laissez-faire capitalism

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Free Money for All: A Basic Income Guarantee Solution for the Twenty-First Century by Mark Walker

3D printing, 8-hour work day, additive manufacturing, Affordable Care Act / Obamacare, basic income, Baxter: Rethink Robotics, Capital in the Twenty-First Century by Thomas Piketty, commoditize, financial independence, full employment, happiness index / gross national happiness, industrial robot, intangible asset, invisible hand, Jeff Bezos, job automation, job satisfaction, John Markoff, Kevin Kelly, laissez-faire capitalism, longitudinal study, market clearing, means of production, new economy, obamacare, off grid, plutocrats, Plutocrats, precariat, profit motive, Ray Kurzweil, rent control, RFID, Rodney Brooks, Rosa Parks, science of happiness, Silicon Valley, surplus humans, The Future of Employment, the market place, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, universal basic income, working poor

Turning from practice to theory, welfare liberals are divided on the question of BIG. The most prominent welfare liberal is John Rawls. In his magisterial A Theory of Justice and other works, Rawls provides a defense of many aspects of the current welfare state.15 Like Marx, Rawls sees that capitalism has helped increase the material prosperity of society as a whole. However, according to Rawls, a laissez-faire capitalism is not justified. Rather, a conditional form of capitalism is justified. Private ownership and the profit motive are justified to the extent that they improve the material well-being of the most economically disadvantaged. This is Rawls’s famous “difference principle”: “social and economic inequalities are to be arranged so that they are both to the greatest benefit of the least advantaged.”16 We will postpone examining whether Rawls is justified on this point.

A tax on income to provide relief for the poor or for other social goods is in effect forced labor: it requires the handing over of money, which is often equivalent to giving over some of one’s labor. Since the paying of taxes is not voluntary but coerced, it follows, says Nozick, this is forced labor or slavery (of a limited sort). I hope to show that the argument only appears persuasive as an apology for laissez-faire capitalism because it turns on an equivocation of the term “rights.” In order for us to accept the second premise, the term “rights” must be understood in a very strong way, in terms of what I shall call “Lockean rights.” But once we see how strong rights must be understood in the second premise, we can see that the first premise is not particularly plausible. It will take us a while to work our way to this conclusion.

For the duration of their trip, they propose to abide by the modified Marxian slogan: from each according to his camping ability, to each according to his camping need. Locke proposes that they should not pool their property in this fashion. They ought to have a competitive market to increase the efficiency of their camping trip. Suppose the rest are unmoved by Locke’s argument and propose to continue their camping trip in the spirit of camaraderie rather than laissez-faire capitalism. They argue that this camping competition will only induce animosity among the campers rather than encourage a relaxing and fun vacation. On Lockean principles, the others could not force Locke to join the camping-collective: this would violate his right to self-ownership. So, if the other seven campers compel Locke to contribute his fishing bounty to the group, then his rights will have been violated.


pages: 400 words: 129,841

Capitalism: the unknown ideal by Ayn Rand

Albert Einstein, anti-communist, Berlin Wall, British Empire, business cycle, 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

"Robert Solow", bank run, banking crisis, Benoit Mandelbrot, Berlin Wall, Black Swan, bonus culture, Bretton Woods, BRICs, business cycle, buy and hold, 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, Kickstarter, laissez-faire capitalism, Long Term Capital Management, mandelbrot fractal, market design, market fundamentalism, Martin Wolf, money market fund, moral hazard, mortgage debt, Nelson Mandela, 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

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

asset-backed security, bank run, banking crisis, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black-Scholes formula, Blythe Masters, 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, hedonic treadmill, 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, Kickstarter, 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

asset-backed security, bank run, banking crisis, banks create money, Ben Bernanke: helicopter money, Bretton Woods, business cycle, 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.


pages: 247 words: 68,918

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

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

To illustrate the differences between a Soviet-style command economy and these various forms of capitalism, imagine a football game or soccer match. Command economics is a game in which the state tries to predetermine the final score by ensuring that all players, referees, and spectators faithfully perform their pre-assigned roles. It’s more a pageant than a sport. Post-Soviet Russian-style laissez-faire capitalism is a blood sport with few rules and referees who represent the competing interests of the spectators who wagered most on the outcome. The strongest dominate, and everyone else loses. Free-market capitalism is a game with referees who exist only to ensure proper enforcement of recognized rules and with players involved in genuine competition. Government’s only role is to ensure that the rules are written effectively and fairly.

Individuals and privately owned institutions make most of the decisions on what to buy and how much to pay, what to make and how much to charge, how much to save and where to invest. Collectively, these decisions create and sustain markets. But even this broader (simplistic) definition allows for variations, differences that are determined by the extent of government involvement in all these decisions. Those who believe in pure or laissez-faire capitalism argue that while the buyers and sellers are buying and selling, the state should mind its own business. Beyond enforcing contracts and protecting property rights, governments enable capitalism by staying out of its way. Adam Smith, the oft-quoted father of modern capitalism, wrote in The Wealth of Nations (1776) of the unintended benefits that society derived from individual greed:By directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.1 Some students of Smith’s writings might qualify this point with a reference to his earlier work, The Theory of Moral Sentiments (1759), in which he argues thatthere are evidently some principles in [man’s] nature which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it.2 Advocates of pure capitalism insist that the “invisible hand” must be allowed to work its magic—and that any effort by government to guide its actions can only burden markets and distort their natural operation.

Murray Rothbard, a disciple of von Mises, attached it to Nazi economic management in Germany, fascist rule in Italy during the 1930s, and the postwar economies of the Soviet bloc. For Rothbard, state capitalism was the economic equivalent of political tyranny—and an invention that could only survive within a totalitarian political system. He argued that free-market capitalism is to state capitalism as “voluntary mutual exchange” is to a “hold-up at gunpoint.” He considered laissez-faire capitalism an efficient and self-replenishing network of small exchanges of goods or services based on free will, including a buyer’s right to refuse new exchanges if the first one left him unsatisfied. All taxation was “purely and pristinely robbery.” He forecast the inevitable self-destruction of central economic planning and insisted that free-market capitalism was “the only moral and by far the most productive system [and] the only viable system for mankind in the industrial era.”8 Beyond Rothbard, there are three ways in which the term state capitalism has been used over the years within the free-market world.


pages: 301 words: 89,076

The Globotics Upheaval: Globalisation, Robotics and the Future of Work by Richard Baldwin

agricultural Revolution, Airbnb, AltaVista, Amazon Web Services, augmented reality, autonomous vehicles, basic income, business process, business process outsourcing, call centre, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, commoditize, computer vision, Corn Laws, correlation does not imply causation, Credit Default Swap, David Ricardo: comparative advantage, declining real wages, deindustrialization, deskilling, Donald Trump, Douglas Hofstadter, Downton Abbey, Elon Musk, Erik Brynjolfsson, facts on the ground, future of journalism, future of work, George Gilder, Google Glasses, Google Hangouts, hiring and firing, impulse control, income inequality, industrial robot, intangible asset, Internet of things, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, knowledge worker, laissez-faire capitalism, low skilled workers, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, manufacturing employment, Mark Zuckerberg, mass immigration, mass incarceration, Metcalfe’s law, new economy, optical character recognition, pattern recognition, Ponzi scheme, post-industrial society, post-work, profit motive, remote working, reshoring, ride hailing / ride sharing, Robert Gordon, Robert Metcalfe, Ronald Reagan, Second Machine Age, self-driving car, side project, Silicon Valley, Skype, Snapchat, social intelligence, sovereign wealth fund, standardized shipping container, statistical model, Stephen Hawking, Steve Jobs, supply-chain management, TaskRabbit, telepresence, telepresence robot, telerobotics, Thomas Malthus, trade liberalization, universal basic income

The Fascist Manifesto was published in 1919.12 Many at the time viewed fascism as a sensible way of smoothing out the roughest edges of laissez-faire capitalism while avoiding the radical changes of communism. Indeed, for much of the early 1900s, one key justification for supporting fascism was that it was the only real alternative to communism. The Manifesto called for voting rights for all, including women; proportional representation in parliament; abolition of the wealth-dominated Italian senate; implementation of an eight-hour workday for all workers; and a progressive tax on capital. Remember that fascism in the 1930s was as yet untarnished by its current association with the horrors of Hitler-ism. The University of Lausanne, for example, awarded the Italian fascist dictator, Benito Mussolini, an honorary doctorate in 1937. More generally, the fascist response to the backlash against laissez-faire capitalism was to stay with the market for many things but to remove the uncertainty by relying on cooperation instead of competition.

Roosevelt with his New Deal economics (known broadly as the social market economy in Europe). The Great Backlashes: Fascism, Communism, and New Deal Capitalism At the dawn of the twentieth century, it was plain to all that automation and globalization represented the way of the future—the way to permanently improve the human condition. But the upheavals and backlashes highlighted problems. Many thinkers viewed laissez-faire capitalism as the wrong way to govern the progress, the wrong way to complete the Great Transformation. Leaving the momentous social and economic choices to capital owners and individual entrepreneurship—guided only by market forces—was the wrong way to harness the promise. Labor markets were the fundamental issue since people are what society is all about and “labor” is what we call people in an economic setting.


pages: 223 words: 10,010

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

"Robert Solow", 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 cycle, 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, Everybody Ought to Be Rich, 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: 525 words: 146,126

Ayn Rand Cult by Jeff Walker

affirmative action, anti-communist, Ayatollah Khomeini, Berlin Wall, buy and hold, credit crunch, deindustrialization, dematerialisation, Doomsday Book, Elliott wave, George Gilder, Jane Jacobs, laissez-faire capitalism, market fundamentalism, Mont Pelerin Society, price stability, Ralph Waldo Emerson, road to serfdom, Ronald Reagan, Saturday Night Live, school vouchers, Torches of Freedom

Reinforcing the emerging hierarchy which placed Nathan second as Rand’s special protégé and intellectual heir, Ayn and Nathan began a sexual affair in 1955, kept secret from all but their spouses, who were persuaded to give their consent to it. By 1957, some of Rand’s more youthfully optimistic disciples were convinced that the world would be almost instantly converted to her selfishness-based laissez-faire capitalism, from the collectivist corruption she had dramatized in Atlas Shrugged. Just as the novel ends with society in ruins and the heroes of Galt’s Gulch about to descend from their Nietzschean mountain retreat to set all things right, so ‘the Collective’ saw itself as the personal vanguard of Ayn Rand’s philosophic and literary genius, preparing to instruct a society grateful for Rand’s solutions.

The youthful students of Objectivism who were recruited in such surprising numbers in the 1960s typically came equipped with a basic education but little or no prior knowledge of the subjects that Objectivism pronounced upon, subjects like philosophy, history, economics, and literature. Typically, recruits learned the Objectivist line on all these subject areas, and then, perhaps, began to learn a little about them. The students’ first exposure to these subjects was through a Randian lens. Pierpont describes Rand’s readership as the largely abandoned class of thinking nonintellectuals. Joan Kennedy Taylor concurs: “Many thought that Rand had invented laissez-faire capitalism. . . . dentists, engineers, and so on loved this vision of a technologically advancing logical world, but this was the first they had dealt with ideas in any grand sense.” Taylor, having grown up with people in the arts and having gone to a liberal arts college, was not quite as overwhelmed by Rand’s ideas as most of her fellow students of Objectivism, for whom these were the only ideas in the world.

(Agliaro soon did likewise.) “What about Ed Snider’s threat to crush you in court?” Harry Binswanger would write in a leaked ARI memo to Peikoff a few years later. Nathaniel Branden recalls that just prior to the publication of Atlas Shrugged, embodying “the excited child in us all . . . Leonards projections were so extravagantly wild that they bordered on hysteria. He spoke of the conversion of the country to laissez-faire capitalism and the ideals of individualism ‘within a year’. He even wondered what there was left for him to do in philosophy, since Ayn had said everything.” He would alternate from inordinate optimism to inordinate pessimism and back. December 1983 had him confessing that there are “times and situations where despite my knowledge of philosophy I feel over-whelmed by the evil in the world, isolated, alienated, lonely, bitter, malevolent,” once so much so that he thought, “I’m going to retire and stop lecturing and let the whole thing blow up.”


pages: 328 words: 92,317

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

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: 345 words: 92,849

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

3D printing, Affordable Care Act / Obamacare, Apple II, barriers to entry, Berlin Wall, Bernie Madoff, blue-collar work, business process, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, collective bargaining, colonial exploitation, 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.


pages: 165 words: 48,594

Democracy at Work: A Cure for Capitalism by Richard D. Wolff

asset-backed security, Bernie Madoff, business cycle, collective bargaining, Credit Default Swap, declining real wages, feminist movement, financial intermediation, Howard Zinn, income inequality, John Maynard Keynes: technological unemployment, laissez-faire capitalism, means of production, moral hazard, mortgage debt, Occupy movement, Ponzi scheme, profit maximization, quantitative easing, race to the bottom, Ronald Reagan, too big to fail, trickle-down economics, wage slave, women in the workforce, Works Progress Administration

State authorities in most countries limited the powers and wealth of corporations and enhanced the wages and state supports for the mass of people. State-interventionist capitalism “with a human face” replaced the more laissez-faire, harsher capitalism that had built up since the late nineteenth century. From 1945 to the 1970s, state-interventionist capitalism was the norm, with Keynesian economics its dominant theoretical frame of reference. From the early 1970s until the crisis of the US economy in 2007, laissez-faire capitalism was the norm, supported by the widespread acceptance of a neoliberal ideological framework. The last half of the twentieth century was thus a perfect example of the shifts within capitalism between more and less state-interventionist phases. In capitalism’s current crisis, an ongoing struggle concerns the pace and form of the next possible oscillation. This time, however, the possibility of a break from capitalism’s repeated oscillations to an altogether other economic system—different from both basic forms of capitalism—is stronger than it has been since at least the 1930s.

In both cases, the shifts continued even when loud rhetoric proclaimed otherwise. In much of the rest of the world, too, similar shifts were also under way. These political developments coincided with surges in economic growth, profits as a percentage of national income, employers’ overall profitability, and income and wealth gains disproportionately appropriated by upper-income groups. Much as the processes of laissez-faire capitalism had led to the crisis of 1929, so the processes of welfare-state capitalism built to its crisis in the 1970s. 1.3 Capitalism, 1970s–2007: The Crisis Building from Below The 1970s brought to an end more than a century of rising average real wages in the United States. It had been a remarkable run for workers, unmatched by workers’ experiences in any other capitalist country. US capitalism had been so profitable, its workers’ rising productivity so steady, that capitalists could sustain capitalist growth by continuing to raise real wages in response to the US economy’s major problem.


pages: 177 words: 50,167

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

affirmative action, Affordable Care Act / Obamacare, Albert Einstein, anti-communist, back-to-the-land, Bernie Sanders, Boris Johnson, Bretton Woods, capital controls, 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, 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.


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

"Robert Solow", addicted to oil, air freight, airline deregulation, Albert Einstein, asset-backed security, bank run, Berlin Wall, Bretton Woods, business cycle, business process, buy and hold, 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, 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, Nelson Mandela, 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, stocks for the long run, 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.


pages: 493 words: 98,982

The Tyranny of Merit: What’s Become of the Common Good? by Michael J. Sandel

affirmative action, Affordable Care Act / Obamacare, anti-communist, Berlin Wall, Bernie Sanders, Boris Johnson, Capital in the Twenty-First Century by Thomas Piketty, centre right, coronavirus, COVID-19, Credit Default Swap, Deng Xiaoping, Donald Trump, ending welfare as we know it, facts on the ground, Fall of the Berlin Wall, financial deregulation, financial innovation, global supply chain, helicopter parent, High speed trading, immigration reform, income inequality, Khan Academy, laissez-faire capitalism, meta analysis, meta-analysis, Nate Silver, new economy, obamacare, Occupy movement, plutocrats, Plutocrats, Ronald Reagan, smart grid, Steve Jobs, Steven Levy, the market place, The Wealth of Nations by Adam Smith, Washington Consensus

TECHNOCRACY AND MARKET-FRIENDLY GLOBALIZATION At the heart of this failure is the way mainstream parties conceived and carried out the project of globalization over the past four decades. Two aspects of this project gave rise to the conditions that fuel populist protest. One is its technocratic way of conceiving the public good; the other is its meritocratic way of defining winners and losers. The technocratic conception of politics is bound up with a faith in markets—not necessarily unfettered, laissez-faire capitalism, but the broader belief that market mechanisms are the primary instruments for achieving the public good. This way of thinking about politics is technocratic in the sense that it drains public discourse of substantive moral argument and treats ideologically contestable questions as if they were matters of economic efficiency, the province of experts. It is not difficult to see how the technocratic faith in markets set the stage for populist discontent.

Despite rejecting the notion that the winners in a competitive market society morally deserve their winnings, these public philosophies offer no antidote to the tyranny of merit. It is instructive nonetheless to see why, despite their disagreements, they both reject merit as the basis of justice. Free-Market Liberalism Perhaps the most influential case for free-market liberalism in the twentieth century was advanced by Friedrich A. Hayek, an Austrian-born economist-philosopher. A source of inspiration for Margaret Thatcher and other proponents of laissez-faire capitalism, Hayek opposed government efforts to reduce economic inequality, argued against progressive taxation, and viewed the welfare state as antithetical to freedom. In his book The Constitution of Liberty (1960), Hayek argues that the only equality compatible with freedom is the purely formal equality of all citizens before the law. Careers should be open to everyone, but the state should not try to create a level playing field by providing equal or compensatory educational opportunities, a project he viewed as unrealistic and ultimately coercive.

., 175–76 hubris, 5 , 25 , 26–27 , 30 , 41 , 42 , 44 , 49 , 55 , 78 , 83 , 118 , 120 , 125–26 , 134 , 141 , 144–46 , 150 , 151 , 177 , 186 , 193–95 ; elites’ condescension toward the less-educated, 95–96 , 117–18 ; of the “open agenda,” 214–16 Huffman, Felicity, 8 human flourishing, 212 humiliation, 25–27 , 30 , 42 , 120 , 125–26 , 145 , 146 , 150 humility, and democracy, 226–27 Hurricane Katrina, 45 immigrants, 17–19 , 25 , 204 , 212 , 213 , 215 , 216 incarceration rates, 29 incentivizing, 107 , 108 income, 22 , 73 ; of college versus high school graduates, 197 ; and contribution to society, 136–37 ; deservingness and, 120 , 127–28 , 134 , 136–37 ; genetic superiority and, 151 ; hedge fund managers versus schoolteachers example, 127–28 ; inequalities in, 12 , 22 , 23 , 28 , 29 , 73 , 85 , 87 , 151 , 184 , 226 , 230 n3 , 237 nn30–31 ; Ivy League schools and, 10–11 , 24 ; justification of differentials in, 144 , 145 , 151 ; ladder of, 75 , 85 , 164 ; median, 197 , 230 n3 ; in meritocracy versus aristocracy, 114–15 ; of parents and their children, 75–76 ; redistribution of, 126 , 132 , 142 , 144 , 146 , 149 , 206 , 207 ; SAT scores and, 10 , 164–65 , 249 n26 ; talents and, 129 , 150–51 ; taxation of, 27 , 67 , 119 , 126 , 128 , 130 , 132 , 142 , 144 , 219 ; wages, 29 , 30 , 85 , 86 , 88 , 120 , 198 , 206 , 209 , 211–13 ; wage subsidies and, 214–15 ; see also inequality ; wealth inequality, 24 , 113–14 , 132 , 143–44 , 151 , 155 , 184 , 206 , 208 , 212 , 226 ; education as answer to, 85–89 , 104 ; justification of, 119 , 122 ; in meritocracy versus aristocracy, 114–15 ; meritocratic college admissions and, 165–67 ; meritocratic ideal and, 122 ; rise in, 4 , 12 , 22 , 23 , 28 , 29 , 59 , 73 , 87 , 152–53 , 207 ; talents and, 129 , 150–51 ; see also income ; wealth infrastructure, 29 injustice, politics of, 26 insurance, 149–50 , 151 intelligence, 151 , 158 , 193 ; Trump and, 82–83 investment banking, 91 IQ, 82 , 84 , 158 Iran, 53 Iraq War, 29 , 52 , 94 , 200 Ishihara, Shintaro, 45 ISIL, 52 Italy, 22 Ivy League, 10–11 , 24 , 155 , 156 , 162 , 165–68 , 180 , 191 ; cheating scandal in, 183 ; Columbia University, 81 ; Harvard University, 9 , 24 , 60–62 , 68 , 81 , 90 , 125 , 156–58 , 160–62 , 166–68 , 170 , 171 , 173 , 181–85 , 251 n44 ; Princeton University, 11 , 68 , 156 , 166–68 , 171 , 249 n31 ; University of Pennsylvania, 9 , 83 ; Yale University, 7 , 8 , 11 , 84 , 90 , 156 , 166 , 167 , 175 , 178 , 185 Jackson, Robert, 100 James, LeBron, 123 , 124 Japan, 29 , 74 , 76 , 179 ; 2011 earthquake and tsunami in, 45 Jefferson, Thomas, 28 , 55 , 160–61 Jews, 40 ; college admission and, 156 , 157 , 162 , 166 Job, 36–37 jobs: in manufacturing, 86 , 197 , 215 ; unemployment, 206 ; see also work Jobs, Steve, 136 John Paul II, Pope, 210 Johns Hopkins University, 176 Johnson, Boris, 100 Johnson, Lyndon, 173 , 236 n15 , 237 n21 Jones, Jesse, 100 justice, 114 , 120 , 141 ; arc of the moral universe and, 54–58 ; Aristotle’s view of, 145 ; contributive, 206 , 211–13 ; distributive, 126 , 132 , 142 , 144 , 146 , 149 , 206 , 207 ; perfect meritocracy and, 121–22 ; rejection of merit and desert as basis of, 132–33 , 141 , 148 , 150 ; relation between the right and the good in, 142 , 143 , 145 ; see also morality and ethics Karabel, Jerome, 167 Kavanaugh, Brett, 84–85 Kennedy, Edward, 171 Kennedy, John F., 69 , 90 Kennedy, Robert F., 206 , 212 Kenyon, E. W., 46 Kerry, John, 50 Keynes, John Maynard, 209 , 211 King, Martin Luther, Jr., 54–57 , 210 Knight, Frank, 137–40 , 209 Knights of Labor, 192 Kristof, Nicholas, 200 Kushner, Jared, 9 Labour Party (Britain), 20 , 22 , 66 , 86 , 97–98 , 100 , 102 , 116 , 117 , 134 , 152 laissez-faire capitalism, 19 , 126 , 139 Lasch, Christopher, 192–93 Latinos/Latinx, 102 , 170 Lears, Jackson, 42–43 , 44 Lemann, Nicholas, 157–58 Le Pen, Marine, 103 Levine, Madeline, 179–80 Lewis, Michael, 217 liberalism, liberals, 11 , 21 , 38 , 78 , 145 ; changing sensibility of, 55 ; and dignity of work, 205 ; free-market, 125–28 , 133–34 , 150 ; luck egalitarians, 69 , 146–50 ; market-friendly, 63 ; meritocratic, 87 ; providentialism and, 49–52 ; technocratic, 20 ; welfare state (egalitarian), 125 , 128–32 , 133–34 , 141 , 143 , 146 , 150–51 ; see also neoliberal globalization libertarian economists, 137 Library of Congress, U.S., 225 Libya, 53 life expectancy, 199–200 Lincoln, Abraham, 99 losing, losers, see success and failure, winners and losers luck and chance, 25 , 46 , 122–23 , 142 , 193 ; bad, compensation for, 146 ; brute luck versus option luck, 148 ; choice and, 146–50 ; genetic lottery, 123 , 149 , 150–51 ; luck egalitarian philosophy, 69 , 146–50 ; talents as, 122–23 , 130 , 150 ; see also misfortune and suffering Luthar, Suniya S., 180 Luther, Martin, 38–41 , 43 Lutherans, 40 Mackey, John, 48–49 Macron, Emmanuel, 103–104 Makers and Takers: The Rise of Finance and the Fall of American Business (Foroohar), 220–21 Manhattan Project, 157 Mankiw, N.


pages: 495 words: 144,101

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

anti-communist, bank run, barriers to entry, centralized clearinghouse, collective bargaining, creative destruction, desegregation, feminist movement, financial independence, George Gilder, invisible hand, jimmy wales, Joan Didion, 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: 772 words: 203,182

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

8-hour work day, active measures, activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, bank run, banking crisis, Basel III, Black Swan, blood diamonds, blue-collar work, Bolshevik threat, bonus culture, British Empire, business cycle, business process, buy and hold, capital controls, Carmen Reinhart, carried interest, cognitive dissonance, collateralized debt obligation, collective bargaining, commoditize, corporate governance, corporate personhood, corporate raider, corporate social responsibility, creative destruction, credit crunch, crony capitalism, crowdsourcing, currency manipulation / currency intervention, David Brooks, David Graeber, David Ricardo: comparative advantage, declining real wages, deindustrialization, Diane Coyle, disruptive innovation, Double Irish / Dutch Sandwich, eurozone crisis, financial deregulation, financial innovation, fixed income, Francis Fukuyama: the end of history, full employment, George Akerlof, George Gilder, Gini coefficient, Gordon Gekko, hiring and firing, income inequality, invisible hand, job satisfaction, John Markoff, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, lake wobegon effect, light touch regulation, Long Term Capital Management, manufacturing employment, market clearing, market fundamentalism, Martin Wolf, minimum wage unemployment, mittelstand, moral hazard, Myron Scholes, Naomi Klein, Northern Rock, obamacare, offshore financial centre, Paul Samuelson, pension reform, performance metric, pirate software, plutocrats, Plutocrats, Ponzi scheme, precariat, price stability, profit 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, Social Responsibility of Business Is to Increase Its Profits, 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.


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

affirmative action, Albert Einstein, American ideology, anti-communist, Bolshevik threat, Charles Lindbergh, 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: 105 words: 18,832

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

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: 283 words: 81,163

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

banking crisis, British Empire, business cycle, 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: 381 words: 101,559

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

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, buy and hold, 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, 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: 391 words: 102,301

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

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, Nelson Mandela, 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.


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Decline of the English Murder by George Orwell

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: 364 words: 104,697

Were You Born on the Wrong Continent? by Thomas Geoghegan

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, 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.)


pages: 430 words: 109,064

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

American ideology, Andrei Shleifer, Asian financial crisis, asset-backed security, bank run, banking crisis, Bernie Madoff, Bonfire of the Vanities, bonus culture, break the buck, business cycle, buy and hold, capital controls, Carmen Reinhart, central bank independence, Charles Lindbergh, 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: 332 words: 106,197

The Divide: A Brief Guide to Global Inequality and Its Solutions by Jason Hickel

Andrei Shleifer, Asian financial crisis, Atahualpa, Bartolomé de las Casas, Bernie Sanders, Bob Geldof, Bretton Woods, British Empire, Cape to Cairo, capital controls, carbon footprint, clean water, collective bargaining, colonial rule, David Attenborough, David Graeber, David Ricardo: comparative advantage, declining real wages, dematerialisation, Doha Development Round, Elon Musk, European colonialism, falling living standards, financial deregulation, Fractional reserve banking, Francisco Pizarro, full employment, Hans Rosling, happiness index / gross national happiness, Howard Zinn, income inequality, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, James Watt: steam engine, laissez-faire capitalism, land reform, land value tax, liberal capitalism, Live Aid, Mahatma Gandhi, Monroe Doctrine, Mont Pelerin Society, moral hazard, Naomi Klein, Nelson Mandela, offshore financial centre, oil shale / tar sands, out of africa, plutocrats, Plutocrats, purchasing power parity, race to the bottom, rent control, road to serfdom, Ronald Reagan, Scramble for Africa, shareholder value, sharing economy, Silicon Valley, Simon Kuznets, structural adjustment programs, The Chicago School, The Spirit Level, trade route, transatlantic slave trade, transfer pricing, trickle-down economics, Washington Consensus, WikiLeaks, women in the workforce, Works Progress Administration

When the Second World War gained pace it proved the point: government spending on factory production for the war effort had the same effect, boosting employment (the US reached full employment during the war), increasing wages and stimulating demand.6 Economic growth soared and – with higher wages for the poor and higher taxes on the rich – inequality was dramatically reduced. Those were heady days. The edifices of laissez-faire capitalism were collapsing all around, and Keynes and his followers were emboldened to argue for a whole new approach to economics. The democratic state should regulate the market and harness its powers towards desired social ends, securing economic stability and improving living standards. The market should be made to serve society, not the other way round. This new system relied on a class compromise between capital and labour: the state would guarantee strong rights and good wages in exchange for a docile, productive workforce that would have sufficient money to consume mass-produced goods, thereby keeping the economy stable and growing.7 As part of the New Deal, the United States also implemented a universal Social Security programme, provided affordable housing and, with the GI Bill, handed out large university tuition subsidies for veterans.

His chief inspiration was Hayek, the Austrian-born economist at the London School of Economics who had become known for his 1944 book The Road to Serfdom, in which he argued that any intervention in the economy would inevitably lead to the kind of totalitarianism that characterised fascist Germany and Communist Russia. But there was virtually no audience for these views at the time. Everyone was Keynesian, and the memory of the Great Depression meant that people were reluctant to return to the dangerous days of laissez-faire capitalism. Nonetheless, the two men continued to propagate their ideas, hoping they would eventually take hold. In 1947, they formed the Mont Pèlerin Society along with others who shared their ideology. It was a club of free-market economists, named for its location in the elite Swiss resort town, established to push these ideas as urgently as possible into the public sphere. Source: Thomas Piketty’s data on www.quandl.com34 By 1950, both Hayek and Friedman had accepted posts in the economics department at the University of Chicago, which soon became a hub for the liberal revival in economics.


pages: 453 words: 117,893

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

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

To this day Friedman remains a divisive figure in popular opinion, but that’s largely a reflection of the very libertarian and pro free-market positions he was to take publicly later in life rather than the body of economic research that led to his 1976 Nobel Prize. He was viewed as one of the key influences behind the Reagan and Thatcher administrations in the 1980s, both of which were ideologically driven towards smaller government and more laissez-faire capitalism. Both leaders attracted criticism, some of which inevitably reflected on Friedman as a well-known conservative who was central to their economic thinking. Like most academics, by the time he received his Nobel Prize he was really past the zenith of the research that propelled him to the award in the first place. This is generally true of grand prizes, but particularly true for the economics Nobel Prize in the years following its inception in 1969, when there was a lot of catching up to do to recognize the pioneers.

Despite these pressures and the risk of low grades, students flocked to his classes because of his insight and his explanatory powers. Outside the classroom he was regarded as kind and generous. When he and Rose spent a year travelling the world in the early 1960s, they were hosted by many of his former students. The notion of the ‘Chicago School’ has become associated with monetarism (a belief that the total amount of money in an economy could not permanently alter the economy) and laissez-faire capitalism. It coincided with Friedman’s tenure at the university, which was to span three decades between 1946 and 1976. Perhaps it should really be referred to as the ‘Friedman School’? In 1976, Friedman was awarded the Nobel Prize in economics. At the time, the award was then only in its seventh year, but it was still a big deal and, without any doubt, the biggest prize available in economics.


pages: 374 words: 113,126

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

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

To this day Friedman remains a divisive figure in popular opinion, but that’s largely a reflection of the very libertarian and pro free-market positions he was to take publicly later in life rather than the body of economic research that led to his 1976 Nobel Prize. He was viewed as one of the key influences behind the Reagan and Thatcher administrations in the 1980s, both of which were ideologically driven towards smaller government and more laissez-faire capitalism. Both leaders attracted criticism, some of which inevitably reflected on Friedman as a well-known conservative who was central to their economic thinking. Like most academics, by the time he received his Nobel Prize he was really past the zenith of the research that propelled him to the award in the first place. This is generally true of grand prizes, but particularly true for the economics Nobel Prize in the years following its inception in 1969, when there was a lot of catching up to do to recognize the pioneers.

Despite these pressures and the risk of low grades, students flocked to his classes because of his insight and his explanatory powers. Outside the classroom he was regarded as kind and generous. When he and Rose spent a year travelling the world in the early 1960s, they were hosted by many of his former students. The notion of the ‘Chicago School’ has become associated with monetarism (a belief that the total amount of money in an economy could not permanently alter the economy) and laissez-faire capitalism. It coincided with Friedman’s tenure at the university, which was to span three decades between 1946 and 1976. Perhaps it should really be referred to as the ‘Friedman School’? In 1976, Friedman was awarded the Nobel Prize in economics. At the time, the award was then only in its seventh year, but it was still a big deal and, without any doubt, the biggest prize available in economics.


pages: 573 words: 115,489

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

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

The role of the state should be to get out of the way of markets so that they can operate without intervention. This idea has achieved an almost unrivalled supremacy in contemporary economics and it has been used to particularly pernicious effect both in the liberalisation of financial markets and in defence of the subsequent austerity (Chapter 2). In support of their views, proponents of laissez-faire capitalism will almost invariably draw on the failure of the most significant governance alternative of the last two centuries. The collapse of communism in the 1990s did nothing to persuade ordinary people that an active, interventionist state can be a good thing. The historical weaknesses of communism – the corruption of power, the erosion of autonomy, the destructive nature of its economic model – appear to underline the same message.

INDEX Locators in italic refer to figures absolute decoupling 84–6; historical perspectives 89–96, 90, 92, 94, 95; mathematical relationship with relative decoupling 96–101, 111 abundance see opulence accounting errors, decoupling 84, 91 acquisition, instinctive 68 see also symbolic role of goods adaptation: diminishing marginal utility 51, 68; environmental 169; evolutionary 226 advertising, power of 140, 203–4 Africa 73, 75–7; life-expectancy 74; philosophy 227; pursuit of western lifestyles 70; growth 99; relative income effect 58, 75; schooling 78 The Age of Turbulence (Greenspan) 35 ageing populations 44, 81 agriculture 12, 148, 152, 220 Aids/HIV 77 algebra of inequality see inequality; mathematical models alienation: future visions 212, 218–19; geographical community 122–3; role of the state 205; selfishness vs. altruism 137; signals sent by society 131 alternatives: economic 101–2, 139–40, 157–8; hedonism 125–6 see also future visions; post-growth macroeconomics; reform altruism 133–8, 196, 207 amenities see public services/amenities Amish community, North America 128 An Inquiry into the Nature and Causes of the Wealth of Nations (Smith) 123, 132 angelised growth see green growth animal welfare 220 anonymity/loneliness see alienation anthropological perspectives, consumption 70, 115 anti-consumerism 131 see also intrinsic values anxiety: fear of death 69, 104, 115, 212–15; novelty 116–17, 124, 211 Argentina 58, 78, 78, 80 Aristotle 48, 61 The Art of Happiness (Dalai Lama) 49 arts, Baumol’s cost disease 171–2 assets, stranded 167–8 see also ownership austerity policies xxxiii–xxxv, 189; and financial crisis 24, 42–3; mathematical models 181 Australia 58, 78, 128, 206 authoritarianism 199 autonomy see freedom/autonomy Ayres, Robert 143 backfire effects 111 balance: private interests/common good 208; tradition/innovation 226 Bank for International Settlements 46 bank runs 157 banking system 29–30, 39, 153–7, 208; bonuses 37–8 see also financial crisis; financial system basic entitlements: enterprise as service 142; income 67, 72–9, 74, 75, 76, 78; limits to growth 63–4 see also education; food; health Basu, Sanjay 43 Baumol, William 112, 147, 222, 223; cost disease 170, 171, 172, 173 BBC survey, geographical community 122–3 Becker, Ernest 69 Belk, Russ 70, 114 belonging 212, 219 see also alienation; community; intrinsic values Bentham, Jeremy 55 bereavement, material possessions 114, 214–15 Berger, Peter 70, 214 Berry, Wendell 8 Better Growth, Better Climate (New Climate Economy report) 18 big business/corporations 106–7 biodiversity loss 17, 47, 62, 101 biological perspectives see evolutionary theory; human nature/psyche biophysical boundaries see limits (ecological) Black Monday 46 The Body Economic (Stuckler and Basu) 43 bond markets 30, 157 bonuses, banking 37–8 Bookchin, Murray 122 boom-and-bust cycles 157, 181 Booth, Douglas 117 borrowing behaviour 34, 118–21, 119 see also credit; debt Boulding, Elise 118 Boulding, Kenneth 1, 5, 7 boundaries, biophysical see limits (ecological) bounded capabilities for flourishing 61–5 see also limits (flourishing within) Bowen, William 147 Bowling Alone (Putnam) 122 Brazil 58, 88 breakdown of community see alienation; social stability bubbles, economic 29, 33, 36 Buddhist monasteries, Thailand 128 buen vivir concept, Ecuador xxxi, 6 built-in obsolescence 113, 204, 220 Bush, George 121 business-as-usual model 22, 211; carbon dioxide emissions 101; crisis of commitment 195; financial crisis 32–8; growth 79–83, 99; human nature 131, 136–7; need for reform 55, 57, 59, 101–2, 162, 207–8, 227; throwaway society 113; wellbeing 124 see also financial systems Canada 75, 206, 207 capabilities for flourishing 61–5; circular flow of the economy 113; future visions 218, 219; and income 77; progress measures 50–5, 54; role of material abundance 67–72; and prosperity 49; relative income effect 55–61, 58, 71, 72; role of shame 123–4; role of the state 200 see also limits (flourishing within); wellbeing capital 105, 107–10 see also investment Capital in the 21st Century (Piketty) 33, 176, 177 Capital Institute, USA 155 capitalism 68–9, 80; structures 107–13, 175; types 105–7, 222, 223 car industry, financial crisis 40 carbon dioxide emissions see greenhouse gas emissions caring professions, valuing 130, 147, 207 see also social care Cat on a Hot Tin Roof (Williams) 213 causal path analysis, subjective wellbeing 59 Central Bank 154 central human capabilities 64 see also capabilities for flourishing The Challenge of Affluence (Offer) 194 change see alternatives; future visions; novelty/innovation; post-growth macroeconomics; reform Chicago school of economics 36, 156 children: advertising to 204; labour 62, 154; mortality 74–5, 75, 206 Chile xxxiii, xxxvii, 58, 74, 74, 75, 76 China: decoupling 88; GDP per capita 75; greenhouse gas emissions 91; growth 99; life expectancy 74; philosophy 7; post-financial crisis 45–6; pursuit of western lifestyles 70; relative income effect 58; resource use 94; savings 27; schooling 76 choice, moving beyond consumerism 216–18 see also freedom/autonomy Christian doctrine see religious perspectives chromium, commodity price 13 Cinderella economy 219–21, 224 circular economy 144, 220 circular flow of the economy 107, 113 see also engine of growth citizen’s income 207 see also universal basic income civil unrest see social stability Clean City Law, São Paulo 204 climate change xxxv, 22, 47; critical boundaries 17–20; decoupling 85, 86, 87, 98; fatalism 186; investment needs 152; role of the state 192, 198, 201–2 see also greenhouse gas emissions Climate Change Act (2008), UK 198 clothing see basic entitlements Club of Rome, Limits to Growth report xxxii, xxxiii, 8, 11–16, Cobb, John 54 collectivism 191 commercial bond markets 30, 157 commitment devices/crisis of 192–5, 197 commodity prices: decoupling 88; financial crisis 26; fluctuation/volatility 14, 21; resource constraints 13–14 common good: future visions 218, 219; vs. freedom and autonomy 193–4; vs. private interests 208; role of the state 209 common pool resources 190–2, 198, 199 see also public services/amenities communism 187, 191 community: future visions of 219–20; geographical 122–3; investment 155–6, 204 see also alienation; intrinsic values comparison, social 115, 116, 117 see also relative income effect competition 27, 112; positional 55–61, 58, 71, 72 see also struggle for existence complexity, economic systems 14, 32, 108, 153, 203 compulsive shopping 116 see also consumerism Conference of the Parties to the UN Framework Convention on Climate Change (CoP21) 19 conflicted state 197, 201, 209 connectedness, global 91, 227 conspicuous consumption 115 see also language of goods consumer goods see language of goods; material goods consumer sovereignty 196, 198 consumerism 4, 21, 22, 103–4, 113–16; capitalism 105–13, 196; choice 196; engine of growth 104, 108, 120, 161; existential fear of death 69, 212–15; financial crisis 24, 28, 39, 103; moving beyond 216–18; novelty and anxiety 116–17; post-growth economy 166–7; role of the state 192–3, 196, 199, 202–5; status 211; tragedy of 140 see also demand; materialism contemplative dimensions, simplicity 127 contraction and convergence model 206–7 coordinated market economies 27, 106 Copenhagen Accord (2009) 19 copper, commodity prices 13 corporations/big business 106–7 corruption 9, 131, 186, 187, 189 The Cost Disease: Why Computers get Cheaper and Health Care Doesn’t (Baumol) 171, 172 Costa Rica 74, 74, 76 countercyclical spending 181–2, 182, 188 crafts/craft economies 147, 149, 170, 171 creative destruction 104, 112, 113, 116–17 creativity 8, 79; and consumerism 113, 116; future visions 142, 144, 147, 158, 171, 200, 220 see also novelty/innovation credit, private: deflationary forces 44; deregulation 36; financial crisis 26, 27, 27–31, 34, 36, 41; financial system weaknesses 32–3, 37; growth imperative hypothesis 178–80; mortgage loans 28–9; reforms in financial system 157; spending vs. saving behaviour of ordinary people 118–19; and stimulation of growth 36 see also debt (public) credit unions 155–6 crises: of commitment 192–5; financial see financial crisis critical boundaries, biophysical see limits (ecological) Csikszentmihalyi, Mihalyi 127 Cuba: child mortality 75; life expectancy 74, 77, 78, 78; response to economic hardship 79–80; revolution 56; schooling 76 Cushman, Philip 116 Dalai Lama 49, 52 Daly, Herman xxxii, 54, 55, 160, 163, 165 Darwin, Charles 132–3 Das Kapital (Marx) 225 Davidson, Richard 49 Davos World Economic Forum 46 Dawkins, Richard 134–5 de Mandeville, Bernard 131–2, 157 death, denial of 69, 104, 115, 212–15 debt, public-sector 81; deflationary forces 44; economic stability 81; financial crisis 24, 26–32, 27, 37, 41, 42, 81; financial systems 28–32, 153–7; money creation 178–9; post-growth economy 178–9, 223 Debt: The First Five Thousand Years (Graeber) 28 decoupling xix, xx, xxxvii, 21, 84–7; dilemma of growth 211; efficiency measures 84, 86, 87, 88, 95, 104; green growth 163, 163–5; historical perspectives 87–96, 89, 90, 92, 94, 95; need for new economic model 101–2; relationship between relative and absolute 96–101 deep emission and resource cuts 99, 102 deficit spending 41, 43 deflationary forces, post-financial crisis 43–7, 45 degrowth movement 161–3, 177 demand 104, 113–16, 166–7; post-financial crisis 44–5; post-growth economy 162, 164, 166–9, 171–2, 174–5 dematerialisation 102, 143 democratisation, and wellbeing 59 deposit guarantees 35 deregulation 27, 34, 36, 196 desire, role in consumer behaviour 68, 69, 70, 114 destructive materialism 104, 112, 113, 116–17 Deutsche Bank 41 devaluation of currency 30, 45 Dichter, Ernest 114 digital economy 44, 219–20 dilemma of growth xxxi, 66–7, 104, 210; basic entitlements 72–9, 74, 75, 76, 78; decoupling 85, 87, 164; degrowth movement 160–3; economic stability 79–83, 174–6; material abundance 67–72; moving beyond 165, 166, 183–4; role of the state 198 diminishing marginal utility: alternative hedonism 125, 126; wellbeing 51–2, 57, 60, 73, 75–6, 79 disposable incomes 27, 67, 118 distributed ownership 223 Dittmar, Helga 126 domestic debt see credit dopamine 68 Dordogne, mindfulness community 128 double movement of society 198 Douglas, Mary 70 Douthwaite, Richard 178 downshifting 128 driving analogy, managing change 16–17 durability, consumer goods 113, 204, 220 dynamic systems, managing change 16–17 Eastern Europe 76, 122 Easterlin, Richard 56, 57, 59; paradox 56, 58 eco-villages, Findhorn community 128 ecological investment 101, 166–70, 220 see also investment ecological limits see limits (ecological) ecological (ecosystem) services 152, 169, 223 The Ecology of Money (Douthwaite) 178 economic growth see growth economic models see alternatives; business-as-usual model; financial systems; future visions; mathematical models; post-growth macroeconomics economic output see efficiency; productivity ‘Economic possibilities for our grandchildren’ (Keynes) 145 economic stability 22, 154, 157, 161; financial system weaknesses 34, 35, 36, 180; growth 21, 24, 67, 79–83, 174–6, 210; post-growth economy 161–3, 165, 174–6, 208, 219; role of the state 181–3, 195, 198, 199 economic structures: post-growth economy 227; financial system reforms 224; role of the state 205; selfishness 137 see also business-as-usual model; financial systems ecosystem functioning 62–3 see also limits (ecological) ecosystem services 152, 169, 223 Ecuador xxxi, 6 education: Baumol’s cost disease 171, 172; and income 67, 76, 76; investment in 150–1; role of the state 193 see also basic entitlements efficiency measures 84, 86–8, 95, 104, 109–11, 142–3; energy 41, 109–11; growth 111, 211; investment 109, 151; of scale 104 see also labour productivity; relative decoupling Ehrlich, Paul 13, 96 elasticity of substitution, labour and capital 177–8 electricity grid 41, 151, 156 see also energy Elgin, Duane 127 Ellen MacArthur Foundation 144 emissions see greenhouse gas emissions employee ownership 223 employment intensity vs. carbon dioxide emissions 148 see also labour productivity empty self 116, 117 see also consumerism ends above means 159 energy return on investment (EROI) 12, 169 energy services/systems 142: efficiency 41, 109–11; inputs/intensity 87–8, 151; investment 41, 109–10, 151–2; renewable xxxv, 41, 168–9 engine of growth 145; consumerism 104, 108, 161; services 143, 170–4 see also circular flow of the economy enough is enough see limits enterprise as service 140, 141–4, 158 see also novelty/innovation entitlements see basic entitlements entrepreneur as visionary 112 entrepreneurial state 220 Environmental Assessment Agency, Netherlands 62 environmental quality 12 see also pollution environmentalism 9 EROI (energy return on investment) 12, 169 Essay on the Principle of Population (Malthus) 9–11, 132–3 evolutionary map, human heart 136, 136 evolutionary theory 132–3; common good 193; post-growth economy 226; psychology 133–5; selfishness and altruism 196 exchange values 55, 61 see also gross domestic product existential fear of death 69, 104, 115, 212–15 exponential expansion 1, 11, 20–1, 210 see also growth external debt 32, 42 extinctions/biodiversity loss 17, 47, 62, 101 Eyres, Harry 215 Fable of the Bees (de Mandeville) 131–2 factor inputs 109–10 see also capital; labour; resource use fast food 128 fatalism 186 FCCC (Framework Convention on Climate Change) 92 fear of death, existential 69, 104, 115, 212–15 feedback loops 16–17 financial crisis (2008) 6, 23–5, 32, 77, 103; causes and culpability 25–8; financial system weaknesses 32–7, 108; Keynesianism 37–43, 188; nationalisation of financial sector 188; need for financial reforms 175; role of debt 24, 26–32, 27, 81, 179; role of state 191; slowing of growth 43–7, 45; spending vs. saving behaviour of ordinary people 118–21, 119; types/definitions of capitalism 106; youth unemployment 144–5 financial systems: common pool resources 192; debt-based/role of debt 28–32, 153–7; post-growth economy 179, 208; systemic weaknesses 32–7; and wellbeing 47 see also banking system; business-as-usual model; financial crisis; reform Findhorn community 128 finite limits of planet see limits (ecological) Fisher, Irving 156, 157 fishing rights 22 flourishing see capabilities for flourishing; limits; wellbeing flow states 127 Flynt, Larry 40 food 67 see also basic entitlements Ford, Henry 154 forestry/forests 22, 192 Forrester, Jay 11 fossil fuels 11, 20 see also oil Foucault, Michel 197 fracking 14, 15 Framework Convention on Climate Change (FCCC) 92 France: GDP per capita 58, 75, 76; inequality 206; life-expectancy 74; mindfulness community 128; working hours 145 free market 106: financial crisis 35, 36, 37, 38, 39; ideological controversy/conflict 186–7, 188 freedom/autonomy: vs. common good 193–4; consumer 22, 68–9; language of goods 212; personal choices for improvement 216–18; wellbeing 49, 59, 62 see also individualism Friedman, Benjamin 176 Friedman, Milton 36, 156, 157 frugality 118–20, 127–9, 215–16 fun (more fun with less stuff) 129, 217 future visions 2, 158, 217–21; community banking 155–6; dilemma of growth 211; enterprise as service 140, 141–4, 147–8, 158; entrepreneur as visionary 112; financial crisis as opportunity 25; and growth 165–6; investment 22, 101–2, 140, 149–53, 158, 169, 208; money as social good 140, 153–7, 158; processes of change 185; role of the state 198, 199, 203; timescales for change 16–17; work as participation 140, 144–9, 148, 158 see also alternatives; post-growth macroeconomics; reform Gandhi, Mahatma 127 GDP see gross domestic product gene, selfish 134–5 Genuine Progress Indicator (GPI) 54, 54 geographical community 122–3 Germany xxxi; Federal Ministry of Finance 224–5; inequality 206; relative income effect 58; trade balance 31; work as participation 146 Glass Steagal Act 35 Global Commodity Price Index (1992–2015) 13 global corporations 106–7 global economy 98: culture 70; decoupling 86–8, 91, 93–5, 95, 97, 98, 100; exponential expansion 20–1; inequality 4, 5–6; interconnectedness 91, 227; post-financial crisis slowing of growth 45 Global Research report (HSBC) 41 global warming see climate change Godley, Wynne 179 Goldman Sachs 37 good life 3, 6; moral dimension 63, 104; wellbeing 48, 50 goods see language of goods; material goods; symbolic role of goods Gordon, Robert 44 governance 22, 185–6; commons 190–2; crisis of commitment 192–5, 197; economic stability 34, 35; establishing limits 200–8, 206; growth 195–9; ideological controversy/conflict 186–9; moving towards change 197–200, 220–1; post-growth economy 181–3, 182; power of corporations 106; for prosperity 209; signals 130 government as household metaphor 30, 42 governmentality 197, 198 GPI (Genuine Progress Indicator) 54, 54 Graeber, David 28 Gramm-Leach-Bliley Act 35 Great Depression 39–40 Greece: austerity xxxiii–xxxiv, xxxvii, 43; energy inputs 88; financial crisis 28, 30, 31, 77; life expectancy 74; schooling 76; relative income effect 58; youth unemployment 144 Green Economy initiative 41 green: growth xxxvii, 18, 85, 153, 166, 170; investment 41 Green New Deal, UNEP 40–1, 152, 188 greenhouse gas emissions 18, 85, 86, 91, 92; absolute decoupling 89–92, 90, 92, 98–101, 100; dilemma of growth 210–11; vs. employment intensity 148; future visions 142, 151, 201–2, 220; Kyoto Protocol 18, 90; reduction targets 19–20; relative decoupling 87, 88, 89, 93, 98–101, 100 see also climate change Greenspan, Alan 35 gross domestic product (GDP) per capita 3–5, 15, 54; climate change 18; decoupling 85, 93, 94; financial crisis 27, 28, 32; green growth 163–5; life expectancy 74, 75, 78; as measure of prosperity 3–4, 5, 53–5, 54, 60–1; post-financial crisis 43, 44; post-growth economy 207; schooling 76; wellbeing 55–61, 58 see also income growth xxxvii; capitalism 105; credit 36, 178–80; decoupling 85, 96–101; economic stability 21, 24, 67, 80, 210; financial crisis 37, 38; future visions 209, 223, 224; inequality 177; labour productivity 111; moving beyond 165, 166; novelty 112; ownership 105; post-financial crisis slowing 43–7, 45; prosperity as 3–7, 23, 66; role of the state 195–9; sustainable investment 166–70; wellbeing 59–60; as zero sum game 57 see also dilemma of growth; engine of growth; green growth; limits to growth; post-growth macroeconomy growth imperative hypothesis 37, 174, 175, 177–80, 183 habit formation, acquisition as 68 Hall, Peter 106, 188 Hamilton, William 134 Hansen, James 17 happiness see wellbeing/happiness Happiness (Layard) 55 Hardin, Garrett 190–1 Harvey, David 189, 192 Hayek, Friedrich 187, 189, 191 health: Baumol’s cost disease 171, 172; inequality 72–3, 205–6, 206; investment 150–1; and material abundance 67, 68; personal choices for improvement 217; response to economic hardship 80; role of the state 193 see also basic entitlements Heath, Edward 66, 82 hedonism 120, 137, 196; alternatives 125–6 Hirsch, Fred xxxii–xxxiii historical perspectives: absolute decoupling 86, 89–96, 90, 92, 94, 95; relative decoupling 86, 87–9, 89 Holdren, John 96 holistic solutions, post-growth economy 175 household finances: house purchases 28–9; spending vs. saving behaviour 118–20, 119 see also credit household metaphor, government as 30, 42 HSBC Global Research report 41 human capabilities see capabilities for flourishing human happiness see wellbeing/happiness human nature/psyche 3, 132–5, 138; acquisition 68; alternative hedonism 125; evolutionary map of human heart 136, 136; intrinsic values 131; meaning/purpose 49–50; novelty/innovation 116; selfishness vs. altruism 133–8; short-termism/living for today 194; spending vs. saving behaviour 34, 118–21, 119; symbolic role of goods 69 see also intrinsic values human rights see basic entitlements humanitarian perspectives: financial crisis 24; growth 79; inequality 5, 52, 53 see also intrinsic values hyperbolic discounting 194 hyperindividualism 226 see also individualism hyper-materialisation 140, 157 I Ching (Chinese Book of Changes) 7 Iceland: financial crisis 28; life expectancy 74, 75; relative income effect 56; response to economic hardship 79–80; schooling 76; sovereign money system 157 identity construction 52, 69, 115, 116, 212, 219 IEA (International Energy Agency) 14, 152 IMF (International Monetary Fund) 45, 156–7 immaterial goods 139–40 see also intrinsic values; meaning/purpose immortality, symbolic role of goods 69, 104, 115, 212–14 inclusive growth see inequality; smart growth income 3, 4, 5, 66, 124; basic entitlements 72–9, 74, 75, 76, 78; child mortality 74–5, 75; decoupling 96; economic stability 82; education 76; life expectancy 72, 73, 74, 77–9, 78; poor nations 67; relative income effect 55–61, 58, 71, 72; tax revenues 81 see also gross domestic product INDCs (intended nationally determined commitments) 19 India: decoupling 99; growth 99; life expectancy 74, 75; philosophy 127; pursuit of western lifestyles 70; savings 27; schooling 76 indicators of environmental quality 96 see also biodiversity; greenhouse gas emissions; pollution; resource use individualism 136, 226; progressive state 194–7, 199, 200, 203, 207 see also freedom/autonomy industrial development 12 see also technological advances inequality 22, 67; basic entitlements 72; child mortality 75, 75; credible alternatives 219, 224; deflationary forces 44; fatalism 186; financial crisis 24; global 4, 5–6, 99, 100; financial system weaknesses 32–3; post-growth economy 174, 176–8; role of the state 198, 205–7, 206; selfishness vs. altruism 137; symbolic role of goods 71; wellbeing 47, 104 see also poverty infant mortality rates 72, 75 inflation 26, 30, 110, 157, 167 infrastructure, civic 150–1 Inglehart, Ronald 58, 59 innovation see novelty/innovation; technological advances inputs 80–1 see also capital; labour productivity; resource use Inside Job documentary film 26 instant gratification 50, 61 instinctive acquisition 68 Institute for Fiscal Studies 81 Institute for Local Self-Reliance 204 institutional structures 130 see also economic structures; governance intended nationally determined commitments (INDCs) 19 intensity factor, technological 96, 97 see also technological advances intentional communities 127–9 interconnectedness, global 91, 227 interest payments/rates 39, 43, 110; financial crisis 29, 30, 33, 39; post-growth economy 178–80 see also credit; debt Intergovernmental Panel on Climate Change (IPCC) 18, 19, 201–2 International Energy Agency (IEA) 14, 152 International Monetary Fund (IMF) 45, 156–7 intrinsic values 126–31, 135–6, 212; role of the state 199, 200 see also belonging; community; meaning/purpose; simplicity/frugality investment 107–10, 108; ecological/sustainable 101, 152, 153, 166–70, 220; and innovation 112; loans 29; future visions 22, 101–2, 140, 149–53, 158, 169, 208, 220; and savings 108; social 155, 156, 189, 193, 208, 220–3 invisible hand metaphor 132, 133, 187 IPAT equation, relative and absolute decoupling 96 IPCC (Intergovernmental Panel on Climate Change) 18, 19, 201–2 Ireland 28; inequality 206; life expectancy 74, 75; schooling 76; wellbeing 58 iron cage of consumerism see consumerism iron ore 94 James, Oliver 205 James, William 68 Japan: equality 206; financial crisis 27, 45; life expectancy 74, 76, 79; relative income effect 56, 58; resource use 93; response to economic hardship 79–80 Jefferson, Thomas 185 Jobs, Steve 210 Johnson, Boris 120–1 Kahneman, Daniel 60 Kasser, Tim 126 keeping up with the Joneses 115, 116, 117 see also relative income effect Kennedy, Robert 48, 53 Keynes, John Maynard/Keynesianism 23, 34, 120, 174, 181–3, 187–8; financial crisis 37–43; financial system reforms 157; part-time working 145; steady state economy 159, 162 King, Alexander 11 Krugman, Paul 39, 85, 86, 102 Kyoto Protocol (1992) 18, 90 labour: child 62, 154; costs 110; division of 158; elasticity of substitution 177, 178; intensity 109, 148, 208; mobility 123; production inputs 80, 109; structures of capitalism 107 labour productivity 80–1, 109–11; Baumol’s cost disease 170–2; and economic growth 111; future visions 220, 224; investment as commitment 150; need for investment 109; post-growth economy 175, 208; services as engine of growth 170; sustainable investment 166, 170; trade off with resource use 110; work-sharing 145, 146, 147, 148, 148, 149 Lahr, Christin 224–5 laissez-faire capitalism 187, 195, 196 see also free market Lakoff, George 30 language of goods 212; material footprint of 139–40; signalling of social status 71; and wellbeing 124 see also consumerism; material goods; symbolic role of goods Layard, Richard 55 leadership, political 199 see also governance Lebow, Victor 120 Lehman Brothers, bankruptcy 23, 25, 26, 118 leisure economy 204 liberal market economies 106, 107; financial crisis 27, 35–6 life expectancy: and income 72, 73, 74, 77–9, 78; inequality 206; response to economic hardship 80 see also basic entitlements life-satisfaction 73; inequality 205; relative income effect 55–61, 58 see also wellbeing/happiness limits, ecological 3, 4, 7, 11, 12, 20–2; climate change 17–20; decoupling 86; financial crisis 23–4; growth 21, 165, 210; post-growth economy 201–2, 226–7; role of the state 198, 200–2, 206–7; and social boundaries 141; wellbeing 62–63, 185 limits, flourishing within 61–5, 185; alternative hedonism 125–6; intrinsic values 127–31; moving towards 215, 218, 219, 221; paradox of materialism 121–23; prosperity 67–72, 113, 212; role of the state 201–2, 205; selfishness 131–8; shame 123–4; spending vs. saving behaviour 118–21, 119 see also sustainable prosperity limits to growth: confronting 7–8; exceeding 20–2; wellbeing 62–3 Limits to Growth report (Club of Rome) xxxii, xxxiii, 8, 11–16 ‘The Living Standard’ essay (Sen) 50, 123–4 living standards 82 see also prosperity Lloyd, William Forster 190 loans 154; community investment 155–6; financial system weaknesses 34 see also credit; debt London School of Economics 25 loneliness 123, 137 see also alienation long-term: investments 222; social good 219 long-term wellbeing vs. short-term pleasures 194, 197 longevity see life expectancy love 212 see also intrinsic values low-carbon transition 19, 220 LowGrow model for the Canadian economy 175 MacArthur Foundation 144 McCracken, Grant 115 Malthus, Thomas Robert 9–11, 132–3, 190 market economies: coordinated 27, 106; liberal 27, 35–6, 106, 107 market liberalism 106, 107; financial crisis 27, 35–6; wellbeing 47 marketing 140, 203–4 Marmot review, health inequality in the UK 72 Marx, Karl/Marxism 9, 189, 192, 225 Massachusetts Institute of Technology (MIT) 11, 12, 15 material abundance see opulence material goods 68–9; identity 52; language of 139–40; and wellbeing 47, 48, 49, 51, 65, 126 see also symbolic role of goods material inputs see resource use materialism: and fear of death 69, 104, 115, 212–15; and intrinsic values 127–31; paradox of 121–3; price of 126; and religion 115; values 126, 135–6 see also consumerism mathematical models/simulations 132; austerity policies 181; countercyclical spending 181–2, 182; decoupling 84, 91, 96–101; inequality 176–8; post-growth economy 164; stock-flow consistent 179–80 Mawdsley, Emma 70 Mazzucato, Mariana 193, 220 MDG (Millennium Development Goals) 74–5 Meadows, Dennis and Donella 11, 12, 15, 16 meaning/purpose 2, 8, 22; beyond material goods 212–16; consumerism 69, 203, 215; intrinsic values 127–31; moving towards 218–20; wellbeing 49, 52, 60, 121–2; work 144, 146 see also intrinsic values means and ends 159 mental health: inequality 206; meaning/purpose 213 metaphors: government as household 30, 42; invisible hand 132, 133, 187 Middle East, energy inputs 88 Miliband, Ed 199 Mill, John Stuart 125, 159, 160, 174 Millennium Development Goals (MDG) 74–5 mindfulness 128 Minsky, Hyman 34, 35, 40, 182, 208 MIT (Massachusetts Institute of Technology) 11, 12, 15 mixed economies 106 mobility of labour, loneliness index 123 Monbiot, George 84, 85, 86, 91 money: creation 154, 157, 178–9; and prosperity 5; as social good 140, 153–7, 158 see also financial systems monopoly power, corporations 106–7 The Moral Consequences of Economic Growth (Friedman) 82, 176 moral dimensions, good life 63 see also intrinsic values moral hazards, separation of risk from reward 35 ‘more fun with less stuff’ 129, 217 mortality fears 69, 104, 115, 212–15 mortality rates, and income 74, 74–6, 75 mortgage loans 28–9, 35 multinational corporations 106–7 national debt see debt, public-sector nationalisation 191; financial crisis 38, 188 natural selection 132–3 see also struggle for existence nature, rights of 6–7 negative emissions 98–9 negative feedback loops 16–17 Netherlands 58, 62, 206, 207 neuroscientific perspectives: flourishing 68, 69; human behaviour 134 New Climate Economy report Better Growth, Better Climate 18 New Deal, USA 39 New Economics Foundation 175 nickel, commodity prices 13 9/11 terrorist attacks (2001) 121 Nordhaus, William 171, 172–3 North America 128, 155 see also Canada; United States Norway: advertising 204; inequality 206; investment as commitment 151–2; life expectancy 74; relative income effect 58; schooling 76 novelty/innovation 104, 108, 113; and anxiety 116–17, 124, 211; crisis of commitment 195; dilemma of growth 211; human psyche 135–6, 136, 137; investment 150, 166, 168; post-growth economy 226; role of the state 196, 197, 199; as service 140, 141–4, 158; symbolic role of goods 114–16, 213 see also technological advances Nudge: Improving Decisions about Health, Wealth, and Happiness (Thaler and Sunstein) 194–5 Nussbaum, Martha 64 nutrient loading, critical boundaries 17 nutrition 67 see also basic entitlements obesity 72, 78, 206 obsolescence, built in 113, 204, 220 oceans: acidification 17; common pool resources 192 Offer, Avner 57, 61, 71, 194, 195 oil prices 14, 21; decoupling 88; financial crisis 26; resource constraints 15 oligarchic capitalism 106, 107 opulence 50–1, 52, 67–72 original sin 9, 131 Ostrom, Elinor and Vincent 190, 191 output see efficiency; gross domestic product; productivity ownership: and expansion 105; private vs. public 9, 105, 191, 219, 223; new models 223–4; types/definitions of capitalism 105–7 Oxfam 141 paradoxes: materialism 121–3; thrift 120 Paris Agreement 19, 101, 201 participation in society 61, 114, 122, 129, 137; future visions 200, 205, 218, 219, 225; work as 140–9, 148, 157, 158 see also social inclusion part-time working 145, 146, 149, 175 Peccei, Aurelio 11 Perez, Carlota 112 performing arts, Baumol’s cost disease 171–2 personal choice 216–18 see also freedom/autonomy personal property 189, 191 Pickett, Kate 71, 205–6 Piketty, Thomas 33, 176, 177 planetary boundaries see limits (ecological) planning for change 17 pleasure 60–1 see also wellbeing/happiness Plum Village mindfulness community 128 Polanyi, Karl 198 policy see governance political leadership 199 see also governance Political Economy Research Institute, University of Massachusetts 41 pollution 12, 21, 53, 95–6, 143 polycentric governance 191, 192 Poor Laws 10 poor nations see poverty population increase 3, 12, 63, 96, 97, 190; Malthus on 9–11, 132–3 porn industry 40 Portugal 28, 58, 88, 206 positional competition 55–61, 58, 71, 72 see also social comparison positive feedback loops 16–17 post-growth capitalism 224 post-growth macroeconomics 159–60, 183–4, 221; credit 178–80; degrowth movement 161–3; economic stability 174–6; green growth 163–5; inequality 176–8; role of state 181–3, 182, 200–8, 206; services 170–4; sustainable investment 166–70 see also alternatives; future visions; reform poverty 4, 5–6, 216; basic entitlements 72; flourishing within limits 212; life expectancy 74, 74; need for new economic model 101; symbolic role of goods 70; wellbeing 48, 59–60, 61, 67 see also inequality; relative income effect power politics 200 predator–prey analogy 103–4, 117 private credit see credit private vs. public: common good 208; ownership 9, 105, 191, 219, 223; salaries 130 privatisation 191, 219 product lifetimes, obsolescence 113, 204, 220 production: inputs 80–1; ownership 191, 219, 223 productivity: investment 109, 167, 168, 169; post-growth economy 224; services as engine of growth 171, 172, 173; targets 147; trap 175 see also efficiency measures; labour productivity; resource productivity profits: definitions of capitalism 105; dilemma of growth 211; efficiency measures 87; investment 109; motive 104; post-growth economy 224; and wages 175–8 progress 2, 50–5, 54 see also novelty/innovation; technological advances progressive sector, Baumol’s cost disease 171 progressive state 185, 220–2; contested 186–9; countering consumerism 202–5; equality measures 205–7, 206; governance of the commons 190–2; governance as commitment device 192–5; governmentality of growth 195–7; limit-setting 201–2; moving towards 197–200; post-growth macroeconomics 207–8, 224; prosperity 209 prosocial behaviour 198 see also social contract prosperity 1–3, 22, 121; capabilities for flourishing 61–5; and growth 3–7, 23, 66, 80, 160; and income 3–4, 5, 66–7; limits of 67–72, 113, 212; materialistic vision 137; progress measures 50–5, 54; relative income effect 55–61, 58, 71, 72; social perspectives 2, 22, 48–9; state roles 209 see also capabilities for flourishing; post-growth macroeconomics; sustainable prosperity; wellbeing prudence, financial 120, 195, 221; financial crisis 33, 34, 35 public sector spending: austerity policies 189; countercyclical spending strategy 181–2, 182; welfare economy 169 public services/amenities: common pool resources 190–2, 198, 199; future visions 204, 218–20; investment 155–6, 204; ownership 223 see also private vs. public; service-based economies public transport 41, 129, 193, 217 purpose see meaning/purpose Putnam, Robert 122 psyche, human see human nature/psyche quality, environmental 12 see also pollution quality of life: enterprise as service 142; inequality 206; sustainable 128 quality to throughput ratios 113 quantitative easing 43 Queen Elizabeth II 25, 32, 34, 37 quiet revolution 127–31 Raworth, Kate 141 Reagan, Ronald 8 rebound phenomenon 111 recession 23–4, 28, 81, 161–3 see also financial crisis recreation/leisure industries 143 recycling 129 redistribution of wealth 52 see also inequality reforms 182–3, 222; economic structures 224; and financial crisis 103; financial systems 156–8, 180 see also alternatives; future visions; post-growth economy relative decoupling 84–5, 86; historical perspectives 87–9, 89; relationship with absolute decoupling 96–101, 111 relative income effect 55–61, 58, 71, 72 see also social comparison religious perspectives 9–10, 214–15; materialism as alternative to religion 115; original sin 9, 131; wellbeing 48, 49 see also existential fear of death renewable energy xxxv, 41, 168–169 repair/renovation 172, 220 resource constraints 3, 7, 8, 11–15, 47 resource productivity 110, 151, 168, 169, 220 resource use: conflicts 22; credible alternatives 101, 220; decoupling 84–9, 92–5, 94, 95; and economic output 142–4; investment 151, 153, 168, 169; trade off with labour costs 110 retail therapy 115 see also consumerism; shopping revenues, state 222–3 see also taxation revolution 186 see also social stability rights: environment/nature 6–7; human see basic entitlements risk, financial 24, 25, 33, 35 The Road to Serfdom (Hayek) 187 Robinson, Edward 132 Robinson, Joan 159 Rockström, Johan 17, 165 romantic movement 9–10 Roosevelt, Franklin D. 35, 39 Rousseau, Jean Jacques 9, 131 Russia 74, 76, 77–80, 78, 122 sacred canopy 214, 215 salaries: private vs. public sector 130, 171; and profits 175–8 Sandel, Michael 150, 164, 218 São Paulo, Clean City Law 204 Sardar, Zia 49, 50 Sarkozy, Nicolas xxxi, 53 savage state, romantic movement 9–10 savings 26–7, 28, 107–9, 108; investment 149; ratios 34, 118–20, 119 scale, efficiencies of 104 Scandinavia 27, 122, 204 scarcity, managing change 16–17 Schumpeter, Joseph 112 Schwartz, Shalom 135–6, 136 schooling see education The Science of Desire (Dichter) 114 secular stagnation 43–7, 45, 173 securitisation, mortgage loans 35 security: moving towards 219; and wellbeing 48, 61 self-development 204 self-expression see identity construction self-transcending behaviours see transcendence The Selfish Gene (Dawkins) 134–5 selfishness 133–8, 196 Sen, Amartya 50, 52, 61–2, 123–4 service concept/servicization 140–4, 147–8, 148, 158 service-based economies 219; engine of growth 170–4; substitution between labour and capital 178; sustainable investment 169–70 see also public services SFC (stock-flow consistent) economic models 179–80 shame 123–4 shared endeavours, post-growth economy 227 Sheldon, Solomon 214 shelter see basic entitlements shopping 115, 116, 130 see also consumerism short-termism/living for today 194, 197, 200 signals: sent out by society 130, 193, 198, 203, 207; social status 71 see also language of goods Simon, Julian 13 simplicity/simple life 118–20, 127–9, 215–16 simulations see mathematical models/simulations slow: capital 170; movement 128 smart growth 85, 163–5 see also green growth Smith, Adam 51, 106–7, 123, 132, 187 social assets 220 social boundaries (minimum standards) 141 see also basic entitlements social care 150–1 see also caring professions social comparison 115, 116, 117 see also relative income effect social contract 194, 198, 199, 200 social inclusion 48, 69–71, 114, 212 see also participation in society social investment 155, 156, 189, 193, 208, 220–3 social justice 198 see also inequality social logic of consumerism 114–16, 204 social stability 24, 26, 80, 145, 186, 196, 205 see also alienation social status see status social structures 80, 129, 130, 137, 196, 200, 203 social tolerance, and wellbeing 59, 60 social unrest see social stability social wage 40 social welfare: financial reforms 182–3; public sector spending 169 socialism 223 Sociobiology (Wilson) 134 soil integrity 220 Solon, quotation 47, 49, 71 Soper, Kate 125–6 Soros, George 36 Soskice, David 106 Soviet Union, former 74, 76, 77–80, 78, 122 Spain 28, 58, 144, 206 SPEAR organization, responsible investment 155 species loss/extinctions 17, 47, 62, 101 speculation 93, 99, 149, 150, 154, 158, 170; economic stability 180; financial crisis 26, 33, 35; short-term profiteering 150; spending: behaviour of ordinary people 34, 119, 120–1; countercyclical 181–2, 182, 188; economic stability 81; as way out of recession 41, 44, 119, 120–1; and work cycle 125 The Spirit Level (Wilkinson and Pickett) 71, 205–6 spiritual perspectives 117, 127, 128, 214 stability see economic stability; social stability stagflation 26 stagnant sector, Baumol’s cost disease 171 stagnation: economic stability 81–2; labour productivity 145; post-financial crisis 43–7, 45 see also recession state capitalism, types/definitions of capitalism 106 state revenues, from social investment 222–3 see also taxation state roles see governance status 207, 209, 211; and possessions 69, 71, 114, 115, 117 see also language of goods; symbolic role of goods Steady State Economics (Daly) xxxii steady state economies 82, 159, 160, 174, 180 see also post-growth macroeconomics Stern, Nicholas 17–18 stewardship: role of the state 200; sustainable investment 168 Stiglitz, Joseph 53 stock-flow consistent (SFC) economic models 179–80 Stockholm Resilience Centre 17, 201 stranded assets 167–8 see also ownership structures of capitalism see economic structures struggle for existence 8–11, 125, 132–3 Stuckler, David 43 stuff see language of goods; material goods; symbolic role of goods subjective wellbeing (SWB) 49, 58, 58–9, 71, 122, 129 see also wellbeing/happiness subprime lending 26 substitution, between labour and capital 177–178 suffering, struggle for existence 10 suicide 43, 52, 77 Sukdhev, Pavan 41 sulphur dioxide pollution 95–6 Summers, Larry 36 Sunstein, Cass 194 sustainability xxv–xxvi, 102, 104, 126; financial systems 154–5; innovation 226; investment 101, 152, 153, 166–70, 220; resource constraints 12; role of the state 198, 203, 207 see also sustainable prosperity Sustainable Development Strategy, UK 198 sustainable growth see green growth sustainable prosperity 210–12; creating credible alternatives 219–21; finding meaning beyond material commodities 212–16; implications for capitalism 222–5; personal choices for improvement 216–18; and utopianism 225–7 see also limits (flourishing within) SWB see subjective wellbeing; wellbeing/happiness Switzerland 11, 46, 157; citizen’s income 207; income relative to wellbeing 58; inequality 206; life expectancy 74, 75 symbolic role of goods 69, 70–1; existential fear of death 212–16; governance 203; innovation/novelty 114–16; material footprints 139–40; paradox of materialism 121–2 see also language of goods; material goods system dynamics model 11–12, 15 tar sands/oil shales 15 taxation: capital 177; income 81; inequality 206; post-growth economy 222 technological advances 12–13, 15; decoupling 85, 86, 87, 96–8, 100–3, 164–5; dilemma of growth 211; economic stability 80; population increase 10–11; role of state 193, 220 see also novelty/innovation Teilhard de Chardin, Pierre 8 terror management, and consumption 69, 104, 115, 212–15 terrorist attacks (9/11) 121 Thailand, Buddhist monasteries 128 Thaler, Richard 194 theatre, Baumol’s cost disease 171–2 theology see religious perspectives theory of evolution 132–3 thermodynamics, laws of 112, 164 Thich Nhat Hanh 128 thrift 118–20, 127–9, 215–16 throwaway society 113, 172, 204 timescales for change 16–17 tin, commodity prices 13 Today programme interview xxix, xxviii Totnes, transition movement 128–9 Towards a Green Economy report (UNEP) 152–3 Townsend, Peter 48, 61 trade balance 31 trading standards 204 tradition 135–6, 136, 226 ‘Tragedy of the commons’ (Hardin) 190–1 transcendence 214 see also altruism; meaning/purpose; spiritual perspectives transition movement, Totnes 128–9 Triodos Bank 156, 165 Trumpf (machine-tool makers) Germany 146 trust, loss of see alienation tungsten, commodity prices 13 Turkey 58, 88 Turner, Adair 157 21st Conference of the Parties to the UN Framework Convention on Climate Change (2015) 19 UBS (Swiss bank) 46 Ubuntu, African philosophy 227 unemployment 77; consumer goods 215; degrowth movement 162; financial crisis 24, 40, 41, 43; Great Depression 39–40; and growth 38; labour productivity 80–1; post-growth economy 174, 175, 183, 208, 219; work as participation 144–6 United Kingdom: Green New Deal group 152; greenhouse gas emissions 92; labour productivity 173; resource inputs 93; Sustainable Development Strategy 198 United Nations: Development Programme 6; Environment Programme 18, 152–3; Green Economy initiative 41 United States: credit unions 155–6; debt 27, 31–32; decoupling 88; greenhouse gas emissions 90–1; subprime lending 26; Works Progress Administration 39 universal basic income 221 see also citizen’s income University of Massachusetts, Political Economy Research Institute 41 utilitarianism/utility, wellbeing 50, 52–3, 55, 60 utopianism 8, 38, 125, 179; post-growth economy 225–7 values, materialistic 126, 135–6 see also intrinsic values Veblen, Thorstein 115 Victor, Peter xxxviii, 146, 175, 177, 180 vision of progress see future visions; post-growth economy volatility, commodity prices 14, 21 wages: and profits 175–8; private vs. public sector 130, 171 walking, personal choices for improvement 217 water use 22 Wealth of Nations, An Inquiry into the Nature and Causes (Smith) 123, 132 wealth redistribution 52 see also inequality Weber, Axel 46 welfare policies: financial reforms 182–3; public sector spending 169 welfare of livestock 220 wellbeing/happiness 47–50, 53, 121–2, 124; collective 209; consumer goods 4, 21, 22, 126; growth 6, 165, 211; intrinsic values 126, 129; investment 150; novelty/innovation 117; opulence 50–2, 67–72; personal choices for improvement 217; planetary boundaries 141; relative income effect 55–61, 58, 71, 72; simplicity 129; utilitarianism 50, 52–3, 55, 60 see also capabilities for flourishing western lifestyles 70, 210 White, William 46 Whybrow, Peter 68 Wilhelm, Richard 7 Wilkinson, Richard 71, 205–6 Williams, Tennessee 213 Wilson, Edward 134 wisdom traditions 48, 49, 63, 128, 213–14 work: as participation 140–9, 148, 157, 158; and spend cycle 125; sharing 145, 146, 149, 175 Works Progress Administration, USA 39 World Bank 160 World Values Survey 58 youth unemployment, financial crisis 144–5 zero sum game, growth as 57, 71


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

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

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.


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The Wake-Up Call: Why the Pandemic Has Exposed the Weakness of the West, and How to Fix It by John Micklethwait, Adrian Wooldridge

Admiral Zheng, Affordable Care Act / Obamacare, basic income, battle of ideas, Berlin Wall, Bernie Sanders, Boris Johnson, carried interest, cashless society, central bank independence, Corn Laws, coronavirus, COVID-19, Covid-19, creative destruction, David Ricardo: comparative advantage, Deng Xiaoping, Dominic Cummings, Donald Trump, Etonian, failed state, Fall of the Berlin Wall, global pandemic, Internet of things, invisible hand, Jones Act, knowledge economy, laissez-faire capitalism, McMansion, night-watchman state, offshore financial centre, oil shock, Panopticon Jeremy Bentham, Parkinson's law, pensions crisis, QR code, rent control, road to serfdom, Ronald Reagan, school vouchers, Shoshana Zuboff, Silicon Valley, smart cities, trade route, universal basic income, Washington Consensus

Even more traditional sorts such as Winston Churchill embraced their idea of a “national minimum.” Modern economics headed down the same path. John Maynard Keynes always saw himself as a liberal who disliked the Webbs’ puritanism as much as their collectivism and believed that the state should never consume more than about a quarter of GDP.27 But his book The General Theory of Employment, Interest and Money (1936) ripped apart laissez-faire capitalism. Left to itself, the market would not prove self-correcting, Keynes showed. Capitalism might be wonderful, but it was also self-destructive and needed to be saved from itself. The invisible hand of the market had to be guided by the visible hand of the state. During crises, government had to step in to boost demand by spending public money, particularly on infrastructure and unemployment pay.


pages: 602 words: 120,848

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

accounting loophole / creative accounting, active measures, affirmative action, asset allocation, barriers to entry, Bonfire of the Vanities, business climate, business cycle, carried interest, Cass Sunstein, clean water, collective bargaining, corporate governance, Credit Default Swap, David Brooks, desegregation, employer provided health coverage, financial deregulation, financial innovation, financial intermediation, fixed income, full employment, 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

anti-communist, Asian financial crisis, bank run, battle of ideas, Big bang: deregulation of the City of London, bonus culture, Boris Johnson, 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.


pages: 404 words: 134,430

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

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, Laplace demon, life extension, moral panic, Murray Gell-Mann, out of africa, 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: 470 words: 130,269

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

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

In the 1910s and 1920s, Lippmann was one of the faces of progressive politics in the United States, emphasizing the role of expertise and scientific intervention in public affairs in his books and New Republic essays. A friend of Keynes and an advocate of Franklin Roosevelt’s political program, it was only in the mid-1930s that his economic views underwent a rightward shift. While he was skeptical of unrestrained laissez-faire capitalism, he lost faith in the efficacy of economic planning. He attributed this new attitude to reading Hayek’s Collectivist Economic Planning. In a letter to Hayek, he confessed, “without the help of you and from Professor von Mises, I could never have developed the argument.” In The Good Society, he castigated planning, extolled the free market, and admonished his readers to avoid “authoritarian collectivism.”

Schumpeter told a swashbuckling tale of capitalist booms and busts, transporting the reader from textile owners in Lancashire to railroad and steel barons in Essen to assembly lines in Detroit. Schumpeter wove a tapestry of capitalist evolution, valorizing efficiency, economies of scale, and disruption. In the end, Schumpeter defended the capitalist process, even in the face of the Great Depression and the “end of laissez-faire”: “Capitalism and its civilization may be decaying, shading off into something else, or tottering toward a violent death. . . . But the world crisis does not prove it and has, in fact, nothing to do with it. It was not a symptom of a weakening or a failure of the system.” Schumpeter railed against efforts to dampen the creative destruction of capitalism, especially New Deal programs and Keynesian economics: “Without that change or, more precisely, that kind of change which we have called evolution, capitalist society cannot exist; . . . without innovations, no entrepreneurs; without entrepreneurial achievement, no capitalist returns and no capitalist propulsion.


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

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

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: 488 words: 144,145

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

Albert Einstein, bank run, banking crisis, Black Swan, Bretton Woods, British Empire, business cycle, buy and hold, 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: 196 words: 57,974

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

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

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, twin studies, 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.


pages: 219 words: 61,720

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

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Affordable Care Act / Obamacare, 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, low earth orbit, 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: 581 words: 162,518

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

1960s counterculture, affirmative action, Affordable Care Act / Obamacare, anti-communist, Bernie Sanders, British Empire, Cass Sunstein, clean water, collective bargaining, corporate governance, corporate personhood, corporate social responsibility, desegregation, Donald Trump, financial innovation, glass ceiling, income inequality, invisible hand, joint-stock company, laissez-faire capitalism, land reform, obamacare, offshore financial centre, plutocrats, Plutocrats, Powell Memorandum, profit maximization, profit motive, race to the bottom, Ralph Nader, Ralph Waldo Emerson, refrigerator car, Robert Bork, Ronald Reagan, Rosa Parks, shareholder value, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, the scientific method, too big to fail, trade route, transcontinental railway, Unsafe at Any Speed, Upton Sinclair, yellow journalism

The decade following the decision saw astonishing growth in the number of corporations, which were quickly becoming the preferred form of business enterprise in the American economy. Equally significant, the decision became, according to historian R. Kent Newmyer, “a potent legal and ideological weapon for corporations who sought to defeat regulation and establish the ideological primacy of laissez-faire capitalism.”25 Dartmouth College did not mean that corporations were completely immune from all regulation, of course. In his concurring opinion in the case, Justice Story observed that the logic of Marshall’s ruling might still allow states to require future charters to include a “reservation clause,” reserving the state’s authority to alter or amend charters. Nevertheless, the contract clause became “the primary constitutional protection for property rights during the first half of the nineteenth century.”

., 296 Kent, James, 128 Kentucky, 221–22 Keppler, Joseph, 196–97, 196, 212 kerosene, in home illumination, 141 Kerry, John, 328 Key, Francis Scott, 59 Key, Philip Barton, 59–60, 60, 344 Kilberg, William, 344, 348 King, Martin Luther, Jr., 257, 349 King, Rufus, 5, 149 King & Spalding, 346 “king’s consent,” 48–49 kinsmen, 168 Kirland & Ellis, 346 knights, 168 Kraft Foods, 302 Ku Klux Klan, 265 labor unions, 219, 287, 289, 326, 329–33, 334, 359, 361, 363, 403 Lacombe, Emile Henry, 175, 177 laissez-faire capitalism, 88, 154, 360–61 Lake Charles American-Press, 250 Lamberth, Royce, 343 Landes, William, 350 land grants, 14–15, 18, 21, 78, 82, 106, 118–19, 123 Landon, Alf M., 330 Lansing Brewing Co., 223–26, 225, 335 Late Corporation of the Church of Jesus Christ of Latter-Day Saints v. United States, The, 261 law: Anglo-American, 24, 30, 46–47, 66–67 of assemblies, 19–20, 21, 22, 24 automobile safety, 285–86 bankruptcy, 88 British, 45–46, 62, 63, 66–67 by-, 49 case, 244 contract, 28, 45, 48, 49–50, 76, 78, 96–97, 146, 154, 155, 159, 181, 182–83, 184, 187–88, 221–22, 246, 261, 275–76, 353, 369, 388, 400 corporate, xxii, 28–29, 46–47, 50–52, 87, 163, 168–69, 170, 184–85, 189, 193–94, 207, 209–10, 244–45, 248, 261, 271–72, 382–89 criminal, 51, 164, 176–77, 179 due process of, xvi environmental, 49, 280, 389–94 federal, 149–53, 178–79, 238, 261, 276, 280, 298, 379–80, 392–94, 403 health, xvi–xvii, 126–27, 378–82, 387 insurance, 209–10 Jim Crow, xv, 63–64, 159, 257, 259–62, 264, 275, 276–78 labor, 49, 99, 153–54, 158 landmark cases in, 120, 181–82, 263–64, 323 local and municipal, 240, 241–42, 292–93, 389–94 loopholes in, 306–7, 329, 351 martial, 16 “of the land,” 63 political impact of, 232 precedent in, 76, 138, 146, 156, 157, 181–82, 241–42, 244, 266–67, 337, 357, 369, 371, 392 public nuisance, 241–42 repugnancy principle in, 63, 82 Roman, 44–45, 49, 184, 399 social change and, xvii state, 53–54, 61, 97–103, 115, 118–19, 131–32, 148, 150, 176–77, 179, 180–81, 209, 220–21, 223, 238, 240, 241–44, 275–76, 290–300, 360, 392 workplace, 49 zoning, 158 law and economics movement, 352–53, 366 law reviews, 294–95, 299, 385–86 law schools, 120, 134–36, 150, 176, 294–95, 299, 341, 385–86 lawsuits, 262–64, 277, 291, 292, 298–300, 306, 320, 322, 324–25, 350, 375, 388, 390, 391–94, 400–401 lawyer’s fees, 122, 346 Ledbetter v.


pages: 232 words: 67,934

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

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, scientific worldview, 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: 305 words: 69,216

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

Andrei Shleifer, banking crisis, Bernie Madoff, business cycle, 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: 231 words: 72,656

A History of the World in 6 Glasses by Tom Standage

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

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.


The Handbook of Personal Wealth Management by Reuvid, Jonathan.

asset allocation, banking crisis, BRICs, business cycle, buy and hold, 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

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, post-work, 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: 251 words: 76,868

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

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, Kickstarter, laissez-faire capitalism, Live Aid, Masdar, mass immigration, megacity, microcredit, mutually assured destruction, Naomi Klein, Nelson Mandela, 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: 330 words: 77,729

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

"Robert Solow", Albert Einstein, banking crisis, Berlin Wall, Bretton Woods, business climate, business cycle, 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: 270 words: 73,485

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

"Robert Solow", 3D printing, bank run, banking crisis, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, BRICs, British Empire, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, correlation coefficient, correlation does not imply causation, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, demographic dividend, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, German hyperinflation, 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: 286 words: 79,305

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

"Robert Solow", 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, additive manufacturing, Albert Einstein, anti-communist, autonomous vehicles, bank run, banks create money, bitcoin, business cycle, call centre, central bank independence, complexity theory, conceptual framework, creative destruction, credit crunch, declining real wages, distributed ledger, Donald Trump, Erik Brynjolfsson, eurozone crisis, fiat currency, Filter Bubble, full employment, future of work, Gini coefficient, gravity well, income inequality, inflation targeting, Internet of things, invisible hand, Jeff Bezos, jimmy wales, job automation, Kickstarter, labour market flexibility, laissez-faire capitalism, light touch regulation, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, money: store of value / unit of account / medium of exchange, Nelson Mandela, North Sea oil, Occupy movement, offshore financial centre, Own Your Own Home, Peter Thiel, Piper Alpha, plutocrats, Plutocrats, profit maximization, quantitative easing, rent-seeking, Ronald Reagan, Second Machine Age, self-driving car, Silicon Valley, smart cities, Steve Jobs, The Great Moderation, The Wealth of Nations by Adam Smith, wealth creators, working-age population

The US has done it before – Roosevelt’s New Deal – as has the UK in the aftermath of the Second World War. We just need to do it again. We all have a role to play in making sure that our society chooses to head towards that Golden Age rather than continuing towards a scorched-earth future of mass impoverishment and plutocracy. CHAPTER 13 Fifty Shades of Capitalism When I say ‘capitalism’, I mean a full, pure, uncontrolled, unregulated laissez-faire capitalism – with a separation of state and economics, in the same way and for the same reasons as the separation of state and church. Ayn Rand1 We are told that we have to love free markets: the USSR tried socialism and that failed – and there is no alternative. This chapter shows that in reality we have a huge variety of choices open to us in thinking about how to run our society, and we’ll explore some of the criteria that might help us make those choices.


pages: 700 words: 201,953

The Social Life of Money by Nigel Dodd

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

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: 717 words: 196,908

The Idea of Decline in Western History by Arthur Herman

agricultural Revolution, Albert Einstein, anti-communist, British Empire, David Attenborough, European colonialism, George Santayana, ghettoisation, hiring and firing, Joan Didion, laissez-faire capitalism, late capitalism, lateral thinking, liberal capitalism, mass immigration, means of production, Menlo Park, Nelson Mandela, Norman Mailer, nuclear winter, plutocrats, Plutocrats, post scarcity, profit motive, road to serfdom, Robert Bork, Scientific racism, Scramble for Africa, The Bell Curve by Richard Herrnstein and Charles Murray, the scientific method, The Wealth of Nations by Adam Smith, transcontinental railway, upwardly mobile

Now an alternative model for economic life was desperately needed. “We preach neither the upsetting of science nor the overthrow of the existing social order,” Schmoller wrote in 1872, “but we do not wish to allow the most crying abuses to become daily worse.” A tremendous crisis would strike the industrial West unless it dissolved the inequities and private concentrations of power that modern capitalism seemed to entail.13 Schmoller’s image of a laissez-faire capitalism doomed to selfdestruction deeply impressed Du Bois, as did the armchair socialists’ shining ideals of a planned economy and “scientific control” of industry. They also impressed a slightly later generation of German students, including the young Oswald Spengler.* Spengler and Du Bois also understood that the objections to capitalism were not entirely, or even principally, economic. Everyone agreed that a free market economy produced more material wealth, more goods and services, than any of its predecessors.

The powerful images in Fritz Lang’s film Metropolis, of human beings being symbolically sacrificed to the industrial machine, reflected this fear that technology would come to control its users rather than vice versa. The third and final challenge to cultural vitality came from liberalism, the belief in limited government and individual rights that emanated from Tocqueville, Mill, and Herbert Spencer. Cultural critics on both the Right and the Left agreed that laissez-faire liberalism was anathema to Germany’s deepest cultural values, just as Adolf Wagner and Schmoller had argued that laissez-faire capitalism was an attack on the idea of organic community and rural life. “Liberals see themselves as isolated individuals,” Arthur Moeller van den Bruck wrote later. “They seek only their own personal advantage in the present.” Werner Sombart saw liberalism as the ideology of materalism and big business. It rationalized “all the lower instincts of men—covetousness, acquisitiveness, the quest for gold,” creating a moral universe of what Sombart’s students called Lug und Trug , “lying and cheating.”19 Sociologist Georg Simmel saw liberalism as depriving human beings of any ultimate meaning in their lives.20 “[It] has undermined civilizations,” wrote Moeller, “has destroyed religions, has ruined nations.”21 The countries most closely identified with this destructive liberal world view were the United States and Great Britain.


pages: 261 words: 81,802

The Trouble With Billionaires by Linda McQuaig

"Robert Solow", 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, Joseph-Marie Jacquard, laissez-faire capitalism, land tenure, lateral thinking, 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

"Robert Solow", airline deregulation, airport security, Andrei Shleifer, anti-communist, Asian financial crisis, balance sheet recession, bank run, barriers to entry, Benoit Mandelbrot, Bretton Woods, business cycle, 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, Kickstarter, 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: 801 words: 209,348

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

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

As track construction sped up, so did production of rails at new ironworks, manufacturing of locomotives and railcars, construction of train stations, growth of small towns along routes, and formation of hubs for gathering produce and grains. Railroads became the arteries of American capitalism, the circulation system of its commerce, even information—a letter or message or rumor could travel only as fast as its messenger, which now invariably was a train. Yet the railroad’s development makes clear that even early American capitalism was never the same as laissez-faire capitalism: Various forms and forces of government were instrumental to its development, its trajectory, and its eventual implications. And what was the notion of corporate limited liability but a legal abstraction created and recognized by the state? As important, the early development of financial markets was propelled by bond guarantees of the various states, enticing private capital to underwrite American infrastructure.

Such policies were successful in diversifying and growing the industrial base: America did emerge as the largest steel producer in the world by the end of the century. From here the growth of the American steel industry paved the way for a variety of ancillary and dependent industries over the next few decades. Even military might in the next century would be firmly rooted in steelmaking capacity. But laissez-faire capitalism it was not. The invisible hand of Adam Smith’s free market was accompanied by the guiding hand of government policy. Fourteen MACHINES The Gilded Age had a philosopher who seemed perfect for the times. Herbert Spencer built upon his fellow countryman Charles Darwin’s observations on natural selection and developed a social treatise that flowed from this evolutionary spirit.


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

addicted to oil, affirmative action, Affordable Care Act / Obamacare, Bernie Sanders, Bretton Woods, buy and hold, 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.


pages: 346 words: 89,180

Capitalism Without Capital: The Rise of the Intangible Economy by Jonathan Haskel, Stian Westlake

"Robert Solow", 23andMe, activist fund / activist shareholder / activist investor, Airbnb, Albert Einstein, Andrei Shleifer, bank run, banking crisis, Bernie Sanders, business climate, business process, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, cognitive bias, computer age, corporate governance, corporate raider, correlation does not imply causation, creative destruction, dark matter, Diane Coyle, Donald Trump, Douglas Engelbart, Douglas Engelbart, Edward Glaeser, Elon Musk, endogenous growth, Erik Brynjolfsson, everywhere but in the productivity statistics, Fellow of the Royal Society, financial innovation, full employment, fundamental attribution error, future of work, Gini coefficient, Hernando de Soto, hiring and firing, income inequality, index card, indoor plumbing, intangible asset, Internet of things, Jane Jacobs, Jaron Lanier, job automation, Kenneth Arrow, Kickstarter, knowledge economy, knowledge worker, laissez-faire capitalism, liquidity trap, low skilled workers, Marc Andreessen, Mother of all demos, Network effects, new economy, open economy, patent troll, paypal mafia, Peter Thiel, pets.com, place-making, post-industrial society, Productivity paradox, quantitative hedge fund, rent-seeking, revision control, Richard Florida, ride hailing / ride sharing, Robert Gordon, Ronald Coase, Sand Hill Road, Second Machine Age, secular stagnation, self-driving car, shareholder value, sharing economy, Silicon Valley, six sigma, Skype, software patent, sovereign wealth fund, spinning jenny, Steve Jobs, survivorship bias, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Tim Cook: Apple, total factor productivity, Tyler Cowen: Great Stagnation, urban planning, Vanguard fund, walkable city, X Prize, zero-sum game

The idea was already well established before the Second World War, when Keynes asserted that stock markets were essentially casinos and had no place in determining business investment; when the British government launched the 1929 Macmillan Committee to investigate whether Britain’s financial system was meeting the needs of its economy; and when Keynes, the driving force behind the committee, articulated his views on the link between financial capital and the nation’s poor capital development. Indeed, much government policy around the world is predicated on the idea that the financial system serves business poorly. For all that the financial services sector is thought of as a bastion of laissez-faire capitalism, most developed countries intervene deeply and widely in the market for business finance. Germany’s Kreditanstalt für Wiederaufbau (founded in 1948) and the US Small Business Administration (SBA, founded in 1953) both guarantee or underwrite business financing; in 1945 the UK set up the Industrial and Commercial Finance Corporation to provide growth capital. A search of the UK government website in summer 2016 yielded 319 finance-based schemes.


pages: 372 words: 92,477

The Fourth Revolution: The Global Race to Reinvent the State by John Micklethwait, Adrian Wooldridge

Admiral Zheng, affirmative action, Affordable Care Act / Obamacare, Asian financial crisis, assortative mating, banking crisis, barriers to entry, battle of ideas, Berlin Wall, Bernie Madoff, Boris Johnson, Bretton Woods, British Empire, cashless society, central bank independence, Chelsea Manning, circulation of elites, Clayton Christensen, Corn Laws, corporate governance, credit crunch, crony capitalism, Deng Xiaoping, Detroit bankruptcy, disintermediation, Edward Snowden, Etonian, failed state, Francis Fukuyama: the end of history, full employment, Gunnar Myrdal, income inequality, Khan Academy, Kickstarter, knowledge economy, Kodak vs Instagram, labor-force participation, laissez-faire capitalism, land reform, liberal capitalism, Martin Wolf, means of production, minimum wage unemployment, mittelstand, mobile money, Mont Pelerin Society, Nelson Mandela, night-watchman state, Norman Macrae, obamacare, oil shale / tar sands, old age dependency ratio, open economy, Parag Khanna, Peace of Westphalia, pension reform, pensions crisis, personalized medicine, Peter Thiel, plutocrats, Plutocrats, popular capitalism, profit maximization, rent control, rent-seeking, ride hailing / ride sharing, road to serfdom, Ronald Coase, Ronald Reagan, school choice, school vouchers, Silicon Valley, Skype, special economic zone, too big to fail, total factor productivity, War on Poverty, Washington Consensus, Winter of Discontent, working-age population, zero-sum game

Herbert Croly, who argued that Americans should start thinking “first of the state” and second of themselves, turned himself into the Webbs’ Yankee publicist and founded the New Republic in 1914 as a megaphone for their views. His magazine remained an ardent fan of the Soviet Union until the end of the Second World War. But the American version of big government was steered in a different direction, especially by the two Roosevelt presidents. Teddy Roosevelt, who was president from 1901 to 1909, accepted the Webbs’ view that the age of laissez-faire capitalism was over. The state needed to act as a lion tamer to the capitalist lion. Roosevelt established regulatory bodies, such as the Bureau of Corporations (the forerunner of the Securities and Exchange Commission) to break up monopolies and empower consumers. “The corporation is the creature of the people,” he proclaimed, “and must not be allowed to become the ruler of the people.” But he did not want to replace the Rockefellers and Carnegies of this world with local government officials.


pages: 326 words: 88,905

Days of Destruction, Days of Revolt by Chris Hedges, Joe Sacco

Berlin Wall, Bernie Sanders, clean water, collective bargaining, corporate personhood, dumpster diving, Exxon Valdez, Goldman Sachs: Vampire Squid, Howard Zinn, Intergovernmental Panel on Climate Change (IPCC), invisible hand, laissez-faire capitalism, Mahatma Gandhi, mass immigration, mass incarceration, Naomi Klein, Nelson Mandela, Occupy movement, oil shale / tar sands, race to the bottom, Ralph Nader, Silicon Valley, Steve Jobs, strikebreaker, union organizing, urban decay, wage slave, white flight, women in the workforce

Workers formed unions and demanded workplace standards, including the minimum wage—although when the 1938 federal minimum-wage law was enacted, farmworkers were not included in its provisions, and remained excluded for three decades.20 But in our globalized economy, where the labor pool stretches from Mexico to Asia and where industry can move easily across borders, Ricardo’s theory has been exposed as yet another absurdity held up by the proponents of laissez-faire capitalism. The determining factor in global corporate production is poverty. The poorer the worker and the poorer the nation, the greater the competitive advantage. With access to vast pools of desperate, impoverished workers eager for scraps, unions and working conditions no longer impede the quest for larger and larger profits. And when corporations no longer need these workers, they are cast aside and left to sleep in the woods or on heating grates.


words: 49,604

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

"Robert Solow", barriers to entry, Berlin Wall, Big bang: deregulation of the City of London, blue-collar work, Bretton Woods, business cycle, 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, invention of the sewing machine, invisible hand, Jane Jacobs, Joseph Schumpeter, Kickstarter, 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: 325 words: 89,374

Municipal Dreams: The Rise and Fall of Council Housing by John Boughton

British Empire, deindustrialization, full employment, garden city movement, ghettoisation, housing crisis, Jane Jacobs, laissez-faire capitalism, manufacturing employment, negative equity, Neil Kinnock, neoliberal agenda, new economy, New Urbanism, profit motive, rent control, Right to Buy, rising living standards, starchitect, The Death and Life of Great American Cities, the market place, upwardly mobile, urban decay, urban planning, urban renewal, young professional

In her own introductory words: The first half of the century was dominated by the age old system of natural selection, which left people free to secure the best accommodation they could. The second half has embraced the Utopian ideal of housing planned by a paternalistic authority, which offered hopes of improved standards but also ran the risk of trapping people in dwellings not of their own choosing.28 A perspective that sees ‘freedom’ within the gross inequality of laissez-faire capitalism and oppression in the Welfare State speaks for itself. But Coleman ventured even more fantastically into an updated version of Social Darwinism with her assertion that the two-storey house and garden represented some kind of evolutionary end-game, a natural culmination of humanity’s quest for shelter and territory. In this view, post-war European policy, where multi-storey urban housing was very much the norm, was clearly some disastrous wrong turning.


pages: 353 words: 98,267

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

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

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: 345 words: 100,135

Snakes in Suits: When Psychopaths Go to Work by Dr. Paul Babiak, Dr. Robert Hare

business process, computer age, fixed income, greed is good, job satisfaction, laissez-faire capitalism, Norman Mailer, old-boy network, risk tolerance, twin studies

The Corporation as Psychopath The Corporation is an award-winning documentary that uses extensive file footage and interviews with a number of well-known commentators and experts to evaluate the moral and social behaviors of the corporate world. The documentary uses a selected set of examples of corporate misbehaviors, as well as a brief clip of a longer interview with Hare, to make and bolster its position that the corporation meets the diagnostic criteria for psychopathy. As a promotional release for the documentary put it: "Diagnosis: the institutional embodiment of laissez-faire capitalism fully meets the diagnostic criteria of a psychopath." Although the producers of the documentary stated that they used the term psychopath merely as a metaphor for the most egregious corporate entities, it is apparent that they had in mind corporations in general. The short excerpt from the interview with Hare did not convey his view that although the attitudes, philosophies, and behaviors of a given corporation (as a legal entity) might be considered psychopathic, at least as an academic exercise, such a "diagnosis" hardly would apply to all, or even most, corporations.


pages: 323 words: 95,939

Present Shock: When Everything Happens Now by Douglas Rushkoff

algorithmic trading, Andrew Keen, bank run, Benoit Mandelbrot, big-box store, Black Swan, British Empire, Buckminster Fuller, business cycle, cashless society, citizen journalism, clockwork universe, cognitive dissonance, Credit Default Swap, crowdsourcing, Danny Hillis, disintermediation, Donald Trump, double helix, East Village, Elliott wave, European colonialism, Extropian, facts on the ground, Flash crash, game design, global pandemic, global supply chain, global village, Howard Rheingold, hypertext link, Inbox Zero, invention of agriculture, invention of hypertext, invisible hand, iterative process, John Nash: game theory, Kevin Kelly, laissez-faire capitalism, lateral thinking, 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.


pages: 463 words: 105,197

Radical Markets: Uprooting Capitalism and Democracy for a Just Society by Eric Posner, E. Weyl

3D printing, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, anti-communist, augmented reality, basic income, Berlin Wall, Bernie Sanders, Branko Milanovic, business process, buy and hold, carbon footprint, Cass Sunstein, Clayton Christensen, cloud computing, collective bargaining, commoditize, Corn Laws, corporate governance, crowdsourcing, cryptocurrency, Donald Trump, Elon Musk, endowment effect, Erik Brynjolfsson, Ethereum, feminist movement, financial deregulation, Francis Fukuyama: the end of history, full employment, George Akerlof, global supply chain, guest worker program, hydraulic fracturing, Hyperloop, illegal immigration, immigration reform, income inequality, income per capita, index fund, informal economy, information asymmetry, invisible hand, Jane Jacobs, Jaron Lanier, Jean Tirole, Joseph Schumpeter, Kenneth Arrow, labor-force participation, laissez-faire capitalism, Landlord’s Game, liberal capitalism, low skilled workers, Lyft, market bubble, market design, market friction, market fundamentalism, mass immigration, negative equity, Network effects, obamacare, offshore financial centre, open borders, Pareto efficiency, passive investing, patent troll, Paul Samuelson, performance metric, plutocrats, Plutocrats, pre–internet, random walk, randomized controlled trial, Ray Kurzweil, recommendation engine, rent-seeking, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Rory Sutherland, Second Machine Age, second-price auction, self-driving car, shareholder value, sharing economy, Silicon Valley, Skype, special economic zone, spectrum auction, speech recognition, statistical model, stem cell, telepresence, Thales and the olive presses, Thales of Miletus, The Death and Life of Great American Cities, The Future of Employment, The Market for Lemons, The Nature of the Firm, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, trickle-down economics, Uber and Lyft, uber lyft, universal basic income, urban planning, Vanguard fund, women in the workforce, Zipcar

The Social Democratic party in Germany, the Labor Party in England, the Progressive movement in the United States, and the French Section of the Workers International rose to prominence. Colonies increasingly chafed under the domination of the empires. Two world wars threw the established social order into question and destabilized many governments. In the 1930s, the first truly global depression undermined confidence in traditional laissez-faire capitalism. Revolutions erupted. In 1911, Chinese Nationalist forces led by Sun Yat-sen overthrew the Qin Dynasty and worked to establish a new republican government free from foreign control. While Sun’s ideas drew on many sources, George’s philosophy was the economic pillar of his Three Principles of the People. Sun wrote, “The teachings of … Henry George … will be the basis of our program of reform.”20 Yet Sun failed to form a coherent government as China disintegrated into warring fiefdoms.


pages: 398 words: 107,788

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

activist lawyer, Benjamin Mako Hill, commoditize, crowdsourcing, Debian, Donald Knuth, dumpster diving, en.wikipedia.org, financial independence, ghettoisation, GnuPG, 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 Hackers Conference, 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: 339 words: 105,938

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

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, hedonic treadmill, Intergovernmental Panel on Climate Change (IPCC), invisible hand, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, labour market flexibility, laissez-faire capitalism, libertarian paternalism, longitudinal study, new economy, 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: 382 words: 105,819

Zucked: Waking Up to the Facebook Catastrophe by Roger McNamee

4chan, Albert Einstein, algorithmic trading, AltaVista, Amazon Web Services, barriers to entry, Bernie Sanders, Boycotts of Israel, Cass Sunstein, cloud computing, computer age, cross-subsidies, data is the new oil, Donald Trump, Douglas Engelbart, Douglas Engelbart, Electric Kool-Aid Acid Test, Elon Musk, Filter Bubble, game design, income inequality, Internet of things, Jaron Lanier, Jeff Bezos, John Markoff, laissez-faire capitalism, Lean Startup, light touch regulation, Lyft, Marc Andreessen, Mark Zuckerberg, market bubble, Menlo Park, Metcalfe’s law, minimum viable product, Mother of all demos, move fast and break things, move fast and break things, Network effects, paypal mafia, Peter Thiel, pets.com, post-work, profit maximization, profit motive, race to the bottom, recommendation engine, Robert Mercer, Ronald Reagan, Sand Hill Road, self-driving car, Silicon Valley, Silicon Valley startup, Skype, Snapchat, social graph, software is eating the world, Stephen Hawking, Steve Jobs, Steven Levy, Stewart Brand, The Chicago School, Tim Cook: Apple, two-sided market, Uber and Lyft, Uber for X, uber lyft, Upton Sinclair, WikiLeaks, Yom Kippur War

What would we forego to safeguard public health? To ensure privacy? To promote a vibrant entrepreneurial economy? A bit of friction in our relationship with technology may yield huge benefits. Eleventh, technology has unlimited potential, but the good of society depends on entrepreneurs and investors adopting an approach that respects the rights of users, communities, and democracies. If the country and the world allow the laissez-faire capitalism that has powered the internet platforms to continue, the cost will be ongoing damage to public health, democracy, privacy, and the economy. Is that what we want? Bad outcomes are not inevitable, but we need to overcome inertia to prevent them. Twelfth, with much reluctance I have concluded that platforms like Facebook, YouTube, Instagram, and Twitter are currently doing more harm than good.


pages: 519 words: 104,396

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

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, social intelligence, starchitect, 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: 111,807

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

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, Nelson Mandela, Northern Rock, obamacare, offshore financial centre, oil shock, open borders, Pareto efficiency, Paul Samuelson, post-industrial society, precariat, principal–agent problem, profit maximization, profit motive, 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: 414 words: 108,413

King Icahn: The Biography of a Renegade Capitalist by Mark Stevens

corporate governance, corporate raider, Donald Trump, Gordon Gekko, Irwin Jacobs, laissez-faire capitalism, old-boy network, Ponzi scheme, profit motive, shareholder value, yellow journalism

“In those days you could live nicely on a teacher’s salary,” Bella says. “If I wanted to take my family to the theater, I had the money for that. And if I wanted to buy myself a mink coat, I could do that too. But nothing was ever done to impress others. Nothing was showy. I drove the same shabby Chevrolet for twelve years.” Compared to her husband, Bella was a free-market reactionary. A ferocious critic of laissez-faire capitalism and of the vast disparity of incomes and lifestyles that it spawned, Michael Icahn railed endlessly at the wealthy “robber barons” comfortably ensconced in the sprawling estates of Lawrence and Woodmere, Greenwich and Scarsdale. “When Carl used to visit me in Scarsdale, he’d get a look at the affluent life,” said his uncle Elliot, Bella’s kid brother, who married into money and was installed by his father-in-law as president of the Cole Steel Co.


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

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

It would seem absurd to Marxists, as well as to pretty much everyone else, that such a development could happen. But the “fall” of communism back to capitalism is equally absurd, and cannot be explained within the traditional Marxist framework. It can be explained better, albeit not fully, within the liberal framework. In the liberal view, which Francis Fukuyama captured quite well in the 1990s with The End of History and the Last Man, liberal democracy and laissez-faire capitalism represent the terminus of socioeconomic formations invented by humankind. What Marxists see as an incomprehensible reversal to a much lower (inferior) system, liberals see as a perfectly understandable movement from an inferior, dead-end system (communism) back onto the straight path leading to the end point of human evolution: liberal capitalism. It is worth stopping here for a moment to note how similarly communism and fascism are treated from the liberal point of view.


pages: 398 words: 111,333

The Einstein of Money: The Life and Timeless Financial Wisdom of Benjamin Graham by Joe Carlen

Albert Einstein, asset allocation, Bernie Madoff, Bretton Woods, business cycle, business intelligence, discounted cash flows, Eugene Fama: efficient market hypothesis, full employment, index card, index fund, intangible asset, invisible hand, Isaac Newton, laissez-faire capitalism, margin call, means of production, Norman Mailer, oil shock, post-industrial society, price anchoring, price stability, reserve currency, Robert Shiller, Robert Shiller, the scientific method, Vanguard fund, young professional

Graham's economic philosophy was just about equidistant from Karl Marx on one end and Ayn Rand on the other. While he certainly did not concur with the former's assertion that the quest for profit was inherently unjust and exploitive, he similarly rejected the latter's notion that the capitalist bore no responsibility for anyone's welfare but his or her own. In fact, Graham viewed the cataclysm of 1929 as a consequence of decades of unrestrained laissez-faire capitalism. Of course, as demonstrated by the entrepreneurialism of his own career and his drive for, in his words, “large earnings and large spending”48 (at least in his younger years), Graham was certainly an eager capitalist himself, and he believed in the overall merits of the American “free enterprise” system. However, he was skeptical of those with a quasi-religious faith in the unmitigated societal benefits of unrestrained capitalism.


pages: 429 words: 120,332

Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens by Nicholas Shaxson

Asian financial crisis, asset-backed security, bank run, battle of ideas, Bernie Madoff, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business climate, call centre, capital controls, collapse of Lehman Brothers, computerized trading, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, David Ricardo: comparative advantage, Double Irish / Dutch Sandwich, failed state, financial deregulation, financial innovation, Fractional reserve banking, full employment, high net worth, income inequality, Kenneth Rogoff, laissez-faire capitalism, land reform, land value tax, light touch regulation, Long Term Capital Management, Martin Wolf, money market fund, New Journalism, Northern Rock, offshore financial centre, oil shock, old-boy network, out of africa, passive income, plutocrats, Plutocrats, Ponzi scheme, race to the bottom, regulatory arbitrage, reserve currency, Ronald Reagan, shareholder value, The Spirit Level, too big to fail, transfer pricing, Washington Consensus

In the second quarter of 2009, the UK received net financing of $332.5 billion just from its three crown dependencies.27 Jersey Finance promotional literature makes a similar point. “Jersey,” it says, “represents an extension of the City of London.”28 As the City of London’s Caribbean havens and its crown dependencies were developing, something similar was happening in Asia. Hong Kong, which the U.S. economist Milton Friedman called the world’s greatest experiment in laissez-faire capitalism, was to be the new Asian offshore jewel, a tax haven gateway to China and the subregion. Britain remained the guiding hand, while giving financiers free rein. The colony’s financial secretary, Sir John Cowperthwaite, installed in 1961, had such stridently antigovernment views that he curtailed the publication of official statistics on the grounds that it would help the civil servants. When China introduced its “Open Door” policy of market reforms in 1978, opening up to foreign investment and export industries, Hong Kong was made: It was, as the financial crimes fighter Jack Blum remembered, “an ‘anything goes, no-regulation’ world.”


pages: 457 words: 125,329

Value of Everything: An Antidote to Chaos The by Mariana Mazzucato

"Robert Solow", activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, bank run, banks create money, Basel III, Berlin Wall, Big bang: deregulation of the City of London, bonus culture, Bretton Woods, business cycle, butterfly effect, buy and hold, Buy land – they’re not making it any more, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, cleantech, Corn Laws, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, David Ricardo: comparative advantage, debt deflation, European colonialism, fear of failure, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, full employment, G4S, George Akerlof, Google Hangouts, Growth in a Time of Debt, high net worth, Hyman Minsky, income inequality, index fund, informal economy, interest rate derivative, Internet of things, invisible hand, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labour market flexibility, laissez-faire capitalism, light touch regulation, liquidity trap, London Interbank Offered Rate, margin call, Mark Zuckerberg, market bubble, means of production, money market fund, negative equity, Network effects, new economy, Northern Rock, obamacare, offshore financial centre, Pareto efficiency, patent troll, Paul Samuelson, peer-to-peer lending, Peter Thiel, profit maximization, quantitative easing, quantitative trading / quantitative finance, QWERTY keyboard, rent control, rent-seeking, Sand Hill Road, shareholder value, sharing economy, short selling, Silicon Valley, Simon Kuznets, smart meter, Social Responsibility of Business Is to Increase Its Profits, software patent, stem cell, Steve Jobs, The Great Moderation, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, too big to fail, trade route, transaction costs, two-sided market, very high income, Vilfredo Pareto, wealth creators, Works Progress Administration, zero-sum game

When speculation spread from a rich leisure class to the wider population, it drove the stock market bubble that ushered in the Wall Street Crash and 1930s depression; but as public spending helped to restore people's jobs and incomes, those with money again began to gamble it on stocks and shares. Wall Street was, he said, ‘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'. By this yardstick, Keynes commented, Wall Street could not ‘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'.22 That ‘different object', in Keynes's view, was not a form of production, but ‘betting' - and the profits of the bookmaker were ‘a mere transfer',23 a transfer which should be limited lest individuals ruin themselves and harm others in the process.


pages: 504 words: 126,835

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

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

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: 443 words: 125,510

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

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

Republican presidents oversaw the beginnings of the Interstate Highway System, the Environmental Protection Agency, and the Department of Homeland Security. Republicans, in short, are deeply committed to the interventionist state and the extensive social engineering that comes with it. The United States does have a political party that is genuinely committed to modus vivendi liberalism, and it is appropriately called the Libertarian Party. It is dedicated to promoting civil liberties and laissez-faire capitalism and to abolishing the welfare state. Its party platform takes dead aim at positive rights: “We seek a world of liberty; a world in which all individuals are sovereign over their own lives and no one is forced to sacrifice his or her values for the benefit of others.”63 The Libertarian Party has never won a single seat in Congress and never come close to winning the White House. Its candidate in the 2016 presidential election received 3.3 percent of the vote.


pages: 382 words: 127,510

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

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: 654 words: 120,154

The Firm by Duff McDonald

"Robert Solow", 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, Kickstarter, laissez-faire capitalism, Mahatma Gandhi, Nelson Mandela, 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: 677 words: 121,255

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

Alfred Russel Wallace, anthropic principle, anti-communist, barriers to entry, Berlin Wall, Boycotts of Israel, Chelsea Manning, clean water, clockwork universe, cognitive dissonance, Colonization of Mars, Columbine, cosmological constant, cosmological principle, creative destruction, dark matter, Donald Trump, Edward Snowden, Elon Musk, Flynn Effect, germ theory of disease, gun show loophole, Hans Rosling, hedonic treadmill, helicopter parent, hindsight bias, illegal immigration, income inequality, invisible hand, Johannes Kepler, Joseph Schumpeter, laissez-faire capitalism, Laplace demon, luminiferous ether, McMansion, means of production, mega-rich, Menlo Park, moral hazard, moral panic, More Guns, Less Crime, Peter Singer: altruism, phenotype, positional goods, race to the bottom, Richard Feynman, Ronald Coase, Silicon Valley, Skype, social intelligence, stem cell, Stephen Hawking, Steve Jobs, Steven Pinker, the scientific method, The Wealth of Nations by Adam Smith, transaction costs, WikiLeaks, working poor, Yogi Berra

When Stein interviewed me and asked my opinion on the impact of Darwinism on culture, he seemed astonishingly ignorant of the many other ways that Darwinism has been used and abused by political and economic ideologues of all stripes. Because Stein is a well-known economic conservative (and because I had just finished writing my book The Mind of the Market, a chapter of which compares Adam Smith’s “invisible hand” with Charles Darwin’s “natural selection”), I pointed out how the captains of industry in the late nineteenth and early twentieth centuries justified their beliefs in laissez-faire capitalism through the social Darwinism of “survival of the fittest corporations.” And, more recently, I noted that Enron’s CEO, Jeffrey Skilling, said his favorite book in Harvard Business School was Richard Dawkins’ The Selfish Gene (first published in 1976), a form of Darwinism that Skilling badly misinterpreted (“read by title only” in Dawkins’ apt phrase to describe those who misread the book).


pages: 1,477 words: 311,310

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

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

Between them and the West, the proverbial “iron curtain” was falling; behind that curtain, Communist party cadres and secret police were determining that the entire region would operate under principles totally at variance with Cordell Hull’s hopes. The same was true in the Far East, where the swift occupation of Manchuria, North Korea, and Sakhalin not only avenged the war of 1904–1905, but allowed a link-up with Mao’s Chinese Communists, who were also unlikely to swallow the gospel of laissez-faire capitalism. But if this growth of Soviet influence looked imposing, its economic base had been badly hurt by the war—in contrast to the United States’ undisturbed boom. Russia’s population losses were appalling: 7.5 million in the armed forces; 6–8 million civilians killed by the Germans; plus the “indirect” war losses caused by the reduced food rations, forced labor, and vastly increased hours of work, so that “altogether probably some 20–25 million Soviet citizens died premature deaths between 1941 and 1945.”50 Since the casualties were mainly men, the consequent imbalance between the sexes greatly affected the country’s demographic structure and caused a severe drop in the birthrate.

This is due, one imagines, to the facts that so many of its immigrants were fleeing from socially rigid circumstances elsewhere; that the sheer size of the country allowed those who were disillusioned with their economic position to “escape” to the West, and simultaneously made the organization of labor much more difficult than in, say, France or Britain; and that those same geographical dimensions, and the entrepreneurial opportunities within them, encouraged the development of a largely unreconstructed form of laissez-faire capitalism which has dominated the political culture of the nation (despite occasional counterattacks from the left). In consequence, the “earnings gap” between rich and poor in the United States is significantly larger than in any other advanced industrial society; and, by the same token, state expenditures upon social services form a lower share of GNP than in comparable countries (except Japan, which appears to have a much stronger family-based form of support for the poor and the aged).


pages: 385 words: 133,839

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

carbon footprint, clean water, collective bargaining, corporate social responsibility, Exxon Valdez, Gordon Gekko, Internet Archive, laissez-faire capitalism, market design, MITM: man-in-the-middle, Naomi Klein, Nelson Mandela, 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: 497 words: 143,175

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

"Robert Solow", 1960s counterculture, activist lawyer, affirmative action, airline deregulation, anti-communist, Ayatollah Khomeini, barriers to entry, Berlin Wall, blue-collar work, Bretton Woods, business cycle, capital controls, centre right, collective bargaining, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, deindustrialization, desegregation, 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: 422 words: 131,666

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

addicted to oil, affirmative action, Amazon Mechanical Turk, anti-globalists, banks create money, big-box store, Bretton Woods, car-free, Charles Lindbergh, colonial exploitation, Community Supported Agriculture, complexity theory, computer age, corporate governance, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, death of newspapers, don't be evil, Donald Trump, double entry bookkeeping, easy for humans, difficult for computers, financial innovation, Firefox, full employment, global village, Google Earth, greed is good, Howard Rheingold, income per capita, invention of the printing press, invisible hand, Jane Jacobs, John Nash: game theory, joint-stock company, Kevin Kelly, Kickstarter, laissez-faire capitalism, loss aversion, market bubble, market design, Marshall McLuhan, Milgram experiment, moral hazard, mutually assured destruction, Naomi Klein, negative equity, new economy, New Urbanism, Norbert Wiener, peak oil, peer-to-peer, place-making, placebo effect, Ponzi scheme, price mechanism, price stability, principal–agent problem, private military company, profit maximization, profit motive, race to the bottom, RAND corporation, rent-seeking, RFID, road to serfdom, Ronald Reagan, short selling, Silicon Valley, Simon Kuznets, social software, Steve Jobs, Telecommunications Act of 1996, telemarketer, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, trade route, trickle-down economics, union organizing, urban decay, urban planning, urban renewal, Vannevar Bush, Victor Gruen, white flight, working poor, Works Progress Administration, Y2K, young professional, zero-sum game

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: 545 words: 137,789

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

"Robert Solow", 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, Blythe Masters, Bretton Woods, British Empire, business cycle, 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, different worldview, 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, Kickstarter, 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.


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

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, Nelson Mandela, publication bias, purchasing power parity, randomized controlled trial, Ronald Reagan, Scramble for Africa, structural adjustment programs, The Fortune at the Bottom of the Pyramid, the scientific method, The Wealth of Nations by Adam Smith, 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.


pages: 419 words: 130,627

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

bank run, Blythe Masters, 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, G4S, housing crisis, interest rate swap, Jeff Bezos, John Meriwether, Kickstarter, laissez-faire capitalism, Long Term Capital Management, margin call, market bubble, money market fund, moral hazard, negative equity, Nelson Mandela, 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: 556 words: 141,069

The Profiteers by Sally Denton

Albert Einstein, anti-communist, Ayatollah Khomeini, Bay Area Rapid Transit, Berlin Wall, Boycotts of Israel, clean water, corporate governance, crony capitalism, Donald Trump, Edward Snowden, energy security, Fall of the Berlin Wall, G4S, invisible hand, James Watt: steam engine, Joan Didion, Kitchen Debate, laissez-faire capitalism, Mikhail Gorbachev, mutually assured destruction, Naomi Klein, new economy, nuclear winter, profit motive, Robert Hanssen: Double agent, Ronald Reagan, Silicon Valley, trickle-down economics, uranium enrichment, urban planning, WikiLeaks, wikimedia commons, William Langewiesche

The Bechtel story is most important for how the company embodied the rise of a corporate capitalism forged in the American West that over the decades took the world by storm—a capitalism much more in line with cronyism than free market ideology. Bechtel pioneered the revolving door system that now pervades both US politics and the American economic system—a door that came to shape foreign policy not always in the interest of the nation and its citizens, but for the interests of multinational corporations. In the end, this is the ugly, untold story of America. A story not of the triumph of laissez faire capitalism, but of Profiteers whose sole client was government itself. (1) This vintage postcard from 1936 shows the construction of Hoover Dam in four different stages, with all views taken from the same point looking upstream. Called the “Eighth Wonder of the World,” it would be known as Bechtel’s historic, signature project. (2) The safety violations and labor unrest that characterized Hoover Dam’s construction site earned for Dad Bechtel the reputation of the “bête noire of American labor.”


pages: 428 words: 134,832

Straphanger by Taras Grescoe

active transport: walking or cycling, Affordable Care Act / Obamacare, airport security, Albert Einstein, big-box store, bike sharing scheme, Boris Johnson, British Empire, call centre, car-free, carbon footprint, City Beautiful movement, congestion charging, correlation does not imply causation, David Brooks, deindustrialization, East Village, edge city, Enrique Peñalosa, extreme commuting, financial deregulation, Frank Gehry, glass ceiling, Golden Gate Park, housing crisis, hydraulic fracturing, indoor plumbing, intermodal, invisible hand, Jane Jacobs, jitney, Joan Didion, Kickstarter, Kitchen Debate, laissez-faire capitalism, Marshall McLuhan, mass immigration, McMansion, megacity, mortgage tax deduction, Network effects, New Urbanism, obamacare, oil shale / tar sands, oil shock, Own Your Own Home, peak oil, pension reform, Peter Calthorpe, Ponzi scheme, Ronald Reagan, Rosa Parks, sensible shoes, Silicon Valley, Skype, the built environment, The Death and Life of Great American Cities, the High Line, transit-oriented development, union organizing, urban planning, urban renewal, urban sprawl, walkable city, white flight, working poor, young professional, Zipcar

On the streets of my own city, Montreal, I’ve lately spotted intercity buses with the logo of Transdev, another French corporation. The privatization of public transport is a recent development, but it has roots in the nineteenth century. While New York’s early elevated and subway lines, like Los Angeles’s streetcar lines, were built with private capital, governments in Britain and most of Continental Europe, though they paid lip service to the principles of laissez-faire capitalism, oversaw the design of transit networks to an extent unimaginable in the United States. In the era of the tramways, Paris and other European cities granted 50-year concessions to private street railways, after which tracks and tunnels would revert to the municipal authorities without payment, and the city would be given the option of buying the rolling stock. Across the Channel, six private companies built and ran the various lines of the early London Underground—a situation that often forced commuters to walk above-ground between stations and buy new tickets when changing lines—until it was integrated into a single system in the 1930s, and nationalized by Labour in 1948.


pages: 454 words: 139,350

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

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

These civic activities do not curb our market freedom, they facilitate it. Democracy makes markets work by allowing us the freedom of our consumer choices in the knowledge that we can counteract their accompanying vices. To do so, however, we must have alternative nonmarket institutions, and in the international arena such democratic tools are entirely absent. Even within nation-states, we are eschewing the tools we have. The dogmas of laissez-faire capitalism that have suffused the politics of America and Europe in the last few decades have been reinforced by the resentments of an alienated electorate that has lost confidence in its own democratic institutions; together, they have persuaded us that our democratic governments neither belong to us nor function usefully either to limit markets or to help them work. The expiration of Marxist and command economy dogmas has breathed new life into free market and laissez-faire dogmas and forced us back into Friedman’s choice of radical collectivism or radical individualism.


pages: 433 words: 127,171

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

addicted to oil, 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, Kickstarter, 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

affirmative action, anti-communist, Ayatollah Khomeini, Berlin Wall, Bonfire of the Vanities, business cycle, colonial rule, Columbine, corporate raider, cuban missile crisis, Deng Xiaoping, friendly fire, glass ceiling, global village, Gordon Gekko, gun show loophole, income inequality, invisible hand, Jeff Bezos, laissez-faire capitalism, late capitalism, Live Aid, Marc Andreessen, Mikhail Gorbachev, mutually assured destruction, Neil Kinnock, Nelson Mandela, 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.


I You We Them by Dan Gretton

agricultural Revolution, anti-communist, back-to-the-land, British Empire, clean water, cognitive dissonance, colonial rule, conceptual framework, corporate social responsibility, Desert Island Discs, drone strike, European colonialism, financial independence, friendly fire, ghettoisation, Honoré de Balzac, IBM and the Holocaust, illegal immigration, invisible hand, Johann Wolfgang von Goethe, laissez-faire capitalism, liberation theology, Mikhail Gorbachev, Milgram experiment, Neil Kinnock, Nelson Mandela, New Journalism, place-making, pre–internet, Stanford prison experiment, University of East Anglia, wikimedia commons

Taylor echoed the core of truth that lay behind Mitchel’s hyperbole – looking at the ideologically driven nature of the prime minister, the chancellor and the secretary to the Treasury, which blinded them to all human considerations, Taylor states: ‘Russell, Wood and Trevelyan were highly conscientious men … [but] they were gripped by the most horrible, and perhaps the most universal of human maladies: the belief that principles and doctrines are more important than lives.3 They imagined that rules, invented by economists, were as “natural” as the potato blight.’ Sir Charles Trevelyan, the powerful assistant secretary to the Treasury from 1840 to 1859, was fanatical in his belief in the economic orthodoxy of the day – laissez-faire capitalism and, above all, the Manchester School’s principle of non-intervention in markets, under any circumstances. He wrote this statement in his book The Irish Crisis, published in 1848 – in which human sympathy for the victims in Ireland is non-existent – attempting to justify the British government’s response to the Famine: ‘It has been proved … that local distress cannot be relieved out of national funds without great abuses and evils, tending, by a direct and rapid process, to an entire disorganisation of society.’

It would be a mistake to believe that policy towards the Irish Famine was dictated by only a coterie of ideological zealots; the reality was that the cultural framework which enabled the policy of non-intervention in Ireland to go ahead with such catastrophic consequences was established by a governing class consensus – a web of hundreds of economists, politicians, civil servants, clerics and journalists – all reinforcing each other’s ideas into a lethal cocktail of race hatred, supremacism and laissez-faire capitalism. Trevelyan’s view (from a letter quoted in Woodham-Smith, The Great Hunger), that ‘the judgement of God sent the calamity to teach the Irish a lesson, that calamity should not be too much mitigated … the greatest evil with which we have to contend is not the physical evil of the famine but the moral evil of the selfish, perverse and turbulent character of the people’ would have been shared by the vast majority of his contemporaries in the British government, Whitehall and Fleet Street.


pages: 468 words: 150,206

The Food Revolution: How Your Diet Can Help Save Your Life and Our World by John Robbins

Albert Einstein, carbon footprint, clean water, complexity theory, double helix, Exxon Valdez, food miles, Intergovernmental Panel on Climate Change (IPCC), laissez-faire capitalism, longitudinal study, 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: 504 words: 143,303

Why We Can't Afford the Rich by Andrew Sayer

accounting loophole / creative accounting, Albert Einstein, anti-globalists, asset-backed security, banking crisis, banks create money, basic income, Boris Johnson, Bretton Woods, British Empire, business cycle, 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, Kickstarter, 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, WikiLeaks, 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’.


The-General-Theory-of-Employment-Interest-and-Money by John Maynard Keynes

bank run, business cycle, collective bargaining, declining real wages, delayed gratification, full employment, invisible hand, laissez-faire capitalism, marginal employment, means of production, moral hazard, Paul Samuelson, price stability, profit motive, quantitative easing, secular stagnation, The Wealth of Nations by Adam Smith, working-age population

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. These tendencies are a scarcely avoidable outcome of our having successfully organised ‘liquid’ investment markets. It is usually agreed that casinos should, in the public interest, be inaccessible and expensive. And perhaps the same is true of stock exchanges.


pages: 524 words: 146,798

Anarchy State and Utopia by Robert Nozick

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

When scrutinized closely, none of these considerations succeeds in doing so (nor does their combination); the minimal state remains as the most extensive state that can be justified. HOW REDISTRIBUTION OPERATES Our normative task in these two chapters is now complete, but perhaps something should be said about the actual operation of redistributive programs. It has often been noticed, both by proponents of laissez-faire capitalism and by radicals, that the poor in the United States are not net beneficiaries of the total of government programs and interventions in the economy. Much of government regulation of industry was originated and is geared to protect the position of established firms against competition, and many programs most greatly benefit the middle class. The critics (from the right or the left) of these government programs have offered no explanation, to my knowledge, of why the middle class is the greatest net beneficiary.


pages: 519 words: 155,332

Tailspin: The People and Forces Behind America's Fifty-Year Fall--And Those Fighting to Reverse It by Steven Brill

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, airport security, American Society of Civil Engineers: Report Card, asset allocation, Bernie Madoff, Bernie Sanders, Blythe Masters, Bretton Woods, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, carried interest, clean water, collapse of Lehman Brothers, collective bargaining, computerized trading, corporate governance, corporate raider, corporate social responsibility, Credit Default Swap, currency manipulation / currency intervention, Donald Trump, ending welfare as we know it, failed state, financial deregulation, financial innovation, future of work, ghettoisation, Gordon Gekko, hiring and firing, Home mortgage interest deduction, immigration reform, income inequality, invention of radio, job automation, knowledge economy, knowledge worker, labor-force participation, laissez-faire capitalism, Mahatma Gandhi, Mark Zuckerberg, mortgage tax deduction, new economy, obamacare, old-boy network, paper trading, performance metric, post-work, Potemkin village, Powell Memorandum, quantitative hedge fund, Ralph Nader, ride hailing / ride sharing, Robert Bork, Robert Gordon, Robert Mercer, Ronald Reagan, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, telemarketer, too big to fail, trade liberalization, union organizing, Unsafe at Any Speed, War on Poverty, women in the workforce, working poor

As we have seen, many of the new troops were lobbyists working Capitol Hill and the White House. Thousands more did lobbying of a different sort: They were charged with defending corporate interests at dozens of regulatory agencies. Their work, as much as anything else, helped freeze the pendulum by grinding the gears of agencies that once would have been instruments of reform that addressed abuses of laissez-faire capitalism. Here again, the supporting actor is another core American value: the country’s preference for the rule of law over the arbitrary rule of men—which can only be achieved by another unassailable virtue: due process. In 1946, Congress was concerned about the power of the regulatory agencies established in the Teddy Roosevelt and Franklin Roosevelt reform eras. The agencies had been created to set rules in areas such as fair commerce (the Federal Trade Commission), labor organizing (the National Labor Relations Board), the stock market (the Securities and Exchange Commission), and the use of the airwaves for radio and television broadcasts (the Federal Communications Commission).


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

Alistair Cooke, American ideology, business cycle, 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, Jones Act, 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, Sam Peltzman, 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: 651 words: 161,270

Global Spin: The Corporate Assault on Environmentalism by Sharon Beder

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

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, business cycle, 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, Kickstarter, 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, stocks for the long run, 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.


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

American ideology, 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: 577 words: 149,554

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

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, Stanford prison experiment, 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.


pages: 498 words: 145,708

Consumed: How Markets Corrupt Children, Infantilize Adults, and Swallow Citizens Whole by Benjamin R. Barber

addicted to oil, AltaVista, American ideology, Berlin Wall, Bertrand Russell: In Praise of Idleness, Bill Gates: Altair 8800, business cycle, Celebration, Florida, collective bargaining, creative destruction, David Brooks, delayed gratification, Donald Trump, double entry bookkeeping, G4S, game design, George Gilder, Gordon Gekko, greed is good, Hernando de Soto, illegal immigration, informal economy, invisible hand, Joseph Schumpeter, laissez-faire capitalism, late capitalism, liberal capitalism, Marc Andreessen, McJob, microcredit, Naomi Klein, new economy, New Journalism, Norbert Wiener, nuclear winter, Panopticon Jeremy Bentham, pattern recognition, presumed consent, profit motive, race to the bottom, Ralph Nader, road to serfdom, Robert Bork, Ronald Reagan, Saturday Night Live, Silicon Valley, spice trade, Steve Jobs, telemarketer, The Fortune at the Bottom of the Pyramid, the market place, The Wisdom of Crowds, Thomas L Friedman, Thorstein Veblen, trade route, X Prize

In a witty but at least half-serious tribute to the “transcendent significance” of spending in the modern marketplace, Brooks portrays the way in which spiritual desire becomes physical desire in what he calls a literal “transubstantiation of goods.”10 Thomas Frank skewers this very same ambivalence in his What’s the Matter with Kansas, where he asserts that the right fails to discern “the connection between mass culture, most of which conservatives hate, and laissez-faire capitalism, which they adore without reservation.” This leads Kansas conservatives to gloat “when celebrities say stupid things” and to “cheer when movie stars go to jail” and in general to scream “for the heads of the liberal elite,” but then come election time “vote to cut all those rock stars’ taxes.”11 There are a few neo-Puritan romantics who go Brooks one better and actually try to keep alive the direct connection between Protestant virtue and the superannuated capitalism of yesteryear.


pages: 1,327 words: 360,897

Demanding the Impossible: A History of Anarchism by Peter Marshall

agricultural Revolution, anti-communist, anti-globalists, Bertrand Russell: In Praise of Idleness, clean water, collective bargaining, colonial rule, David Graeber, different worldview, do-ocracy, 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, MITM: man-in-the-middle, Naomi Klein, open borders, Panopticon Jeremy Bentham, 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: 598 words: 172,137

Who Stole the American Dream? by Hedrick Smith

Affordable Care Act / Obamacare, Airbus A320, airline deregulation, anti-communist, asset allocation, banking crisis, Bonfire of the Vanities, British Empire, business cycle, business process, clean water, cloud computing, collateralized debt obligation, collective bargaining, commoditize, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, David Brooks, Deng Xiaoping, desegregation, Double Irish / Dutch Sandwich, family office, 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 airline, low cost carrier, manufacturing employment, market fundamentalism, Maui Hawaii, mega-rich, MITM: man-in-the-middle, mortgage debt, negative equity, new economy, Occupy movement, Own Your Own Home, Paul Samuelson, Peter Thiel, Plutonomy: Buying Luxury, Explaining Global Imbalances, Ponzi scheme, Powell Memorandum, 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: 543 words: 157,991

All the Devils Are Here by Bethany McLean

Asian financial crisis, asset-backed security, bank run, Black-Scholes formula, Blythe Masters, break the buck, buy and hold, 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: 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 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: 510 words: 163,449

How the Scots Invented the Modern World: The True Story of How Western Europe's Poorest Nation Created Our World and Everything in It by Arthur Herman

British Empire, California gold rush, creative destruction, do-ocracy, financial independence, global village, invisible hand, Isaac Newton, James Watt: steam engine, Joan Didion, joint-stock company, laissez-faire capitalism, land tenure, mass immigration, means of production, new economy, New Urbanism, North Sea oil, oil shale / tar sands, Republic of Letters, Robert Mercer, spinning jenny, The Wealth of Nations by Adam Smith, transcontinental railway, trickle-down economics, urban planning, urban renewal, working poor

“There are no colonies of which the progress has been more rapid than that of the English in North America,” Smith wrote, and yet thanks to its monopolistic policies, “Great Britain derives nothing but loss from the dominion which she assumes over her colonies.” Smith’s critique reached out beyond colonial monopolies to all kinds of unwanted government meddling in economic affairs. This is the second myth about Wealth of Nations, that in it Smith invented the notion of laissez-faire capitalism, in which the government has little or no role to play. In fact, the phrase laissez-faire comes from French economists, not Smith, who does not use the term at all. And contrary to the myth, Smith did see an important role for a strong national government. He saw it as necessary for providing a system of national defense, to protect the society and its commerce with its neighbors. It also must provide a system of justice and protection of individual rights, particularly the right to property: “[I]t is only under the shelter of the civil magistrate that the owner of that valuable property, which is acquired by the labor of many years, or perhaps of many successive generations, can sleep a single night in security.”


pages: 741 words: 179,454

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

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, business cycle, 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, Everybody Ought to Be Rich, 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, Jones Act, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, 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, NetJets, Network effects, new economy, Nick Leeson, Nixon shock, Northern Rock, nuclear winter, oil shock, Own Your Own Home, Paul Samuelson, pets.com, Philip Mirowski, 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 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.”


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

Apple II, Bob Noyce, business cycle, collective bargaining, computer age, George Gilder, informal economy, John Markoff, Kickstarter, laissez-faire capitalism, low skilled workers, means of production, Menlo Park, Murray Gell-Mann, open economy, 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: 650 words: 203,191

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

agricultural Revolution, Atahualpa, Berlin Wall, Bretton Woods, British Empire, Cape to Cairo, 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: 840 words: 202,245

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

accounting loophole / creative accounting, Asian financial crisis, bank run, Bretton Woods, business cycle, 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, MITM: man-in-the-middle, 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: 843 words: 223,858

The Rise of the Network Society by Manuel Castells

"Robert Solow", Apple II, Asian financial crisis, barriers to entry, Big bang: deregulation of the City of London, Bob Noyce, borderless world, British Empire, business cycle, 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, laissez-faire capitalism, Leonard Kleinrock, longitudinal study, 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.


pages: 823 words: 220,581

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

"Robert Solow", 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, business cycle, butterfly effect, capital asset pricing model, cellular automata, central bank independence, citizen journalism, clockwork universe, collective bargaining, complexity theory, correlation coefficient, creative destruction, credit crunch, David Ricardo: comparative advantage, debt deflation, diversification, double entry bookkeeping, en.wikipedia.org, 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, Kickstarter, 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: 1,088 words: 228,743

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

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, business cycle, buy and hold, 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, G4S, 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, London Interbank Offered Rate, 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, stocks for the long run, 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: 1,000 words: 247,974

Empire of Cotton: A Global History by Sven Beckert

agricultural Revolution, Bartolomé de las Casas, British Empire, colonial exploitation, colonial rule, Corn Laws, creative destruction, crony capitalism, deindustrialization, European colonialism, Francisco Pizarro, imperial preference, industrial cluster, James Hargreaves, James Watt: steam engine, joint-stock company, laissez-faire capitalism, land tenure, Mahatma Gandhi, market fundamentalism, race to the bottom, Silicon Valley, spice trade, spinning jenny, The Wealth of Nations by Adam Smith, transaction costs, transatlantic slave trade, union organizing, women in the workforce

The manufacturers’ and the government’s interests never entirely converged, because Charles Wood and other British government officials were acutely aware of the dangers of upsetting India’s fragile social order in the wake of the Rebellion of 1857, which had severely challenged British rule in India. They understood, unlike many manufacturers, that the transformation of the Indian countryside was a gigantic project that entailed great risks.30 Yet like no other crisis before it, the cotton famine opened new vistas on colonial raw material production. Even The Economist, the world’s leading publicist for the benefits of laissez-faire capitalism, eventually endorsed state involvement in securing cotton, especially from India. It was hard to justify these steps in terms of the “laws of supply and demand,” but eventually The Economist—and with it many others—found a way: “The answer, at least a great part of the answer is, that there appears to exist in many important parts of Indian society very peculiar difficulties, which to some extent impede and counteract the action of the primary motives upon which political economy depends for its efficacy.”


pages: 768 words: 291,079

The Ragged Trousered Philanthropists by Robert Tressell

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, Nelson Mandela, 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.


pages: 1,108 words: 321,463

The Fountainhead by Ayn Rand

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.


From Peoples into Nations by John Connelly

Albert Einstein, anti-communist, bank run, Berlin Wall, Cass Sunstein, centre right, collective bargaining, colonial exploitation, colonial rule, crony capitalism, cuban missile crisis, facts on the ground, Fall of the Berlin Wall, financial independence, German hyperinflation, Gini coefficient, Johann Wolfgang von Goethe, joint-stock company, laissez-faire capitalism, land reform, land tenure, liberal capitalism, means of production, Mikhail Gorbachev, moral hazard, oil shock, old-boy network, open borders, Panopticon Jeremy Bentham, Peace of Westphalia, profit motive, purchasing power parity, Ronald Reagan, strikebreaker, the built environment, The Chicago School, trade liberalization, Transnistria, union organizing, upwardly mobile, wikimedia commons, women in the workforce

.), and streamlined educational forms so that as many children as possible could advance from primary to secondary education (previously the great majority had to leave school after six or eight years). Based on the Soviet example, they also created crash courses, so that the children of workers and peasants could get high school equivalence in one to two years.5 Sentiments in favor of a radical break with laissez-faire capitalism were by no means limited to one corner of Europe. From the United Kingdom through France, Italy, into the Balkans and Poland, people felt that new governments could not simply reprise the economic mismanagement and vast social inequalities of the 1930s. In July 1945, British voters threw Winston Churchill out of office and replaced him with Clement Atlee of the Labour Party, and soon the British state was nationalizing industry, banking, health care, and transportation.