Just Finished Reading: Traffic by John Ruskin (FP: 1862/1866) [56pp] 

This is going to be somewhat difficult to review because it made so little impact on me. Firstly, although I had heard of the author, I didn’t have very much idea of what this short booklet was going to be about. The VERY short blurb on the back gave little away merely saying that it was a defence of dignity and creativity in a world obsessed by money. 

The booklet itself was in two parts. Firstly, we had ‘Traffic’ itself which was a lecture given during the opening of an Exchange Hall in Bradford and later published in 1866. I’m guessing that his audience were either surprised or disappointed by his talk. They (rightly?) suspected that a highly respected art critic such as the author would talk mainly about the Exchange itself. Not so. He actually talked mostly about how money and the pursuit of money was ruining architecture, art and just about everything else it touched. I think the thing that jumped out at me most was the fact that these views were being put forward almost 160 years ago. Truely nothing is new under the sun! He also had nothing good to say about ‘Political Science’ - what we call today, Economics! Rightly he said that it fails to understand the real world because it fails to account for the human factor. 

The second piece was ‘The Roots of Honour’ (1862) extracted from the larger work Until This Last and Other Writings. Here the author critiques ‘political economy’ more closely looking into the ideas that supposedly explain how the economy ‘works’ that only hold together IF significant elements of humanity are removed from the supposed ‘self-seeking’ agents that make up the population. 

Although moderately interesting overall, I can’t say that I either enjoyed this or learnt much from it. As I noted earlier, the primary thing that really struck me was how very modern the economic critique felt although I suppose Economics at that time was both far more blatant and brutal than today. The other thing that really struck (and rather annoyed) me, was the overabundance of comma use in Victorian text. I think that's one thing that makes reading it rather more difficult that modern text. All those commas REALLY break up the flow of things! Reasonable in its historical context. 

Just Finished Reading: How Markets Fail – The Logic of Economic Calamities by John Cassidy (FP: 2009) [361pp] 

I have long had a poor opinion of Economics as a study and Economists as a profession. Through various downturns and the odd crisis over the decades they seem either completely bemused or dangerously overconfident about any event or trend we’re living through at that time. Reading up on the topic in recent years I’m beginning to realise why they all too often seem not to understand what’s going on – because they don’t. 

Such complete lack of understanding was on full display during the 2007/2008 financial crisis that almost tipped the world into a Depression more reminiscent of the post-1929 Wallstreet Crash. Only Herculean (and VERY expensive) intervention by governments across the world – at least this complete irony was a delight in the face of ‘free market fundamentalists’ who harp on about governments being an impediment to economic activity rather than its saviour – saved us from mass unemployment and soup kitchens throughout the world (and, no doubt MUCH worse). But why did it happen? How did we manage to miss any signs of upcoming collapse and why didn’t the ‘market’ “self-correct” as it's ‘supposed’ to? 

I’d probably blame Adam Smith. His idea of the ‘invisible hand’ that guides sellers to buyers and always gets the best price for everything has a lot to answer for. Market fundamentalists don’t just think that the free market is the best way to organising our economic life, they don’t even think that it's the only way – they believe, in their heart of hearts, as an act of unquestioned Faith, that the market is PERFECT. They believe, against all logic, against all reason and against actual historical fact, that bubbles, crashes and Depressions simply don’t happen. The reason they ‘seem’ to happen is twofold – firstly that people don’t understand what they’re seeing and that government interference is throwing sand in the wheels of the economy. If only they got out of the way and let the market self-correct everything would be fine. Sure, businesses and banks would fail. Sure, people would be out of work and maybe a handful of them would starve. Sure, there would be a modicum of social angst, unrest and handwringing but in the end, months, years or maybe decades down the line, once the dust had settled and the bodies had been buried, everything would be fine and the stock market would rise again, bigger, better and healthier than before once the deadwood and the brush had been removed and set on fire. 

Except, of course, the real world isn’t like that – at all. Now I have no issue with the idea that models of the world, or of the human activity in it – Economics – are a simplified, and often very simplified, version of reality. But, along with the idea of perfect markets we need to add in the idea of rational people who operate with perfect knowledge regarding what they’re buying and what they’re paying for it. Now, with less than two seconds thought I think we’d all agree that people are rather less than fully rational most of the time and we most certainly do not operate with anything close to perfect knowledge about anything – including ourselves. It's a bit like coming up with an equation to explain a natural phenomenon but it only works for spherical chickens in a vacuum. The answer might very well be ‘elegant’ and it might even work – at least sometimes – but it won’t be a very good reflection of the real-world. It shouldn’t surprise anyone that economists working with this level of ‘theory’ can’t really explain why a non-perfect market in which irrational people often make irrational decisions with inadequate knowledge sometimes does strange and dangerous things – like bubbles, depressions and crashes. 

I think we all remember the 2007/2008 financial turmoil and the years long aftereffects. Different countries reacted in different ways but, generally, this involved bailouts of banks and other institutions that were considered ‘too big to fail’, austerity measures and much else besides. What we saw precious little of was people held to account – almost anywhere – and fundamental changes to the way banks, financial institutions and the market itself was allowed to function. The conditions that led to the crash/crisis (or whatever you want to call it) still, by and large, exist. There is little in place to stop it happening again. 

I’ve been trying to wrap my head around and understand Economics from around 2010 (for obvious reasons). This book has greatly aided that quest. I can completely understand why it became book of the year in the Economist on publication. The author really knows his stuff and had interviewed the ‘people in the room’ who were at the very centre of things as they unfolded in the money markets and in government – especially the US Federal Reserve. I thought the result was not only very informative – he spends the first half of the book explain how we got here going back to Adam Smith himself – but also very even handed. There is/was certainly enough blame to go around, not only in the banks and financial institutions who created, traded and then defaulted on countless toxic loans but also in government (who helped enable things) and the bodies entrusted to oversee and regulate things. If you’ve ever wondered exactly what happened in the run-up to the financial disaster we all lived through and want to understand exactly why it happened, then this is most definitely the book for you. It’s not an easy read though. Despite an almost complete lack of equations this is still fairly dense and technical in places. It's not the kind of thing you can skim read to get the gist. Concentration and thought is required – at least from time to time. A basic knowledge of economic thought will help but the author does go through quite a lot between the covers. Highly recommended.  

Just Finished Reading: Global Economic History – A Very Short Introduction by Robert C Allen (FP: 2011) [147pp] 

Much like the movement of people, indeed the movement of whole peoples, trade including global trade has a very long history. The Roman Empire traded directly with India and, no doubt, other world empires had similar trading arrangements. But it was only in the 16th century that regular trade in quantity emerged as a factor in global history. With the search for a quicker and more profitable source of spice the Portuguese (to begin with) sought ways to bypass the expensive Spice Road and go directly to the source. Opening up trading posts along the way they began carving out the first global empire. Other European powers were not long behind with Spain, the Dutch, French and finally the British expanding their reach and the reach of global trade itself to every continent on Earth. Empires would rise and fall bolstered or destroyed by changes in global trading patterns. Items, such as pepper and sugar, which had once been affordable only by the rich dropped dramatically in price but still made their traders vast fortunes. Before long everything that could be traded was traded – from cotton to slaves, from tea to opium. A countries economy could be made or broken by the arrival of a fleet of ships off the coast. Some countries became the bread-baskets of faraway empires whilst others, willing and able to practice European style economics, became local powerhouses themselves. Global trade and global history became inseparable. 

As a useful foundation for a knowledge of global economic history this definitely lived up to the reputation of the Very Short Introduction series. Through my other readings I was already familiar with the highlights covered here but was particularly intrigued by the authors analysis of why some countries are rich and why others stay poor. Much of it seems to be timings with Europe getting ‘lucky’ by a combination of readily available resources – especially coal – and a culture that required rapid innovation to maintain profits in a high-wage economy. I think I grasped the basics of this idea but will see if I can follow up with some other readings. From what I understood it certainly made sense but then I do sometimes struggle getting my head around economic theory! 

If you’ve ever wondered about certain aspects of economic history – especially on a global scale – but didn’t know where to start reading about it, this is a pretty good choice to do so. Obviously covering 5-600 years in less that 150 pages means it's all very high level but it does give the flavour of things and points out areas of further study – helped, as always, by a decent bibliography. Recommended and more VSI books to come. 

Just Finished Reading: How to Make the World Add Up – Ten Rules for Thinking Differently About Numbers by Tim Harford (FP: 2020) [296pp] 

Numbers are everywhere. We are bombarded with them from media outlets, on the Internet and from politicians. But what, exactly, are we supposed to DO with them? When you’re told that inflation is down by 2% what exactly does that mean? When a government department has made a £5 billion deal is that a lot of money? When we’re told that migration is up by 15% since this time last year how are we supposed to react to that? 

Facts and figures thrown at us from every news programme or every tweet [side note: If tweets were part of Twitter, what do we call individual posts on ‘X’?] could simply be ignored as either lies, misinformation or just too complicated to think about (and do ‘they’ want you to feel that way about them?) but it doesn’t have to be that way. One thing you can, and the author suggests that you should, do is the pause a moment and think of how the number/statistic being presented makes you feel. Is it anger? Shock? Dismay? Elation? Or confusion? Now ask yourself: Was that emotional response the point of the figure you’ve just seen? If it is, it's time to dig deeper and start asking questions. 

Take the (made-up) figure I mentioned earlier – that migration was up by 15% since this time last year. If true (which it might not be), what does it mean? Is 15% a lot? In raw numbers does that mean hundreds, thousands or millions? If it's say, 10K what kind of percentage is that of the population? Does that number seem large to you or insignificant? So, was the 15% figure – given without context – designed to make you afraid/angry. If it was, maybe you shouldn’t trust that source about other figures. Then, of course, there’s the question of what constitutes a ‘migrant’ (a term I particularly loathe)? Does it include those studying here on 3–5-year visas who will be leaving on graduation? Does it include those who have been recruited to fill vital job vacancies in critical industries? Does it include seasonal farm labourers who will be gone in a few months? Or does it only include so-called ‘illegal immigrants’ many of which might legitimately claim refugee status?  

Once you start asking these sorts of questions several things happen – firstly you should expect to lose some of the emotional heat and then you start to LEARN things, like how things work, what figures really mean and that definitions (often unstated, sometimes on purpose) matter. After a while you stop being afraid of figures, stop being befuddled by statistics and stop being manipulated by those who suspect (rightly too often) that people tend to ‘switch off’ when they’re presented with a math problem. That, in a nutshell, is what this excellent book is all about – providing the intellectual tool-set that’s handy and easy to use when presented with facts and figures. Personally, I’m a sceptic by nature and probably always have been. This doesn’t mean I dismiss everything I see or hear. It does mean that I TEST things for logic, reason and, even sometimes, whether it makes mathematical sense. With this book I think I just got a whole lot better at the last bit. MUCH more from this author to come (I’ve already bought two of his other books). This was highly readable, fun (and often funny) and a much-needed aid for modern life. One of the highlights of the year. Highly recommended.   

Just Finished Reading: Narconomics – How to Run a Drug Cartel by Tom Wainwright (FP: 2016) [286pp] 

Humans have been taking drugs, growing drugs and selling drugs probably for as long as there have been people. It is almost one of our defining features [Side note: Personally, I find it pretty amazing that plants exist that naturally produce – processed or not – a variety of narcotics that can get us ‘high’]. On the other side of this equation, though I guess much later in human cultural evolution, there have long been those who want to stop people taking these drugs for a variety of reasons. As we know – they have almost universally failed in this endeavour. The ‘why’ of this failure is the topic of this intriguing and often troubling book. 

What governments (and other authorities) regularly attempt to do is to reduce the supply of drugs to stifle their consumption. For many (often obvious) reasons this is doomed to fail from the outset. For one thing, many of the drugs and both easy and cheap to grow so ploughing up fields or spraying them with herbicides is an expensive way to do very little. Likewise processing drugs is an industrial process on an industrial scale so the interception of the odd (even large) shipment makes little overall difference to the ‘price on the street’ (a proxy metric for how well the anti-drugs authorities are performing). What makes this metric worse is that drug users (who are often physically addicted to the product) are more than willing to pay the higher price for their ‘fix’ and, if that wasn’t enough, by doing so INCREASE the profits of drug dealers. This is hardly a sustainable policy. [Side note: I’ve never understood the fact that drug seizures are destroyed – usually on camera – rather than sold to drug companies for processing into legal drugs. If so, this could almost self-finance the war of drugs] The author, who clearly knows his stuff and has on more than one occasion walked the walk into the proverbial lion's den, suggests a far more effective and cheaper alternative. The idea is to reduce demand and reduce illegal revenue. You reduce demand, especially for the harder drugs, by rehabilitation programmes and other techniques and you reduce revenue by legalising at least SOME of the lighter drugs like cannabis thus cutting the user base from under the dealers. 

The author makes a very valid case for using the unique economics of the drug industry against it rather than staying the course of a decades long failed moral crusade. Seeing the issue as a cold economic one, rather than simply seeing drug users as moral degenerates, would be more effective and longer lasting – essentially because it makes actual sense – than what we (collectively) are doing today. It does seem that at least some regions or countries are listening to this advice with the slow decriminalisation of cannabis use across the world. Even if still illegal here (as far as I know) the police tend to turn a blind eye to its use unless the user steps over the line. Making it legal and standardising the quality/safety of the produce plus taxing it, seems the much more logical solution. It’s coming, and when it does people will look back and wonder what all the fuss was about. This is a fascinating look into a global mega-industry that few of us have any experience with and an even more interesting look at the economics of criminal activity. Highly recommended and one of the stand out reads of the year. 

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Just Finished Reading: Weapons of Math Destruction – How Big Data Increases Inequality and Threatens Democracy by Cathy O’Neil (FP: 2016) [218pp] 

Algorithms – it seems to be THE word of technological age we’re living through. They seem (and indeed are) everywhere. Most people see them plainly on Amazon recommendations and other seemingly innocuous, and to be honest sometimes hilariously bad ‘suggestions’ from other websites. But like the vanishing icebergs most of the work of algorithms happen DEEP in the background. Been turned down for bank loan, mortgage or online job application? Watched a convicted criminal get an eyebrow rising super low or super harsh sentence? Heard about ‘blips’ on the Stock market that suddenly buy or sell vast amounts of stock and then almost instantly buy it back again? Started receiving some oddly specific news on your Facebook feed? That’s probably an algorithm (or a few of them) at work doing what they do – making assumptions, making deals and changing (and sometimes destroying) people’s lives based on data, correct or otherwise. The author calls this sort of thing ‘Weapons of Math Destruction’ or WMDs for short. 

Of course, the problem with using math (or as we say over here, maths) to make decisions about people's lives or livelihoods is that human beings are messy. Few of us (fortunately) fit into neat categories and a great deal of what we do, know, believe and act on isn’t exactly easy to quantify. So, what’s a mathematician or statistician to do? Use proxies – in other words something that can (at least theoretically) be measured for something that can’t. Like the chance of defaulting on a loan – how do you measure something like that? Well, you compare the data of the person asking for money with people like him – so where they live, education, criminal record, criminal records of their neighbours, family and friends. In other words, you ‘profile’ them. Rather than treating them as an individual you treat them as a member of a group – be in women, the young, racial minorities and so on. It makes decision making by the bank SO much easier. But if you’re an upstanding  member of a group with a bad rep? - Sucks to be you, right? And in a nutshell, there’s your problem. Unlucky enough to be born in a ‘bad’ area or into a risky demographic, you’re screwed. Born on the right side of the tracks? Your life is going to be a lot easier – especially with a fair winded algorithm at your back. 

Using 99.9% US examples – apart from 2 UK examples (one of which was hilariously from the British ‘city’ of Kent) - covering the whole gamut from school grades, teacher standards, incarceration suggestions, loan applications, and much more this was an often-frightening look at how pervasive algorithms are and how much effect they have on millions of people's lives – often with unthinking and unwarranted approval. Despite being almost entirely US focused and starting to feel rather out of date even after just 7 years, this will be a wake-up call to anyone not already familiar with the implications of algorithm influenced decision making. Many more questions need to be asked about how they work, what assumptions are deeply embedded within them and how we go about correcting badly performing ones. A recommended read (with some caveats) to anyone who has wondered what all the fuss is about.

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Just Finished Reading: Moneyland – Why Thieves & Crooks Now Rule the World & How to Take it Back by Oliver Bullough (FP: 2018) [278pp] 

The Bretton Woods agreement was supposed to stop it – at least that was the idea. One of the reasons for the long path from WW1 to WW2 was, so financiers and economists agreed, was the free flow of money which destabilised countries and led to war. There was something to that so a new set of rules aimed to make such easy flow either impossible or, at least, very difficult. So it did, for decades after the end of WW2 – until... Making money from money – rather than solid stuff in the real world – wasn't easy after 1945 and the financial sector, even in places like London and New York was rather small. But it the late 60’s a bright idea popped into life – holding money ‘off-shore’ beyond the reach of the authorities. It was a short step from holding money to using it to make more money. Starting slowly, the ‘off-shore’ revolution snowballed. At first it was a few of the new ‘jet-set’ hiding assets from their governments or future ex-wives. Before long it was government leaders themselves, from Africa, Asia, Latin America and the collapsed Soviet Union who hid billions of purloined dollars WAY beyond recovery – even when their regimes finally fell and they escaped with their lives and (apparently) little else. ‘Naughty’ money now sloshed around with ‘evil’ money and both were protected by absolute anonymity with bankers, lawyers and lawmakers vying to make THEIR systems more attractive for those stealing, hiding and (hopefully) spending their money. The virtual space of Moneyland was born and it's been growing ever since. 

I think that anyone paying attention has at least heard of thew growth in tax evasion, off-shore bank accounts, money laundering, asset stripping dictators and the whole sleaziness of the global financial system. There’s certainly been enough scandals and enough world leaders, celebrities and just plain crooks caught using and abusing banking to horde ill-gotten gains. Here the author shows how it started, how it spread, what governments tried (and all too often failed) to do about it and what impact it is having on the world's economy (spoiler – not a good one). I knew about some of this, although not in such detail, but didn’t realise both how complex it all is and how the West both enables it – both by commission and omission – and attempts to fight it. You might imagine that global finance would either be boring (it’s certainly not) or just too complicated to understand (ditto in the hands of the author). Told through the authors own investigations and with interviews with some of the main players this was a fascinating look into a shady world which impacts all of us indirectly. Moneyland is going to be here for a while yet. Although its only around 50-60 years old now its global reach and VERY deep pockets is going to keep it largely free of regulation or even observation for decades to come. It’s a global problem which requires a global solution – and we all know how rare those are (and looking forward are going to be rarer still). But something needs to be done – before every dollar and every dime has been stolen from under our feet. Certainly not the most uplifting book you’ll read this year but an interesting and sobering one. Recommended for anyone interested in Economics or Finance. 

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Just Finished Reading: Why Women Have Better Sex Under Socialism And Other Arguments for Economic Independence by Kristen R Ghodsee (FP: 2018) [177pp] 

Written in response to questions raised by her 2017 New York Times article ‘Why Women Had Better Sex Under Socialism’ this is a very interesting a rather thought provoking read. Naturally the title itself was hard to ignore – I'm guessing that it’ll be by far the best title of the year – but it is far more than a catchy title. The author was travelling in Europe just as the Wall came down and decided to see what things were *really* like in the East. Interviewing academics and ‘ordinary’ people across Europe – not only in pre-Soviet countries but across Scandanavia and the UK too – laid the foundations for her PhD and informed her feminist critique of unrestrained and unregulated Capitalism. 

One of the things that became clear to her (and has been clear to me for a while now) is that not only does Capitalism treat women differently from men but that it generally treats them worse than their male counterparts. Generally under Capitalism, women are paid less, hold lower status jobs, undertake far more part-time and temporary work, do far more unpaid care work for children, the sick and the elderly and so on. Until very recently, women have been considered very much as second class citizens (if as citizens at all) and treated accordingly. Taken all together this has resulted in women having a much lower economic ‘value’ than men, overall less spending power and, again overall, less power of any kind. This has resulted in what a 2004 research article [Sexual Economics: Sex as Female Resource for Social Exchange in Heterosexual Interactions] called sexual economics or sexual exchange theory where women ‘sell’ sex to ensure or enhance their economic standards to men who can ‘provide’ for them. In other words, women use a resource that they have and that men want – sex – to purchase security because of their relative poverty in other respects. Although somewhat shocking (indeed crass) said out loud like that I think there’s a lot to it. I’ve long thought that ‘modern’ relationships seem far more nakedly transactional (pun intended!) than they used to be or, indeed, should be. I’m also aware of the unapologetic ‘trading up’ that some women do to get a higher status male partner and to enjoy a better lifestyle. If that’s not sexual economics I don’t know what it is. 

During the Soviet era in the East, as well as in present day Scandinavia and other left leaning societies, the impact of sexual economics was, and is, much reduced. With access to Higher education, laws to ensure more equal pay, easier (often free) access to health care like contraception, abortion, pregnancy and birth care, often subsidized childcare, maternity (and paternity) leave, return to work guarantees and much else besides, the general underlying foundation of sexual economics becomes untenable. Sex is no longer a marketable commodity and because there is no longer a price tag attached (for either party) is freely given as part of a loving relationship. Non-transactional sex is less baggage laden. It’s simply better under Socialism. 

This was, to be honest, a FUN read. The author has certainly done her research and, as a socialist myself, I think she made her case pretty well. The only issue I had with any of her arguments was the idea of quotas for the filling of corporate posts with a significant percentage being allocated to women. I’m not a fan of the quota system for a host of reasons. I can see why she proposed this idea – as a short cut – but I prefer the more difficult path of ensuring that women are educated enough, experienced enough and good enough to fill those roles themselves – without the fear of being discriminated against because of their sex or gender. Definitely recommended for anyone interested in politics, economics or women's issues.  

Just Finished Reading: The Great Depression & The New Deal – A Very Short Introduction by Eric Rauchway (FP: 2008) [131pp] 

The Great Crash of 1929 led directly to the Great Depression of the 1930’s - right? It might certainly seem that way but the direct cause and effect of both events is far trickier. There had been crashes before, sure not as bad or as deep or lasting so long as the one in ‘29 but they had happened and, after a short sharp recession, the economy had recovered. The thinking at the time, the prevailing idea of laissez-faire, suggested that if left alone the stock market as well as the larger economy would ‘self-correct’ in time. So, time was given then more time and then some more time. Instead of any self-correction things instead grew steadily worse. Pronouncements from politicians and industry leaders followed stating publicly that everything was fine and that people really should spend money. Meetings were held (again very publicly) between government and industry to show that they were ‘doing something’. Eventually, the Hoover administration decided that they really had to do something but it was too little and too late – their thunder’ had already been stolen by the Democratic candidate for President who promised a New Deal if elected: Franklin D Roosevelt. The problem was, even FDR had no clear idea what could be done, if anything, to bring the country back. 

Looking back with a ‘big picture’ lens it's easy to see the New Deal program as a coherent and coordinated response to the Great Depression. At the time it was nothing of the sort. FDR and his administration knew (as did most people) that ‘something’ needed to be done but there was only so much that could be done as well as only so much that would be allowed to be done. Despite the condition of the US, and the world, economy the idea of direct government intervention was still anathema to many. Even those most effected on the ground were loath to take charity or government handouts even if they desperately needed them. Yet still, something had to be done. The first order of business was to shore up the financial sector and restore confidence in the banks. Then there were incentives for business to invest and grow. Some things seemed to work and were expanded, others seemed not to work and were dropped. The Federal government extended aid and guarantees to the States for plans already drawn up and awaiting funds. States were encouraged to plan more projects and businesses were asked, encouraged and sometimes bullied into keeping their workers in employment even at shorter hours or reduced pay. Although things improved slightly, or stopped being so bad for so many, it still wasn’t enough. Nowhere near enough. The government would, it seemed, need to get its hands dirty. Over the coming years the Federal government started funding projects directly – to build roads, schools, dams and much else. It increased Social Security and began to directly influence business decisions. It was heavily criticised for inaugurating Socialism in America (whilst being nothing of the sort of course) but things did improve and keep on improving. But did the New Deal work? Did it end the Great Depression. The clear answer is No. Although things were improving as the 1930’s began to draw to a close it was the war in Europe which boosted job numbers and then the massive increase in defence spending prior to the attack on Pearl Harbor that pulled the economy out of Depression and laid the foundation for American financial dominance for the rest of the 20th century and beyond. 

I thought this was a useful follow up to my previous read on the Wall Street Crash and rounded off the subject nicely. Obviously in a mere 130 pages the author couldn’t do full justice to either the Depression nor the response to it – in America never mind the rest of the world – but he did manage to hit the highlights and, as always, provide a full bibliography for further reading. I’ll see if I can follow this up (at some point) with some of the different responses to the Depression in the UK, France and other places around the world. A very good (as these very often are) introduction to an interesting and important topic especially after the Crash of 2008. Recommended. 

Just Finished Reading: The Great Crash 1929 by John Kenneth Galbraith (FP: 1954) [210pp] 

The NY Stock Market crash of 1929 is undoubtedly one of the most important events of the 20th century. The worldwide ramifications of the event and the Depression that followed shaped the world we live in to a significant extent. Without an understanding of what happened and why it happened any appreciation of 20th century history can only be severely hampered. But what made the Crash of ‘29 so devastating? Afterall, we’ve had economic boom & bust for a good chunk of human history, likewise we’ve had financial ‘bubbles’ that have emerged, grown and ‘popped’ before without dragging the world into economic chaos. What was significant about this one? 

Part of the reason it seems is both the length and the height of the boom before it all fell apart. It’s not unusual for stock markets to climb and then fall back but it is unusual for the market to climb to giddy heights and then keep on climbing. For a LONG while it looked like, and was talked about by people who should have known better, as if the rise in value could indeed go on indefinitely. It’s hardly surprising then that people saw buying stocks as an easy, indeed essentially free, way to make money. Starting with the usual suspects – the financial speculators – it wasn’t long until average people started buying stocks and watched with great pleasure as their net worth grew week on week. As the market continued to grow it made sense to borrow money to buy stock and then to use that stock as collateral to extend the loan to buy more stock. It was even worth companies cutting back on investment in order to buy stock (often in their own company) which seemed like a sure way to ensure ever greater profits. As the bubble grew and grew those ‘in the know’ knew that, at some point, the bubble would burst and the market would ‘self-correct’. The trick was to sell just before this happened. The problem was, of course, knowing precisely when to do so. This decision wasn’t exactly made easy by the market reporting methods of the time. These were designed to report on market prices where a reasonably moderate number of shares exchanged hands each day. As the number of shares bought and sold ballooned in the late 20’s information regarding these sales started to lag behind reality. In this state of uncertainty, it was all too possible to jump too soon or, even worse, too late without even knowing it.  

Of course, the US government could also see the risk of a burst bubble but what to do about it, that was the question. It was certain that the bubble would burst eventually but would intervention make things better in the long run or worse in the short term and, most importantly to the political mind, who would be blamed for either action (or inaction). In an attempt to ‘cool things down’ the bank borrowing rate was increased. This, by and large, achieved little to nothing. The interest on any loan paled in comparison to the interest on bought shares. In any case, the prevailing theories of the time confidently said, after the burst would come the market self-correct and after a short period of pain, the market would start increasing again. Afterall, the fundamentals of the real economy were sound. Unfortunately, the politicians, the economic theories, and the experts were wrong. Dead wrong. 

After a few minor falls and recoveries, the market dropped a LOT. The next day it was expected to recover, at least in part, but the delayed transactions from the day before put paid to that. The market dropped again, and kept on dropping. It wasn’t long before the panic set in. Stock prices plummeted with even so-called guilt stock losing 20, 30, 50% of its price within days. Those who didn’t cash out quickly lost everything. Those who managed to sell in the early days still lost a great deal. But, no matter how bad the Crash itself was it was assumed that, once things hit bottom, a recovery could begin. Unfortunately, that ‘bottom’ failed to materialise in days, weeks or months after the initial precipitous fall. Many assurances were made, both in the financial and political realm that the ‘real’ economy was fine and that whatever happened in New York really didn’t influence things ‘out there’ too much. Stocks were ephemeral things but bricks and mortar, land, and acres of wheat were the real wealth of the country, right? The problem, however, was twofold: firstly, the underlying economy was NOT fundamentally sound and second even those who had money (and only a small percentage of people had actually speculated in the market) where reluctant to spend it during a period of growing uncertainty. It wasn’t long before the fantasy world of the stock market started to infect the real-world decisions of whether to buy or not or whether to keep your money in the local bank (if you had it) rather than under your mattress. The Great Depression was about to begin. 

Although, I’m sure along with most other people, I had an appreciation of the events of 1929 I wasn’t fully aware of the details of that disaster. This classic work of Economic history has filled in a lot of blanks in that regard. Written within living memory of the events and by an economist of note this was a quite fascinating look at the logical, almost rational, madness that gripped the US and the world in the late 1920’s. If you’ve ever wondered about the Crash and where it fits into 20th century history but didn’t know where to start, I think this is definitely the place. Written in an easily digestible language format you won’t need a background in Economics to witness the financial trainwreck unfold before your eyes. Recommended for all those interested in 20th century history and economics.    

Just Finished Reading: The Physics of Wall Street – A Brief History of Predicting the Unpredictable by James Owen Weatherall (FP: 2013) [243pp] 

For as long as there has been gambling (a VERY long time) there have been those who tried to ‘play’ the system in such a way that they could ensure winning much more often than losing. For most of that history such actors have operated by using their instincts, magical thinking and, where possible, cheating or some sort of manipulation. As you might expect the vast majority of these schemes fall at the first turn of a card or very shortly afterwards. That all changed with the advent of mathematics and the development of probability theory. Once games of ‘chance’ and skill, such as Blackjack (21) and Roulette, became capable of being modelled mathematically it became possible to predict outcomes with a fair degree of accuracy – and certainly more accurately that the average player was capable of. But even with maths, theory and the odd (early) computer behind them these theorists found that making a LOT of money needed a LOT of initial investment, something which most of them and most of their university departments either didn’t have or were loath to loan either with a high probability of a low return. But when modelling card games started to fall out of favour the mathematicians and physicists saw a much more lucrative and much more challenging prospect – the Stock Market. 

Of course, modelling the Stock Market was never going to be easy. Indeed, many scoffed at the very idea of attempting to predict the unpredictable but, ever up for an impossible challenge, some mathematicians tried and, more radically, put their own money where their mouths were. Early models (and it needs to be kept in mind that these were models and not reality) of early Stock Markets – notably in France – where neither particularly accurate nor particularly responsive to sudden changes. But they didn’t need to be – at least generally. Even with the advent of the telegraph the amount of stock being traded was small and the speed of the trades almost glacial compared to today. Even so the early crude models had a long way to go and they only really began to take off with the advent of computers post-WW2. As computers got faster the capability of the Stock Market models improved in step – but so did the size and complexity of the Market itself. Still, many thought the task was simply impossible. There was no predictable market to model, they were wasting everyone's time and, more importantly, money. It was time to put up or shut up and that’s exactly what one team of physicists did by creating a Hedge Fund based on their theories. What happened next astounded everyone and changed financial management forever. Not only did the Hedge Fund consistently make money but it consistently outperformed other Hedge Funds made up of supposed market experts. The Quants had arrived.  

This was an interesting story, well told. It seemed obvious to me that Stock Market prices cannot possibly be random and that the ebb and flow of the Market cannot, therefore, be completely unpredictable. If that was the case there would be no way to regularly make money on the market as every deal would be a crap shoot. As at least some people obviously make a great deal of money from market trading, and do so consistently, there are rules governing the system that can be discovered, followed and exploited. Likewise, the better your model is of actual behaviour then the better and more consistent your results will be even when markets become volatile. What was more interesting from my PoV is that modelling the Stock Market is, essentially, modelling aggregate human behaviour. This mean that, at least theoretically and at least crudely, human behaviour – in the aggregate can be modelled mathematically if you have the right algorithms to do so. With my long-standing interest in Asmovian Psycho-History it raised the possibility that these early predictive tools for Stock Market trades could be the foundational (pun intended!) building blocks of such a theory. Definitely a recommended read for anyone interested in the Stock Market, mathematics or the possibility of prediction human behaviour. More to come on this and associated subjects.  

Just Finished Reading: The Summit – The Biggest Battle of the Second World War – fought behind closed doors by Ed Conway (FP: 2014) [408pp]

As the Second World War entered its final year a conference took place at the Mount Washington Hotel in New Hampshire. Known forever for the name section of the nearby town of Carroll – Bretton Woods – this conference was set to determine the economic foundations of the post-war world. Attended by delegates, economic, finance and trade experts including luminaries such as John Maynard Keynes, the plan was to prevent future wars, regulate trade and ensure global prosperity after the Axis Powers had been defeated. With news of the recent D-Day landings mixing with haggling over currency regulations and the Gold Standard (along with copious amounts of alcohol much to the delight of the Russian delegation) for 3 weeks hundreds of functionaries hammered out agreements, policy positions and charters the world (mostly) lived with until the 1970’s. Along with the creation of the World Bank and the International Monetary Fund the final document produced just as the conference came to a close – thanks to the Russian reluctance to get fully involved at the last minute – arguably led directly to the economic ‘long boom’ from the 1940’s until the economic upheavals 30 years later. To understand the foundations of the modern post-war world you cannot ignore Bretton Woods.

Thinking about it dispassionately it’s difficult to imagine an interesting book about an economics conference – even if you have an interest in economics. However, the author manages to do so – and more. Not only is there the chaos of the hotel itself which was far too small and in a state of disrepair even when the conference started but the attendee’s themselves, with their various axes to grind, provided a great deal of heat with only very occasional light. The arguments over the very existence of both the World Bank and the IMF to say nothing of how they would operate, who would run them and the very contentious issue of where they would be based soured relations between the US and UK for years afterwards (as well as giving political ammunition to the Soviets in the upcoming Cold War propaganda sphere). Post-war debt repayment from Britain, European recovery (later known as The Marshall Plan), Soviet access to loans at preferential rates of interest and much more were discussed, argued about, almost fought over and finally, for the most part, agreed – although not to everyone’s satisfaction. Then, of course, there was the eventual fallout, with Soviet retreat into the Cold War, the growth of the European and especially the American economy, the burgeoning of world trade and the stirrings of what we now recognise as Globalisation. It all really started as Bretton Woods.

Even if you’re not an Economics nerd (I’m not though I am enjoying my forays into this sometimes bewildering subject) this is a very interesting insight to how the framework of the modern world was created over a space of 3 weeks in a cramped hotel in New Hampshire. If you have ever wondered why such things as the IMF exist or what it was created to do then this book puts you in on the ground floor. Surprisingly entertaining (and not just for nerds – honest!) this is a fascinating look at an often overlooked aspect of WW2 when rather than carving out territorial spoils following victory the Allies, Neutrals and Occupied powers carved out a new world order that many of us were born into and many more are living with its echoes. Definitely recommended if you want to understand the world of today a little bit more.        

Just Finished Reading: The Revenge of History – The Battle for the 21^st Century by Seumas Milne (FP: 2012) [277pp]

This is a bit of an odd one. I picked it up expecting (indeed hoping) that it was an analysis of how the late 20^th and start of the 21 centuries got us into this mess. Although there were elements of that it turned out to be, at least for me, rather disappointing on that note. This isn’t to say that the book was bad or defective in some way – it wasn’t. It’s just that it wasn’t what I wanted it to be.

Running from 1999 to 2011 this was a look at the political, economic and military events of the period from 9/11 to the Arab Uprising. There was one aspect that took me a little while to get my head around from the very start. Rather than looking backwards from 2012 when it was published each section (and sub-section) is contemporary with the events described. Although I don’t think it actually says anywhere, either in the preamble or the blurb on the back, the book is (or seems to be) a collection of the author’s articles presumably printed at the time in The Guardian newspaper. Whilst that is a valid way of doing things – especially if you hadn’t read them before – it does I think significantly reduce the authors opportunities to analyse events with the benefit of hindsight that he obviously had prior to publication of the book rather than prior to publication of the articles themselves. What might have been more interesting would be if the author had commented on his own work with that hindsight from an almost god-like position of ‘knowing’ what was coming next. A little ‘post-modern’ I know but I think it would have worked and would have given some interesting and valuable insights into things.

For those who are unaware, The Guardian is/was the premier left-leaning newspaper in the UK and, before I stopped buying all newspapers some years ago, I read it for many years from my student days and through my first 20 years of employment from then. So naturally I found myself in agreement with almost every word in this book. Unfortunately that was one of the things that ‘disappointed’ me (*I know*!) and I must admit I did find myself a little bored from time to time. I also clearly remember much of what’s covered here because I’m fairly switched on politically (as you may have realised – lol) and I was paying attention at the time these events were unfolding around me. If this applies to you as much as me I can’t see you deriving much from reading this book. If, however, you were *not* paying attention (for any of a whole host of reasons) or want to see the first part of the 21^st century through a pair of lefty eyes then you might get quite an education. Reasonable but I’m really looking for something a bit more analytical.  

Just Finished Reading: Austerity – The History of a Dangerous Idea by Mark Blyth (FP: 2013) [272pp]

Selected as the Best Book of 2013 by the Financial Times and Bloomberg News this is a well presented, deep and blistering attack on the response to the (fast fading from memory) financial crisis of 2008. Putting the blame where it belongs – in other words NOT with the governments who were forced to use tax payers money to bail out the banks and financial institutions that actually caused the problem – the author looks at two aspects of the financial fall out. Looking first at the USA – ‘too big to fail’ – then moving onto the Eurozone ‘too big to bail’. I was mostly aware of the American response to the crisis so most of it didn’t come with many surprises. What really caught be unaware though was what exactly happened in the Eurozone. I was aware of the bank bailouts (with Iceland being the very notable exception here) and the deepening crisis in Greece but what I failed to appreciate was the total mess within the Eurozone almost completely caused by issues around the single currency (which we never joined) and the dictates of the European Central Bank controlled by the Germans. It almost, emphasis on the almost, made me cheer to fact that we’re no longer IN the European Union. What it did make clear was that fiscal integration within Europe moved MUCH faster than it should have done as was far to in advance of political integration which should have happened first. Despite the real danger that this whole debate could have gone very technical very quickly the author not only managed to make it interesting but I felt that I actually understood a LOT more about European political decisions over the last ten years than I had prior to reading this excellent volume.   

After spending around half of the volume dealing with the US and Europe the author moved onto the history of the idea of Austerity handily debunking theory after theory – which often had either little basis in reality or were actually (and in effect fraudulently) based on manipulated or massaged data sets to arrive at forms of political positions that could be made (or made to sound like) into ideas palatable or at least grudgingly acceptable to the voting public. Of course we all know WHY governments stepped in and bailed out the criminals who caused the Crash of 2008. They had to, or at least they knew that if they didn’t that they would pay the political consequences at the next election. Of course most of those responsible walked away without a scratch and, in too many cases, actually better off. It still astounds me that organisations and individuals supposedly dead set against government intervention of any kind and especially intervention in economic affairs were more than happy accepting government bailouts – from institutions that many of them believed did not need to exist nor should exist. Hypocrisy just doesn’t cover it. If they’d had an atom of honour (yeah, right) they would have admitted that they’d fucked up, refused the bailout and fallen on their collective swords. Personally I would have stopped the economic collapse, arrested those involved and thrown the lot of them in jail (if they were lucky) and then asset stripped their companies to pay back as much as they could.

Unfortunately austerity is one of those toxic ideas that refuses to do the right thing and slink off into the woods to die alone. Despite failing time and time again it is brought out as a ‘solution’ to the problem of recession or depression despite the fact that throughout recorded history it has made recessions longer, deeper and more painful. If you’re of an economical mind-set and wonder exactly why the financial fallout from the Crash of 2008 played out the way it did across the world this is definitely the book for you. Definitely recommended.    

Just Finished Reading: Austerity – The Great Failure by Florian Schui (FP: 2014)

It’s pretty clear to me, and more so after the debacle of 2008, that most politicians as well as a fair few economists don’t understand how actual economies work. Delving a little more into the morass of economic thought I can see why. Few of their theories have more than a passing relationship with reality, history or human behaviour. So it should come as no great surprise that the response to the Crash of 2008 – caused we should remember by the banks and financial institutions that are supposedly at the cutting edge of economic efficiency and effectiveness – was Austerity. That same Austerity that was so effective after the Crash of 1929, that same Austerity that prolonged and deepened an already deep recession and helped create the Great Depression. I do wonder if we’d still be there without a World War to pull us out of it.

The logic of Austerity has long confused me. The problem, it seems, is the lack of consumer spending, consumer ‘confidence’ and business investment. I won’t even start of the stupidity of an entire economic system based on people like me going out and buying a fridge. Anyway, in bad economic times people quite naturally worry about their future so are much less likely to spend money on ‘big ticket’ items and, instead, concentrate on the basics (like food) and will put money aside (if they have any) to help them through if things go South. So what do governments do? Cut back on spending wherever they can and try to balance their budgets. One thing they usually do is play with Interest Rates. But here’s the problem with that approach – if you increase interest rates to encourage saving that it puts business off borrowing money so they can’t invest as easily. If you decrease interest rates you might increase borrowing/investment but people won’t save as much (if anything) so there will be less money available to invest.

Of course businesses want to maintain their profits in a recession – as much as they can – and the easiest way to reduce costs is to sack people and then get the remainders’ to produce more for the same wage – essentially exploiting your workforce with the threat of unemployment. But the workers you made unemployed now can’t afford to buy your products (at least not to the same level) so you need to cut back further. Governments will pay your unemployed enough – generally – to get by on but in order to afford that they need to raise taxes, cut back elsewhere or both. With less money in the economy and more fear of losing jobs businesses cut back and we go down another level until, eventually, we hit bottom and, generally, bump along it until something happens to get things going again – like a world war. Austerity really doesn’t work – although there are enough politicians and economists who will tell you that it does or at least it should. They just don’t often use economic reasoning to justify it. This is what this fascinating and thoughtful book is all about – essentially debunking the (usually) non-economic arguments for the Austerity policy of the day.

Starting with the ancient Greeks (naturally) the author made an obvious statement that practically stopped me in my tracks. Their early arguments for not pursuing excessive wealth or commodities – like the latest iSaddle with the improved bevelled edges – came from a time of essentially zero economic growth. Arguments from the dawn of Capitalism and the fabled Protestant Work Ethic relied on simplicity and lack of ostentation in order not to offend God by crude displays of wealth. Later arguments from the likes of Hayek postulated that active engagement with the myth of the Free Market inevitably leads to Totalitarianism based on his experiences in Austria between the world wars. Later still the Club of Rome used environmental arguments about the runaway growth of populations (Malthus has never been far from people’s minds despite the fact that we continue to feed our growing populations in most places most of the time) and resource depletion. Here, I freely admit, I have much more sympathy with reducing the lust for growth that has driven the capitalist west for the last few hundred years. But even here growth can be managed if correctly without the wholesale slamming on of the breaks.

Although I certainly don’t agree with every argument the author presents I think he does make a very valid argument overall against the idea of Austerity as a credible answer to the present (or future) economic crises. Time and again, both locally and globally, austerity when enacted has both extended and deepened economic depressions and recessions. It’s time we found another way. Definitely recommended for anyone arguing against the austerity toolset.    

Just Finished Reading: The Corporation – The Pathological Pursuit of Profit and Power by Joel Bakan (FP: 2004)

It’s hard to believe, living at a time when the Corporation is everywhere, that not only was there a time when they did not exist but a time when they were actually outlawed. But times change and money talks and whispers in all the necessary ears. As businesses grew and opportunities grew with them financing such ventures became increasingly difficult. Corporations – especially with limited liability – were the answer and so they were permitted once more. Before limited liability anyone investing in a business could lose everything if the business collapsed owing debts that needed to be recovered. When liability was limited only the investment was lost – not everything the investor owned. Naturally investment opportunities increased and with them profits as well as the power that corporations wielded. One of the most famous corporation in the 17^th century, which lasted long into the 19^th before being ‘wound up’ by the British government, was the East India Company which had its own armed forces! But the modern corporation we know so well today came of age in the USA – so much so that today’s ventures have all of the rights (though few of the responsibilities it seems – of citizenship itself. They also – under law indeed – are charged to focus purely on earning dividends for their shareholders. They are legally obliged to maximise profits and only engage in activities that are primarily aimed at this outcome. Any other task – such as setting up schools or crèche’s for their employees or food banks or anything else for the community must, at least in some way, profit the company. What is more, with the profit motive front and centre, anything that increases profits it naturally held to be of the highest value – anything. So ‘lobbying’ politicians to downgrade environmental protection laws that cost companies to comply with is a good thing. Saving money on adequate protection on vehicles to prevent deaths in collisions – knowing that the average fine is less than the cost of fixing the problem and saving lives – is a good thing. Using friendly media outlets and scientists to question the link between smoking and lung cancer or CO2 and Climate Change (AKA Global Warming) is a good thing as it delays the day when companies will need to do anything that might reduce their profits regardless of the damage and death they cause in the meantime. Anything like this are essentially someone else’s problem – or someone else’s opportunity to make money from the misery caused by someone else – rather than a problem that needs to be addressed and, ultimately, solved. Welcome to the world of the Corporation.

Told mainly from an American PoV – especially for the legal bits – this is an unashamed polemic against the unbridled greed and actual danger of unrestricted corporations. The answer, the author says (and I agree) are enforceable and enforced regulations overseen by agencies with the will and the legal teeth to do so. Corporations in their present guise are wild animals that need either to be tamed or at the very least caged within acceptable ranges. Letting them roan free and comparatively unencumbered is a recipe for disaster – as we will, no doubt, find out. Companies are presently very powerful institutions but they exist at the will of the State. Powerful companies have been wound up before when they got above their station – just ask the East India Company, and they had an army behind them. An interesting read if a very partisan one. Unfortunately this is one of those books that end up either preaching to the already converted or wasting their time trying to convince the ‘opposition’ of their case. But at a mere 167 pages it’s still worth a read though – by either side.   

Just Finished Reading: Inequality and The 1% by Danny Dorling (FP: 2014)

Capitalism certainly didn’t create fiscal inequality but it most certainly exacerbated it – a lot! According to several figures I’ve seen, something like the 5 richest people have more wealth than the bottom billion. That’s wealth inequality on a truly awesome global scale. In this rather polemical review of this ever growing disparity the author says that this phenomena is one of, if not the, most important issues in the world today. Although the facts are indeed shocking I’m personally not convinced.

One other interesting piece of financial information I came across recently is that people on the ‘poverty line’ in most Western countries are still in the top 25% in terms of wealth globally. Essentially the poor here would be comparatively rich anywhere else. Of course most of the 99% barely interact with the 1%. We often live in very different worlds. But is this a problem? Sure, the wealthy are like Black Holes pulling more and more of the money supply to themselves but still we are, comparatively speaking, still generally better off than most of the world throughout most of human history. Damage is being done – but I don’t think it’s in the way the author thinks it is. I think that the most damaging aspects of extreme wealth are cultural rather than crudely financial. The ‘gravity’ of wealth generates its own particular ‘pull’. Wealth (and the greater the better) is seen – in movies, books and much else - as a prime good: something that should be strived for to the exclusion of almost everything else. But, ironically, the very act of striving for great wealth is also all too often portrayed as destructive to those who obsessively seek it – like poorly equipped moths attracted to a too hot flame. Wealth, our culture seems to tell us (that is the 99%), is something both to be striven for and essentially beyond our reach. It is an activity almost designed to both elevate the status of the already rich whilst, at the same time, prove that most (99% maybe?) are unworthy of attaining that status. In other words we are being stimulated by an unobtainable dream to work ourselves to death to achieve an unreachable goal – it is the brilliance of the Capitalistic system that has worked very well indeed.

To me at least the fact of wealth – even extreme wealth – is not the crux of the great economic problem. As I see it the problem is hinted at, indicated by, the great fiscal disparity between rich and poor. It is not that there are so few of the super-rich but that there are so many of the super-poor across the world. To twist an old saying: The Rich have ALWAYS been with us and, to be honest, they probably always will be. The challenge of the 21st Century and beyond is what we do about the *Poor* and most especially those living a hand-to-mouth life on the edge of existence itself. Naturally the Rich themselves can help in that regard – both through a reasonable level of taxation – that isn’t so easily avoided or evaded – and through being encouraged to invest in programmes designed to permanently reduce the absolute number of the poor and through public recognition of the exercise of the philanthropic impulse.

The author argues that countries with ever increasing fiscal inequalities are both unhappier in general (at both ends of the spectrum and not just at the shallow end) and more politically unstable. This may in fact be true. It is definitely in the best interests of the Rich not to leave the other 99% with nothing left to lose. Such societies tend not to last very long and when they inevitably fail that ending tends to be bloody. Although the author does make some valid points I think he fails in his larger argument that we cannot and should not learn to live with the 1%. It is entirely possible that such an argument does in fact exist but this book is not the place to find it. Overall rather disappointing.         

Just Finished Reading: The Consolations of Economics – Good News in the Wake of the Financial Crisis by Gerard Lyons (FP: 2014)

I picked this up (cheap) because I believed that I would disagree with the author. I did, but not nearly as much as I thought I would. This wasn’t because I agreed with him though – at least not very much. Written not too long after the financial crisis of 2008 this was very much a positive book looking towards the global recovery that was just beginning to show itself (rather ironically just a week or so ago the UK average monthly wage had just, by a matter of pennies, topped that in 2008). But he wasn’t just blindly optimistic about things. That would’ve made this book very difficult – if not impossible – the read. No, he backed up his ideas with facts and reasonable projections.

The bits I disagreed with were, to my mind, obvious. The author is a believer in the genius of markets – in the idea that all economic and a fair few other problems can be solved by just letting the Market do its thing and that a number of problems are caused by governments in particular meddling where they don’t belong. He did save himself though from being thrown in the nearest recycling bin by admitting more than once that the markets are far from perfect and that governments sometimes need to step in during ‘market corrections’. He also agreed that there are several areas where markets do not give the best outcome – infrastructure projects for instance or defence. Personally I would add schools, hospitals, prisons and utilities like water. He also mentioned, without a single sneer, that things after 2008 would have been a LOT worse if governments around the globe hadn’t stepped in to halt a total banking meltdown and even laid the blame where it belonged – investment bankers and the lack of sufficient regulation and control. So, points for him!

Much more interesting from my point of view was his analysis of the future prospects of Europe, Africa and China. He made a very strong case that the move to the Euro in the EU was far more a political decision that an economic one and that the difficulties in the Eurozone was, largely, of its own making and that countries on the periphery should not have been allowed to join in the way they did (and he praised the UK government for staying out). He was confident for Africa’s future despite everything we see in the News. Africa, he says, will surprise us in the not too distant future. I guess we’ll see. His detailed analysis of China was most intriguing – from their move to a more Capitalistic path to their internal problems and how they’re going to be solved. He was in the camp of ‘no future conflict’ with the US, either military or economic which has turned out to be more of a miss than a hit I think but he certainly didn’t see anyone like Trump coming or America’s slow slide into something akin to isolationism. Interestingly he expressed some disappointment with India which should be an economic powerhouse with its very large and very young population readily available. All in all a very interesting global analysis indeed.

Overall this wasn’t a bad book at all. A little too much on the Right for my liking but he made good points and may have shifted my appreciation of some subjects which is all to the good. As an introduction to future global economic trends I think this would be a good place to start for anyone new(ish) to economics. It certainly gave me a lot to think about and definitely deepened my appreciation of a subject I’m starting to find endlessly fascinating. 

Just Finished Reading: The Deluge – The Great War and the Remaking of Global Order (1916-1931) by Adam Tooze (FP: 2014)

No doubt it was offered with the very best of intentions however naïve. But all the same the idea was like political acid – self-determination. Never fully explained or even understood it meant many things to many people and that, at its heart, was the problem. Throughout Europe and the wider world the idea of the right to and expectation of self-determination worked its magic helping to break up old empires and create countries out of whole cloth. It encouraged people’s, previously disenfranchised, to rise up against their governments to be allowed their own homeland and equal rights in the eyes of the law, and it brought democracy where none had previously existed. The Genie was very much out of the bottle and no one, even at gun point, was going to put it back in – although some would try very hard indeed.

Of course principles are easy to state, safely between two oceans with little or nothing to lose by the statement. Living up to the same principles when they hit the hard reality of international politics was something else. The easy part was returning Alsace-Lorraine to France (despite the number of ethnic Germans living there). The harder part was countries like Poland which had to be carved out of the pre-existing territories of Germany, Russia and others. Most especially difficult was the provision of natural resources and, more importantly, access to the sea at Danzig. No self-determination there just hard economics, realpolitik and hard bargaining. Even those on the ground could see that the Polish solution was storing up problems for the future. But that was for the newly formed League of Nations to resolve or at least that was the idea before it was effectively emasculated by its Byzantine internal set of rules in an attempt to appear fairer than it in fact was as well the aspect that America never took up its place at the table to spare any future European entanglements.

As a forward looking people the Americans – in the public guise of President Wilson – had little interest in Europe’s Imperial past. They did have an interest in the world’s economic future, unrestricted access to new markets, an open seas policy enforced by a navy at least the equal of Britain’s and the speedy recovery of war debt accrued by the Entente powers. Almost as important in many eyes was the restriction of Japanese expansionism within China and throughout Asia. Not only did the US consider the Pacific to be within their sphere of influence but they thought of the Japanese themselves with a mixture of suspicion and contempt. The US policy towards China itself was hardly coherent and managed to send mixed signals to both the Japanese and Chinese authorities which did little to help stabilise that chaotic region.

At the centre of everything were two countries fighting in many ways for their very existence – Germany and Russia. Germany was the vanquished foe trying to recover from the heavy blow of defeat and the heavier blow of post-Versailles reparations. Stumbling from government to government, fighting elements from both the hard-left and the hard-right, it had an uncertain future. Russia meanwhile was trying to decide between being a failed state or a pariah state. After the 1917 revolution, the declaration of a separate peace with Germany and a descent into years of Civil War the newly formed Soviet Union, birthed in a sea of blood, began to take its place on the world stage. Contained for now by the western powers it still had the capacity, real or imagined, to infect the rest of the world with the ideas of universal Communism. It was in many ways a useful bogeyman.

In this truly formidably impressive work the global chaos caused by 5 years of war, the likes of which had never been seen before, is laid out for all to see and the echoes of this great conflict are followed through as they impacted countries as diverse as Japan and Ukraine. Despite its world spanning reach and its 15 year timeline the detail presented between these 500+ pages is awe inspiring. It is by no means an easy read but the effort is amply rewarded and then some. Not only does the author clearly explain exactly the damage – political, economic and in a real sense moral – caused by the war but he also (again very clearly) shows how this often unresolved and unaddressed damage significantly facilitated an even greater disaster a mere two decades later. The author rightly points out that although World War Two was not the inevitable result of its predecessor the fact that systemic problems in the world system after 1918 were not addressed – even when known about and warned about – meant that any realistic options for peace were increasingly closed off between then and 1939. This is an important work and a must read for anyone who wants to understand exactly how we got here. I can think of much worse places to start if you’re willing to put the time and brain effort into it. Highly recommended. 

Just Finished Reading: Why Marx Was Right by Terry Eagleton (FP: 2011)

I still chuckle over the fact that one of my lecturers in University commonly referred to me as ‘comrade’ in his seminars. After he’d said it a few times I challenged him on why he was calling me that. “Well”, he said, “You’re a Communist aren’t you?” at which point I laughed – a lot. I am most definitely Left of centre (or for my American readers *Far* Left – LOL) and readily refer to myself as a Socialist. Part of my reading over the past few years, including this volume, was to test that assertion by reading Left leaning texts and gauging my level of agreement (or otherwise). So far my reading has hardly caused a ripple of disturbance in my political viewpoint. I am still happy with the Socialist label. I am not, however, a Marxist (or indeed a Communist).

I freely admit that I have not read any of Marx’s works and am only aware of his ideas through books like this one and, naturally, the incessant anti-Marxist rhetoric from most Western leaders throughout the Cold War and beyond. I first really studied his thought in school during my 2 year Sociology A level. After that I could confidently analyse just about any subject from a Marxist perspective and indeed, during my University years, publically challenged visiting lecturers on their Marxist perspectives on issues of the day. Yes, I was *that* student. I’m starting to see why some people had a certain political view of me……

Naturally being of the Left I have an interest in, a sympathy for and an admiration of Marx and his work. Despite not being a follower of Marx I am somewhat of a fan. Marx was one of the most diamond sharp critics of Capitalism and, despite rumours to the contrary, still is. As this book rightly points out – as long as Capitalism exists there will be Marxism to critique it. The death of Marxism (post-Soviet Union) has been greatly and, mostly successfully, exaggerated. Addressing the most common myths of Marxism – the first being that it is safely dead – the author steadily goes through the list and does a very good job of debunking each in turn. Interestingly I did find some of my views of Marxism challenged by this book and, it seems, my ideas on the subject seem to be at least tinged with Western propaganda. I’ll see how this stands up to scrutiny in upcoming books on Marxism.
Generally I found myself nodding along as the author laid out the case for a living breathing Marxism in the 21st century. But a few things did leave me sceptical if not outright incredulous. Now we all know that Marx thought the Revolution would happen in one of the two most advanced Capitalist countries of his time – England or Germany. He never imagined that it could happen in a backward place like Russia and would have heaped scorn on the idea that the final stages of Communism could emerge in either a single country or in a predominantly agricultural one. The Russian ‘experiment’, the author maintains, failed (in Marxist terms) because the preconditions for Revolution either did not exist or where so poor that dictatorship was pretty much inevitable. That I can just appreciate. What I have a much more difficult time with was the assertion that the Bolshevik Revolution was almost bloodless. You could probably get away with this statement if, and only if, you restricted the ‘revolution’ to a few days in St Petersburg. The initial ‘coup’, the seizure of political power, was indeed almost bloodless but the Revolution that grew out of it (even putting aside the years of subsequent Civil War) was anything but. The actions taken to protect the revolution and to prevent the anticipated counter-revolution drenched the country in blood. The excuse that the Bolshevik’s where only protecting themselves against enemies both foreign and domestic who were dedicated to destroying them is a poor excuse for the levels of barbarity we are now unfortunately all too familiar with.

It is very arguable that the Russian Revolution was in essence a perversion of Marxist thought and, from that point of view, should never have happened or should not have been able to sustain itself for so long. The fact that it did has, I think, done a great deal of damage to Marxist thought. This I think is a great pity. Marxism is still, even after so long after its inception, a serious and quite possibly devastating critique of the Capitalist worldview. I may still not call myself a Marxist but I am more than happy to think of myself as an admirer. Recommended for anyone who wanted to know more about Marx but was afraid to ask – plus for anyone wanting to frighten anyone who sees you reading this in public.