The Wealth of Nations by Adam Smith

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Adam Smith: Father of Economics by Jesse Norman

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

ALSO BY JESSE NORMAN Edmund Burke: The First Conservative The Big Society: The Anatomy of the New Politics BIBLIOGRAPHY WORKS BY ADAM SMITH Correspondence of Adam Smith, ed. Ernest Campbell Mossner and Ian Simpson Ross, Liberty Fund 1987 An Early Draft of Part of The Wealth of Nations, in LJ Essays on Philosophical Subjects, ed. W. P. D. Wightman and J. C. Bryce, Liberty Fund [1795] 1980 An Inquiry into the Nature and Causes of the Wealth of Nations, ed. R. H. Campbell, A. S. Skinner and W. B. Todd, 2 vols., Liberty Fund [1776] 1981 Lectures on Jurisprudence, ed. R. L. Meek, D. D. Raphael and P.

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In the words of the Chicago School economist Jacob Viner on The Wealth of Nations, ‘Traces of every conceivable sort of doctrine are to be found in that most catholic book, and an economist must have peculiar theories indeed who cannot quote from The Wealth of Nations to support his special purposes.’ So it has proven. One example of this tendency will suffice, and from Viner’s most famous student no less. In a famous article of 1977 for Challenge magazine, Milton Friedman, fresh from winning a Nobel Prize in the previous year, undertook to spell out ‘Adam Smith’s Relevance for Today’. For Friedman, Smith was ‘a radical and revolutionary’ in his own time—just as Friedman was in his.

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MYTH 3: ADAM SMITH WAS PRO-RICH The Wealth of Nations was published at a time when Scotland was in the early stages of one of the longest and most rapid periods of national economic growth ever recorded. Vast fortunes were being made by Scottish merchants and industrialists, and the book serves in part not merely to explain but to ratify and defend emerging ideas of a commercial system based on free markets. As a result, Smith’s name is often invoked today to justify extreme inequalities of wealth and income as the supposedly natural results of such a system. Yes, The Wealth of Nations is a hymn to the possibility of ‘universal opulence’—that is, material advancement for all sections of society.

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

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

My preference is the 1937 (latest reprint, 1994) Modern Library edition, edited by Edwin Cannan. The significance of The Wealth of Nations has reached such biblical proportions that a complete concordance was prepared by Fred R. Glahe (1993), economics professor at the University of Colorado. Oh, the wonders of computers! Did you know that the word "a" appears 6,691 times in The Wealth of Nations? A concordance is undoubtedly valuable, especially for scholars. For example, "de-5.1 recommend the book Adam Smith Across Nations: Translations and Receptions of The Wealth of Nations, edited by Cheng-chung Lai (2000), for a fascinating account of the influence of Adam Smith's book over the centuries.

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In Essays on John Maynard Keynes, ed. Milo Keynes, 132-41. Cambridge, UK: Cambridge University Press. Garrison, Roger B. 1985. "West's 'Cantillon and Adam Smith': A Comment." Journal of Libertarian Studies 7, 2 (Fall): 287-94. . 2001. Time and Money. London: Routledge. Glahe, Fred R., ed. 1978. Adam Smith and the Wealth of Nations: 1776-1976 Bi-centennial Essays. Boulder: Colorado Associated University Press. . 1993. Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations: A Concordance. Landam, MD: Rowman and Littlefield. Gordon, H. Scott. 1967. "Discussion on Das Kapital: A Centenary Appreciation."

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On March 9, 1776, the London printers William Strahan and Thomas Cadell released a 1,000-page, two-volume work entitled An Inquiry into the Nature and Causes of the Wealth of Nations. It was a fat book with a long title destined to have gargantuan global impact. The author was Dr. Adam Smith, a quiet, absent-minded professor who taught "moral philosophy" at the University of Glasgow. The Wealth of Nations was the intellectual shot heard around the world. Adam Smith, a leader in the Scottish Enlightenment, had put on paper a universal formula for prosperity and financial independence that would, over the course of the next century, revolutionize the way citizens and leaders thought about and practiced economics and trade.

The Classical School by Callum Williams

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

It is little wonder that conservative economists have embraced Smith as one of their own. Newspaper columnists love drawing on Smith if ever they advocate tax cuts. The Adam Smith Institute, a libertarian think tank, was set up in 1977, a time when free-market philosophies were gaining intellectual ground. Homo economicus on the ropes Yet Smith’s outlook was more complex than the pithy quotations above suggest. It is here that one must do what Smith wanted us to do, and read the Wealth of Nations in conjunction with Moral Sentiments.4 If the Wealth of Nations is a blueprint for how the economy works, Moral Sentiments is a guidebook for how people navigate it.

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Marx would surely have incorporated them into the later volumes of Capital if he had lived long enough. Ricardo had been looking forward to meeting Jean-Baptiste Say, but was ultimately left underwhelmed. Harriet Martineau seemed to know pretty much everybody. Even if they did not know each other personally, the 20 were constantly criticising and critiquing each other. Adam Smith published the Wealth of Nations in 1776 in opposition to the “mercantile system” of Jean-Baptiste Colbert, France’s finance minister from 1661 to 1683. John Stuart Mill at first slavishly adhered to Ricardo, but would later come to reject much of what he had written. Alfred Marshall, the final economist profiled in this book, constantly referred to Sir William Petty, one of the first.

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Empirical evidence was hard to get hold of, was unreliable, and, thanks to David Hume, there were lingering doubts as to whether it was possible to draw general statements from the analysis of data. According to Schumpeter, Petty’s guiding principle that “generalisations [be] the joint product of figures and reasoning” fell out of fashion with Adam Smith (who does not once namecheck Petty in the Wealth of Nations). David Ricardo had no time for empirical research. Karl Marx believed that data and statistics were grubby–and did not bother with the question of whether his analysis of capitalism was in any way testable against the real world. If Petty had come back to life in 1900 he would have been disappointed with the progress that his profession had made.

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

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

Readers can dip in and out: each chapter is a self-contained story about one original thinker and their impact on the development of economic thinking. CHAPTER 1 Adam Smith– the ‘founding father’ of economics 1 2 The Great Economists ‘It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.’ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Book 1, ch. 2 Every Briton should know who Adam Smith is – or least what he looks like. This is not because he is a celebrity or a national treasure but because since 2007 his face has adorned the £20 banknote.

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According to a popular urban myth, Thatcher was said to carry a copy of The Wealth of Nations in her famous handbag, and in her own book, Statecraft, she described Adam Smith’s invisible hand as a ‘bracing blast of freedom itself’. 20 The Great Economists According to Bruce Chapman, one of Reagan’s Deputy Assistants in the White House, Smith was a hero to Reagan since he studied classical economics at college. Speaking at a memorial service for Reagan, Chapman also recalled that ties with little Adam Smith busts on them ‘festooned every male conservative chest in Washington. You had a wide range of choices: there were green Adam Smith neckties, maroon Adam Smith neckties, red, white and blue Adam Smith neckties.

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With 40 per cent of the UK economy taken by the state in the form of social security benefits, the National Health Service and the education system among others, it is clear we have moved a long way from The Wealth of Nations. Chapter 1 • Adam Smith25 What you should take away Adam Smith is justifiably known as the father of economics and his reputation will last long after he has disappeared from British banknotes. The Wealth of Nations has become the template for all the major textbooks that have followed it up to the present day. His key ideas, which influence modern thinking within economics and business, include: • Real wealth is the sum of the annual produce of the land and labour of the whole country rather than the monetary wealth it hoards.

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

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

Introduction: Great Economists on Our Economic Challenges 1.    Adam Smith, 1979 [1776], An Inquiry into the Nature and Causes of the Wealth of Nations, eds. R. H. Campbell, A. S. Skinner and W. B. Todd, Oxford: Clarendon Press, bk II, ch. 3, para 2. 2.    Alvin H. Hansen, 1939, ‘Economic Progress and Declining Population Growth’, American Economic Review, 29(1), pt I, pp. 1–15. 1 – Adam Smith: Should the Government Rebalance the Economy? 1.    Adam Smith, 1979 [1776], An Inquiry into the Nature and Causes of the Wealth of Nations, ed. R. H. Campbell, A. S. Skinner and W. B. Todd, Oxford: Clarendon Press, bk IV, ch. 2, para. 10. 2.    

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Perhaps their insights can help guide our economic future too. 1 Adam Smith: Should the Government Rebalance the Economy? Widely viewed as the seminal figure in economics, Adam Smith witnessed the beginning of the Industrial Revolution, which fundamentally changed the Western world. During this time and in the decades that followed, Britain became the world’s first industrialized economy. This extraordinary period formed the backdrop to one of the most influential books in economics. Adam Smith’s magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, took a decade to write. It sets out the concept of the ‘invisible hand’, which refers to the unseen market forces that set prices by equating supply and demand.

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Stein, Oxford: Clarendon Press ________, 1979 [1776], An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith, eds. R. H. Campbell, A. S. Skinner and W. B. Todd, Oxford: Clarendon Press Solow, Robert, 1956, ‘A Contribution to the Theory of Economic Growth’, Quarterly Journal of Economics, 70(1), pp. 65–94 ________, 1957, ‘Technical Change and the Aggregate Production Function’, Review of Economics and Statistics, 39(3), pp. 312–20 Sperber, Jonathan, 2013, Karl Marx: A Nineteenth-Century Life, New York: Liveright Stewart, Dugald, 1793, ‘Account of the Life and Writings of Adam Smith’, read to the Royal Society of Edinburgh and published in Adam Smith’s posthumous Essays on Philosophical Subjects of 1795, London and Edinburgh: T.

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

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

Notes Introduction: Great Economists on Our Economic Challenges 1. Adam Smith, 1979 [1776], An Inquiry into the Nature and Causes of the Wealth of Nations, eds. R. H. Campbell, A. S. Skinner and W. B. Todd, Oxford: Clarendon Press, bk II, ch. 3, para 2. 2. Alvin H. Hansen, 1939, ‘Economic Progress and Declining Population Growth’, American Economic Review, 29(1), pt I, pp. 1–15. Chapter 1 – Adam Smith: Should the Government Rebalance the Economy? 1. Adam Smith, 1979 [1776], An Inquiry into the Nature and Causes of the Wealth of Nations, ed. R. H. Campbell, A. S. Skinner and W. B. Todd, Oxford: Clarendon Press, bk IV, ch. 2, para. 10. 2.

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Perhaps their insights can help guide our economic future too. CHAPTER 1 Adam Smith: Should the Government Rebalance the Economy? Widely viewed as the seminal figure in economics, Adam Smith witnessed the beginning of the Industrial Revolution, which fundamentally changed the Western world. During this time and in the decades that followed, Britain became the world’s first industrialized economy. This extraordinary period formed the backdrop to one of the most influential books in economics. Adam Smith’s magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, took a decade to write. It sets out the concept of the ‘invisible hand’, which refers to the unseen market forces that set prices by equating supply and demand.

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Joseph Schumpeter, 1997 [1954], History of Economic Analysis, London: Routledge, pp. 472–3. 12. Adam Smith, 1979 [1776], An Inquiry into the Nature and Causes of the Wealth of Nations, eds. R. H. Campbell, A. S. Skinner and W. B. Todd, Oxford: Clarendon Press, bk IV, ch. 2, para 12. 13. Ricardo, Works and Correspondence, IV, p. 23. 14. Ibid., p. 21. 15. King, David Ricardo, p. 88. 16. Ricardo, Works and Correspondence, IV, pp. 28, 32. 17. Ibid., p. 35. 18. Ibid., p. 33. 19. Ibid., p. 41. 20. Ricardo Hausmann and Federico Sturzenegger, 2007, ‘The Missing Dark Matter in the Wealth of Nations and Its Implications for Global Imbalances’, Economic Policy, 22(51), pp. 470–518. 21.

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

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

William Robertson used Smith’s lectures on natural law and the four-stage theory of civil society for his own history of Europe—so much so that Smith privately accused him of plagiarism! All this shows that long before he published his Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith was a prominent and influential figure in Edinburgh circles. He attended the meetings of the Select Society and the Poker Club, and went to the dinner parties of even nonintellectual citizens. As a guest he could be trying. He rarely spoke, but when he did, it was usually at great length. Alexander Carlyle remembered Adam Smith as “the most absent man in Company that I ever saw, Moving his Lips and talking to himself, and Smiling, in the midst of large Company’s.”

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Muller’s Adam Smith in His Time—And Ours (New York, 1993). Ian Ross’s biography of Smith (see Chapter Three, above), was of course crucial for writing this chapter, as was Dugald Stewart’s Biographical Memoir of Adam Smith, which first appeared in 1793 but which was reprinted from the collected works of Dugald Stewart in 1966. Adam Smith’s two major works, An Inquiry Into the Nature and Causes of the Wealth of Nations and The Theory of Moral Sentiments, are generally available, while even his lectures on jurisprudence and Lectures on Rhetoric and Belles Lettres, both of which are based on notes by former students, can be found in modern editions.

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One of these was John Millar, who served as tutor to Kames’s son, then became the University of Glasgow’s first Professor of Civil Law. As a teacher and scholar, Millar would virtually invent modern political history. Another was Adam Smith, who came to Edinburgh in 1746 looking for an academic job. Because none was available, Kames arranged for him to deliver a series of public lectures on rhetoric, literature, and the subject dear to Kames’s heart, civil jurisprudence. Those lectures, delivered between 1748 and 1751, would become the foundation for the Wealth of Nations. A third was James Boswell, the son of Kames’s colleague on the Court of Session bench, Lord Auchinleck. The headstrong James quarreled frequently with his cold, reproachful father, and looked to the rough but affectionate Kames as his intermediary when things were going badly at home.

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

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 8-hour work day, active measures, activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, benefit corporation, Black Swan, blood diamond, blue-collar work, Bolshevik threat, bonus culture, British Empire, business cycle, business process, buy and hold, capital controls, Carmen Reinhart, carried interest, cognitive dissonance, collateralized debt obligation, collective bargaining, commoditize, company town, compensation consultant, corporate governance, corporate personhood, corporate raider, corporate social responsibility, creative destruction, credit crunch, crony capitalism, crowdsourcing, currency manipulation / currency intervention, David Brooks, David Graeber, David Ricardo: comparative advantage, declining real wages, deindustrialization, Diane Coyle, disruptive innovation, Double Irish / Dutch Sandwich, eurozone crisis, financial deregulation, financial engineering, financial innovation, fixed income, Ford Model T, Francis Fukuyama: the end of history, full employment, George Akerlof, George Gilder, Gini coefficient, Glass-Steagall Act, Gordon Gekko, Greenspan put, hiring and firing, Ida Tarbell, income inequality, independent contractor, invisible hand, job satisfaction, John Markoff, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, lake wobegon effect, light touch regulation, Long Term Capital Management, low interest rates, manufacturing employment, market clearing, market fundamentalism, Martin Wolf, minimum wage unemployment, mittelstand, Money creation, moral hazard, Myron Scholes, Naomi Klein, Northern Rock, obamacare, offshore financial centre, Paul Samuelson, Paul Volcker talking about ATMs, pension reform, performance metric, Pershing Square Capital Management, pirate software, plutocrats, Ponzi scheme, precariat, price stability, profit maximization, profit motive, prosperity theology / prosperity gospel / gospel of success, purchasing power parity, race to the bottom, Ralph Nader, rent-seeking, reshoring, Richard Thaler, rising living standards, road to serfdom, Robert Gordon, Robert Shiller, rolling blackouts, Ronald Reagan, Sand Hill Road, Savings and loan crisis, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, Steve Ballmer, Steve Jobs, stock buybacks, subprime mortgage crisis, The Chicago School, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transcontinental railway, transfer pricing, trickle-down economics, tulip mania, Tyler Cowen, Tyler Cowen: Great Stagnation, union organizing, Upton Sinclair, upwardly mobile, women in the workforce, working poor, zero-sum game

Mary Visot, “Areva, the Candidate of Juniac ‘Incompatible,’” Le Figaro, Dec. 15, 2010. 92 “Bonus Windfall Tax,” Editorial, Financial Times, Nov. 20, 2009. 93 Adam Smith, The Wealth of Nations (New York: Oxford University Press Classics), 376. 94 P.J. O’Rourke, “Adam Smith Gets the Last Laugh,” Financial Times, Feb. 10, 2009. 95 Ibid. 96 Adam Smith, The Wealth of Nations, 129. 97 Adam Smith, The Wealth of Nations, 188. 98 Trevor Manuel, “Let Fairness Triumph over Corporate Profits,” Financial Times, March 16, 2009. 99 Nicholas Phillipson, Adam Smith: An Enlightened Life (Hartford, CT: Yale University Press, 2010). 100 James K. Galbraith, Predator State, 162. 101 “Bonus Points,” Editorial, Financial Times, Dec. 7, 2009. 102 David Brown, “Blood Levels of Trans Fats Plunge after Food-Labeling Decree,” Washington Post, Feb. 9, 2012. 103 Michael E.

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For us today in interpreting Adam Smith, an especially important bubble arose in 1772 in Scotland, when the giant Ayr Bank and others collapsed, impoverishing Scotland for years. P.J. O’Rourke explained the environment in which Smith wrote the Wealth of Nations in a February 2009 column in the Financial Times: “The Mississippi Scheme and the South Sea Bubble had both collapsed in 1720, three years before his (Smith’s) birth. In 1772, while Smith was writing The Wealth of Nations, a bank run occurred in Scotland. Only three of Edinburgh’s 30 private banks survived.”94 As he looked out his study window, Adam Smith could scarcely avoid the financial news of the day, and realized the barrier such abuses posed to his hopes for advancing the condition of his day.95* That accounts for his abiding support for prudent government regulation to channel the business community’s greed into competition.

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Meckling, “Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure,” Journal of Financial Economics, vol. 3, no. 4, 1976. 24 John Plender, “Investing: Rules of Engagement,” Financial Times, July 11, 2010. 25 Justin Baer, Francesco Guerrera, and Richard Milne “A Need to Reconnect,” Financial Times, March 13, 2009. 26 Rakesh Khurana and Nitin Nohria, “Management Needs to Become a Profession,” Financial Times, Oct. 20, 2008. 27 Adam Smith, The Wealth of Nations, 368–69. 28 Joe Nocera, “Nice Wasn’t Part of the Deal,” New York Times, Aug. 1, 2009. 29 Adam Smith, The Wealth of Nations. 30 Milton Friedman, “Rethinking the Social Responsibility of Business,” Reason, October 2005. 31 David Magee, Jeff Immelt and the New GE Way (New York: McGraw-Hill Professional, 2009). 32 John P. Hussman, “Misallocating Funds,” Weekly Market Comment, July 12, 2010, hussmanfunds.com, http://www.hussmanfunds.com/wmc/wmc100712.htm. 33 Truman F.

Private Government: How Employers Rule Our Lives (And Why We Don't Talk About It) by Elizabeth S. Anderson

Affordable Care Act / Obamacare, barriers to entry, call centre, collective bargaining, corporate governance, correlation does not imply causation, declining real wages, deskilling, feminist movement, Frederick Winslow Taylor, full employment, independent contractor, invisible hand, Jeremy Corbyn, manufacturing employment, means of production, Panopticon Jeremy Bentham, principal–agent problem, profit motive, Ronald Coase, scientific management, shareholder value, Socratic dialogue, spinning jenny, The Nature of the Firm, The Wealth of Nations by Adam Smith, trickle-down economics, Tyler Cowen

Smith, in particular, has been misread as a theorist of benign “invisible hand” self-interest and socially disembedded, selfequilibriating markets. Bromwich rightly invokes Polanyi against such illusions, but wrongly supposes that Smith held them. For corrections, see Gavin Kennedy, “Adam Smith: Some Popular Uses and Abuses,” in Adam Smith: His Life, Thought, and Legacy, edited by Ryan Hanley (Princeton, NJ: Princeton University Press, 2016), 461–77. 2. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Vol. 1, Glasgow Edition of the Works and Correspondence of Adam Smith (Indianapolis: Liberty Fund, 1981), I.10.2.61. Nor did Locke support unregulated labor markets. Although he prescribed harsh measures for dealing with those among the poor whom he imagined to be voluntarily unemployed, he also argued that property owners should be required to hire the involuntarily unemployed at a state-prescribed minimum wage.

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But it serves to fix ideas. I hasten to add that some egalitarians of the seventeenth and eighteenth centuries—notably, the Diggers and Rousseau—rejected market society. My focus in this lecture is on those who embraced it. 2. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, vol. 1, Glasgow Edition of the Works and Correspondence of Adam Smith (Indianapolis: Liberty Fund, 1981), I.ii.2. 3. Karl Marx, Capital: A Critique of Political Economy, edited by Frederick Engels, translated by Samuel Moore and Edward Aveling (Chicago: Charles H. Kerr, 1912), 195–96. 4. This is not just cynicism on Smith’s part.

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He did not appeal to racist premises to justify his position. On this point, see Jeremy Waldron, God, Locke, and Equality: Christian Foundations of John Locke’s Political Thought (Cambridge and New York: Cambridge University Press, 2002), Kindle loc. 2256–2335, 2402–15. 5. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Vol. 2, Glasgow Edition of the Works and Correspondence of Adam Smith (Indianapolis: Liberty Fund, 1981), V.1.f.61. 6. Locke contradicted himself on this point. Notoriously, he invested in the slave trade, and probably helped draft The Fundamental Constitutions of Carolina, 1669, http://avalon.law.yale.edu/17th_century/nc05.asp, which upheld slavery.

The Rational Optimist: How Prosperity Evolves by Matt Ridley

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

p. 37 ‘In civilized society,’ wrote Adam Smith’. Smith, A. 1776. The Wealth of Nations. p. 38 ‘Leonard Read’s classic 1958 essay “I, Pencil”’. Read, L.E. 1958. I, Pencil. The Freeman, December 1958. For a fine modern rerun of the same subject see the novel by Roberts, R. 2008. The Price of Everything. Princeton University Press. p. 38 ‘As Friedrich Hayek first clearly saw’. Hayek, F.A. 1945. The use of knowledge in society. American Economic Review 35:519–30. p. 39 ‘a smaller quantity of labour produce a greater quantity of work’. Smith, A. 1776. The Wealth of Nations. p. 39 ‘you would have spent your after-tax income in roughly the following way’.

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Current Biology 17:1908–12. p. 57 ‘as Leda Cosmides and John Tooby put it’. Cosmides, L. and Tooby, J. 1992. Cognitive adaptations for social exchange. In The Adapted Mind (eds J.H. Barkow, L. Cosmides and J. Tooby). Oxford University Press. p. 57 ‘In Adam Smith’s words’. Both Adam Smith quotes are from book 1, part 2, of The Wealth of Nations (1776). p. 57 ‘In the grasslands of Cameroon’. Rowland and Warnier, quoted in Shennan, S. 2002. Genes, Memes and Human History. Thames & Hudson. p. 59 ‘The primatologist Sarah Brosnan tried to teach two different groups of chimpanzees about barter’.

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Arnold, J.E. 2001. The Origins of a Pacific Coast Chiefdom: The Chumash of the Channel Islands. University of Utah Press. p. 93 ‘Das Adam Smith Problem’. Coase, R. H. 1995. Adam Smith’s view of man. In Essays on Economics and Economists. University of Chicago Press. p. 93 ‘How selfish soever man may be supposed’. Smith, A. 1759. The Theory of Moral Sentiments. p. 93 ‘Man has almost constant occasion for the help of his brethren’. Smith, A. 1776. The Wealth of Nations. p. 93 ‘honorary friends’. Seabright, P. 2004. The Company of Strangers. Princeton University Press. p. 94 ‘As the philosopher Robert Solomon put it’.

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

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

Marx, we will see, was more subtle in his understanding of this distinction. Adam Smith: The Birth of the Labour Theory of Value Born in 1723 into a family of customs officials in Kirkcaldy, in the county of Fife, Scotland, Adam Smith became Professor of Moral Philosophy at the University of Glasgow before turning his mind to what we now call economic questions, although at the time such questions were deeply influenced by philosophy and political thought. With Britain well on the path to industrial capitalism, Smith's The Wealth of Nations highlighted the role of the division of labour in manufacturing. His account of pin-manufacturing continues to be cited today as one of the first examples of organizational and technological change at the centre of the economic growth process.

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And to choose a different path among the many that are available. 1 A Brief History of Value There is one sort of labour which adds to the value of the subject upon which it is bestowed: there is another which has no such effect. The former, as it produces a value, may be called productive; the latter, unproductive labour. Adam Smith, The Wealth of Nations (1776) Today we take increasing prosperity for granted. We assume that by and large the next generation will be better off than the last. But it was not always so. For most of human history people had no such expectations and, partly because living standards improved at best very slowly, few thinkers devoted much time to asking why some economies grow and others do not.

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This normative and moral view of price, linked to cheating or criminal behaviour, began to fade after the seventeenth century - the time of Petty and King - but lingered on until firmly supplanted by the concept of individual utility, which held that it was not about good or bad but how common goals could be reached through each individual trying to maximize the benefit to him- or herself. In 1776 - the year that Adam Smith published The Wealth of Nations - the Englishman Jeremy Bentham argued that ‘the greatest happiness of the greatest number' should be the ‘measure of right and wrong'.5 In other words, an action should be evaluated according to its consequences in a particular context: killing may be justified if it prevents more killing.

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

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

A woman is willing to punish defectors in ways that entail even the sacrifice (from the Latin, “make holy”) of her own profits.19 Humans have a sense of justice (as the primatologist Frans de Waal argues, so also do some other animals, if less elaborately), a sense of appropriate behavior toward other people and especially in other people. They will go to lengths to praise and reward manifestations of the virtues—prudence, temperance, courage, justice, faith, hope, and love—and to blame and punish the corresponding vices. The Blessed Adam Smith called such matters of internalized ethics the “impartial spectator”—though a spectator who then gets up on stage to act, for the moral sentiments and the wealth of nations. A society can craft an official rule against cheating in business. Such a rule would be a “good institution.” It’s even necessary, to discourage the simplest game-theoretic defections and to generate “Schelling points” around which business can gather.

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The three virtues of the classical and Christian seven that are missing from Austen—transcendent hope and faith and love of God—are the same one’s missing from Adam Smith. (Austen appears to have got the gist of Smith only indirectly, if at all. Her father’s considerable library of five hundred books might possibly have contained one of the two books Smith published. Waterman, who has gone into the matter of the circulation of The Wealth of Nations in detail, doubts it.) That is, she is not a Romantic novelist, even though she concerned herself exclusively with romance in its recent sense of “affairs of the heart.”

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Smith was inclined to “offices of secret charity,” a most bourgeois inclination.18 The Duke of Buccleuch, in whose entourage Smith traveled the Continent 1764–1766, admired him for “every private virtue,” the sort of virtues an aristocrat would think well suited to a bourgeois.19 On eighteenth-century suppositions, the public virtues—that is, the political virtues—were to be exercised mainly by aristocrats. Of the seven principal virtues of classical and Christian theory, Adam Smith paid particular attention to three. His three books—two published and one intended—match the three. Prudence is the chief, if nothing like the only, virtue considered in The Wealth of Nations. Temperance is the chief, if again not the only, virtue considered in The Theory of Moral Sentiments. And justice was to be considered in a projected Treatise on Jurisprudence, the shape of which we can imagine from elaborate notes by Smith’s students in courses given from his chair of Moral Philosophy in 1762–1763 and 1766.

The Unknowers: How Strategic Ignorance Rules the World by Linsey McGoey

Alan Greenspan, An Inconvenient Truth, anti-globalists, antiwork, battle of ideas, behavioural economics, Big Tech, Black Lives Matter, Branko Milanovic, British Empire, Cambridge Analytica, carbon tax, Cass Sunstein, Clive Stafford Smith, conceptual framework, Corn Laws, corporate governance, corporate raider, Credit Default Swap, David Ricardo: comparative advantage, Donald Trump, drone strike, en.wikipedia.org, European colonialism, fake news, Frances Oldham Kelsey, hiring and firing, Howard Zinn, income inequality, it is difficult to get a man to understand something, when his salary depends on his not understanding it, joint-stock company, junk bonds, knowledge economy, market fundamentalism, mass incarceration, Michael Milken, minimum wage unemployment, Naomi Klein, new economy, Nick Leeson, p-value, Paul Samuelson, Peter Thiel, plutocrats, post-truth, public intellectual, race to the bottom, randomized controlled trial, rent-seeking, road to serfdom, Robert Mercer, Ronald Reagan, Scientific racism, selective serotonin reuptake inhibitor (SSRI), Social Justice Warrior, Steven Pinker, Suez crisis 1956, The Chicago School, The Wealth of Nations by Adam Smith, union organizing, Upton Sinclair, W. E. B. Du Bois, Washington Consensus, wealth creators

If you read on, beyond Books One to Three of the Wealth of Nations, into those parts almost never represented in modern selected editions, it becomes clear that Smith foresaw negative consequences to unfettered economic growth; that for Smith the moral economy still mattered. Female economists, of whom there have been a few over the intervening centuries, often seem to grasp that point, but it has been widely ignored in a predominantly male specialism.32 It is a very good point, but while gender plays some role, it can’t explain all. Writing in 1952, the British economist Lionel Robbins suggested that to call Adam Smith a laissez faire thinker ‘is a sure sign of ignorance or malice.’33 In other words, women have been at the forefront of a more accurate understanding of Smith’s writing.

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, a wonderful and witty book which highlights important points about the way that contemporary economic theories tend to ignore the economic importance of domestic, unpaid labour, especially the labour of women.1 My focus is a little different. I agree that much academic theory ignores the role of unpaid labour in creating economic value. But there’s also another problem surrounding the treatment of Smith’s work today. His book, The Wealth of Nations, published in 1776, is widely viewed today as the most important modern economic text ever written. Smith is seen as the patron saint of the belief that economic self-interest will lead naturally to positive economic growth for all members of a community. Steven Pinker and others call this the ‘positive-sum’ or ‘shared prosperity’ thesis and they attribute it to Smith.

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She notes that the editor of a 1970 Penguin version expects that his readers will agree ‘that the first two books contain the central part of Smith’s work as a theoretical economist, and the real basis of a profoundly influential school of thought.’ Another editor, of the Everyman version in 1991, suggests the first four books ‘contain the whole of what Smith had to say in carrying out his aim, “An inquiry into the Nature and Causes of the Wealth of Nations.”’31 Sutherland makes an important and neglected observation. To discount the centrality of Book 5 might seem like an arbitrary decision, but when multiple versions omit the same book, it amounts to a pattern of wilful omission. The deliberate cutting of sections where Smith writes at length about the necessity of government intervention is an example of what I mean by elite ignorance, because it proves that what people today don’t know about Smith isn’t simply accidental, but rather results from the biases of earlier scholars who are influential in shaping what future generations understand about the past.

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

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

Jacoby, “Probabilistic Forecast for 21st Century Climate Based on Uncertainties in Emissions (without Policy) and Climate Parameters,” MIT Joint Program on the Science and Policy of Global Change, Report 169, January 2009. 5. Jane Mayer, “Covert Operations: The Billionaire Brothers Who Are Waging a War against Obama,” New Yorker, August 30, 2010, pp. 44–55. 6. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, State College, PA: Penn State University, 2005, p. 364 (originally published in 1776). 7. Ibid., p. 111. 8. For a comprehensive account of how laissez-faire enthusiasts have often misrepresented Adam Smith’s positions, see Amartya Sen’s introduction to the 250thanniversary edition of Smith’s The Theory of Moral Sentiments, New York: Penguin, 2009. 9. Charles Darwin, The Origin of Species, 6th London Edition, The Literature Project, 2000–2010.

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John Rawls, A Theory of Justice, Cambridge, MA: Belknap Press of Harvard University Press, 1971. 2. Harriet Rubin, “Ayn Rand’s Literature of Capitalism,” New York Times, September 15, 2007, http://www.nytimes.com/2007/09/15/business/15atlas.html. 3. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, State College, PA: Penn State University, 2005, book 1, chapter 1 (originally published in 1776), http://www.online-literature.com/adam_smith/wealth_nations/3/. 4. Ibid., book 1, chapter 3. 5. Robert Nozick, Anarchy, State, and Utopia, New York: Basic Books, 1974. 6. www.sirclisto.com/cavalier/spain.htm. INDEX absolute consumption, 24–25, 40 absolute income, 23, 44 ACAP.

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One century hence, if a roster of professional economists is asked to identify the intellectual father of their discipline, a majority will name Charles Darwin. If the same question were posed today, of course, more than 99 percent of my colleagues would name Adam Smith. My views about Darwin’s significance reflect no shortage of admiration for Smith on my part. On the contrary, reading any random passage from the eighteenth-century Scottish moral philosopher’s masterwork, The Wealth of Nations, still causes me to marvel at the depth and breadth of his insights. Charles Darwin was himself no slouch, obviously, yet few people outside academic departments of biology and economics associate his name with ideas in economics.

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

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

But eventually, if money kept flooding in from outside (as was the case with Spain in the previous two centuries), there would be limits to how far economic activity could expand in the short term, and this constraint would result in inflation. As to the question of what constituted wealth, the answer was to come from a fellow Scotsman and friend – Adam Smith. Determining the Wealth of Nations Adam Smith, a lifelong bachelor who lived with his mother and sister all his adult life, was a friend of David Hume. Smith was elected a Professor of Moral Philosophy at Glasgow, and later gave up the post to become a tutor to the Duke of Buccleuch, which allowed him to travel all over Europe meeting the famous philosophers of his day.

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In the eighteenth century, kings still sought to increase their wealth through invasion and plunder – Britain was even then in the middle of its long century of war with France, which lasted, on and off, from 1695 to 1815. In his celebrated book An Inquiry into the Nature and Causes of the Wealth of Nations, published in 1776, Adam Smith pointed out that it was the productivity of its workers which was the key to the prosperity of a nation and not the treasures of gold and silver it had accumulated. The productivity of the workers could be enhanced with tools and machines. The capital – the money to buy the tools and machinery as well as to pay the wages – was accumulated out of the profits that the providers of capital made by employing the workers.

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He was well aware of the role of benevolence and sympathy in social life, which he had discussed in The Theory of Moral Sentiments. There were restraints on the pursuit of self-interest by individuals in the laws of the land as well as social conventions. But the dynamic energy unleashed by millions of people pursuing self-interest was the key to the wealth of nations. Adam Smith was a Deist, that is, someone who did not believe in the Revelation or the Virgin Birth but was religious. The fashionable doctrine in those days was of God as a Clockmaker. God did not intervene in the mundane affairs of the people on earth. He set the universe in motion as if it were a highly sprung and delicate clock which then worked away on its own as the pendulum swung back and forth.

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

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

Emergent ideas were all around him. He read his grandfather’s Lucretius-emulating poems. ‘My studies consist in Locke and Adam Smith,’ he wrote from Cambridge, citing two of the most bottom–up philosophers. Probably it was Smith’s The Moral Sentiments that he read, since it was more popular in universities than The Wealth of Nations. Indeed, one of the books that Darwin read in the autumn of 1838 after returning from the voyage of the Beagle and when about to crystallise the idea of natural selection was Dugald Stewart’s biography of Adam Smith, from which he got the idea of competition and emergent order. The same month he read, or reread, the political economist Robert Malthus’s essay on population, and was struck by the notion of a struggle for existence in which some thrived and others did not, an idea which helped trigger the insight of natural selection.

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Human action, but not human design The great enrichment was an evolutionary phenomenon. Let’s return to the late eighteenth century, when Britain stands on the brink of this great enrichment, and revisit that great thinker about the general theory of evolution, Adam Smith. In 1776 Smith published his second book, The Wealth of Nations. In it he set out to champion a different evolutionary idea from that which he had set out in his Theory of Moral Sentiments. If God was not the cause of morality, was government the cause of prosperity? In Smith’s day, commerce was a tightly regulated business, with joint-stock companies chartered specifically and exclusively by the state to have monopolies, and mercantilist trade policies designed to promote certain kinds of foreign exports, not to mention professions strictly licensed by the government.

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

What They Do With Your Money: How the Financial System Fails Us, and How to Fix It by Stephen Davis, Jon Lukomnik, David Pitt-Watson

activist fund / activist shareholder / activist investor, Admiral Zheng, banking crisis, Basel III, Bear Stearns, behavioural economics, Bernie Madoff, Black Swan, buy and hold, Carl Icahn, centralized clearinghouse, clean water, compensation consultant, computerized trading, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, crowdsourcing, David Brooks, Dissolution of the Soviet Union, diversification, diversified portfolio, en.wikipedia.org, financial engineering, financial innovation, financial intermediation, fixed income, Flash crash, Glass-Steagall Act, income inequality, index fund, information asymmetry, invisible hand, John Bogle, Kenneth Arrow, Kickstarter, light touch regulation, London Whale, Long Term Capital Management, moral hazard, Myron Scholes, Northern Rock, passive investing, Paul Volcker talking about ATMs, payment for order flow, performance metric, Ponzi scheme, post-work, principal–agent problem, rent-seeking, Ronald Coase, seminal paper, shareholder value, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical model, Steve Jobs, the market place, The Wealth of Nations by Adam Smith, transaction costs, Upton Sinclair, value at risk, WikiLeaks

Pitt speech on introducing his budget, February 17, 1792, quoted in John Kenneth Galbraith, A History of Economics (Hamish Hamilton, 1987), 61. 10. Adam Smith, The Wealth of Nations (Oxford University Press, 2008), bk 1, chap 2. 11. Smith claimed that 240 times the number of pins could be created in this way than by an artisan working alone. 12. See Adam Smith, The Wealth of Nations, bk. 1, chap. 7. 13. Other economists of the same era also sought to turn economics into a science like physics. Stanley Jevons, for example, is described as “wanting to make human behavior as predictable as gravity.” Eric Beinhocker, The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics (Random House, 2005), 34. 14.

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7 In the Middle Ages, writings on economic matters could be found in manuals for confessors, who were concerned that prices charged by merchants were “just.” Adam Smith was a professor of moral philosophy who believed his most important book to be one entitled The Theory of Moral Sentiments.8 But he became most famous for a follow-up work in which he applied his mind to the world of commerce: The Wealth of Nations. Even in his own time, it was profoundly influential. Prime Minister William Pitt declared to the House of Commons in 1792 that Smith’s work would “furnish the best solution to every question connected to the history of commerce and with the system of political economy.”9 The Wealth of Nations contains two profoundly important observations, the first of which flew in the face of society’s preference for thinking about money in moral terms.

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But scientists have certain statistical methods by which they can determine how accurate their measurements, and therefore their predictions, are likely to be. One of the key figures in developing those statistical methods was the mathematician who graced the ten-euro note: Carl Friedrich Gauss. Gauss, born the year after Adam Smith published The Wealth of Nations, is recognized as one of the world’s greatest mathematicians. His most direct contributions were in mathematics and physics; he did not turn his attention to economics, which at the time was not considered a mathematical science. As director of the astronomical observatory at Göttingen, Germany, however, he was interested in astronomical measurements and, in particular, the distribution of errors in measurement.17 Simply put, he wanted to know how wrong he could be, how often.

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

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

remarks at the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, Wyoming, August 25–27, 2005, available at www.kc.frb.org/publicat/sympos/2005/PDF/GD5_2005.pdf. 23 “The conventional wisdom . . .”: John Kenneth Galbraith, The Affluent Society (Boston: Mariner Books, 1998), 9. 2. ADAM SMITH’S INVISIBLE HAND 27 “It is striking to me . . .”: Alan Greenspan, The Age of Turbulence (New York: Penguin Press, 2007), 260. 27 “One man draws out . . .”: Adam Smith, The Wealth of Nations, Books 1–3 (New York: Penguin Books, 1997), 109–10. 28 In China between 1981 . . . : Poverty Data: A Supplement to World Development Indicators 2008, World Bank, December 2008. 28 “The shepherd, the sorter . . .”: Smith, Wealth of Nations, Books 1–3, 116–17. 29 iPod’s manufacturing chain: See Greg Linden, Kenneth L.

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Rubinfeld, of the University of California, Berkeley: General equilibrium theory, Pindyck and Rubinfeld write, “is the most direct way of illustrating the working of Adam Smith’s famous invisible hand, because it tells us that the economy will automatically allocate resources efficiently without the need for governmental regulatory control.” A defining feature of equilibrium theory, and the source of its appeal to many economists, is its mathematical elegance. For a hundred years or so, following the publication of The Wealth of Nations, economics remained an informal discipline: most of its major figures expressed their arguments in prose. As the nineteenth century progressed, this began to change.

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Its main importance was that, starting out from a perfectly orthodox position—Romer did his Ph.D. at Chicago, where Robert Lucas was one of his teachers—it ended up undermining Adam Smith’s argument that unfettered competition is always the most effective vehicle for promoting economic growth. In an encouraging sign, at least some textbook writers have recognized this point. “That knowledge is both nonrivalrous and nonexcludable creates substantial problems for a market economy,” David Miles and Andrew Scott, the authors of Macroeconomics: Understanding the Wealth of Nations, note. “Because the output of R&D activity is both uncertain and, largely, nonexcludable, firms would prefer to let other firms discover successful new technologies and then copy them.

Why We Work by Barry Schwartz

Atul Gawande, call centre, deskilling, do well by doing good, Frederick Winslow Taylor, fulfillment center, future of work, Higgs boson, if you build it, they will come, invisible hand, job satisfaction, meta-analysis, Paradox of Choice, scientific management, Silicon Valley, TED Talk, The Wealth of Nations by Adam Smith, Toyota Production System

You can see this view operating in the “carrot and stick” approach that has dominated efforts to solve the world’s recent financial crisis. To prevent a financial meltdown from happening again, people argued, we needed to replace the “dumb” incentives that led to it with “smarter” ones. We had to get incentives right. Nothing else really mattered. This idea animated the inventor of the free market, Adam Smith. In The Wealth of Nations, published in 1776, he wrote that: It is in the inherent interest of every man to live as much at his ease as he can; and if his emoluments are to be precisely the same whether he does or does not perform some very laborious duty, to perform it in as careless and slovenly a manner that authority will permit.

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Empathy, and care and concern for the well-being of others, are routine parts of most people’s character. Yet they are in danger of being crowded out by exclusive concern for self-interest—a concern that is encouraged by the incentive-based structure of the workplace. Even Adam Smith understood that there was more to human nature than self-interest. The Wealth of Nations followed another book, The Theory of Moral Sentiments, in which he suggested that a certain natural sympathy for one’s fellow human beings provided needed restraints on what people would do if they were left free to “barter, truck, and exchange one thing for another.”

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New York: Riverhead, 2010.* Sen, A. “Rational Fools.” Philosophy and Public Affairs, 6 (1976): 317–44. Skinner, B. F. (1953). Science and Human Behavior. New York: Macmillan.* Smith, A. The Theory of Moral Sentiments (Originally published in 1753). Oxford: Clarendon Press, 1976.* ——. The Wealth of Nations (Originally published in 1776). New York: Modern Library, 1937.* Snyder, M. and E. D. Tanke. (1977). “Social Perception and Interpersonal Behavior: On the Self-fulfilling Nature of Social Stereotypes.” Journal of Personality and Social Psychology, 35 (1977): 655–66. Sowell, T. A Conflict of Visions.

The Logic of Life: The Rational Economics of an Irrational World by Tim Harford

activist fund / activist shareholder / activist investor, affirmative action, Albert Einstein, Andrei Shleifer, barriers to entry, behavioural economics, Berlin Wall, business cycle, colonial rule, company town, Daniel Kahneman / Amos Tversky, double entry bookkeeping, Dr. Strangelove, Edward Glaeser, en.wikipedia.org, endowment effect, European colonialism, experimental economics, experimental subject, George Akerlof, income per capita, invention of the telephone, Jane Jacobs, John von Neumann, Larry Ellison, law of one price, Martin Wolf, mutually assured destruction, New Economic Geography, new economy, Patri Friedman, plutocrats, Richard Florida, Richard Thaler, Ronald Reagan, Silicon Valley, spinning jenny, Steve Jobs, The Death and Life of Great American Cities, the market place, the strength of weak ties, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Tyler Cowen, women in the workforce, zero-sum game

Delaying motherhood means big income gains: Amalia Miller is the young economist behind this very clever research. Her working paper is available at www.virginia.edu/economics/miller.htm. (His employer was): Biographical details of Adam Smith are from James Buchan, Adam Smith and the Pursuit of Perfect Liberty (London: Profile, 2006). But despite his travels: See David Warsh’s superb Knowledge and the Wealth of Nations (New York: Norton, 2006), chapter 3. “could scarce, perhaps”: Adam Smith, The Wealth of Nations, book 1, chapter 1, paragraph 3. Versions are available online, for instance at www.econlib.org/library/Smith/smWN.html. His adoring wife: Stephanie Coontz, Marriage: A History (New York: Viking, 2005).

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And they are perhaps delayed indefinitely: Betsey Stevenson and Justin Wolfers, “Marriage and Divorce: Changes and their Driving Forces,” NBER Working Paper 12944. Also Tyler Cowen, “Matrimony Has Its Benefits, and Divorce Has a Lot to Do with That,” The New York Times, April 19, 2007. “We know there exists something”: Interview with Justin Wolfers, June 2007. “The man whose whole life”: Adam Smith, The Wealth of Nations, book 5, chapter 1, par. 178, www.econlib.org/library/Smith/smWN.html. 4. WHY YOUR BOSS IS OVERPAID Dilbert: This Dilbert cartoon was reprinted in Edward Lazear, Personnel Economics for Managers (New York: Wiley, 1998). He reckoned that 30,000: Tim Harford, “Odd Numbers,” Financial Times, April 23, 2005.

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Another good popular account is “Economics Focus: Winds of Change,” Economist, November 2, 2006. “Nobody ever saw a dog”: Smith, The Wealth of Nations, book 1, chapter 2. Computer-based simulations: See “Homo Economicus?” Economist, April 7, 2005, and Richard D. Horan, Erwin Bulte, and Jason F. Shogren, “How Trade Saved Humanity from Biological Exclusion: An Economic Theory of Neanderthal Extinction,” Journal of Economic Behavior & Organization 58, no. 1(September 2005): 1–29. Neanderthals, apparently, did not: “Mrs. Adam Smith,” Economist, December 9, 2006. Also Steven L. Kuhn and Mary C. Stiner, “What’s a Mother to Do? The Division of Labor Among Neanderthals and Modern Humans in Eurasia,” Current Anthropology 47, no. 6(December 2006): 953–80, www.journals.uchicago.edu/CA/journal/issues/v47n6/066001/066001.web.pdf.

Basic Economics by Thomas Sowell

affirmative action, air freight, airline deregulation, Alan Greenspan, American Legislative Exchange Council, bank run, barriers to entry, big-box store, British Empire, business cycle, clean water, collective bargaining, colonial rule, corporate governance, correlation does not imply causation, cotton gin, cross-subsidies, David Brooks, David Ricardo: comparative advantage, declining real wages, Dissolution of the Soviet Union, diversified portfolio, European colonialism, fixed income, Ford Model T, Fractional reserve banking, full employment, global village, Gunnar Myrdal, Hernando de Soto, hiring and firing, housing crisis, income inequality, income per capita, index fund, informal economy, inventory management, invisible hand, John Maynard Keynes: technological unemployment, joint-stock company, junk bonds, Just-in-time delivery, Kenneth Arrow, knowledge economy, labor-force participation, land reform, late fees, low cost airline, low interest rates, low skilled workers, means of production, Mikhail Gorbachev, minimum wage unemployment, moral hazard, offshore financial centre, oil shale / tar sands, payday loans, Phillips curve, Post-Keynesian economics, price discrimination, price stability, profit motive, quantitative easing, Ralph Nader, rent control, rent stabilization, road to serfdom, Ronald Reagan, San Francisco homelessness, Silicon Valley, surplus humans, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, transcontinental railway, Tyler Cowen, Vanguard fund, War on Poverty, We are all Keynesians now

Cadell and W. Davies, Strand, 1805), Volume I, p. 337. {986} Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Modern Library, 1937), p. 79. {987} Ibid., p. 250. {988} Ibid., p. lvii. {989} Ibid., p. 325. {990} Ibid., p. 900. {991} Ibid., pp. 80–81, 365; Adam Smith, The Theory of Moral Sentiments (Indianapolis: Liberty Classics, 1976), p. 337. {992} Adam Smith, The Wealth of Nations, p. 423. {993} Sir James Steuart, The Works, Volume I, pp. 4, 15, 73, 88. {994} Adam Smith, The Wealth of Nations, p. 435. {995} David Ricardo, The Works and Correspondence of David Ricardo, Volume VII: Letters 1816–1818, edited by Piero Sraffa (New York: Cambridge University Press, 1952), p. 372

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John Maynard Keynes{981} People have been talking about economic issues, and some writing about them, for thousands of years, so it is not possible to put a specific date on when the study of economics began as a separate field. Modern economics is often dated from 1776, when Adam Smith wrote his classic, The Wealth of Nations, but there were substantial books devoted to economics at least a century earlier, and there was a contemporary school of French economists called the Physiocrats, some of whose members Smith met while traveling in France, years before he wrote his own treatise on economics. What was different about The Wealth of Nations was that it became the foundation for a whole school of economists who continued and developed its ideas over the next two generations, including such leading figures as David Ricardo (1772–1823) and John Stuart Mill (1806–1873), and the influence of Adam Smith has to some extent persisted on to the present day.

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Thus Sir James Steuart could write in 1767 of “a whole nation fed and provided for gratuitously” by means of slavery.{985} Although slaves were obviously part of the population, they were not considered to be part of the nation. CLASSICAL ECONOMICS Adam Smith Within a decade after Sir James Steuart’s multi-volume mercantilist treatise, Adam Smith’s The Wealth of Nations was published and dealt a historic blow against mercantilist theories and the whole mercantilist conception of the world. Smith conceived of the nation as all the people living in it. Thus you could not enrich a nation by keeping wages down in order to export.

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

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

“There are few ways in which a man can be more innocently employed than in getting money,” was how Dr. Johnson famously put it. His French contemporary Montesquieu talked of the douceur of commerce.14 Once money-making had been stripped of its ethical opprobrium, it became open to treatment in terms of cause and effect. Hume’s friend, the Scottish philosopher Adam Smith, took the lead. The Wealth of Nations, his masterpiece of 1776, presents humans as driven by a natural desire for self-improvement, which under conditions of free competition leads them “as if by an invisible hand” to promote the public well-being. Newton’s mechanical science of nature was thereby extended to economic relations, with self-interest in the role of gravity.

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The role of the state in management, ownership, regulation, allocation, and distribution was drastically pared back. Governments gave up attempts to steer market forces to desirable social outcomes, limiting themselves to maintaining framework conditions for successful market performance. The wealth of nations would be made to grow faster by releasing acquisitiveness from its communal restraints, in a reprise of the arguments first advanced by Adam Smith and his followers. In this kind of world there is no reason why capitalism should ever end, provided everything goes according to plan. Keynes’s notion of satiety has no place: the progress of the system will create new wants and stimulate positional competition without limit.

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John Maynard Keynes, The General Theory of Employment, Interest, and Money, The Collected Writings of John Maynard Keynes, vol. 7 (Cambridge: Cambridge University Press, 1973), p. 374. 7. IMSciences.net, accessed 09/09/11. 8. H. J. Johnson, “The Political Economy of Opulence,” Canadian Journal of Economics and Political Science, vol. 26, pt. 4 (1960), p. 554. 9. Adam Smith, The Wealth of Nations (Lawrence, Kan.: Digireads.com, 2009; first publ. 1759), p. 40; Alfred Marshall, Principles of Economics (London: Prometheus Books, 1920), p. 1; Lionel Robbins, An Essay on the Nature and Significance of Economic Science (London: Macmillan, 1932), p. 16. 10. Keynes, Essays in Persuasion, p. 332.

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

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

That number is bound to rise with the increase in population, so the evolution of global inequality will increasingly depend on what is happening in Africa. 38. Adam Smith, The Wealth of Nations, book 4, chap. 7. Appendix A 1. “The colony of a civilised nation which takes possession either of a waste country, or of one so thinly inhabited that the natives easily give place to the new settlers, advances more rapidly to wealth and greatness than any other human society” (Adam Smith, The Wealth of Nations, book 4, chap. 7). 2. “The British Rule in India,” New York Tribune, June 25, 1853, in Marx (2007, 218–219). 3. “The Future Results of British Rule in India,” New York Tribune, August 8, 1853, in Marx (2007, 220). 4.

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In order to answer that question and look at the prospects of political capitalism, it would be useful to consider an interesting approach suggested by Giovanni Arrighi in Adam Smith in Beijing: Lineages of the Twenty-First Century (2007). Smithian and Marxian capitalisms Arrighi starts from a dichotomy that I think he was the first to have defined, in a series of articles, between what he calls a Smithian “natural” path of development of capitalism and a Marxian “unnatural” path. Smith’s natural path, “the natural progress of opulence,” in the terminology of The Wealth of Nations, is that of a market economy of small producers that grows, through division of labor, from agriculture into manufacturing and only later goes into domestic trade and eventually long-distance foreign trade.

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David Wootton writes: “The two works [The Theory of Moral Sentiments and The Wealth of Nations] do not fit quite so neatly together, for one is about how we ought to behave toward our family, friends, and neighbors (who evoke our benevolent feelings), and the other about how we should interact with strangers we meet in the marketplace (to whom we owe no particular duty of care—caveat emptor is an attitude we can legitimately adopt to strangers, but not to family, friends, and neighbors).… [There is] a tension between the amoral world of market forces, and the moral world of human interactions. The Wealth of Nations establishes the extent to which our choices are constrained by market forces, and these constraints limit our opportunities for admirable moral behavior” (Wootton 2018, 174–175; my emphasis). 5.

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

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

The son, also a Catholic, had unrealized pretensions of regaining his father’s throne as James III.) Smith’s leading success story was the American colonies (whose side he took in their dispute with the Crown just as the Wealth of Nations was published). Their secret was “plenty of good land, and liberty to manage their own affairs their own way.” The word liberty appears eighty-five times in the Wealth of Nations. As one biographer, Nicholas Phillipson, put it, Smith’s life’s work was “a call to his contemporaries to take moral, political and intellectual control of their lives.”44 In a remarkable and little-known paragraph criticizing Quesnay, Smith is starting to see that a free political system could also have an Invisible Hand: [Quesnay] seems not to have considered, that in the political body, the natural effort which every man is continually making to better his own condition, is a principle of preservation capable of preventing and correcting, in many respects, the bad effects of a political economy. . . .

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Ian Simpson Ross, The Life of Adam Smith, second edition (Oxford: Oxford University Press, 2010), Kindle edition, locations 1231–39. 5. Ross, Life of Adam Smith, 6131–39. 6. Nicholas Phillipson, Adam Smith: An Enlightened Life (New Haven, CT: Yale University Press, 2010), Kindle edition, location 727. 7. Adam Smith, Wealth of Nations (Beijing, China: Dolphin Books, 2008), Kindle edition, locations 6696–98. There is something evocative and/or ironic about a Chinese company producing an electronic edition of Adam Smith sold on Amazon for $1.00. Emphasis added. 8. Ibid., 212–14. 9. Adam Smith, The Theory of Moral Sentiments (MacMay, 2008), Kindle edition, location 3585; http://www.amazon.com/dp/B001NPDN46/ref=rdr_kindle_ext_tmb. 10.

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Actually, Smith held many negative views about both the rich and businessmen. In his first classic, The Theory of Moral Sentiments, published in 1759, Smith spoke of the rich as a “few lordly masters,” consumed by “vain and insatiable desires,” not to mention their “natural selfishness and rapacity.”9 As for businessmen, Smith in The Wealth of Nations spoke of “the mean rapacity, the monopolizing spirit, of merchants and manufacturers,” which sounds like something he had personally observed in Glasgow. His whole work he described as a “very violent attack” targeting “the wretched spirit of monopoly.” Another famous statement of Smith’s further develops this: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”10 Greedy merchants were, for Smith, far from concerned about promoting general well-being.

The Ages of Globalization by Jeffrey D. Sachs

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

Spain and Portugal each held some Asian colonies as well, including the Philippines under Spain and eastern Timor under Portugal. 6.8 World Empires and Selected Nations, 1830 Much of the ensuing drama of nineteenth-century economic development would take place on the mainland of Europe, which pioneered the new age of industrial globalization. Adam Smith’s Summation of the Age of Global Empire Adam Smith, the great inventor of modern economic thought, living in Scotland in the eighteenth century, published his magnum opus, The Wealth of Nations, in 1776. As a great humanist, he observed the consequences of globalization with a globalist perspective rather than British partiality. (In his own work on moral sympathy, Smith spoke about the “impartial spectator” as the vantage point for moral reasoning.)

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Private businesses, drunk with greed, hired private armies, enslaved millions, bribed their way to privileged political status at home and abroad, and generally acted with impunity. But even beyond the private greed, it was an age of conquest and unchecked competition among Europe’s powers. The world beyond the oceans was up for grabs, and little would hold back the rapaciousness that was unleashed as a result. Adam Smith’s masterwork, The Wealth of Nations, provided a template for riches: global trade as the spur for specialization and rising productivity. Smith’s recipe worked beyond his wildest imagination. As we shall see in the next phase of globalization, productivity began to rise rapidly and persistently as new inventions expanded the market and thereby the incentives for even more inventions.

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The second is the social-democratic ethos, meaning an inclusive and participatory approach to political and economic life. The third is subsidiarity, meaning that we solve problems at the proper level of governance. The fourth is a reformed United Nations. The fifth is a world safe for diversity. Sustainable Development In The Wealth of Nations, Adam Smith largely defined the ethos of the Industrial Age: the quest for national wealth. Since the early nineteenth century, sovereign governments have competed for wealth and power through industrialization and technological advancement. A global-scale market economy emerged in which privately owned companies aggressively pursue profits on a global scale.

Stealth of Nations by Robert Neuwirth

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By 2020, the OECD projects, two-thirds of the workers of the world will be employed in System D. There’s no multinational, no Daddy Warbucks or Bill Gates, no government that can rival that level of job creation. Given its size, it makes no sense to talk of development, growth, sustainability, or globalization without reckoning with System D. Adam Smith understood this intuitively back in 1776, when he published The Wealth of Nations. As Smith wrote, “The whole consumption of the inferior ranks of people, or of those below the middling rank, it must be observed, is in every country much greater, not only in quantity, but in value, than that of the middling and of those above the middling rank.”

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Even the simple rhymes of The Grumbling Hive show that Mandeville favored some government intervention in the market: “Vice is beneficial found / when it’s by justice lopp’d and bound.” Adam Smith, too, acknowledged that merchants could be expected to manipulate trade for their own gain. “The interest of the dealers, however, in any particular branch of trade or manufacture, is always in some respects different from, and even opposite to, that of the public,” he wrote in The Wealth of Nations, adding that “the proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the scrupulous, but with the most suspicious attention.

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So, by this neat trick, Gesell proposed to encourage people to continually spend, and this stimulus in consumption of all sorts (two thumbs up from Bernard Mandeville!) would naturally force production to increase, thus creating jobs and sharing the wealth. Another thirty years on—a hundred and sixty years after Adam Smith published The Wealth of Nations—John Maynard Keynes offered a frank diagnosis of the problems of the free-market system in the last chapter of his 1936 book The General Theory of Employment, Interest and Money: “The outstanding faults of the economic society in which we live,” he wrote, “are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and income.”

Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist by Kate Raworth

"Friedman doctrine" OR "shareholder theory", 3D printing, Alan Greenspan, Alvin Toffler, Anthropocene, Asian financial crisis, bank run, basic income, battle of ideas, behavioural economics, benefit corporation, Berlin Wall, biodiversity loss, bitcoin, blockchain, Branko Milanovic, Bretton Woods, Buckminster Fuller, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Cass Sunstein, choice architecture, circular economy, clean water, cognitive bias, collapse of Lehman Brothers, complexity theory, creative destruction, crowdsourcing, cryptocurrency, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, degrowth, dematerialisation, disruptive innovation, Douglas Engelbart, Douglas Engelbart, Easter island, en.wikipedia.org, energy transition, Erik Brynjolfsson, Ethereum, ethereum blockchain, Eugene Fama: efficient market hypothesis, experimental economics, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, Financial Instability Hypothesis, full employment, Future Shock, Garrett Hardin, Glass-Steagall Act, global supply chain, global village, Henri Poincaré, hiring and firing, Howard Zinn, Hyman Minsky, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of writing, invisible hand, Isaac Newton, it is difficult to get a man to understand something, when his salary depends on his not understanding it, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kickstarter, land reform, land value tax, Landlord’s Game, loss aversion, low interest rates, low skilled workers, M-Pesa, Mahatma Gandhi, market fundamentalism, Martin Wolf, means of production, megacity, Minsky moment, mobile money, Money creation, Mont Pelerin Society, Myron Scholes, neoliberal agenda, Network effects, Occupy movement, ocean acidification, off grid, offshore financial centre, oil shale / tar sands, out of africa, Paul Samuelson, peer-to-peer, planetary scale, price mechanism, quantitative easing, randomized controlled trial, retail therapy, Richard Thaler, Robert Solow, Ronald Reagan, Second Machine Age, secular stagnation, shareholder value, sharing economy, Silicon Valley, Simon Kuznets, smart cities, smart meter, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, statistical model, Steve Ballmer, systems thinking, TED Talk, The Chicago School, The Great Moderation, the map is not the territory, the market place, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, Torches of Freedom, Tragedy of the Commons, trickle-down economics, ultimatum game, universal basic income, Upton Sinclair, Vilfredo Pareto, wikimedia commons

Earth itself, however, is a closed system because almost no matter leaves or arrives on this planet: energy from the sun may flow through it, but materials can only cycle within it.22 Redrawing the economy as an open subsystem of the closed Earth system is the major conceptual shift introduced by ecological economists such as Herman Daly in the 1970s. And it’s a paradigm shift that has become increasingly important, given the economy’s ever-growing scale. When Adam Smith published The Wealth of Nations in 1776, there were fewer than one billion people alive and, in dollar terms, the size of the global economy was 300 times smaller than it is today. When Paul Samuelson published Economics in 1948 there were not yet three billion people on Earth and the global economy was still ten times smaller than it is today.

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– fresh and ready for work each day at the office or factory door. So who cooked, cleaned up, and cleared away to make that possible? When Adam Smith, extolling the power of the market, noted that, ‘it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner’, he forgot to mention the benevolence of his mother, Margaret Douglas, who had raised her boy alone from birth. Smith never married so had no wife to rely upon (nor children of his own to raise). At the age of 43, as he began to write his opus, The Wealth of Nations, he moved back in with his cherished old mum, from whom he could expect his dinner every day.

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If it were to be drawn, however, he would have to look something like this: standing alone, money in hand, calculator in head, and ego in heart. Rational Economic Man: the human character at the heart of mainstream economic theory. Where did this infamous character come from? His most intimate early portrait was created by Adam Smith in two major works, his 1759 Theory of Moral Sentiments and his 1776 book known as The Wealth of Nations. Today Smith is best remembered for having noted the human propensity to ‘truck, barter and exchange’ and the role of self-interest in making markets work.2 But although he believed self-interest was, ‘of all virtues that which is most helpful to the individual’, Smith also believed it was far from the most admirable of our traits, knocked off that top spot by our ‘humanity, justice, generosity and public spirit … the qualities most useful to others’.

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

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

It also makes the problem of scarcity insoluble, as we shall see. Economics was not always as ethically colour-blind as it is now. Historically, there are two main definitions of the subject. The first makes it the study of wealth; the second the study of choice. The first dates from Adam Smith (1723–1790) who called his famous 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations. In discussing the nature of wealth, Smith set out to controvert the ‘erroneous opinion’ that wealth consists of money (gold and silver). Rather, he defined it as the ‘annual produce of the land and labour of society’.1 Wealth arises from the production and exchange of ‘useful’ things like provisions, houses, clothes, and furniture.

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An Essay on the Nature and Significance of Economic Science, 2nd ed., London: Macmillan. Sahlins, Marshall (1972). Stone Age Economics, New York: de Gruyter. Sen, Amartya (1981). Poverty and Famines: An Essay on Entitlement and Deprivation, Oxford: Oxford University Press. Smith, Adam (1904 [1776]). An Inquiry into the Nature and Causes of the Wealth of Nations, London: Methuen. Veblen, Thorstein (1899). The Theory of the Leisure Class, New York: Macmillan. Chapter 3 Acemoglu, Daron, Johnson, Simon and Robinson, James (2001). ‘The Colonial Origins of Comparative Development: An Empirical Investigation’, American Economic Review, Vol. 91 (5): 1369–1401.

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‘Keynes, Globalization and the Bretton Woods Institutions in the Light of Changing Ideas about Markets’, World Economics, Vol. 6 (1): 1–16. Skidelsky, Robert and Craig, Nan (eds.) (2016). Who Runs the Economy?: The Role of Power in Economics, London: Palgrave Macmillan. Smith, Adam (1904 [1776]). An Inquiry into the Nature and Causes of the Wealth of Nations, London: Methuen. Stiglitz, Joseph E. (1993). ‘Post Walrasian and Post Marxian Economics’, Journal of Economic Perspectives, Vol. 7 (1): 109–114. Streeck, Wolfgang (2016). How Will Capitalism End? Essays on a Failing System, London: Verso. Tugendhat, Christopher (1972). The Multinationals, New York: Random House.

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

air traffic controllers' union, Alan Greenspan, banking crisis, British Empire, business cycle, California energy crisis, collective bargaining, Cornelius Vanderbilt, corporate governance, corporate social responsibility, electricity market, financial deregulation, Fractional reserve banking, Hernando de Soto, Ida Tarbell, income inequality, invisible hand, Joseph Schumpeter, laissez-faire capitalism, McDonald's hot coffee lawsuit, means of production, medical malpractice, Menlo Park, minimum wage unemployment, Money creation, Norman Mailer, plutocrats, price stability, profit maximization, profit motive, Ralph Nader, rent control, rent-seeking, Robert Bork, rolling blackouts, Ronald Coase, Ronald Reagan, scientific management, Silicon Valley, statistical model, Tax Reform Act of 1986, The Wealth of Nations by Adam Smith, transcontinental railway, union organizing, Upton Sinclair, vertical integration, W. E. B. Du Bois, wealth creators, working poor, Works Progress Administration, zero-sum game

The more Americans come to understand the truth about capitalism, the more reason they will have to be optimistic for the future of their country. ———— NOTES INTRODUCTION: THE UNTOLD STORY 1. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Random House, 1937), 422. 2. Neela Banerjee and David Firestone, “New Kind of Electricity Market Strains Old Wires Beyond Limits,” New York Times, August 24, 2003, 1. CHAPTER ONE: WHAT IS CAPITALISM? 1. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Random House, 1937), 422. 2. Ludwig von Mises, Liberalism: In the Classical Tradition (San Francisco: Cobden Press, 1985), 32. 3.

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Of course, nearly every one of Marx’s assumptions (government would wither away under communism, capitalism would make workers poorer, etc.) turned out to be wrong, including this one. Free-market capitalism, based on private property and peaceful exchange, is the source of civilization and human progress. Human beings have a natural propensity to “truck, barter, and exchange,” as Adam Smith said more than two centuries ago, and free-market capitalism is by far the best-known means by which this can be accomplished. In his famous treatise The Wealth of Nations, Smith neatly summed up the essence of how capitalism works: “Give me that which I want, and you shall have this which you want.”1 In other words, commerce is what economists call a “positive-sum game.” The act of buying and selling always benefits both buyer and seller; otherwise they wouldn’t trade with each other.

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But such a claim unfairly lumps together those who succeeded on the strength of their own talents, intelligence, and innovations and those who did in fact gain an unfair advantage over competitors (and consumers). The true capitalists—in the railroad industry and other industries—were the so-called market entrepreneurs. In contrast, the real robber barons—the political entrepreneurs—were not capitalists but corporatists, or, to use a term that Adam Smith employed in The Wealth of Nations, mercantilists. These political entrepreneurs gained an unfair advantage through special privileges created by government intervention (direct subsidies, regulations that harmed their competitors, and much more). The critics are right to condemn these business/government partnerships, but they are wrong to label them as capitalism.

The Fair Trade Scandal: Marketing Poverty to Benefit the Rich by Ndongo Sylla

"there is no alternative" (TINA), British Empire, carbon footprint, corporate social responsibility, David Ricardo: comparative advantage, deglobalization, degrowth, Doha Development Round, Food sovereignty, global value chain, illegal immigration, income inequality, income per capita, invisible hand, Joseph Schumpeter, labour mobility, land reform, market fundamentalism, mass immigration, means of production, Mont Pelerin Society, Naomi Klein, non-tariff barriers, offshore financial centre, open economy, Philip Mirowski, plutocrats, price mechanism, purchasing power parity, Ronald Reagan, Scientific racism, selection bias, structural adjustment programs, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, transatlantic slave trade, trickle-down economics, vertical integration, Washington Consensus, zero-sum game

Schumpeter (2006 [1954]: 179–80) wrote: But no matter what he actually learned or failed to learn from predecessors, the fact is that the Wealth of Nations does not contain a single analytic idea, principle, or method that was entirely new in 1776 […]. And it was Adam Smith’s good fortune that he was thoroughly in sympathy with the humors of his time. He advocated the things that were in the offing, and he made his analysis serve them. Needless to insist on what this meant both for performance and success: where would the Wealth of Nations be without free trade and laissez-faire? Also, the ‘unfeeling’or ‘slothful’ landlords who reap where they have not sown, the employers whose every meeting issues in conspiracy, the merchants who enjoy themselves and let their clerks and accountants do the work, and the poor laborers who support the rest of society in luxury – these are all important parts of the show.

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On this point, the story begins with the tradition of free trade. Its influence has grown consistently since the Scottish economist and philosopher Adam Smith, considered as the founding father of modern economic science, published in 1776 his work entitled An Inquiry into the Nature and Causes of the Wealth of Nations. Just as the official history of capitalism conveys the false theory that free trade was the strategy followed in the past by countries that are rich today, the official history of political economy as written by the ‘victors’ also teaches us that Adam Smith is the founding father of the free trade tradition. Smith certainly set the standard of economic liberalism.

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This approach was criticised by some authors due to its ‘neo-Smithian’ vision of the capitalist system (Fridell, 2007). In the language of authors in the Marxist lineage, this label symbolises the vision initially developed by Adam Smith, according to which capitalism would have ‘originated’ and been structured by a division of labour based on market exchange (Brenner, 1977). In the Wealth of Nations, Adam Smith demonstrates that the division of labour is a source of wealth creation – it increases labour productivity – and therefore of economic growth. He also underscores that the division of labour is limited by the size of the market.

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

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

We should glorify—or at least advocate and defend—capitalism and capitalists for moral reasons, not just material ones. The abundances they create come about precisely because of capitalism’s moral foundations. This profound, basic understanding is what makes George Gilder’s Wealth & Poverty one of the great books of Western civilization, on par with Adam Smith’s The Wealth of Nations and the late Jude Wanniski’s The Way the World Works. The original edition was published in the early 1980s when, like today, people had profound doubts about capitalism. Gilder’s opening words were, “The most important event in the recent history of ideas is the demise of the socialist dream.”

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It is, however, a golden rule of economics, a key to peace and prosperity, a source of the gifts of progress. It is the belief that finally confounded the predatory economics of mercantilism, in which nations used regulation and beggar-thy-neighbor trade campaigns to gather surpluses and bullion. It was this golden rule that inspired the first great book of economics, The Wealth of Nations, by Adam Smith. It was this belief that David Hume proclaimed in 1742, at the end of his essay “Of the Jealousy of Trade”: “I shall therefore venture to acknowledge, that, not only as a man, but as a British subject, I pray for the flourishing commerce of Germany, Spain, Italy, and even France itself.

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The trend seems to have begun in politics. In fact, our current situation recalls the world in which economic science gained its first triumphs. This was the age of mercantilism, a time of similar hypertrophy of politics, when Adam Smith reproached the governments of Europe for believing that the power of demand, in the form of accumulated gold, constituted the source of wealth. In The Wealth of Nations Smith argued that real riches came from the power of production and supply, not bullion collected through a trade surplus. But during the two centuries since Smith won this initial victory for supply-side economics, the demand side has all too often triumphed.

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

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

Hearing the young prince complain of the burden of responsibility he would carry as king, the doctor replied dismissively, “I do not see that it is so troublesome.” Irritated, the prince demanded, “Then what would you do if you were king?” Quesnay’s reply was the classic physiocrate description of government’s role: “Nothing.” Adam Smith owed the theory of laissez-faire economics to the physiocrates, and he owed some at least of his understanding about the behavior of money to Cantillon. But The Wealth of Nations was more than the sum of its parts. It extended the market-driven motivations of capitalist agriculture to industry and trade, and yoked them to the financial systems of mercantile capitalism. And it based its analysis of the wealth-producing capacity of free-market economics on the pragmatic reality that human nature is encouraged by the prospect of profit and discouraged by the experience of injustice.

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In fact the 1873 recession proved to be of critical importance to those parts of the earth occupied by private property economies. By the time its effects had cleared away, it was apparent that the theory of free-enterprise capitalism described by Adam Smith had a flaw. Rural capitalism had offered Smith a model of a free enterprise system based on a myriad of small producers competing on price and delivery in a market where overproduction of one product brought a fall in price and profit, leading either to more efficient production or to a switch to a more profitable item. In The Wealth of Nations, he noted that it was fully working in England, reasonably developed in Scotland, evolving in France, and well-grounded in colonial America.

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Allen, “The Price of Freehold Land and the Interest Rate in the Seventeenth and Eighteenth Centuries,” The Economic History Review, New Series, 41, no. 1 (Feb. 1988): 33–50; Robert C. Allen, “The High Wage Economy of Pre-Industrial Britain,” www.helsinki.fi/iehc2006/papers2/Allen77.pdf. “the natural fertility of the soil”: Adam Smith, An Enquiry into the Nature and Causes of the Wealth of Nations (New York: Random House, 1937), bk. 3, ch. IV, p. 133, http://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/index.htm. For the early development of mercantile capitalism, see Niall Ferguson, The Ascent of Money: A Financial History of the World (London and New York: Penguin, 2008).

Work: A History of How We Spend Our Time by James Suzman

agricultural Revolution, AlphaGo, Anthropocene, basic income, biodiversity loss, carbon footprint, clean water, coronavirus, corporate social responsibility, cyber-physical system, David Graeber, death from overwork, deepfake, do-ocracy, double entry bookkeeping, double helix, fake news, financial deregulation, Ford Model T, founder crops, Frederick Winslow Taylor, gentrification, Great Leap Forward, interchangeable parts, invention of agriculture, invention of writing, invisible hand, Isaac Newton, James Watt: steam engine, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, karōshi / gwarosa / guolaosi, Kibera, Kickstarter, late capitalism, lateral thinking, market bubble, New Urbanism, Occupy movement, ocean acidification, Parkinson's law, Peter Singer: altruism, post-industrial society, post-work, public intellectual, Rubik’s Cube, Schrödinger's Cat, scientific management, sharing economy, social intelligence, spinning jenny, The Future of Employment, the scientific method, The Wealth of Nations by Adam Smith, theory of mind, trickle-down economics, universal basic income, upwardly mobile, urban planning, work culture , zoonotic diseases

It had a busy market and a thriving textile industry, and Smith spent his early life watching a near-ceaseless procession of three-masted merchantmen cutting across the black-green waters of the North Sea, coming to deposit cargoes of flax, wheat, continental beer and hemp at the harbour, before disembarking again with holds stuffed with coal and salt, or decks piled with bales of linen. An ageing Adam Smith returned to his childhood home, after several decades studying and teaching in Cambridge, Glasgow and Europe, to write his most celebrated work, An Inquiry into the Nature and Causes of the Wealth of Nations, which he published in 1776. Influenced by the ‘physiocrats’– a French intellectual movement that, among other things, lobbied for idle aristocrats to shoulder a greater proportion of the king’s extravagant tax demands, and who believed that neither governments nor nobles should meddle in the natural order of the markets – Smith was convinced that reason could reveal the fundamental laws of human economic behaviour in the same way that Isaac Newton had used reason to reveal some of the fundamental laws that governed the movement of celestial bodies.

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The solution, Smith argued, lay in their agreeing on a ‘common instrument of commerce’ – what economic historians now often call ‘primitive currency’ – in the form of ‘one commodity or the other’, whether it be cattle, salt, nails, sugar or, as would ultimately become the case, gold, silver and coinage. For much of the nineteenth and early twentieth centuries, it was believed that Benjamin Franklin and Adam Smith had been friends, and that Franklin had offered Smith the benefit of his thoughts on an early draft of An Inquiry into the Nature and Causes of the Wealth of Nations. The appeal of this tale of Enlightenment collaboration stemmed principally from the fact that the publication of Wealth of Nations in 1776 not only coincided with the United States wresting its independence from the British Crown, but also because it could be read as a velvet-gloved critique of the tariffs, taxes and customs duties that inspired North American colonists to cast off the shackles of British imperial rule in the first place.

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Ancient Greek philosophers, for instance, may have been contemptuous of hard manual labour but they still acknowledged its fundamental importance, even if they had slaves to do it for them. The same principle is also discussed in the writings of fourteenth-century scholars like Thomas Aquinas – who insisted that any commodity’s value should ‘increase in relation to the amount of labour which has been expended in the improvement’ of it. When Adam Smith returned to Kirkcaldy to write the Wealth of Nations, this idea still retained a kind of primal currency across Western Europe, where more than half of the population still made a living as small-scale farmers and so saw an obvious correspondence between how hard they worked and how well they ate. Smith was well aware that most people felt there was an organic link between labour and value.

The Future of Capitalism: Facing the New Anxieties by Paul Collier

"Friedman doctrine" OR "shareholder theory", accounting loophole / creative accounting, Airbnb, An Inconvenient Truth, assortative mating, bank run, Bear Stearns, behavioural economics, Berlin Wall, Bernie Sanders, bitcoin, Bob Geldof, bonus culture, business cycle, call centre, central bank independence, centre right, commodity super cycle, computerized trading, corporate governance, creative destruction, cuban missile crisis, David Brooks, delayed gratification, deskilling, Donald Trump, eurozone crisis, fake news, financial deregulation, full employment, George Akerlof, Goldman Sachs: Vampire Squid, greed is good, income inequality, industrial cluster, information asymmetry, intangible asset, Jean Tirole, Jeremy Corbyn, job satisfaction, John Perry Barlow, Joseph Schumpeter, knowledge economy, late capitalism, loss aversion, Mark Zuckerberg, minimum wage unemployment, moral hazard, negative equity, New Urbanism, Northern Rock, offshore financial centre, out of africa, Peace of Westphalia, principal–agent problem, race to the bottom, rent control, rent-seeking, rising living standards, Robert Shiller, Robert Solow, Ronald Reagan, shareholder value, Silicon Valley, Silicon Valley ideology, sovereign wealth fund, The Wealth of Nations by Adam Smith, theory of mind, too big to fail, trade liberalization, urban planning, web of trust, zero-sum game

This chapter explores how our morals are linked to our emotions, how they evolve, and how things can go wrong.1 WANTS AND ‘OUGHTS’ The glib supporters of capitalism who argue that the end justifies the means invoke Adam Smith’s famous proposition in The Wealth of Nations that the pursuit of self-interest leads to the common good. ‘Greed is good’ became the intellectual underpinning for the zeal of the Reagan–Thatcher revolution. Smith’s proposition is a valuable corrective to the naïve notion that an action is good only if well-motivated. But modern economics, which The Wealth of Nations launched in 1776, is built on a character who is utterly despicable. Economic man is selfish, greedy and lazy. Such people do exist and you will meet some of them.

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The Nobel Laureate Vernon Smith saw that The Wealth of Nations and The Theory of Moral Sentiments are built on a common idea: the mutual benefit from exchange. The arena for exchanging commodities is the market. The arena for exchanging obligations is the networked group, the subject of this chapter. For two centuries, economists thought that Adam Smith had written two incompatible books and ignored The Theory of Moral Sentiments. Only recently has he been properly understood: there are not two Smiths but one, and his neglected ideas are profoundly important.4 People are motivated partly by the ‘wants’ of The Wealth of Nations, and partly by the ‘oughts’ of The Theory of Moral Sentiments.

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Yes, London has a lot of jobs, but they are lousy ones. Having set out what good non-cognitive training looks like, and the alternative track down which many young people are currently lured, we can finally turn to the psychology: what determines whether young people prefer this option? The crude psychology of The Wealth of Nations suggests that people only care about money. The more accurate psychology of The Theory of Moral Sentiments tells us that people also care about their position in society: they give and receive esteem. The evidence on regrets supports our intuition that esteem trumps money. But even on the criterion of money, many young people in America and Britain are being lured down cognitive culs-de-sac.

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

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

Chapter Three 1 Robert Heilbroner, The Worldly Philosophers, Chapters 1-2. 2 Max Weber, The Protestant Ethic and the Spirit of Capitalism. 3 Adam Smith, The Wealth of Nations, Books 1-III, 119. 4 Seabright, The Company of Strangers, 14-15. 5 The first edition of Smith’s The Wealth of Nations was published on March 9, 1776 by W. Strahan and T. Cadell in London. Andrew Skinner notes the coincidence of its publication on the eve of the Declaration of Independence in his introduction to Smith’s work. Andrew Skinner, introduction to The Wealth of Nations, Books I-III, by Adam Smith, 6. 6 Keynes and others have traced the first recorded use of the phrase “laissezfaire”—which literally means “let do” or “let make”—to a speech by French minister Rene de Voyer, Marquis d’Argenson, in 1751 in which he declared, “Laissez faire, telle devrait être la devise de toute puissance publique, depuis que le monde est civilisé. ” (Let it be, such should be the motto of every public power, ever since the world is civilized.)

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As expounded by Max Weber in his classic The Protestant Ethic and the Spirit of Capitalism, there are two additional requirements: acceptance of profit and capital accumulation as motives with genuine moral legitimacy, as opposed to deplorable, though ineradicable, human vices; and the recognition of voluntary exchange and cooperation, rather than heredity and coercion, as the main organizing principles of economic life.2 These concepts emerged from the Calvinist ideology of the late seventeenth century, according to the standard view of social history pioneered by Weber. But they were crystallized by Adam Smith in The Wealth of Nations, producing some astonishingly counterintuitive revelations. Smith observed that a market economy, although it involves millions of unconnected individuals who work at highly specialized and narrow tasks, is a naturally self-organizing mechanism provided a few simple rules of commerce and mutual trust are generally obeyed and enforced.

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Most great economists—Smith, Ricardo, Mill, Keynes, Schumpeter, and Hayek—had an optimistic outlook about human creativity and the capacities of the market system. They were fundamentally optimistic for both practical and intellectual reasons. The main intellectual goal of economics set out by Adam Smith, and partly achieved by him in The Wealth of Nations, was to explain the miracle that led millions of unrelated individuals, all working freely in pursuit of their own desires and personal interests, to serve the needs of others and promote the prosperity of all. After Smith, other great economists enriched this understanding with unexpected and counterintuitive detail.

Empire of Guns by Priya Satia

banking crisis, British Empire, business intelligence, Corn Laws, cotton gin, deindustrialization, delayed gratification, European colonialism, Fellow of the Royal Society, flying shuttle, hiring and firing, independent contractor, interchangeable parts, invisible hand, Isaac Newton, James Watt: steam engine, joint-stock company, Khyber Pass, Lewis Mumford, Menlo Park, military-industrial complex, Panopticon Jeremy Bentham, rent-seeking, Scramble for Africa, Silicon Valley, spinning jenny, technological determinism, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, transatlantic slave trade, zero-sum game

Its mercantilist mainstream saw commercial and colonial resources—metal, specie—as the liquidity needed to acquire a military arsenal and favored policies enabling Britain to acquire more resources than its rivals. Adam Smith’s complaints about the costs of war, about the “ruinous expedient” of perpetual funding and high public debt in peacetime, staked out a contrarian position; The Wealth of Nations (1776) was a work of persuasion. His and other voices in favor of pacific economic development grew louder from the margins. By denormalizing war, liberal political economy raised the stakes of the century’s long final wars from 1793 to 1815, which could be stomached only as an exceptional, apocalyptic stage on the way to permanent peace.

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He struck a deal with Christopher Sholes, inventor of the modern keyboard, in 1868, producing the first Remington typewriter in 1874, a “discursive machine-gun” whose strikes and triggers echo the ammunitions transport in a revolver or machine gun. Electronic writing revolutionized communication; like the gun, it alters us fundamentally. 10 Opposition to the Gun Trade after 1815 Before he explained the wealth of nations, Adam Smith wrote about the moral sentiments necessary for judicious economic behavior, especially the capacity to survey one’s own sentiments “with the eyes of other people.” His Theory of Moral Sentiments appeared in 1759–61, when the doubling of identity was the norm—when exercising one’s conscience involved an almost literal division of the self into the judge and the self being judged.

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Industrial organization was: The iron industry switched to coal-burning methods only late in the century, when wartime tariff policies suddenly rendered uncompetitive the foreign iron that had effectively been meeting rising demand. Evans et al., “Baltic Iron and the British Iron Industry,” 662. Adam Smith considered: A. Smith, The Wealth of Nations, 4–5. Handicraft and mechanized production: M. Berg, “Revisions and Revolutions.” Karl Marx knew: M. Berg, The Age of Manufactures, 194–98, 204, 255. short- or medium-term large rises: Hudson, The Industrial Revolution, 45. “semiskilled men with”: Collier, Arms and the Men, 29.

The Sovereign Individual: How to Survive and Thrive During the Collapse of the Welfare State by James Dale Davidson, William Rees-Mogg

affirmative action, agricultural Revolution, Alan Greenspan, Alvin Toffler, bank run, barriers to entry, Berlin Wall, borderless world, British Empire, California gold rush, classic study, clean water, colonial rule, Columbine, compound rate of return, creative destruction, Danny Hillis, debt deflation, ending welfare as we know it, epigenetics, Fall of the Berlin Wall, falling living standards, feminist movement, financial independence, Francis Fukuyama: the end of history, full employment, George Gilder, Hernando de Soto, illegal immigration, income inequality, independent contractor, informal economy, information retrieval, Isaac Newton, John Perry Barlow, Kevin Kelly, market clearing, Martin Wolf, Menlo Park, money: store of value / unit of account / medium of exchange, new economy, New Urbanism, Norman Macrae, offshore financial centre, Parkinson's law, pattern recognition, phenotype, price mechanism, profit maximization, rent-seeking, reserve currency, road to serfdom, Ronald Coase, Sam Peltzman, school vouchers, seigniorage, Silicon Valley, spice trade, statistical model, telepresence, The Nature of the Firm, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, trade route, transaction costs, Turing machine, union organizing, very high income, Vilfredo Pareto

Conquest implies the destruction of the other party; commerce implies the satisfaction of the other party. As modern technology has 296 made conquest an extraordinarily dangerous policy, commerce has become the only rational approach to the problems of survival. This interdependence is strengthened by another central idea of Adam Smith~not new with him~which is the specialization of function. The Wealth of Nations starts with a celebrated passage in which Adam Smith observes that "the greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity and judgement with which it is any where directed, or applied, seem to have been the effects of the division of labour."

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See Mancur Olson, "Diseconomies of Scale and Development," Cato Journal, vol.7, no.1 (Spring/Summer 1987). 11. Ibid. 12. Basil Davidson, The Black Mans' Burden: Africa and the Curse of the Nation State (New York: Times Books, 1992), p.290. 13. Olson, op. cit. 14. Adam Smith, The Wealth of Nations, p.724. This point was suggested by an argument by Edwin G. West in his Adam Smith and Modern Economics (Aldershot, England: Edward Elgar Publishing, 1990), pp.88-89. 15. Fritz Rorig, The Medieval Town (Berkeley: University of California Press, 1967), p.28. 16. Albert 0. Hirschman, Exit, Voice, and Loyalty (Cambridge: Harvard University Press, 1969), p.81. 17.

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The First Industrial Technology Just as the cannon was opening new economic horizons, the printing press opened new intellectual horizons. It was the first machine of mass production, a signature technology that marked the onset of industrialism. In saying this, we share the view advanced by Adam Smith in The Wealth of Nations that the Industrial Revolution had already happened well before he wrote. It had not reached maturity, to be sure, but the principles of mass production and the factory system were well established. His famous example of the pin manufacturers makes this case. Smith explains how eighteen separate operations are employed to produce pins.

More From Less: The Surprising Story of How We Learned to Prosper Using Fewer Resources – and What Happens Next by Andrew McAfee

back-to-the-land, Bartolomé de las Casas, Berlin Wall, bitcoin, Blitzscaling, Branko Milanovic, British Empire, Buckminster Fuller, call centre, carbon credits, carbon footprint, carbon tax, Charles Babbage, clean tech, clean water, cloud computing, congestion pricing, Corn Laws, creative destruction, crony capitalism, data science, David Ricardo: comparative advantage, decarbonisation, DeepMind, degrowth, dematerialisation, Demis Hassabis, Deng Xiaoping, do well by doing good, Donald Trump, Edward Glaeser, en.wikipedia.org, energy transition, Erik Brynjolfsson, failed state, fake news, Fall of the Berlin Wall, Garrett Hardin, Great Leap Forward, Haber-Bosch Process, Hans Rosling, humanitarian revolution, hydraulic fracturing, income inequality, indoor plumbing, intangible asset, James Watt: steam engine, Jeff Bezos, job automation, John Snow's cholera map, joint-stock company, Joseph Schumpeter, Khan Academy, Landlord’s Game, Louis Pasteur, Lyft, Marc Andreessen, Marc Benioff, market fundamentalism, means of production, Michael Shellenberger, Mikhail Gorbachev, ocean acidification, oil shale / tar sands, opioid epidemic / opioid crisis, Paul Samuelson, peak oil, precision agriculture, price elasticity of demand, profit maximization, profit motive, risk tolerance, road to serfdom, Ronald Coase, Ronald Reagan, Salesforce, Scramble for Africa, Second Machine Age, Silicon Valley, Steve Jobs, Steven Pinker, Stewart Brand, Ted Nordhaus, TED Talk, telepresence, The Wealth of Nations by Adam Smith, Thomas Davenport, Thomas Malthus, Thorstein Veblen, total factor productivity, Tragedy of the Commons, Uber and Lyft, uber lyft, Veblen good, War on Poverty, We are as Gods, Whole Earth Catalog, World Values Survey

This comparison illustrates a fundamental point: instead of being limited by the environment, we learned to shape it to our own ends during the Industrial Era. And did we do this wisely as well? In many ways and many places we did not. I. Also in 1776 the American Declaration of Independence was signed and the Scottish economist Adam Smith published his landmark The Wealth of Nations (a book we’ll come back to later). II. The battles over the Corn Laws led the politician James Wilson, who was in favor of free trade, to found The Economist. It’s still published today and is one of my favorite magazines (even though it calls itself a newspaper). III. It would have made sense for England to concentrate on manufacturing even if it were more productive than mainland Europe at both farming and manufacturing.

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Keeping Smith’s insights in mind lets us see why this system for organizing economic activity works so well at delivering prosperity. It also lets us see where capitalism’s fault lines lie and helps us in evaluating arguments against it. So, with Adam Smith as a guide, let’s look at three valid critiques of capitalism, and three invalid ones. First, the valid criticisms: Capitalism is selfish. Yes, it absolutely is. But as Smith points out, this is a good thing. One of the most quoted passages from his 1776 masterpiece, The Wealth of Nations,I is “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”

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As we’ll see later, progress in many important areas has sped up in recent decades as capitalism and tech progress have both spread around the world. Adam Smith realized that capitalism’s greatest virtue was that it improved the lives of not only the elite but also of people born into modest circumstances. He saw much more clearly than Marx or Malthus what the future held as long as capitalism was allowed to operate properly. And throughout his writing, he’s concerned with what we might today call social justice. Smith believed deeply that workers deserved a high and rising standard of living. As he wrote in The Wealth of Nations, “They who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed, and lodged.”

The Price of Time: The Real Story of Interest by Edward Chancellor

"World Economic Forum" Davos, 3D printing, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, asset allocation, asset-backed security, assortative mating, autonomous vehicles, balance sheet recession, bank run, banking crisis, barriers to entry, Basel III, Bear Stearns, Ben Bernanke: helicopter money, Bernie Sanders, Big Tech, bitcoin, blockchain, bond market vigilante , bonus culture, book value, Bretton Woods, BRICs, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, cashless society, cloud computing, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, commodity super cycle, computer age, coronavirus, corporate governance, COVID-19, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cryptocurrency, currency peg, currency risk, David Graeber, debt deflation, deglobalization, delayed gratification, Deng Xiaoping, Detroit bankruptcy, distributed ledger, diversified portfolio, Dogecoin, Donald Trump, double entry bookkeeping, Elon Musk, equity risk premium, Ethereum, ethereum blockchain, eurozone crisis, everywhere but in the productivity statistics, Extinction Rebellion, fiat currency, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, Flash crash, forward guidance, full employment, gig economy, Gini coefficient, Glass-Steagall Act, global reserve currency, global supply chain, Goodhart's law, Great Leap Forward, green new deal, Greenspan put, high net worth, high-speed rail, housing crisis, Hyman Minsky, implied volatility, income inequality, income per capita, inflation targeting, initial coin offering, intangible asset, Internet of things, inventory management, invisible hand, Japanese asset price bubble, Jean Tirole, Jeff Bezos, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Rogoff, land bank, large denomination, Les Trente Glorieuses, liquidity trap, lockdown, Long Term Capital Management, low interest rates, Lyft, manufacturing employment, margin call, Mark Spitznagel, market bubble, market clearing, market fundamentalism, Martin Wolf, mega-rich, megaproject, meme stock, Michael Milken, Minsky moment, Modern Monetary Theory, Mohammed Bouazizi, Money creation, money market fund, moral hazard, mortgage debt, negative equity, new economy, Northern Rock, offshore financial centre, operational security, Panopticon Jeremy Bentham, Paul Samuelson, payday loans, peer-to-peer lending, pensions crisis, Peter Thiel, Philip Mirowski, plutocrats, Ponzi scheme, price mechanism, price stability, quantitative easing, railway mania, reality distortion field, regulatory arbitrage, rent-seeking, reserve currency, ride hailing / ride sharing, risk free rate, risk tolerance, risk/return, road to serfdom, Robert Gordon, Robinhood: mobile stock trading app, Satoshi Nakamoto, Satyajit Das, Savings and loan crisis, savings glut, Second Machine Age, secular stagnation, self-driving car, shareholder value, Silicon Valley, Silicon Valley startup, South Sea Bubble, Stanford marshmallow experiment, Steve Jobs, stock buybacks, subprime mortgage crisis, Suez canal 1869, tech billionaire, The Great Moderation, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tim Haywood, time value of money, too big to fail, total factor productivity, trickle-down economics, tulip mania, Tyler Cowen, Uber and Lyft, Uber for X, uber lyft, Walter Mischel, WeWork, When a measure becomes a target, yield curve

Part One (Of Historical Interest) sets the scene. We trace the origins of interest to the Ancient Near East (Chapter 1) and follow its story through the Middle Ages to the birth of capitalism in Europe (Chapter 2). We describe how interest and capitalism are inseparable. This principle may have been accepted by the date Adam Smith’s The Wealth of Nations was published in 1776, but there has always existed a ‘psychopathic’ fear of excessive interest rates. In seventeenth-century England, the most prominent exponent of lower rates was the wealthy City merchant Sir Josiah Child, who stood to benefit most from a reduction in the cost of borrowing.

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This new concept of interest was ethically wide-ranging: it ‘came to cover virtually the entire range of human actions, from the narrowly self-centered to the sacrificially altruistic, and from the prudently calculated to the passionately compulsive’.49 The seventeenth-century English statesman and philosopher Lord Shaftesbury summed up the new thinking with his comment that ‘Interest governs the World.’50 In his Fable of the Bees (1714), Bernard Mandeville exposed the paradox at the heart of the modern world, namely that private vices brought public benefits. Adam Smith incorporated Mandeville’s wicked insights into his political economy. In The Wealth of Nations, Smith describes the individual as one who ‘By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.’51 A similar thought is expressed in another famous line, in which Smith writes that ‘It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.’

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Rents in future years must be worth less than this year’s rent, Petty said, otherwise ‘an acre of land would be equal in value to a thousand acres of the same land; which is absurd, an infinity of units being equal to an infinity of thousands.’fn7 In the following century, Adam Smith described how the price of land depended on the market rate of interest. In The Wealth of Nations (published in 1776) Smith noted that land prices had risen in recent decades as interest rates declined. An act of investment – say the construction of a new manufacturing plant with factory buildings, machinery and all the necessary infrastructure – requires that investors forgo current consumption.

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

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

In this book we'll present solutions. We end the book with thoughts on how to reform and fix the economy and political system. We do hope you're outraged after reading this book, but more important, we hope that you come away knowing that consumer and voter anger can be harnessed for good. In 1776 Adam Smith wrote The Wealth of Nations, and the Continental Congress declared independence from Britain. Smith complained bitterly about monopolies. He wrote of the East India Company: “… the monopoly which our manufacturers have obtained … has so much increased the number of some particular tribes of them, that, like an overgrown standing army, they have become formidable to the government, and upon many occasions intimidate the legislature.”

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Few are complete monopolies, so when you read headlines about the monopoly problem in the United States, as Professor Tim Wu has noted, “the press is sounding the wrong alarm. We know how to fight monopolies, but regulators are confused when it comes to duopolies and oligopolies.”18 You won't find the words duopoly or oligopoly in Adam Smith's The Wealth of Nations or in any of the antitrust acts, such as the Sherman Act of 1890 or the Clayton Act of 1914. The word oligopoly was not even created until the 1930s by the Harvard economist Edward Chamberlin. The word oligopoly comes from Greek and means “few sellers.” It has the same origin as the word oligarchs.

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Except in this case, there are no “made men” and only middle-aged white power brokers dividing the country. It doesn't matter where you look, competition looks fierce on paper but in reality it is often carefully orchestrated. There is nothing new under the sun. Even in the eighteenth century, Adam Smith wrote in The Wealth of Nations that “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” A little later John Stuart Mill echoed the sentiment, “Where competitors are so few, they always end by agreeing not to compete.”

Austerity: The History of a Dangerous Idea by Mark Blyth

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

“Monthly Statement of the Public Debt of the United States: January 31, 2011,” United States Department of the Treasury, http://www.treasurydirect.gov/govt/reports/pd/mspd/2011/opds012011.pdf. 24. Adam Smith, Wealth of Nations (Buffalo, NY: Prometheus Books, 1991), 587. 25. See Murphy, “Genesis,” 155–179, for a good overview of Smith’s economics. 26. Albert Hirschman, The Passions and The Interests: Political Arguments for Capitalism before Its Triumph (Princeton, NJ: Princeton University Press, 1977). 27. Murphy, “Genesis.” Although some commentators see Smith as being critical of banks, there are other parts of the Wealth of Nations in which he is positively enthusiastic about them. 28. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Indianapolis, IN: Hackett, 1996), 64. 29.

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The state was therefore something to be avoided, minimized, bypassed, curtailed, and above all, not trusted. The market, in contrast, emerged in liberal thought as the intellectual and institutional antidote to the confiscatory politics of the king.4 In such a world, if prices and merchants were set free, the wealth of nations (note, not “kingdoms”) would multiply. But from the start this liberal view of “the state versus the market” rested upon a misunderstanding: markets naturally appear when you remove the state from the equation. However, as Karl Polanyi noted at the end of World War II, there is nothing natural about markets.5 Turning people into wage laborers, securing the private ownership of land, even inventing capital and preserving its monetary form are all deeply political projects that involve courts, regulation, enforcement, bureaucracy, and all the rest.6 Indeed, gaining control of the state by the merchant class was a defining feature of early capitalism.7 With the partial exceptions of the United Kingdom and the United States (the former because it was first to make the transition to capitalism and the latter because it was geographically isolated), from Germany in the 1870s to China today, states make markets as much as markets determine the fate of states.8 Yet liberal economic thought remains largely oblivious to these facts.

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The details of what Smith said about the economy are far less well known and quite surprising. Smith brought together much of the scattered work of early economists on the nature of money, economic growth, the role of capital and labor, and a host of other issues, and then had the good sense to put it in one accessible place: The Wealth of Nations.25 As Albert Hirschman observed, this book was no academic project. It was an argument for capitalism before its triumph, and a very successful argument, too.26 For our purposes here, we find in Smith a particular sensibility toward the state and its debt that brings us closer to the modern idea of austerity, but from a surprising angle: the importance of personal frugality and parsimony as the engine of capitalist growth.

Capitalism: Money, Morals and Markets by John Plender

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

They then triumphantly rediscover the secret of prosperity: Thus Vice nurs’d Ingenuity, Which joined with Time and Industry, Had carry’d Life’s conveniencies, Its real Pleasures, Comforts, Ease, To such a Height, the very Poor Liv’d better than the Rich before. Adam Smith in Britain and Voltaire in France put the case for material values rather differently. For Voltaire, the great merit of commerce was that the pursuit of self-interest was less dangerous than the pursuit of other goals such as military expansion or religious salvation. He also believed that the self-interested pursuit of profit through commerce had a socialising influence, not least because it helped reduce religious differences. For his part, Adam Smith in The Wealth of Nations argued that consumption was socially benign and that the market economy was the best means for achieving what he called ‘universal opulence’.

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To name just one example, Gordon Gekko’s ‘greed is good’ speech in the film Wall Street clearly descends in a direct line from the author of the fable. The Fable of the Bees was not universally admired by other Enlightenment thinkers. Adam Smith could not bring himself to accept the extremity of Mandeville’s paradox, in which vice was a necessary condition of prosperity. In his justly celebrated redefinition of the boundaries of the argument about business and morality, he emphasised self-interest rather than vice, with his statement in The Wealth of Nations that ‘it is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard for their own interest’. 10 In much the same vein, he added: ‘I have never known much good done by those who affected to trade for the public good.’11 Yet, as the author of The Theory of Moral Sentiments, he also emphasised the need for markets to operate within a moral context and believed that the act of engaging in market exchange entailed a discipline that encouraged good individual behaviour as well as the good of wider society.

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Yet, as I will show, it is arguable that manufacturing employment ought to fall in a mature economy; and one of the safest predictions for the twenty-first century is that in the developed world it will continue to do so without causing a collapse in living standards. To make this case is admittedly quite a challenge, because the prejudice about the superiority of manufacturing over services has deep historical roots. Adam Smith, still hugely influential across the centuries, showed a bias in The Wealth of Nations against services, suggesting that while the labour of a manufacturer added value, the labour of a menial servant did not: There is one sort of labour which adds to the value of the subject upon which it is bestowed: there is another which has no such effect.

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

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

The South Sea Company collapsed in such a bubble of speculation in 1720 that the British parliament banned the creation of such entities—characterized by dispersed shareholders whose liability for the company’s debt was limited to the value of their shares. In 1776, Adam Smith argued that the “joint-stock company,” as the corporation was then known, had proved an unmitigated disaster. “The directors of such companies,…being the managers of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own,” he wrote in the Wealth of Nations. “Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company.”1 During the industrial revolution that began just after Smith’s death, it became apparent that his analysis was off.

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Richard Hofstadter, Social Darwinism in American Thought, rev. ed. (Boston: Beacon Press, 1955), 51–53. 10. William Graham Sumner, What the Social Classes Owe to Each Other (Caldwell, Idaho: The Caxton Printers, 1989), 107. 11. Adam Smith, Wealth of Nations, book 4, chap. 2, par. 4, 2.9 (Indianapolis: Liberty Fund, 1981). It’s not clear Smith himself saw it that way, although many subsequent economists did. The actual quote from the Wealth of Nations is: As every individual…endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can.

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Ross, and Mark Rubinstein, “Option Pricing: A Simplified Approach,” Journal of Financial Economics (Sept. 1979): 229–63. 25. Stephen A. Ross, “Options and Efficiency,” Quarterly Journal of Economics (Feb. 1976): 76. CHAPTER 9: MICHAEL JENSEN GETS CORPORATIONS TO OBEY THE MARKET 1. Adam Smith, The Wealth of Nations (Indianapolis: Liberty Fund, 1981), 741. 2. In the United States the first all-purpose general incorporation statute was Connecticut’s, enacted in 1837, although some states allowed easy incorporation of companies in particular industries before that. In the United Kingdom, Parliament allowed for general incorporation in 1844.

The Locavore's Dilemma by Pierre Desrochers, Hiroko Shimizu

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

Blackwell Publishing; Vaclav Smil. 2010. Prime Movers of Globalization. The History and Impact of Diesel Engines and Gas Turbines. MIT Press; and Robert P. Clark. 2000. Global Life Systems. Population, Food, and Disease in the Process of Globalization. Rowman & Littlefield Publishers, Inc. 5 Adam Smith. 1776. An Inquiry Into the Nature and Causes of the Wealth of Nations, Vol. 1, Book I, chapter II: Of the Principle which gives occasion to the Division of Labour. Available at http://www.econlib.org/library/Smith/smWN1.html#B.I, Ch.2, Of the Principle which gives Occasion to the Division of Labour. 6 Gisday Wa and Delgam Uukw. 1989 The Spirit in the Land.

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“Come On Down to the Farmers Market (Bring Your Wallet and Your Food Orthodoxy), (September 17) http://www.consumerfreedom.com/news_detail.cfm/h/3992-come-on-down-to-the-farmers-market-bring-your-wallet-and-your-food-orthodoxy. 7 Alisa Smith and J.B. MacKinnon. 2005. “Living on the 100-mile Diet,” The Tyee (June 28) http://thetyee.ca/Life/2005/06/28/HundredMileDiet and Alisa Smith and J.B. MacKinnon. 2007.The 100-Mile Diet. A Year of Local Eating. Random House Canada. 8 Adam Smith. 1776. An Inquiry Into the Nature and Causes of the Wealth of Nations, Vol. 1, Book IV, chapter II: Of Restraints upon the Importation from Foreign Countries of Such Goods as Can Be Produced at Home http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=237&chapter=212328&layout=html&Itemid=27. 9 See, among others, Tom Philpott. 2011.

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Bloomberg.com (November 24) http://www.bloomberg.com/news/2011-11-24/china-s-soybean-imports-in-2011-may-decline-shanghai-jc-says.html In 2010, the USA, Brazil, Argentina and China produced respectively 35, 27, 19 and 6% of the world’s total production (“World Statistics” at soy stats.com http://www.soystats.com/2011/Default-frames.htm ). 56 Quoted in Alan L. Olmstead and Paul W. Rhode. 2008. Creating Abundance. Biological Innovation and American Agricultural Development. Cambridge University Press, p. 381. 57 Adam Smith. 1776. An Inquiry Into the Nature and Causes of the Wealth of Nations, Vol. 1, Book I, chapter 8: On the Wages of Labour http://oll.libertyfund.org/?option=com_staticxt&staticfile=show. php%3Fti tle=220&chapter=217399 &layout=html&Itemid=27. Chapter 4 1 See, among others, Dennis E. Jelinski. 2005. “There is no Mother Nature—There is no Balance of Nature: Culture, Ecology and Conservation.”

Who Needs the Fed?: What Taylor Swift, Uber, and Robots Tell Us About Money, Credit, and Why We Should Abolish America's Central Bank by John Tamny

Airbnb, Alan Greenspan, Apollo 13, bank run, Bear Stearns, Bernie Madoff, bitcoin, Bretton Woods, business logic, buy and hold, Carl Icahn, Carmen Reinhart, corporate raider, correlation does not imply causation, cotton gin, creative destruction, Credit Default Swap, crony capitalism, crowdsourcing, Donald Trump, Downton Abbey, Fairchild Semiconductor, fiat currency, financial innovation, Fractional reserve banking, full employment, George Gilder, Glass-Steagall Act, Home mortgage interest deduction, Jeff Bezos, job automation, Joseph Schumpeter, junk bonds, Kenneth Rogoff, Kickstarter, Larry Ellison, liquidity trap, low interest rates, Mark Zuckerberg, market bubble, Michael Milken, Money creation, money market fund, moral hazard, mortgage tax deduction, NetJets, offshore financial centre, oil shock, peak oil, Peter Thiel, Phillips curve, price stability, profit motive, quantitative easing, race to the bottom, Ronald Reagan, self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, Solyndra, Steve Jobs, The Wealth of Nations by Adam Smith, too big to fail, Travis Kalanick, Uber for X, War on Poverty, yield curve

Eventually, he plugged in what Harford described as a “toaster-shaped birthday cake,” and “two seconds later, the toaster was toast.” Thwaites concluded, “If you started absolutely from scratch, you could easily spend your life making a toaster.”1 Harford’s opening subject was, in many ways, a tribute to Adam Smith’s brilliant book The Wealth of Nations, and more modernly, to Leonard Read’s I, Pencil. In the former, Smith opens with an essential point: “The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgment with which it is any where directed, or applied, seem to have been the effects of the division of labour.”2 Smith goes on to describe something as basic as a pin factory.

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That they’re not falling, but most often rising, is a market signal that fears of an environmental calamity related to oil consumption are vastly overdone. Instead, the nature of my argument about why the fracking boom has been anticredit is monetary. Specifically, it’s about the value of the dollar. For some simple background, we turn to Adam Smith, who made a critical observation in The Wealth of Nations: “The sole use of money is to circulate consumable goods.”7 There’s nothing abnormal or intimidating about Smith’s quote. As readers know by now, if money were actual wealth or itself a commodity, we’d all be rich. We could simply create lots of dollars. But money is not wealth.

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It bought 1/266th of an ounce of gold when Bush was inaugurated in 2001, and by July 2008 it bought 1/940th of an ounce.12 In a sequel to the 1970s, Americans once again started speculating on housing. It offered better returns than the stock market, plus you can live in a house. The rush into housing was a hugely negative economic signal, much as it was in the 1970s. As Adam Smith wrote in The Wealth of Nations: Though a house . . . may yield a revenue to its proprietor, and thereby serve in the function of a capital to him, it cannot yield any to the public, nor serve in the function of a capital to it, and the revenue of the whole of the people can never be in the smallest degree increased by it.13 Housing was all the rage.

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

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

Drucker, “Trading Places,” National Interest, Spring 2005. 14 Antoine van Agtmael, The Emerging Markets Century: How a New Breed of World-Class Companies Is Overtaking the World (New York: Free Press, 2007). 15 From Bill Clinton’s 1996 State of the Union Address, http://clinton4.nara.gov/WH/New/other/sotu.html. 16 Forbes magazine’s Global 2000 list of companies for 2008. CHAPTER TWO : A Brief History of Capitalism 1 Adam Smith, The Wealth of Nations (1776; New York: Modern Library, 1994), book 4, ch. 2, pp. 484-85. 2 Adam Smith, The Theory of Moral Sentiments (1759; Cambridge, UK: Cambridge University Press, 2002), Introduction. 3 During the savings-and-loan crisis of the 1980s (and early 1990s) more than a thousand savings-and-loan associates failed at a cost of at least $125 billion to the U.S. federal government. 4 The South Sea Company, founded in 1711, enjoyed a monopoly over British trade with Spanish South America and the Pacific region.

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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.

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Yet all mixed capitalist systems share faith in the principle that only free markets can generate long-term prosperity and that government should never become the dominant player in an economy. State capitalism represents a direct challenge to that belief. Capitalism and Political Free Markets It’s not mere coincidence that Adam Smith published The Wealth of Nations in the same year that America’s founders signed their Declaration of Independence from Britain. The movement that eighteenth-century philosopher Immanuel Kant called the Enlightenment inspired all sorts of people to demand all sorts of freedoms—both economic and political—from priests, lords, and kings.

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

"there is no alternative" (TINA), Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, antiwork, AOL-Time Warner, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, Bear Stearns, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, Charles Babbage, collateralized debt obligation, colonial rule, Corn Laws, corporate governance, corporate raider, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, discovery of the americas, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, falling living standards, financial deregulation, financial engineering, financial innovation, flying shuttle, Ford Model T, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Akerlof, Gini coefficient, Glass-Steagall Act, global value chain, Goldman Sachs: Vampire Squid, Gordon Gekko, Great Leap Forward, greed is good, Gunnar Myrdal, Haber-Bosch Process, happiness index / gross national happiness, high net worth, income inequality, income per capita, information asymmetry, intangible asset, interchangeable parts, interest rate swap, inventory management, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, laissez-faire capitalism, land bank, land reform, liberation theology, manufacturing employment, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, means of production, Mexican peso crisis / tequila crisis, Neal Stephenson, Nelson Mandela, Northern Rock, obamacare, offshore financial centre, oil shock, open borders, Pareto efficiency, Paul Samuelson, post-industrial society, precariat, principal–agent problem, profit maximization, profit motive, proprietary trading, purchasing power parity, quantitative easing, road to serfdom, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, scientific management, Scramble for Africa, search costs, shareholder value, Silicon Valley, Simon Kuznets, sovereign wealth fund, spinning jenny, structural adjustment programs, The Great Moderation, The Market for Lemons, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, transaction costs, transfer pricing, trickle-down economics, Vilfredo Pareto, Washington Consensus, working-age population, World Values Survey

But that little metal thing that most of you do not use – that is, unless you have long hair and like to keep it tidy or make your own clothes. The making of the pin is the subject of the very first chapter of what is commonly (albeit mistakenly)1 considered to be the first economics book, namely, An Inquiry into the Nature and Causes of the Wealth of Nations, by Adam Smith (1723–90). Smith starts his book by arguing that the ultimate source of increase in wealth lies in the increase in productivity through greater division of labour, which refers to the division of production processes into smaller, specialized parts. He argued that this increases productivity in three ways.

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During this era, even many of those who worked for capitalists were not wage labourers. There were still slaves around. Like tractors or traction animals, slaves were means of production owned by capitalists, especially the plantation owners in the American South, the Caribbean, Brazil and elsewhere. It was two generations after the publication of The Wealth of Nations (henceforth TWON) that slavery was abolished in Britain (1833). It was nearly a century after TWON and after a bloody civil war that slavery was abolished in the US (1862). Brazil abolished it only in 1888. While a large proportion of people who worked for capitalists were not wage labourers, many wage labourers were people who wouldn’t be allowed to become wage labourers today.

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In their attempts to make profits, producers strive to supply cheaper and better things, ultimately producing their products at the minimum possible costs, thus maximizing national output. This idea is known as the invisible hand and has become arguably the most influential metaphor in economics, although Smith himself used it only once in The Wealth of Nations (TWON) and did not accord it a prominent role in his theory.* Most Classical economists believed in the so-called Say’s Law, which states that supply creates its own demand. The reasoning was that every economic activity generates incomes (wages, profits, etc.) equivalent to the value of its output.

GDP: A Brief but Affectionate History by Diane Coyle

Alan Greenspan, Asian financial crisis, Berlin Wall, big-box store, Bletchley Park, Bretton Woods, BRICs, business cycle, clean water, computer age, conceptual framework, crowdsourcing, Diane Coyle, double entry bookkeeping, driverless car, en.wikipedia.org, endogenous growth, Erik Brynjolfsson, Fall of the Berlin Wall, falling living standards, financial intermediation, global supply chain, happiness index / gross national happiness, hedonic treadmill, income inequality, income per capita, informal economy, Johannes Kepler, John von Neumann, Kevin Kelly, Les Trente Glorieuses, Long Term Capital Management, Mahbub ul Haq, mutually assured destruction, Nathan Meyer Rothschild: antibiotics, new economy, Occupy movement, Phillips curve, purchasing power parity, Robert Shiller, Robert Solow, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, The Wealth of Nations by Adam Smith, Thorstein Veblen, University of East Anglia, working-age population

Once again, financing warfare was the motivation. Then came a substantial intellectual innovation. In The Wealth of Nations (published 1776), Adam Smith introduced the distinction between “productive” and “unproductive” labor. An anonymous author had written in 1746, “What I mean by National Income is, all the whole body of our People get or receive from Land, Trade, Arts, Manufactures, Labour, or any other way whatsoever; and by Annual Expence I mean, the whole that they spend or consume.” Yet in Adam Smith’s definition thirty years later, the “whole body of our People” did not count. Only those involved in the making of physical commodities, agriculture and industry, would count toward national income.

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Importantly, money spent on warfare or the interest on government debt was also being used unproductively. The nation’s wealth was its stock of physical assets less the national debt. National income was what derived from the national wealth. According to Benjamin Mitra-Kahn, “The Wealth of Nations introduced a new idea of the economy, and through the effort of Adam Smith’s students and admirers, it was adopted almost instantly.” In Smith’s own words: There is one sort of labour which adds to the value of the subject upon which it is bestowed: There is another which has no such effect. The former, as it produces a value, may be called productive; the latter, unproductive labour.

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Frits Bos, “Uses of National Accounts: History, International Standardization and Applications in the Netherlands,” MPRA Paper no. 9387, 30 June 2008, http://mpra.ub.uni-muenchen.de/9387/. Accessed 1 August 2012. 2. Benjamin H. Mitra-Kahn, “Redefining the Economy: How the ‘Economy’ Was Invented, 1620” (Ph.D. dissertation, City University London, 2011), http://openaccess.city.ac.uk/1276/. Accessed 3 August 2012. 3. Adam Smith, The Wealth of Nations (first published 1776), book II, chap. 3. 4. Geoff Tily, “John Maynard Keynes and the Development of National Accounts in Britain, 1895–1941,” Review of Income and Wealth 55, no. 2 (2009): 331–359. 5. Angus Maddison, The World Economy: Historical Statistics (Paris: Organization for Economic Cooperation and Development, 2003), preface. 6.

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

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

Estimates from the Brookings Institution say that preservation of Social Security at current levels would entail expenditure of about 2% of taxable earnings.16 We thought then, and we still think now, that Kerry’s mistake cost him the election. Saving and the Wealth of Nations We have been talking so far about personal decisions to save, why saving varies, and how important it is to people’s welfare in retirement. But there has long been another theme regarding savings. There are vast differences in the wealth of nations. In per capita terms there is more than a 200-fold difference between per capita income from the richest countries to the poorest. Indeed if we include Luxembourg and Burundi it is closer to a 1,000-fold difference.17 Income and wealth depend upon countries’ freedom to trade, the skills of their people, their geography, their current and past history of wars, their political and legal institutions.

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Journal of Finance 52(1):33–55. Sims, Christopher A. 1972. “Money, Income and Causality.” American Economic Review 62:540–52. ———. 2001. “Pitfalls of a Minimax Approach to Model Uncertainty.” American Economic Review 91(2):51–54. Smith, Adam. 1776. An Inquiry into the Nature and Causes of the Wealth of Nations. London: Ward, Lock, Bowden & Co. Smith, Edgar Lawrence. 1925. Common Stocks as Long-Term Investments. New York: Macmillan. Solow, Robert. 1979. “Another Possible Source of Wage Rigidity.” Journal of Macroeconomics 1(1):79–82. Sorkin, Andrew Ross. 2008. “JP Morgan Pays $2 a Share for Bear Stearns.”

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Applied Economics 35(3):337–42. Venti, Steven F., and David A. Wise. 2000. “Choice, Chance, and Wealth Dispersion at Retirement.” National Bureau of Economic Research Working Paper 7521, February. “Want Old Rate Restored.” 1894. Boston Daily, February 10, p. 10. Warsh, David. 2006. Knowledge and the Wealth of Nations: A Story of Economic Discovery. New York: W. W. Norton. Weinstein, Neil, and William M. Klein. 1996. “Unrealistic Optimism: Present and Future.” Journal of Social and Clinical Psychology 15:1–8. Welch, Jack, with John A. Byrne. 2001. Jack: Straight from the Gut. New York: Warner. Wentura, Dirk. 2005.

The Trouble With Billionaires by Linda McQuaig

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

‘No fundamental disturbance of the whole system is involved,’ noted Simons in his classic ‌1938 text Personal Income Taxation.6 He elaborated on this theme later, in Economic Policy for a Free Society, emphasizing how progressive taxation achieves redistribution without impinging on freedom: ‘What is important for libertarians is that we preserve the basic processes of free exchange and that egalitarian measures be superimposed on those processes, effecting redistribution afterward and not in the immediate course ‌of production and commercial transactions.’7 It could be added here that taxation – and even heavy taxation of the rich – was supported by no less a conservative heavyweight than Adam Smith. This might come as a surprise since Smith’s legacy has been largely appropriated in recent years by neoliberals. While they’ve managed to tear snippets out of context to present his The Wealth of Nations as a manifesto for unbridled capitalism, in fact Smith was a philosopher who was wary of the social consequences of the emerging industrial capitalist system, and in particular the dangers of inequality. Throughout The Wealth of Nations, Smith consistently championed the rights of workers against the rights of merchants and industrialists.

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In the United States, the slogan ‘no taxation without representation’ became the rallying cry of the Revolutionary War, reflecting the connection the colonial rebels made between taxation and democracy. Similarly, Adam Smith, the eighteenth-century Scottish philosopher and founder of the classical school of economics, rejected suggestions put forward by some in his day that taxes were ‘badges of slavery’. As he wrote in The Wealth of Nations: ‘Every tax…is to the person who pays it a badge, not of slavery, but of liberty. It denotes that he is subject to government, indeed, but that, as he has some property, he cannot himself be ‌the property of a master.’2 • • • Key to the development and promotion of today’s fierce anti-tax ideology was the emergence of a school of thought known as ‘public choice theory’.

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Frankfurt, ‘Reflections on Bullshit’, Harper’s, February 1987. Frankfurt later developed his theory into a bestselling book, On Bullshit, published by Princeton University Press in 2005. 10 Revamping the Ovarian Lottery ‌1 Norbert Haring & Niall Douglas, Economists and the Powerful (London: Wimbledon Publishing Company, 2012), p. 1. ‌2 Adam Smith, The Wealth of Nations (London: Penguin Books, 1999), p. 857. ‌3 Hugh Stretton & Lionel Orchard, Public Goods, Public Enterprise, Public Choice: Theoretical Foundations of the Contemporary Attack on Government (New York: St. Martin’s Press, 1994), p. 20. ‌4 Karl Polanyi, The Great Transformation (Boston: Beacon Press, 1957), p. 163. ‌5 R.

A Little History of Economics by Niall Kishtainy

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

Malthus panicked, and wrote to Ricardo to ask him to get rid of his share. Ricardo held his nerve, though, and held onto his own stake. When news came of the British victory, he became one of the wealthiest men in Britain overnight. Ricardo stumbled upon economics in a library where he discovered Adam Smith’s The Wealth of Nations. It turned out to be the most important book he ever read, and inspired him to apply his formidable mind to the analysis of the economy at a time when the new capitalists were competing for power with the old land-owning aristocrats. The question was how the country’s growing wealth was to be divided between the landowners, the capitalists and the mass of workers.

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He’d moved away from the buzz of the cities where he’d made his name as a philosopher to write what would become arguably the most celebrated book in the history of economics. It led some to call him the father of modern economics. Fuelled by bracing walks and sleepless nights, the hefty book was published in 1776 and called The Wealth of Nations. In it Smith posed one of the fundamental questions of economics. Is self-interest compatible with a good society? To understand what this means, let’s compare the workings of society with those of a football team. A good football team needs good players, obviously. Good players do more than simply dribble and shoot well.

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Smith had a vision of a new economy that was then being born, one based on the division of labour and self-interest. He has been acclaimed as a sage, often by those who believe that markets should rule above all else, that governments should do as little as possible and businesses do what they like. Two hundred years after The Wealth of Nations was published, American President Ronald Reagan championed these principles, taking Smith as his inspiration. Some of his White House officials even took to wearing ties with Smith’s portrait on them. But Smith might not have felt flattered by this. For one thing, he championed the role of markets as an attack on the mercantilist system which then ruled Europe with its many restrictions on buying and selling.

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

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

It’s that the memory skills and other traits that higher-IQ individuals tend to have are useful in searching out win-win possibilities, so it would be a great surprise if that didn’t happen in the lab and out in the real world. And if a game of pure conflict turns even slightly into a game of mutual interest, Sobel and Crawford would predict that mutual interest will spur clearer communication. Adam Smith’s Pin Factory: A Team Effort If you’ve never read it before, right now is an excellent time to read the first chapter of Adam Smith’s second book, The Wealth of Nations, published in 1776. Just a few pages long, it discusses how pins are made—the small pushpins that have a flat head, not sewing needles or wooden clothespins. This chapter is where Smith lays out the power of the division of labor, showing that by dividing the job of making pins into about a half-dozen separate tasks—wire-cutting, point-sharpening, head-flattening, and so on—a small group of individuals could make a few pounds of pins each day.

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If you have cooperative, patient, well-informed neighbors, that probably makes you a bit more cooperative, patient, and well-informed. Of course, test scores don’t explain everything about the wealth of nations: I’m only claiming that IQ-type scores explain about half of everything across countries—and much less within a country. If your next-door neighbor earns a lot more or less than you, it’s not mostly because of IQ. And across countries, differences in geography, culture, and the long reach of colonialism are surely shaping the wealth of nations. The hive mind is no single-cause theory of prosperity. It’s just a story that almost no one else is talking about. Chapter 1 JUST A TEST SCORE?

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After all, rich countries and poor countries differ in countless ways, and average test scores are just one of the differences. I could just as easily have shown a graph that shows that rich countries have more cell phones per person, or that people in rich countries eat at restaurants more often or are more likely to have vacation homes. Does Figure I.1 really tell us anything about what drives the wealth of nations? One preliminary check is to see whether a nation’s average test scores still do a good job of predicting a nation’s level prosperity even when you know a lot of other things about the country: this approach is known as multiple regression. It amounts to asking, “Even if I already know that your country has a high savings rate, a lot of mineral wealth, or whatever, does knowing your nation’s average test scores still help me to predict how productive your country is?”

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

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

Epstein and Maarten Prak, Guilds, Innovation, and the European Economy, 1400–1800 (Cambridge: Cambridge University Press, 2008) 31. 23. Ibid., 44. Chapter 3 1. Yujiro Hayami and Yoshihisa Godo, Development Economics: From the Poverty to the Wealth of Nations (New York: Oxford University Press, 2005), 341. 2. Maurice Dobb, Studies in the Development of Capitalism (New York: International Publishers, 1947), 143. 3. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Edinburgh: Thomas Nelson, 1843), 20. 4. Ibid. 5. Ibid., 21. 6. Ibid., 22. 7. Carl Lira, “Biography of James Watt,” May 21, 2013, http://www.egr.msu.edu/~lira/supp/steam /wattbio.html (accessed January 7, 2014). 8.

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Through most of history, markets were occasional meeting places where goods were exchanged. Today, virtually every aspect of our daily lives is connected in some way to commercial exchanges. The market defines us. But here lies the contradiction. Capitalism’s operating logic is designed to fail by succeeding. Let me explain. In his magnum opus, The Wealth of Nations, Adam Smith, the father of modern capitalism, posits that the market operates in much the same way as the laws governing gravity, as discovered by Isaac Newton. Just as in nature, where for every action there is an equal and opposite reaction, so too do supply and demand balance each other in the self-regulating marketplace.

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Of course, my father could never have imagined in the early years that the millions of plastic bags he was selling would end up in landfills and pollute the environment. Nor could he have foreseen that the petrochemicals used to extrude the polyethylene would emit carbon dioxide and play a key role in altering the climate of the planet. Reflecting on my own father’s career, it is clear to me that the invisible hand that Adam Smith alluded to 237 years ago in The Wealth of Nations is really not all that invisible. It’s the entrepreneurial spirit that drove my dad and countless other entrepreneurs to innovate, reduce marginal costs, bring cheaper products and services to the market, and spur economic growth. That entrepreneurial spirit is now taking us to near zero marginal costs and into a new economic era of history where more goods and services will be nearly free and shared on a Collaborative Commons.

Why We Can't Afford the Rich by Andrew Sayer

"World Economic Forum" Davos, accounting loophole / creative accounting, Alan Greenspan, Albert Einstein, Anthropocene, anti-globalists, asset-backed security, banking crisis, banks create money, basic income, biodiversity loss, bond market vigilante , Boris Johnson, Bretton Woods, British Empire, Bullingdon Club, business cycle, call centre, capital controls, carbon footprint, carbon tax, 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, degrowth, deindustrialization, delayed gratification, demand response, don't be evil, Double Irish / Dutch Sandwich, en.wikipedia.org, Etonian, financial engineering, financial innovation, financial intermediation, Fractional reserve banking, full employment, G4S, Goldman Sachs: Vampire Squid, green new deal, high net worth, high-speed rail, income inequality, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, Isaac Newton, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", James Dyson, job automation, Julian Assange, junk bonds, Kickstarter, labour market flexibility, laissez-faire capitalism, land bank, land value tax, long term incentive plan, 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, popular capitalism, predatory finance, price stability, proprietary trading, pushing on a string, quantitative easing, race to the bottom, rent-seeking, retail therapy, Ronald Reagan, shareholder value, short selling, sovereign wealth fund, Steve Jobs, tacit knowledge, TED Talk, The Nature of the Firm, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, 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

Anyway, don’t the differences in the quality of work that people do simply reflect differences in intelligence and effort? And doesn’t the division of labour make for economic efficiency, from which, supposedly, we all benefit? Let’s look at these objections. Isn’t the unequal division of labour a reflection of differences in ability and effort? In 1776, in The Wealth of Nations, Adam Smith famously analysed the benefits of division of labour through his example of the pin factory. Splitting the manufacture into 18 different operations, carried out repetitively and covered by about 10 workers, allowed them to produce over 48,000 pins per day, whereas if each worker had to do all 18 operations on each pin from start to finish before moving on to the next they would scarcely have produced 20 a day.

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The proportion of part-timers in the workforce has also risen in the US in the last 40 years. 13 Tawney, R.H. (2004) [1920] The acquisitive society, Mineola, NY: Harcourt Brace and Howe. 14 Hudson, M. (2008) http://dandelionsalad.wordpress.com/2008/09/08/’modern-debt-peonage”-economic-democracy-is-turning-into-a-financial-oligarchy/. Chapter Four: For rent … for what? 15 Smith, A. (1976) [1776] The wealth of nations, ed. E. Cannan, Chicago, IL: University of Chicago Press, Bk I, ch V, p 56. 16 Paine, T. (1797) Agrarian justice, paragraph 11, http://geolib.pair.com/essays/paine.tom/agjst.html. 17 Churchill, W. (1909) The people’s rights, ch 4, http://www.wealthandwant.com/docs/Churchill_TPL.html. 18 Tawney, R.H. (2004) [1920] The acquisitive society, Mineola, NY: Harcourt Brace and Howe. 19 http://www.richest-people.co.uk/duke-of-westminster/. 20 Mill, J.S. (1965) Principles of political economy, in Collected Works, ed.

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19 For a fuller discussion of these possibilities see Wright, E.O. (2000) Class counts, Cambridge: Cambridge University Press. 20 Orton, M and Rowlingson, K. (2007) Public attitudes to inequality, York: Joseph Rowntree Foundation; Horton, L. and Bamfield, T. (2009) Understanding attitudes to tackling economic inequality, York: Joseph Rowntree Foundation; Miller, D. (1999) Principles of social justice, Cambridge, MA: Harvard University Press. 21 See Robert Jackall’s wonderful study of corporate managers in the US in his 1988 book, Moral mazes, Oxford: Oxford University Press. 22 Gomberg, P. (2007) How to make opportunity equal, Oxford: Blackwell; Sayer, A. (2009) ‘The injustice of unequal work’, Soundings, 43, pp. 102–13. 23 Horton and Bamfield (2009). 24 Gomberg (2007). 25 Gomberg (2007). 26 Smith, A. (1976) [1776], The wealth of nations, ed. E. Cannan, Chicago, IL: University of Chicago Press, vol 2, bk V, ch i, pp 302–3. 27 Murphy, J.B. (1993) The moral economy of labor, New Haven, CT: Yale University Press. 28 Smith (1976) [1776], vol 1, bk I, ch ii, pp 19–20. 29 Feinstein, L. (2003) ‘Inequality in the early cognitive development of British children in the 1970 cohort’, Economica, 70, pp 73–97.

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

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

The story of the United States is the story of an economic miracle and a political miracle that was made possible by the translation into practice of two sets of ideas—both, by a curious coincidence, formulated in documents published in the same year, 1776. One set of ideas was embodied in The Wealth of Nations, the masterpiece that established the Scotsman Adam Smith as the father of modern economics. It analyzed the way in which a market system could combine the freedom of individuals to pursue their own objectives with the extensive cooperation and collaboration needed in the economic field to produce our food, our clothing, our housing. Adam Smith's key insight was that both parties to an exchange can benefit and that, so long as cooperation is strictly voluntary, no exchange will take place unless both parties do benefit.

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We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chuses to depend chiefly upon the benevolence of his fellow citizens." —Adam Smith, The Wealth of Nations, vol. I, [>] We cannot indeed depend on benevolence for our dinner—but can we depend wholly on Adam Smith's invisible hand? A long line of economists, philosophers, reformers, and social critics have said no. Self-love will lead sellers to deceive their customers. They will take advantage of their customers' innocence and ignorance to overcharge them and pass off on them shoddy products.

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The action shall name as defendant the Treasurer of the United States, who shall have authority over outlays by any unit or agency of the Government of the United States when required by a court order enforcing the provisions of this article. The order of the court shall not specify the particular outlays to be made or reduced. Changes in outlays necessary to comply with the order of the court shall be made no later than the end of the third full fiscal year following the court order. NOTES INTRODUCTION 1. Adam Smith, The Wealth of Nations (1776). (All page references are to the edition edited by Edwin Cannan, 5th ed. (London: Methuen & Co., Ltd., 1930). 2. On Liberty, People's ed. (London: Longmans, Green & Co., 1865), p. 6. 3. Wealth of Nations, vol. I, p. 325 (Book II, Chap. III). CHAPTER 1 1. See Hedrick Smith, The Russians (New York: Quadrangle Books/New York Times Book Co., 1976), and Robert G.

For Profit: A History of Corporations by William Magnuson

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

One famous shareholder of the East India Company, Sir Josiah Child, was notorious for spreading false rumors that war had broken out in India, causing the company’s share price to drop. He would then proceed to buy up entire blocks of shares on the cheap. This kind of market manipulation wreaked havoc on stock markets and the pockets of unsophisticated investors for centuries. What should we make of the rise of this capitalist system? Adam Smith believed that it was all for the best. In The Wealth of Nations, Smith famously argued that an “invisible hand” oversaw the market. The invisible hand ensured that selfish individuals, looking out solely for themselves, ended up promoting the greater good of society as a whole. Precisely how the invisible hand did its work was unclear, but it generally involved some combination of supply and demand: by competing with one another in responding to the demands of consumers, corporations supplied the goods and services that society needed with high quality and at a reasonable price.

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Corporations are public entities with a public purpose, given special rights and privileges precisely because governments believe they will contribute to the greatness of their nations. While they sometimes—perhaps even often—stray from this purpose, their original and abiding justification has always been their ability to promote the good of all. Adam Smith, the father of capitalism, understood this. In the seldom-read passage of The Wealth of Nations in which he articulated his vision of the invisible hand, he was careful to provide an important caveat about capitalism as a cure-all. The invisible hand is not infallible. “By directing [his] industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention,” Smith wrote.

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“The monopoly of tea is, I dare say, but a small part of the plan they have formed to strip us of our property,” Dickinson concluded.36 The East India Company also attracted the attention of two philosophers developing new theories about nations and economies. Adam Smith, the father of modern capitalism, famously wrote in The Wealth of Nations that an “invisible hand” leads individuals pursuing their self-interest in a free market to simultaneously and unintentionally promote the interest of society more broadly. But in a somewhat less well known section of his treatise, Smith cast doubt on the ability of corporations to do the same.

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

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

Such an economy will shape us—make us more like the individuals and society to which we aspire. And in doing so, it will enable us to create a more humane economy, one capable of delivering for the vast majority of our citizens the “middle-class” life to which they aspire, but which has increasingly become out of reach. The Wealth of Nations Adam Smith’s famous book of 1776, The Wealth of Nations, is a good place to start for understanding how nations prosper. It is usually thought of as the beginning of modern economics. Smith rightly criticized mercantilism, the economic school of thought that dominated Europe during the Renaissance and the early industrial period.

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Even to make money by taking advantage of weaknesses, such as gambling or alcohol, requires market power, because in our amoral society, there is an ample supply of those able and willing to do so, and in the absence of market power, profits even for nefarious activities would be driven down to zero. 10.While traditionally, corruption focuses on instances such as these, in fact there is widespread corruption in the private sector, as when an employee (even a CEO) takes advantage of his position to enrich himself, or when a company behaves dishonestly, to enrich itself at the expense of others. 11.Adam Smith, An Inquiry into the Causes of the Wealth of Nations, 1776. 12.Actually, the passage was in response not just to the potential for monopolization, but the pervasive presence of market power that had emerged at the end of the nineteenth century, including in oil, railroads, meatpacking, and tobacco. 13.There are, of course, fluctuations in the risk premium that the market requires, depending on judgment about risk in the economy. 14.For a close look at the corporate sector, see Simcha Barkai, “Declining Labor and Capital Shares” (working paper, 2017).

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In short, our elites, in both parties, thought that focusing on GDP could be a substitute for focusing on people. In effect, they dissed large parts of the country. This disrespect was perhaps almost as painful as the economic tragedy that was befalling them. Alternative Theories to the Sources of the Wealth of Nations I’ve described the real source of the wealth of nations—resting on foundations of science and knowledge and the social institutions that we’ve created to help us not just live peacefully with each other but cooperate together for our common good. I’ve described too the threat to these foundations represented by Trump and his ilk.

The New Enclosure: The Appropriation of Public Land in Neoliberal Britain by Brett Christophers

Alan Greenspan, book value, Boris Johnson, Capital in the Twenty-First Century by Thomas Piketty, Corn Laws, credit crunch, cross-subsidies, Diane Coyle, estate planning, Garrett Hardin, gentrification, ghettoisation, Hernando de Soto, housing crisis, income inequality, invisible hand, Jeremy Corbyn, land bank, land reform, land tenure, land value tax, late capitalism, market clearing, Martin Wolf, New Journalism, New Urbanism, off grid, offshore financial centre, performance metric, Philip Mirowski, price mechanism, price stability, profit motive, radical decentralization, Right to Buy, Skype, sovereign wealth fund, special economic zone, the built environment, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tragedy of the Commons, Tyler Cowen, urban sprawl, wealth creators

But Our Belief in It Has Gone’, Guardian, 1 February 2017. 1 M. Rothbard, Economic Thought Before Adam Smith: An Austrian Perspective on the History of Economic Thought, Volume I (Aldershot: Edward Elgar, 1995), p. xii. 2 D. Reisman, ‘Adam Smith on Market and State’, Journal of Institutional and Theoretical Economics 154 (1998), pp. 357–83, at p. 374. 1 A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Edinburgh: Thomas Nelson/Peter Brown, 1831), p. 303. 2 Reisman, ‘Adam Smith on Market and State’, p. 375. 3 On infrastructure, see P. O’Neill, ‘The Financialisation of Infrastructure: The Role of Categorisation and Property Relations’, Cambridge Journal of Regions, Economy and Society 6 (2013), pp. 441–54. 1 See, for example, C.

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But the land itself is not the only such asset. Also irreplaceable, and arguably more significant, is the particular capacity for public self-determination conferred by state ownership and control of the land – even if only ‘potentially’. Economic disorder There is a widely cited passage from Adam Smith’s The Wealth of Nations that reads as follows: As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce. The wood of the forest, the grass of the field, and all the natural fruits of the earth, which, when land was in common, cost the labourer only the trouble of gathering them, come, even to him, to have an additional price fixed upon them.

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Letwin delivered a draft report in June 2018, just as this book was going to press. See O. Letwin, Independent Review of Build Out Rates: Draft Analysis. 3 Cited in R. Sylvester, A. Thomson, F. Elliott and T. Knowles, ‘Greedy House Developers Face Losing Right to Build’, The Times, 31 January 2018. 1 A. Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations (Edinburgh: Thomas Nelson/Peter Brown, 1831), p. 21. 2 For example, B. Christophers, ‘On Voodoo Economics: Theorising Relations of Property, Value and Contemporary Capitalism’, Transactions of the Institute of British Geographers 35 (2010), pp. 94–108. Note that ‘rentier capitalism’ does not necessarily signify the prominence of land rents; it denotes the significance of economic rent in general, where rent is understood as value captured by virtue of monopoly ownership of a scarce asset.

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

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

., 2009), pp. 277–79; See also John Clarke, “Living With/in and Without Neo-Liberalism,” Focaal–European Journal of Anthropology 51 (2008), pp. 135–47; and Ronen Shamir, “The Age of Responsibilization: On Market-Embedded Morality,” Economy and Society 37.1 (2008), pp. 1–19. 240 notes 21. Adam Smith, The Wealth of Nations (Chicago: University of Chicago Press, 1976), p. 477 22. Thus the persistent effort to fathom why working and middle-class voters can often be mobilized “against their interests” operates within an anachronistic paradigm of liberalism; such voters are behaving like good neoliberal subjects.

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., 1.9,15–18 39. Ibid., 1.9.14 notes 241 40. Laval, L’homme économique; Hirschman, The Passions and the Interests. 41. C. B. MacPherson, The Political Theory of Possessive Individualism: Hobbes to Locke (Oxford: Oxford University Press, 1962), p. 3. 42. Smith, The Wealth of Nations. 43. Marx, The German Ideology. 44. In chapter 2 of the Wealth of Nations, Smith writes: “whether this propensity [to truck and barter] be one of those original principles in human nature of which no further account can be given; or whether, as seems more probable, it be the necessary consequence of the faculties of reason and speech, it belongs not to our present subject to inquire.”

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Hunger, thirst, the passion which unites the two sexes, and the dread of pain, prompt us to apply those means for their own sakes, and without any consideration of their tendency to those beneficent ends which the great Director of nature intended to produce by them.” Adam Smith, Theory of Moral Sentiments (Indianapolis: Liberty Classics, 1976), p. 378. Useful considerations of Smith’s account of human nature include Samuel Fleischacker, On Adam Smith’s Wealth of Nations: A Philosoph­ical Companion (Princeton: Princeton Univ. Press, 2004) and Manfred J. Holler, “Adam Smith’s Model of Man and Some of its Consequences,” Homo Oeconomicus 23.3 (2006), pp. 467–88. 242 notes 46. John Locke, Two Treatises of Government, in Political Writings, ed.

Who Rules the World? by Noam Chomsky

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

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

…

Randolph Bourne, “Twilight of Idols,” Seven Arts, October 1917, 688–702.   7. Michael Crozier, Samuel P. Huntington, and Joji Watanuke, The Crisis of Democracy: Report on the Governability of Democracies to the Trilateral Commission (New York: New York University Press, 1975), http://www.trilateral.org/download/doc/crisis_of_democracy.pdf.   8. Adam Smith, The Wealth of Nations (New York: Bantam Classics, 2003), 96.   9. Gordon S. Wood, The Creation of the American Republic, 1776–1787 (New York: W. W. Norton, 1969), 513–14. Lance Banning, in The Sacred Fire of Liberty: James Madison and the Founding of the Federal Republic (Ithaca: Cornell University Press, 1995), strongly affirms Madison’s dedication to popular rule but nevertheless concurs with Wood’s assessment of the Constitutional design (245). 10.

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Fails to Explain Policies to Muslim World, Panel Says,” New York Times, 24 November 2004. 12. Afaf Lutfi Al-Sayyid Marsot, Egypt in the Reign of Muhammad Ali (Cambridge: Cambridge University Press, 1984). For more extensive discussion on post–World War II Egypt, see Noam Chomsky, World Orders Old and New (New York: Columbia University Press, 1994), chapter 2. 13. Adam Smith, The Wealth of Nations (New York: Bantam Classics, 2003), 309. 14. Noam Chomsky, Year 501: The Conquest Continues (Chicago: Haymarket Books, 2014), 150. 15. Chomsky, Hopes and Prospects, 80. 16. David Ricardo, The Works of David Ricardo: With a Notice of the Life and Writings of the Author by J. R.

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

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

O’Rourke described economics as “an entire scientific discipline of not knowing what you’re talking about.”2 Economics focuses on how production and financial systems work or should work. Macroeconomics focuses on growth, employment, production, inflation, and monetary and government budgetary (fiscal) policy. Microeconomics tries to analyze the behavior of firms or individuals, and how things like prices are determined and markets work. In his 1776 work The Wealth of Nations, Adam Smith argued for a self-regulating market system in which narrow self-interest could order economic activity: It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.3 Capitalism created wealth and progress, but at high social cost.

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Alain de Botton (2002) The Art of Travel, Penguin Books, London: 40. 10. Ibid: 57. 11. Quoted in Andrew Ross Sorkin “A ‘bonfire’ returns as heartburn” (24 June 2008) New York Times. Chapter 1—Mirror of the Times 1. Michael Jackson “Money” from History—Past, Present And Future Book 1 (2009). 2. Adam Smith (1776) An Inquiry into the Nature and Causes of the Wealth of Nations: Book 1 Chapter 2 (http://geolib.com/smith.adam/won1-02.html). 3. Glyn Davies (2002) A History of Money: From Ancient Times to the Present Day, University of Wales Press, Cardiff: 13, 14. 4. Ibid: 18, 20. 5. Christian Oliver and Jan Cienski “North Korea offers ginseng to pay Czech debt” (10 August 2010) Financial Times. 6.

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William Jennings Bryan, Speech concluding debate on the Chicago Platform (9 July 1896), Democratic National Convention, Chicago, Illinois (http://en.wikisource.org/wiki/Cross_of_Gold_Speech). 10. Wetherford, The History of Money: 175–7. 11. Quoted in Brook Larmer “The price of gold” (January 2009) National Geographic: 42. 12. Ian Fleming (2009) Goldfinger, Penguin Books, London: 73. 13. John Updike (1982) Rabbit is Rich, Penguin Books, London: 201. 14. Adam Smith (2007) The Wealth of Nations, Cosmino, New York: 241. 15. John Kenneth Galbraith (1975) Money: Whence It Came, Whence It Went, Houghton Mifflin, Boston: 45. 16. Dylan Grice “Popular delusions: a Minskian roadmap to the next gold mania” (18 November 2009), Société Générale Cross Asset Research. 17. Walsh, Keynes and the Market: 167. 18.

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

Abraham Maslow, Alan Greenspan, Andrei Shleifer, asset-backed security, bank run, banking crisis, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Blythe Masters, Boris Johnson, bread and circuses, Bretton Woods, business cycle, capital controls, carbon footprint, Carmen Reinhart, Cass Sunstein, centre right, choice architecture, cloud computing, collective bargaining, conceptual framework, Corn Laws, Cornelius Vanderbilt, corporate governance, creative destruction, credit crunch, Credit Default Swap, debt deflation, decarbonisation, Deng Xiaoping, discovery of DNA, discovery of the americas, discrete time, disinformation, diversification, double helix, Edward Glaeser, financial deregulation, financial engineering, financial innovation, financial intermediation, first-past-the-post, floating exchange rates, Francis Fukuyama: the end of history, Frank Levy and Richard Murnane: The New Division of Labor, full employment, general purpose technology, George Akerlof, Gini coefficient, Glass-Steagall Act, global supply chain, Growth in a Time of Debt, Hyman Minsky, I think there is a world market for maybe five computers, income inequality, inflation targeting, interest rate swap, invisible hand, Isaac Newton, James Dyson, James Watt: steam engine, Japanese asset price bubble, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, knowledge worker, labour market flexibility, language acquisition, Large Hadron Collider, liberal capitalism, light touch regulation, Long Term Capital Management, long term incentive plan, Louis Pasteur, low cost airline, low interest rates, low-wage service sector, mandelbrot fractal, margin call, market fundamentalism, Martin Wolf, mass immigration, means of production, meritocracy, Mikhail Gorbachev, millennium bug, Money creation, money market fund, moral hazard, moral panic, mortgage debt, Myron Scholes, Neil Kinnock, new economy, Northern Rock, offshore financial centre, open economy, plutocrats, power law, price discrimination, private sector deleveraging, proprietary trading, purchasing power parity, quantitative easing, race to the bottom, railway mania, random walk, rent-seeking, reserve currency, Richard Thaler, Right to Buy, rising living standards, Robert Shiller, Ronald Reagan, Rory Sutherland, Satyajit Das, Savings and loan crisis, shareholder value, short selling, Silicon Valley, Skype, South Sea Bubble, Steve Jobs, systems thinking, tail risk, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, the scientific method, The Wealth of Nations by Adam Smith, three-masted sailing ship, too big to fail, unpaid internship, value at risk, Vilfredo Pareto, Washington Consensus, wealth creators, work culture , working poor, world market for maybe five computers, zero-sum game, éminence grise

_r=1. 4 This problem is even more pernicious in developing countries. See Raymond Fisman and Edward Miguel (2008) Economic Gangsters: Corruption, Violence and the Poverty of Nations, Princeton University Press. 5 Adam Smith (1776) An Enquiry into the Nature and Causes of the Wealth of Nations, Vol. I, pp. 363–4. 6 Generally, see Emma Rothschild (2001) Economic Sentiments: Adam Smith, Condorcet, and the Enlightenment, Harvard University Press. The spirit of rationalism underpinned early centralisation and the emergence of unified markets. See Stephan Epstein (2000) Freedom and Growth: The Rise of States and Markets in Europe, 1300–1750, Routledge. 7 J.

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The acquirer must leave for his neighbour ‘as good and as large a possession (after the other had taken out his) as before it was appropriated’.11 A shipwrecked sailor, for example, cannot appropriate the only tools available because that would leave others at an unjustifiable disadvantage. Property ownership therefore had limits, but it was justified not as part of God’s dominion but because of the effort made to win it. We earn our rights – a view that has turned out to be durable. Adam Smith, the author of The Wealth of Nations, saw poor workers as victims of the disproportionate allocation of property, unacknowledged Atlases supporting a superstructure of ‘ease and plenty’ above them. Rather than pitiful creatures who deserved their fate, Smith’s humanity and Enlightenment recognition that human beings were of equal worth made him see virtue in the apparently virtueless poor.

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He was wrong about derivatives alleviating risk, wrong that shareholders would ensure that banks pursued policies that did not destroy wealth, and wrong about the housing boom not being a bubble that would inevitably burst. But the pre-credit crunch, ‘socialist’ Brown was happy to go along with all this. Perhaps we should not be surprised. After all, Edinburgh University was Adam Smith’s alma mater, too, and both Brown and Smith were citizens of Kirkcaldy, and proud of the fact. Greenspan might stress The Wealth of Nations in his belief system; Brown might stress the humanism and commitment to fairness in Smith’s Theory of Moral Sentiments. But both worshipped at the same shrine.8 Brown was flattered that American conservatives thought so highly of the Scottish contribution to the European Enlightenment.

Debt: The First 5,000 Years by David Graeber

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

People continued keeping accounts in the old imperial currency, even if they were no longer using coins.28 Similarly, the Pukhtun men who like to swap bicycles for donkeys are hardly unfamiliar with the use of money. Money has existed in that part of the world for thousands of years. They just prefer direct exchange between equals—in this case, because they consider it more manly.29 The most remarkable thing is that even in Adam Smith’s examples of fish and nails and tobacco being used as money, the same sort of thing was happening. In the years following the appearance of The Wealth of Nations, scholars checked into most of those examples and discovered that in just about every case, the people involved were quite familiar with the use of money, and in fact, were using money—as a unit of account.30 Take the example of dried cod, supposedly used as money in Newfoundland.

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In the Middle Ages, for instance, everyone continued to assess the value of tools and livestock in the old Roman currency, even if the coins themselves had ceased to circulate.6 It’s money that had made it possible for us to imagine ourselves in the way economists encourage us to do: as a collection of individuals and nations whose main business is swapping things. It’s also clear that the mere existence of money, in itself, is not enough to allow us see the world this way. If it were, the discipline of economics would have been created in ancient Sumer, or anyway, far earlier than 1776, when Adam Smith’s The Wealth of Nations appeared. The missing element is in fact exactly the thing Smith was attempting to downplay: the role of government policy. In England, in Smith’s day, it became possible to see the market, the world of butchers, ironmongers, and haberdashers, as its own entirely independent sphere of human activity because the British government was actively engaged in fostering it.

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Cambridge: Cambridge University Press. Smith, Adam. 1761. Theory of moral sentiments. Cambridge: Cambridge University Press (2002 edition). _____. 1762. Lectures on Jurisprudence. Glasgow Edition of the Works and Correspondence of Adam Smith Vol. 5. Indianapolis: Liberty Fund (1982 edition). _____. 1776. An Inquiry into the nature and causes of the wealth of nations. Oxford: Clarendon Press (1976 edition). Smith, Edwin, and Andrew Murray Dale. 1968. The Ila Speaking Peoples Of Northern Rhodesia. Two Volumes. London: Kessinger. Smith, Timothy. 1983. “Wampum as Primitive Valuables.” Research in Economic Anthropology 5: 225-246.

Capitalism 3.0: A Guide to Reclaiming the Commons by Peter Barnes

Albert Einstein, car-free, carbon tax, clean water, collective bargaining, corporate governance, corporate personhood, corporate raider, corporate social responsibility, cotton gin, dark matter, digital divide, diversified portfolio, do well by doing good, Easter island, en.wikipedia.org, Garrett Hardin, gentrification, hypertext link, Isaac Newton, James Watt: steam engine, jitney, junk bonds, Michael Milken, military-industrial complex, money market fund, new economy, patent troll, precautionary principle, profit maximization, Ronald Coase, telemarketer, The Wealth of Nations by Adam Smith, Tragedy of the Commons, transaction costs, War on Poverty, Yogi Berra

The Ascent of Corporations When I speak in this book of corporations, I’m speaking of a very special institution: the publicly traded stock corporation. This is an institution with a board of directors, a set of executive officers, and a fluctuating set of shareholders to whom the directors and officers are legally accountable. These corporations have an explicit mission: to maximize return to stock owners. When Adam Smith wrote The Wealth of Nations in 1776, there were barely a handful of corporations in Britain or America. The dominant business form was the partnership, in which small groups of people known to each other ran businesses they co-owned. In the public’s mind—as in Smith’s—the corporate form, in which managers sold stock to strangers, was inherently prone to fraud.

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.”: Bob Dole’s statement on the spectrum giveaway can be found at www.anu.edu.au/mail-archives/link/link9601/0035.html. See also Ralph Kinney Bennett, “The Great Airwaves Giveaway,” Reader’s Digest, June 1996. 119 “If you steal $10 . . .”: Walter Hickel, Crisis in the Commons: The Alaska Solution (Oakland, Calif.: ICS Press, 2002), p. 217. 120 a handful of corporations: Adam Smith, The Wealth of Nations (London: Penguin Books, 1982 [originally published 1776]). 121 corporations were persons”: The Supreme Court decision that established corporate personhood was Santa Clara County v. Southern Pacific Railroad, 118 U.S. 394 (1886). 122 Fortune 500 sales: I computed the annual sales of Fortune 500 corporations from data available (for a fee) on Fortune magazine’s website.

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.: South End Press, 2002. Shiva, Vandana. Earth Democracy: Justice, Sustainability, and Peace. Cambridge, Mass.: South End Press, 2005. Shulman, Seth. Owning the Future. Boston: Houghton Mifflin, 1999. Simms, Andrew. Ecological Debt: The Health of the Planet and the Wealth of Nations. London: Pluto Press, 2005. Smith, Adam. The Wealth of Nations. London: Penguin Books, 1982. (Originally published 1776) Smith, Adam. The Theory of Moral Sentiments. Amherst, N.Y.: Prometheus Books, 2000. (Originally published 1759) Steinberg, Theodore. Slide Mountain: The Folly of Owning Nature. Berkeley: University of California Press, 1995.

Year 501 by Noam Chomsky

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

So it has always been.11 Stigler may well be right, however, that Smith “certainly convinced all subsequent economists.” If so, that is a comment on the dangers of illegitimate idealization that isolates some inquiry from factors that crucially affect its subject matter, a problem familiar in the sciences; in this case, separation of abstract inquiry into the wealth of nations from questions of power: Who decides, and for whom? We return to the point as Adam Smith himself understood it. The wealth of the colonies returned to Britain, creating huge fortunes. By 1700, the East India Company accounted for “above half the trade of the nation,” one contemporary critic commented. Through the following half-century, Keay writes, its shares became the “equivalent of a gilt-edged security, much sought after by trustees, charities and foreign investors.”

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Their “conservative” counterparts are only more extreme in their adulation of the Wise Men who are the rightful rulers—in the service of the rich and powerful, a minor footnote regularly forgotten.18 The rabble must be instructed in the values of subordination and a narrow quest for personal gain within the parameters set by the institutions of the masters; meaningful democracy, with popular association and action, is a threat to be overcome. These too are persistent themes, that only take new forms. Adam Smith’s nuanced interpretation of state interference with international trade extended to the domestic scene as well. The praise in his opening remarks for “the division of labor” is well-known: it is the source of “the greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgment with which it is any where directed, or applied,” and the foundation of “the wealth of nations.” The great merit of free trade, he argued, is that it contributes to these tendencies.

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The policies they contrived were reasonable enough in terms of narrow self-interest, however others may have been harmed, including the general population of England.17 Smith’s conclusion that “Under the present system of management, therefore, Great Britain derives nothing but loss from the dominion which she assumes over her colonies” is highly misleading. From the point of view of policy choices, Great Britain was not an entity. “The wealth of nations” is no concern of the “architects of policy,” who, as Smith insists, seek private gain. The fate of the common people is no more their concern than that of the “mere savages” who stand in the way. If an “invisible hand” sometimes provided others with benefits, that is merely incidental. The basic focus on “wealth of nations” and what “Great Britain derives” is faulty from the start, undermined by illegitimate idealization, though at least it is qualified and corrected in Smith’s fuller discussion.

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

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

Market-led solutions are profoundly amoral and, thus, fail to address many of the key issues of political economy. Market forces may lead to more efficient outcomes, but efficiency says nothing about whether the rewards are fairly distributed. For markets to provide widespread benefits, property rights and the rule of law are most certainly required, but they may not be enough. As Adam Smith wrote in The Wealth of Nations, ‘Wherever there is great property, there is great inequality . . . the affluence of the rich excites the indignation of the poor, who are often driven by want, and prompted by envy, to invade his possessions . . . The acquisition of valuable and extensive property, therefore, necessarily requires the establishment of civil government.’

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To put China’s gold medal haul into context, the Middle Kingdom managed to win only five gold medals in the Seoul Olympics in 1988. 7. For an informed discussion of the client state problem, see Tony Judt’s Post War: A History of Europe since 1945 (William Heinemann, London, 2005). 8. An Inquiry into the Nature and Causes of the Wealth of Nations, first published in 1776. As it turned out, this was a remarkably auspicious year for political and economic developments. 9. See, for example, ‘The market for lemons: quality uncertainty and the market mechanism’, the groundbreaking paper by George A. Akerlof, Quarterly Journal of Economics, 84.3 (1970), pp. 488–500. 10.

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., Latin America’s Political Economy of the Possible: Beyond Good Revolutionaries and Free-Marketeers, MIT Press, Boston, 2007 Sen, A., Identity and Violence: The Illusion of Destiny, Allen Lane, London, 2006 Shiller, R., Irrational Exuberance, Princeton University Press, Princeton, 2000 Smith, A., The Wealth of Nations, Books I–III and Books IV–V, Penguin, London, 1999 ———, Theory of Moral Sentiments, Prometheus, London, 2000 Stevenson, D., 1914–1918: The History of the First World War, Allen Lane, London, 2004 Stiglitz, J., Globalisation and its Discontents, Penguin, London, 2003 Stock, J. and Watson, M., Has the Business Cycle Changed and Why?

Payoff: The Hidden Logic That Shapes Our Motivations by Dan Ariely

Affordable Care Act / Obamacare, always be closing, behavioural economics, David Brooks, en.wikipedia.org, IKEA effect, knowledge economy, knowledge worker, science of happiness, Snapchat, TED Talk, The Wealth of Nations by Adam Smith

This view holds that the labor market is a place where individuals exchange work for wages (regardless of how meaningless the labor is) and that people typically don’t really care what happens to their work as long as they are fairly compensated for it. This view of labor as a work-wage exchange springs from Adam Smith’s 1776 magnum opus The Wealth of Nations, in which Smith described the benefits of breaking a large task into components, assigning one person to each specific task, and encouraging them to specialize in performing it. In his famous example of the pin factory, Smith argued that having one person make every part of a pin would result in low productivity.

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CLICK HERE TO SIGN UP or visit us online to sign up at eBookNews.SimonandSchuster.com NOTES 1 As long as you don’t expect a simple answer to this question by the end of the book, we are going to be okay. 2 My father used to say that having very young kids at home is a sure way to get people to stay in the office longer. 3 Roy Baumeister, Kathleen Vohns, Jennifer Aaker, Emily Garbinsky, “Some Key Differences Between a Happy Life and a Meaningful Life,” Journal of Positive Psychology (2013). 4 Dan Ariely, Emir Kamenica, and Drazen Prelec, “Man’s Search for Meaning: The Case of Legos,” Journal of Economic Behavior & Organization (2008). 5 Amy Adkins, “Majority of U.S. Employees Not Engaged Despite Gains in 2014,” Gallup, January 28, 2015, http://www.gallup.com/poll/181289/majority-employees-not-engaged-despite-gains-2014.aspx. 6 Adam Smith, “An Inquiry into the Nature and Causes of the Wealth of Nations,” http://geolib.com/smith.adam/won1-01.html. 7 John Maynard Keynes, The General Theory of Employment, Interest and Money (1936). 8 Michelle Park, “A History of the Cake Mix, the Invention That Redefined ‘Baking,’ ” http://www.bonappetit.com/entertaining-style/pop-culture/article/cake-mix-history. 9 Mike Norton, Daniel Mochon, and Dan Ariely “The IKEA Effect: When Labor Leads to Love,” Journal of Consumer Psychology (2012).

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In 1844, Marx wrote about what he called “the alienation of labor,” which described a situation in which someone works on a small sub-task, in a small part of a larger enterprise. Like the worker in Adam Smith’s pin factory, the laborer has no idea what his project is all about. He doesn’t understand how his work fits in with the enterprise as a whole. It is unclear to him who will use the product he makes, and he generally feels no connection to the organization, the project, the end user, or the outcome. It is clear that Adam Smith and Karl Marx had very different understandings of the nature of productivity. Smith assumed that management could change the structure of the workplace and achieve more efficiency without sacrificing human motivation.

Money: The Unauthorized Biography by Felix Martin

Alan Greenspan, bank run, banking crisis, Basel III, Bear Stearns, Bernie Madoff, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business cycle, call centre, capital asset pricing model, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, creative destruction, credit crunch, David Graeber, en.wikipedia.org, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, fixed income, Fractional reserve banking, full employment, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Hyman Minsky, inflation targeting, invention of writing, invisible hand, Irish bank strikes, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kenneth Rogoff, land bank, Michael Milken, mobile money, moral hazard, mortgage debt, new economy, Northern Rock, Occupy movement, Paul Volcker talking about ATMs, plutocrats, private military company, proprietary trading, public intellectual, Republic of Letters, Richard Feynman, Robert Shiller, Savings and loan crisis, Scientific racism, scientific worldview, seigniorage, Silicon Valley, smart transportation, South Sea Bubble, supply-chain management, The Wealth of Nations by Adam Smith, too big to fail

The new world being forged by this corporate and financial revolution clamoured to be explained and justified—and Mandeville’s outrageous hypothesis appeared to do both at once. When it was taken up by one of the Enlightenment’s morning stars, the Scotsman Adam Smith, it became the basis of a fully fledged theory of monetary society that has survived to this day. In his Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith formulated the first systematic theory linking individual behaviour with the organisation of the economy, and presented the first cogent synthesis of earlier thinkers’ ideas of how the financial revolution had transformed traditional society.

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A version of it can be found in Aristotle’s Politics, the earliest treatment of the subject in the entire Western canon.9 It is the theory developed by John Locke, the father of classical political Liberalism, in his Second Treatise of Government.10 To cap it all, it is the very theory—almost to the letter—advocated by none other than Adam Smith in his chapter “Of the Origin and Use of Money” in the foundation text of modern economics, An Inquiry into the Nature and Causes of the Wealth of Nations: But when the division of labour first began to take place, this power of exchanging must frequently have been very much clogged and embarrassed in its operations … The butcher has more meat in his shop than he himself can consume, and the brewer and the baker would each of them be willing to purchase a part of it.

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., p. 74 (where it is accidentally attributed to Book XXII, 14). 6. Montesquieu, Esprit des lois, Book XXI, 20, quoted ibid., pp. 72–3. 7. Ibid. 8. James Carville, quoted in Wall Street Journal, 25 February 1993, p. A1. 9. It was published in England in 1767, nine years before Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations. 10. Steuart, 1966, Vol. 1, p. 278. Quoted in Hirschman, 1977, p. 85. 11. Boyer-Xambeu et al., 1994, p. 30. 12. The extent to which the development of finance in England lagged behind Continental Europe until the late seventeenth century is demonstrated by Thomas Mun’s treatment of standard Latin practices such as payments by transfer between bank accounts as unknown in England in his 1621 Discourse on Foreign Trade.

Deaths of Despair and the Future of Capitalism by Anne Case, Angus Deaton

Affordable Care Act / Obamacare, basic income, Bertrand Russell: In Praise of Idleness, Boeing 737 MAX, business cycle, call centre, collapse of Lehman Brothers, collective bargaining, company town, Corn Laws, corporate governance, correlation coefficient, crack epidemic, creative destruction, crony capitalism, declining real wages, deindustrialization, demographic transition, Dissolution of the Soviet Union, Donald Trump, Downton Abbey, Edward Glaeser, Elon Musk, falling living standards, Fellow of the Royal Society, financial engineering, fulfillment center, germ theory of disease, income inequality, Jeff Bezos, Joseph Schumpeter, Ken Thompson, Kenneth Arrow, labor-force participation, Les Trente Glorieuses, low skilled workers, Martin Wolf, meritocracy, Mikhail Gorbachev, obamacare, opioid epidemic / opioid crisis, pensions crisis, pill mill, randomized controlled trial, refrigerator car, rent-seeking, risk tolerance, shareholder value, Silicon Valley, The Spirit Level, The Wealth of Nations by Adam Smith, Tim Cook: Apple, trade liberalization, Tyler Cowen, universal basic income, working-age population, zero-sum game

Those explanations are long standing. But there is another story that is more recent in origin: the decline in the power of workers relative to corporations, not only in workplaces and markets but also in Congress. It is to this that we now turn. 15 Firms, Consumers, and Workers IN A FAMOUS PASSAGE in The Wealth of Nations, Adam Smith writes that “people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”1 The use of market power to raise prices remains a concern today, as we have already seen in healthcare.

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Emily Guendelsberger, 2019, On the clock: What low-wage work did to me and how it drives America insane, Little, Brown; James Bloodworth, 2018, Hired: Six months undercover in low-wage Britain, Atlantic Books. 16. Durkheim, Le suicide. 17. Dani Rodrik, 1997, Has globalization gone too far?, Institute for International Economics. 18. Sam Quinones, 2015, Dreamland: The true tale of America’s opiate epidemic, Bloomsbury. 19. Adam Smith, 1776, The wealth of nations, bk. 4. 20. Matthew Smith, Danny Yagan, Owen M. Zidar, and Eric Zwick, 2019, “Capitalists in the 21st century,” Quarterly Journal of Economics, 134(4), 1675–745. 21. Kenneth Scheve and David Stasavage, 2016, Taxing the rich: A history of fiscal fairness in the United States and Europe, Princeton University Press. 22.

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Martin, Micah Hartman, Benjamin Washington, Aaron Catlin, and the National Health Expenditure Accounts Team, 2019, “National health care expenditure in 2017: Growth slows to post-Great Recession rates; share of GDP stabilizes,” Health Affairs, 38(1), 96–106, https://doi.org/10.1377/hlthaff.2018.05085. 2. Adam Smith, 1776, The wealth of nations, bk. 4. See our introduction. 3. Robert E. Hall and Charles I. Jones, 2007, “The value of life and the rise in health spending,” Quarterly Journal of Economics, 122(1), 39–72, https://doi.org/10.1162/qjec.122.1.39. 4. Kenneth J. Arrow, 1963, “Uncertainty and the welfare economics of medical care,” American Economic Review, 53(5), 941–73. 5.

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

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

Carlota Perez Author of Technological Revolutions and Financial Capital: The Dynamics of Bubble and Golden Ages Technological University of Tallinn, Estonia; London School of Economics, University of Cambridge and University of Sussex, UK February 2013 INTRODUCTION DO SOMETHING DIFFERENT …our disability is discursive: we simply do not know how to talk about things anymore. Tony Judt (2010, 34) A Discursive Battle Never more than today is it necessary to question the role of the State in the economy – a burning issue since Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations (Smith, 1776). This is because in most parts of the world we are witnessing a massive withdrawal of the State, one that has been justified in terms of debt reduction and – perhaps more systematically – in terms of rendering the economy more ‘dynamic’, ‘competitive’ and ‘innovative’.

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Equally important, the jobs created by a technology-driven supply chain are much higher paying – but, they must be sustained over entire technology life cycles. (2012, 31) Keynes focused on the need for the State to intervene in order to bring stability and prevent crises, certainly a pressing issue in today’s circumstances.3 But in order to understand the dynamics of such investments, it is fundamental to better understand different perspectives on the theory of economic growth first, and then to establish the role of technology and innovation in driving that economic growth. Technology and Growth While growth and the wealth of nations has been the lead concern of economists since Adam Smith, in the 1950s it was shown by Abramovitz (1956) and Solow (1956) that conventional measures of capital and labour inputs could not account for 90 per cent of economic growth in an advanced industrialized country such as the United States. It was assumed that the unexplained residual must reflect productivity growth, rather than the quantity of factors of production.

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Soviet Union 37, 39; market failure theory applied to 61; as measure of innovation performance 34, 41; myth of business investment requirements 53–5; myth of innovation being about 44, 159–60; as not enough 142; of pharmaceutical companies 25–6, 188; R&D/GDP 52; SEMATECH funding 99; spending differences 42; of struggling OECD countries 41; technological change investments 59; in wind energy projects 144–5; worker tax credit 54 R&D/GDP 52 R&D Magazine 63 redistributional policies 31 Reenen, John van 46 Reinert, Erik 9n3, 38n5, 73 Reinhart, Carmen 17–18 renewable energy credits (RECs) 115n1 Renewable Portfolio Standards 114 ‘repatriation tax holiday’ 175 ‘representative’ agent 60 research 60, 78, 84, 136; see also science rewards, socialization of 156 risk 58–62, 70; see also socialization of risk risk landscape 22–3, 58, 194, 198 risk–reward nexus framework 186 risk–reward relationships: Apple and the US government 167–8; collective vs. private benefit 165–6, 196; corporate success resulting in regional economic misery 176–8; need for functional dynamic in 182–3, 197–8; overview 165–7; State recognition in 12 Robinson, Joan 34 Roche 82 Rock, Arthur 94 Rodrik, Dani 27, 28 Rogoff, Kenneth 17–18 Roland, Alex 98n7 Roosevelt, Franklin D. 6, 74 Royal Radar Establishment (RRE) 101 royalties 188–9 Ruegg, Rosalie 148 Ruttan, Vernon 62–3 Sanofi 69 Schmidt, Horace 92, 92–3; see also Apple Schumpeter, Joseph 10n4, 31, 35, 58 Schumpeterian innovation economics: creative destruction concept in 10, 10n4, 58, 165; extended protection in 189; influence of on BNDES 5; investment role in 31; macro models of 44; ‘systems of innovation’ view of 35–6; theory of 36n4 science 49, 51, 57, 59n1, 69; see also research Seagate 97 Segal, David 170 Semiconductor Manufacturing Technology (SEMATECH) consortium 99 Shapiro, Isaac 170–71, 171n2 share buybacks 25–7, 67, 171, 175 shareholder-value ideology 184, 186 Shiman, Philip 98n7 Shi Zhengrong 141, 152–4 Shockley, William 76 Silicon Valley 20, 63, 78, 95 Silver, Jonathan 129, 154 SIRI 103, 105–6, 109 SITRA, Finnish Innovation Fund 190 small and medium enterprises (SMEs) 10, 45–6, 45n6, 111n13 Small Business Administration (US) 94 small business associations 19 Small Business Innovation Development Act of 1982 79 Small Business Innovation Research (SBIR) (US) 20, 47, 79–81, 80, 188 Small Business Investment Company (SBIC) (US) 94 Smith, Adam 30; see also Adam Smith Institute; Inquiry into the Nature and Causes of the Wealth of Nations, An; ‘Invisible Hand’ socialization of risk and privatization of rewards: as cause of inequity and instability 185; direct or indirect returns of 187–91; framework for change of 185–7; income-contingent loans and equity 189–90; in the innovation economy 3; ‘innovation fund’ creation 189; IPR 189; mapping innovative labour into division of rewards 184–5; in pharmaceutical development 181; in public–private partnerships 27; skewed reality of risk and reward 181–5 social vs. private returns on investment 3–4 solar power: see wind and solar power Solow, Robert M. 33–4 Solyndra 129–32, 151, 154–5, 162; see also clean technology; ‘No More Solyndras Act’ Something Ventured, Something Gained (documentary) 78 Sony 108 Soppe, Birgit 146 South Korea 40, 61, 120–21 Soviet Union 37–9, 39, 76 Spain 120n4, 121, 121, 157 Spectrawatt 130n11, 162 spillovers 194 spinoff business model 76 SPINTRONICS 97, 97n5 Sputnik launch 76 Stanford Research Institute (SRI) 105–6; see also SIRI State: administrative role of 6, 12; attracting talent 12; capitalintensive investment by 27; ‘crowding in’ of 5–6, 8; ‘Developmental State’ 10, 37–8, 37–8n5, 40, 68; ‘directionality’ provided by 32n2; ‘dynamizing in’ 8; economic role of 1, 29; flexibility of 195–6; funding: see individual US agencies and departments; industrial directives of 21; as leading entrepreneurial force 193; market creation by 62, 167; organizational dynamics consideration 197; performance indicators lacking for 194; as private sector partner 5; response to criticism 19; responsibilities of 13; scope of endeavours of 18–19, 195; sectors funded by 63, 83, 196; targeted catch-up policies of 40; views of 9; see also ‘entrepreneurial’ State; ‘picking winners’ State development banks 2–3, 5, 122, 137–40, 189–91; see also Brazilian Development Bank (BNDES); China Development Bank (CDB); KfW (German Development Bank) stock market 49–50 Strategic Computing Initiative (SCI) 98–9 strategic management 197 Stumpe, Bent 101 Sullivan, Martin A. 174 SunPower 151 Suntech of China 152–5, 152n5 supply-side policies 83, 113–15, 159 sustainability 117, 119, 123, 195; see also green industrial revolution Swanson, Richard 151 Sweden 121 ‘systems of innovation’ approach: defined 36; foundation of 35–7; market failure approach vs. 9–10, 61–2; need for 22; regional 39; State role in 74; see also innovation; innovation ecosystems; Schumpeterian innovation economics ‘systems’ perspective 196 tariffs 108, 157, 157n6; see also feed-in tariffs Tassey, Gregory 32 tax avoidance: by Apple 11, 12, 171–5, 188; corporate 173–5, 187; ‘tax gap’ 187, 187n1 tax breaks 45–7 tax credits: energy 114, 138; impact of on R&D 28, 52–4; and R&D 111n13; and R&E 110; wind and solar power 126n8, 145, 149 tax cuts 10, 19, 23, 54, 69 taxes: antidumping tariffs 108; business as dependent on 69; ‘carbon tax’ 114; Citizens for Tax Justice 174n5; citizens unawareness of uses of 166; global avoidance schemes 174, 174n5; incentives to biotech firms 81; innovation systems not supported by 187–8; insensitivity of investment to 30n1; IRS 529 plans 111, 111n15; ‘patent box’ policy 51–2; policies impacting SMEs 45; policy 51; ‘repatriation tax holiday’ 175; State return from 165; US tax code 174; see also private vs. social returns; risk–reward nexus framework Taxol 188 Tea Party movement 17 technology: causing creative destruction 58; commissioning of advances in 54; core enabler technologies of Apple 95; dual-use 97; and growth 33–4; impact of regions on national performance 39; interagency collaborations in 74; origins of Apple products 109; revolutions 125, 126; SIRI 103, 105–6; State leadership of strategy for 40; unique situations in 59; see also computer field; wind and solar power technology commercialized: from capacitive sensing to click-wheels 99–101, 100n9, 103; cellular 102, 104, 109; from click-wheels to multi-touch screens 102–3; digital signal processing (DSP) 109; GPS 105; GPTs 62; LCD 107–8; lithium-ion battery 108; resistive touch-screens 101; silicon ICs impact on 98; thin-film transistors (TFTs) 107–8; ‘zero-emission’ electric vehicles 108 technology policy 75 Technology Reinvestment Program (TRP) 97 TFP of India vs. 46 TFTs (thin-film transistors) 107–8 Thomas, Patrick 148 ‘trade wars’ 122, 131, 157 ‘traitorous eight’, the 76 Tulum, Oner: on biopharmaceutical industry 67, 69, 82; NIH spending data compilation of 25, 69; on orphan drugs 81–2 United Kingdom (UK): approach to green initiatives 124–6; BBC 16; BERD (business expenditure on R&D) in 24; Big Society theme of 15–16; clean technology investment by 120; energy strategies of 116; government energy R&D spending 121, 121; green revolution in 120; Medical Research Council (MRC) 20, 67; outsourcing in 16; public R&D spending in 61; R&D/GDP 52; sector specialties of 42; SME government support 45; SME performance in 46 United States: Air Force 98, 104, 105; American Energy Innovation Council (AEIC) 26; Apple’s risk– reward relationship with 167–8; Army 107; competitiveness decline in 176; energy policy 158; energy strategies of 116, 137; funding and innovation in 52; funding sources for basic research R&D in 61; funding sources for R&D in 60, 60–61, 60n2; green revolution in 120; ‘hidden Developmental State’ in 38, 38n5; innovation threatened in 24; systems of innovation in 37; tax code 174; tax system 172; ‘trade wars’ of 122, 131, 157; types of venture capital successes in 49; undermining of innovation in 53; wind capacity of 143; see also taxes; specific agencies and departments of University of Southern California 77–8 UNIX 104 USSR: see Soviet Union US Windpower (later Kenetech) 147 Valentine, Don 94 Vallas, Steven P. 67–8 value: extraction 26, 42, 162; measures of 34 Venrock 94 Vensys Energiesysteme 149 venture capital: in Europe 53; Europe’s lag attributed to lack of 20; exit opportunities 48, 67, 81, 130, 138; failure of 107; government stimulation of 116; impatience of 129–32, 146n2; limited role of 131, 138; myth of as risk loving 47–50, 142, 161–2; and NASDAQ’s coevolution 50; presenting as lead risk taker 183; public vs. private 19, 47; short-termist approach of 108, 127; timing of investment by 23; Venrock 94; see also private sector venture capital sector investment: clean technology 161; green revolution 127–8, 128n9; in Solyndra 130; subsectors of within clean energy 128 venture capital stages of investment 47, 48; early stage and seed funding awards by 80; risk of loss in 48 Vestas: Denmark producing 143; DoE research influence on 148; early years of 147; patents purchased by 145; policy responses by 125, 137; rugged designs of 146 vision: Apple’s 93, 94, 99–100; ‘green’ 116, 120, 123; lack of 107; in nanotechnology 83–4; State’s 21–4, 58, 62–4 Warburg Pincus 50 Washington Consensus 40 Washington Post 57 Wayne, Ronald 89, 89n1; see also Apple welfare state institutions 31 Westerman, Wayne 102–3 Westinghouse 107 wind and solar power: clean technology in crisis 158–9; collective failure in 163; decline of US firms in 144, 144n1; grid parity in 141; networks of learning in 146n2; R&D myth in 159–60; small being beautiful myth in 160–61; solar bankruptcies 153–6; symbiotic innovation ecosystems in 162–3; venture capital myth in 161–2; from ‘Wind Rush’ to rise of China’s wind power sector 144–50; withdrawal of government support 149; see also specific corporations; clean technology wind and solar power markets: competition, innovation and market size 156–8; disrupting existing markets 161; global market for 143; growth opportunities in 156–7; growth powered by crisis 142–4; and manufacturing of 144, 146–7, 153 wind and solar power policies: California’s tax programme 147; fostering development 144–5; providing incentives 149–51; subsidies 148–9, 152; tax credits 145, 149 wind and solar power technology: aerodynamics of 148; computer use in 147–8; C-Si 129, 130n11, 151–2, 158; Denmark’s Gedser design 145; oil company role in 161n8; origins of solar technologies 150–53; remote power applications 150; research behind 148–9; see also clean technology wind energy R&D projects 144–6 Witty, Andrew 66–7 World Trade Organization (WTO) 40 World War II 74 Wozniak, Steve 89, 89n1, 94; see also Apple Wuxi-Guolian 152 Wuxi Suntech 153 Xerox 107 Xerox PARC 24 Zond Corporation 147–8 Table of Contents Halftitle Page Title Page Copyright Dedication Epigraph Contents List of Tables and Figures List of Acronyms Acknowledgements Foreword by Carlota Perez Introduction: Do Something Different A Discursive Battle Beyond Fixing Failures From ‘Crowding In’ to ‘Dynamizing In’ Images Matter Structure of the Book Chapter 1: From Crisis Ideology to the Division of Innovative Labour And in the Eurozone State Picking Winners vs.

Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism by Ha-Joon Chang

"there is no alternative" (TINA), "World Economic Forum" Davos, affirmative action, Albert Einstein, Big bang: deregulation of the City of London, bilateral investment treaty, borderless world, Bretton Woods, British Empire, Brownian motion, business cycle, call centre, capital controls, central bank independence, colonial rule, Corn Laws, corporate governance, David Ricardo: comparative advantage, Deng Xiaoping, Doha Development Round, en.wikipedia.org, export processing zone, falling living standards, Fellow of the Royal Society, financial deregulation, financial engineering, fixed income, foreign exchange controls, Francis Fukuyama: the end of history, income inequality, income per capita, industrial robot, Isaac Newton, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, land reform, liberal world order, liberation theology, low skilled workers, market bubble, market fundamentalism, Martin Wolf, means of production, mega-rich, moral hazard, Nelson Mandela, offshore financial centre, oil shock, price stability, principal–agent problem, Ronald Reagan, South Sea Bubble, structural adjustment programs, The Wealth of Nations by Adam Smith, trade liberalization, transfer pricing, urban sprawl, World Values Survey

Thus they were compelled to leave the most profitable ‘high-tech’ industries in the hands of Britain – which ensured that Britain would enjoy the benefits of being on the cutting edge of world development.18 The double life of the British economy The world’s first famous free-market economist, Adam Smith, vehemently attacked what he called the ‘mercantile system’ whose chief architect was Walpole. Adam Smith’s masterpiece, The Wealth of Nations, was published in 1776, at the height of the British mercantile system. He argued that the restrictions on competition that the system was producing through protection, subsidies and granting of monopoly rights were bad for the British economy.* Adam Smith understood that Walpole’s policies were becoming obsolete. Without them, many British industries would have been wiped out before they had had the chance to catch up with their superior rivals abroad.

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Pitt is cited as the Earl of Chatham, which he was at the time. 26 The full quotation is: ‘Were the Americans, either by combination or by any other sort of violence, to stop the importation of European manufactures, and, by thus giving a monopoly to such of their own countrymen as could manufacture the like goods, divert any considerable part of their capital into this employment, they would retard instead of accelerating the further increase in the value of their annual produce, and would obstruct instead of promoting the progress of their country towards real wealth and greatness.’ Adam Smith (1776), The Wealth of Nations, the 1937 Random House edition, pp. 347–8. Smith’s view was later echoed by the respected 19th-century French economist Jean-Baptise Say, who is reported to have said that, ‘like Poland’, the US should rely on agriculture and forget about manufacturing. Reported in List (1841), p. 99. 27 Hamilton divided these measures into eleven groups.

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Therefore, adopting free trade was now increasingly in Britain’s interest. However, Smith was somewhat ahead of his time. Another generation would pass before his views became truly influential, and it was not until 84 years after The Wealth of Nations was published that Britain became a genuine free trading nation. By the end of the Napeolenic Wars in 1815, four decades after the publication of The Wealth of Nations, British manufacturers were firmly established as the most efficient in the world, except in a few limited areas where countries like Belgium and Switzerland possessed technological leads. British manufacturers correctly perceived that free trade was now in their interest and started campaigning for it (having said that, they naturally remained quite happy to restrict trade when it suited them, as the cotton manufacturers did when it came to the export of textile machinery that might help foreign competitors).

Bad Samaritans: The Guilty Secrets of Rich Nations and the Threat to Global Prosperity by Ha-Joon Chang

"there is no alternative" (TINA), "World Economic Forum" Davos, affirmative action, Albert Einstein, banking crisis, Big bang: deregulation of the City of London, bilateral investment treaty, borderless world, Bretton Woods, British Empire, Brownian motion, business cycle, call centre, capital controls, central bank independence, colonial rule, Corn Laws, corporate governance, David Ricardo: comparative advantage, Deng Xiaoping, Doha Development Round, en.wikipedia.org, export processing zone, falling living standards, Fellow of the Royal Society, financial deregulation, financial engineering, fixed income, foreign exchange controls, Francis Fukuyama: the end of history, income inequality, income per capita, industrial robot, Isaac Newton, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, land reform, liberal world order, liberation theology, low skilled workers, market bubble, market fundamentalism, Martin Wolf, means of production, mega-rich, moral hazard, Nelson Mandela, offshore financial centre, oil shock, price stability, principal–agent problem, Ronald Reagan, South Sea Bubble, structural adjustment programs, The Wealth of Nations by Adam Smith, trade liberalization, transfer pricing, urban sprawl, World Values Survey

Thus they were compelled to leave the most profitable ‘high-tech’ industries in the hands of Britain – which ensured that Britain would enjoy the benefits of being on the cutting edge of world development.18 The double life of the British economy The world’s first famous free-market economist, Adam Smith, vehemently attacked what he called the ‘mercantile system’ whose chief architect was Walpole. Adam Smith’s masterpiece, The Wealth of Nations, was published in 1776, at the height of the British mercantile system. He argued that the restrictions on competition that the system was producing through protection, subsidies and granting of monopoly rights were bad for the British economy.iv Adam Smith understood that Walpole’s policies were becoming obsolete. Without them, many British industries would have been wiped out before they had had the chance to catch up with their superior rivals abroad.

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Pitt is cited as the Earl of Chatham, which he was at the time. 26 The full quotation is: ‘Were the Americans, either by combination or by any other sort of violence, to stop the importation of European manufactures, and, by thus giving a monopoly to such of their own countrymen as could manufacture the like goods, divert any considerable part of their capital into this employment, they would retard instead of accelerating the further increase in the value of their annual produce, and would obstruct instead of promoting the progress of their country towards real wealth and greatness.’ Adam Smith (1776), The Wealth of Nations, the 1937 Random House edition, pp. 347–8. Smith’s view was later echoed by the respected 19th-century French economist Jean-Baptise Say, who is reported to have said that, ‘like Poland’, the US should rely on agriculture and forget about manufacturing. Reported in List (1841), p. 99. 27 Hamilton divided these measures into eleven groups.

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Therefore, adopting free trade was now increasingly in Britain’s interest. However, Smith was somewhat ahead of his time. Another generation would pass before his views became truly influential, and it was not until 84 years after The Wealth of Nations was published that Britain became a genuine free trading nation. By the end of the Napeolenic Wars in 1815, four decades after the publication of The Wealth of Nations, British manufacturers were firmly established as the most efficient in the world, except in a few limited areas where countries like Belgium and Switzerland possessed technological leads. British manufacturers correctly perceived that free trade was now in their interest and started campaigning for it (having said that, they naturally remained quite happy to restrict trade when it suited them, as the cotton manufacturers did when it came to the export of textile machinery that might help foreign competitors).

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

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

These people are willing to forgo many of life’s ordinary pleasures to acquire fine sculpture, and a law that prohibits them from doing so inflicts gratuitous injury. Another difficulty is that sumptuary laws were typically profoundly undemocratic, enacted to insulate those in positions of power and privilege from emulation by their social inferiors. It is this aspect of these laws that seems to have inspired Adam Smith’s contempt for them. Thus, as he put it in The Wealth of Nations, It is the highest impertinence of kings and ministers to pretend to watch over the economy of private people and to restrain their expense, either by sumptuary laws or by prohibiting the importation of foreign luxuries. They are themselves always and without exception, the greatest spendthrifts in the society.

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For instance, if there were too many carriage makers and not enough automobile assembly workers, wage adjustments in these and other labor markets would quickly restore the proper balance—all without government bureaucrats ever having to lift a finger. Eighty-three years after publication of The Wealth of Nations, Charles Darwin launched a series of books that analyzed competition not among human traders but among animals in the wild. Darwin was much influenced by the British economist Thomas Malthus, an intellectual descendant of Smith’s. It is therefore no surprise that Darwin’s view of competition was in many ways similar to Smith’s.

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Diener, E., and R. A. Emmons. “The Independence of Positive and Negative Affect,” Journal of Personality and Social Psychology 50, 1985: 1031-38. Diener, Ed. “A Value Based Index for Measuring National Quality of Life,” Social Indicators Research 36, 1995: 107-27. Diener, Ed, and Carol Diener. “The Wealth of Nations Revisited: Income and the Quality of Life,” Social Indicators Research 36, 1995: 275-86. Diener, Ed; Marissa Diener; and Carol Diener, “Factors Predicting the Subjective Well-Being of Nations,” Journal of Personality and Social Psychology 59, 1995: 851-64. Diener, Ed, and Eunkook Suh. “Measuring Quality of Life: Economic, Social, and Subjective Indicators,” Social Indicators Research, forthcoming.

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

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

He never sought nor received the press that Fed governors get, but when the governors gave speeches, it was his forecast of the U.S. economy that Fed watchers were getting. We governors learned to see him as the indispensable, behind-the-scenes staffer.* Long before Adam Smith wrote his 1776 masterpiece, An Inquiry into the Nature and Causes of the Wealth of Nations, people were arguing over the shortest, straightest path to prosperity. Truly it is an argument without end. But even so, the data point to three important characteristics influencing global growth: (1) the extent of competition domestically, and, *David is so low-key that it wasn't until after we'd worked together closely for years that I learned t h a t his distant forebear, Richard Stockton, was a signer of t h e Declaration of Independence. 250 More ebooks visit: http://www.ccebook.cn ccebook-orginal english ebooks This file was collected by ccebook.cn form the internet, the author keeps the copyright.

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These days, almost every professional field is constrained by some regulatory framework, so it's harder than it once was to isolate the reputation effect, but a sector in which one can is e-commerce. Alibris, for example, is a Web site that acts as a broker between sellers and buyers of used books. If you were eager to buy an early edition of Adam Smith's The Wealth of Nations, you might search on Alibris for the names of booksellers around the country who had copies for sale. Customers are given the opportunity to rate the reliability of booksellers from whom they've purchased at least one book, and those ratings no doubt play an important role in the decision as to which of several booksellers to use.

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A U.S. economist looking for Smith's grave in an Edinburgh churchyard in 2000 reported having to clear away beer cans and debris to read the worn inscription on the stone: HERE ARE DEPOSITED THE REMAINS OF ADAM SMITH. A U T H O R OF THE THEORY OF M O R A L SENTIMENTS AND WEALTH OF NATIONS. Yet Scotland, too, has come around to according Smith the kind of honor he deserves. The way to the grave is now marked by a newly installed stone that quotes from The Wealth of Nations, and a college near Kirkcaldy has been renamed after Smith. A ten-foot-tall bronze statue of him is planned for Edinburgh's Royal Mile. Appropriately it is being paid for with 265 More ebooks visit: http://www.ccebook.cn ccebook-orginal english ebooks This file was collected by ccebook.cn form the internet, the author keeps the copyright.

Blood in the Machine: The Origins of the Rebellion Against Big Tech by Brian Merchant

"World Economic Forum" Davos, Ada Lovelace, algorithmic management, Amazon Mechanical Turk, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, basic income, Bernie Sanders, Big Tech, big-box store, Black Lives Matter, Cambridge Analytica, Charles Babbage, ChatGPT, collective bargaining, colonial rule, commoditize, company town, computer age, computer vision, coronavirus, cotton gin, COVID-19, cryptocurrency, DALL-E, decarbonisation, deskilling, digital rights, Donald Trump, Edward Jenner, Elon Musk, Erik Brynjolfsson, factory automation, flying shuttle, Frederick Winslow Taylor, fulfillment center, full employment, future of work, George Floyd, gig economy, gigafactory, hiring and firing, hockey-stick growth, independent contractor, industrial robot, information asymmetry, Internet Archive, invisible hand, Isaac Newton, James Hargreaves, James Watt: steam engine, Jeff Bezos, Jessica Bruder, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Roose, Kickstarter, Lyft, Mark Zuckerberg, Marshall McLuhan, means of production, military-industrial complex, move fast and break things, Naomi Klein, New Journalism, On the Economy of Machinery and Manufactures, OpenAI, precariat, profit motive, ride hailing / ride sharing, Sam Bankman-Fried, scientific management, Second Machine Age, self-driving car, sharing economy, Silicon Valley, sovereign wealth fund, spinning jenny, Steve Jobs, Steve Wozniak, super pumped, TaskRabbit, tech billionaire, tech bro, tech worker, techlash, technological determinism, Ted Kaczynski, The Future of Employment, The Wealth of Nations by Adam Smith, Thomas Malthus, Travis Kalanick, Uber and Lyft, uber lyft, union organizing, universal basic income, W. E. B. Du Bois, warehouse automation, warehouse robotics, working poor, workplace surveillance

So was the factory, and the factory owner, as the chief engines of economic prosperity. “Adam Smith’s discussion in The Wealth of Nations united two key concepts: division of labor as a motor for generating prosperity, and market systems based on self-interest as a fuel for that motor,” the political scientist Mike Munger explained. Two of Smith’s earliest and most influential advocates were the British prime ministers guiding England’s post–Revolutionary War economic policy: the Earl of Shelburne and William Pitt the Younger. During a debate in the Commons on the fiscal health of the nation on February 17, 1792, Pitt offered a paean to Adam Smith: “The writings of an author of our own times… of a celebrated treatise on the Wealth of Nations… will, I believe, furnish the best solution to every question connected with the history of commerce, or with the systems of political economy.”

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Why care too much about the way government institutions or old-line industries worked, when your purpose was to disrupt them in favor of something far better? Why care about history when you were building the future?” The entrepreneurs’ faith in “progress” was rooted in the trendy philosophy of the Scottish economist Adam Smith. “Laissez-faire,” the Luddite historian Brian Bailey wrote, had become “the political dogma of the English bourgeoisie. In fact, it represented freedom for the employers and intolerable repression of the workers.” Smith had published The Wealth of Nations in 1776, and while initial reaction was limited, it became influential in the following decades. The book, a synthesis of recent strands of economic thought, presented the doctrine of laissez-faire, or “let people do” (as they see fit), as a science.

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During a debate in the Commons on the fiscal health of the nation on February 17, 1792, Pitt offered a paean to Adam Smith: “The writings of an author of our own times… of a celebrated treatise on the Wealth of Nations… will, I believe, furnish the best solution to every question connected with the history of commerce, or with the systems of political economy.” Those theories imbued Pitt’s “New Tories” with a sheen of modernity and lent an ideological fuel to the ascendent entrepreneurial class.1 Factory owners began invoking Adam Smith, and workers began despairing of him. (And newspaper columnists would continue to lambast Pitt, years after he was in office, for turning Smith’s ideas into public policy.) When Horsfall and Cartwright did complete their weekly journeys to the busy Huddersfield market, heads would turn as they made their transactions and moved more and more sums of money.

Status Anxiety by Alain de Botton

hiring and firing, invention of the steam engine, invisible hand, means of production, meritocracy, plutocrats, Ralph Waldo Emerson, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen

In 1900, a giant Coca-Cola sign was erected on one side of Niagara Falls, while an advert for Mennen’s Toilet Powder was suspended over the gorge. 11. When defenders of modern societies have sought to make a case to sceptics, their task has not been difficult: they have had only to point to the enormous wealth that modern societies are able to generate for their members. In his Inquiry into the Nature and Causes of the Wealth of Nations (1776), Adam Smith sarcastically compared the awe-inspiring productivity of proto-industrial societies with the bare subsistence of primitive hunting-and-gathering ones. The latter were, by Smith’s account, steeped in terrible poverty. Harvests rarely yielded enough food, there were chronic shortages of basic necessities and, in times of serious crisis, children, the elderly and the poor were often left “to be devoured by wild beasts.”

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A family bond, a friendship or a sexual attraction may at times render material incentives unnecessary, but only a reckless optimist would rely on emotional currencies for the regular fulfilment of his or her needs. Humans rarely smile without having some robust reason to do so. 3. Adam Smith, The Wealth of Nations (Edinburgh, 1776): “Man has almost constant occasion for the help of his brethren. [However], it is in vain for him to expect this from their benevolence only. He will be more likely to prevail if he can interest their self-love… . It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest.

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In the ancient world, debate raged among philosophers about what was materially necessary for happiness and what unnecessary. Epicurus, for one, argued that simple food and shelter were all that was needed, and that an expensive house and lavish meals could be safely passed up by every rational, philosophically minded person. However, reviewing the argument many centuries later in The Wealth of Nations, Adam Smith wryly pointed out that in modern, materialistic societies, countless things that were no doubt unnecessary from the point of view of physical survival had nonetheless in practical terms come to be seen as “necessaries,” simply because no one could be thought respectable and so lead a psychologically comfortable life without owning them: “By necessaries I understand not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without.

Civilization: The West and the Rest by Niall Ferguson

Admiral Zheng, agricultural Revolution, Albert Einstein, Andrei Shleifer, Atahualpa, Ayatollah Khomeini, Berlin Wall, BRICs, British Empire, business cycle, clean water, collective bargaining, colonial rule, conceptual framework, Copley Medal, corporate governance, creative destruction, credit crunch, David Ricardo: comparative advantage, Dean Kamen, delayed gratification, Deng Xiaoping, discovery of the americas, Dissolution of the Soviet Union, Easter island, European colonialism, Fall of the Berlin Wall, financial engineering, Francisco Pizarro, full employment, Great Leap Forward, Gregor Mendel, guns versus butter model, Hans Lippershey, haute couture, Hernando de Soto, income inequality, invention of movable type, invisible hand, Isaac Newton, James Hargreaves, James Watt: steam engine, John Harrison: Longitude, joint-stock company, Joseph Schumpeter, Kickstarter, Kitchen Debate, land reform, land tenure, liberal capitalism, Louis Pasteur, Mahatma Gandhi, market bubble, Martin Wolf, mass immigration, means of production, megacity, Mikhail Gorbachev, new economy, Pearl River Delta, Pierre-Simon Laplace, power law, probability theory / Blaise Pascal / Pierre de Fermat, profit maximization, purchasing power parity, quantitative easing, rent-seeking, reserve currency, retail therapy, road to serfdom, Ronald Reagan, savings glut, Scramble for Africa, Silicon Valley, South China Sea, sovereign wealth fund, special economic zone, spice trade, spinning jenny, Steve Jobs, Steven Pinker, subprime mortgage crisis, Suez canal 1869, Suez crisis 1956, The Great Moderation, the market place, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, Thorstein Veblen, total factor productivity, trade route, transaction costs, transatlantic slave trade, undersea cable, upwardly mobile, uranium enrichment, wage slave, Washington Consensus, women in the workforce, work culture , World Values Survey