invisible hand

589 results back to index

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

Anarchy State and Utopia by Robert Nozick

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

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

…

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

…

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

Adam Smith: Father of Economics by Jesse Norman

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

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

…

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

…

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

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

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

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

…

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

…

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

For Profit: A History of Corporations by William Magnuson

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

Virtual Competition by Ariel Ezrachi, Maurice E. Stucke

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

A Little History of Economics by Niall Kishtainy

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

Exploring Everyday Things with R and Ruby by Sau Sheong Chang

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

Why Government Is the Problem by Milton Friedman

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

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

The Classical School by Callum Williams

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

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

…

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

…

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

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

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

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

…

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

…

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

Impact: Reshaping Capitalism to Drive Real Change by Ronald Cohen

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

Occupy by Noam Chomsky

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

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

…

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

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

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

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

…

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

…

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

Why Europe Will Run the 21st Century by Mark Leonard

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

Nuclear War and Environmental Catastrophe by Noam Chomsky, Laray Polk

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

Social Life of Information by John Seely Brown, Paul Duguid

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

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

…

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

…

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

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

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

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

Stealth of Nations by Robert Neuwirth

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

Animal Spirits by Jackson Lears

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

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

…

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

…

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

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

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

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

…

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

…

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

The Ages of Globalization by Jeffrey D. Sachs

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

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

…

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

…

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

Capital Ideas Evolving by Peter L. Bernstein

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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

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

…

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

…

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

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

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