In a capitalist system, consumers, investors, and corporations orient their activities toward a future that contains opportunities and risks. How actors assess uncertainty is a problem that economists have tried to solve through general equilibrium and rational expectations theory. Powerful as these analytical tools are, they underestimate the future’s unknowability by assuming that markets, in the aggregate, correctly forecast what is to come.
Jens Beckert adds a new chapter to the theory of capitalism by demonstrating how fictional expectations drive modern economies—or throw them into crisis when the imagined futures fail to materialize. Collectively held images of how the future will unfold are critical because they free economic actors from paralyzing doubt, enabling them to commit resources and coordinate decisions even if those expectations prove inaccurate. Beckert distinguishes fictional expectations from performativity theory, which holds that predictions tend to become self-fulfilling prophecies. Economic forecasts are important not because they produce the futures they envision but because they create the expectations that generate economic activity in the first place. Actors pursue money, investments, innovations, and consumption only if they believe the objects obtained through market exchanges will retain value. We accept money because we believe in its future purchasing power. We accept the risk of capital investments and innovation because we expect profit. And we purchase consumer goods based on dreams of satisfaction.
As Imagined Futures shows, those who ignore the role of real uncertainty and fictional expectations in market dynamics misunderstand the nature of capitalism.
Tracing the development of monistic interest from its origins in Reformation political theory and theology through late-twentieth-century neoliberalism, Engelmann reconceptualizes the history of liberalism as consisting of phases in the history of monistic interest or economic government. He describes how monistic interest, as formulated by Bentham, is made up of the individual’s imagined expectations, which are constructed by the very regime that maximizes them. He asserts that this construction of interests is not the work of a self-serving manipulative state. Rather, the state, which is itself subject to strict economic regulation, is only one cluster of myriad "public" and "private" agencies that produce and coordinate expectations. In place of a liberal vision in which government appears only as a protector of the free pursuit of interest, Engelmann posits that the free pursuit of interest is itself a mode of government, one that deploys individual imagination and choice as its agents.
This timely study of the recent migration tides explores the political and economic factors that have influenced the rise of immigration in postwar Europe and the United States. It seeks to explain immigration in terms of the globalization of labor markets and the expansion of civil rights for marginal groups in the liberal democracies.
Immigration raises emotional issues of nationalism and citizenship. Territorial norms of community and nationhood come into conflict with the liberal ideal of free, rational individuals seeking a better life for themselves and their families. Yet immigration has been an essential ingredient in economic growth. How then can liberal states reconcile economic pressures to maintain adequate supplies of labor with political pressures to protect citizenship and safeguard rights that are accorded, in principle, to every member of society?
Three prominent democracies—France, Germany, and the United States—are chosen for study because their experience illustrates the dilemma that liberal states must face when trying to control immigration. The author carefully distinguishes differences in the factors that influence each state’s struggle to resolve the status of the “guest” worker and the “illegal” immigrant. Yet he finds that the accretion of rights for aliens and the globalization of markets have led to a convergence of immigration policies in the industrialized West.
The sociologist Thomas Sowell writes, "We need to confront the most blatant fact that has persisted across centuries of social history—vast ddifferences in productivity among peoples, and the economic and other consequences of such differences." Poverty demeans dignity, shrinks the soul, wastes potential, and inflicts suffering on three billion people on our planet. We must also acknowledge that, during the past fifty yyears, the record in international assistance to the least developed countries has been disappointing; the economics-based abstractions developed in the think tanks of Europe and North America are insufficient.
In the River They Swim is the antithesis of that search for solutions to the next big theory of global poverty. From the fresh perspective of advisors on the frontlines of development to the insight of leaders like President Paul Kagame of Rwanda and Pastor Rick Warren, it tells the story of change in the microcosms of emerging businesses, industries, and governments. These essays display a personal nature to their work that rigorous analysis alone cannot explain.
We learn that a Sufi master can teach us about the different levels of knowledge, the "different ways to know a river." These practitioners could have written about its length, its source, its depth, its width, the power of its current, and the life it contains. They could have invested time and money to travel to that river so that they could sit on its shores and look at it, feel the sand that borders it, and watch the birds at play over it. Instead, they dove in to swim in the river, felt its current along their bodies, and tasted something of it. They wondered, briefly, if they had the strength to swim its length, and now they share the answer.
If human development is a river, the authors in this volume, and perhaps some readers, will no longer be satisfied to stand along its banks.
In the twenty years since the dissolution of the Soviet Union, the fifteen new independent republics have embarked on unprecedented transitions from command economies into market-oriented economies.
Important motivating factors for their reform efforts included issues of geographic and economic proximity to Europe and the influence of the pre-Soviet era histories in those countries. In the Shadow of Russia builds upon the conceptual frameworks that include geography and policy choices about economic integration in an analysis of the reform efforts of Kazakhstan and Uzbekistan.
Blackmon's book addresses such central questions as: How and in what areas has a republic's previous level of integration with Soviet-era Russia influenced its present economic orientation? What are the contributing factors that explain the differences in how leaders ( of a similar regime type) developed economic reform policies? To answer these questions, the author utilizes information from both the economic and the political literature on post-communist transitions, as well from political speeches.
This illuminating study of the evolution of Chinese capitalism chronicles the fortunes of the Song family of North China under five successive authoritarian governments. Headed initially by Song Chuandian, who became rich by exporting hairnets to Europe and America in the early twentieth century, the family built a thriving business against long odds of rural poverty and political chaos.
A savvy political operator, Song Chuandian prospered and kept local warlords at bay, but his career ended badly when he fell afoul of the new Nationalist government. His son Song Feiqing—inspired by the reformist currents of the May Fourth Movement—developed a utopian capitalist vision that industry would redeem China from foreign imperialism and cultural backwardness. He founded the Dongya Corporation in 1932 to manufacture wool knitting yarn and for two decades steered the company through a constantly changing political landscape—the Nationalists, then Japanese occupiers, then the Nationalists again, and finally Chinese Communists. Increasingly hostile governments, combined with inflation, foreign competition, and a restless labor force, thwarted his ambition to create an “Industrial Eden.”
Brett Sheehan shows how the Song family engaged in eclectic business practices that bore the imprint of both foreign and traditional Chinese influences. Businesspeople came to expect much from increasingly intrusive states, but the position of private capitalists remained tenuous no matter which government was in control. Although private business in China was closely linked to the state, it was neither a handmaiden to authoritarianism nor a natural ally of democracy.
The Mexican Revolution has long been considered a revolution of peasants. But Aurora Gómez-Galvarriato’s investigation of the mill towns of the Orizaba Valley reveals that industrial workers played a neglected but essential role in shaping the Revolution. By tracing the introduction of mechanized industry into the valley, she connects the social and economic upheaval unleashed by new communication, transportation, and production technologies to the political unrest of the revolutionary decade. Industry and Revolution makes a convincing argument that the Mexican Revolution cannot be understood apart from the changes wrought by the Industrial Revolution, and thus provides a fresh perspective on both transformations.
By organizing collectively on a wide scale, the spinners and weavers of the Orizaba Valley, along with other factory workers throughout Mexico, substantially improved their living and working conditions and fought to secure social and civil rights and reforms. Their campaigns fed the imaginations of the masses. The Constitution of 1917, which embodied the core ideals of the Mexican Revolution, bore the stamp of the industrial workers’ influence. Their organizations grew powerful enough to recast the relationship between labor and capital, not only in the towns of the valley, but throughout the entire nation.
The story of the Orizaba Valley offers insight into the interconnections between the social, political, and economic history of modern Mexico. The forces unleashed by the Mexican and the Industrial revolutions remade the face of the nation and, as Gómez-Galvarriato shows, their consequences proved to be enduring.
After communism collapsed in the former Soviet Union, capitalism seemed to many observers like the only game in town, and questioning it became taboo for academic economists. But the financial crisis, chronic unemployment, and the inexorable rise of inequality have resurrected the question of whether there is a feasible and desirable alternative to capitalism. Against this backdrop of growing disenchantment, Giacomo Corneo presents a refreshingly antidogmatic review of economic systems, taking as his launching point a fictional argument between a daughter indignant about economic injustice and her father, a professor of economics.
Is Capitalism Obsolete? begins when the daughter’s angry complaints prompt her father to reply that capitalism cannot responsibly be abolished without an alternative in mind. He invites her on a tour of tried and proposed economic systems in which production and consumption obey noncapitalistic rules. These range from Plato’s Republic to diverse modern models, including anarchic communism, central planning, and a stakeholder society. Some of these alternatives have considerable strengths. But daunting problems arise when the basic institutions of capitalism—markets and private property—are suppressed. Ultimately, the father argues, all serious counterproposals to capitalism fail to pass the test of economic feasibility. Then the story takes an unexpected turn. Father and daughter jointly come up with a proposal to gradually transform the current economic system so as to share prosperity and foster democratic participation.
An exceptional combination of creativity and rigor, Is Capitalism Obsolete? is a sorely needed work about one of the core questions of our times.
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