Spellbinding, insightful and, perhaps most important, timely.
Erudite, entertaining macroeconomic history of the lead-up to the Great Depression as seen through the careers of the West’s principal bankers.
Investment manager Ahamed sets the stage for his story with Toynbeean sweep. The gold standard, to which the major currencies of the world were tied, was thrown into tumult by World War I. France, Britain and Germany found themselves depleted of gold reserves. The United States, a new economic power holding the bulk of the world’s gold bullion, demanded repayment of loans made to its allies; this forced large, untenable reparation payments on Germany. The main characters of this unfolding drama were a quartet of bankers who saw themselves as “elite tribunes, standing above the fray of politics, national resentments, and amateur nostrums,” and who wielded astonishing, autonomous authority over monetary policy. Eccentric, aristocratic Montagu Norman of the Bank of England dealt with the problem of inadequate gold reserves to support the overvalued pound sterling by convincing Benjamin Strong, head of the Federal Reserve Bank of New York, to lower interest rates in America to encourage the flow of gold back to Europe. This directly fueled the U.S. stock-market bubble, Ahamed argues. The crash of 1929 and the worldwide depression that followed were the inevitable results. Other catalysts included the Reichsbank’s irascible, unpredictable Hjalmar Schacht, whose obsession with eliminating reparations led Germany to the brink of default, and vindictive Émile Moreau, whose policy at the Banque de France aimed to destabilize the British pound. Ahamed compares these bankers to the Greek mythological character Sisyphus, condemned to eternal, endless effort. “Their goal is a strong economy and stable prices,” he writes. “This is, however, the very environment that breeds the sort of overoptimism and speculation that eventually ends up destabilizing the economy.” Ahamed soberingly suggests that, “bubbles and crises seem to be deep-rooted in human nature and inherent to the capitalist system.”
Spellbinding, insightful and, perhaps most important, timely.Pub Date: Jan. 26, 2009
ISBN: 978-1-59420-182-0
Page Count: 546
Publisher: Penguin
Review Posted Online: May 19, 2010
Kirkus Reviews Issue: Dec. 15, 2008
Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our...
A psychologist and Nobel Prize winner summarizes and synthesizes the recent decades of research on intuition and systematic thinking.
The author of several scholarly texts, Kahneman (Emeritus Psychology and Public Affairs/Princeton Univ.) now offers general readers not just the findings of psychological research but also a better understanding of how research questions arise and how scholars systematically frame and answer them. He begins with the distinction between System 1 and System 2 mental operations, the former referring to quick, automatic thought, the latter to more effortful, overt thinking. We rely heavily, writes, on System 1, resorting to the higher-energy System 2 only when we need or want to. Kahneman continually refers to System 2 as “lazy”: We don’t want to think rigorously about something. The author then explores the nuances of our two-system minds, showing how they perform in various situations. Psychological experiments have repeatedly revealed that our intuitions are generally wrong, that our assessments are based on biases and that our System 1 hates doubt and despises ambiguity. Kahneman largely avoids jargon; when he does use some (“heuristics,” for example), he argues that such terms really ought to join our everyday vocabulary. He reviews many fundamental concepts in psychology and statistics (regression to the mean, the narrative fallacy, the optimistic bias), showing how they relate to his overall concerns about how we think and why we make the decisions that we do. Some of the later chapters (dealing with risk-taking and statistics and probabilities) are denser than others (some readers may resent such demands on System 2!), but the passages that deal with the economic and political implications of the research are gripping.
Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our minds.Pub Date: Nov. 1, 2011
ISBN: 978-0-374-27563-1
Page Count: 512
Publisher: Farrar, Straus and Giroux
Review Posted Online: Sept. 3, 2011
Kirkus Reviews Issue: Sept. 15, 2011
BOOK REVIEW
IN THE NEWS
A readable, persuasive argument that our ways of doing business will have to change if we are to prosper—or even survive.
A well-constructed critique of an economic system that, by the author’s account, is a driver of the world’s destruction.
Harvard Business School professor Henderson vigorously questions the bromide that “management’s only duty is to maximize shareholder value,” a notion advanced by Milton Friedman and accepted uncritically in business schools ever since. By that logic, writes the author, there is no reason why corporations should not fish out the oceans, raise drug prices, militate against public education (since it costs tax money), and otherwise behave ruinously and anti-socially. Many do, even though an alternative theory of business organization argues that corporations and society should enjoy a symbiotic relationship of mutual benefit, which includes corporate investment in what economists call public goods. Given that the history of humankind is “the story of our increasing ability to cooperate at larger and larger scales,” one would hope that in the face of environmental degradation and other threats, we might adopt the symbiotic model rather than the winner-take-all one. Problems abound, of course, including that of the “free rider,” the corporation that takes the benefits from collaborative agreements but does none of the work. Henderson examines case studies such as a large food company that emphasized environmentally responsible production and in turn built “purpose-led, sustainable living brands” and otherwise led the way in increasing shareholder value by reducing risk while building demand. The author argues that the “short-termism” that dominates corporate thinking needs to be adjusted to a longer view even though the larger problem might be better characterized as “failure of information.” Henderson closes with a set of prescriptions for bringing a more equitable economics to the personal level, one that, among other things, asks us to step outside routine—eat less meat, drive less—and become active in forcing corporations (and politicians) to be better citizens.
A readable, persuasive argument that our ways of doing business will have to change if we are to prosper—or even survive.Pub Date: May 1, 2020
ISBN: 978-1-5417-3015-1
Page Count: 336
Publisher: PublicAffairs
Review Posted Online: Feb. 16, 2020
Kirkus Reviews Issue: March 15, 2020
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