Book Review: "The Worldly Philosophers" by Robert L. Heilbroner

I've recently read the book The Worldly Philosophers by Robert L. Heilbroner; this was a book that I got from a friend who moved away a few years ago, but never got around to reading until now. This book is essentially a survey of the lives & works of famous philosophers whose works & thoughts had fundamental impacts on the development of economics as a field, and who considered the general problems faced by & ultimate evolution of society to be within the purview of their grand theories. The preface gives some background regarding the writing of this book, the first chapter explains how economic philosophy can be especially dangerous as it has arguably much more immediate relevance to human society but much less rigorous testability than natural sciences, the second chapter explains why economics as a distinct discipline did not emerge until societal change in Europe (and its colonies in North America) had led to a state where the interconnections of goods, services, and money pervaded all aspects of life even for ordinary people (i.e. going far beyond the raising of stocks & bonds for the large colonial corporations like the Dutch East India Company, which had to deal with financial instruments only at the level of the national interest), the eleventh (final) chapter recapitulates the ideas of the book and explains that there may be no further grand theorists of "worldly philosophy" because the apparent inability of capitalism to effectively regulate itself (in the author's view, at the time of the publication of this edition in 1986) would mean all further development would have to come more from active political decisionmaking, and each chapter in between catalogs the lives & works of famous "worldly philosophers". A key feature of this book is that the historical context of each of these philosophers' lives is made clear, such that the development of those philosophies can be read as essentially a natural consequence of those circumstances; as examples, the optimism of Adam Smith is seen as coming from his observation of improved standards of living arising from the proliferation of many small factories, while the pessimism of Thomas Malthus & David Ricardo came from their observations of growing numbers of people living in abject poverty and in unsafe & overcrowded conditions without their living standards seeming to improve as a whole.

The book is written in a very engaging, accessible, and clear way. The details of the philosophers' lives make for a more interesting read, and they sometimes (though not always) even add further context for understanding how the mindsets behind their philosophies. Moreover, the author's contextualization of each philosophy in its historical place & time is combined with clear explanations of the more generally applicable features of those philosophies, so that it becomes clear whether certain aspects of some philosophies that are dependent on the historical contexts leading to their development might suggest that applying those philosophies today may be problematic. This is also combined with cogent & clear critical analysis of those philosophies in the present context by the author, as appropriate; perhaps there could have been a little more critical analysis of some of the assumptions of Karl Marx, and I felt like the author made John Maynard Keynes's analysis of the emergence of economic recessions from savings gluts seem unduly different from prior ideas that economic recessions are essentially mass panics, but these are ultimately minor points. (As "present" means 34 years ago, some of those analyses & predictions have obviously not aged well, but in fairness, I cannot hold that against the author, because none of those analyses suggest an arrogance on the part of the author in claiming that nothing of those analyses would change 34 years later.)

The explanations of the various philosophies aren't extremely deep, but they are deep enough to give readers an appreciation for their contexts & differences and to encourage readers to learn more. For instance, I was struck by realizing how similar my thoughts about economic policy are to those of John Stuart Mill, so I've been inspired to read more by & about him. As another example, I always felt too intimidated to read about Karl Marx, due to the high likelihood that what I would find online would be too inflammatory/partisan (as he is revered among socialists & communists and reviled among many other groups, especially in the US given the country's historically strong anticommunist stance); while I may be biased in my sensibilities from growing up in the US, I thought the author did a good job of treating Marx & his work in an evenhanded way, explicitly stating that Marx should be thought of as neither saint nor demon, and the same should be true of his work. I also thought that by the end of the book, the reasons for the author's choices of which philosophers to highlight became quite clear. For example, I wondered why Henry George wasn't discussed in a full chapter but only in a part, but then the author made clear that this is partly because Henry George's singular focus on land rents was overly narrow & simplified, and because Henry George, like other heterodox economists in the 19th century, was too uncritically revered by those who wanted to think about the deep implications of economics for society (as opposed to the narrow focuses on mathematical formalism & description of equilibrium that had come into favor among establishment orthodox economists at that time); the author's criticisms helped to solidify some of the instinctive reservations that I had but couldn't quite articulate about Henry George's claims that taxing only land & rents would solve everything, as it seemed intuitively appealing yet weirdly incomplete. As another example, I felt like the chapter on Joseph Schumpeter didn't seem to suggest any great impact that would justify his inclusion along with John Maynard Keynes or other philosophers, but the following (final) chapter made clear that the real novelty of Schumpeter's analysis was in predicting an end state for business owners/capitalists that was notably different from their beginning state, and using this to argue for socialism as an end state to capitalism for completely different reasons than what Marx argued. Perhaps it could be argued that the contributions of John von Neumann & John Nash to game theory merited further discussion, given the important application of game theory to international politics (particularly nuclear deterrence in the Cold War), but a counterargument would be that unlike those discussed in this book, they did not set forth grand economic philosophies describing society as a whole, nor did they broadly set out to describe the evolution or endpoint of capitalism.

Overall, I rather enjoyed reading this book. I would recommend it to anyone who is interested in starting to learn about economic philosophies, as the engaging storytelling helps to leaven the philosophical parts that may seem drier to some readers.

Book Review: "Michael Polanyi" by Mark T. Mitchell

I've recently read the book Michael Polanyi by Mark T. Mitchell. (As an aside, it may be worth noting that some listings of this book carry the subtitle The Art of Knowing, but the usage of this subtitle within the copy of the book I got was inconsistent.) The book gives a relatively brief summary of the life and times of the physical chemist-turned-economist/philosopher Michael Polanyi in the first chapter, and then goes into a little more detail about his philosophies on economics, politics, science, morality, knowledge, religion, and other things in the second through fourth chapters, concluding in the fifth chapter with a comparison of his philosophical views to those of his contemporaries along with a little discussion about the implications of Polanyi's views for the present day.

The book is fairly short, well-written, and engaging even for a layperson like myself. The overview of Polanyi's life is quite interesting, and as I am considering the next steps for my own career (more on that in a future post), I was particularly taken by the story of Polanyi's career change so late in life. The discussion of his philosophy avoids unexplained jargon and very heavy technical arguments, instead clearly laying things out in simple terms & examples, and I was surprised (mainly as I was previously unacquainted with Polanyi's work per se, even though I have already read works about some of the people who influenced him and whom he may have influenced) to see myself having come to similar conclusions as Polanyi even before reading this book. With respect to the latter point, though, I do have a few criticisms, which are attributable in parts to Polanyi or to the author of this book. For one, the appeals to common sense & simple examples lead to the situation where the defense of Polanyi's theory of tacit knowledge against charges of subjectivism or circularity (i.e. begging the question) isn't necessarily as tightly constructed or satisfying as possible; some of this comes from Polanyi's own quotes, while the remainder comes from the author (who seems to agree with and follow Polanyi's philosophy). For another, some of Polanyi's defenses of Christianity and critiques of evolutionary theory, with respect to their implications for constructing meaning out of human existence, aren't clear as to how broadly they should be applied in his more general framework, and it isn't clear whether this very opacity is in itself the fault of Polanyi versus the author of this book. Overall, I really enjoyed reading this book, and would recommend it to anyone looking for a nontechnical clear read about a sometimes-overlooked figure in Western philosophy of the 20th century. Follow the jump to read more detailed summaries per chapter and about my thoughts regarding the book as well as Polanyi's philosophy (warning: it may be quite roughly organized).

Book Review: "Capitalism Without Capital" by Jonathan Haskel & Stian Westlake

I've recently read the book "Capitalism Without Capital" by Jonathan Haskel & Stian Westlake. I found out about this book from a reading list by Bill Gates that was circulated by various media outlets online, which suggested that this book would have a lot to say about the currently relevant issue of people's personal data held by large online companies like Facebook & Google. This turned out to not be the case, as there was only a single brief mention of this point later in the book. Instead, this book is a discussion about how companies in many developed countries rely more on intangible assets than tangible assets, how associated trends can explain many issues faced by societies in those countries today, and why governments need to take notice of these trends. The authors start by carefully defining their notions of investments & assets, along with tangibility (essentially physical goods that can be valued & traded relatively easily) versus intangibility (things like institutions, rules, know-how, intellectual property, and social relationships that are much harder to quantify & trade), and then discuss why the values of intangible assets are harder to measure and how various econometric organizations are trying to improve this situation. They then describe their central thesis, which is that intangible assets have much greater scalability, sunk costs, spillover effects, and synergistic effects compared to tangible assets, and this leads to qualitatively different economic & political outcomes. This leads to discussion of specific points, including the role of intangible assets in secular stagnation (low business investment levels despite low interest rates) as well as income & wealth inequality, the issues associated with creating infrastructure for as well as financing investment in intangible assets, the role of intangible assets in promoting a cult of management and the greater role of management in turn as intangible assets become more important, and the questions governments will have to face with respect to managing this growth in intangible assets.

I thought this book was meant for lay readers, but it seems more meant for policymakers, entrepreneurs, and the like, and it is a bit dense. Nonetheless, it is quite well-written, and I enjoyed gaining more perspective about these aspects of the economy that I wouldn't have consciously considered otherwise. I particularly appreciated the summaries at the end of each chapter, as the authors seemed to implicitly acknowledge the density of information in their book and wanted to refresh readers' minds after going through each chapter. Moreover, I really liked the fact that the authors were more interested in laying out the facts as they interpreted them instead of making bold, sweeping proclamations about the generality of their analysis: they really tried to avoid the golden hammer fallacy of trying to contort their explanation to fit every possible problem. As a particular example, one of the features of intangible goods being synergy would seem to suggest that as synergistic/agglomeration effects are correlated with dense urban development, then policymakers should promote dense urban development to promote the formation of synergy/agglomeration clusters and that this should be a guaranteed way of growing a local economy; however, the authors take pains to mention at multiple points in the book that the empirical evidence for this is sparse in general, and where it does exist, the results are mixed, thereby providing a testable & falsifiable scenario that leads to a failure to reject the null hypothesis. As another example, both this book and the book Radical Markets by Eric A. Posner & E. Glen Weyl (which I have reviewed here) discuss Friedrich Hayek's anecdote of pencil-making to illustrate how markets efficiently communicate information via prices, but while the authors of the other book uncritically praise and extend that notion, the authors of this book are quick to show how in practice, gathering price & other information as well as conducting bargaining can be quite costly, which is how Ronald Coase concluded that people organize into firms with hierarchies in order to lessen these costs and uncertainties. Also, in the chapter about what governments should consider doing, the authors explicitly state that they are not trying to suggest the existence of quick fixes, but are instead laying out the challenges in full and suggesting possible general approaches that governments can tailor to their specific needs. Overall, I would need to read a lot more to more seriously evaluate the claims in the book, so I wouldn't be able to recommend this to lay readers, but specialists in the field may find this book interesting & thought-provoking.

Book Review: "Medici Money" by Tim Parks

I've recently read the book Medici Money by Tim Parks. It's a book that covers the rise, consolidation of money and power, and downfall of the Medici banking family in Florence in the 15th century. It focuses on the main players in the Medici family as they relate to their banking business, and how that business grew, became intertwined in politics & religion, and was able to fund the collection & creation of artworks and other cultural artifacts; the whole story is just a long power play, with jockeying between Medici family members, popes & cardinals, politicians, and competing nobility & business interests.

The book itself is a well-written, engaging, fun jaunt through that period in history; by the fact that it only has a casual section at the end containing bibliographic notes, without having a formal bibliography, footnotes, or endnotes, I can tell this was written for popular rather than technical/academic consumption, which I can appreciate. It was particularly interesting to see the tensions, contradictions, and hypocrisies of the Catholic Church's views on usury (in the old sense of lending money at any nonzero interest rate) explored fully in this book: the argument is that usury allowed ordinary people to become wealthy without needing to inherit it or work as hard, upending the social order, while the Catholic Church depended on usury to fund its own wars & extravagant lifestyles even as it condemned the practice (though even people at that time struggled to find coherent Biblical justifications for injunctions against usury), leading to weird debates about whether some commercial practices like speculation on currency exchanges were really usury in disguise. My only quibble is that the author ties the notion of usury too much to currency: the way I see it, currency simply liquefies commercial value across space (i.e. making value available across different geographic areas), while usury liquefies commercial value across time (i.e. making value available to future buyers), so while currency certainly makes usury much more feasible by combining liquidity in space and time, it is conceivable to imagine usury without currency, simply through bonds between people expecting greater future returns to be settled through consensual barter. Overall, I think this book could be an interesting and fun history for a general audience.

Book Review: "The Half Has Never Been Told" by Edward Baptist

I've recently been able to read the book The Half Has Never Been Told by Edward Baptist. It is a thorough account of the history of chattel slavery in the present-day US from the 17th century through the Civil War. The main point of the book is to challenge three common assumptions in prevailing historical narratives of slavery, namely that its incompatibilities with liberal democracy in the 1850s were points of universal agreement in the North at that time and drove the Civil War, that its worst aspects were its denial of civil liberties & rights to black people, and that it was bound to fail eventually for being an inefficient economic system. The author counters this, marshaling numerous statistics from that time and corroborating analyses too, to show that slavery was in fact an efficient and dynamic economic system that went hand-in-hand with capitalism and national expansion, and further uses the stories of individual slaves (often left out of conventional historical narratives) on top of the available statistics to show the violence and brutality inherent in slavery as extending far beyond the mere denial of rights (as that denial of rights remained even in the Jim Crow era succeeding slavery).

The facts are presented in a very straightforward manner, and the narrative structure is remarkably coherent and engaging; this makes the emotionally weight of the book all the more apparent. I was particularly surprised to see not just how much of financial speculation familiar to modern readers was present with respect to the products of slavery in the 19th century, but particularly to see that even the slicing and dicing of securities that was practiced on subprime mortgages leading up to the 2008 financial crisis & recession were practiced almost identically with securities representing fractions of average slave labor products in the 1830s (even leading to financial panics then too). Moreover, while I was abstractly aware of the lack of happy endings for most slaves and the conditions of enslavement that would prevent successful revolts or emancipation, the reality of this didn't truly hit me until reading this book, seeing so many stories of slaves whose histories were obscured after a final sale or flogging. It was also quite interesting (and depressing) to see just how much slavery and the desire to maintain unity across the country drove the national political & economic conversations right up until the Civil War, and how much the North economically depended on the products of slavery until they started getting many more immigrants and gaining political power in turn; that discussion really puts into perspective just how simple lies the narratives of the Civil War being "for states' rights" or "of Northern aggression" were. The content is of course depressing to read, but that only enhances its importance; I really believe that this should be taught in schools & colleges to remove a lot of the myths and misinformation about slavery that are promulgated in schools throughout the country, and for that reason, I certainly recommend this book to anyone (though one must be mentally prepared to read about the horrors described).

Why Open-Source is not Socialism

I was thinking of writing something on this for a few days, but I got lazy. Then, I saw this (Glyn Moody, The H Open) article, and it gave me the perfect motivation to actually write this.
I'll first sum up what he says, as he covers most of the important stuff. Follow the jump to read more about Linux, Microsoft, capitalism, socialism, cars, and the music industry.