily compressed.


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, 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, Mikhail Gorbachev, new economy, nuclear winter, oil rush, oil shale / tar sands, oil shock, peak oil, Ralph Nader, Richard Feynman, Ronald Reagan, selection bias, Simon Kuznets, The Rise and Fall of American Growth, Thomas Malthus, Thorstein Veblen, uranium enrichment, urban renewal, Vanguard fund, working poor, young professional

With coal cheap at the pithead, Newcomen engines pumped water from British coal mines for more than two hundred years. Unfortunately for Newcomen, Thomas Savery had written his 1698 patent so broadly that it covered all engines that raised water by fire, and Parliament in 1699 had extended the Savery patent for an additional twenty-one years beyond the original fourteen, to 1733. Having no other choice, Newcomen partnered with Savery, an arrangement that continued after Savery died in 1715 with a joint-stock company formed to exploit the Savery patent, the Proprietors of the Invention for Raising Water by Fire.21 The proprietors issued eighty shares, of which Newcomen was awarded twenty. Newcomen built his first full-scale commercial engine within sight of Dudley Castle, near Birmingham, in 1712. This Dudley Castle engine’s cylinder, made of cast brass, was 21 inches in diameter and almost 8 feet long; it raised water from within a coal mine 153 feet below, and because it was built above the mine, at ground level, it risked no mine fires.22 Other Newcomen engines followed across Britain.

In lieu of buying John McClintock’s farm, Crosby proposed to the farmer a thirty-day option dividing his farm into three parts: the land on one side of Oil Creek for $1,000, the land on the other side for $5,000, and the oil spring for $2,000—or the entire farm for $7,000. Evidently disbelieving the promise of oil riches under his property, McClintock agreed. Back in Titusville, Albert Crosby negotiated an agreement with Brewer and his sawmill partners, who owned the farm where the original oil spring was located. (Bissell had preauthorized Crosby to do so if he liked what he saw.) The young attorney proposed to organize a joint-stock company capitalized at $250,000 ($7 million today), dividing among the parties the shares to be sold to investors. With that capital, the enterprise, to be called the Pennsylvania Rock Oil Company, would buy the hundred-acre Hibbard farm outright for $5,000. The company’s public offering would include the oil rights to several thousand more acres that the sawmill partners owned in the area. A period of confusion ensued as the various parties sorted out what they thought their agreements meant, but by autumn 1854, Bissell and Eveleth had formed the Pennsylvania Rock Oil Company of New York and were preparing to sell stock.


pages: 164 words: 57,068

The Second Curve: Thoughts on Reinventing Society by Charles Handy

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

His lament is echoed by the protesters around the world, angered by the growing gap between the 1 per cent and the 99 per cent. We have to ask, has capitalism overreached itself? Can we put it back in its box without losing its vigour and creativity? Is it already too late? Capitalism was given its huge boost by two creative social inventions back in the mid-19th century, when the twin ideas of the joint-stock company and limited liability were first widely applied in Britain. Their combination fuelled the Industrial Revolution by sharing and limiting the risk of investment. But down the centuries those good ideas have had some very unintended consequences, as good ideas often do. For a visible sign of the outcome of those social inventions one has only to look at the changing skylines of our cities, how the castles and cathedrals of the Middle Ages have been replaced, first by the parliaments of the people but now by the shining glass towers of the corporate world.


pages: 935 words: 267,358

Capital in the Twenty-First Century by Thomas Piketty

"Robert Solow", accounting loophole / creative accounting, Asian financial crisis, banking crisis, banks create money, Berlin Wall, Branko Milanovic, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, 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, German hyperinflation, Gini coefficient, high net worth, Honoré de Balzac, immigration reform, income inequality, income per capita, index card, inflation targeting, informal economy, invention of the steam engine, invisible hand, joint-stock company, Joseph Schumpeter, Kenneth Arrow, market bubble, means of production, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, open economy, Paul Samuelson, pension reform, purchasing power parity, race to the bottom, randomized controlled trial, refrigerator car, regulatory arbitrage, rent control, rent-seeking, Robert Gordon, Ronald Reagan, Simon Kuznets, sovereign wealth fund, Steve Jobs, The Nature of the Firm, the payments system, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade liberalization, twin studies, very high income, Vilfredo Pareto, We are the 99%, zero-sum game

Sources and series: see piketty.pse.ens.fr/capital21c. Flows: More Difficult to Estimate Than Stocks Another important caveat concerns the income of nonwage workers, which may include remuneration of capital that is difficult to distinguish from other income. To be sure, this problem is less important now than in the past because most private economic activity today is organized around corporations or, more generally, joint-stock companies, so a firm’s accounts are clearly separate from the accounts of the individuals who supply the capital (who risk only the capital they have invested and not their personal fortunes, thanks to the revolutionary concept of the “limited liability corporation,” which was adopted almost everywhere in the latter half of the nineteenth century). On the books of such a corporation, there is a clear distinction between remuneration of labor (wages, salaries, bonuses, and other payments to employees, including managers, who contribute labor to the company’s activities) and remuneration of capital (dividends, interest, profits reinvested to increase the value of the firm’s capital, etc.).

Economic Transparency and Democratic Control of Capital More generally, it is important, I think, to insist that one of the most important issues in coming years will be the development of new forms of property and democratic control of capital. The dividing line between public capital and private capital is by no means as clear as some have believed since the fall of the Berlin Wall. As noted, there are already many areas, such as education, health, culture, and the media, in which the dominant forms of organization and ownership have little to do with the polar paradigms of purely private capital (modeled on the joint-stock company entirely owned by its shareholders) and purely public capital (based on a similar top-down logic in which the sovereign government decides on all investments). There are obviously many intermediate forms of organization capable of mobilizing the talent of different individuals and the information at their disposal. When it comes to organizing collective decisions, the market and the ballot box are merely two polar extremes.

See IMF (International Monetary Fund) Internet bubble, 172 Investments: in­e­qual­ity of, 430–­432, 452–­455; wealth rankings and, 432–­443; university endowments and, 447–­452; alternative, 449–­450, 454, 456; petroleum and, 455–­460, 462; sovereign wealth funds and, 455–­460 Iraq, 537–­538 Italy: growth rate of, 174, 445; savings in, 177–­178, 185; public wealth in, 184–­185; wealth tax in, 528–­529, 533 Ivanishvili, Bidzina, 625n22 James, Henry, fiction of, 152, 414 Jantt, Markus, 631n28 Japan: national income and, 63–­64, 66, 68; growth in, 86, 93, 95, 174–­176, 588n10; savings in, 177–­178; foreign assets in, 192–­194; capital/income ratio in, 195; in­e­qual­ity in, 322, 445; taxation and, 490, 498, 637n31 Japa­nese bubble, 172, 597n30 Jeanne, Olivier, 645n41 Jefferson, Thomas, 158, 363 Jobs, Steve, 440–­441 Joint stock companies, 203 Jones, Alice Hanson, 159, 347 Jones, Charles I., 586n35 Judet de la Combe, P., 644n30 Judicial conservatism, 566, 653n49 Justification of in­e­qual­ity, 264 Kaldor, Nicholas, 231, 601n36, 634n1, 638n35 Kaplan, Steven N., 607n41 Katz, Lawrence, 306, 314–­315, 608n12, 640n53 Kennickell, Arthur, 347 Kesztenbaum, Lionel, 612n4 Keynes, John Maynard, 135, 220, 231–­232, 600n22, 652n44 King, Gregory, 56, 180, 590n1, 637n28 King, Willford, 348, 506, 613n13 Knowledge and skill diffusion, 21, 71, 313 Kopczuk, Wojciech, 607n38 Kotlikoff-­Summers thesis, 428, 622n63 Krueger, Alan, 313, 608n10 Krugman, Paul, 294 Kubrick, Stanley, 620n40 Kuczynski, Jürgen, 219–­220, 599n20 Kumhof, Michael, 606n32 Kuwait, 537 Kuznets, Simon, 11–­17, 20, 23, 580nn9,11,14, 581nn15–­16, 582n36, 603n4 Kuznets Curve, 13–­15, 237, 274, 336, 580n14 Labor.


The Great Crash 1929 by John Kenneth Galbraith

Bernie Madoff, business cycle, Everybody Ought to Be Rich, full employment, housing crisis, invention of the wheel, joint-stock company, margin call, market fundamentalism, short selling, South Sea Bubble, the market place

But that this mood survived the Florida collapse is still more remarkable. It was widely understood that things had gone to pieces in Florida. While the number of speculators was almost certainly small compared with the subsequent participation in the stock market, nearly every community contained a man who was known to have taken "quite a beating" in Florida. For a century after the collapse of the South Sea Bubble, Englishmen regarded the most reputable joint stock companies with some suspicion. Even as the Florida boom collapsed, the faith of Americans in quick, effortless enrichment in the stock market was becoming every day more evident. III It is hard to say when the stock market boom of the nineteen-twenties began. There were sound reasons why, during these years, the prices of common stocks should rise. Corporate earnings were good and growing. The prospect seemed benign.


pages: 547 words: 172,226

Why Nations Fail: The Origins of Power, Prosperity, and Poverty by Daron Acemoglu, James Robinson

"Robert Solow", Admiral Zheng, agricultural Revolution, Albert Einstein, Andrei Shleifer, Atahualpa, banking crisis, Bartolomé de las Casas, Berlin Wall, blood diamonds, BRICs, British Empire, central bank independence, clean water, collective bargaining, colonial rule, conceptual framework, Corn Laws, 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, Francis Fukuyama: the end of history, Francisco Pizarro, full employment, 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, mass immigration, Mikhail Gorbachev, minimum wage unemployment, Mohammed Bouazizi, Paul Samuelson, price stability, profit motive, Rosa Parks, Scramble for Africa, Simon Kuznets, spice trade, spinning jenny, Steve Ballmer, Steve Jobs, trade liberalization, trade route, transatlantic slave trade, union organizing, upwardly mobile, Washington Consensus, working poor

This increased by more than 50 percent, to 70,000, by 1200. By 1330 the population had again increased by another 50 percent, to 110,000; Venice was then as big as Paris, and probably three times the size of London. One of the key bases for the economic expansion of Venice was a series of contractual innovations making economic institutions much more inclusive. The most famous was the commenda, a rudimentary type of joint stock company, which formed only for the duration of a single trading mission. A commenda involved two partners, a “sedentary” one who stayed in Venice and one who traveled. The sedentary partner put capital into the venture, while the traveling partner accompanied the cargo. Typically, the sedentary partner put in the lion’s share of the capital. Young entrepreneurs who did not have wealth themselves could then get into the trading business by traveling with the merchandise.

In 1600 they persuaded the ruler of Ambon to sign an exclusive agreement that gave them the monopoly on the clove trade in Ambon. With the founding of the Dutch East India Company in 1602, the Dutch attempts to capture the entire spice trade and eliminate their competitors, by hook or by crook, took a turn for the better for the Dutch and for the worse for Southeast Asia. The Dutch East India Company was the second European joint stock company, following the English East India Company, major landmarks in the development of the modern corporation, which would subsequently play a major role in European industrial growth. It was also the second company that had its own army and the power to wage war and colonize foreign lands. With the military power of the company now brought to bear, the Dutch proceeded to eliminate all potential interlopers to enforce their treaty with the ruler of Ambon.


pages: 442 words: 39,064

Why Stock Markets Crash: Critical Events in Complex Financial Systems by Didier Sornette

Asian financial crisis, asset allocation, Berlin Wall, Bretton Woods, Brownian motion, business cycle, buy and hold, capital asset pricing model, capital controls, continuous double auction, currency peg, Deng Xiaoping, discrete time, diversified portfolio, Elliott wave, Erdős number, experimental economics, 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, 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, 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

The South Sea bubble is a fascinating story of mass hysteria, political corruption, and public upheaval. (See Figure 1.2.) It is really a collection of thousands of stories, tracing the personal fortunes of countless individuals who rode the wave of stock speculation for a furious six months in 1720. The “bubble year,” as it is called, actually 10 chapter 1 involves several individual bubbles, as all kinds of fraudulent joint-stock companies sought to take advantage of the mania for speculation. The following account borrows from “The Bubble Project” [60]. In 1711, the South Sea Company was given a monopoly of all trade to the South Sea ports. The real prize was the anticipated trade that would open up with the rich Spanish colonies in South America. In return for this monopoly, the South Sea Company would assume a portion of the national debt that England had incurred during the War of the Spanish Succession.

Crowds of people beset his door, and when he shut up at three o’clock, he found that no less than one thousand shares had been subscribed for, and the deposits paid. He was thus, in five hours, the winner of £2,000. He was philosophical enough to be contented with his venture, and set off the same evening for the Continent. He was never heard of again. Such scams were bad for the speculation business and so, largely through the pressure of the South Sea directors, the so-called “Bubble Act” was passed on June 11, 1720 requiring all joint-stock companies to have a royal charter. For a moment, the confidence of the people was given an extra boost, and they responded accordingly. South Sea stock had been at £175 at the end of February, 380 at the end of March, and around 520 by May 29. It peaked at the end of June at over £1,000 (a psychological barrier in that four-digit number). With credulity now stretched to the limit and rumors of more and more people (including the directors themselves) selling off, the bubble then burst according to a slow but steady deflation (not unlike the 60% drop of the Japanese Nikkei index after its all-time peak at the end of December 1989).


pages: 596 words: 163,682

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

activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, 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, 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, disruptive innovation, Donald Trump, Edward Glaeser, facts on the ground, financial innovation, financial repression, full employment, future of work, global supply chain, high net worth, housing crisis, 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, low skilled workers, manufacturing employment, market fundamentalism, Martin Wolf, means of production, moral hazard, Network effects, new economy, Nicholas Carr, obamacare, Productivity paradox, profit maximization, race to the bottom, Richard Thaler, Robert Bork, Robert Gordon, Ronald Reagan, Sam Peltzman, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, 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: 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

Indeed, the initial loans that were available to the new government were still short-term, and the first attempt at issuing long-term debt in 1693 ended in abject failure, raising just over one tenth of the desired amount.34 Subsequent attempts were more successful but the greatest share of early borrowing was not from the public but from government debt issued to an entirely more traditional source, three monopoly joint-stock companies, the East India Company, the Bank of England, and the South Sea Company. The Revolution’s effects did manifest themselves over time. The Crown’s borrowing was no longer on the personal account of the monarch, but was the responsibility of a permanent sovereign entity, the state. Future governments would continue to bear responsibility for repayment so debt could be issued for a longer term and repayment smoothed out.

With improved and more professional dedicated tax administration, tax revenues were more predictable. So debt could be assigned specific streams of revenues. Lenders had more confidence in such “funded” debt for they knew that the tax revenues that were earmarked could not be diverted elsewhere without the Parliament’s notice. These “tripwires” were backed by an elaborate mechanism of monitoring. Many of those with savings to invest, as well as the stockholders in the three joint-stock companies, came from the landowning or business class, with a presence or influence in Parliament. So investors in government debt, through Parliamentary reports and committees, had information about government finances, and could vote to curtail or repurpose government spending if it impaired the chances of them recovering their investments. Property rights were protected by political power. Government debt became traded in the market over time, so investors who might need money quickly could still invest in long-term government debt and sell it in the market if they had a need for funds—their loans were now liquid.


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

Andrei Shleifer, asset-backed security, bank run, banking crisis, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, bonus culture, 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 innovation, financial intermediation, fixed income, George Akerlof, Growth in a Time of Debt, income inequality, information asymmetry, invisible hand, Jean Tirole, joint-stock company, joint-stock limited liability company, Kenneth Rogoff, Larry Wall, light touch regulation, London Interbank Offered Rate, Long Term Capital Management, margin call, Martin Wolf, money market fund, moral hazard, mortgage debt, mortgage tax deduction, negative equity, Nick Leeson, Northern Rock, open economy, peer-to-peer lending, regulatory arbitrage, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, Satyajit Das, shareholder value, sovereign wealth fund, technology bubble, The Market for Lemons, the payments system, too big to fail, Upton Sinclair, Yogi Berra

Note that Kate’s equity, which will be the equivalent of “capital” in the banking context, is always invested in the house; it is tied up there but is not idle and is not a cash reserve. Chapter 6 discusses again the pervasive confusion about the term bank capital, already mentioned in Chapter 1. 10. There are many forms of limited-liability companies, with legal details varying across countries and even across companies. For joint-stock companies, that is, corporations whose shares are publicly traded, many features of governance and control, such as public reporting obligations, are specified by law or regulation; this provides investors with the means to acquire the information they need for their purchasing decisions. In companies whose shares are not publicly traded there is much less need for investor protection, so there is great flexibility to determine the company’s governance in the corporate charter.

., 291n31 Japan: Kobe earthquake of 1995 in, 55; lobbying by banks of, 231n10; monopoly power of banks in, 249n12, 275n4; nuclear disaster of 2011 in, xi, 206–7; opposition to banking reform in, 193, 231n12 Japanese crisis of 1990s: insolvency of many banks in, 333n41; international impact of, 61, 65, 258n25; Principle of Unripe Time in, 171; resolution issues in, 264n70; versus subprime mortgage crisis in United States, 60, 61 Jenkins, Antony, 283n17 Jenkins, Patrick, 230n6, 280n1, 335n52 Jenkins, Robert, 311n53 Jensen, Michael C., 242n17, 305n22 Jimmy Stewart Is Dead (Kotlikoff), 247n1 Jöeveer, Karin, 290n29 Johnson, Simon, 248n3, 269nn27–28, 270n33, 311n54, 319n9, 325nn49–51, 325n54, 326n58, 332n30, 333n40 joint-stock companies, 240n10 Jordà, Oscar, 233nn18–19 JPmorgan Chase: actual balance sheet of, 84–87, 84f, 266n11, 266n14, 267nn15–16, 317n88; in Bear Stearns bailout, 72, 74, 219, 326n58; on capital requirements, 265n5; and costs of resolution, 78; “fortress balance sheet” of, 83–87, 266n6; large trading losses of, 78, 260n39, 328n6; lending as fraction of activities of, 86, 267n18; market value versus book value of equity of, 86–87, 113–14; mistakes admitted by, 232n17; off-balance-sheet commitments of, 83, 84, 266n7; payouts to shareholders by, 182, 312n57; potential damage caused by default of, 10–11; regulatory capture by, 205, 326n58; risk management at, 285n38; scandals involving, 328n6; stock price of, 86, 87; versus UBS, 267n18; on “unintended consequences,” 231n10; value of debt of, 12, 85; vulnerability of, 83, 86, 87.


pages: 253 words: 69,529

Britain's 100 Best Railway Stations by Simon Jenkins

Beeching cuts, British Empire, joint-stock company, Khartoum Gordon, market bubble, railway mania, South Sea Bubble, starchitect, the market place, urban renewal, wikimedia commons

The routes approved in 1835–6 had proved mostly profitable, with some paying shareholders what were considered huge dividends of 10–12 per cent. Soon the industry was again straining at the leash, as if readying itself for a new burst of expansion. The Mania At the start of 1843, money suddenly surged back into railway shares, leading to a stock market boom on a scale not seen since the South Sea Bubble of 1720. It was spurred on its way by William Gladstone’s 1844 bill instituting the joint stock company, which allowed companies to be formed by shareholders without needing a full act of parliament as previously. They did, however, need an act to compel landowners to surrender rights of way. This was followed by the introduction of limited liability, liberating company directors from ruin if they went bankrupt. These reforms galvanised British capitalism and were a crucial boost to rail investment.


pages: 231 words: 72,656

A History of the World in 6 Glasses by Tom Standage

Berlin Wall, British Empire, Colonization of Mars, Copley Medal, Edmond Halley, Edward Lloyd's coffeehouse, Eratosthenes, European colonialism, interchangeable parts, invention of agriculture, Isaac Newton, joint-stock company, Kickstarter, laissez-faire capitalism, Lao Tzu, multiplanetary species, out of africa, South Sea Bubble, spice trade, spinning jenny, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade

In 1773 a group of traders from Jonathan's broke away and decamped to a new building, initially known as New Jonathan's. But this name did not last long, as the Gentlemen s Magazine reported: "New Jonathan's came to the resolution that instead of its being called New Jonathan's, it should be called The Stock Exchange, which is to be wrote over the door." This establishment was the forerunner of the London Stock Exchange. This period of rapid innovation in public and private finance, with the floating of joint-stock companies, the buying and selling of shares, the development of insurance schemes, and the public financing of government debt, all of which culminated in London's eventual displacement of Amsterdam as the world's financial center, is known today as the Financial Revolution. The need to fund expensive colonial wars made it necessary, and the fertile intellectual environment and speculative spirit of the coffeehouses made it possible.


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, indoor plumbing, invisible hand, joint-stock company, land reform, land tenure, mass immigration, New Urbanism, Norman Mailer, plutocrats, Plutocrats, 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, War on Poverty, working poor, Works Progress Administration

In the garden paradise of early Virginia that never was, war and suffering, greed and colonial conquest are conveniently missing. Class and cultural dissonance magically fade from view in order to remake American origins into a utopian love story.13 • • • Can we handle the truth? In the early days of settlement, in the profit-driven minds of well-connected men in charge of a few prominent joint-stock companies, America was conceived of in paradoxical terms: at once a land of fertility and possibility and a place of outstanding wastes, “ranke” and weedy backwaters, dank and sorry swamps. Here was England’s opportunity to thin out its prisons and siphon off thousands; here was an outlet for the unwanted, a way to remove vagrants and beggars, to be rid of London’s eyesore population. Those sent on the hazardous voyage to America who survived presented a simple purpose for imperial profiteers: to serve English interests and perish in the process.

Ralph Borsodi, who set up a subsistence homestead on the outskirts of New York City, helped to organize a cooperative village near Dayton, Ohio. Similar ventures appeared in other states. The southern journalist Charles Morrow Wilson described these folks as “American peasants,” but they are perhaps better described as the heirs of James Oglethorpe’s eighteenth-century Georgia colonists. One such group from Tulsa established a community in the Ozark hills. They founded a corporation, much like the older joint-stock companies, and adopted a set of bylaws, in which each member was a shareholder and had a vote. They sold timber, raised hogs and chickens, repaired the lumbering shanties on the property, and set up a school.17 Unlike Arkansas tenant farmers and sharecroppers, the Tulsa colonists owned the land, albeit land of little value, which lowered them to the level of subsistence farmers. The common pattern in Arkansas was different.


pages: 777 words: 186,993

Imagining India by Nandan Nilekani

addicted to oil, affirmative action, Airbus A320, BRICs, British Empire, business process, business process outsourcing, call centre, clean water, colonial rule, corporate governance, cuban missile crisis, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, digital map, distributed generation, farmers can use mobile phones to check market prices, full employment, ghettoisation, glass ceiling, global supply chain, Hernando de Soto, income inequality, informal economy, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), joint-stock company, knowledge economy, land reform, light touch regulation, LNG terminal, load shedding, low cost airline, Mahatma Gandhi, market fragmentation, mass immigration, Mikhail Gorbachev, Network effects, new economy, New Urbanism, open economy, Parag Khanna, pension reform, Potemkin village, price mechanism, race to the bottom, rent control, rolodex, Ronald Reagan, school vouchers, Silicon Valley, smart grid, special economic zone, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, transaction costs, trickle-down economics, unemployed young men, upwardly mobile, urban planning, urban renewal, women in the workforce, working poor, working-age population

The rise of new navigation tools—better maps, sextants and chronometers—also allowed explorers to chart out better sea routes, giving Europe access to colonies, slaves, silks and gold. The tiny island of Britain emerged as the major European power in the eighteenth century with innovations in public finance and an embryonic stock market. These institutions created richly funded, powerful companies that quickly dominated global trade—our old acquaintance the East India Company was in fact the very first “joint-stock” company of Britain. And of course, the technological prowess of the Industrial Revolution enabled Britain and Europe to dominate world economic growth for more than a hundred years. In this context, India has been fortunate even in its barriers. In the 1970s and 1980s, IT was literally the only option for a start-up entrepreneur to begin a business without political access or capital. A slow-growing economy also ended up diverting much of its huge talent into a small but burgeoning IT sector, and these firms got by on very little—a leased computer, a data line—over which they sold Indian brainpower to the outside world.

CEO Forum Industrial Development and Regulation Act (1951) Industrial Revolution infant mortality rates inflation information technology (IT); acceptance of; in agriculture ; in banking ; caste identification and; computers in ; economic impact of ; education and ; for energy sources; entrepreneurs in; for environmental issues; “gatekeepers” eliminated by ; in global economy ; government policies on ; growth of ; for health care ; identity cards supported by; Internet access of ; investment in ; jobs created by ; kiosks for ; for land records, ; low-cost approach of; outsourcing of; see also business process outsourcing; paperwork eliminated by; political applications of; poverty alleviated by ; for railroad schedules ; for retirement funds ; in rural areas ; for social services; for stock exchanges ; for taxation; technological revolution in; in telecommunications ; in urban areas ; for voting ; see also software industry Infosys Technologies Institution for Human Settlements insurance industry Insurance Regulatory Authority of India (IRAI) Integrated Energy Policy interest rates Intergovernmental Panel on Climate Change (IPCC) International Food Policy Research Institute International Monetary Fund (IMF) International Water Management Institute International Year of the Aged Invest India Foundation investment, capital Iran Ireland iron irrigation ISO 9000 certifications Israel Ivory Coast Iyengar, Haravu Raj Jaffrelot, Christophe Jain, L. C. Jallianwala Bagh attack (1919) Jammu Janaagraha Janata Dal Jan Sangh Japan jatropha jaundice Jawaharlal Nehru National Urban Renewal Mission (JNNURM) Jayakar Commission (1927) Jejeebhoy, Lady Avia Jharkhand Jiang Zemin Jindal Steel Jinnah, Mohammed Ali job creation job retraining job security Johnson, Lyndon B. “joint-stock” companies Joshi, Murli Manohar Joshi, Rajendra jugaad vehicle jute Kabir, Humayun Kahn, E. J. Kamaraj, K. Kamath, H. V. Kannada language Kapoor, Anil Karat, Prakash Karnataka Kashmir Katara, Neelam Katara, Nitish Kaur, Rajkumari Amrit Kaviraj, Sudipta Kelkar, Vijay Keniston, Kenneth Kerala kerosene Khan, Ajit Khan, Kushboo Khan, Mehboob Khanna, Parag Kheny, Ashok Khilnani, Sunil Khosla, Vinod King, Robert Kishwar, Madhu Koenigsberger, Otto Kohli, Atul Kohli, K.


pages: 289 words: 22,394

Virus of the Mind by Richard Brodie

cognitive dissonance, Douglas Hofstadter, Gödel, Escher, Bach, joint-stock company, New Journalism, phenotype, Ponzi scheme, profit motive, publish or perish, Ralph Waldo Emerson, Richard Feynman, Stephen Hawking, Steven Levy

Institutions that were designed by people for the specific purpose of perpetuating and spreading, I call designer viruses. But long before anyone came up with that Machiavellian notion, viruses of the mind evolved on their own into powerful cultural fixtures. I call the institutions that evolved on their own to become self-perpetuating cultural viruses. ttt 146 C hapter nine C ultur al Viruses “Society everywhere is in conspiracy against the manhood of every one of its members. Society is a joint-stock company, in which the members agree, for the better securing of his bread to each shareholder, to surrender the liberty and culture of the eater. The virtue in most request is conformity.” — Ralph Waldo Emerson From the children’s game of “telephone,” we know that it’s difficult to copy memes with 100 percent fidelity even if we want to. When replication occurs with slight changes in the replicator, and those modified replicators are selected somehow for their fitness, then we have evolution.


pages: 306 words: 78,893

After the New Economy: The Binge . . . And the Hangover That Won't Go Away by Doug Henwood

"Robert Solow", accounting loophole / creative accounting, affirmative action, Asian financial crisis, barriers to entry, borderless world, Branko Milanovic, Bretton Woods, business cycle, capital controls, corporate governance, corporate raider, correlation coefficient, credit crunch, deindustrialization, dematerialisation, deskilling, ending welfare as we know it, feminist movement, full employment, gender pay gap, George Gilder, glass ceiling, Gordon Gekko, greed is good, half of the world's population has never made a phone call, income inequality, indoor plumbing, intangible asset, Internet Archive, job satisfaction, joint-stock company, Kevin Kelly, labor-force participation, liquidationism / Banker’s doctrine / the Treasury view, manufacturing employment, means of production, minimum wage unemployment, Naomi Klein, new economy, occupational segregation, pets.com, post-work, profit maximization, purchasing power parity, race to the bottom, Ralph Nader, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, statistical model, structural adjustment programs, Telecommunications Act of 1996, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, total factor productivity, union organizing, War on Poverty, women in the workforce, working poor, zero-sum game

This was 1999, and millennial feeHng was thick in the air. To Burbach and Robinson, the present is capitaHsm's fourth era. First was mercantiHsm and the early stages of European colonization—^primi- tive accumulation. Then came the era of industrial capitalism, with the development of the big bourgeoisie and the nation-state. Then came corporate or monopoly capitalism—the emergence of the joint-stock company as the dominant form. And now we have globalized capitalism, born in the early 1970s. Epochs aren't what they used to be; unUke humans, they seem to have shortening Ufespans.They date their first epoch, Marx's "rosy dawn of the era of capitaHst production," from 1492 to 1789, 357 years. The second, the day of the industrial capitalist, from 1789 to 1900, 111 years. The third, the corporate era, lived about seventy years from 1900 to the early 1970s.


pages: 183 words: 17,571

Broken Markets: A User's Guide to the Post-Finance Economy by Kevin Mellyn

banking crisis, banks create money, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, Bonfire of the Vanities, bonus culture, Bretton Woods, BRICs, British Empire, business cycle, buy and hold, call centre, Carmen Reinhart, central bank independence, centre right, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate raider, creative destruction, credit crunch, crony capitalism, currency manipulation / currency intervention, disintermediation, eurozone crisis, fiat currency, financial innovation, financial repression, floating exchange rates, Fractional reserve banking, global reserve currency, global supply chain, Home mortgage interest deduction, index fund, information asymmetry, joint-stock company, Joseph Schumpeter, labor-force participation, light touch regulation, liquidity trap, London Interbank Offered Rate, market bubble, market clearing, Martin Wolf, means of production, mobile money, money market fund, moral hazard, mortgage debt, mortgage tax deduction, negative equity, Ponzi scheme, profit motive, quantitative easing, Real Time Gross Settlement, regulatory arbitrage, reserve currency, rising living standards, Ronald Coase, seigniorage, shareholder value, Silicon Valley, statistical model, Steve Jobs, The Great Moderation, the payments system, Tobin tax, too big to fail, transaction costs, underbanked, Works Progress Administration, yield curve, Yogi Berra, zero-sum game

The direction of credit and investment linked to industrial policy (and social policy) is simply how choices get made. Subsidized green energy is but an extreme example, since the Eisenhower national highway system, subsidies for home ownership, and student loans are all examples of using the financial system for essentially nonmarket, noneconomic ends. This kind of thing goes back to the day when royal monopolies Broken Markets were given to joint stock companies to build out the British Empire for broke British monarchs, and it is not going away any time soon. It is all a matter of degree and balance. In the Victorian Era, the markets became free and global for several generations, but that was an anomaly backed by British wealth and sea power along with an almost mystical British belief in free trade. In the 1980s, as Daniel Yergin’s now incredibly dated documentary The Commanding Heights relates, the financial markets regained some of their freedom after half a century of financial repression and industrial policy.


pages: 297 words: 77,362

The Nature of Technology by W. Brian Arthur

Andrew Wiles, business process, cognitive dissonance, computer age, creative destruction, double helix, endogenous growth, Geoffrey West, Santa Fe Institute, haute cuisine, James Watt: steam engine, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kevin Kelly, knowledge economy, locking in a profit, Mars Rover, means of production, Myron Scholes, railway mania, Silicon Valley, Simon Singh, sorting algorithm, speech recognition, technological singularity, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions

It creates the realm our lives inhabit. If you woke some morning and found that by some odd magic the technologies that have appeared in the last six hundred years had suddenly vanished: if you found that your toilet and stove and computer and automobile had disappeared, and along with these, steel and concrete buildings, mass production, public hygiene, the steam engine, modern agriculture, the joint stock company, and the printing press, you would find that our modern world had also disappeared. You—or we, if this strange happening befell all of us—would still be left with our ideas and culture, and with our children and spouses. And we would still have technologies. We would have water mills, and foundries, and oxcarts; and coarse linens, and hooded cloaks, and sophisticated techniques for building cathedrals.


pages: 238 words: 73,121

Does Capitalism Have a Future? by Immanuel Wallerstein, Randall Collins, Michael Mann, Georgi Derluguian, Craig Calhoun, Stephen Hoye, Audible Studios

affirmative action, blood diamonds, Bretton Woods, BRICs, British Empire, business cycle, butterfly effect, creative destruction, deindustrialization, demographic transition, Deng Xiaoping, discovery of the americas, distributed generation, eurozone crisis, fiat currency, full employment, Gini coefficient, global village, hydraulic fracturing, income inequality, Isaac Newton, job automation, joint-stock company, Joseph Schumpeter, land tenure, liberal capitalism, liquidationism / Banker’s doctrine / the Treasury view, loose coupling, low skilled workers, market bubble, market fundamentalism, mass immigration, means of production, mega-rich, Mikhail Gorbachev, mutually assured destruction, offshore financial centre, oil shale / tar sands, Ponzi scheme, postindustrial economy, reserve currency, Ronald Reagan, shareholder value, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, too big to fail, transaction costs, Washington Consensus, WikiLeaks

The city of Moscow had a legal and institutional status in the Soviet Union and a not completely dissimilar one in the successor Russian federation and republic. Gazprom changed more. Its creation in 1989 restructured the legal status and operating organization of the preexisting Russian gas industry. After the dissolution of the U.S.S.R., Gazprom was privatized in 1992 and has since operated as a joint-stock company. It was subjected to asset-stripping in the 1990s, then partially reintegrated and brought under state control in the first decade of the 2000s. In similar fashion one could trace a long list of partial continuities and partial transformations. Nonetheless, Derluguian’s account of how the U.S.S.R. could be treated as stable and obviously enduring almost to the moment it reached its end is instructive.


pages: 333 words: 76,990

The Long Good Buy: Analysing Cycles in Markets by Peter Oppenheimer

"Robert Solow", asset allocation, banking crisis, banks create money, barriers to entry, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, business cycle, buy and hold, Cass Sunstein, central bank independence, collective bargaining, computer age, credit crunch, debt deflation, decarbonisation, diversification, dividend-yielding stocks, equity premium, Fall of the Berlin Wall, financial innovation, fixed income, Flash crash, forward guidance, Francis Fukuyama: the end of history, George Akerlof, housing crisis, index fund, invention of the printing press, Isaac Newton, James Watt: steam engine, joint-stock company, Joseph Schumpeter, Kickstarter, liberal capitalism, light touch regulation, liquidity trap, Live Aid, market bubble, Mikhail Gorbachev, mortgage debt, negative equity, Network effects, new economy, Nikolai Kondratiev, Nixon shock, oil shock, open economy, price stability, private sector deleveraging, Productivity paradox, quantitative easing, railway mania, random walk, Richard Thaler, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, Simon Kuznets, South Sea Bubble, special economic zone, stocks for the long run, technology bubble, The Great Moderation, too big to fail, total factor productivity, trade route, tulip mania, yield curve

The cost of a three-minute telephone call from New York to London fell from $4.37 in 1990 (in 2000 dollars) to $0.40 in 2000.19 Deregulation and Financial Innovation Light touch regulation, or deregulation, is often an ingredient in the buildup of financial bubbles. In the railway boom of the early 19th century in Great Britain, for example, the repeal of the Bubble Act in 1825, introduced after the collapse of the South Sea bubble in 1720, was an important development. Aimed at controlling the formation of new companies, it limited the number of investors in joint stock companies to just five. In rescinding the act, the government made it easier to register, and set up, companies. It also made it much easier for large numbers of an increasingly enthralled public to invest in the new companies. Meanwhile, as noted previously, the financial innovation of new insurance companies allowed for a more conducive environment for risk-taking. During the railway boom in Great Britain in the mid-19th century, the process of applying for permits to build new railways was relaxed.


pages: 238 words: 76,544

Night Trains: The Rise and Fall of the Sleeper by Andrew Martin

Boris Johnson, Etonian, joint-stock company, Neil Kinnock

They crossed the Baltic on the next morning and, rather disappointingly, neither the train nor even the sealed carriage was put onto the boat. One Swedish expert on the route sent me an email saying, ‘There were probably other cars [carriages] on the Drottning Victoria but for some unknown reason, Lenin’s car remained in Sassnitz, and he took another train from Trelleborg.’ In both wars, the train ferry was operated by our old friend MITROPA. After the Second World War, MITROPA survived as one of the few joint stock companies in East Germany, where it provided the railway catering. It then served reunified Germany until 2002. (Lars von Trier’s black-and-white expressionist film of 1991, Europa, concerns a young American lured into a pro-Nazi conspiracy hatched by a sinister railway company called Zentropa, a deliberate echo of MITROPA. The idea of a sinister railway catering company would be absurd, so Zentropa is a railway in the fullest sense.)


pages: 845 words: 197,050

The Gun by C. J. Chivers

air freight, Berlin Wall, British Empire, cuban missile crisis, defense in depth, G4S, illegal immigration, joint-stock company, Khartoum Gordon, mutually assured destruction, offshore financial centre, Ponzi scheme, RAND corporation, South China Sea, trade route, Transnistria

Its operations were limited and its prospects for large orders grim. It seemed unlikely to shut down entirely, though its security rested not in its performance as a private enterprise but in a political fact: For the Russian military, the plants that produced the rifles remained a strategic enterprise. Similar problems manifested themselves throughout the firearms sector. Another Russian Kalashnikov manufacturer, the Molot joint stock company in Kirov, which complemented the production at Izhevsk, was so cash-strapped that in late 2008 it stopped paying wages to many employees. By 2009 it compensated workers not with rubles, but with food. This was, literally, subsistence labor.78 As the workers struggled, Mikhail Kalashnikov’s stature spared him from both material suffering and idleness. He fared, if not well, at least better than many of his generation.

., 403–4 Meinertzhagen, Richard, 119–21, 426n Merz gun works, 163–64 MG08 (Maschinengewehr 08), 90, 119 Michault, Jacques, 274 Mikoyan, Anastas, 224 Miller, Mikhail, 242, 435n Mills, J. D., 36, 420n Minié balls, 33–34 Minin, Leonid, 369–71, 411 Misr, 16, 349 mitrailleur, 43–46, 51, 421n ammunition of, 43 design of, 43–44 Fosbery on, 44–45, 55–56 in Franco-Prussian War, 45–46 production of, 43 secrecy of, 43–44 tactical uses of, 45–46 Model 1873, 60 Model 1895, 108, 111, 145 Modern Traveler, The (Belloc), 103 Molot joint stock company, 400 Molotov, Vyacheslav, 212n, 219n, 221 Molotov cocktails, 219 Montigny, Joseph, 43, 46, 55 Moore, Harold G., Jr., 294–95 Morning Post, 97 mortars, 11, 216, 246, 253, 367 of LRA, 379 in Vietnam, 264, 311, 313, 317 in World War I, 121, 123, 132, 267 Morton, A. C., 103 Morton, Oliver P., 29–30 Mosin-Nagant rifle: ammunition of, 169 in Hungarian revolution, 219 production and distribution of, 155, 169, 216–17, 219, 357 Mozambique flag, 15, 384 MP-5 (Maschinenpistole 5), 384n MP-18 (Maschinenpistole 18), 139–40, 163–64, 228 MP-43 (Maschinenpistole 43), 164 MPiK (Maschinen Pistole Kalashnikov), 16, 247 mujahideen, 10, 13, 361–62 Mukhabarat, 349 Muller, Mark, 15 Mumbai, terrorist raid in, 340 Munich Olympics, terrorism at, 337–40, 350–52, 443n Museveni, Yoweri, 374, 379 musket balls, 27, 33 muzzle velocity, 167, 198, 252–53, 284, 291, 293, 383 My Life (Maxim), 135 Nadezhda, 1–2 Nagasaki, 1, 144 Nagorno-Karabakh, war for, 408 Nagy, Imre, 237–39 arrest and execution of, 239, 437n Hungarian revolution and, 222–24, 226, 238 and Hungary’s attempt to withdraw from Warsaw Pact, 237 Napoleon III, Emperor of France, 43–45 Nasser, Gamal Abdel, 216, 349, 358 Nasution, Abdul Haris, 258 National Firearms Act, 18, 236 National Rifle Association (NRA), 298 National Security Council, 237 Native Americans, see Indian wars NATO (North Atlantic Treaty Organization), 6, 169, 214, 249–50, 255–58, 352 automatic rifles used by, 256–58, 296, 364 FAL rifle distribution and, 364 M-16 and, 296 standardizing ammunition and arms of, 255–57, 275, 296, 436n, 444n Nature, 54 Navy, Union, 30 Navy, U.S., 88, 110, 272, 314–16 Gatling gun and, 40, 52–54 Vietnam and, 264, 315–16 Ndebele, 86–87, 103 needle gun (zundnadelgewehr), 42 Netherlands, 40, 246, 400 and AK-47 production and distribution, 250, 257–59 New York Times: on Civil War draft protests, 31–32 on Gatling gun, 47 Maxim’s article in, 135, 423n New York Tribune, 32 New York University, 230 Nez Percé, 61–62 Nicholas II, Czar of Russia, 113, 165, 170 Nickelson, Alfred J., 263–64, 267, 316–18, 324 Nikitin, Grigory I., 243 NIPSMVO (Research and Proving Grounds for Firearms and Mortars), 143–48, 256 AK-47 testing at, 199–201, 205 and AK and AK-type rifle design and development, 144, 146–48, 159–60, 187, 189–91, 202, 205, 345 closure of, 345–46 Kalashnikov at, 143–48, 183–87 NKVD (People’s Commissariat for Internal Affairs), 156, 158, 166 Nobel, Alfred, 390 Gatling’s quarrels with, 51–52, 55, 74 Maxim’s quarrels with, 74 Nonte, George, 297 Nordenfelt, Thorsten, 86 Nordenfelt gun, 75 automatic, 109 competition of, 53, 83–84, 86 tests and demonstrations of, 53, 84 Norinco, 399 North Atlantic Treaty Organization, see NATO North Korea, see Korea, Democratic People’s Republic of NRA (National Rifle Association), 298 nuclear programs: of Soviet Union, 1–5, 148, 203, 359–60, 407–8 of U.S., 1, 4–5, 144, 272 nuclear war, 4, 271 Nugent, Edward, 35, 420n Ocira, Walter, 337 October Revolution, 156, 167, 170, 193, 351 Okwera, Jimmy, 372–73 Okwera, Patrick, 372–73 Okwonga, Dennis, 379 Olivier, Alfred G., 285–88 Omar, Mullah Mohammed, 386–87 Omdurman: casualties in, 98–102 fighting at, 97–102, 107–9, 119, 124, 129–30, 165, 252, 255 Maxim guns at, 97–102, 107–8, 124, 165, 252 “On the Personality Cult and Its Consequences” (Khrushchev), 244 Operations Research Office, 254 Ottoman Empire, 42 Owen, J.


pages: 700 words: 201,953

The Social Life of Money by Nigel Dodd

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

This taking defines financial capitalism, wherein the logic of primitive accumulation connects to later theories of imperialism and finance capital (Harvey 2006: xvii). According to Harvey, it is the role of the state in this process (accumulation by dispossession) that presents the greatest analytical challenge for Marxism. The basic ingredients of such an analysis can be found in Marx’s own treatment of the centralization of capital, as joint stock companies and monopolies and cartels develop to curtail capital’s anarchic qualities. Engels provides further insight, arguing that the state eventually becomes the official representative of capitalist society. This notion is subsequently elaborated by Hilferding and Lenin as finance capital, i.e., a unification of banking and productive capital (Harvey 2006: 137). Primitive accumulation (or accumulation by dispossession) is an alternative to Keynesian demand management (Harvey 2010b: 108).

Proudhon described the Bank of the People as the translation into economic language of the principles that had underwritten modern democracy and the French Revolution: liberty, equality, and fraternity (Proudhon 1927: 94). The Bank of the People promised to be a realization of the financial formula of the principle of reciprocity itself. Although Proudhon intended that the Bank of the People would eventually be turned into a joint-stock company, in the first instance it had to operate as a partnership, with a general manager, a supervising council consisting of thirty delegates, and a general assembly with one thousand members. Should the Bank of the People fail, assets would be divided “among those who are entitled to them” (Proudhon 1927: 112). And, indeed, the Bank of the People was short-lived. By early April, he announced that the experiment was coming to an end: events, he said, had “proved too strong for it.”


pages: 772 words: 203,182

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

8-hour work day, active measures, activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, bank run, banking crisis, Basel III, Black Swan, blood diamonds, 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, 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 innovation, fixed income, Francis Fukuyama: the end of history, full employment, George Akerlof, George Gilder, Gini coefficient, Gordon Gekko, hiring and firing, income inequality, invisible hand, job satisfaction, John Markoff, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, lake wobegon effect, light touch regulation, Long Term Capital Management, manufacturing employment, market clearing, market fundamentalism, Martin Wolf, minimum wage unemployment, mittelstand, moral hazard, Myron Scholes, Naomi Klein, Northern Rock, obamacare, offshore financial centre, Paul Samuelson, pension reform, performance metric, pirate software, plutocrats, Plutocrats, Ponzi scheme, precariat, price stability, profit