Book Description

Continuing his groundbreaking analysis of economic structures, Douglass North develops an analytical framework for explaining the ways in which institutions and institutional change affect the performance of economies, both at a given time and over time. Institutions exist, he argues, due to the uncertainties involved in human interaction; they are the constraints devised to structure that interaction. Yet, institutions vary widely in their consequences for economic performance; some economies develop institutions that produce growth and development, while others develop institutions that produce stagnation.North first explores the nature of institutions and explains the role of transaction and production costs in their development. The second part of the book deals with institutional change. Institutions create the incentive structure in an economy, and organizations will be created to take advantage of the opportunities provided within a given institutional framework. North argues that the kinds of skills and knowledge fostered by the structure of an economy will shape the direction of change and gradually alter the institutional framework. He then explains how institutional development may lead to a path-dependent pattern of development. In the final part of the book, North explains the implications of this analysis for economic theory and economic history. He indicates how institutional analysis must be incorporated into neo-classical theory and explores the potential for the construction of a dynamic theory of long-term economic change.Douglass C. North is Director of the Center of Political Economy and Professor of Economics and History at Washington University in St. Louis.He is a past president of the Economic History Association and Western Economics Association and a Fellow, American Academy of Arts and Sciences.He has written over sixty articles for a variety of journals and is the author of The Rise of the Western World: A New Economic History (CUP, 1973, with R.P. Thomas) and Structure and Change in Economic History (Norton, 1981).Professor North is included in Great Economists Since Keynes edited by M. Blaug (CUP, 1988 paperback ed.) ... Read more

Reviews (7)

Incentiv-creating institutions
The puzzle of the modern world is not that so many people are poor, but that so many are wealthy. How do democracies, with well-defined property rights and education for all com into place? In this Nobel prize winning work, North investigates some issues overlooked by most economists: the role of a society's institutions, defined as formal and informal constraints, varying from written laws to vague values (but important nevertheless) in a society. Economic theory is not able to explain the great differences in wealth between nations, argues North, and that is certainly a shame, because that would be the most interesting explanation it could possibly make. The solution is to include institutions into economic analysis.

Institutions determine transaction costs. In neoclassical economic theory, transaction costs are usually assumed to be zero (for reasons of comfort). North assumes transaction costs to make up half of the economy in a modern well-organized Western society with efficient institutions. A major reason for developing countries to be poor is that transaction costs are prohibitive, obstructing the benefits of trade.

North asks some extremely important questions in this book, but I was a bit disappointed that he didn't offer more answers. English not being my natural tongue, I found the book a bit hard to read. However, being very interested in the subject, I found it well worth the effort. Without a major (interest) in economics, you should probably enjoy some of the reviews instead. North's main answer to the main question, by the way, is that countries will prosper if the incentives created by their institutions motivate production, and not redistribution.

Most comprehensive book ever
Douglass North is an amazing writer. If you are purchasing this book, you probably already know what this book is about and its impact. This book, I would argue is largely responsible for his receiving the Nobel Prize in 1993.

His new-institutionalist view links together history, economics, political science, sociology, and every other social science. This book truly inspired me to specialize in institutional economics. Every social issue can be approached from the institutional perspective, namely that institutions determine actions and the market determines institutions. Though my professors are all old institutionalists, they agree this is the best book by far on the subject and most research papers in the subject thus reference this book.

For more information on New Institutional Social Science, visit the website at http://cniss.wustl.edu/people.html

Important for all social scientists and interesting for all
As a Japanese, I am interested in how Northfs concept ginstitutionsh are useful for explaining the gap in performance of the US and Japanese economy during the 1990s. What kinds of policy prescriptions can the Japanese government derive from Northfs argument on institutions?
Institutions are the constraints or mechanisms (such as rules on property rights) to reduce uncertainties inherent in human interaction and thus to reduce transaction costs. As a extreme case, you will find it difficult to make a long-term economic transaction or commitment in Baghdad just after Iraqfs defeat in the war with the US, since there are no institutions in that particular moment.
Broadly, this concept is related to the argument by Christopher Freeman at SPRU on gnational system of innovation,h especially on norms and rules on intellectual rights, and generation and transfer of technological knowledge enabled by those norms and rules. I think the US system is superior on that.
My point is that this already classic book would be valuable for thinking on those topical issues.

OBVIOUS IN RETROSPECT, WHICH MAKES IT EVEN MORE OUTSTANDING
In this book, North outlines the precise features of the neo institutional economics school, which includes Coase, Williamson, Olson, Fogel, among others. This book is mainly about the theory itself and its origins and features, not about applications in particular, though the author does address that issue at the end of the book in the section about eocnomic performance.

I believe this book is great reading for the literate economist. It is difficult to follow for the non-economist, which I believe North focuses on in his other book, "Structure and Change in Economic History". That work is earlier and I believe not as complete, but it is much more readable. Either way, North's work is among the most important advances in economics in the 20th century (for which he got the Nobel Prize), so knowledge of it should benefit one and all.

Institutions, Common Sense, and Economic Performance
An intriguing book on the so-called neo-institutionalist approach by one of its long-time proponents, Douglass C. North. Written without accessive jargon, this book is accessible to any intermeidate level student of Economics and Political Science. North argues that institutions (laws, rules, regulations) in their fromal and informal varieties determine economic performance. North has an almost guru-like status in the eyes of the World Bank. Third World countries remain poor, argues new institutionalism, because their institutions foster corruption and distort incentives. But what is the solution?

It is hard to imagine that one can graft institutions. How can the rules that function in the U.S. function under all kinds of social and political circumstances? The other troubling point is that it is still hard to integrate this approach with mainstream economics. A serious economist today is trained to shy away from anything that cannot be mathematically modeled. More troubling, however, is the following: neo-institutionalism argues that rules, laws, and regulations structure incentives, which in turn determine economic performance. A thoughtful person probably guessed this a long time ago based on common sense--one does not need a scholarly approach to advocate this position. "Incentives are the underlying determinants of economic performance," says North (p. 135). It is hard to disagree. ... Read more

Amazon.com

In 100 Years of Wall Street, Charles Geisst (author of Wall Street: A History) takes us on a tour of one of America's most storied institutions. From the early bucket shops at the turn of the century to Maria Bartiromo of CNBC, Geisst, with the help of a collection of pictures, charts, cartoons, and stock certificates presents an entertaining look at the remarkable changes that have transformed this small corner of New York into the cornerstone of the world's financial markets. ... Read more

Reviews (4)

most vivid picture of the street
I enjoyed looking at the pictures and reading the headlines. Very educational and informative.

Informative and interesting
This book, rich with wonderful old photos, gives a concise history of the last 100 years of the financial culture that has come to be known as Wall Street. A good blend of text, photos, and charts make this book interesting to the non-financial reader.

The author divided the book into decades and each chapter outlined the changes that occurred over those years.

At the beginning of the last century, Wall Street was known for its lack of financial regulation regarding trades. Scandals and outright swindles abounded. Four years after the Crash of 1929, FDR's administration passed nationwide banking and securities laws to make sure that this kind of disaster did not happen again.

Unfortunately, the real and distasteful inner workings of Wall Street were revealed in the Senate hearings. An SEC commissioner called investment bankers "financial termites". This knowledge scared investors away for the next 20 years.

In the early 50s, investing became popular with middle class investors for the first time in a generation, and mutual funds were developed after being gone for 30 years.

The 60s brought the birth of the modern mergers and acquisitions business in the U.S, and the days of small brokerage firms were coming to an end.

The 70s brought extensive reforms concerning commissions while the 80s were the years of junk bonds, insider trading scandals, and the savings and loan crisis.

The author called the 80s the decade of greed and the 90s the decade of boom. The Internet has brought about a totally new way of trading stocks and has made up-to-the-minute financial news available to everyone.

The changes in the last 100 years on Wall Street have been phenomenal, mirroring the technological changes in our society.

Insightful!
Charles R. Geisst's enjoyable book chronicles Wall Street in the twentieth century. He effectively captures the feel of the various boom and bust periods. The clear, informative text is supplemented with incredible black and white photographs of each period's key events and people, making it very evocative and intriguing. We at ... recommend this book to anyone - not only someone in business - who wants to learn about Wall Street's history. It would make a great gift for anyone who works in the financial industry or for a young person who is interested in how money works.

Wall Street: The Street Worth Billions
100 Years of Wall Street is one of the greatest books ever written. Its in depth analysis of the history of Wall Street is remarkable. It is an essential to anyone that is learning more about investments, yet it is still quite enjoyable without knowing anything about the subject. This is truly a remarkable read, and I would recommend it with my eyes closed and my hands tied behind my back! ... Read more

Book Description

No book has done more to instruct, enlighten, and inform conservatives about economics than Adam Smith's undisputed classic. ... Read more

Reviews (45)

The only great seminal work I found lucid and persuasive
When I was twenty I set out to read the seminal works of a wide range of disciplines. I read Darwin, Newton, Einstein, Hobbes, Machiavelli, Plato, Aristotle, Levi-Strauss, Jung, Campbell, Freud, Frazer (abridged), Epictetus, Keynes, Adam Smith, and others I can't remember. In most cases I was disappointed. I realised that in many cases the first exposition of an idea is difficult and obscure, and that it is the later, summarising writers who collect the best and clearest explanations of profound thoughts.

The exception was Adam Smith's 'Wealth of Nations'. Only later did I discover that he began his amazingly varied academic career as a teacher of English prose style. It came as no surprise.

Smith's writing is a brilliant as Gibbon, but even more lucid. His insight is profound. And his marvellous style of explanation makes the reader feel like a genius. Somewhat to my astonishment, the only part of his argument that I found at all difficult was the section on international exchange, which I had to translate from terms of flow of specie to terms of exchange rates of fiat currencies. Of all that stuff I read that year, Smith's 'Wealth of Nations' was the clearest, most persuasive, and most inspiring.

It is because of Smith that the next year I took up the study of economics at the Australian National University. I came first in my class: my prize? A copy of 'The Wealth of Nations', much appreciated.

Adam Smith A Brave Man
In his day monarchies, emerging democracies, business people and government employees were profoundly inept in the affairs of economics, trade and taxation. We have come a long way. Now governments are simply inept including the USA government. When you compare the errors in governmental affairs that he reviewed more than two hundred years ago to the mistakes and wrong governmental policies of today there is considerable reason for optimism.

What a damning review of governmental affairs he wrote. This is the predominant reason for reading this book. Secondarily, to trace the development of economic thought. Adam Smith was one of the greatest pioneers in the science of economics. There are areas where we now know he was in error. Science content of modern economics is more profound than most observers are willing to admit. If you just want to learn about economics you would be well served to first read more current economists. In modern times, Milton Friedman has played a similar role. Again there is that radical urgency to place Friedman in the conservative pile before they decide the correctness of his thought. The legacy of critically reviewing the errors of democratic governments as well as repressive governments will hopefully be kept alive and well. Much is left to be done-- even in the USA. A very exciting question remains what happens when the repressive leaders of China realize that good economic policy and political freedom are so deeply intertwined that there repression is truly doomed. Will the end be destructive or positive. It is surely coming.

Similarly in the USA and other developed nations, as more people learn economics on the path to greater involvement in business, investing and entrepreneurship one would expect increasing rebellion against the reckless of policies by politicians and the uninformed contentions of the media. There are many helpful books some I have recently reviewed that can broaden ones understanding of governmental failings in economic policy.

While everybody would benefit from more knowledge about economics, the basic shortcomings of the media and politicians is of critical concern. It is no surprise that reviewers of economics related books have to rush to place any book either in the conservative pile or the liberal pile. Why or how one decides to place Adam Smith in the conservative pile, is surely the sickness of political views over logic. While it is unfortunate that the Great Minds Series does not disclose that this is an abridged edition, most readers will find this is more than enough to read.

Wealth is the product of labor
I appreciate that for most readers, Adam Smith's Wealth of Nations is going to be a deadly dull read, although I think this is a pity. With a little discipline, I think that the erudite reader will take away many enriching (yes, pun intended) lessons from Smith's ground breaking treatise. For me, as a business professional and business student (I have an MBA), the Wealth of Nations was a Damascus Road experience.

I think there are several myths about economics that are exploded by a first hand reading of Wealth of Nations. Many supply side economists eagerly tout Smith's "invisible hand" metaphor in advocating deregulated markets, but in my view, Smith took a balanced and integrated approach in analyzing the supply and demand sides of national economy. In the first chapter Smith notes that national wealth is the production of labor. This has dual implications in that production is the creation of supply, but the labor force consumes that supply by trading the resulting wealth. These are two sides to the same coin, & therefore indivisible. Also in the first chapter, Smith notes that increasingly sophisticated economies will employ a division of labor to increase production efficiency, which is another concept that necessarily integrates supply and demand, production and consumption.

Smith devotes quite a bit of time lamenting governmental intrusion into economics by way of regulation. However, he does not condemn government regulation per se, but make very specific criticisms against those state regulatory polices that tend to create monopolies. None of his comments are strictly political in nature. Smith's analysis is purely based on economics & the efficient allocation of capital. He views the enemy not as the King's ministers, but rather the monopolies that were so prevalent during the 18th century mercantile system.

On a related note, I think it is clear that Smith would be horrified by the military centric nature of many post-industrial economies today. He notes that a standing army is a drain on national wealth. Essentially the state is paying workers not to work, but rather to stand ready to fight. I suspect that Smith would view large state defense budgets as being most closely akin to a transfer payment made by a welfare state. For those who will scream invective at me for saying this, please remember that the largest item on any defense budget by far, is payroll.

Finally, as an amateur historian, I enjoyed the brief glimpse into what life was like in the 18th century Empire from an economist's perspective. Various parts of his book review social welfare systems of his day, as well as international banking, political economy, agrarian systems, and life in general.

ebook: Hope you don't need it right away! AMAZON SLOW!
The book is a classic and needs no review from me. However, if you thought that you could download the book from Amazon.com quickly, you will probably be sadly mistaken. I've been waiting 30 minutes so far and still my order is "being processed". No other eBook site on the internet takes more than a few seconds after entering your credit card. If you need this or any ebook in a hurry. Take a look at the other sites out there. Evidently, Amazon understands the package sending business a lot better than they do the electronic media download business!

Still an amazing accomplishment
I really wonder how many people have ever read this book--especially those who deal with economic issues (say Congress or the President). Of course, some of the ideas have become dated because the world of 2004 isn't the world of 1776. However, what's amazing is what has held. So much of this book is still basic economic theory. Plus, its not as if Smith had predecessors who he could follow. Smith is one of those people who will still be remember in 2500 or 3000 and deservedly so. ... Read more

Book Description

Reviews (108)

Outstanding
Hayek's classic book is a dissertation on why political freedom is, and can only be, inextricably linked to economic freedom. Originally published in 1944, his specific examples of socialist planning gone wrong are (were) Italy, the USSR, and most prominently, Germany. He primarily uses the British for comparison and contrast purposes, and directs many of his remarks toward Western European nations who were flirting with their own versions of socialist economic planning. He felt that these nations were ultimately going down the same road that the Germans had already traveled two or three generations earlier.

Hayek's central thesis is that individual liberty (economic and political) and collectivism are mutually exclusive, and that even the most well-intentioned socialist society will ultimately evolve into a totalitarian state. Hayek elaborates upon the following key arguments (and others): (1) Collectivism represents the undoing of liberalism (in the classic sense). (2) Socialism necessitates that the efforts of the populace be directed towards a common goal, often called something like "the common good." The economic system must be centrally planned in order to achieve this goal. Such planning amounts to coercion, and individual liberty is sacrificed for the degree of security a socialist state provides. (3) A free society operates according to the Rule of Law, where the rules are known beforehand. The economy of a free society consists of the net sum of individual decisions made within the known legal framework. By contrast, a centrally planned society relies upon government decisions that must be made on the basis of current necessity, what Hayek calls "arbitrary government." (4) Money promotes economic liberty, acting as the medium to provide the individual with the freedom to use his compensation in whatever manner he chooses, rather than being dependent upon a compensation whose specific nature is determined by others. (5) Socialism is inherently nationalistic or ethnocentric, because the leading party often must rally the populace to focus against a threatening group in order to effectively promote its own agenda. A "one-world" socialism that unites across peoples, nations, and ethnic backgrounds is not workable. (6) True believers in a socialist society must hold the interests of the State as higher than their own. Those who will move up the ranks in a socialist society are often prepared to do anything on behalf of the state, no matter how much this opposes one's own moral principles. Those who are amoral are thus more likely to "succeed" in a socialist hierarchy. Hayek holds out little hope that a socialist utopia will work if only "good people" are put in charge.

Contrary to some of the negative reviews below, I must argue that Hayek's book is certainly not "vicious propaganda," (and, I might add, that I sincerely doubt that Hayek's own lips were "lice-ridden.") Nowhere in the book does Hayek celebrate wealth. There is not one sentence in the book extolling the virtues of material riches. He DOES celebrate individual liberty and the superiority of a free market economy. To intelligently oppose Hayek, one must provide a literate argument against the points Hayek actually argues. In addition, one would be compelled in this debate to explain how a rigid socialist system would NOT degenerate into Nazi Germany, Fascist Italy, or Stalinist Russia (or, for that matter, Pol Pot's Cambodia, Castro's Cuba, Communist China, etc.)

That said, Hayek's book is not free from criticism. He takes a few swipes at the Germans -- Hayek all but proclaims that because of their general ethnic personality the Germans as a people were an ideal setup for Naziism and ruthless obedience to Hitler. Not surprisingly, some readers may take offense to this. Hayek also concedes that in a prosperous economy a basic minimum standard of living should be guaranteed everyone, although he makes no mention of how it could be guaranteed in a manner consistent with his overall free market vision. There is not a single statistic in the entire book (some may find this a GOOD thing), nor is there mention of any specific historical event, except the ongoing war at the time. Hayek's arguments are essentially based upon logical deductions, relying upon assumptions of human nature - as individuals, large groups, or those in authority. I suppose some will find Hayek's logic dubious, although arguably the history of the fifty-plus years since Hayek wrote The Road to Serfdom would back him up quite well.

A Snapshot of History - A Profile in Intellectual Courage
The late Professor Hayek's book is one of the most important books of the twentieth century. It is dedicated to "the socialists of all parties". When Hayek wrote the book, virtually no one was left believing in a competitive market economy in mainstream English politics. The book was utterly defiant in terms of the zeitgeist. Indeed, the Attlee Labour government in England was elected not long after the book's publication and Hayek had long enjoyed a substantial connection with the London School of Economics. A wave of socializations followed - coal, steel, electricity, gas, water utilities, etc.

Whilst Hayek's arguments are valuable and important and should not be forgotten, because we are doomed to repeat history that we forget, the world has moved on. The truths Hayek had to argue for trenchantly are today commonplace. No one of any political significance in the English speaking Western world believes that he or she can secure election by promising to end private property and inheritance rights, for example.

The Holocaust, which was not fully appreciated in 1944 by the public and the Fall of the Berlin Wall in 1989 have concretely made Hayek's points.

However, Hayek's surmounting of the vilification that he suffered for writing this important work and and his having the courage to speak against "the powers that be in academia" who expected an ocean of jobs from the socialization of the economy mark him as a man of profound intellectual courage, vigour and honesty.

It is noteworthy that Professor Hayek lived to see the fall of the Berlin Wall. This is an important book written by a Nobel economics laureate at the height of his intellectual powers, against the impending death camp of a totalitarian future. We are all in his debt for his courage. That one can read the book today in horror that his arguments were arrogantly dismissed shows how far the world has come.

The Corporation Bible
If you love Enron and Halliburton, and you support corporate opression of the middle-class, read this hogwash.

If capitalism is so great, why is it easier to get health care in former Communist countries like Poland? Why does Cuba have a lower infant mortality rate than the United States?

Paradox of success
Hayek distinguishes liberty, or true freedom, from license and "serfdom." In the tradition of Adam Smith, he analyzes economic and political questions from moral and practical perspectives, with emphasis on individual liberty. His central conceit, that increasing government activity in the economic sphere would devalue individual dignity and stifle human progress, might seen overblown to some readers; it could be that the influence of this book on conservative political leaders and thinkers in the latter half of the American century may have corrected some of the impending problems Hayek foresaw. The Road to Serfdom is a pleasurable, thought-provoking read, persuasively written.

Why we have to fight government
Hayek, the great communicator of libertarian thought, meticulously explains why every scheme aiming for an utopian goal through state power, whether it be the well-being of a "race" or the universal socialist Eden, _must_ end in tyranny.

At first glance, his analysis seems to apply to a bygone era, before "the end of history" where liberal democracy triumphs over statist terror. However, his words are as important today as ever - liberty is as threatened today by both the well-meaning and the self-interested.

The most interesting part of this book for me was his explanation of how Nazism, Fascism, and Communism are of the same cloth, not only in their effects, but also in their influences. Major figures in the National Socialist movement made their way there from a communist background, well documented in this book.

It is illuminating, and sad, how society still considers Nazism to be to the "right" of the political spectrum and communism to the "left", and therefore less evil than Nazism. This despite the fact that communism killed many more people than Nazism ever did. Compare only the 14 million Ukranians with the 6 million Jews, and then we have not even mentioned the Poles and the other statistics on the road to tyranny.

In fact, fascism, national socialism and communism are the same - they meet in the oppresion and killing of people. That should give pause to the left and the right today, but still they persist in their schemes to achieve their idea of "justice" at any cost - even if that cost is tallied in human lives. Killing civilians in Iraq is good for them - because their childrem might be free. Or, it is unfortunate that you will die because the FDA forbids you to try unapproved drugs, but, it is better for the other people, don't you see? ... Read more

Reviews (4)

Negative Review Missed the Very Point of the Book
I read the reviews and found them helpful, but the unnamed reviewer that attributed the Great Depression to causes totally other than this book cites, and bashed Friedman as "not having a leg to stand on" concerned me because it seems the reviewer missed the very point of the book. Nobel prize winning economist Milton Friedman and his co-author undertook the monumental work of tracing money supply for each year for nearly a century. In doing so, they did the staggering amount of work required to show all of us something very powerful. To say they don't have a leg to stand on is disconcerting because it seems to indicate a review without a reading, or at least understanding. Obviously the Great Depression was the result of of complex interactions within the economy. What Friedman tries to do is show us the EMPIRICAL evidence for interaction between a contracting money supply and a worsening economic situation, and a steady money supply and a bettering economic situation. The Great Depression may have come about because of arrogant decisions and cascading failures, and those who decided to contract the money supply evidently were a very important trigger. I can say "evidently" because Friedman's research gives us the chance to observe the evidence for ourselves. To have advanced our knowledge of economics in a practical way, to have given useful facts for fending off depressions, is a gift. That's why this book will remain a watershed work in the history of economics.

An Excellent Partial History
Monetary History of the US served a vital purpose when it first came out, and still has much use value. For a brief period, economists ignored the importance of variations in the nominal quantity of money to business cycles. This book provided important evidence that helped correct that error. Economists used to focus on spending rather than the money supply. This book, along with subsequent work, showed that money matters.

The most important part of this book is the section on the Great Contraction. Federal Reserve policy did contract the money supply by 1/3 during the early years of the depression. The Federal Reserve did revive the depression by increasing reserve requirements in 1937. The collapse of the banking system collapsed the real economy. The recovery of the banking system was important to the recovery of industry. Money matters.

The style of this book is excellent. Considering the sophistication of its subject matter, it is highly readable. It gets into both statistics and relevant written history. It also has a helpful appendix on the determinants of the money supply.

There are some problems with this book. Money is not all that matters. Government policies that prevented wage deflation contributed greatly to the Great Depression. Of course, this book was meant to focus on monetary history alone, as the title implies. But, readers must keep the limitations of such a narrow focus in mind when considering the explanatory power of this book. Its' authors also have too little appreciation for private banking systems (Friedman latter embraced free banking). Despite its' limitations, this book is important as a empirical source for understanding how money matters to economic conditions.

The Definative work in Economics
This monumental work swept away all the now archaic notions about especially the great depression. The old rationalisms that the causes of the depression were 1) the Smoot Hawley terrif 2)over speculation in the stock market or 3)that lower interrest rates are the same as increased liquidity have been swept in to the dust bin of history repeated now only by the technically challenged.

A monetarist without a leg to stand on...
Professor Friedman argues that the Great Depression was caused by the Fed's reluctance and ultimate failure to provide sufficient liquidity to the fiancial system in order to save it from collapse. This is pure folly, as the Fed cut rates from 6.0% to 1.5% during 1929-31, during a time when the money supply did not decline until late 1930 and early 1931, while the stock market fell nearly 75%.

While some counter with the argument that Smoot-Hawley Tarrif Act of 1930 (which took effect in mid-1931) caused the Depression, nations such as Argentina, Australia, Canada, New Zealand, Portugal, the Dutch East Indies, and South Africa all began raising tariffs in 1928-29 against a backdrop of commodities price deflation and a collapse in currencies.

I am sorry, Professor Friedman, the Great Depression was caused by misinvestment, excessive credit expansion, and structural collapse in the international credit system. Sound familiar (October 1998)? ... Read more

Book Description

One of the twentieth century's most thorough and discerning historians, Karl Polanyi sheds "new illumination on . . . the social implications of a particular economic system, the market economy that grew into full stature in the nineteenth century." -R. M. MacIver ... Read more

Reviews (8)

Ground-breaking for its time, but now dated
IN this book written in late 1940s, Polanyi argues that free-market policies advocated by liberal economists were pushing human society to a breaking points -- he implies that the world wars were the results of these policies. According to Polanyi, these liberal theorists did not understand that the market has always been a human institution, inextricably tied to the social fabric. Their policies are distrastrous for the world because their theories assumed that human beings act solely for financial motives, Polanyi argued. Only the society's reaction to protect itself against the abuses of the market -- the second prong of what Polanyi calls the "Double Movement" -- was the damage of liberalization mitigated.

All this probably sounds obvious today, but I assume that it was quite revolutionary when Polanyi wrote it. So this book is worth reading as intellectual history. I wouldn't recommend it as economic history per se because Polanyi has a habit of glossing over the historical evidences that he uses to make his argument, and his rhetoric sounds over-heated to me at times. Perhaps this reflects his background as a journalist. It made me think that he was overreaching even though I am quite sympathetic to his arguments.

K. Polanyi¡¯s Demystification of liberlism
Polanyi's masterpiece, 'The Great Transformation' dealt with the same question as his forerunners like Marx, Weber, Durkheim: 'how our world come into being?' or as its subtitle, 'the political and economic origins of our time'. But he didn't suggest any name except banal title of 'The Great Transformation' which is barely used in his book and does barely play the explanatory role in the analysis contrary to his forerunners systemic edifice, for example, Marx's 'capital' or Weber's 'rationalization'. All his writings are the venture to overhaul existing concept, above all, the market. His world is different from forerunners' world 1 or 2 generation ago. The age of masters is over. Now it's time for exegesis. The weight of thought is realized through not only speculating but also historical event. His world was literally the aftermath of liberalism, he argued. His world located between 2 Great Wars one of which he participated in as army officer of the Habsburg Empire and another is the time when he wrote his influential work, 'The Great Transformation' (1944). We need to peep into what he had seen and felt then.
The chasm between generation before World War 1 and after, is reflected in the lack of optimism about path of western civilization in 'The Great Transformation'. Polanyi disdained that kind of optimism as '(liberal) cree'. That kind of attitude is different from his forerunners. Marx had unquestionable faith in 'progress'. And judging from his studies of religion, even pessimistic Weber seems to have shared that kind of view. His forerunners were optimistic about the attaining of rationality and liberty. But the confidence scattered away in the mid of 2 World Wars. Overarching intellectual climate of social scientists in Europe between wars, can be symbolized by the word, obsession. Polanyi's masterpiece was written in this atmosphere. For as Jews of Frankfurt school froze in front of Auschwitz, Polanyi was thus overwhelmed with the magnitude of catastrophe.
German citizen's confidence in Nazi lay not in the psychological disposition as Frankfurt school claimed or nihilist determinism as Krockow asserted but in disillusion caused by inability of Weimar republic to cope with Great Depression and political disorder. Their choice was not irrational but rational at that point. There were 2 choices before them: liberalism, communism. Liberalism seemed too inept to solve the problems they faced. Bolshevism seemed the serious threat to many classes who were troubled with riots since 1918. Nazism was the second best.
This was the bankruptcy of liberalism i.e., 19th century of civilization. It was not limited to Germany but worldwide phenomenon; the signal was sent by England's going off gold standard (1931). Collapse of gold standard means there is no standard for exchange between currencies. So next step in chain reaction was giving up free trade. The economic protectionism caught up world economy, which led in so called the bloc economy; Pound bloc, Franc bloc, Mark bloc, Dollar bloc, Yen bloc. Polanyi argued the failure of liberalism is traced back to fin de siecle and beyond.

Old School Political Science
Polanyi's "The Great Transformation" is a broad, sweeping work that encompasses history, sociology, economics and political science. MacIver writes that the book's particular relevance for a political scientist is that "it will help him to restate old issues and to evaluate old doctrines" (xi). However, with the recent renaissance of liberal/classical economic doctrines (what Polanyi would scornfully call the utopia of the "self-adjusting market") it seems that the issues restated and the doctrines evaluated by Polanyi are not so "old" after all. For this reason, the book has even more relevance now than it did for past readers, even just twenty years after its publication, when the heyday of planned economics appeared to be carrying out Polanyi's proposed remedies for the excesses of free marketism, and blunting the force of his critique as applied to post-transformation society. But in the era of WTO and NAFTA, a strong case can be made that his critique has attained newfound relevance beyond even its original application.

This critique can be phrased into a causal historical argument as follows: The Great Depression and two World Wars are Polanyi's dependent variable (the outcome to be explained). For Polanyi, this turmoil of 1917-1945 was a catastrophic indicator that 19th Century civilization had collapsed. And since 19th Century civilization rested upon the "classical" economic liberal doctrine of a self-regulating market, (with accompanying balance-of-power system, gold standard, and laissez-faire liberal state that defended property rights above all else and viewed human labor as no more than a commodity) it is this doctrine that is Polanyi's independent, explanatory variable. For him, the "utopian" and unattainable ideal of the self-regulating market was in reality a destructive force that robbed humanity of its freedom, by causing one hundred years of relative peace (the veritable calm before the storm) and then unleashing heretofore unheard of levels of economic dislocation and political repression. The "Great Transformation" itself is merely the mechanism by which this causal relationship unfolded. It is the process by which the ideal of the self-regulating market utopia brought about the destruction of the old world and the dawning of a new, more dangerous world.

Polanyi's evidence for this process is both deductive and inductive. Most of the book masquerades as a straightforward historical account of the Great Transformation and its exact social processes, but at times Polanyi reads less like an empiricist and more like a deductive rationalist. For instance, he proposes a general covering law of historical causality whereby countries that are apparently "opposed to the status quo would be quick to discover the weakness of the existing institutional order and to anticipate the creation of institutions better adapted to their interests" (28). He then gives Germany in the 1930s as an example of such a process, Germany for him being one of the "catalyst" states that sped up the Great Transformation by abandoning market liberalism in favor of fascism. While the example is fascinating and has obvious historical merit, it's not clear how Polanyi arrived at the general law of which Germany is an example, not to mention whether he truly believes that such a law applies consistently throughout history, or whether he merely means to inductively show the importance of Germany's opposition to the status quo for the particular historical causal mechanism of the Great Transformation.

Polanyi's work obviously runs counter to a great deal of conventional wisdom on the topic of economic and political doctrines and their relationship to social change in the 19th Century. For instance, the 19th century is often called the "age of nationalism," but Polanyi's Great Transformation, like the work of Marx, minimizes the role of the nation-state in shaping the lives of its own citizens, by arguing that state governments were merely pawns for the ideal of the self-regulating market and its stooges in power, both financial and political. Indeed, as a remedy to the negative effects of the Great Transformation, Polanyi seems to advocate a rise in the power of the nation-state, through the active securing of freedom and rights by its citizens in opposition to the stateless self-regulating market. One could brand Polanyi a collectivist for this reason, although he would resist such a charge precisely because of his defense of individual freedom against the market and his warnings about the dangers of erring on the other side: the potential loss of human freedom that would come from free individuals attempting to subjugate and regulate markets through government. "Regulation both extends and restricts freedom; only the balance of the freedoms lost and won is significant" (254). In other words, Polanyi is certainly not a Marxist, because of his lack of both economic determinism and any clear theory of class conflict and revolution, but neither can he be an apologist for capitalism since he seeks to shatter the myth of the self-regulating market as being a "natural" ideal independent of social moorings and above general social welfare. Therefore, instead of these two extremes, he strikes a middle ground that is as paradoxically complex as it is eloquently defended.

Exposes the socially constructed nature of "free markets"
Polanyi challenges the Neoclassical (specifically Hayekian) assertion that humans started out as individuals , and only later grew into societies. Siding with Durkheim and other holists, Polanyi argues that the concept of a freely contracting economic individual is actually a very recent, and very sociohistorically localized, assertion. Put simply, "free markets" are something consciously made and supported by societies, not an a-priori order nor a state of nature. Polanyi beautifully weaves legal, economic, political, and social history into a cogent thread of argument. One doesn't have to oppose free markets upon accepting Polanyi's argument; one just has to become aware of markets' socially constructed and supported nature.

Masterpiece
This is undoubtedly Polanyi's finest work, and an example of the highest quality of scholarship available. This analysis of the rise and influence of "the socially embedded market" is simultaneously lucid and profound; clear and complex; detailed and sweeping. It provides one with a wonderful model for an interdiscipinary approach to the investigation of social phenomena - it is employs political, economic and sociological concepts within a genuinely historical framework to reveal truths about our modern industrial society that no single discipline could fathom. It is, in short, a masterpiece. ... Read more

Book Description

In this important study, Abu-Lughod presents a groundbreaking reinterpretation of global economic evolution, arguing that the modern world economy had its roots not in the sixteenth century, as is widely supposed, but in the thirteenth century economy--a system far different from the European world system which emerged from it. Using the city as the working unit of analysis, Before European Hegemony provides a new paradigm for understanding the evolution of world systems by tracing the rise of a system that, at its peak in the opening decades of the 14th century, involved a vast region stretching between northwest Europe and China. Writing in a clear and lively style, Abu-Lughod explores the reasons for the eventual decay of this system and the rise of European hegemony. ... Read more

Reviews (5)

A landmark of the "new" economic history
There are few books in the field of economic history that I'd say are both landmarks and enjoyable to read. Assuming the reader has a great interest in history, Before European Hegemony is certainly one of them.

Abu-Lughod's excellent world systems survey details the inter-connections between pre-modern economies and societies of the era. There is also the sense of continuity between these pre-modern economic relationships and the modern era.

Special mention should be made of the fact that Before European Hegemony was one of the first of a new wave of economic, historical and sociological studies that de-emphasized the eurocentric histories that came before them. Guilty of the same simplistic approaches the eurocentric histories were charged with, for example giving the only reason for the rise of the West as military might, much of what followed Before European Hegemony was, in a word, garbage. Not so, this groundbreaking study.

Well researched, well written and highly recommended.

Great book, but still one sided
Dr. Abu Lughod's book is a great work of scholarship and a much needed addition to the "New Histories" being written that show the history as it really happened.

Still, as Gunder Frank mentions in his review of this book, Abu Lughod misses one point in her survey. She sees the world economy as a disconnected series of events, and much like Wallerstein, maintains the idea that world after 1500 hundred was not connected to the one before that date. She treats the Mongol trade network as an isolated world-system, instead of a period in the world system.

This is a small flaw in the face of so many larger problems we have in current historiography. A great read, and I suggest you read it in conjunction with ReOrient, The Colonizers' Model of the World, and World System History.

Continuity in global connections -- the rest of the history
In much the same way that Eric Wolf shows the world before European conquest in his book titled Europe and the People Without History starting in 1400, Abu-Lughod begins before the European trade routes by ship. She traces the cross-continent trade routes of India, China and the Mediterranean. By looking back to these early systems of trade, Abu-Lughod shows how ideas, foods, language and people were transported between regions of the earth long before colonialism took hold. By looking at movements of people and ideas before Europe's world domination, Abu-Lughod is able to take a new look at the future - a perspective that does not seem as deterministic as other historic views. Europe was not necessarily "destined" to become the greatest region on the planet and it need not be in the future.
This new look at history provides a wider framework from which to understand the current era. While it is true that computer technology and the spread of the Internet has been facilitated predominately by English-speaking programmers and subsequently English-based programs, this might not be the wave of the future. Looking at how vast regions of the planet interacted centuries ago provides a better base from which to understand how they might interact in the future. The people from the same geo-political regions that Abu-Lughod describes in her book are now "commuting" or "traveling" and conversing via electronic media. How will the new instrument of communication change the way these people share time and space?

'New World History' Classic
Among teachers and students of world history, this book is already considered a classic. It is not so much a book about people, places, and events, as it is a book about processes and networks in a non-Eurocentric 13th century Old World.

Welcome to a world whose hub is India. To the east Southeast Asian gold and spices and Chinese silks and porcelain. From the west come carpets, dye, incense, gold, silver, and slaves from the Persian Gulf and Red Sea - gold, ivory, and slaves from East Africa. To the north, the Mongols control Central Asia and the Silk Road that Marco Polo takes to China. However, much like "westernization" is sometimes used as a concept in modern history, this was a time of "southernization" in an Asia-centered world connected by monsoon winds. Way out on the periphery of an overlapping Mediterranean network lie Genoa and Venice. Indeed, if Europe were mentioned at this time, most literate people would think of Constantinople - not medieval Western Europe, but the postclassical Byzantine Empire.

*Before European Hegemony* is obviously a 'not for everyone' history book. Nevertheless, the reason that I gave it 5 stars is because I consider it the most accessible 'world systems' history - and also because of the maps of overlapping trading networks which are probably known even better than the book. I can recommend the book to teachers (and students) of AP and college-survey world history courses without hesitation, or any reader whose tastes run to historical scholarship.

A World Economy in the 1200s
A completely convincing presentation of a world economic system before the surge of the West, in which Europe played only a minor part. Not as Marxist as Wallerstein, and not as over-the-top as Andre Gunner Frank's new book Re-Orient, which draws on it considerably. Her prose style does not scintillate, but neither is she difficult; reads like it grew out of her thesis. Because this is a big idea, and she explores it thoroughly, it's one of the most exciting books I have read in a long time. ... Read more

Book Description

Over the past century, Alcoa has developed from a small entrepreneurial venture to a giant corporation; from a one-dimensional, owner-managed firm to a complex managerial bureaucracy; from a domestic company to a multinational enterprise.In the process, Alcoa survived a difficult transition from its long-held position as a monopolist (of aluminum production) to its current status as a firm operating in highly competitive international markets.This book presents Alcoa's history, from its beginnings as a speculative venture seeking to exploit an untested technology, through its rise to become the most successful monopoly in American history.By World War II, no other American corporation had developed its industry's markets more dramatically and then dominated them more completely. The book analyzes the undoing of Alcoa's monopoly by war and antitrust, as well as how Alcoa adapted to evolving forms of competition. ... Read more

Book Description

Human beings are the only species in nature to have developed an elaborate division of labor between strangers. Even something as simple as buying a shirt depends on an astonishing web of interaction and organization that spans the world. But unlike that other uniquely human attribute, language, our ability to cooperate with strangers did not evolve gradually through our prehistory. Only 10,000 years ago--a blink of an eye in evolutionary time--humans hunted in bands, were intensely suspicious of strangers, and fought those whom they could not flee. Yet since the dawn of agriculture we have refined the division of labor to the point where, today, we live and work amid strangers and depend upon millions more. Every time we travel by rail or air we entrust our lives to individuals we do not know. What institutions have made this possible?

In The Company of Strangers, Paul Seabright provides an original evolutionary and sociological account of the emergence of those economic institutions that manage not only markets but also the world's myriad other affairs.

Drawing on insights from biology, anthropology, history, psychology, and literature, Seabright explores how our evolved ability of abstract reasoning has allowed institutions like money, markets, and cities to provide the foundation of social trust. But how long can the networks of modern life survive when we are exposed as never before to risks originating in distant parts of the globe? This lively narrative shows us the remarkable strangeness, and fragility, of our everyday lives.

... Read more

Reviews (3)

Wonderful stuff
Academic press books rarely get the attention they deserve, so I hope this book does not get lost in the mix. Paul Seabright is a terrific writer, and his account in this book of the origins of cooperation is lucid and exciting. Seabright makes the important point that successful economies and societies depend on cooperation, and that even though self-interest would seem to lead us to reject that, time and again we manage to work together. This cooperation with strangers is, though, a fragile thing, and Seabright's conclusion raises the specter that in the future we may need to work a lot harder to remain in the company of strangers. I'm not fully convinced by the book's end, but the argument is worth thinking about. Also see Robert Wright's "Nonzero," Howard Rheingold's "Smart Mobs," and James Surowiecki's "The Wisdom of Crowds" for variations on this argument.

Why it's in our interests to cooperate with strangers
It's a scary world out there, but Professor Seabright helps explain why we're prepared to put our trust in people to whom we're not related. Starting with the example of the (unplanned) global cooperation needed just to enable Paul to buy a new shirt, he takes the reader on an ambitious tour of the economic evolution of human nature.

Previous Seabright publications have included macroeconomic monographs on Eastern Europe. Though still not an easy read, this will appeal to the intelligent general reader looking for a new perspective on world affairs.

And what links this to Iron Maiden, the heavy-metal rock group? From 1972 to 1976, Paul Seabright was at the same school (and in the same house) as Bruce Dickinson, who would go on to become lead singer of that group. It is a strange world, and one wonders how much trust there would now be between the two.

My belief is that this could be one of the most important books published this year. It would also make a great documentary TV series, if the BBC were prepared to make another epic in the mold of 'The Ascent of Man' and 'Civilisation'.

The Great Experiment -- Trade and Trust
The Company of Strangers starts with the purchase of a shirt. How is it that exactly the item we want is available in our local store, when we didn't know the farmer who grew the cotton, the dyer who dyed the thread, the tailor who sewed the pieces, nor the shipper who shipped the shirt? Nor did most of these people know each other. Of all the things that might puzzle a Neanderthal who wandered into our time zone, this would be one of the strangest.

In this wonderfully readable book, subtitled "A Natural History of Economic Life", Paul Seabright follows the story of what he calls the "shy, murderous ape" from lonely hunter to homo economicus, confidently mingling with crowds of strangers and daily dependant on numerous people whom he has never met. Amazingly, to our Neanderthal, we have learned to trust strangers.

The question asked in the second half of the book is how far we should rely on such leaderless chains. Some items, such as airline travel and hospital care, don't lend themselves to blind trust. And who is to stop the cotton farmer from polluting the river that the dyer downstream drinks from, or the dyer from polluting the air that the tailor breathes? At what point do the connections between countries or companies become impossibly fragile?

Finally Professor Seabright dismisses recent talk about globalization as "excitable" and dismisses it as a mere continuation of a trend of "at least the last ten thousand years." That does imply that, as far as economics is concerned, camels and the Silk Road are no different from container ships and the internet highway. This is one of several topics in the final chapters of the book which are only touched upon and which would repay our closer attention. Perhaps we can hope that The Company of Strangers is only the first volume in a story to be continued.

Kudos also to Leslie Flis, Tim Flach and Augustin de Berranger for the stunning dust jacket. They too were part of the chain in the production of this highly entertaining and likable book. ... Read more

Book Description

What economic regimes offer children born into poor families the best hope of moving into higher income groups? This study analyzes and contrasts the experience of the more free market based North American and British economies with the more corporate state models of continental Europe. Written by leading economists from North America and Europe, the book combines innovative methodology with surprising conclusions. It ends with two more policy-oriented chapters which consider intergenerational mobility in a broader perspective. ... Read more

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Reviews (1)

Much More than a Monograph
James Jaffe is a classic example of that rare breed, the passionate historian. He brings history alive with his smart, sensitive, and humane approach to the difficult topic of the Industrial Resolution and its indelible effects on English class and culture. This well-written and well-edited book is a must-read for anyone with an interest in 19th-century British labor issues. ... Read more

Book Description

What role did economics play in leading the United States into the Civil War in the 1860s, and how did the war affect the economies of the North and the South? Tariffs, Blockades, and Inflation uses contemporary economic analyses such as supply and demand, modern market theory, and the economics of politics to interpret events of the Civil War.

Simplifying the sometimes complex intricacies of the subject matter, Thornton and Ekelund have penned a nontechnical primer that is jargon-free and accessible. Tariffs, Blockades, and Inflation also takes a comprehensive approach to its topic. It offers a cohesive and a persuasive explanation of the how, what, and why behind the many factors at work on both sides of the contest. While most books only delve into a particular aspect of the war, this title effectively bridges the gap by offering an all-encompassing, yet relatively brief, introduction to the essential economics of the Civil War.

This book starts out with a look at the reasons for the beginning of the Civil War, including explaining why the war began when it did. It then examines the economic realities in both the North and South. Also covered are the different financial strategies implemented by both the Union and the Confederacy to fund the war and the reasons behind what ultimately led to Southern defeat. Finally, the economic effect of Reconstruction is discussed, including the impact it had on the former slave population.

Thornton and Ekelund have contributed an overdue examination of the Civil War that will impart to readers a modern way to better comprehend the conflict. Tariffs, Blockades, and Inflation offers fresh, penetrating insights into this pivotal event in American history. ... Read more

Reviews (2)

An unusual, important analysis
The collaborative effort of Mark Thornton and Robert Ekelund Jr., Tariffs, Blockades, and Inflation blends contemporary economic analysis and modern market theory with a history of the Civil War era to provide a comprehensive approach to Civil War history. From analysis of why and how the war began as it did to chapters contrasting the different underlying economic concerns of North and South before, during and after conflict, this provides an unusual, important analysis.

The actually not dismal science
I bought this book with the intention that it should complement and supplement previously read works on the "Civil War", eg.: Tom DiLorenzo's Lincoln, Jeffrey Hummel's Emancipation and Enslavement, and Charles Adams' When in the Course. It didn't disappoint. Although it is strictly an economic look at the war, it is a Human Action type (self-interest) economics. Stats and graphs add to the text, they don't overwhelm it.

The highlights---Slavery a factor, yes, but as an economic issue, much more than a moral issue. Tariffs a factor, yes, but the uncertainty about future rates, with the election of Republican Lincoln, more than the immediate antebellum rates. The Anaconda Plan worked, yes, but with a great assist from the South with its impressments, embargo, and "luxury" taxes, the Rhett Butler effect. The relationship between the financing of the war (a lot of inflation,yes) and The Wonderful Wizard of Oz. When one ponders today's current account deficit, the Civil War's economics do not represent the distant past.

All in all, a book of around 160 pages including introduction,index and bibliography full of interesting interpretations of things which I thought I knew so well, yet didn't. ... Read more

Book Description

"This book", writes historian Walter Licht in the Introduction, "is concerned with the great social and economic transformation that occurred in this country over the course of the 19th century between the ages of Jefferson and McKinley. When and where change occurred and the pace of change will be of prime importance, but the great issue will be the 'why' of change. What caused America to be so fundamentally transformed?" ... Read more

Reviews (3)

A well-rounded ntroduction to American Industrialization
Licht's oft-repeated thesis is that American industrialization is characterized by complexity and diversity, yet he still synthesizes a coherent narrative and argument in his book. Plus, he deftly summarizes (and takes sides in) debates regarding several major questions about U.S. industrialization: Did labor scarcity create more mechanization? Was the late nineteenth century a second industrial revolution? Was what transpired a continuation of earlier initiatives or a fundamental shift?

Licht's book is appropriate for an undergraduate classroom, or a graduate seminar in which a quick introduction to industrialization is needed. It presents the major themes of American industrialization, and has enough teeth to leave room for debate, especially if students are prompted with questions before they begin reading. Licht approaches industrialization from many angles--labor, capital, robber barons, government, craftsmen, factory workers--and gives the reader a solid introduction to the issues. Instead of footnotes,the book concludes with a strong bibliograpic essay for each chapter. The book is not intended for advanced scholars of industrialization, but some specialists may find Lichts reframing of American industrialization in a social history lens useful. I did.

Most succinct summarizing quote: "Complexity and diversity marked the whole process of industrialization. The growth of manufacture occurred in different countries, regions within countries, and trades in a remarkably uneven fashion; the timing and pace of change varied widely, as did choices of technology and managerial arrangements. Industrialization destroyed certain skills and occupations but created others; the process similarly generated both small- and large-scale enterprise. In the United States, agricultural expansion, not contraction, accompanied industrial development; professional, clerical, and service sector employment grew alongside." (21)

Good Information and Analysis, Bad Writing
This book was required reading for my AP US History course, so naturally I didn't want to read it anyways. Unfortunately, I also had to write a report on the book so I was stuck. This book is packed full of nonstop information with the occasional analysis of facts. It moves very slowly stating so many facts that it is simply a boring book to read. As I usually am an avid reader, this says a lot. However, if you want to know all the informartion there is about the Industrial Revolution, this is the book for you.

The Ongoing Regurgitaion of Historical Dross
I had to read this book for an advanced history class. If you want a good text book for the nineteenth century, this is your guide. But for anything but an index for the industrial revolution, this book is no different than reading binary code. It is a long string of useless facts about things minutely interesting or important to this time period. Granted, it does have some good information, and I applaud the author for his tenacity on sticking to writing this ticking brain tumor, this book is about as fun and interesting as poking myself with something rusty. ... Read more