In science no one believes the Earth is flat anymore. Economists, on the other hand, haven't budged from their original worldview. Market capitalism depends on seven big ideas: competition, the "invisible hand", utility, agency theory, pricing, shareholder value, and limited liability. These served the world well in the past, but over the years they have become cancerous and are slowly killing the system as a whole.
Eve Poole argues that if you zoom in on any of these firm foundations, they start to blur and wobble. Here she offers alternative views for a healthier system. And looking at them together, it becomes clear why we're so stuck. The capitalist system masquerades as a machine programmed by experts, with only economists and governments qualified to tinker with it. But the market is just a mass of messages about supply and demand. The rich world shapes the market in its image because it has more "votes". So if we want to change the way things are, we don't need to wait for the experts; we can start now.
In each chapter Poole shows how quiet action by consumers, investors, employees, and employers can make big changes by shifting behaviors and adjusting the way financial "votes" are cast in the market.
In 2008 when the Queen spoke to academics at the London School of Economics about the turmoil on the business markets she famously asked "Why did nobody notice it?" The massed ranks of mainly male economists were unable to answer her question. Seven years later despite many worthy books on the financial crisis the world’s community of economists remains incapable of using the evidence of the past to reliably provide any assurance to protect our future from another collapse.
Until now. Along has come Dr Poole with a comprehensive reassessment of the flaws in modern capitalism and with a road map to guide the profession away from its worst ills. She has had the nerve (and intellect) to look at the fundamental laws of the dismal science and question them in the light of modern evidence derived from psychology and moral philosophy - remembering always that Adam Smith, the father of the “invisible hand”, wasn’t an economist but was a moral philosopher whose work was taken up and interpreted by economists after he was dead when he couldn’t easily answer back.
Her conclusions about co-operation and not selfishness being a key aspect in the success of business enterprises should find support from Matt Ridley whose TED talk https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CCQQyCkwAA&url=http%3A%2F%2Fwww.ted.com%2Ftalks%2Fmatt_ridley_when_ideas_have_sex%3Flanguage%3Den&ei=VfYgVce1OZDPaI-WgeAC&usg=AFQjCNEKToSGP_cOsilmEFltGsYfXaPwAA&sig2=XReqPeu4XFU9bpQD34WOcg&bvm=bv.89947451,d.d2s
develops ideas Matt first cited in The Origins of Virtue
Most importantly Dr Poole indicates ways in which we could re-engineer our business processes and corporate structures to stop the harm arising from the rampageous beast of raw capitalism whilst preserving all its best features. Her analysis is by no means complete - nobody could in a single volume cover the myriad of changes in regulation, structures and human resource management that are required to implement her thoughtful proposals. But it is a major start to the process of re-evaluation of the fundamental laws of economics which are necessary because, in the words of an earlier Prince of Wales, “Something must be done”.
5 of 5 people found this review helpful
What was most disappointing about Eve Poole’s story?
Adam Smith’s name will probably be prominent when almost all current writers are forgotten. Not that this should immunise his ideas from scrutiny. He paid no respect to the standing of the influential people of his day.
The main problem with this book is the starting point. Smith’s main work was ‘An Inquiry into the Nature and Causes of the Wealth of Nations’. This could be ‘Why Adam Smith is wrong’. Adam Smith realised facets of how the economy worked and then shone this light on the practices of mercantilists, guilds, capitalists and others to show how their actions were damaging the common good. ‘Capitalism’s Toxic Assumptions’ seems to (sorry I didn’t get past chapter 2) recognise an incompatible alternative to someone’s ‘perfect world’, attack it in any half plausible manner and then try to put something together from whatever’s lying around.
If someone has a strong sense the state should be taking a greater part in our lives, if they build a reasoned case a philosopher like Adam Smith, and a even a lesser one like myself would happily consider it. Its not that the author isn’t engaged and there aren’t any interesting and telling observations, its just that I couldn’t see an underlying rationale. When the starting point is nearly always the denigration of an idea its incredibly difficult to keep the critical faculties in tact. As it was I couldn’t get past chapter 2. I really wanted to be collaborative and did try to restart a couple of times after stopping.
Before taking on board the contents, particularly chapter 2 on the invisible hand, please read a classical economics account, if not Wealth of Nations 1600+ pages, then something accessible like The Undercover Economist.
We shouldn’t be dragging such an important topic down in to the quagmire of partisan politics, particularly not in these polarising times.
Which scene did you most enjoy?
Collaboration rather than competition.
Found some interesting ideas. even if I felt it lacked the feel of objectivity or at least respect for alternative views.
Reader can be irritating because he puts on voices for quotes. Otherwise he's fine.