Edmund Phelps:

Widespread ignor­ance of the hazards of capitalism has made imprudence in markets and policy neglect all the more likely. Regaining a well-functioning capitalism will require re-education and deep reform.

Well into the 20th century, scholars viewed economic advances as resulting from commercial innovations enabled by the discoveries of scientists - discoveries that come from outside the economy and out of the blue. Why then did capitalist economies benefit more than others?

Friedrich Hayek portrayed a well-functioning capitalist system as a broad-based, bottom-up organism that gives diverse new ideas opportunities to compete for development and, with luck, adoption in the marketplace.

From the outset, the biggest downside was that creative ventures caused uncertainty not only for the entrepreneurs themselves but also for everyone else in the global economy.

Unfortunately, there is still no wide understanding among the public of the benefits that can fairly be credited to capitalism and why these benefits have costs.

Now capitalism is in the midst of its second crisis.

Why did big shareholders not move to stop over-leveraging before it reached dangerous levels? Why did legislators not demand regulatory intervention? The answer, I believe, is that they had no sense of the existing uncertainty.

Over at The Week, Brad DeLong offers a history lesson about The Panic of 1825:

This was the birth of central banking as we know it.

When politicians wash their hands of a financial system in crisis and fail to intervene on a large scale, things do not turn out well.

Uncertainty bedevils the best system

Sam Knight on Marilyn vos Savant:

"It's a social scene," said Savant, who is 62, with a smile. "But it's not our social scene. Let me just say that." A few minutes later, when a serious-looking man happened to make a goofy swish right in front of them, Savant and Jarvik caught each other's eye and couldn't help laughing. Not long afterwards, they took a taxi home, to their midtown penthouse. "We usually dance more, a lot more," said Savant as they are leaving. It is only 8.30pm. "And then we go back to the office."

Is a high IQ a burden as much as a blessing?

Jina Moore:

Fifteen years after Rwandan Hutu massacred hundreds of thousands of their Tutsi countrymen, one survivor and the man who cut off her hand tell the horrible truth about the genocide and explain how, even with so much suffering between them, they eventually made peace.

Freeman Dyson from the archive:

In my opinion, the moral imperative at the end of every war is reconciliation. Without reconciliation there can be no real peace.

See also, Evil has ruined my life, an excellent Reading in the March 2009 issue of Harper's:

From recent interviews with survivors and perpetrators of the Rwandan genocide, by Jean Hatzfeld, in the Fall issue of The Paris Review. In 1994, Hutu attacks on Tutsis and moderate Hutus killed 800,000. Since 2003, the Rwandan government has released more than 50,000 prisoners accused of involvement in the killings. Hatzfeld’s new book about Rwanda, The Antelope’s Strategy, will be published this month by Farrar, Straus and Giroux. Translated from the French by Linda Coverdale. Hatzfeld’s “Machete Season” appeared in the April 2005 issue of Harper’s Magazine.

The Rwanda Genocide: A Reconciliation

Johann Hari:

All over the city, there are maxed-out expats sleeping secretly in the sand-dunes or the airport or in their cars.

"The thing you have to understand about Dubai is – nothing is what it seems," Karen says at last. "Nothing. This isn't a city, it's a con-job."

The sheikh did not build this city. It was built by slaves. They are building it now.

I believe this is what you'd call an indictment.

Jeff Jarvis:

Dubai is either an act of fiction or of the future. I arrived thinking the former; I leave wondering whether it could be the latter.

From the archive, a selection:

Dubai threatens to become an instant ruin, an emblematic hybrid of the worst of both the West and the Middle-East and a dangerous totem for those who would mistakenly interpret this as the de-facto product of a secular driven culture.

... it's clear that the emirate will soon be overflowing with attractions ...

Dubai, with its Disneyesque Arab souks in which you can purchase Arab handicrafts or a Cinnabon ...

The company behind some of Dubai's best-known landmarks is considering a stock market listing to raise as much as $15bn to reinforce its finances.

Back to Johann Hari:

The most famous hotel in Dubai – the proud icon of the city – is the Burj al Arab hotel, sitting on the shore, shaped like a giant glass sailing boat.

The dark side of Dubai

Nicholas Eberstadt:

Russia's adult population--women as well as men--puts down the equivalent of a bottle of vodka per week.

In 2006--the most recent year for which we have such data--overall Russian life expectancy at birth was over three years lower than it had been in 1964.

Putin's Kremlin made a fateful bet that natural resources--oil, gas, and other extractive saleable commodities--would be the springboard for the restoration of Moscow's influence as a great power on the world stage. In this gamble, Russian authorities have mainly ignored the nation's human resource crisis. During the boom years--Russia's per capita income roughly doubled between 1998 and 2007--the country's death rate barely budged. Very much worse may lie ahead. How Russia's still-unfolding demographic disaster will affect the country's domestic political situation--and its international security posture--are questions that remain to be answered.

Neil Howe:

If you think that things couldn't get any worse, wait till the 2020s.

From the archive, a bit of Gladwell:

The relation between the number of people who aren't of working age and the number of people who are is captured in the dependency ratio.

Have you seen "4"?

Sometimes a severed pig's head is just a severed pig's head, after all, though sometimes a weeping crone yodeling mournfully about the Volga River is also a symbol of a grotesque and nostalgic nationalism.

Robert Levine:

The Great Depression brought the New Deal to the United States. It brought the rest of the world Nazism and universal war. This time, though, many nations have nuclear weapons.

"Maybe we could" is the limit of optimism in this paper. The world ahead looks difficult.

Mara Hvistendahl:

By the time these newborns reach puberty, war games may seem like a quaint relic.

Drunken Nation: Russia's Depopulation Bomb

Nassim Nicholas Taleb:

1. What is fragile should break early while it is still small.
2. No socialisation of losses and privatisation of gains.
3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus.
4. Do not let someone making an “incentive” bonus manage a nuclear plant – or your financial risks.
5. Counter-balance complexity with simplicity.
6. Do not give children sticks of dynamite, even if they come with a warning.
7. Only Ponzi schemes should depend on confidence. Governments should never need to “restore confidence”.
8. Do not give an addict more drugs if he has withdrawal pains.
9. Citizens should not depend on financial assets or fallible “expert” advice for their retirement.
10. Make an omelette with the broken eggs.

Ten principles for a Black Swan-proof world

Golumbia:

I argue that we must also keep in mind the possibility of de-emphasizing computerization, resisting the intrusion of computational paradigms into every part of the social structure, and resisting too strong a focus on computationalism as the solution to our social problems.

Peter Norvig:

PowerPoint doesn't kill meetings. People kill meetings. But using PowerPoint is like having a loaded AK-47 on the table: You can do very bad things with it.

Golumbia:

The wave of upbeat "democratization of information" writers seem to look almost exclusively at what one might think of as the "good side" of the web, and in so doing nearly ignore the countervailing tendencies that undermine the movements they champion. These writers also endorse a radical populism that around the world only sometimes aligns itself with democratic social justice.

Freeman Dyson:

I beseech you, in the words of Oliver Cromwell, to think it possible you may be mistaken.

Golumbia:

How do we guarantee that computers and other cultural products are not so pleasurable that they discourage us from engaging in absolutely necessary forms of social interaction? I see the current emphasis on the "social web" as not so much an account of a real phenomenon as it is a reaction to what we all know inside -- that computers are pulling us away from face-to-face social interactions and in so doing removing something critical from our lived experience.

Niall Ferguson:

Chimerica is really the key to how the global financial system works, and has been now for about a decade. Both sides stand to lose from a breakdown of Chimerica, which is why both sides are affirming a commitment to it. The Chinese believe in Chimerica maybe even more than Americans do. They have nowhere else to go.

Golumbia:

It is legitimate and even necessary to operate as if it is possible that computationalism will eventually fail to bear the philosophical-conceptual burden that we today put on it. We have to learn how to critique even that which helps us.

Noam Cohen's friend:

Privacy is serious. It is serious the moment the data gets collected, not the moment it is released.

Golumbia:

For at least one hundred years and probably much longer, modern societies have been built on the assumption that more rationality and more techne (and more capital) are precisely the solutions to the extremely serious problems that beset our world and our human societies. Yet the evidence that this is not the right solution can be found everywhere.

Robert McNamara:

Rationality will not save us.

The Cultural Logic of Computation | Excerpts II

Golumbia:

This book is not about computers. It is instead about a set of widespread contemporary beliefs about computers -- beliefs that can be hard to see as such because of their ubiquity and because of the power of computers themselves. More specifically, it is about the methods computers use to operate, methods referred to generally as computation.

Neal Stephenson:

It wasn't just some silly adding machine or slide rule. Leibniz actually thought about symbolic logic and why it was powerful and how it could be put to use. He went from that to building a machine that could carry out logical operations on bits. He knew about binary arithmetic. I found that quite startling. Up till then I hadn't been that well informed about the history of logic and computing. I hadn't been aware that anyone was thinking about those things so far in the past.

Golumbia:

In a time of the most extreme rhetoric of cultural change -- which does not, at the same time, accompany a concomitant recognition of the possibilities for radical cultural difference -- the need for resistance to the rhetoric of novelty seems especially pressing, not least when such claims are so often based on willful avoidance of the existence of analogous phenomena in the recent historical past. Networks, distributed communication, personal involvement in politics, and the geographically widespread sharing of information about the self and communities have been characteristic of human societies in every time and every place: a burden of this book is to resist the suggestion that they have emerged only with the rise of computers. In a familiar phrase whose import we sometimes seem on the verge of forgetting: the more things change, the more things stay the same.

From the archive:

It is ironic: people don't notice that noticing is important!

Golumbia:

I am convinced that from the perspective of the individual, and maybe even from the perspective of informal social groups, the empowering effects of computerization appear (and may even be) largely salutary. But from the perspective of institutions, computerization has effects that we as citizens and individuals may find far more troubling. Here, computationalism often serves the ends of entrenched power despite being framed in terms of distributed power and democratic participation.

From the archive, on the culture of the new capitalism:

The widespread use of enterprise systems has given top managers much greater latitude to direct and control corporate workforces, while at the same time making the jobs of everyday workers and professionals more rigid and bleak.

The Cultural Logic of Computation | Excerpts I

Lisa Gitelman on David Golumbia's new book:

Golumbia's argument is that contemporary Western and Westernizing culture is deeply structured by forms of hierarchy and control that have their origins in the development and use of computers over the last 50 years. I look forward to pressing this book on friends and colleagues, starting with anyone who has ever recommended The World is Flat to me.

Bill McKibben on Thomas Friedman:

Thomas Friedman is the prime leading indicator of the conventional wisdom, always positioned just far enough ahead of the curve to give readers the sense that they're in-the-know, but never far enough to cause deep mental unease.

You can read an excerpt from the first chapter.

The Cultural Logic of Computation

Geoff Mulgan:

To find insights into how the current crisis might connect to these longer-term trends we need to look not to Marx, Keynes or Hayek but to the work of Carlota Perez, a Venezuelan economist whose writings are attracting growing attention.

Perez is a scholar of the long-term patterns of technological change. One implication of Perez’s work, and of Joseph Schumpeter’s before her, is that some of the old has to be swept away before the new can find its most successful forms. Propping up failing industries is in this light a risky policy. Perez suggests that we may be on the verge of another great period of institutional innovation and experiment that will lead to new compromises between the claims of capital and the claims of society and of nature.

If another great accommodation is on its way, this one will be shaped by the triple pressures of ecology, globalisation and demographics.

Obama should be ideally suited to offering a new vision, yet has surrounded himself with champions of the very system that now appears to be crumbling.

The result is that a large political space is opening up. In the short run it is being filled with anger, fear and confusion. In the longer run it may be filled with a new vision of capitalism, and its relationship to both society and ecology, a vision that will be clearer about what we want to grow and what we don’t.

We need to rekindle our capacity to imagine, and to see through the still-gathering storm to what lies beyond.

Mark Twain:

When an entirely new and untried political project is sprung upon the people, they are startled, anxious, timid, and for a time they are mute, reserved, noncommittal. The great majority of them are not studying the new doctrine and making up their minds about it, they are waiting to see which is going to be the popular side.

It is desire to be in the swim that makes political parties.

After capitalism