laissez-faire capitalism

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pages: 400 words: 129,841

Capitalism: the unknown ideal by Ayn Rand

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Albert Einstein, anti-communist, Berlin Wall, British Empire, East Village, Ford paid five dollars a day, full employment, Isaac Newton, laissez-faire capitalism, means of production, minimum wage unemployment, profit motive, the market place, trade route, transcontinental railway, urban renewal, War on Poverty, yellow journalism

eISBN : 978-1-101-13769-7 http://us.penguingroup.com INTRODUCTION This book is not a treatise on economics. It is a collection of essays on the moral aspects of capitalism. Our approach can best be summarized by my statement in the first issue of The Objectivist Newsletter (January 1962): “Objectivism is a philosophical movement; since politics is a branch of philosophy, Objectivism advocates certain political principles—specifically, those of laissez-faire capitalism—as the consequence and the ultimate practical application of its fundamental philosophical principles. It does not regard politics as a separate or primary goal, that is: as a goal that can be achieved without a wider ideological context. “Politics is based on three other philosophical disciplines: metaphysics, epistemology and ethics—on a theory of man’s nature and of man’s relationship to existence.

Observe that in World War II, both Germany and Russia seized and dismantled entire factories in conquered countries, to ship them home—while the freest of the mixed economies, the semi-capitalistic United States, sent billions worth of lend-lease equipment, including entire factories, to its allies.6 Germany and Russia needed war; the United States did not and gained nothing. (In fact, the United States lost, economically, even though it won the war: it was left with an enormous national debt, augmented by the grotesquely futile policy of supporting former allies and enemies to this day.) Yet it is capitalism that today’s peace-lovers oppose and statism that they advocate—in the name of peace. Laissez-faire capitalism is the only social system based on the recognition of individual rights and, therefore, the only system that bans force from social relationships. By the nature of its basic principles and interests, it is the only system fundamentally opposed to war. Men who are free to produce have no incentive to loot; they have nothing to gain from war and a great deal to lose. Ideologically, the principle of individual rights does not permit a man to seek his own livelihood at the point of a gun, inside or outside his country.

America’s industrial progress, in the short span of a century and a half, has acquired the character of a legend: it has never been equaled anywhere on earth, in any period of history. The American businessmen, as a class, have demonstrated the greatest productive genius and the most spectacular achievements ever recorded in the economic history of mankind. What reward did they receive from our culture and its intellectuals? The position of a hated, persecuted minority. The position of a scapegoat for the evils of the bureaucrats. A system of pure, unregulated laissez-faire capitalism has never yet existed anywhere. What did exist were only so-called mixed economies, which means: a mixture, in varying degrees, of freedom and controls, of voluntary choice and government coercion, of capitalism and statism. America was the freest country on earth, but elements of statism were present in her economy from the start. These elements kept growing, under the influence of her intellectuals who were predominantly committed to the philosophy of statism.


pages: 484 words: 136,735

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

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bank run, banking crisis, Benoit Mandelbrot, Berlin Wall, Black Swan, bonus culture, Bretton Woods, BRICs, Carmen Reinhart, cognitive dissonance, collapse of Lehman Brothers, Corn Laws, correlation does not imply causation, creative destruction, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, deglobalization, Deng Xiaoping, Edward Glaeser, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, F. W. de Klerk, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, George Akerlof, global rebalancing, Hyman Minsky, income inequality, information asymmetry, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, laissez-faire capitalism, Long Term Capital Management, mandelbrot fractal, market design, market fundamentalism, Martin Wolf, money market fund, moral hazard, mortgage debt, new economy, Northern Rock, offshore financial centre, oil shock, paradox of thrift, Pareto efficiency, Paul Samuelson, peak oil, pets.com, Ponzi scheme, post-industrial society, price stability, profit maximization, profit motive, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, statistical model, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, Vilfredo Pareto, Washington Consensus, zero-sum game

The first of these great transitions—the period of social and economic upheaval that started with the political revolutions in America and France and the industrial revolution in England—created the first era of modern capitalism, running roughly from the British victory over Napoleon in 1815 until the First World War. This long period of relative systemic stability and rising prosperity ended with the First World War, the Russian Revolution, and finally the Great Depression in the United States. These unprecedented political and economic traumas destroyed the classical laissez-faire capitalism of the nineteenth century and created a different version of the capitalist system, embracing Franklin Roosevelt’s New Deal, Lyndon Johnson’s Great Society, and the British and European welfare states. Then, forty years after the Great Depression, another enormous economic crisis—the global inflation of the late 1960s and 1970s—inspired the free-market revolution of Margaret Thatcher and Ronald Reagan, creating a third version of capitalism, clearly distinct from the previous two.

The changing relationship between government and private enterprise, between political and economic forces, has been the clearest feature of capitalism’s evolution from one phase to the next—first in the early nineteenth century, then in the 1930s, then in the 1970s, and again today. And after each of these evolutions, the capitalist system has emerged stronger than it was before. To understand the new politico-economic model emerging from the crisis, it helps to consider the changing relationships of governments and markets in these three previous phases. In the classical laissez-faire capitalism that dominated the world from the early nineteenth century until 1930, politics and economics were essentially distinct spheres. The interactions of government and markets were confined to collecting taxes, mainly to pay for wars, and erecting tariff barriers, mostly to protect powerful political interests. Then, from 1932 onward, came the New Deal and the social democratic European welfare states.

Those of us who have looked to the self-interest [of private companies to promote the capitalist system]—myself especially—are in a state of shocked disbelief.”1 Appropriately enough, the nature of this flaw was identified by Ayn Rand herself in an essay on her objectivist philosophy that had inspired Greenspan and other American conservatives for two generations: “The ideal political-economic system is laissez-faire capitalism . . . In a system of full capitalism, there should be (but, historically, has not yet been) a complete separation of state and economics, in the same way and for the same reasons as the separation of state and church.”2 Most serious political philosophers, sociologists, and economic historians have long realized that the opposite is true. Any society driven purely by market incentives will fail catastrophically, in economic as well as political terms.


pages: 411 words: 136,413

The Voice of Reason: Essays in Objectivist Thought by Ayn Rand, Leonard Peikoff, Peter Schwartz

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affirmative action, Berlin Wall, British Empire, business process, cuban missile crisis, haute cuisine, invisible hand, Isaac Newton, laissez-faire capitalism, means of production, medical malpractice, profit motive, Ralph Nader, Ronald Reagan, source of truth, The Wealth of Nations by Adam Smith, trade route, transcontinental railway, urban renewal, War on Poverty

The end of the Apollo program is the subject of Chapter 18. Part 11 ends with a pair of my lectures on the American educational system. One documents the anti-Americanism rampant in our universities (Chapter 19); the other, the anti-conceptual methodology that is wrecking our grade schools (Chapter 20). Part III, Politics, considers a number of political issues from the standpoint of an advocate of laissez-faire capitalism. It includes attacks on the quota system (Chapter 21), public TV (Chapter 22), antitrust legislation (Chapter 24), foreign aid (Chapter 25), and socialized medicine (Chapters 29 and 30). It also offers a practical proposal to break up the government’s monopoly in the field of education (Chapter 23); a discussion of the role of wealth in an industrial economy (Chapter 27); an identification of the cause of world hunger (Chapter 28); and an explanation of Ayn Rand’s view that a rational woman would not desire to serve as president of the United States (Chapter 26).

Reason (the faculty which identifies and integrates the material provided by man’s senses) is man’s only means of perceiving reality, his only source of knowledge, his only guide to action, and his basic means of survival. 3. Man—every man—is an end in himself, not the means to the ends of others. He must exist for his own sake, neither sacrificing himself to others nor sacrificing others to himself. The pursuit of his own rational self-interest and of his own happiness is the highest moral purpose of his life. 4. The ideal political—economic system is laissez-faire capitalism. It is a system where men deal with one another, not as victims and executioners, nor as masters and slaves, but as traders, by free, voluntary exchange to mutual benefit. It is a system where no man may obtain any values from others by resorting to physical force, and no man may initiate the use of physical force against others. The government acts only as a policeman that protects man’s rights; it uses physical force only in retaliation and only against those who initiate its use, such as criminals or foreign invaders.

In the popular, political usage of today, the term “liberal” is generally understood to mean an advocate of greater government control over the country’s economy, or, loosely, an advocate of socialism—while the term “conservative” is generally understood to mean an opponent of government controls, or an advocate of capitalism. But this was not the original, historical meaning of the two terms, or their use in the nineteenth century. Originally, the term “liberal” meant an advocate of individual rights, of political freedom, of laissez-faire capitalism, and an opponent of the authoritarian state—while the term “conservative” meant an advocate of the state’s authority, of tradition, of the established political order, of the status quo, and an opponent of individual rights. It has been observed many times that the term “liberal” today means the opposite of its nineteenth-century meaning. This would not have been too disastrous intellectually if the two terms had been merely reversed and had exchanged their original meanings.


pages: 322 words: 77,341

I.O.U.: Why Everyone Owes Everyone and No One Can Pay by John Lanchester

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asset-backed security, bank run, banking crisis, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black-Scholes formula, Celtic Tiger, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, diversified portfolio, double entry bookkeeping, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial innovation, fixed income, George Akerlof, greed is good, hindsight bias, housing crisis, Hyman Minsky, intangible asset, interest rate swap, invisible hand, Jane Jacobs, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, laissez-faire capitalism, light touch regulation, liquidity trap, Long Term Capital Management, loss aversion, Martin Wolf, money market fund, mortgage debt, mortgage tax deduction, mutually assured destruction, Myron Scholes, negative equity, new economy, Nick Leeson, Norman Mailer, Northern Rock, Own Your Own Home, Ponzi scheme, quantitative easing, reserve currency, Right to Buy, risk-adjusted returns, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, South Sea Bubble, statistical model, The Great Moderation, the payments system, too big to fail, tulip mania, value at risk

He had charge of the Federal Reserve under four presidents, from Ronald Reagan, who appointed him in 1987, to the second President Bush, whom he served until his retirement in 2006, and during that time he oversaw the response to several crises, from the crash of October 1987 (during which share prices fell 20 percent in a single day) through the recession of 1991, the implosion of LTCM in 1998, and the dot-com bust of 2001. For most of this time, Greenspan’s militant advocacy of deregulation and laissez-faire capitalism seemed to be an effective intellectual underpinning of his policies. Greenspan was a close friend and disciple of Ayn Rand, the Russian-born philosopher who advocated a philosophy she called “Objectivism” (she wanted to call it “Existentialism,” but some pesky Euros had already bagged that name).* Objectivism is undergoing a vogue on the Internet at the moment, perhaps because its libertarian ideology appeals to a certain type of computer nerd.

.* Objectivism is undergoing a vogue on the Internet at the moment, perhaps because its libertarian ideology appeals to a certain type of computer nerd. Rand’s central ideas focused on her belief that society must get out of the way of great men. Man is “a heroic being, with his own happiness as the moral purpose of his life,” and the only good society is capitalism, which Rand glossed as follows: “When I say ‘capitalism,’ I mean a full, pure, uncontrolled, unregulated laissez-faire capitalism.”3 Today Objectivism seems a sophomoric belief system, whose main truth lies in its unexpressed but profound longing for the world to be a much simpler place than it is. Still, there’s no denying Objectivism’s impact on the world, thanks to its direct influence on the most economically powerful man alive, Alan Greenspan. His emphasis throughout all his years in office was on the belief—the mystical belief—that markets could be entirely trusted to regulate themselves.

When they do that, the issue they’re focusing on is that of regulation. Their argument, put forcefully by Judge Richard A. Posner, is that “We are learning from [the crisis] that we need a more active and intelligent government to keep our model of a capitalist economy from running off the rails. The movement to deregulate the financial industry went too far by exaggerating the resilience—the self-healing powers—of laissez-faire capitalism.”5 The financial industry caused the crisis, but it could not have happened without the help of the governments, which spent decades committed to the idea of pure laissezfaire capitalism. What that ideology did, in practice, was essentially to allow bankers to write their own rules—or their lack of rules. There was a decades-long process of deregulation and opening up, of stripping out all measures designed to second-guess the financial world’s ability to regulate itself via “market discipline.”


pages: 248 words: 57,419

The New Depression: The Breakdown of the Paper Money Economy by Richard Duncan

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asset-backed security, bank run, banking crisis, banks create money, Ben Bernanke: helicopter money, Bretton Woods, currency manipulation / currency intervention, debt deflation, deindustrialization, diversification, diversified portfolio, fiat currency, financial innovation, Flash crash, Fractional reserve banking, income inequality, inflation targeting, Joseph Schumpeter, laissez-faire capitalism, liquidity trap, market bubble, market fundamentalism, mass immigration, Mexican peso crisis / tequila crisis, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, private sector deleveraging, quantitative easing, reserve currency, Ronald Reagan, savings glut, special drawing rights, The Great Moderation, too big to fail, trade liberalization

The first section of this chapter presents a brief history of how capitalism evolved into the credit-based, government-directed economic system that is in place today. Once that is understood, the policy options available within this system become clearer. The rest of the chapter outlines a strategy that could avert economic breakdown by making use of the new policy tools our current economic system makes possible. Capitalism and the Laissez-Faire Method Laissez-faire capitalism did not survive World War I. In Europe, the belligerent nations suspended the convertibility of their currencies into gold in order to finance the war with government debt and fiat money creation. The classical gold standard was thus one of the first victims of the war. The United States did not leave the gold standard at that time, but the U.S. economy was destabilized by Europe’s abandonment of the gold standard nevertheless.

It is intended, however, to demonstrate that they did create economic growth, regardless of how or why they came about. In other words, the economy—and the evolution of the economic system from capitalism to creditism—have been driven by the government without being planned by the government. It is necessary to understand how great the role of the government has been in the economy and how far removed our economic system is now from laissez-faire capitalism in order to understand the nature of this crisis and the options that are available to resolve it. Cutting government spending and allowing market forces to reestablish a market-determined equilibrium are not among those options. Reallocating government spending away from consumption and toward investment is. Murray Rothbard (1926 to 1995), a student and friend of Ludwig von Mises and an impressive economist in his own right, believed that the Great Depression would have ended much sooner had the government not interfered and simply allowed the economy to adjust by itself.

See Balance of payments Fortune magazine Fractional reserve banking, money creation through Freddie Mac: conservatorship of credit creation and decline in liquidity reserves quantitative easing and U.S. debt guarantees and Friedman, Milton General equilibrium, theory of Germany Glass–Steagall Act Globalization Global savings glut theory, of Bernanke Goldman Sachs Gold reserve requirement, end of and creation of fiat money Government Accountability Office report Government sector: inflation and deflation’s effects on percentage of total credit market debt rational investment option for results of spending cuts in Government-sponsored entities (GSEs): credit supply and GSE-backed mortgage pools inflation and deflation’s effects on quantitative easing and U.S. debt guarantees and Great Depression economic conditions during Friedman’s conclusions about Greece Greenspan, Alan Gross domestic product (GDP): change in value added, by industry debt as percentage of driven by credit equation of exchange and during Great Depression ratio of credit growth to GSE-backed mortgage pools History of Economic Analysis (Schumpeter) Hoover, Herbert Household sector: debt and inflation and deflation’s effects on Human Action (von Mises) Hyperinflation Inflation and deflation credit and inflation derivative regulation and effects on asset classes Fisher’s theory of debt-deflation inflation in 2011 inflation likely in 2012 inflation likely without additional quantitative easing and fiscal stimulus New Great Depression scenarios and protectionism and wealth preservation during Innovation, in Mitchell’s theory of business cycles Interest rates, in U.S.: bond sales and cut by Federal Reserve to encourage credit expansion money supply and quantitative easing and trade balances and International Monetary Fund Ireland Jackson, Andrew Japan Johnson, Lyndon JP Morgan JPMorgan Chase Keynes, John Maynard Korea Labor market, changes in marginal cost of wages in. See also Unemployment Laissez-faire capitalism, evolution to credit-based, government-directed economic system Lehman Brothers Libertarian Party Life insurance companies, credit supply and Maiden Lane I, I, and III Marx, Karl Merrill Lynch Military sector, in New Great Depression Mitchell, Wesley Monetarism Monetary aggregates Monetary History of the United States, 1967–1960, A (Friedman and Schwartz) Money market funds, credit supply and Money multiplier Money supply, during Great Depression Morgan Stanley Mutual funds, credit supply and Net worth, credit expansion’s effect on New Deal New Depression banking sector and global trade imbalances and policy responses to private sector debt and New Great Depression.

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

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

It's the story of an architect named Howard Roarkwho heroically resists all pressure to compromise his vision—he even blows up a public-housing project when he finds out that the builder has altered his design—and ultimately prevails. Rand wrote the story to illustrate a philosophy she had come to, one that emphasized reason, individualism, and enlightened self-interest. Later she named it objectivism; today she would be called a libertarian. Objectivism championed laissez-faire capitalism as the ideal form of social organization; not surprisingly, Ayn Rand abhorred Soviet communism, in which she had been schooled. She saw it as the embodiment of brutal collectivism. And at the height of Soviet power, she held that the system was so inherently corrupt that eventually it would collapse from within. She and her circle called themselves the Collective, an inside joke because collectivism was the polar opposite of their belief.

The acceptance of Smith's economics was, by then, prompting the reorganization of commercial life in much of the "civilized" world. Yet Smith's reputation and influence eroded as industrialization spread. He was no hero to many who struggled during the nineteenth and twentieth centuries against what they saw as the barbarism and injustice that accompanied laissez-faire market economies. Robert Owen, a successful British factory owner, believed that laissez-faire capitalism by its very nature could lead only to poverty and disease. He founded the Utopian movement, which advocated, in Owen's phrase, "villages of cooperation." In 1826, his adherents set up New Harmony, Indiana. Ironically, strife among the residents brought New Harmony to collapse within two years. But Owen's charisma continued to draw large followings among those struggling to eke out a living in appalling working environments.

To me, the degree of willingness to take risks is, in the end, the major defining characteristic that separates countries into the various modes of capitalism. Whether different degrees of risk aversion stem from an ethical antipathy toward wealth accumulation or the stress of competitive battle does not affect the consequences. They are both captured in the choice of legal inhibitions imposed on competition that dilute laissez-faire capitalism, an important purpose of the welfare state. But there are other, less fundamental suppressants of competitive behavior as well. Most politically prominent is the inclination of many societies to protect "national treasures" from the winds of creative destruction, or worse, foreign ownership. That is a dangerous restraint on international competition and another issue that differentiates one culture from another.

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

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anti-communist, bank run, barriers to entry, centralized clearinghouse, collective bargaining, creative destruction, desegregation, feminist movement, financial independence, George Gilder, invisible hand, jimmy wales, John Markoff, Joseph Schumpeter, knowledge worker, laissez-faire capitalism, lone genius, Menlo Park, minimum wage unemployment, Mont Pelerin Society, new economy, Norman Mailer, offshore financial centre, Ponzi scheme, profit motive, RAND corporation, rent control, road to serfdom, Robert Bork, rolodex, Ronald Reagan, side project, Stewart Brand, The Chicago School, The Wisdom of Crowds, union organizing, urban renewal, white flight, Whole Earth Catalog

At times old and new mingled together, as when she wondered, if perhaps, “the rational faculty is the dominant characteristic of the better species, the Superman.” 6336 The way Rand integrated reason into her earlier ideas demonstrated her strong drive for consistency. She labored to define reason as inextricably linked to individuality, asserting, “The rational faculty is an attribute of the individual.” Men could share the result of their thinking but not the process of thought itself, she argued. And since man’s survival depended on his own thought, individuals must be left free. Rationality thus connected to laissez-faire capitalism, the only economic system that sought to maximize individual freedom. Placing rationality at the heart of her philosophy also began to shift the grounding of Rand’s ethics. In her early work independence had been the basic criterion of value. Now she wrote, “All the actions based on, proceeding from, in accordance with man’s nature as a rational being are good. All the actions that contradict it are evil.”

In 1956 Buckley’s National Review would offer a famously lukewarm endorsement: “We prefer Ike.”32 But now, to her dismay, most of Rand’s New York friends swallowed their reservations and climbed aboard the Eisenhower bandwagon. Twenty years of Democratic rule had made them desperate for any Republican president. This struck Rand as foolish compromise and unforgiveable inconsistency. She realized, “[T]hey were not for free enterprise, that was not an absolute in their minds in the sense of real laissez faire capitalism. I knew then that there is nothing that I can do with it and no help that I can expect from any of them.”33 After a string of disappointments, she was ready to turn her back on conservatives altogether. It was Nathan, stepping forward into a new role of advisor, who gently nudged Rand to this conclusion. The conservatives were not really “our side,” he told Rand. “We have really nothing philosophically in common with them.”

It was an augury of the first national political realignment since FDR’s New Deal.47 “It’s earlier than we think,” Rand told the New York Times the day after Goldwater’s loss. Advocates of capitalism had to “start from scratch” and concentrate on culture rather than practical politics.48 This was the same conclusion she had reached after the Willkie campaign—that a popular consensus on the virtues of capitalism had to be established before electoral success could be achieved. Laissez-faire capitalism belonged to the uncharted future rather than the past. The senator himself seemed to accept Rand’s explanation for his defeat, quoting her in his syndicated column.49 In The Objectivist Newsletter, her private forum, Rand openly blamed Goldwater for his loss. She was appalled that the only voters he had drawn to his banner were southern whites: “As it stands, the most grotesque, irrational and disgraceful consequence of the campaign is the fact that the only section of the country left in the position of an alleged champion of freedom, capitalism and individual rights is the agrarian, feudal, racist South.” 50 The only glimmer of hope had been Ronald Reagan’s principled and philosophical speech on behalf of Goldwater, but it had been too little, too late.


pages: 328 words: 92,317

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

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

The middle class has expanded enormously, and now includes many people whose professions would once have classified them for membership in the laboring classes. In absolute terms, the rich have also gotten richer, but the gap between rich and poor seems, so far as very imperfect statistics make it possible to judge, to have been slowly closing. Many modern liberals argue that Marx's predictions were accurate enough for laissez-faire capitalism, but that such liberal institutions as strong labor unions, minimum wage laws, and progressive income taxes prevented them from being realized. A statement about what might have happened is difficult to refute. We can note that both the rise in general standard of living and the decreasing inequality appear to have been occurring fairly steadily, over a long period of time, in a variety of different more or less capitalist societies.

(This effect is seen in the dramatic rise in the unemployment rate of nonwhite teenagers which consistently follows rises in the minimum wage.) In the previous chapter I argued that liberal measures tend to injure the poor, not benefit them, and to increase, not decrease, inequality. If that has been true in the past, then the increasing equality we have experienced is in spite of, not because of, such measures. Another version of the same argument is the claim that the great depression was the true expression of laissez faire capitalism and that we were rescued from it by the abandonment of laissez faire in favor of Keynesian policies. The controversy here runs into, not merely a book, but an extensive literature; for some decades it was a central issue of debate among economists. Those who would like to see the anti-Keynesian side will find one variant of it in The Great Contraction by Friedman and Schwartz. The authors argue that the great depression was caused not by laissez faire but by government intervention in the banking industry, and that without such intervention it would not have occurred.

Many people, reading of the long work days and low salaries of nineteenth-century England and America, consider the case against capitalism and industrialism already proven. They forget that those conditions seem intolerable to us only because we live in an enormously richer society and that our society became so productive largely through economic progress made during the nineteenth century under institutions of relatively unrestrained laissez-faire capitalism. Under the economic conditions of the nineteenth century, no institutions, socialist, capitalist, or anarcho-capitalist, could have instantly produced what we would regard as a decent standard of living. The wealth simply was not there. If a socialist had confiscated the income of all the capitalist millionaires and given it to the workers, he would have found the workers little better off than before.


pages: 223 words: 10,010

The Cost of Inequality: Why Economic Equality Is Essential for Recovery by Stewart Lansley

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banking crisis, Basel III, Big bang: deregulation of the City of London, Bonfire of the Vanities, borderless world, Branko Milanovic, Bretton Woods, British Empire, business process, call centre, capital controls, collective bargaining, corporate governance, corporate raider, correlation does not imply causation, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, deindustrialization, Edward Glaeser, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, Goldman Sachs: Vampire Squid, high net worth, hiring and firing, Hyman Minsky, income inequality, James Dyson, Jeff Bezos, job automation, John Meriwether, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, laissez-faire capitalism, light touch regulation, Long Term Capital Management, low skilled workers, manufacturing employment, market bubble, Martin Wolf, mittelstand, mobile money, Mont Pelerin Society, Myron Scholes, new economy, Nick Leeson, North Sea oil, Northern Rock, offshore financial centre, oil shock, Plutocrats, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, Right to Buy, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, shareholder value, The Great Moderation, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, Tyler Cowen: Great Stagnation, Washington Consensus, Winter of Discontent, working-age population

At the heart of this economic leap-in-the-dark was a switch in economic and political philosophy from the ‘managed capitalism’ of the post-war era to what might be called ‘market capitalism’. Central to the new philosophy was a belief in efficient and self-regulating markets. In the UK from the early 1980s, the commitments of managed capitalism to full employment, progressive taxation and inclusive welfare were dropped. Of course, the effect of this process was not a return to the much more laissez faire capitalism of the 1920s. Even by the mid-1990s, the state retained a major role in the running of the economy, with higher levels of public spending as a share of output than in the 1950s and 1960s. Nevertheless, most elements of the post-war ideological settlement—and its belief in economic fine-tuning, greater equality and a strong state—were scaled back. State industries were privatised, regulations swept away—especially in the City—and corporate and top income tax rates axed.

In the five years to 2008, Abbey, Lloyds and RBS cut their staff levels by 39,000.185 Although shareholder value was initially shunned in those nations most wedded to a ‘social market’, notably Germany and Japan, a weaker version of the new supercapitalism spread, if gingerly, elsewhere. Parts of Asia—from Hong Kong to Singapore—embraced the new capitalism in full. Milton Friedman once described Hong Kong as the world’s best example of laissez faire capitalism in action. Most richer and developing nations embarked on at least some degree of deregulation and privatisation. The German model has been distinguished by fewer takeovers, a greater emphasis on investment from retained earnings and lower dividend payments. But even Germany, the spiritual home of the social, stakeholder model, with its greater emphasis on collective success, consensus and the long term, found itself being drawn in the direction of the greater individualism and short-termism of the Anglo-Saxon model.

But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. The measure of success attained by Wall Street, regarded as an institution of which the proper social purpose is to direct new investment into the most profitable channels in terms of future yield, cannot be claimed as one of the outstanding triumphs of laissez-faire capitalism—which is not surprising, if I am right in thinking that the best brains of Wall Street have been in fact directed towards a different object.’317 But Keynes also viewed the growing income gap as a key contributor to the buildup of financial instability during the 1920s. He argued that because lower income groups consume a higher proportion of their income than the rich (in economic jargon, they have a lower marginal propensity to consume) while the rich also have a high propensity for speculation, excessive income inequality increases the risk of financial instability and economic collapse.


pages: 345 words: 92,849

Equal Is Unfair: America's Misguided Fight Against Income Inequality by Don Watkins, Yaron Brook

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3D printing, Affordable Care Act / Obamacare, Apple II, barriers to entry, Berlin Wall, Bernie Madoff, blue-collar work, business process, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, collective bargaining, colonial exploitation, corporate governance, correlation does not imply causation, creative destruction, Credit Default Swap, crony capitalism, David Brooks, deskilling, Edward Glaeser, Elon Musk, en.wikipedia.org, financial deregulation, immigration reform, income inequality, indoor plumbing, inventory management, invisible hand, Isaac Newton, Jeff Bezos, Jony Ive, laissez-faire capitalism, Louis Pasteur, low skilled workers, means of production, minimum wage unemployment, Naomi Klein, new economy, obamacare, Peter Singer: altruism, Peter Thiel, profit motive, rent control, Ronald Reagan, Silicon Valley, Skype, statistical model, Steve Jobs, Steve Wozniak, The Spirit Level, too big to fail, trickle-down economics, Uber for X, urban renewal, War on Poverty, wealth creators, women in the workforce, working poor, zero-sum game

It doesn’t mean the fairness of getting what you deserve according to what you earn, but of having your needs satisfied regardless of what you earn (and of not being free to earn too much more than others). What made America great, in their view—to the extent they grant that it ever was great—was not freedom, but the post–New Deal regulatory-welfare state. The danger they see today is the alleged breakdown of that regulatory-welfare state in the name of laissez-faire capitalism. The key to saving the American Dream, they conclude, is to move rapidly in the direction of a European social welfare state. We have seen that every element of this narrative is false—in many cases it is wildly false, based on inexcusable errors, fallacies, and even deceptions. The inequality critics attempt to prove we are stagnating—by playing statistical games that evade the fact that as inequality has increased, so has our standard of living.

How to Liberate Ability We do face problems today, but they aren’t economic inequality problems—they are political inequality problems. Our equal rights as human beings aren’t being protected. If we want to save the American Dream, we need a program to secure those rights and thereby liberate human ability. In our first book, Free Market Revolution, we laid out a full program for establishing laissez-faire capitalism in America. Here are five steps that, while not erasing all of the government’s barriers to success, would go a long way toward restoring opportunity to America. Abolish all forms of corporate welfare so that no business can gain unfair advantages. This includes bailouts, subsidies, tariffs, government-granted monopolies, and the like. Businesses should have to compete for customers on a free market.

., 160–1 Keohane, Georgia Levinson, 110 Khmer Rouge, 207–10 Kilby, Jack, 89 Kinsley, Michael, 151–2 Klein, Naomi, 7, 212 Krakauer, Jon, 56–7 Krueger, Alan B., 126 Krugman, Paul, 23, 26, 29, 81, 111, 117, 125–6, 143, 159–60, 162, 185–6, 210, 217 Kwak, James, 192 labor unions, 5, 114, 128, 130, 170, 211 and inequality narrative, 20, 23–4, 27–30 pro-union legislation, 7, 20, 24, 27–9, 224 laissez-faire capitalism, 32–3, 37–8, 224 Landsburg, Steven, 169 Larrimore, Jeff, 45–6 Lein, Laura, 142 Lemieux, Pierre, 35–6 Lewis, Hunter, 151 life expectancy, 24, 39, 84 Lindquist, Matthew J., 123 Locke, John, 12 management, 91–2. See also CEOs Manzi, James, 158, 163 Marconi, Guglielmo, 89 Markkula, Mike, 93–4 Marxism, 215–16 Mazumder, Bhashkar, 123 McCandless, Christopher Johnson, 56–7 McCloskey, Deirdre, 104, 165–6 McElwee, Sean, 125, 211, 213 McLaughlin, Patrick, 36 Mead, Lawrence, 140 Medicaid, 35, 134, 136, 138, 183 Medicare, 35, 70, 127, 134–6, 138, 170, 183, 225 merit, 6, 13–16, 114, 118, 120, 145–53, 179, 223 Micklethwait, John, 32 Microsoft, 92, 131–2, 146, 151–2 mobility, 4–5, 20, 63, 117–23, 222–3 “Money-Makers” and “Money-Appropriators,” 149–54 Munell, Alicia, 181 Munkhammar, Johnny, 113 Murphy, Liam, 203–4 Murray, Charles, 75, 139–40, 239n43 Musk, Elon, 28, 91, 130 Nagel, Thomas, 187, 203–4, 217 Nardelli, Robert, 164 New Deal, 28, 38, 174, 185–6 Newcomen, Thomas, 90 Newman, Katherine, 73, 77–8, 141–2 Newton, Isaac, 90, 100 Noah, Timothy, 4, 8, 121 Nolan, Hamilton, 212 Noyce, Robert, 89 Obama, Barack, 4–6, 9, 117, 119, 151–2, 164, 181, 196–7, 210.


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The Populist Explosion: How the Great Recession Transformed American and European Politics by John B. Judis

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affirmative action, Affordable Care Act / Obamacare, Albert Einstein, anti-communist, back-to-the-land, Bernie Sanders, Bretton Woods, capital controls, centre right, collapse of Lehman Brothers, deindustrialization, desegregation, Donald Trump, eurozone crisis, financial deregulation, first-past-the-post, fixed income, full employment, ghettoisation, glass ceiling, hiring and firing, illegal immigration, immigration reform, income inequality, invisible hand, laissez-faire capitalism, mass immigration, means of production, neoliberal agenda, obamacare, Occupy movement, open borders, Plutocrats, plutocrats, Post-materialism, post-materialism, rolodex, Ronald Reagan, Silicon Valley, War on Poverty, We are the 99%, white flight, Winter of Discontent

Progressive taxation was itself part of a broader worldview sometimes described as New Deal liberalism. It had replaced a worldview that stressed a far more limited role for government in the economy. The role of underlying worldviews is characteristic of politics in the United States and Europe, and of all countries that are governed primarily by consent rather than by force and terror. In Great Britain, for instance, laissez-faire capitalism, associated with Adam Smith’s invisible hand, prevailed for much of the nineteenth century, but after World War II it was superseded by Keynesian economics. American politics is structured to sustain prevailing worldviews. Its characteristics of winner takes all, first past the post, single-member districts have encouraged a two-party system. Third-party candidates are often dismissed as “spoilers.”

They are usually precipitated by economic depression or war, and by a succession of political outbursts that challenge, but do not replace, the prevailing worldview. In American politics, these outbursts often take the form of populist candidacies and movements. These catalytic populists have defined politics in “us vs. them” terms—as struggles of the people against the establishment based on issues and demands that the latter had been sidestepping. The rise of the People’s Party was the first major salvo against the worldview of laissez-faire capitalism. Huey Long’s Share Our Wealth coincided with Franklin Roosevelt’s election in 1932 and helped drive the Roosevelt administration to develop a new politics to sustain its majority. Together, these movements established the populist framework that Bernie Sanders, who described himself both as a democratic socialist and as a progressive, would adopt during his 2016 campaign. As liberal critics would point out during the 1950s, the People’s Party had within it strains of anti-Semitism, racism, and nativism, particularly toward the Chinese, but these were at best secondary elements.


pages: 756 words: 228,797

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

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

(Rand apparently never considered that one of Roosevelt’s accomplishments may have been to stave off a Russian-style insurrection.) Still, the intrepid president was so deeply, if narrowly, hated that country-club Republicans swore he possessed every vice from Stalinism to syphilis (rumored to have been transmitted to him by the first lady, who got it “from a Negro”). When he ran for a third term, those who believed in minimal government and laissez-faire capitalism saw totalitarianism in the making. If he were to win, Rand and others believed, there might never be another federal election. America might turn to dictatorship, a notion that was not as fanciful then as it seems now, given that Hitler and Mussolini had risen to power through popular movements and were overrunning the free nations of Europe. By the summer of 1940, Nazi Germany and the Soviet Union, allies for the moment, had already invaded France, Poland, Norway, Belgium, the Netherlands, Finland, Lithuania, Estonia, and Latvia.

She and others formed the Associated Ex—Willkie Workers Against Willkie and wrote broadsides and letters to the editor ridiculing the luckless utilities executive and accusing him of aiding the U.S. Communist Party agenda. What the country needed now, before it was too late, she told Channing Pollock, was an organization of conservative intellectuals to frame and promote a full-fledged ideology, or moral justification, of laissez-faire capitalism—to do what Willkie had refused to do. She asked Pollock to be its leader. He agreed. The first few meetings were held in offices around town or in the O’Connors’ most recent apartment, tucked into a slightly scruffy building on East Forty-ninth Street and First Avenue, near where the United Nations headquarters later rose. She and her husband had moved there from the Upper East Side during the campaign, to save money, and the following fall they would move again, this time to a sunless ground-floor apartment on East Thirty-fifth Street near Lexington Avenue.

Most governments have hounded geniuses to martyrdom. The sole affirmative function of the state is to safeguard individuals from one another so that they may create and work in peace. Third, there is “and ever has been” one fountainhead of progress: the individual person in a state of political and economic freedom. This was the source of the wheel, the steam engine, the electric lightbulb, and all great music, art, and literature. Laissez-faire capitalism is the only system ever evolved to operate solely on the basis of individual human reason juxtaposed against an opportunity or a need, and as such must be thanked for 150 years of industrial creativity and material progress such as the world had never known. Perhaps most important, capitalism, unlike Communism, doesn’t demand the impossible. It doesn’t ask people to turn themselves inside out and twist their desires into halos to serve its ends, as Communism does.


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 process, 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, 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, labour market flexibility, 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 maximization, profit motive, purchasing power parity, race to the bottom, Ralph Nader, rent-seeking, reshoring, Richard Thaler, rising living standards, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, Sand Hill Road, shareholder value, Silicon Valley, South Sea Bubble, sovereign wealth fund, Steve Ballmer, Steve Jobs, The Chicago School, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transcontinental railway, transfer pricing, trickle-down economics, tulip mania, Tyler Cowen: Great Stagnation, union organizing, Upton Sinclair, upwardly mobile, women in the workforce, working poor, zero-sum game

Bush doubled down on Reaganomics, and President Barack Obama, amid a gridlocked Washington, has been stymied in efforts to change it. We’ve been living under Reaganomics since the 1980s, a span I call the Reagan era. Please be clear that I’m referring to the entire period from 1980 until now, and not just the duration of Reagan’s presidency. I’ll define Reaganomics in detail later in the book, but for now, this brief description will suffice. Reaganomics is a version of laissez-faire capitalism that emphasizes a minimum of regulation, especially in the financial sector; a lowering of taxes, especially on the wealthiest individuals; rapid growth in government spending, especially on national defense; and an indulgent attitude toward the business community. The Impact of Reaganomics Economists are critical of the overall impact of Reaganomics on productivity and family prosperity.

As Jeremy Rifkin noted, “Although Europe was the seedbed for advancing a private property regime, there was opposition from the start,” mostly farmers and the urban working class—subsisting in such squalor that they fled the dreadful conditions of the early Industrial Revolution by the millions for opportunity offered by new lands in the Americas, Australia, South Africa, and Canada.40 Dickensian eighteenth- and nineteenth-century societies demonstrated that joint stock entities and the rising merchant bourgeois class could easily outmuscle families to seize economic sovereignty. Rising income disparities gave voice to collectivists; Jean-Jacques Rousseau, for example, who published Discourse on the Origin of Inequality in 1755, and Karl Marx, whose dense Communist Manifesto was published nearly a century later. Mainstream critics sought to temper the increasingly evident excesses of poverty, wage suppression, and the amorality endemic with laissez-faire capitalism, as popularized by Charles Dickens and others, and later, by American writers such as Upton Sinclair and John Steinbeck. It was a battle first waged in England, featuring the Chartist laborers’ uprisings in 1838–1848 promising class warfare.41 Forced by public opinion to acknowledge the validity of long-suppressed employee grievances, Parliament launched study commissions and soon crafted a middle ground between conservatives like Thomas Carlyle and socialists like John Stuart Mill that became a continent-wide template.

And they planned for a rebirth of family capitalism even as World War II raged, drawing inspiration from Franklin Roosevelt. His January 1944 fireside chat encapsulated the wisdom that human fulfillment has an inescapable economic component: “True individual freedom cannot exist without economic security and independence. People who are hungry and out of a job are the stuff of which dictatorships are made.”55 Drawing on Adam Smith, their alternative was to remediate the flaws of laissez-faire capitalism with careful regulation, creating a twentieth-century grand bargain, with government maintaining prudent regulations on commerce and labor markets and expanding the safety net with retirement and unemployment support. As explained by his biographer, Robert Skidelsky, Keynes supported regulation to “redress the failings of society not because he loved it, but because he saw it, in the last resort, as the savior of capitalism from the temptations of collectivism or worse.”56, 57 In clarifying a capitalism that sanctified family prosperity, Keynes and others fended off the Bolsheviks and provided the intellectual heft and insights vital to victory later during the Cold War.


pages: 283 words: 81,163

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

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banking crisis, British Empire, collective bargaining, corporate governance, corporate social responsibility, financial deregulation, Fractional reserve banking, Hernando de Soto, income inequality, invisible hand, Joseph Schumpeter, laissez-faire capitalism, means of production, medical malpractice, Menlo Park, minimum wage unemployment, Norman Mailer, Plutocrats, plutocrats, price stability, profit maximization, profit motive, Ralph Nader, rent control, rent-seeking, Robert Bork, Ronald Coase, Ronald Reagan, Silicon Valley, statistical model, The Wealth of Nations by Adam Smith, transcontinental railway, union organizing, Upton Sinclair, wealth creators, working poor, Works Progress Administration, zero-sum game

UTOPIANISM Intellectuals deal mainly in abstract ideas, including ideas about how to reconstruct entire societies to their liking. As such, they are predominantly utopians. Laissez-faire capitalism has little or no role in utopian planning, for such a system calls for no central planning authority (which the advising intellectual class should guide, of course). Under pure capitalism individuals constantly plan, but they do so voluntarily and in a way that best serves their own interests, as they see them, which are not necessarily the same as the would-be government planners’ interests. This is another reason why the intellectual class is predominantly socialistic: under a regime of economic freedom and laissez-faire capitalism there is no role for intellectuals to advise to the state on how to best plan everyone else’s affairs. In the field of economics this utopianism has manifested itself in what Hayek described as “the contrast between an existing state of affairs and that one ideal of a possible future society which the socialists alone held up before the public.”6 For many years, economics students were taught that a genuinely competitive capitalist economy was one in which: (1) all businesses in an industry produced the exact same physical product; (2) every business charged exactly the same price; (3) consumers had “perfect information” (that is, were omniscient) about all available products; (4) businesses also had “perfect information” about how to manufacture their products at the minimum cost; and (5) it was cost-free to enter into or exit any industry.


pages: 105 words: 18,832

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

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

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


pages: 381 words: 101,559

Currency Wars: The Making of the Next Gobal Crisis by James Rickards

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Asian financial crisis, bank run, Benoit Mandelbrot, Berlin Wall, Big bang: deregulation of the City of London, Black Swan, borderless world, Bretton Woods, BRICs, British Empire, business climate, capital controls, Carmen Reinhart, Cass Sunstein, collateralized debt obligation, complexity theory, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, Daniel Kahneman / Amos Tversky, Deng Xiaoping, diversification, diversified portfolio, Fall of the Berlin Wall, family office, financial innovation, floating exchange rates, full employment, game design, German hyperinflation, Gini coefficient, global rebalancing, global reserve currency, high net worth, income inequality, interest rate derivative, John Meriwether, Kenneth Rogoff, labour mobility, laissez-faire capitalism, liquidity trap, Long Term Capital Management, mandelbrot fractal, margin call, market bubble, Mexican peso crisis / tequila crisis, money market fund, money: store of value / unit of account / medium of exchange, Myron Scholes, Network effects, New Journalism, Nixon shock, offshore financial centre, oil shock, one-China policy, open economy, paradox of thrift, Paul Samuelson, price mechanism, price stability, private sector deleveraging, quantitative easing, race to the bottom, RAND corporation, rent-seeking, reserve currency, Ronald Reagan, sovereign wealth fund, special drawing rights, special economic zone, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, time value of money, too big to fail, value at risk, War on Poverty, Washington Consensus, zero-sum game

However, given their quasi-sovereign powers, they are more properly understood as extensions of the sovereign with private owners and managers. This arrangement bears comparison to regional Federal Reserve Banks in the United States, which are privately owned but act as a financial arm of the government. It was only in the late eighteenth century, with the industrial revolution and the publication of The Wealth of Nations by Adam Smith, that a more modern form of laissez-faire capitalism with private ownership and banking arose. Yet through the twentieth century, despite the success of private enterprise, state-controlled businesses still prevailed in societies dominated by communists, fascists, oligarchs and many other antidemocratic forces. What we today take for granted as the dominant financial paradigm of private capitalist free enterprise and entrepreneurship is, in fact, exceptional in most times and most places.

The creation of the Nobel Memorial Prize in Economic Sciences in 1969, seventy-four years after the original Nobel Prize in physics, confirmed this academic metamorphosis. Economists were the new high priests of a large part of human activity—wealth creation, jobs, savings and investment—and came well equipped with the equations, models and computers needed to perform their priestly functions. There has never been a time since the rise of laissez-faire capitalism when economic systems were entirely free of turmoil. Bubbles, panics, crashes and depressions have come and gone with the regularity of floods and hurricanes. This is not surprising, because the underlying dynamics of economics, rooted in human nature, are always at work. Yet the new scientific economics promised better. Economists promised that through fine tuning fiscal and monetary policy, rebalancing terms of trade and spreading risk through derivatives, market fluctuations would be smoothed and the arc of growth extended beyond what had been possible in the past.


pages: 430 words: 109,064

13 Bankers: The Wall Street Takeover and the Next Financial Meltdown by Simon Johnson, James Kwak

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Andrei Shleifer, Asian financial crisis, asset-backed security, bank run, banking crisis, Bernie Madoff, Bonfire of the Vanities, bonus culture, break the buck, capital controls, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, commoditize, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Edward Glaeser, Eugene Fama: efficient market hypothesis, financial deregulation, financial innovation, financial intermediation, financial repression, fixed income, George Akerlof, Gordon Gekko, greed is good, Home mortgage interest deduction, Hyman Minsky, income per capita, information asymmetry, interest rate derivative, interest rate swap, Kenneth Rogoff, laissez-faire capitalism, late fees, light touch regulation, Long Term Capital Management, market bubble, market fundamentalism, Martin Wolf, money market fund, moral hazard, mortgage tax deduction, Myron Scholes, Paul Samuelson, Ponzi scheme, price stability, profit maximization, race to the bottom, regulatory arbitrage, rent-seeking, Robert Bork, Robert Shiller, Robert Shiller, Ronald Reagan, Saturday Night Live, Satyajit Das, sovereign wealth fund, The Myth of the Rational Market, too big to fail, transaction costs, value at risk, yield curve

This sudden collapse in the value of almost everything can trigger widespread bank failures, corporate bankruptcies, and mass unemployment. The 1920s were a period of significant deregulation, as Republican administrations dismantled the system of state control developed in order to fight the First World War.75 By the time the war ended and President Warren G. Harding came to power in 1921, there was a determined effort to restore laissez-faire capitalism.76 Harding’s philosophy was “The business of America is the business of everybody in America”; his successor, Calvin Coolidge, famously said, “The chief business of the American people is business.”77 But the two people who best embodied the hands-off philosophy of the decade were Andrew Mellon, treasury secretary from 1921 to 1932, and Herbert Hoover, secretary of commerce under both Harding and Coolidge and president from 1929 to 1933.

Although Greenspan was not a Wall Street banker—he headed a New York economic consulting firm for nearly thirty years before becoming Fed chairman—there came to be no truer believer in the ideology of free markets, financial innovation, and deregulation. Greenspan was a “lifelong libertarian Republican” and a longtime associate of Ayn Rand, the philosopher and novelist who argued for pure laissez-faire capitalism.34 He believed in both the doctrine of efficient markets and the Reagan Revolution against governmental interference in the economy. He looked forward eagerly to a world without government regulation: Regulation is inherently conservative. It endeavors to maintain the status quo and the special interests who benefit therefrom.… With technological change clearly accelerating, existing regulatory structures are being bypassed, freeing market forces to enhance wealth creation and economic growth.


pages: 364 words: 104,697

Were You Born on the Wrong Continent? by Thomas Geoghegan

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

I mean that the social market economy is a human creation, and not an impersonal machine, inhuman, cold, barking out commands, the way Americans such as Alan Greenspan conceive of it. The very constitutions of these countries, like the German Basic Law, make clear the purpose of the state is to protect people from the “excesses of capitalism.” Law professors actually state this in their lectures. In the Basic Law there is literally a provision to protect the family, and yes, it’s right wing and Catholic, but they’re serious about protecting the family against laissez-faire capitalism. In that sense, laissez-faire is unconstitutional. In defending the Gothic against the Classical, John Ruskin argued that, however flawed and imperfect the Gothic style might be, at least it was human and, because of that, greater and closer to the divine than the cold, impersonal Classical style could ever be. And so it is with the European model: however flawed, when compared to the “perfect” but impersonal Anglo-American model, at least it is a work of human beings and not machines.

Johnson, Diane Judt, Tony Kafka, Franz Kant, Immanuel Keynes, John Maynard Kiel, Germany Kinsley, Michael Knowledge and the Wealth of Nations (Warsh) “knowledge” economies Kohl, Helmut Krise. See financial meltdown of 2008 (the Krise) and German model labor markets (German). See German model of social democracy (labor and industry) labor movement (German). See German model of social democracy (unions and labor movement) Lafontaine, Oskar laissez-faire capitalism Landesbank (State Bank of Hesse) land-use planning Lane, Nathan law students and law education Germany U.S. leisure time Lenya, Lotte Libération (French newspaper) “the Links” Longworth, Dick Maastricht Treaty Major, John Malin, Martin Marshall Fund grant Marx, Karl Marx, Reinhard maternity leave/paternity leave May Day parade in Berlin (2001) Mazower, Mark McKinnon, Robert Meany, George Merkel, Angela and co-determined boards and German model and unemployment rates Microsoft military spending minimum wage Mitbestimmung (German magazine) mobility and public transportation Le Monde Moscow, Russia A Moveable Feast (Hemingway) Moynihan, Daniel Patrick Munnell, Alicia Muslims Netherlands bank model children in poverty elderly poor GDP per capita hours worked jobs/employment percent of adults holding an associate degree percent of adults self-employed purchasing power ratios/disparities unemployment rates for college graduates works councils New Deal (U.S.)


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Zero-Sum Future: American Power in an Age of Anxiety by Gideon Rachman

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Asian financial crisis, bank run, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, Bonfire of the Vanities, borderless world, Bretton Woods, BRICs, capital controls, centre right, clean water, collapse of Lehman Brothers, colonial rule, currency manipulation / currency intervention, deindustrialization, Deng Xiaoping, Doha Development Round, energy security, failed state, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, full employment, global reserve currency, greed is good, Hernando de Soto, illegal immigration, income inequality, invisible hand, Jeff Bezos, laissez-faire capitalism, Live Aid, market fundamentalism, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, moral hazard, mutually assured destruction, Naomi Klein, offshore financial centre, open borders, open economy, Peace of Westphalia, peak oil, pension reform, Plutocrats, plutocrats, popular capitalism, price stability, RAND corporation, reserve currency, rising living standards, road to serfdom, Ronald Reagan, shareholder value, Sinatra Doctrine, sovereign wealth fund, special economic zone, Steve Jobs, Stewart Brand, The Chicago School, The Great Moderation, The Myth of the Rational Market, Thomas Malthus, trickle-down economics, Washington Consensus, Winter of Discontent, zero-sum game

Many years later, when he was wooing TV reporter Andrea Mitchell, who became his second wife, he ended a dinner date by inviting her back to his apartment, “where I showed her this essay I’d written on anti-trust for Ayn Rand.”2 The reference to Rand is perhaps as revealing as Greenspan’s unusual mode of courtship. For Greenspan was not a mere technician or a number cruncher. He was a man of powerful libertarian and free-market convictions who both captured and molded the spirit of his age. As a young man, Greenspan had been captivated by the personality and ideas of Ayn Rand, a Russian exile, philosopher, and bestselling novelist who, as Greenspan puts it, “championed laissez-faire capitalism as the ideal form of social organization.”3 Debating with her, Greenspan later remembered, was “like starting a game of chess thinking I was good, and later finding myself in checkmate.”4 Rand was short, forceful, charismatic, and dominated many of her youthful disciples. One of them, Nathaniel Branden, became involved in an affair with her despite being twenty-five years her junior. (Rand convinced her own husband and Branden’s wife to accept this arrangement.)

Conversation with the author, London, March 2009. 26. Conversation with the author, Washington, D.C., May 2009. 27. Michael Mandelbaum, The Ideas That Conquered the World: Peace, Democracy, and Free Markets in the Twenty-First Century (New York: Public Affairs, 2002), 395. 28. Yukio Hatoyama, “A New Path for Japan,” New York Times, August 27, 2009. 29. Quoted in Elitsa Vucheva, “Laissez-faire capitalism is finished says France,” EUObserver.com, September 26, 2008. 30. Piergiorgio Alessandri and Andrew Haldane, “Banking on the State,” Bank of England, November 2009. Available from http://www.bankofengland.co.uk/publications/ speeches/2009/speech409.pdf. 31. John Reed, “Back on the road,” Financial Times, June 18, 2009. 32. Francesco Guerrera, “Welch condemns shareholder value focus,” Financial Times, March 12, 2009. 33.


pages: 96 words: 33,963

Decline of the English Murder by George Orwell

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

Here is the stuff that is read somewhere between the ages of twelve and eighteen by a very large proportion, perhaps an actual majority, of English boys, including many who will never read anything else except newspapers; and along with it they are absorbing a set of beliefs which would be regarded as hopelessly out of date in the Central Office of the Conservative Party. All the better because it is done indirectly, there is being pumped into them the conviction that the major problems of our time do not exist, that there is nothing wrong with laissez-faire capitalism, that foreigners are unimportant comics and that the British Empire is a sort of charity-concern which will last for ever. Considering who owns these papers, it is difficult to believe that this is unintentional. Of the twelve papers I have been discussing (i.e. twelve including the Thriller and Detective Weekly) seven are the property of the Amalgamated Press, which is one of the biggest press-combines in the world and controls more than a hundred different papers.


pages: 695 words: 194,693

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

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Albert Einstein, Andrei Shleifer, asset allocation, asset-backed security, banking crisis, Benoit Mandelbrot, Black Swan, Black-Scholes formula, Bretton Woods, Brownian motion, 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, transatlantic slave trade, tulip mania, wage slave

She adopted the American name Ayn Rand. She was eventually moderately successful as a screenwriter, but her true claim to fame came through her political novels. Atlas Shrugged is widely regarded as one of the most influential books of the twentieth century. Published in 1957 at the height of the Cold War, it stridently rejects Soviet-style collectivism and instead proposes “Objectivism”—a libertarian philosophy championing laissez-faire capitalism and self-interested rational economic action. Atlas Shrugged pits the economic elite—the entrepreneurs and self-made CEOs of a future United States—against a system of political favoritism that rewards mediocracy, a system in which business decisions are made in the back rooms of Washington, DC. Rand spins out a tale of moral, social, and technological decay caused by well-intentioned collectivism—an obvious reflection of the failure of Russian society and economy she witnessed in Saint Petersburg as a young woman.

However improbable, during the fog of an unprecedented world war, a revolutionary party seized power over a nation of more than 100 million people and fought off the Great Powers. Rejecting a long tradition of financial innovation and reliance on global capital markets, Russia instead villainized capitalism and formed itself in the image of the Communist Manifesto; a slim volume short on practical detail, written by two armchair revolutionaries and elaborated by them in a massive work of cultural criticism, penned in London, the bastion of laissez-faire capitalism. The strange schism of the twentieth century would not soon heal. One might have expected that the world would divide itself along lines of religious intolerance. After all, the Crusades are still the rallying cry in parts of the Islamic world. But the notion that the theory of finance—in particular, a disagreement over the role of investors in society—could rip the world in two is difficult to conceive of ex ante.

But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. The measure of success attained by Wall Street, regarded as an institution of which the proper social purpose is to direct new investment into the most profitable channels in terms of future yield, cannot be claimed as one of the outstanding triumphs of laissez-faire capitalism—which is not surprising, if I am right in thinking that the best brains of Wall Street have been in fact directed towards a different object.1 J. M. KEYNES, THE GENERAL THEORY AMERICAN WAY AMERICAN WAY The seminar room was classic Harvard: paneled walls; a coffered ceiling; and a long, beautiful table. Professors and graduate students wandered into the room to take their seats following the accustomed pecking order that reserves prime spots for senior professors and chairs along the wall for doctoral students.


pages: 488 words: 144,145

Inflated: How Money and Debt Built the American Dream by R. Christopher Whalen

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Albert Einstein, bank run, banking crisis, Black Swan, Bretton Woods, British Empire, California gold rush, Carmen Reinhart, central bank independence, commoditize, conceptual framework, corporate governance, corporate raider, creative destruction, cuban missile crisis, currency peg, debt deflation, falling living standards, fiat currency, financial deregulation, financial innovation, financial intermediation, floating exchange rates, Fractional reserve banking, full employment, global reserve currency, housing crisis, interchangeable parts, invention of radio, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, means of production, money: store of value / unit of account / medium of exchange, moral hazard, mutually assured destruction, non-tariff barriers, oil shock, Paul Samuelson, payday loans, Plutocrats, plutocrats, price stability, pushing on a string, quantitative easing, rent-seeking, reserve currency, Ronald Reagan, special drawing rights, The Chicago School, The Great Moderation, too big to fail, trade liberalization, transcontinental railway, Upton Sinclair, women in the workforce

Not all of the leaders of Europe disagreed with FDR’s actions with respect to gold, however, including a conservative back bencher in the United Kingdom named Winston Churchill. Keynes subsequently wrote an article supporting FDR’s action. More than a few politicians understood that FDR, by following the thinking of Keynes, was essentially creating an alternative, a “middle way” between the laissez-faire capitalism of nineteenth century America and the Marxist socialism that was destroying Russia. Many people believed that a communist revolution threatened Europe and America equally. But for most Americans, FDR’s actions with respect to gold and the dollar marked a repudiation of the past. In the wonderfully sarcastic book The New Dealers, published anonymously in 1934 by Simon & Schuster, the “Unofficial Observer” described the FDR devaluation and repudiation of gold, and what this meant for the way the U.S. economy performed: On the one hand, you have the good old traditional way of doing business, which required the entire population of the country to “walk home” at twenty-year intervals in the name of God and the Gold Standard.

“New Frontier” speech Kennedy, Joseph SEC role Kern, John Worth Keynes, John Maynard central planning belief evangelism fiscal action support General Theory of Employment, Interest, and Money How to Pay for the War impact Treatise on Money Keynesian liquidity problems Kleppner, Paul Knickerbocker Trust Company depositor run failure Knox, P.C. Knox v. Lee Koestler, Arthur Korean War China, entry initiation mobilization Kotok, David Krugman, Paul Kubarych, Roger LaFollette, Robert (Progressive Party) Laissez faire capitalism Republican approach role, return system Lamont, Thomas Lance, Bert Land speculation (1830s) Latin debt crisis Corrigan management Laughlin, Lawrence Lee, Robert Henry Leffingwell, Russell Legal Tender Act (1862) Legal tender laws Continental Congress usage legacy legality, upholding Lincoln enactment Legal tender notes, Chase opposition Lehman Brothers, collapse/destruction Lend Lease Act of WWII Lend-lease obligation, forgiveness Lend Lease program Less-developed countries, debt forgiveness Less developed countries (LDCs), trouble Liberia, WWI loan repayment Liberty bonds, U.S.


pages: 404 words: 134,430

Why People Believe Weird Things: Pseudoscience, Superstition, and Other Confusions of Our Time by Michael Shermer

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Albert Einstein, Alfred Russel Wallace, anesthesia awareness, anthropic principle, butterfly effect, cognitive dissonance, complexity theory, conceptual framework, correlation does not imply causation, cosmological principle, discovery of DNA, false memory syndrome, Gary Taubes, invention of the wheel, Isaac Newton, laissez-faire capitalism, life extension, moral panic, Murray Gell-Mann, out of africa, Richard Feynman, Richard Feynman, Search for Extraterrestrial Intelligence, Silicon Valley, Stephen Hawking, Steven Pinker, The Bell Curve by Richard Herrnstein and Charles Murray, the scientific method, Thomas Kuhn: the structure of scientific revolutions

She did so as follows (Rand 1962, p. 35): 1. Metaphysics: Objective Reality 2. Epistemology: Reason 3. Ethics: Self-interest 4. Politics: Capitalism In other words, reality exists independent of human thought. Reason is the only viable method for understanding reality. Every human should seek personal happiness and exist for his own sake, and no one should sacrifice himself for or be sacrificed by others. And laissez-faire capitalism is the political-economic system in which the first three flourish best. This combination, said Rand, allows people to "deal with one another, not as victims and executioners, nor as masters and slaves, but as traders, by free, voluntary exchange to mutual benefit." This is not to say, however, that "anything goes." In these free exchanges, "no man may initiate the use of physical force against others" (Rand 1962, p. 1).

The fact that the atomic bomb, the hydrogen bomb, and many even more destructive weapons have been invented does not mean we should abandon the study of the atom. Moreover, there may well be Marxist, communist, atheistic, and even immoral evolutionists, but there are probably just as many capitalist, theist, agnostic, and moral evolutionists. As for the theory itself, it can be used to support Marxist, communist, and atheistic ideologies, and it has; but so has it been used (especially in America) to lend credence to laissez-faire capitalism. The point is that linking scientific theories to political ideologies is tricky business, and we must be cautious of making connections that do not necessarily follow or that serve particular agendas (e.g., one person's cultural and moral decline is another person's cultural and moral progress). 8. Evolutionary theory, along with its bedfellow, secular humanism, is really a religion, so it is not appropriate to teach it in public schools.


pages: 602 words: 120,848

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

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accounting loophole / creative accounting, active measures, affirmative action, asset allocation, barriers to entry, Bonfire of the Vanities, business climate, carried interest, Cass Sunstein, clean water, collective bargaining, corporate governance, Credit Default Swap, David Brooks, desegregation, employer provided health coverage, financial deregulation, financial innovation, financial intermediation, fixed income, full employment, Home mortgage interest deduction, Howard Zinn, income inequality, invisible hand, knowledge economy, laissez-faire capitalism, Martin Wolf, medical bankruptcy, moral hazard, Nate Silver, new economy, night-watchman state, offshore financial centre, oil shock, Powell Memorandum, Ralph Nader, Ronald Reagan, shareholder value, Silicon Valley, The Wealth of Nations by Adam Smith, too big to fail, trickle-down economics, union organizing, very high income, War on Poverty, winner-take-all economy, women in the workforce

As the great political economist Karl Polanyi famously argued in the 1940s, even the ostensibly freest markets require the extensive exercise of the coercive power of the state—to enforce contracts, to govern the formation of unions, to spell out the rights and obligations of corporations, to shape who has standing to bring legal actions, to define what constitutes an unacceptable conflict of interest, and on and on.19 The libertarian vision of a night-watchman state gently policing an unfettered free market is a philosophical conceit, not a description of reality. The intertwining of government and markets is nothing new. The frontier was settled because government granted land to the pioneers, killed, drove off, or rounded up Native Americans, created private monopolies to forge a nationwide transportation and industrial network, and linked the land settled with the world’s largest postal system. Similarly, the laissez-faire capitalism of the early twentieth century was underpinned by a government that kept unions at bay, created a stable money supply, erected trade barriers that sheltered the new manufacturing giants, protected entrepreneurs from debtors’ prison and corporations from liability, and generally made business the business of government. When the political economy of the Gilded Age collapsed, it was government that reinvented American capitalism.

., 141, 202 Kerry, John, 226, 259, 272, 304 Keynes, John Maynard, 88 Kirk, Paul, 178 Koch, Charles, 283–84 Koch, David, 283–84 Koch, Fred, 283–84 Konwinski, Lisa, 260 Koppel, Ted, 105 Kristol, Irving, 123, 135, 233, 302 Kristol, William, 123, 233, 262–63, 286 Krugman, Paul, 42 K Street Project, 178, 207, 231, 250 Kuttner, Robert, 68, 224 Labor Department, U.S., 186–87 Labor Law Reform Bill, 130–32 Labor-Management Group, 131–32, 141 La Follette, Robert, 306 LaHood, Ray, 262 laissez-faire capitalism, 55, 81 Landrieu, Mary, 245, 281 Landrum-Griffin Act (1959), 129 laws, labor, 44, 58, 78, 80, 125–32, 134, 189, 296 lawyers, 48, 68, 154, 219, 252 Lazio, Rick, 272 legal realism, 81, 82 Lehman Brothers, 67, 70 Leuchtenburg, William, 90 leverage, financial, 197, 249, 254 Levitt, Arthur, 66, 197, 247 Levy, Frank, 58 Lewis, John, 140 Lewis, Michael, 233–34 liberalism, 5, 7, 43, 53–56, 62, 68, 69, 88–90, 91, 95–100, 110, 115, 116–19, 137, 138, 140, 145–48, 159–60, 163, 178, 179, 181, 186–89, 200, 225, 234, 239, 256–57, 305 libertarianism, 55, 254 liberum veto, 271 Lieberman, Joe, 181, 225, 226, 239, 247, 281 Limbaugh, Rush, 294 Lincoln, Abraham, 260 Lincoln, Blanche, 240, 245, 273, 274, 281 Lincoln Savings and Loan, 185 Lippmann, Walter, 83, 86, 90, 91, 305 litigation, private, 65, 219 lobbyists, 66, 89, 114, 117, 118, 124–26, 135–36, 144, 183–84, 198, 205–7, 218, 238–39, 275–77 Lochner v.


pages: 388 words: 125,472

The Establishment: And How They Get Away With It by Owen Jones

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anti-communist, Asian financial crisis, bank run, battle of ideas, Big bang: deregulation of the City of London, bonus culture, Bretton Woods, British Empire, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, centre right, citizen journalism, collapse of Lehman Brothers, collective bargaining, don't be evil, Edward Snowden, Etonian, eurozone crisis, falling living standards, Francis Fukuyama: the end of history, full employment, G4S, glass ceiling, hiring and firing, housing crisis, inflation targeting, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, James Dyson, laissez-faire capitalism, light touch regulation, market fundamentalism, mass immigration, Monroe Doctrine, Mont Pelerin Society, moral hazard, Neil Kinnock, night-watchman state, Northern Rock, Occupy movement, offshore financial centre, old-boy network, open borders, Plutocrats, plutocrats, popular capitalism, profit motive, quantitative easing, race to the bottom, rent control, road to serfdom, Ronald Reagan, shareholder value, short selling, sovereign wealth fund, stakhanovite, statistical model, The Wealth of Nations by Adam Smith, transfer pricing, union organizing, unpaid internship, Washington Consensus, wealth creators, Winter of Discontent

Blanchflower clashed from the outset with King about how economics should be done: Blanchflower was mocked because his research included investigating the economics of happiness, for example. ‘From the first moment, war was declared.’ Back in 1981, King had been among 364 economists who had signed a public letter to The Times damning the then Chancellor Geoffrey Howe for his savage, City-pleasing deflationary economics. But, like so many of his contemporaries, King came to embrace the economics of the outriders, believing in laissez-faire capitalism and leaving the market to work its magic. King was the ‘classic example of a theorist who cares less about what the world actually looked like,’ says Blanchflower. ‘So there was an ideological bent, pretty much. The economists there were really dominantly those who Mervyn wanted.’ With an ideologue such as King firmly in place, those who disagreed with the Bank of England’s line could be quietly marginalized.

Unless an alternative is crafted that is coherent and credible, and which resonates with a mass audience, then the status quo is here to stay. That is what the neo-liberal outriders themselves realized many decades ago. One of the false arguments thrown at opponents of the Establishment is that our alternative is simply statism, replacing the liberating free market with a stultifying, bureaucratic monstrosity. This is a false binary opposition: an alternative to laissez-faire capitalism does not mean top-down statism. In a sense the alternative to Establishment mantras is partly about rolling back the state. What is called the ‘free market’ is actually a con, a front in part for generous subsidies and handouts for the wealthy elite. A welfare state that was intended to provide social security for all has become distorted: it acts as a de facto source of income for low-wage-paying bosses and extortionate-rent-charging private landlords.

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

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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

Perhaps someday we shall understand how truly to democratize economic relations Page 161 , and widespread use of public-purpose corporations may be a key part of the plan. In the meantime, however, in the near- to medium- range future-in terms of what we can do tomorrow, next week, and next year-realism dictates presuming that the corporation's constitution will remain much as it is: self-interested to the point of psychopathy. It bears stating here that the corporation is an institutional reflection of the principles of laissez faire capitalism. Changing it must be understood as part of a larger project of economic change. The challenge for now is to find ways to control the corporation- to subject it to democratic constraints and protect citizens from its dangerous tendencies-even while we hope and strive in the longer term for a more fully human and democratic economic order. Improving the legitimacy, effectiveness, and accountability of government regulation is currently the best, or at least the most realistic, strategy for doing this.


pages: 196 words: 57,974

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

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affirmative action, barriers to entry, Bonfire of the Vanities, borderless world, business process, Corn Laws, corporate governance, corporate 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

The robber barons themselves found heartwarming justification for their doings in the Social Darwinism of Herbert Spencer, an English thinker who won a huge following in America for his doctrine of “the survival of the fittest” and his opposition to state intervention of all sorts, from tariffs to public education. “Light came in as a flood, and all was clear” was Carnegie’s reaction to Spencer. Rockefeller likened laissez-faire capitalism to breeding an American Beauty rose “by sacrificing the early buds which grew up around it. This is not an evil tendency in business. It is merely the working out of a law of nature and a law of God.”26 Others saw this pruning from the other side. In 1869, the historian Charles Francis Adams wondered whether the joint-stock corporation wasn’t a dangerous idea. Society had “created a class of artificial beings who bid fair soon to be masters of their creator.


pages: 187 words: 62,861

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

business process, California gold rush, citizen journalism, Daniel Kahneman / Amos Tversky, East Village, Everything should be made as simple as possible, experimental economics, experimental subject, framing effect, informal economy, invisible hand, jimmy wales, job satisfaction, Joseph Schumpeter, Kenneth Arrow, knowledge economy, laissez-faire capitalism, loss aversion, Murray Gell-Mann, Nicholas Carr, peer-to-peer, prediction markets, Richard Stallman, Scientific racism, Silicon Valley, Steven Pinker, telemarketer, Toyota Production System, ultimatum game, Washington Consensus, zero-sum game, Zipcar

In the United States, Britain, and other liberal democracies, Leviathan took more benevolent forms: the burgeoning welfare state and the rise of government bureaucracies (ushered in by the New Deal in the United States, and by similar movements in Western Europe). By the late 1950s and early 1960s the pendulum began to swing back as concerns mounted over petty bureaucrats, unchecked discretion, and inefficiency. By the 1980s we were back in full swing toward laissez-faire capitalism; the Reagan and Thatcher governments in the United States and Britain, the rise of the efficiency- and free-trade-focused European Commission in Europe, and the emergence of the World Bank and the International Monetary Fund as bearers of what came to be known as “the Washington Consensus.” The Invisible Hand seemed to have completely won when even the center-left governments of the United States and the United Kingdom, under Bill Clinton and Tony Blair, busied themselves with dismantling welfare as we know it—replacing government bureaucracies with privatized, market-based alternatives—and deregulating the financial markets that flourished in New York and London.

The Handbook of Personal Wealth Management by Reuvid, Jonathan.

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asset allocation, banking crisis, BRICs, collapse of Lehman Brothers, correlation coefficient, credit crunch, cross-subsidies, diversification, diversified portfolio, estate planning, financial deregulation, fixed income, high net worth, income per capita, index fund, interest rate swap, laissez-faire capitalism, land tenure, market bubble, merger arbitrage, negative equity, new economy, Northern Rock, pattern recognition, Ponzi scheme, prediction markets, Right to Buy, risk tolerance, risk-adjusted returns, risk/return, short selling, side project, sovereign wealth fund, statistical arbitrage, systematic trading, transaction costs, yield curve

The link between art and money is at times challenging but long standing, with the first evidence of the art trade 5,000 years ago. The first well-documented art markets developed in Italy and Flanders (modern Belgium) during the 15th century. Even today, art from those times still appears on the market occasionally. Despite its long history, the art market remains one of the last examples of almost unregulated laissez-faire capitalism: one where supply tends to stimulate demand and objects tend to become more highly valued as their original purpose (or even beauty) is lost. As Western investors experience slim returns on cash, weak stock markets, falling property prices and the threat of deflation, art remains a safe haven, since it tends to hold its value over a longer period while providing lower risk and higher returns if part of a diversified investment portfolio.


pages: 300 words: 78,475

Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream by Arianna Huffington

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American Society of Civil Engineers: Report Card, Bernie Madoff, Bernie Sanders, call centre, carried interest, citizen journalism, clean water, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, extreme commuting, Exxon Valdez, full employment, greed is good, housing crisis, immigration reform, invisible hand, knowledge economy, laissez-faire capitalism, late fees, market bubble, market fundamentalism, Martin Wolf, medical bankruptcy, microcredit, new economy, New Journalism, offshore financial centre, Ponzi scheme, Report Card for America’s Infrastructure, Richard Florida, Ronald Reagan, Rosa Parks, single-payer health, smart grid, The Wealth of Nations by Adam Smith, too big to fail, transcontinental railway, trickle-down economics, winner-take-all economy, working poor, Works Progress Administration

We see the results of capitalism without a conscience all around us: the pollution of our environment, workers being injured or killed, the sale of dangerous products, the shameless promotion of risky mortgages for overvalued homes, and the wholesale loss of millions of jobs and trillions in savings. The collapse of communism as a political system sounded the death knell for Marxism as an ideology. But while unregulated, laissez-faire capitalism has been a monumental failure in practice, the ideology is still alive and kicking. You can find all manner of free-market fundamentalists still on the Senate floor or in governors’ mansions or showing up on TV trying to peddle deregulation snake oil. Given how close we were in 2008 to the complete collapse of our economic and financial system, anyone who continues to make the case that markets do best when left alone should be laughed off his bully pulpit.17 Despite the fact that many banks, car companies, and so on would be defunct without government intervention, the free-market fundamentalists continue to live in denial, trying to convince the world that if only left alone, free markets would right themselves.


pages: 232 words: 67,934

The Immortalization Commission: Science and the Strange Quest to Cheat Death by John Gray

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Alfred Russel Wallace, anthropic principle, anti-communist, dematerialisation, George Santayana, laissez-faire capitalism, Law of Accelerating Returns, life extension, Nikolai Kondratiev, random walk, Ray Kurzweil, the scientific method

He knew that evolution cares nothing for humans or their values – it moves, as he put it, like the wind – but he could not hold on to this truth, because it means evolution is a process without a goal. Progress implies a destination towards which one is travelling, whereas natural selection is simply drift. The popular cult of evolution has always denied this truth, and in fact the most influential versions of evolution have never been Darwin’s. One was that of Herbert Spencer (1820–1903), the prophet of laissez-faire capitalism who invented the expression ‘survival of the fittest’. In Spencer’s version evolution was a teleological process – in other words, it had a goal: a universal state of complex equilibrium. Another version was developed by the French naturalist Jean-Baptiste Lamarck (1744–1829), who believed traits acquired during an organism’s lifetime could be inherited by future generations. Like Darwin, who in the third edition of Origin of Species (1861) praised Lamarck’s work for showing that all forms of life tend to progress, Lamarck viewed evolution as tending towards perfection.


pages: 330 words: 77,729

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

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

Even the World Bank, once a severe critic of the capitalist model, has shifted dramatically in favor of market solutions to underdevelopment problems (with some important exceptions). The radical model of Marx and the socialists was clearly losing ground. But it wasn't always that way. In fact, during most of the twentieth century, heavy-handed central planning was considered more efficient and more productive than laissez-faire capitalism. At the depths of the Great Depression, radical thinking dominated the atmosphere in intellectual and political circles. Suspicious of free-market capitalism, many were attracted to central planning and the Soviet model. Ludwig von Mises and Friedrich Hayek were in the minority in questioning the collectivist Zeitgeist and offering a critique of socialism on purely economic grounds. Hayek published Mises's 1920 article, "Economic Calculation in the Socialist Commonwealth," and other essays in a volume entitled Collectivist Economic Planning (Hayek 1935).


pages: 231 words: 72,656

A History of the World in 6 Glasses by Tom Standage

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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, 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

This period of rapid innovation in public and private finance, with the floating of joint-stock companies, the buying and selling of shares, the development of insurance schemes, and the public financing of government debt, all of which culminated in London's eventual displacement of Amsterdam as the world's financial center, is known today as the Financial Revolution. The need to fund expensive colonial wars made it necessary, and the fertile intellectual environment and speculative spirit of the coffeehouses made it possible. The financial equivalent of the Principia was The Wealth of Nations, written by the Scottish economist Adam Smith. It described and championed the emerging doctrine of laissez-faire capitalism, according to which the best way for governments to encourage trade and prosperity was to leave people to their own devices. Smith wrote much of his book in the British Coffee House, his base and postal address in London, and a popular meeting place for Scottish intellectuals, among whom he circulated chapters of his book for criticism and comment. So it was that London's coffeehouses were the crucibles of the scientific and financial revolutions that shaped the modern world.


pages: 219 words: 61,720

American Made: Why Making Things Will Return Us to Greatness by Dan Dimicco

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2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, Affordable Care Act / Obamacare, American energy revolution, American Society of Civil Engineers: Report Card, Bakken shale, barriers to entry, Bernie Madoff, carbon footprint, clean water, crony capitalism, currency manipulation / currency intervention, David Ricardo: comparative advantage, decarbonisation, fear of failure, full employment, Google Glasses, hydraulic fracturing, invisible hand, job automation, knowledge economy, laissez-faire capitalism, Loma Prieta earthquake, manufacturing employment, oil shale / tar sands, Ponzi scheme, profit motive, Report Card for America’s Infrastructure, Ronald Reagan, Silicon Valley, smart grid, smart meter, sovereign wealth fund, The Wealth of Nations by Adam Smith, too big to fail, uranium enrichment, Washington Consensus, Works Progress Administration

When we think of mercantilism, we usually think of England and Spain in the sixteenth or seventeenth centuries, trying to amass as much gold and silver as they could get their hands on. A mercantilist trading policy is one in which a government protects and heavily subsidizes key industries, exporting as much as possible and importing as little as possible. The great Scottish philosopher and economist Adam Smith said the remedy to mercantilism was laissez-faire capitalism. The “invisible hand” of capitalism has always struggled with the heavy hand of government meddling. The U.S. trade deficit, which had fallen 60 percent during Reagan’s second term and into the elder Bush’s presidency, began to expand again in the early 1990s.7 The move toward free trade (which we’ll discuss at greater length in chapter 5) left U.S. industries vulnerable once again to predatory foreign trade practices.


pages: 305 words: 69,216

A Failure of Capitalism: The Crisis of '08 and the Descent Into Depression by Richard A. Posner

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Andrei Shleifer, banking crisis, Bernie Madoff, collateralized debt obligation, collective bargaining, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, debt deflation, diversified portfolio, equity premium, financial deregulation, financial intermediation, Home mortgage interest deduction, illegal immigration, laissez-faire capitalism, Long Term Capital Management, market bubble, money market fund, moral hazard, mortgage debt, Myron Scholes, oil shock, Ponzi scheme, price stability, profit maximization, race to the bottom, reserve currency, risk tolerance, risk/return, Robert Shiller, Robert Shiller, savings glut, shareholder value, short selling, statistical model, too big to fail, transaction costs, very high income

Companies that raise billions of dollars, some of it from immensely wealthy investors, have a legitimate business interest in decorating their quarters in a manner apt to impress such investors. The financial crisis was indeed the consequence of decisions, some mistaken, by financiers. But the mistakes were systemic —the product of the nature of the banking business in an environment shaped by low interest rates and deregulation rather than the antics of crooks and fools. Laissez-faire capitalism failed us, but government allowed the preconditions of depression to develop and wreak havoc with the economy. And its responses to the crisis were late, slow, indecisive, and poorly articulated. The responses also created "moral hazard" (the tendency to engage in risky behavior if one is insured against the consequences of the risks' materializing). They did this by eliminating the limits on federal deposit insurance of bank deposits and by extending that insurance to checkable accounts in money market funds, but more important by bailing out failing firms deemed "too big to fail"—an incentive for corporate giantism and financial irresponsibility (which go hand in hand because the difficulty of controlling subordinates grows with the size of an organization).


pages: 270 words: 73,485

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

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

But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. The measure of success attained by Wall Street, regarded as an institution of which the proper social purpose is to direct new investment into the most profitable channels in terms of future yield, cannot be claimed as one of the outstanding triumphs of laissez-faire capitalism – which is not surprising, if I am right in thinking that the best brains of Wall Street have been in fact directed towards a different object.4 The crash when it came first hit the banks.5 They had overextended their lending and bought each other’s dubious packages of securitized mortgages and other derivative products. It was like the children’s game of Pass the Parcel. When the music stopped, each was left holding a parcel and did not know what the parcel contained.


pages: 251 words: 76,868

How to Run the World: Charting a Course to the Next Renaissance by Parag Khanna

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Albert Einstein, Asian financial crisis, back-to-the-land, bank run, blood diamonds, Bob Geldof, borderless world, BRICs, British Empire, call centre, carbon footprint, charter city, clean water, cleantech, cloud computing, commoditize, continuation of politics by other means, corporate governance, corporate social responsibility, Deng Xiaoping, Doha Development Round, don't be evil, double entry bookkeeping, energy security, European colonialism, facts on the ground, failed state, friendly fire, global village, Google Earth, high net worth, index fund, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, labour mobility, laissez-faire capitalism, Live Aid, Masdar, mass immigration, megacity, microcredit, mutually assured destruction, Naomi Klein, New Urbanism, off grid, offshore financial centre, oil shock, open economy, out of africa, Parag Khanna, private military company, Productivity paradox, race to the bottom, RAND corporation, reserve currency, Silicon Valley, smart grid, South China Sea, sovereign wealth fund, special economic zone, sustainable-tourism, The Fortune at the Bottom of the Pyramid, The Wisdom of Crowds, too big to fail, trade liberalization, trickle-down economics, UNCLOS, uranium enrichment, Washington Consensus, X Prize

In the words of one prominent academic observing the discussions, “When the world’s biggest economy and the world’s biggest emerging economy look for lessons in the same place at the same time, you know something is up. We are seeing a paradigm shift toward a more European state.” America represents a late-twentieth-century role model for managing political-economic modernity, but the future will reveal an increasing number of variants and formulas. The more universal the acceptance of capitalism becomes, the more its many shades of gray are revealed, most notably between what was once American laissez-faire capitalism and the surging Asian state capitalism. Within that spectrum, only two real criteria separate winners from losers among models of entrepreneurial capitalism: those that enforce contracts and attract innovation and those that don’t. In other words, we are in an up-for-grabs era of economic management, one in which mixed models compete to pull their countries ahead and, in doing so, set examples that others will follow.


pages: 261 words: 81,802

The Trouble With Billionaires by Linda McQuaig

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

In a thoughtful essay in Harper’s magazine entitled ‘Reflections on Bullshit’, Frankfurt sought to develop a philosophical theory to distinguish ‌between truth-tellers, liars and bullshitters.34 In a nutshell, his argument, as it might apply here, is that those who assert that social security is a threat to freedom while enthusiastically taking advantage of its benefits, are not necessarily lying, they’re simply disregarding the truth in order to advance their agenda. Liars are people who deliberately tell untruths. Bullshitters, on the other hand, don’t really care about the truthfulness of their assertions. When Koch discovered Hayek could qualify for social security, he wasn’t horrified by the implications of this for Hayek’s personal liberty, nor was he worried that this godfather of laissez-faire capitalism would end up on some private road to serfdom. It’s hard not to conclude that the right’s claims about the freedom-depriving nature of social security are nothing more than empty statements meant to advance a larger agenda. Neoliberals and libertarians seem to be simply pretending to be concerned about the political and economic effects they allege. In reality, they don’t appear to care about these things at all.


pages: 1,242 words: 317,903

The Man Who Knew: The Life and Times of Alan Greenspan by Sebastian Mallaby

airline deregulation, airport security, Andrei Shleifer, anti-communist, Asian financial crisis, balance sheet recession, bank run, barriers to entry, Benoit Mandelbrot, Bretton Woods, central bank independence, centralized clearinghouse, collateralized debt obligation, conceptual framework, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, energy security, equity premium, fiat currency, financial deregulation, financial innovation, fixed income, Flash crash, forward guidance, full employment, Hyman Minsky, inflation targeting, information asymmetry, interest rate swap, inventory management, invisible hand, Kenneth Rogoff, Kitchen Debate, laissez-faire capitalism, Long Term Capital Management, low skilled workers, market bubble, market clearing, Martin Wolf, money market fund, moral hazard, mortgage debt, Myron Scholes, new economy, Nixon shock, Northern Rock, paper trading, paradox of thrift, Paul Samuelson, Plutocrats, plutocrats, popular capitalism, price stability, RAND corporation, rent-seeking, Robert Shiller, Robert Shiller, rolodex, Ronald Reagan, Saturday Night Live, savings glut, secular stagnation, short selling, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, unorthodox policies, upwardly mobile, WikiLeaks, women in the workforce, Y2K, yield curve, zero-sum game

The proper subject for art was “greatness, intelligence, ability, virtue, heroism,” and if portraying such qualities constituted an escape, “then medicine is an ‘escape’ from disease, agriculture is an ‘escape’ from hunger, knowledge is an ‘escape’ from ignorance, ambition is an ‘escape’ from sloth, and life is an ‘escape’ from death. . . . A hard-core realist is a vermin-eaten brute who sits motionless in a mud puddle, contemplates a pigsty, and whines that ‘such is life.’ If that is realism, then I am an escapist. So was Aristotle. So was Christopher Columbus.”25 As a passionate Romantic, Rand favored the economic system that “demands and rewards the best in every man, great or average, and which is, obviously, laissez-faire capitalism.” She had arrived in the United States as a near-penniless student, sailing into New York Harbor in 1926, the year of Greenspan’s birth, and had been immediately enthralled by the skyline that greeted her. The Standard Oil Building, the Singer Tower, the Woolworth Building—these were the triumphant expressions of capitalism’s creative power; they were “the will of man made visible.” The industrialists who had commanded these structures into being were heroes in Rand’s mind—she shared Greenspan’s enthusiasm for the robber barons of yore, but she took it much further.

“My problem with your nomination,” Proxmire summed up, “is that it is very difficult, because you are honest, you are capable, and some of the things that you propose I enthusiastically applaud; but I have a great, great difficulty with the fact that you are a free enterprise man who does not believe in antitrust, does not believe in consumer protection, does not believe in progressive income tax. . . . The old-style laissez-faire capital system is dead,” Proxmire continued; the challenge for intelligent policy makers in the late twentieth century was how to make the mixed economy work better. “With the greatest goodwill in the world, you are not going to go back to Adam Smith. You know that.” “I am aware of that,” Greenspan conceded. But he was still not backing off. However popular the mixed economy, its existence was precisely the problem.

He flattered Wayne Angell, a particularly volatile governor, by complimenting him on his television performances and inviting him to play tennis; he invited other senior colleagues and their wives over to Andrea’s for dinner.63 As a private consultant, Greenspan had clashed with the Fed’s general counsel, Michael Bradfield, even trading heated personal insults after disagreeing about the regulation of the S&Ls on a public panel. But now Greenspan made amends, treating Bradfield and his wife to a concert at the Kennedy Center. When the Journal’s crack reporters called around their sources for comments on the new chairman, they encountered nothing but warm praise. Greenspan had covered all his bases. If Black Monday boosted Greenspan’s reputation, the same could not be said for laissez-faire capitalism.64 The presumption of market efficiency, which had dominated academic finance since the late 1960s, now demanded a rethink. Statisticians pointed out that extreme falls in prices occurred far more commonly than was assumed in the efficient marketers’ equations. Behavioral economists invoked psychological experiments that showed the limits to investors’ rationality.65 For Greenspan, who had never bought into the efficient markets hypothesis, none of this revisionism upset his settled views; but there were other lessons from the crash that did challenge his thinking.66 Black Monday forced him even further from his youthful conviction that central banks ought to allow private financiers to go bust; and it drove him to reconsider his belief that a steep fall in the market would drag down the real economy.


pages: 700 words: 201,953

The Social Life of Money by Nigel Dodd

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accounting loophole / creative accounting, bank run, banking crisis, banks create money, Bernie Madoff, bitcoin, blockchain, borderless world, Bretton Woods, BRICs, 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, 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

Historically, this problem triggered what Polanyi calls the double movement, as society “protected itself against the perils inherent in a self-regulating market system” (Polanyi 1957b: 80). Although incoherent and unplanned, this countermovement led ultimately to a paradoxical situation whereby the only way of realizing the “stark utopia” (Polanyi 1957b: 218, 250) of the self-adjusting market was through the support of a strong interventionist state. He wittily describes this system as planned laissez-faire capitalism: “There was nothing natural about laissez-faire, free markets could never have come into being merely by allowing things to take their course … laissez-faire itself was enforced by the state” (Polanyi 1957b: 145). The double movement that Polanyi describes consists of the reembedding of market institutions within society. It is important to bear in mind that Polanyi’s use of the term “embeddedness” differs quite significantly from its subsequent use in economic sociology.

See also death of God; eternal return; Übermensch Nigeria, 301 ninety-nine percent, 3, 129–30, 370–71 nihilism, 141, 142 Nishibe, Makoto, 345 Nixon, Richard, 45, 98–99, 244 Nixon shock, 45n Nobel Prize, 330 nomos, 262, of the Earth, 222, 223 nongovernmental organizations (NGOs), 239 nonpecuniary values, 287, 294 North, Peter, 373 North Atlantic Treaty Organization (NATO), 239 Nostradamus, 49 Nuer, 284 numismatics, 165; sociological, 34 nummus, 223, 262 occultism, 7, 11; and capital, 56, 154 Occupy movement, 1, 3, 50, 130n55, 201, 267, 370 Oedipus complex, 149, 150, 230 Oesterreichische Nationalbank, 20n Old Glory Mint, 361 one trillion dollar platinum coin, 385, 386, 387, 392 optimal currency area (OCA), 20, 253 order of worth, 200 Organisation for Economic Co-operation and Development (OECD) Orléan, André, 19, 43–46, 250; on Mauss, 32 Ortega y Gasset, José, 247 overaccumulation, in Bataille, 176; in Baudrillard, 192; and financialization, 61n22; in Harvey, 68, 166, 243; Marxian concept of, 65, 88, 205 overbanking, 122, 124 overproduction, 57, 73 Owen, Robert, 342 Pan, 77, 246 panic, etymology, 77n; financial, 77 paradox of thrift, 208, 347, 348 parallax view, 80–81, 205 Park, Robert, 319 Parsons, Talcott, 8, 34, 230, 276n patriarchy, 336 Patton, Paul, 227 Paulhan, Jean, 172n payday loans, 325 PayPal, 378, 380n Peace of Westphalia, 216 Pecunix, 42, 316 Peebles, Gustav, 304–5 peer-to-peer (P2P) currencies, 105, 365, 370 peer-to-peer (P2P) lending, 247, 316 peer-to-peer (P2P) payment networks, 365 pension fund socialism, 77 pension funds, 59, 68, 75, 110, 129n52, 132, 221, 243 pensioners, 2, 22, 72, 77, 88, 126 perfect money, 14, 30, 197, 315, 316, 317–22, 326, 328–30, 339, 341, 356–57, 375, 382 perfect society, 30, 315, 316, 320–21, 322, 326, 329–30, 351 Perroux, François, 207 philanthropy, 166 Pixley, Jocelyn, 315n Plato, 200, 313 Platonism, 322, 326 Plender, John, 50 Poe, Edgar Allen, 185 poetry, 313, 314, 331 Polanyi, Karl, 13, 36, 57n16, 271, 279–86, 291, 292, 294, 299, 306; on the double movement, 128, 280, 311; on embeddedness, 279, 280–81, 285; on fictitious commodities, 279–80; on formal versus substantive approaches to the economy, 285; The Great Transformation, 279, 282, 284, 286; on limited and general purpose money, 279, 282–83, 285, 286, 325, 373; on the market, 372, 279–81; on money and language, 297; on planned laissez-faire capitalism, 280 Polillo, Simone, 218–19 Polybius, Histories, 239 Ponzi, Charles, 117n Ponzi finance, 58, 117n, 118, 199; and Bitcoin, 368 Ponzi stage, 120. See also Minsky moment Poovey, Mary, 296 Pope Francis, 270–71 Posner, Eric, 368 postcapitalism, 83, 251 post-Fordism, 72, 75–76, 77, 238, 240–41, 248, 249, 341 postindustrialism, 39 post-Keynesianism, 76; monetary theory, 112n, 106n19; and neochartalism, 106 postmodernism., 238, 239 postnational money, 238 poststructuralism, 238 potlatch, 33, 155, 166, 172 power, 172, 222, 272, 389; in Agamben, 266; and banking, 115; in Baudrillard, 196, 197–98; and capital, 61n22, 64, 69, 81, 129, 234, 245, 340; and debt, 91, 101, 136, 144, 146, 147, 157; in Deleuze and Guattari, 230–31, 233, 250–51; and divinity, 274; and economics, 221, 310; in the Eurozone, 261, 265, 266; and the exception, 261, 266, 393; of finance, 121, 129; in Foucault, 25n13; in Fromm, 332, 335, 337; of the gift, 31, 33, 195; in Hardt and Negri, 238–39, 240, 241, 244, 245–46, 248; and markets, 109, 121, 129, 286; and the military, 99; of monetary institutions, 4, 69, 134, 316, 380n, 385; and money, 10, 33, 34, 42, 44, 51, 152, 154, 181–82, 246, 248, 274, 283, 284, 285, 295, 298–99, 300, 306, 307, 308, 342–43, 346, 351; in Nietzsche, 135, 141, 144, 161, 389; and nomos, 223, 262; in Proudhon, 352; in Schmitt, 223, 224, 261, 266n; and sovereignty, 26, 223, 262; of the state via money, 4, 9, 71, 73–74, 75, 96, 103, 110, 113, 212, 214, 261, 298–99, 309, 360; of states, 107n, 129; versus society, 102; supranational, 236–37, 238–39, 242; and symbolic exchange, 196, 198; and violence, 44; and wealth, 166, 343.


pages: 398 words: 107,788

Coding Freedom: The Ethics and Aesthetics of Hacking by E. Gabriella Coleman

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Benjamin Mako Hill, commoditize, crowdsourcing, Debian, Donald Knuth, dumpster diving, en.wikipedia.org, financial independence, ghettoisation, Hacker Ethic, informal economy, Jacob Appelbaum, Jaron Lanier, Jason Scott: textfiles.com, Jean Tirole, knowledge economy, laissez-faire capitalism, Larry Wall, Louis Pasteur, means of production, Paul Graham, peer-to-peer, pirate software, popular electronics, RFC: Request For Comment, Richard Stallman, rolodex, Ronald Reagan, Silicon Valley, Silicon Valley startup, slashdot, software patent, software studies, Steve Ballmer, Steven Levy, Ted Nelson, the scientific method, The Structural Transformation of the Public Sphere, web application, web of trust

Among moderate proponents, the commons is understood as compatible with private property and a capitalist market, although certainly acting as a bulwark against some of their worst abuses.14 The more liberal facet of the commons endeavor is but one moment within a broader liberal critique of the neoliberal face of capitalism. In an Atlantic Monthly article, reformed financial tycoon (now also philanthropist) George Soros (1997) enunciated the basic terms of this liberal critique: “the untrammeled intensification of laissez-faire capitalism and the spread of market values into all areas of life is endangering our open and democratic society.” The most influential articulations and organizations within this nascent commons movement have been those founded by Lessig (1999, 2001b; Creative Commons) and David Bollier (2002, 2009; Public Knowledge). These in turn have helped spawn offshoots, such as the Students for Free Culture movement, which is organized into clubs on colleges across North America.


pages: 353 words: 98,267

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

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

At the beginning of the twentieth century, France was a highly evolved capitalist economy. The market capitalization of companies listed on the Parisian bourse reached 78 percent of French GDP, more than the value of the firms on the New York Stock Exchange as a share of the American economy. But the Great Depression and the German occupation delivered a shock to the faith of the French in the Third Republic. And their faith in laissez-faire capitalism suffered a permanent blow too. The history of capitalism is punctuated by changes of direction in response to crises. In the 1930s, even as most major economies were mired in what would come to be known as the Great Depression, economic orthodoxy had it that government had no role to play in economic management. After the stock-market crisis of 1929 Secretary of the Treasury Andrew Mellon argued that government should stay out.


pages: 339 words: 105,938

The Skeptical Economist: Revealing the Ethics Inside Economics by Jonathan Aldred

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airport security, Berlin Wall, carbon footprint, citizen journalism, clean water, cognitive dissonance, congestion charging, correlation does not imply causation, Diane Coyle, endogenous growth, experimental subject, Fall of the Berlin Wall, first-past-the-post, framing effect, greed is good, happiness index / gross national happiness, Intergovernmental Panel on Climate Change (IPCC), invisible hand, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, labour market flexibility, laissez-faire capitalism, libertarian paternalism, new economy, Pareto efficiency, pension reform, positional goods, Ralph Waldo Emerson, RAND corporation, risk tolerance, school choice, spectrum auction, Thomas Bayes, trade liberalization, ultimatum game

First, it is sometimes suggested that arguments against markets will only persuade those with leftish politics. However, there are many contemporary restrictions on free markets which find favour with the traditional Right. Examples include immigration controls and planning law. More importantly, the idea that expanding the domain of markets represents a return to the heyday of 19th-century laissez-faire capitalism, before the dead hand of government began to interfere, is a grotesque misrepresentation of history. It was Victorian capitalists who first developed the idea of a public service ethos, because they recognized the need to separate politics, specifically the civil service, from business interests. Similarly, the commercialization of education is a very recent trend; private schools in the UK were mostly established as charities.51 Second, it is often claimed that only arguments couched in terms of money have any persuasive power in the world of realpolitik.


pages: 385 words: 111,807

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

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

By bringing peace to a region riven with wars and rivalries and by integrating markets, the EEC contributed to the economic development in the member countries. The most influential explanation of the Golden Age is, however, that it was mainly the result of reforms in economic policies and institutions that gave birth to the mixed economy – mixing positive features of capitalism and socialism. Following the Great Depression, the limits of laissez-faire capitalism came to be widely accepted. It was agreed that the government should take an active role to deal with the failings of unregulated markets. At the same time, the success in wartime planning during the Second World War diminished scepticism about the feasibility of government intervention. Electoral successes by parties of the left in many European countries, thanks to their key roles in fighting fascism, led to the expansion of the welfare state and greater labour rights.


pages: 323 words: 95,939

Present Shock: When Everything Happens Now by Douglas Rushkoff

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algorithmic trading, Andrew Keen, bank run, Benoit Mandelbrot, big-box store, Black Swan, British Empire, Buckminster Fuller, cashless society, citizen journalism, clockwork universe, cognitive dissonance, Credit Default Swap, crowdsourcing, Danny Hillis, disintermediation, Donald Trump, double helix, East Village, Elliott wave, European colonialism, Extropian, facts on the ground, Flash crash, game design, global supply chain, global village, Howard Rheingold, hypertext link, Inbox Zero, invention of agriculture, invention of hypertext, invisible hand, iterative process, John Nash: game theory, Kevin Kelly, laissez-faire capitalism, Law of Accelerating Returns, loss aversion, mandelbrot fractal, Marshall McLuhan, Merlin Mann, Milgram experiment, mutually assured destruction, negative equity, Network effects, New Urbanism, Nicholas Carr, Norbert Wiener, Occupy movement, passive investing, pattern recognition, peak oil, price mechanism, prisoner's dilemma, Ralph Nelson Elliott, RAND corporation, Ray Kurzweil, recommendation engine, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, Skype, social graph, South Sea Bubble, Steve Jobs, Steve Wozniak, Steven Pinker, Stewart Brand, supply-chain management, the medium is the message, The Wisdom of Crowds, theory of mind, Turing test, upwardly mobile, Whole Earth Catalog, WikiLeaks, Y2K, zero-sum game

Facebook’s reduction of people to predictively modeled profiles and investment banking’s convolution of the marketplace into an algorithmic battleground were not the choices of machines but of humans. Those who choose to see technology as equal to life end up adopting a “let it rip” approach to its development that ignores the biases of the many systems with which technology has become intertwined. The answer to the problems of technology is always just more technology, a pedal-to-the-metal ethos that is entirely consonant with laissez-faire capitalism. Ever since the invention of central currency, remember, the requirement of capitalism is to grow. It should not surprise us that in a capitalist society we would conclude that technology also wants to grow and that this growth supports the universe in its inexorable climb toward greater states of complexity. However, I find myself unable to let go of the sense that human beings are somehow special, and that moment-to-moment human experience contains a certain unquantifiable essence.

Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America by Matt Taibbi

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affirmative action, Affordable Care Act / Obamacare, Bernie Sanders, Bretton Woods, carried interest, clean water, collateralized debt obligation, collective bargaining, computerized trading, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, desegregation, diversification, diversified portfolio, Donald Trump, financial innovation, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, illegal immigration, interest rate swap, laissez-faire capitalism, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, medical malpractice, money market fund, moral hazard, mortgage debt, obamacare, passive investing, Ponzi scheme, prediction markets, quantitative easing, reserve currency, Ronald Reagan, Sergey Aleynikov, short selling, sovereign wealth fund, too big to fail, trickle-down economics, Y2K, Yom Kippur War

His impartiality was believable to the public precisely because of his long-demonstrated unscrupulousness and political spinelessness: he sucked up with equal ferocity to presidents of both parties and courted pundit-admirers from both sides of the editorial page, who all blessed his wrinkly pronouncements as purely nonpartisan economic wisdom. Greenspan’s rise to the top is one of the great scams of our time. His career is the perfect prism through which one can see the twofold basic deception of American politics: a system that preaches sink-or-swim laissez-faire capitalism to most but acts as a highly interventionist, bureaucratic welfare state for a select few. Greenspan pompously preached ruthless free-market orthodoxy every chance he got while simultaneously using all the powers of the state to protect his wealthy patrons from those same market forces. A perfectly two-faced man, serving a perfectly two-faced state. If you can see through him, the rest of it is easy.


words: 49,604

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

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

But George Soros explains why his mind and his money are pitted against the system that made him fabulously wealthy.’ However, the Soros fortune remains firmly invested in the markets. His argument is with a particular fundamentalist version of free-market economics. The article begins: ‘Although I have made a fortune in the financial markets, I now fear that the untrammelled intensification of laissez-faire capitalism and the spread of market values into all areas of life is endangering our open and democratic society.’ The danger, he believes, is the development of ‘robber capitalism’, the ‘gangster state’ — in other words, a world of inequality, exploitation and instability, where a few have the freedom to become rich at the expense of the many, terrorised and lacking in opportunities. The Soros conversion delighted all those left-wing commentators who had clung to the belief throughout the heyday of Thatcherism and Reaganomics that free markets were undesirable: that they did not work and had unwelcome social consequences.


pages: 519 words: 104,396

Priceless: The Myth of Fair Value (And How to Take Advantage of It) by William Poundstone

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availability heuristic, Cass Sunstein, collective bargaining, Daniel Kahneman / Amos Tversky, delayed gratification, Donald Trump, East Village, en.wikipedia.org, endowment effect, equal pay for equal work, experimental economics, experimental subject, feminist movement, game design, German hyperinflation, Henri Poincaré, high net worth, index card, invisible hand, John von Neumann, Kenneth Arrow, laissez-faire capitalism, Landlord’s Game, loss aversion, market bubble, mental accounting, meta analysis, meta-analysis, Nash equilibrium, new economy, Paul Samuelson, payday loans, Philip Mirowski, Potemkin village, price anchoring, price discrimination, psychological pricing, Ralph Waldo Emerson, RAND corporation, random walk, RFID, Richard Thaler, risk tolerance, Robert Shiller, Robert Shiller, rolodex, Steve Jobs, The Chicago School, The Wealth of Nations by Adam Smith, ultimatum game, working poor

Crew clothing company, 190, 203, 205 Jensen, Keith, 123–24 Jensen, Marlene, 232 JetBlue Airlines, 182, 183 Jews: Israeli, 81–82; mobsters, 49; Nazi persecution of, 83–84 Jobs, Steve, 184, 257 Johns Hopkins University, 52 Johnson, Eric, 280–82 Johnson & Johnson, 6 Jopling, Jay, 267 Journal of Business, 110 Journal of Consumer Research, 153, 280 Journal of Experimental Psychology, The, 65 juries, 197; damages awarded by, 3–4, 17–21, 276–79 Kahn, Irah, 84 Kahneman, Daniel, 16, 83–87, 105, 133, 146, 147, 188, 196, 236; on altruism, 117; on anchoring, 144, 207; economists’ hostility to, 77; fairness research of, 106–107, 110, 112–14; heuristics of, 88–89, 125–28, 197; on jury awards, 19, 276–77, 279; at Oregon Research Institute, 28, 87–88; on priming, 92, 94, 286; prospect theory of, 97–99, 101–102, 104, 132; and stock market bubbles, 261; on ultimatum game, 113, 115; United Nations experiment of, 10–12, 90 Kalmar, Tepper, 160, 161 Kelley Blue Book, 75 Kelly, Walt, 76 Kennedy, Edward, 257 Kenya, 122 Klein, Calvin, 246 Knetsch, Jack, 105, 107, 110, 113–14, 117 Kohl, Helmut, 271 Koolhaas, Rem, 158 Kouri, Elena, 250 Kozlowski, Dennis, 234–36 Kozlowski, Karen, 234 Krueger, Alan, 165–66 Kucher, Eckhard, 148–49 Lacayo, Richard, 267 Lagavulin whiskey, 219 laissez-faire capitalism, 108 Lamelera people, 123 “Landlord’s Game, The,” 284 La Rue, Diane, 167 Las Vegas Review Journal, 71 Laube, Jim, 160 laundry detergent, 180 Lauren, Ralph, 155 lawsuits, jury awards in, 3–4, 17–21, 276–79 Leaves of Grass (Whitman), 194 Lee, Bob, 144 Leeds, University of, 219 Leeuwenhoek, Anton von, 208 Lehman Brothers, 268 Leipzig, University of, 30 Lichtenstein, Donald, 204–206 Lichtenstein, Sarah, 10, 28, 53, 62–77, 79, 81, 82, 87, 90, 220 Liebeck v.


pages: 385 words: 133,839

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

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

In order to keep alive its mystique, he dragged the secret formula out of a company vault in New York and personally transferred it by train to a safe-deposit box in the Trust Company bank in Atlanta—where it supposedly remains to this day. In his mind he’d hit upon the perfect product, one that could sell in any economic time, and—with the success of its “Thirst Knows No Season” ad campaign—any climate. “Robert Woodruff could still look out on an America that justified his bedrock faith in laissez-faire capitalism,” write J. C. Louis and Harvey Yazijian. “This faith informed his fundamen­ tal opposition to socialism, and later, to Franklin Delano Roosevelt.” Roosevelt’s New Deal was, like the Progressive movement half a century earlier, a backlash against the greed of corporations, who were blamed by many for the crash. The government moved in to regulate the stock market and the banking industry, along with other businesses.


pages: 479 words: 133,092

The Coke Machine by Michael Blanding

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

In order to keep alive its mystique, he dragged the secret formula out of a company vault in New York and personally transferred it by train to a safe-deposit box in the Trust Company bank in Atlanta—where it supposedly remains to this day. In his mind he’d hit upon the perfect product, one that could sell in any economic time, and—with the success of its “Thirst Knows No Season” ad campaign—any climate. “Robert Woodruff could still look out on an America that justified his bedrock faith in laissez-faire capitalism,” write J. C. Louis and Harvey Yazijian. “This faith informed his fundamental opposition to socialism, and later, to Franklin Delano Roosevelt.” Roosevelt’s New Deal was, like the Progressive movement half a century earlier, a backlash against the greed of corporations, who were blamed by many for the crash. The government moved in to regulate the stock market and the banking industry, along with other businesses.


pages: 468 words: 150,206

Food Revolution, The: How Your Diet Can Help Save Your Life and Our World by John Robbins, Dean Ornish M. D.

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Albert Einstein, carbon footprint, clean water, complexity theory, double helix, Exxon Valdez, food miles, Intergovernmental Panel on Climate Change (IPCC), laissez-faire capitalism, Mahatma Gandhi, meta analysis, meta-analysis, profit motive, Ralph Nader, randomized controlled trial, Rosa Parks, telemarketer

Unfortunately, his shows have often been slanted in favor of the chemical industry, food irradiation, and large-scale agribusiness, and he has had a long and troubling history of sacrificing accuracy to promote his far right-wing personal ideology. "I have come to believe that markets are magical and the best protectors of consumers," he once declared. "It is my job to explain the beauties of the free market."'1 Unfortunately, this enthusiasm for laissez-faire capitalism has too often led Stossel to neglect his job as a journalist-seeking truth and reporting it.16 According to Jeff Cohen, the director of Fairness and Accuracy in Reporting (FAIR), "Stossel's clearly one of the most biased reporters in the business." Even with Stossel's public apology, many who had seen the original program were left confused, with the mistaken idea that since organic farmers favor manure over agrochemicals, organic produce might carry a heightened risk of E. cola infection.


pages: 543 words: 157,991

All the Devils Are Here by Bethany McLean

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Asian financial crisis, asset-backed security, bank run, Black-Scholes formula, break the buck, call centre, collateralized debt obligation, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Exxon Valdez, fear of failure, financial innovation, fixed income, high net worth, Home mortgage interest deduction, interest rate swap, laissez-faire capitalism, Long Term Capital Management, margin call, market bubble, market fundamentalism, Maui Hawaii, money market fund, moral hazard, mortgage debt, Northern Rock, Own Your Own Home, Ponzi scheme, quantitative trading / quantitative finance, race to the bottom, risk/return, Ronald Reagan, Rosa Parks, shareholder value, short selling, South Sea Bubble, statistical model, telemarketer, too big to fail, value at risk, zero-sum game

It even had a Division of Consumer and Community Affairs, to look after the interests of bank customers. The Fed, in other words, was a regulator. Greenspan, however, was not. As a young economist, Greenspan had come under the spell of Ayn Rand, the author of The Fountainhead and Atlas Shrugged, two of the most influential odes to capitalism ever written. The capitalism Rand believed in was “full, pure, unregulated, laissez-faire capitalism,” as she once put it, the kind that didn’t put regulatory roadblocks in the way of red-blooded entrepreneurs. Greenspan met Rand in the early 1950s, became part of her inner circle, and remained close to her until she died in 1982. A conservative economist like Greenspan is always going to tilt against regulation. But Rand gave his leaning a philosophical underpinning and helped turn him into a true free-market absolutist.


pages: 497 words: 143,175

Pivotal Decade: How the United States Traded Factories for Finance in the Seventies by Judith Stein

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1960s counterculture, affirmative action, airline deregulation, anti-communist, Ayatollah Khomeini, barriers to entry, Berlin Wall, blue-collar work, Bretton Woods, capital controls, centre right, collective bargaining, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, deindustrialization, desegregation, energy security, Fall of the Berlin Wall, falling living standards, feminist movement, financial deregulation, floating exchange rates, full employment, Gunnar Myrdal, income inequality, income per capita, intermodal, invisible hand, knowledge worker, laissez-faire capitalism, liberal capitalism, Long Term Capital Management, manufacturing employment, market bubble, Martin Wolf, new economy, oil shale / tar sands, oil shock, open economy, Paul Samuelson, payday loans, post-industrial society, post-oil, price mechanism, price stability, Ralph Nader, RAND corporation, reserve currency, Robert Gordon, Ronald Reagan, Simon Kuznets, strikebreaker, trade liberalization, union organizing, urban planning, urban renewal, War on Poverty, Washington Consensus, working poor, Yom Kippur War

Campaign aide David Gergen tried to inject them and told Ford that “the Democrats ran against Hoover for years, and we should do the same about the ’60s.”40 But the president did not follow that script. The economy was the major issue. Ford waged a classic Republican campaign. Too much government spending deprived business of the capital it needed to invest. Inflation, caused by budget deficits, encouraged people to borrow, not save, and this inhibited investment, too. The script was not a return to laissez-faire capitalism, but the ideas did rest upon pre-Keynesian notions. The president had his work cut out for him. After the Republican convention, polls showed Carter enjoying a 52–37 percent advantage. Ford’s advisers told him that the new campaign finance law impaired the campaign: “We no longer have the previous advantage of being able to outspend our opponent.” Unlike Nixon in 1972, we “can’t woo voter blocs through extensive government programs and patronage.


pages: 545 words: 137,789

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

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Albert Einstein, Andrei Shleifer, anti-communist, asset allocation, asset-backed security, availability heuristic, bank run, banking crisis, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Black-Scholes formula, Bretton Woods, British Empire, capital asset pricing model, centralized clearinghouse, collateralized debt obligation, Columbine, conceptual framework, Corn Laws, corporate raider, correlation coefficient, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Daniel Kahneman / Amos Tversky, debt deflation, diversification, Elliott wave, Eugene Fama: efficient market hypothesis, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, full employment, George Akerlof, global supply chain, Gunnar Myrdal, Haight Ashbury, hiring and firing, Hyman Minsky, income per capita, incomplete markets, index fund, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Nash: game theory, John von Neumann, Joseph Schumpeter, Kenneth Arrow, laissez-faire capitalism, Landlord’s Game, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, margin call, market bubble, market clearing, mental accounting, Mikhail Gorbachev, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Myron Scholes, Naomi Klein, negative equity, Network effects, Nick Leeson, Northern Rock, paradox of thrift, Pareto efficiency, Paul Samuelson, Ponzi scheme, price discrimination, price stability, principal–agent problem, profit maximization, quantitative trading / quantitative finance, race to the bottom, Ralph Nader, RAND corporation, random walk, Renaissance Technologies, rent control, Richard Thaler, risk tolerance, risk-adjusted returns, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, shareholder value, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical model, technology bubble, The Chicago School, The Great Moderation, The Market for Lemons, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, unorthodox policies, value at risk, Vanguard fund, Vilfredo Pareto, wealth creators, zero-sum game

The managers of factories that produced consumer goods would be ordered to operate their facilities as cheaply as possible while trying to break even. This directive would lead them to economize on inputs, including labor, and to set prices that just covered their costs, which is what firms in competitive markets are driven to do. This argument had clear echoes of Pareto and Barone, and even of Hayek, who had never doubted that laissez-faire capitalism was efficient. In many ways, Lange and Hayek had come to view the free market in a similar way: as a machine that solved allocation problems. (The big difference between them was over whether a socialist economy, even one with some freely determined prices, could replicate the market’s efficiency.) Lange’s 1936 essay included a clear verbal exposition of how competitive markets generate efficient outcomes.


pages: 504 words: 143,303

Why We Can't Afford the Rich by Andrew Sayer

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accounting loophole / creative accounting, Albert Einstein, asset-backed security, banking crisis, banks create money, basic income, Bretton Woods, British Empire, call centre, capital controls, carbon footprint, collective bargaining, corporate raider, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Graeber, David Ricardo: comparative advantage, debt deflation, decarbonisation, declining real wages, deglobalization, deindustrialization, delayed gratification, demand response, don't be evil, Double Irish / Dutch Sandwich, en.wikipedia.org, Etonian, financial innovation, financial intermediation, Fractional reserve banking, full employment, G4S, Goldman Sachs: Vampire Squid, high net worth, income inequality, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, Isaac Newton, James Dyson, job automation, Julian Assange, labour market flexibility, laissez-faire capitalism, land value tax, low skilled workers, Mark Zuckerberg, market fundamentalism, Martin Wolf, mass immigration, means of production, moral hazard, mortgage debt, negative equity, neoliberal agenda, new economy, New Urbanism, Northern Rock, Occupy movement, offshore financial centre, oil shale / tar sands, patent troll, payday loans, Philip Mirowski, Plutocrats, plutocrats, popular capitalism, predatory finance, price stability, pushing on a string, quantitative easing, race to the bottom, rent-seeking, Ronald Reagan, shareholder value, short selling, sovereign wealth fund, Steve Jobs, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transfer pricing, trickle-down economics, universal basic income, unpaid internship, upwardly mobile, Washington Consensus, wealth creators, Winter of Discontent, working poor, Yom Kippur War, zero-sum game

Commenting on the former chairman Matt Ridley’s views, George Monbiot writes: As chairman of Northern Rock, he was responsible, according to the Treasury select committee, for the ‘high-risk, reckless business strategy’ which caused the first run on a British bank since 1878 . . . Before he became chairman, a position he appears to have inherited from his father, Matt Ridley was one of this country’s fiercest exponents of laissez-faire capitalism. He described government as ‘a self-seeking flea on the backs of the more productive people of this world … governments do not run countries, they parasitise them. …’ What did the talented Mr Ridley learn from this experience? The square root of nothing. He went on to publish a book in which he excoriated the regulation of business by the state’s ‘parasitic bureaucracy’ and claimed that the market system makes self-interest ‘thoroughly virtuous’.

Crisis and Leviathan: Critical Episodes in the Growth of American Government by Robert Higgs, Arthur A. Ekirch, Jr.

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Alistair Cooke, clean water, collective bargaining, creative destruction, credit crunch, declining real wages, endowment effect, fiat currency, fixed income, full employment, hiring and firing, income per capita, Joseph Schumpeter, laissez-faire capitalism, manufacturing employment, means of production, minimum wage unemployment, Plutocrats, plutocrats, post-industrial society, price discrimination, profit motive, rent control, rent-seeking, Richard Thaler, road to serfdom, Ronald Reagan, Simon Kuznets, strikebreaker, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, transcontinental railway, union organizing, Upton Sinclair, War on Poverty, Works Progress Administration

While his analysis of the politico-economic dynamics of Western countries pointed to socialism as the "likely heir apparent," he recognized several other possibilities, including one in which the political economy would become lodged in a "halfway house" short of full-fledged socialism. 4 The Schumpeterian model of politico-economic dynamics, which indicates a probable transition from capitalism to socialism, rests on four central propositions: (1) Large corporate firms, bureaucratically managed and routinely innovative, displace the entrepreneurs and owner-managers of classic capitalism, thereby shrinking the size, attenuating the economic function, and diminishing the social and political standing of the business class. (2) As capitalism matures, society grows ever more "rational," which causes a loss of respect for and allegiance to such extra-rational institutions as private property rights and freedom of contract. (3) Capitalism nurtures a growing intellectual class that, ironically, is inherently hostile toward the system that makes possible its existence. (4) As the opposition of intellectuals, labor unionists, and their allies mounts, the bourgeoisie loses faith in its traditional values and ideals; its defense of the free-market system grows steadily weaker as it accommodates itself to a political environment that gives ever greater priority to social security, equality, and governmental regulation and planning. While Schumpeter recognized at the end of the 1940s a residual capitalist vitality in the American economic order, he emphasized that "we have traveled far indeed from the principles of laissez-faire capitalism." 5 Although he conceded that crises such as war or depression would accelerate the secular tendencies, he denied that "any mere 'events,' even events of the importance of 'total wars,' or the political situations created thereby, or any attitudes or feelings entertained by individuals or groups on the subject of these situations, dominate the long-run contours of social history-these are a matter of much deeper forces."


pages: 422 words: 131,666

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

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affirmative action, Amazon Mechanical Turk, banks create money, big-box store, Bretton Woods, car-free, 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, 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

Freakonomics, the runaway best seller and its follow-up New York Times Magazine column, applied this model of “rational utility-maximization” to human behaviors ranging from drug dealing to cheating among sumo wrestlers. Economics explained everything with real numbers, and the findings were bankable. Even better, the intellectual class had a new way of justifying its belief that people really do act the way they’re supposed to in one of John Nash’s game scenarios. Ironically, while the intelligentsia were using social evolution to confirm laissez-faire capitalism to one another, the politicians promoting these policies to the masses were making the same sale through creationism. Right-wing conservatives turned to fundamentalist Christians to promote the free-market ethos, in return promising lip service to hot-button Christian issues such as abortion and gay marriage. It was now the godless Soviets who sought to thwart the Maker’s plan to bestow the universal rights of happiness and property on mankind.


pages: 651 words: 161,270

Global Spin: The Corporate Assault on Environmentalism by Sharon Beder

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American Legislative Exchange Council, battle of ideas, business climate, centre right, clean water, corporate governance, Exxon Valdez, Gary Taubes, global village, Intergovernmental Panel on Climate Change (IPCC), invisible hand, laissez-faire capitalism, oil shale / tar sands, old-boy network, price mechanism, profit maximization, Ralph Nader, RAND corporation, Ronald Reagan, shareholder value, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, the market place, The Wealth of Nations by Adam Smith, urban planning

The Montana Department of Fish and Game had offered to finance the installation of an electric fence. . . In court Schuler claimed he shot the bear in self defence, an argument the judge didn’t buy. Two environmental groups have since paid to have an electric fence installed around Schuler’s corral.8 Ralph Maughan and Douglas Nilson, academics from Idaho State University, suggest that the Wise Use agenda stems from an ideology that combines laissez-faire capitalism with “cultural characteristics of an imagined Old West”. The resulting beliefs include the following:9 1. Human worth should be measured in terms of productivity and wealth. Status and power are a reward for hard work. 2. Nature is there for the use of humans. 3. Real wealth derives from extracting and adding value to primary material resources. 4. “Productive lands and waters should be owned (or at least controlled) and tamed by producers.


pages: 444 words: 151,136

Endless Money: The Moral Hazards of Socialism by William Baker, Addison Wiggin

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Andy Kessler, asset allocation, backtesting, bank run, banking crisis, Berlin Wall, Bernie Madoff, Black Swan, Branko Milanovic, break the buck, Bretton Woods, BRICs, business climate, capital asset pricing model, commoditize, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, crony capitalism, cuban missile crisis, currency manipulation / currency intervention, debt deflation, Elliott wave, en.wikipedia.org, Fall of the Berlin Wall, feminist movement, fiat currency, fixed income, floating exchange rates, Fractional reserve banking, full employment, German hyperinflation, housing crisis, income inequality, index fund, inflation targeting, Joseph Schumpeter, laissez-faire capitalism, land reform, liquidity trap, Long Term Capital Management, McMansion, mega-rich, money market fund, moral hazard, mortgage tax deduction, naked short selling, negative equity, offshore financial centre, Ponzi scheme, price stability, pushing on a string, quantitative easing, RAND corporation, rent control, reserve currency, riskless arbitrage, Ronald Reagan, school vouchers, seigniorage, short selling, Silicon Valley, six sigma, statistical arbitrage, statistical model, Steve Jobs, The Great Moderation, the scientific method, time value of money, too big to fail, upwardly mobile, War on Poverty, Yogi Berra, young professional

Even two years later at the London Economic Conference in the summer of 1933 the delegates who represented 66 of the world’s major countries clung to the orthodox view that the gold standard could be patched back together (but their hopes would be dashed by Roosevelt’s bombshell message that America would devalue). Against a larger backdrop, the world had been in flux from the turn of the century. It was challenged by the destruction of Europe in world war, inflation, deflation, and the beginnings of fascism in Germany and Italy as a “third way” between laissez faire capitalism and communism (which had overtaken Russia). In science, the world had already been shaken by the breaking of Newtonian physics by relativity theory; in music, chromaticism seemingly took to an extreme the rejection of rhythm, melody, and harmony; in painting, perspective had been abandoned for cubism, expressionism, and other abstract forms. Rejecting gold for paper, even after the horrendous inflations of the 1920s, must have been heretical and dangerous in the opinions of many.


pages: 433 words: 127,171

The Grid: The Fraying Wires Between Americans and Our Energy Future by Gretchen Bakke

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Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, back-to-the-land, big-box store, Buckminster Fuller, demand response, dematerialisation, distributed generation, energy security, energy transition, full employment, illegal immigration, indoor plumbing, Internet of things, laissez-faire capitalism, Menlo Park, Negawatt, new economy, off grid, post-oil, profit motive, Ronald Reagan, self-driving car, Silicon Valley, smart grid, smart meter, the built environment, too big to fail, washing machines reduced drudgery, Whole Earth Catalog

No one ever made money off of anybody else’s customer base and so grid instability in any one region could serve as an object lesson for utilities dealing with the same issues in their own locales. Since 2000, however, not only is there far more information pouring into utility databases—a product of the widespread introduction of computerization at many points in the system, of which digital “smart” meters are the most infamous—but that information is treated as proprietary. Electricity trading, in this way, fails to be laissez-faire capitalism because nobody quite has access to the information necessary to make real-time decisions about how to manage their systems, and thus also their capital. Not even, oddly, the utilities themselves, since they now have so much information to contend with that most of it sits unprocessed in giant servers called “historians.” Big data has become just another modern way to use up electricity.

The America That Reagan Built by J. David Woodard

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affirmative action, anti-communist, Ayatollah Khomeini, Berlin Wall, Bonfire of the Vanities, colonial rule, Columbine, corporate raider, cuban missile crisis, Deng Xiaoping, friendly fire, glass ceiling, global village, Gordon Gekko, gun show loophole, income inequality, invisible hand, Jeff Bezos, laissez-faire capitalism, late capitalism, Live Aid, Marc Andreessen, Mikhail Gorbachev, mutually assured destruction, Neil Kinnock, new economy, postindustrial economy, Ralph Nader, Robert Bork, Ronald Reagan, Ronald Reagan: Tear down this wall, Rubik’s Cube, Silicon Valley, South China Sea, stem cell, Ted Kaczynski, The Predators' Ball, trickle-down economics, women in the workforce, Y2K, young professional

The lame duck syndrome afflicted Ronald Reagan’s last two years in office when a combination of the term limitation and the Iran-Contra scandal drained the lifeblood out of his presidency. Democrats regained control of the U.S. Senate in 1986 and joined their colleagues in the U.S. House to dictate the domestic agenda to the White House. The president had to accept legislation he would have preferred to veto, like the plant-closing law that required companies to give sixty-five days’ notice to their workers before shutting down a facility. The law was a slam on the laissez-faire capitalism and free market idealism so dear to the heart of the GOP. In 1988, Congress overrode Reagan’s veto of the Civil Rights Restoration Act. The president called it a ‘‘quota bill,’’ but in suffering a veto override he further alienated African Americans from the party of Abraham Lincoln and the Emancipation Proclamation. The political initiative shifted from the White House to Congress, and it became harder for Reagan’s nominees to high administrative offices to be confirmed.


pages: 382 words: 127,510

Outposts: Journeys to the Surviving Relics of the British Empire by Simon Winchester

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borderless world, British Empire, colonial rule, Corn Laws, Edmond Halley, European colonialism, illegal immigration, Khyber Pass, laissez-faire capitalism, offshore financial centre, sensible shoes, South China Sea, special economic zone, the market place

Ten miles away from the frontier, still deep inside a China of timeless rural peace—workers knee-deep in the paddy fields, ducks straggling along the roadside, the occasional bullock-cart lumbering down a muddy lane—we passed two unexpected signs of the new, post-Mao order: a petrol station, run by Texaco (though no cars were taking advantage of it), and a tall, electrified fence, with watchtowers and a massive and well-guarded border control post, such as you might find when taking the autobahn from Vienna to Budapest. This was not the frontier with Hong Kong, however. It was a new ‘internal’ frontier that divided the special economic zone of Shen Zhen from Marxist orthodoxies of the rest of China—the zone being a sort of halfway house, an airlock, between the rigidities of the Communist world and the laissez-faire capitalism of the Crown colony. It is a frantically busy place, with factories and tower blocks and hotels (most of them paid for by wealthy Hong Kong investors) rising out of the paddy fields, and restaurants jammed solid with a new Chinese élite who are making money on a scale of which Mao would never have dreamed. And then, dark on a distant hill, the first sign of a familiar Empire: the square and battlemented outline of a fort.


pages: 577 words: 149,554

The Problem of Political Authority: An Examination of the Right to Coerce and the Duty to Obey by Michael Huemer

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Cass Sunstein, Chelsea Manning, cognitive dissonance, cuban missile crisis, Daniel Kahneman / Amos Tversky, en.wikipedia.org, Eratosthenes, experimental subject, framing effect, Gini coefficient, illegal immigration, impulse control, Isaac Newton, Julian Assange, laissez-faire capitalism, Machinery of Freedom by David Friedman, Milgram experiment, moral hazard, Phillip Zimbardo, profit maximization, profit motive, Ralph Nader, RAND corporation, rent-seeking, Ronald Coase, The Wealth of Nations by Adam Smith, unbiased observer, uranium enrichment, WikiLeaks

Despite studies indicating that these measures would reduce the risk of wrongful convictions, American police and courts have generally not adopted them.12 11.9.2 Oversupply of law Under a legal system based on a central authority with legislative powers, a great deal more law is provided than under a pure common-law system. Some see that as an advantage – perhaps we need a strong network of regulations to protect us against the failures of laissez-faire capitalism. Nevertheless, it is worth considering whether a governmental system might provide too much law. As an exercise, try to imagine an ideal legal system. Before reading on, try to estimate how many pages worth of laws that system would contain. There are many difficulties with making such an estimate; nevertheless, attempting at least a vague, order-of-magnitude estimate before finding out how much law actually exists may help to forestall the tendency to rationalize the status quo.

The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good by William Easterly

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airport security, anti-communist, Asian financial crisis, bank run, banking crisis, Bob Geldof, Bretton Woods, British Empire, call centre, clean water, colonial exploitation, colonial rule, Edward Glaeser, end world poverty, European colonialism, failed state, farmers can use mobile phones to check market prices, George Akerlof, Gunnar Myrdal, Hernando de Soto, income inequality, income per capita, Indoor air pollution, invisible hand, Kenneth Rogoff, laissez-faire capitalism, land reform, land tenure, Live Aid, microcredit, moral hazard, Naomi Klein, publication bias, purchasing power parity, randomized controlled trial, Ronald Reagan, Scramble for Africa, structural adjustment programs, The Fortune at the Bottom of the Pyramid, the scientific method, The Wealth of Nations by Adam Smith, transaction costs, War on Poverty, Xiaogang Anhui farmers

Most of the recent success in the world economy is happening in Eastern and Southern Asia, not as a result of some global plan to end poverty but for homegrown reasons. Moreover, the success stories follow a variety of formulas, perhaps an indication of an exploration that reflected each country’s unique history and characteristics. South Korea’s government intervened in guiding its corporations, while Hong Kong was the poster child for laissez-faire capitalism. China is a unique blend of Communist Party dictatorship, state enterprises, and partial free-market liberalization. India is a long-standing democracy, South Korea and Taiwan more recent democratic converts, while Singapore is not a democracy. All of these cases did realize most of their success from markets, but some were quite far from a laissez-faire model. While I think that free markets and democracy are a big part of the success story of the West, countries sometimes take a circuitous route to get there, or they may conceivably have their own unique recipe.


America Right or Wrong: An Anatomy of American Nationalism by Anatol Lieven

British Empire, centre right, cognitive dissonance, colonial rule, cuban missile crisis, desegregation, European colonialism, failed state, Francis Fukuyama: the end of history, full employment, Gunnar Myrdal, illegal immigration, income inequality, laissez-faire capitalism, mass immigration, Mikhail Gorbachev, millennium bug, mittelstand, Monroe Doctrine, moral hazard, moral panic, new economy, Norman Mailer, oil shock, Ralph Waldo Emerson, Robert Bork, Ronald Reagan, Thomas L Friedman, World Values Survey, Y2K

The political importance of the religious factor is of course not peculiar to the United States. As long as religious belief and adherence remained of great importance in certain Western European societies, it also had a critical effect on political allegiances in those countries—sometimes, unfortunately, in extremist directions. The tragicomic aspect of the situation of politically conservative American religious believers is that the laissez-faire capitalism which they support is not only undermining their economic world, but through the mass media and entertainment industries is also playing a central role in biting away at their moral universe. Godly Republicans Conservative religiosity thus plays a very important part in U.S. politics, and especially in the Republican Party. Its growth has formed part of the "southernization" of that party in recent decades.


pages: 504 words: 126,835

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

Airbnb, Albert Einstein, asset allocation, autonomous vehicles, barriers to entry, Basel III, Bernie Madoff, bitcoin, Black Swan, blockchain, BRICs, Burning Man, 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, labour market flexibility, laissez-faire capitalism, lump of labour, 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 Wealth of Nations by Adam Smith, too big to fail, total factor productivity, transaction costs, transportation-network company, tulip mania, Tyler Cowen: Great Stagnation, University of East Anglia, unpaid internship, Vanguard fund, Yogi Berra

Industrial policy is popular again and Western countries sprinkle money over particular sectors, often with the expressed intention of giving them a direct competitive advantage over their foreign competitors. Other forms of regulation are becoming far more detailed and prescribe a certain behavior, adding new regulatory costs and deterring entrepreneurship just by the sheer volume of regulations that a business needs to absorb. In the United States – that mythological example of laissez-faire capitalism – states are banning people from selling home-baked bread without a commercial license.50 Almost 900 measures restricting foreign trade were imposed in the US between 2008 and 2015.51 Regulation is back in fashion and Figure 6.2 shows this trend for selected Western countries by using data on regulatory performance in the Fraser Institute’s ranking of economic freedom in the world. Economic regulations concerning credit, labor, and business were reduced or eliminated in most of these countries from the late 1970s up to the early 2000s – leading to a higher index rate – but in the past 10 to 15 years, regulations have again become more stringent in Europe and, notwithstanding an upturn in recent years, the United States.


pages: 419 words: 130,627

Last Man Standing: The Ascent of Jamie Dimon and JPMorgan Chase by Duff McDonald

bank run, Bonfire of the Vanities, centralized clearinghouse, collateralized debt obligation, conceptual framework, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Exxon Valdez, financial innovation, fixed income, housing crisis, interest rate swap, Jeff Bezos, John Meriwether, laissez-faire capitalism, Long Term Capital Management, margin call, market bubble, money market fund, moral hazard, negative equity, Northern Rock, profit motive, Renaissance Technologies, risk/return, Rod Stewart played at Stephen Schwarzman birthday party, Saturday Night Live, sovereign wealth fund, statistical model, Steve Ballmer, Steve Jobs, technology bubble, The Chicago School, too big to fail, Vanguard fund, zero-coupon bond, zero-sum game

The early going was tough for Greenspan—the stock market crashed in the fall of 1987 and the national economy sputtered for most of the first half of the 1990s—but by the latter half of the decade, things were humming along. A disciple of the objectivist philosopher Ayn Rand—author of Atlas Shrugged and The Fountainhead—Greenspan was a vocal, if often convoluted, proponent of free-market ideology and laissez-faire capitalism. Famous for his intentionally incomprehensible testimony in front of Congress—he was legendary for saying nothing in a complicated way—he was nevertheless widely trusted for his market acumen. Bankers particularly adored him. By relaxing the Glass-Steagall Act, he opened the door for banks to become major deal makers and create new financial empires. Passed in 1933 in response to the crash of 1929, Glass-Steagall was intended to prevent deposit-taking banks from incurring too much risk.


pages: 654 words: 120,154

The Firm by Duff McDonald

Asian financial crisis, borderless world, collective bargaining, commoditize, conceptual framework, corporate governance, creative destruction, credit crunch, family office, financial independence, Frederick Winslow Taylor, income inequality, invisible hand, Jeff Bezos, Joseph Schumpeter, laissez-faire capitalism, Mahatma Gandhi, new economy, pets.com, Ponzi scheme, Ralph Nader, risk tolerance, risk-adjusted returns, shareholder value, Silicon Valley, Steve Jobs, supply-chain management, The Nature of the Firm, young professional

BusinessWeek went so far as to suggest that McKinsey had deliberately turned a “blind eye to signs of trouble” in order to perpetuate the lucrative relationship.21 It was also perpetuating McKinsey’s self-image as the cutting-edge intellectuals of the corporate suite. McKinsey partner Richard Foster’s 2001 book, Creative Destruction, was nothing short of a big wet kiss to Enron’s way of doing business. It was also a mere repackaging of economist Joseph Schumpeter’s own work on the strengths of capitalism a half century before, but with a crucial twist: It was celebrating the worst instincts of laissez-faire capitalism, not the best. The War for Talent, a 2001 book by McKinsey consultants Ed Michaels, Helen Handfield-Jones, and Beth Axelrod (now head of HR at eBay), might have been an even wetter kiss for Enron than Creative Destruction. The book set off a worldwide craze for a raft of flimsy ideas, many of which were based on simple observation of Skilling’s management style and practices, a large part of which had come out of McKinsey itself.


pages: 1,327 words: 360,897

Demanding the Impossible: A History of Anarchism by Peter Marshall

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agricultural Revolution, anti-communist, Bertrand Russell: In Praise of Idleness, clean water, collective bargaining, colonial rule, David Graeber, feminist movement, garden city movement, hive mind, Howard Zinn, invisible hand, laissez-faire capitalism, land reform, land tenure, Lao Tzu, liberation theology, Machinery of Freedom by David Friedman, Mahatma Gandhi, means of production, Naomi Klein, open borders, Plutocrats, plutocrats, post scarcity, profit motive, Ralph Waldo Emerson, road to serfdom, Ronald Reagan, sexual politics, the market place, union organizing, wage slave, washing machines reduced drudgery

With prophetic clarity, Proudhon at the end of his life observed that the doctrinaire, authoritarian, dictatorial, governmental, communist system is based on the principle that the individual is essentially subordinate to the collective; that from it alone he has his right and life; that the citizen belongs to the State like a child to the family; that he is in its power and possession, in manu, and that he owes it submission and obedience in all things.106 As for the dictatorship of the proletariat advocated by Marx, Proudhon argued prophetically that it would ensure universal servitude, all-encompassing centralization, the systematic destruction of individual thought, an inquisitorial police, with ‘universal suffrage organized to serve a perpetual sanction to this anonymous tyranny’.107 In place of laissez-faire capitalism and State socialism, Proudhon finally proposed once again his system of mutualism as the only way to create a free society: ‘In this system the labourer is no longer a serf of the State, swamped by the ocean of the community. He is a free man, truly his own master, who acts on his own initiative and is personally responsible.’108 When it came to practical tactics, Proudhon rejected the remedy of the trade unions and the parliamentary road to power.

But where Warren looked to ‘equitable’ individuals to work out the cost, Tucker relied on their self-interested conduct in a free market (that is, one which has abolished money, tariffs and patents). He also believed that absolute equality is not desirable: people should enjoy the results of their superiority of muscle or brain. But while retaining private property and admiring certain aspects of laissez-faire capitalism, he was critical of the ‘system of violence, robbery, and fraud that the plutocrats call “law and order”’.28 Although Emma Goldman complained that his attitude to the communist anarchists was ‘charged with insulting rancor’, he remained a left- rather than a right-wing libertarian.29 Like Godwin, Tucker looked to the gradual spread of enlightenment to bring about change. He made a plea for non-resistance to become a universal rule.


pages: 840 words: 202,245

Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present by Jeff Madrick

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accounting loophole / creative accounting, Asian financial crisis, bank run, Bretton Woods, capital controls, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, desegregation, disintermediation, diversified portfolio, Donald Trump, financial deregulation, fixed income, floating exchange rates, Frederick Winslow Taylor, full employment, George Akerlof, Hyman Minsky, income inequality, index fund, inflation targeting, inventory management, invisible hand, John Meriwether, Kitchen Debate, laissez-faire capitalism, locking in a profit, Long Term Capital Management, market bubble, minimum wage unemployment, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Myron Scholes, new economy, North Sea oil, Northern Rock, oil shock, Paul Samuelson, Philip Mirowski, price stability, quantitative easing, Ralph Nader, rent control, road to serfdom, Robert Bork, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, Ronald Reagan: Tear down this wall, shareholder value, short selling, Silicon Valley, Simon Kuznets, technology bubble, Telecommunications Act of 1996, The Chicago School, The Great Moderation, too big to fail, union organizing, V2 rocket, value at risk, Vanguard fund, War on Poverty, Washington Consensus, Y2K, Yom Kippur War

At the time, he also met an intelligent, pretty painter in New York City, Joan Mitchell (not the celebrated Abstract Expressionist), who soon became his first wife. She introduced him to Ayn Rand and her circle. Greenspan’s ideology was more deeply ingrained in him by the charismatic writer and philosopher than by his economic education. Rand was the Russian-born self-declared “objectivist” philosopher who vehemently advocated laissez-faire capitalism, and had a profound, passionate distaste for government. Her best-selling romantic novels, The Fountainhead and Atlas Shrugged, whose masculine heroes were individual icons, extended her influence and made her wealthy. In the 1960s, Greenspan wrote several essays for the Rand publication, The Objectivist. In these extremist essays he called for linking the dollar only to gold and he scathingly criticized both consumer protection and antitrust laws because they interfered with the free market.


pages: 650 words: 203,191

After Tamerlane: The Global History of Empire Since 1405 by John Darwin

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agricultural Revolution, Atahualpa, Berlin Wall, Bretton Woods, British Empire, Cape to Cairo, colonial rule, Columbian Exchange, cuban missile crisis, deglobalization, deindustrialization, European colonialism, failed state, Francisco Pizarro, invisible hand, Isaac Newton, joint-stock company, Khartoum Gordon, laissez-faire capitalism, land reform, Mahatma Gandhi, Malacca Straits, mutually assured destruction, new economy, New Urbanism, oil shock, open economy, price mechanism, reserve currency, Ronald Reagan, Scramble for Africa, South China Sea, South Sea Bubble, spice trade, The Wealth of Nations by Adam Smith, trade route, transaction costs, transatlantic slave trade

The newSoviet culture was meant to reach technical modernity through collective proletarian effort, not bourgeois self-help. It was part of the vast campaign of ‘de-peasantization’.76 The new‘Soviet man’ would embrace science and socialism in the certain belief that capitalist societies were on course to self-destruct. In Germany too the culture of liberalism came under heavier fire after 1918. This was no coincidence. There was long-standing antipathy on both Left and Right to the corrosive effect of laissez-faire capitalism on social cohesion. Part of the appeal of a German-led Mitteleuropa had been its offer of a middle way between the backward East and an over-commercialized West. The trauma of defeat, the ‘loss’ of millions of Germans permanently separated from the newGerman state, and the devastating impact of economic shocks from outside created a powerful sense of social and cultural crisis. Only a strong state could save the German Volk from being broken on the wheel of international capitalism, with its ruthless disregard for authenticity and belonging.


pages: 598 words: 172,137

Who Stole the American Dream? by Hedrick Smith

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Affordable Care Act / Obamacare, Airbus A320, airline deregulation, anti-communist, asset allocation, banking crisis, Bonfire of the Vanities, British Empire, business process, clean water, cloud computing, collateralized debt obligation, collective bargaining, commoditize, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, David Brooks, Deng Xiaoping, desegregation, Double Irish / Dutch Sandwich, family office, full employment, global supply chain, Gordon Gekko, guest worker program, hiring and firing, housing crisis, Howard Zinn, income inequality, index fund, industrial cluster, informal economy, invisible hand, Joseph Schumpeter, Kenneth Rogoff, Kitchen Debate, knowledge economy, knowledge worker, laissez-faire capitalism, late fees, Long Term Capital Management, low cost carrier, manufacturing employment, market fundamentalism, Maui Hawaii, mega-rich, mortgage debt, negative equity, new economy, Occupy movement, Own Your Own Home, Paul Samuelson, Peter Thiel, Plutonomy: Buying Luxury, Explaining Global Imbalances, Ponzi scheme, Powell Memorandum, Ralph Nader, RAND corporation, Renaissance Technologies, reshoring, rising living standards, Robert Bork, Robert Shiller, Robert Shiller, rolodex, Ronald Reagan, shareholder value, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Steve Jobs, The Chicago School, The Spirit Level, too big to fail, transaction costs, transcontinental railway, union organizing, Unsafe at Any Speed, Vanguard fund, We are the 99%, women in the workforce, working poor, Y2K

The trademark conservatism of the militant New Right was coined by Senator Barry Goldwater of Arizona, a handsome, straight-talking, ardently anti-government, anti-union conservative who lit the fire of ideological rebellion within the Republican Party in the 1960s. By breaking with traditional GOP conservatism and spurning the bipartisan consensus that governed America, Goldwater opened a polarizing cleavage between the two parties and provided an ideology for New Right crusaders for the next fifty years. As a vehemently anti-union head of two family-owned department stores in Phoenix, Goldwater was an apostle of pure laissez-faire capitalism. He rejected the mainstream conservatism of Dwight Eisenhower and Richard Nixon, who talked about limited government but embraced the status quo, including New Deal programs, and who pushed government regulation of business to protect consumers and workers. By contrast, Goldwater advocated repealing or revamping Social Security and warned that the welfare state and a permissive society were undermining America’s morals.


pages: 741 words: 179,454

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

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

When selling his Range Rover, he suffered a loss of 50 percent of the price he paid 6 months ago. The proceeds from the sale of the car (despite the 50 percent loss) would have allowed the banker to purchase five times the number of bank shares he originally sold to finance the car. In Iceland, there was an oversupply of Range Rovers, now known as “Game Overs.” Crying Games Nicolas Sarkozy, president of France, pronounced laissez faire capitalism dead: “C’est fini!” Wang Qishan, vice-premier of China, tartly observed: “The teachers now have some problems.”21 Luiz Inácio “Lula” da Silva, president of Brazil, blamed the global financial crisis on “the irrational behavior of white people with blue eyes, who before the crisis appeared to know everything, but are now showing that they know nothing.”22 He termed it “an eminently American crisis” caused by people trying to make a lot of “third-class money.”


pages: 1,088 words: 228,743

Expected Returns: An Investor's Guide to Harvesting Market Rewards by Antti Ilmanen

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Andrei Shleifer, asset allocation, asset-backed security, availability heuristic, backtesting, balance sheet recession, bank run, banking crisis, barriers to entry, Bernie Madoff, Black Swan, Bretton Woods, buy low sell high, capital asset pricing model, capital controls, Carmen Reinhart, central bank independence, collateralized debt obligation, commoditize, commodity trading advisor, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, debt deflation, deglobalization, delta neutral, demand response, discounted cash flows, disintermediation, diversification, diversified portfolio, dividend-yielding stocks, equity premium, Eugene Fama: efficient market hypothesis, fiat currency, financial deregulation, financial innovation, financial intermediation, fixed income, Flash crash, framing effect, frictionless, frictionless market, George Akerlof, global reserve currency, Google Earth, high net worth, hindsight bias, Hyman Minsky, implied volatility, income inequality, incomplete markets, index fund, inflation targeting, information asymmetry, interest rate swap, invisible hand, Kenneth Rogoff, laissez-faire capitalism, law of one price, Long Term Capital Management, loss aversion, margin call, market bubble, market clearing, market friction, market fundamentalism, market microstructure, mental accounting, merger arbitrage, mittelstand, moral hazard, Myron Scholes, negative equity, New Journalism, oil shock, p-value, passive investing, Paul Samuelson, performance metric, Ponzi scheme, prediction markets, price anchoring, price stability, principal–agent problem, private sector deleveraging, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, random walk, reserve currency, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, riskless arbitrage, Robert Shiller, Robert Shiller, savings glut, selection bias, Sharpe ratio, short selling, sovereign wealth fund, statistical arbitrage, statistical model, stochastic volatility, survivorship bias, systematic trading, The Great Moderation, The Myth of the Rational Market, too big to fail, transaction costs, tulip mania, value at risk, volatility arbitrage, volatility smile, working-age population, Y2K, yield curve, zero-coupon bond, zero-sum game

Shifting pendulum between markets and state It is hardest to quantify this trend, but it is clear that the decades since the early 1980s witnessed globally spreading capitalism. Many centrally planned economies turned into market economies and even China embraced economic liberalism while nominally remaining a communist state. Deregulation, liberalization of cross-border flows, and falling top (and other) tax rates were other prevalent trends. The pendulum is shifting back. A backlash against laissez-faire capitalism is understandable after financial market excesses and turbulence caused the worst global recession in decades in 2008. While the reasons for this crisis can be debated, the consensus view blames free market ideology as much as greedy bankers, reckless home buyers, or misguided government policy. More regulation will certainly follow. Stretched public finances also make higher taxes inevitable down the road.


pages: 843 words: 223,858

The Rise of the Network Society by Manuel Castells

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Apple II, Asian financial crisis, barriers to entry, Big bang: deregulation of the City of London, Bob Noyce, borderless world, British Empire, capital controls, complexity theory, computer age, computerized trading, creative destruction, Credit Default Swap, declining real wages, deindustrialization, delayed gratification, dematerialisation, deskilling, disintermediation, double helix, Douglas Engelbart, Douglas Engelbart, edge city, experimental subject, financial deregulation, financial independence, floating exchange rates, future of work, global village, Gunnar Myrdal, Hacker Ethic, hiring and firing, Howard Rheingold, illegal immigration, income inequality, Induced demand, industrial robot, informal economy, information retrieval, intermodal, invention of the steam engine, invention of the telephone, inventory management, James Watt: steam engine, job automation, job-hopping, John Markoff, knowledge economy, knowledge worker, labor-force participation, labour market flexibility, labour mobility, laissez-faire capitalism, Leonard Kleinrock, low skilled workers, manufacturing employment, Marc Andreessen, Marshall McLuhan, means of production, megacity, Menlo Park, moral panic, new economy, New Urbanism, offshore financial centre, oil shock, open economy, packet switching, Pearl River Delta, peer-to-peer, planetary scale, popular capitalism, popular electronics, post-industrial society, postindustrial economy, prediction markets, Productivity paradox, profit maximization, purchasing power parity, RAND corporation, Robert Gordon, Robert Metcalfe, Shoshana Zuboff, Silicon Valley, Silicon Valley startup, social software, South China Sea, South of Market, San Francisco, special economic zone, spinning jenny, statistical model, Steve Jobs, Steve Wozniak, Ted Nelson, the built environment, the medium is the message, the new new thing, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, total factor productivity, trade liberalization, transaction costs, urban renewal, urban sprawl, zero-sum game

But before undertaking a new stage of our analytical trip, I will recast the argument presented in this chapter. In sum, what is the new economy? The new economy is certainly, for the time being, a capitalist economy. Indeed, for the first time in history, the whole planet is capitalist or dependent on its connection to global capitalist networks. But this is a new brand of capitalism, technologically, organizationally, and institutionally distinct from both classical (laissez-faire) capitalism and Keynesian capitalism. As the empirical record (in spite of all the measurement problems) seems to indicate at the turn of the millennium, the new economy is/will be predicated on a surge in productivity growth resulting from the ability to use new information technology in powering a knowledgebased production system. For new sources of productivity to dynamize the economy it is, however, necessary to ensure the diffusion of networking forms of organization and management throughout the economy – and networks are indeed spreading throughout the entire economy, phasing out, through competition, previous, rigid forms of business organization.

The Man Behind the Microchip: Robert Noyce and the Invention of Silicon Valley by Leslie Berlin

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Apple II, Bob Noyce, collective bargaining, computer age, George Gilder, informal economy, John Markoff, laissez-faire capitalism, low skilled workers, means of production, Menlo Park, Murray Gell-Mann, open economy, Richard Feynman, Richard Feynman, Ronald Reagan, Sand Hill Road, Silicon Valley, Silicon Valley startup, Steve Jobs, Steve Wozniak, union organizing, War on Poverty, women in the workforce, Yom Kippur War

In 1983 as part of the LaFalce Plan, House Democrats called for a new Bank for Industrial Competitiveness, capitalized with $8.5 billion in federal funds, which would “make and guarantee loans to older industries in need of modernization and to innovative businesses having trouble getting started.”24 Much more than money was at stake in this debate over industrial policy. At issue was the country’s understanding of itself as a stronghold of freemarket, laissez-faire capitalism. Republicans couched their arguments in language calculated to strike fear into a nation historically suspicious of federal power: did Americans really want more government meddling in industry affairs? Did voters really believe that Washington bureaucrats should have the power to determine the “proper” focus for the American economy? (In a strangely self-defeating slap at industrial policy advocates, Republican congressman Dan Lundgren of California alleged that “Supporters of industrial policy have never been able to demonstrate that the ‘best and the brightest’ are in Washington and . . . can do a better job [than is currently the case] of making the economic decisions affecting our lives.”)25 266 THE MAN BEHIND THE MICROCHIP Industrial policy advocates, on the other hand, claimed that laissezfaire ideals were hollow and that the United States had a de facto industrial policy, administered largely by the Department of Defense.


pages: 823 words: 220,581

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

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

But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. The measure of success attained by Wall Street, regarded as an institution of which the proper social purpose is to direct new investment into the most profitable channels in terms of future yield, cannot be claimed as one of the outstanding triumphs of laissez-faire capitalism – which is not surprising, if I am right in thinking that the best brains of Wall Street have been in fact directed towards a different object. (Keynes 1936: 159; emphasis added) Though deregulation of the financial sector was far from the sole cause of the financial crisis that began in 2007, removing the fetters from the financial sector resulted in a crisis that was more extreme than it would have been had the previous regulations been kept in place.


pages: 578 words: 168,350

Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies by Geoffrey West

Alfred Russel Wallace, Anton Chekhov, Benoit Mandelbrot, Black Swan, British Empire, butterfly effect, carbon footprint, Cesare Marchetti: Marchetti’s constant, clean water, complexity theory, computer age, conceptual framework, continuous integration, corporate social responsibility, correlation does not imply causation, creative destruction, dark matter, Deng Xiaoping, double helix, Edward Glaeser, endogenous growth, Ernest Rutherford, first square of the chessboard, first square of the chessboard / second half of the chessboard, Frank Gehry, Geoffrey West, Santa Fe Institute, Guggenheim Bilbao, housing crisis, Index librorum prohibitorum, invention of agriculture, invention of the telephone, Isaac Newton, Jane Jacobs, Jeff Bezos, Johann Wolfgang von Goethe, John von Neumann, Kenneth Arrow, laissez-faire capitalism, life extension, Mahatma Gandhi, mandelbrot fractal, Marchetti’s constant, Masdar, megacity, Murano, Venice glass, Murray Gell-Mann, New Urbanism, Peter Thiel, profit motive, publish or perish, Ray Kurzweil, Richard Feynman, Richard Feynman, Richard Florida, Silicon Valley, smart cities, Stephen Hawking, Steve Jobs, Stewart Brand, technological singularity, The Coming Technological Singularity, The Death and Life of Great American Cities, the scientific method, too big to fail, transaction costs, urban planning, urban renewal, Vernor Vinge, Vilfredo Pareto, Von Neumann architecture, Whole Earth Catalog, Whole Earth Review, wikimedia commons, working poor

The extension of the concept of the survival of the fittest to the social and political domain has led many thinkers to the controversial concept of Social Darwinism, whose roots go back to Malthus. Regardless of its validity, this idea has been sadly misrepresented, abused, and misused by politicians and social thinkers, sometimes with devastating consequences, to support all sorts of extreme views ranging from eugenics and racism to rampant laissez-faire capitalism. The desire for more can apply to many things beyond wealth and material assets. It is a hugely powerful force in society that poses enormous moral, spiritual, and psychological challenges at both the individual and collective levels. The desire to succeed, whether in sports, business, or academia—to run the fastest, have the most creative company, or generate the most profound and insightful idea—has been a major underlying societal dynamic that has been instrumental in bringing us the extraordinary standard of living and quality of life many of us are privileged to enjoy.


pages: 1,108 words: 321,463

The Fountainhead by Ayn Rand

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British Empire, collective bargaining, laissez-faire capitalism, Plutocrats, plutocrats, profit motive, the scientific method, yellow journalism

Since man’s character is the product of his premises, I had to define and present the kinds of premises and values that create the character of an ideal man and motivate his actions; which means that I had to define and present a rational code of ethics. Since man acts among and deals with other men, I had to present the kind of social system that makes it possible for ideal men to exist and to function—a free, productive, rational system which demands and rewards the best in every man, and which is, obviously, laissez-faire capitalism. “But neither politics nor ethics nor philosophy is an end in itself, neither in life nor in literature. Only Man is an end in himself.” Are there any substantial changes I would want to make in The Fountainhead? No—and, therefore, I have left its text untouched. I want it to stand as it was written. But there is one minor error and one possibly misleading sentence which I should like to clarify, so I shall mention them here.


pages: 768 words: 291,079

The Ragged Trousered Philanthropists by Robert Tressell

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Berlin Wall, British Empire, Corn Laws, cuban missile crisis, full employment, James Watt: steam engine, Khartoum Gordon, laissez-faire capitalism, Louis Pasteur, means of production, Murano, Venice glass, Thomas Malthus, union organizing, Upton Sinclair, upwardly mobile, wage slave, Winter of Discontent, women in the workforce

Back in 1818–19 there was an attempt to establish a General Union of Trades for British workers in all occupations. The name of the union was to be ‘The Philanthropic Hercules’––the strength of labour amalgamated into a powerful giant dedicated to doing good to one’s fellow man. In the course of the nineteenth century ‘philanthropy’ became a term more associated with the actions and charitable institutions of a middle class seeking to take the edge off the excesses of the laissez-faire capitalism that at the same time guaranteed the social position of that class. It is in this context that the word ‘philanthropy’ gains its pejorative overtones: in the old adage, the middle class will do anything for the working class except get off its back. Mugsborough’s Mayor and Liberal candidate, the 2 C. F. G. Masterman, From the Abyss (1911), 59. Introduction xxi local draper Adam Sweater (owner of ‘The Cave’), poses as a philan- thropist of a familiar kind (‘no starving wretch had ever appealed to him in vain for a penny soup ticket’), yet it is the structural exploitation of working people practised every day by such as Sweater that lays the foundation for the very existence of those starving wretches.