Book: The Worldly Philosophers

== Summary ==
=== I. Introduction ===
This book is a bout a handful of men with a curious claim to fame. They did not make any decisions as waging war; instead, they shaped and swayed men's minds. And because he who enlists a man's mind wields a power greater than the sword or scepter, these men shaped and swayed the world. Yet, in a world torn by economic problems, the great economists are only shadowy figures of the past unlike the great philosophers or statesmen. 
Not all the economists were such titans, some of them wrote monuments of dullness and explored minutiae with the zeal of medieval scholars. If economics today is lacking its sense of great adventure, it has no one to blame but its own practitioners. The great economists took the whole world as their subject, and the evolution of their heretical opinions into common sense constitutes nothing less than the gradual construction of the intellectual architecture of much of contemporary life. 
An odder group of men---one less apparently destined to remake the world---could scarcely be imagined. They were as different from each other as people come, but had in common a curiosity for the world around them and searched for order and patterns to make sense of the social world around them. It is this search for the order and meaning of social history that lies at the heart of economics. This is a journey through history-shaping ideas, and we will go back to rediscover the roots of our own society in the mess of social patterns that the great economists discovered. 
=== II. The Economic Revolution ===
* 18-21: three ways of organizing society
* 22- 24: pre-market idea Europe practical reality/examples
* 24-26: the idea of gain
* 27-30: markets as mechanism for organizing society was inconceivable
* 30-33: events/resistance to the transition to markets
* 33-37: what caused the transition from tradition/authority to markets?
* 38-42: this new conceptualization of human nature (gain, self-interest, freedom) begged for a philosophy: economics! (AS)
If would be convenient to start with the first great economist; Adam Smith. But, we must first account for the perplexing fact that six thousand years of recorded history had produced philosophers, politicians, statesman, and scientists by the score, but no economists. In this earlier and far longer-lasting world than our own, an economist would have only have been unnecessary, but impossible.
For man as a socially cooperative creature, the struggle between self-interest and cooperation is inevitable. In more primitive societies, this might be solved by the threat of starvation or universally accepted norms of kinship and reciprocity, but in an advanced society these are not the driving forces. He argues that more advanced societies have found three ways to solve this:
# Tradition: one's tasks are defined by history; e.g. profession is inherited so people are born into their social task
# Authoritarian rule: a single authority's edicts and penalties
# Market system
=== III. The Wonderful World of Adam Smith ===
* 42-44: it was not conceived, and 1960s England didn't suggest, that there were laws ordering the seemingly disorderly social world
* 45-50: funny anecdotes, short biography, and influence of Quesnay/Physiocrats
* 51-53: the book, not wholly original but a masterpiece of synthesis and panorama of his time
* 53-59: Q1: how does self-interested action produce societally beneficial outcomes? --> laws of the market = supply and demand dynamics + competition
* 59-63: Q2: to where does a capitalist system tend over time? --> laws of motion (Q1 feeds into Q2) = productivity growth allows the material welfare of the many to grow in tandem. Two laws that propel the market system into spiral of productivity growth.
*63-64: Law of accumulation: greed produces accumulation/capital, which increases productivity of labor
* 65-67: Law of population: population responds to labor demand, therefore high labor prices are a self-curing decease like with any other commodity.
* 67-71: reception/use in his time. Was abused to argue for laissez-faire, AS stressed 3 functions of gov: (1) national security, (2) "exact administration of justice" for everyone, and (3) public institutions and works. 
* 71-74: the long-term impact/what survived? The long-run evolution/laws of motion did not. The laws of the market largely did, though nuanced later by others.
1723-1740: Kirkcaldy; 1740-1746: Oxford; ... ; 1751-....: Glasgow Uni (dean in 1758); 1759: Theory of Moral Sentiments; 1764-1766: tour as tutor (Toulouse, Voltaire, Geneva, Paris, Quesnay); 1766-....: back in Kirkcaldy; 1776: Wealth of Nations; 1790: died.
Book only achieved full recognition some ~25 years and 9 editions later. 
=== IV. The Gloomy Presentiments of Malthus and Ricardo ===
d
=== V. The Dreams of the Utopian Socialists ===
* 105-107: examples of how early capitalism/industralization in England was grim
* 107-108: New Lanark
* 109-111: biography of Robert Owen
* 111-113: villages of cooperation; idea and its reception in his time
* 113-116: Owen started village of cooperation in US, but it failed. Back in UK he was involved with early labor unions. Romantic story of a 'social architect'. If he left behind one great idea, it is that "man is the creature of circumstances". 
* 116-119: biography of Saint-Simon
* 119-121: his 'industrious religion', productive members of society (have the highest contribution and therefore) merit the highest reward, and the system should be reorganized around this principle.
* 121-124: Charles Fourier and his Phalansteres.
* 124-126: utopian socialists revolted against the horror chamber of early capitalism. Since the view of the time was that economic laws were like natural laws and to rail their outcomes was like lamenting the ebb and flow of tides, they sought for fundamental economic reform of society.
* 126-127: John Stuart Mill biography
* 128-130: his Principles of Political Economy; a total survey of the field, and the 'discovery' that: the economic laws that are 'natural' are those of production, the way wealth ends up distributed is not a 'natural outcome', but up to society to decide. ('natural' economic laws pertain to production, not distribution)
* 130-132: if capitalism in that time's form, then Mill prefers Communism. Yet, he believes this is not the choice since the principle of private property has not had a fair trial yet, it could be reformed. Notes two doubts about communism: (1) the competitiveness is a vent for the energies of mankind, and (2) does it leave enough space for individuality of character?
* 132-133: Mill's 'laws of motion': unlike Smith and Ricardo's but Mill believed people could be taught to regulate their reproduction. As capital accumulates, then wages will rise until a 'stationary'/equilibrium level of capital is reached. From this position, society would turn its energies to justice and liberty instead of only growth and tend towards some form of communism.
* 133-135: some anecdotes about Mill and later life.
J.S.Mill: 1806: born; 1848: Principles of Political Economy; 1859: On Liberty; 1863: Utilitarianism; 1869: The Subjection of Women; 1873: died
=== VI. The Inexorable System of Karl Marx ===
* 136-139: set the scene. Communist Manifesto (1848): a philosophy of history in which a communist revolution was not only morally desirable, but demonstrably inevitable by logical analysis.
* 139-143: context and—the quite different—biographies of Marx and Engels up to the point of meeting each other in 1844 in Paris, when his new philosophy of history began to take formal shape.
*144-146: the philosophy is often called dialectical materialism:
**Materialism: the materialist conception of history starts from the principle that production and the exchange of its products, is the basis of the division of society into classes. The causes of social change are to be sought not in the minds of men, but in the economics of the epoch. Whatever the form in which men solve their economic problem, society requires a superstructure of noneconomic activity/thought, reflecting the economic reality. Thoughts and ideas are the product of environment, even though they aim to change that environment.
**Dialectical: (juxtaposition of opposite/conflicting ideas) inspired by Hegel's idea of inherent change. Ideas were not passive results from economic activity, they were dialectical/in constant flux. This flux however, was not just between ideas and social structures, but also influenced by changing economic conditions. Economic changes produce changes in the social structure (e.g. technology creates factories and industrial proletariat, markets create a merchant class).
**Was a important as new perspective into history. But, for Marx and Engels it was not just historical reinterpretation, it produced a view on the future: capitalism will inevitably produce revolution.
*146-148:
**Class structures: aggregates of individuals who stand in some common relationship to the existing form of production. As production changes, the social relations of production change too, leading to changes in the distribution of wealth and conflict between incumbent and upcoming classes.
**Because the economic base (industrial production) was an interdependent process, and the superstructure (private property) fundamentally individualistic, they were incompatible. 
*148-151: Marx married, moved from Paris to Brussels to Germany to London. Lived in severe financial struggle with which Engels helped. He died in 1883.
*151-154: Marx set out to steer societal change through organizing an international working-class movement. Included: the Communist League, Int. Workingmen's Association 1, 2, and 3. Marx had a persistence of narrowness, and inability to entertain dissent form his ideas that communism perhaps inherited from its founder. But, his impact through these movements did not persist the way his dialectical materialist theory of history and his analysis of the laws of motion of capitalism.
*154-161: what are these laws of motion? Marx's answer is in Das Kapital (vol I: 1883, II: 1885, III: 1894, IV: contested). 
**Creates a 'perfect' abstract theoretical form of capitalism: no monopolies, no unions, no special advantages, every commodity sells at its proper price = value = amount of labor (direct or indirect through machines) in it.
**Two characters in the model: workers who sell their labor, and capitalists who strive to accumulate.
**How can there be profits in the system if everything sells for its labor-based value? Daily wage = value(labor power) = #hours to produce subsistence lvl consumption < daily hours worked. Let x be the production of a worker. Since price(x) = #labor hours(x), surplus value(x) = #labor hours(x) - #labor hours(subsistence consumption).
**This happens because capitalists monopolize one thing: acces to the means of production/the supply of jobs. (hence no bargaining power for workers?)
**Since profits are proportional to #workers employed, capitalists want to accumulate, and capitalists are in competition with each other, will compete for workers which produces upward pressure on wages (to the point where surplus value goes to zero?).
*161- : contrast with earlier views; lack of post-capitalist doom vision; mathematical error/labor theory of value/possible ways of disposing; 2 extraordinary properties of his analysis: (1) (2); 
Karl Marx:1818: born; 1843: married; 1845: move from Paris to Brussels; 1848: The Communist Manifesto; 1849: move to London; 1881: wife (Jenny) died; 1883: died
Friedrich Engls: 1820: born; 1844: The Condition of The Working Class England in 1844; 1895: died
=== VII. The Victorian World and the Underworld of Economics ===
* 170-177: ...
* 177-178: start of 'underworld' with Mandeville
* 178-182: Frederic Bastiat (1801-1850): satirical writer about economics, especially ridiculed those arguing in favor of barriers to trade in order to decrease their own competitive pressures. Heilbroner points out that he scrutinized whether "we trust the automatic mechanism of private interest when it is perverted by the far from automatic mechanism of the political structure it erects?"
* 182-190: Henry George (1839-1897): wrote Progress and Poverty (1879), one of the most-sold books of the late 19th century. Laments the 'social extortion' of rent from land, and how a sort of Utopia could be realized by a single massive tax that absorbs all rents.
* 190-192: The second half of the 19th century saw a change from skepticism to widespread approval of imperialism. While academic economics didn't engage this new phenomenon much, underworld economics saw in it a change in the fundamental character of capitalism.
* 192-199: John Hobson (1858-1940): wrote The Physiology of Industry (1889), which against economic consensus argued that depressions are caused by excessive saving: the rich lack the physical capacity to spend their vast incomes, and given the poor already spend their whole income there is no scope for investing in industrial production anymore. After going to Africa, he wrote Imperialism (1902), arguing that the unequal distribution of wealth producing forced savings led to imperialism to create new opportunities to invest their excessive wealth. Because there are competitive pressures between countries to find new markets, this paves the way to wars. 
* 199-201: Some thoughts of Heilbroner on the motives for colonization noting that the common denominator was economic gain. (doesn't mean that it goes through this excessive savings channel though, could just be greed?)
* 201-203: is imperialism indeed inseparable from capitalism? Heilbroner: No, we think about it more as capitalism tending to displace other systems.
* 203-205: Imperialism changed with the rise of multinational companies as the way capital moves from its home country overseas, and internationalization intensified the competitive pressures. 
* 205-210: Going from underground econ to its anthesis, Alfred Marshall (1842-1924): His main interest is in equilibrium/the self-adjusting, self-correcting nature of the economy. This idea was not new (Smith, Ricardo, Mill), but the existing theory was imprecise. In Principles of Economics (1890):
** he addressed unclarities such as whether supply or demand ultimately determines the price of a good, by incorporating the time as an element: In the sort-run, supply is fixed so demand determines price, but in the long-run the cost of production primarily determines price. 
** He posits a new figure: the individual, and models the economy/social order as a collection of individuals seeking their 'utility'.
** He sees the purpose of economics as explaining economic phenomena (such as equilibrium prices) within the relations of power and obedience that structure societies, now how these structures themselves arise.
*210-212: Marshall's contribution to economic analysis of abstract time and equilibrium was far removed from the world of history. Rather than acknowledging this as a short-coming, when others insisted that major historical changes were the subject of economic inquiry instead of stable equilibrium textbook society, they were scored. Heilbroner notes this as an 'intellectual tragedy'.
=== VIII. The Savage Society of Thorstein Veblen ===
* 213-217: until here, this was exclusively Europe. In this old world, money was not the same as social status, so even while new people became rich this didn't overthrow completely the old institutions. In the US this was different, "having acquired a passport of suitable wealth, the American millionaire needed no further visa for his entree into the upper classes". Accordingly, the sportsmanship was somewhat less. Time of capitalist melee and the robber barons in the US. (roughly 100 years after WoN)
* 217-218: what did economists think about this? Not much. It was unperceptive, and forced the American world into the same formal mold made by European economists. It needed the eye of an outsider to view the scene with added clarity and perspective: Veblen.
* 218-221: Veblen's (1857-1929) personality and interest: a stranger/outsider alienated from society with many eccentricities with only one avenue for expression: he wrote in razorlike English. His econ had no relation to the formal Victorians. He wanted to know something else: why things were as they were in the first place. With an almost anthropological approach he sought to penetrate the true nature of society, often fastened on the smallest trivia when he believed it to be projecting some important but buried reality.
* 221-228: Veblen early biography: immigrant from Norway, went to Carlton College. Graduated in 1884 with a PhD in Philosophy from Yale, followed by 7 years of isolation where he loafed and did nothing except read. Worked at UChicago 1892 till 1906. Many funny quotes about odd personality.
* 228-233: The Theory of the Leisure Class (1899): 
** while some saw the book as nothing more than a satire on the ways of the aristocratic class, these examples were no more than the illustrative material of the book. Veblen was inquiring into the theory of the leisure class: what is the nature of economic man? What gives rise to a leisure class? What is the economic meaning of leisure itself? 
** To Veblen, the classical economic explanation of negative utility of work being minimized by those who can afford it made little sense. He wasn't convinced leisure was in and of itself preferable to work, which he saw examples of in anthropological studies of some primitive societies which didn't elevate leisure.The American Indians, the Ainus of Japan, the Todas of the Nilgiri hills, and the bushmen of Australia. In other ones, a leisure class was present who weren't idlers but seized their riches without meaningful contribution to society. Veblen saw human nature to still be savage and as a result, man instinctively nonpredatory activity to be inferior to predatory behavior. 
** While this may seem farfetched, we don't need to accept this anthropological logic to benefit from his many examples and insight that much of the economic motives can be far better understood by deep-buried irrationalities than in terms of rational happiness machines. 
** Lastly, in addition to (1) explaining the presence of a leisure class, and (2) the display of expenditure as the norm, his savage model gives a clue to the nature of social cohesion itself: we all, workers and capitalists alike, see work as 'less-dignified', and the worker is not trying to displace their managers as much as emulate them.
* 234-240: The Theory of the Business Enterprise (1904) + some other books/work: 
** In contrast to economics since the WoN, while the businessman was still the central figure, he was now portrayed as the saboteur of the system. Veblen did not begin with the clash of human interests. Instead, he began 'the machine': he envisaged the economic process itself as mechanical in character, as econ meant production and production mean machinelike meshing of society as it produced. In such a mechanical world, there was no place for the businessman to make profit, except if they conspired against the machine. This was done by causing breakdowns in the flow of output by using a superstructure of credit, loans, and make-believe capitalizations. 
** Might sound odd, but this was written in the time of the 'robber barons'. Some examples follow of those interested in the accumulation of wealth in a way that was completely disconnection from production.
** He had in mind with this also to present a theory of social change: the machine "throws out anthropomorphic habits of thought" that forced man to become more matter of fact, which would divide society not poor against rich, but technician v. businessman, and scientist v. ritualist. In The Engineers and the Price System (1921) and Absentee Ownership and Business Enterprise (1923) he spelled out the 'revolution' in greater detail: a group of engineers from society would take over the chaos of the business system at some point, dispense with the "lieutenants of absentee ownership", and run the economy along the principles of a huge well-ordered production machine.
* 240-244: other writings and remaining biography till death: left Chicago in 1906, Stanford till ~1911, Missouri ~1911-1917, DC and NYC after, till moving back to California at end of life. Later books had less influence and he was a bit of a notorious figure in society. For a while he seemed to wait for a sign of his revolution of engineers and technicians, but it never came.
* 244-247: his legacy: in his analysis he often went to the extreme and draw caricatures that shade off into the extreme. Like e.g. Marx, Veblen did not seriously inquire into the extent that the institution of business might adapt itself, not seeing that the 'machine' would change the nature of the entrepreneurial function just as much as it would alter the thought process of the workman. Yet, Veblen did put his finger on an overlooked process of social change: the emergence of technology and science. He thought that man is not to be comprehended in terms of 'economic laws', but better dealt with in the less flattering but more fundamental vocabulary of anthropology and psychology. (this last part puts more emphasis on this theory around the machine, while I feel that most people remember him just for the Theory of the Leisure Class?).
** "There was the disturbing influence of Thorstein Veblen---that visitor from another world who dissected the current commonplaces which the student had unconsciously acquired, as if the most familiar of his daily thoughts were the curious products wrought in him by outside forces. No other such emancipator of the mind from the subtle tyranny of circumstance has been known in social science, and no other such enlarger of the realm of inquiry."
=== IX. The Heresies of John Maynard Keynes ===
* 248-253: transition from Veblen, and describes the temptation and jubilation around the stock market in the roaring-twenties and how the great recession with all its misery followed it. The Dow increased sixfold from 1921 to 1929, and from black Monday 28 October 1929 to summer of 1932 it lost 89% from its peak value. This produced an unprecedented contraction and massive prolonged unemployment that economic theory had no ability to explain. The man who would seek to solve the paradox of insufficient production yet massive unemployment was Keynes.
* 253-256: Early life: Keynes (1883-1946). Victorian old-school upbringing with a father who was also an economist. Went to Eton at 14, then King's College, Cambridge where the was close to Marshall and Pigou. In 1907 at the age of 24, he went to work for the India office which he hated and left after two years, but he wrote 'Indian Currency and Finance' (1913) based on what he learned there. He went back to Cambridge which was more to his liking and became editor of the Economic Journal (which he remained for 33 years). This also was the start of the Bloomsbury group.
* 256-261: Mid life: the war years somewhat disrupted Bloomsbury. He went to Paris for the settlement of Europe after the war as Deputy for the Chancellor of the Exchequer. While he had a grandstand seat, he had no power to interfere directly in the game. Keynes saw that the Versailles Treaty was unworkable and resigned in despair three days before it was signed. He immediately wrote his polemic against it 'The Economic Consequences of the Peace' (1919), which was an immense success and made his name. After, he made a fortune speculating in international markets, married Lydia Lopokova, and wrote Treatise on Probability (1921).
* 262-264: 
** he raised eyebrows with his Tract on Monetary Reform (1923) in which he inveighed against the abdication of conscious control of currencies to the mechanism of the gold standard. 
** The Treatise on Money (1930) was an attempt to account for the business cycle. Previously, these were thought of as a sort of mass nervous disorder, but this left unanswered the basic question of what caused such widespread hysteria. Jevons had made an attempt using the idea of sunspots causing weather cycles which caused crop cycles which in turn caused business cycles. Instead, Keynes resorted to find fault with saving, as Malthus did earlier. But, from his time, the economy had changed. Back then, those who saved where those who invested, while wealth was now more widespread and those who saved weren't necessarily also investors. Hence, saving and investing became operations carried out by separate groups of people. This introduced trouble Malthus never foresaw.
* 265-267: what exactly causes the problem? Saving! Prosperity in a point in time is best measured by income (e.g. not wealth), but this is a flow. With every transaction, part of one's income is given to someone else for whom it constitutes part of their income, this is the case for any portion of anyone's income. For the most part, this takes place uninterrupted, driven by our constant need for consumption goods (food, clothing, housing, etc), but there is one part of income that does not directly become someone else's income: saving. If we keep saving in cash, we return less to society than it gave to us, and if this was widespread there would be less and less handed around at each turn. This generally does not happen because savings tend to be invested by businesses. But, notice this vital fact, there is nothing automatic about the saving-investment channel. Businesses might not in the position to expand and require investment for this. If savings do not become invested by expanding business firms, our incomes must decline. (note that this story has no greedy landlords, avaricious capitalists, etc. It is a passionless tug of war). 
* 267-269: The Treatise on Money was a sparkling exposition of this seesaw of savings and investment. Yet, no sooner had Keynes written the Treatise than he tore it up, for his theory of this seesaw failed at the central point of explaining how an economy could remain depressed. Since savings and investment are connected as the supply and demand in the money market, if supply outweighed demand the price (the interest rate) should go down which in turn would stimulate investment. Hence, the seesaw theory promised an automatic safety. Yet, in the Great Depression this is exactly what failed to materialize: the interest rate declined but investment remained depressed. 
* 269-273: The General Theory of Employment, Interest and Money (1936) was revolutionary as it stood economics on its head as The Wealth of Nations and Capital had done, since it had a startling and dismaying conclusion: there was no automatic safety mechanism after all. How could this be? Would the flood of savings at the bottom of the slump not push down interests thereby inducing business expansion? Keynes found an answer in a simple fact: there would be no flood of savings at the bottom. Why? Because when an economy contracts so does its income and savings. And, if there is no surplus saving, there is no downward pressure on interest. This mechanical chain of events was a tragedy of poverty, but one without a villain. At any time, industry is limited by the size of demand.Note that there is no role in any of this for productivity? Possibly for business cycles this is less important? Hence, the three-part gloomy diagnosis of the book: (1) there is no safety mechanism, an economy in depression can stay there, (2) prosperity depends on investment and if it falls a spiral of contraction begins, and (3) investment is an undependable drive for the economy, uncertainty is at the very core of capitalism. 
* 273-280: But The General Theory was not means to be a book of doom, it proposed a cure: the deliberate undertaking of government spending to stimulate the economy. The remedy was perfectly logical: if business was unable to expand, the government must take up the slack.With his tongue only partly in cheek: "If the Treasury were to fill old bottles with bank notes, bury them at suitable depths in disused coal mines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well tried principles of laissez-faire to dig the notes up again... there need be no more unemployment and with the help of the repercussions, the real income of the community would probably become a good deal larger than it is. It would, indeed, be more sensible to build houses and the like; but if there are practical difficulties in the way of doing this, the above would be better than nothing." This was not a wholly new idea, as this was precisely what was started to be implemented under Roosevelt, it provided a rationale. Yet, the stimulus didn't quite bring the desired results with 9 million unemployed in 1936 while private investment had largely recovered. Two reasons: (1) insufficient medicine, not enough spending to really bring about full employment, and (2) it was interpreted by business as a threat and came during a wave of antibusiness sentiment which increased uncertainty. (few parts about ideology)
* 280-287: Hart attack in 1937, slowed him down. How to Pay for the War: compulsory saving that becomes redeemable upon the end of the war, a policy opposite to the previous one, but also the opposite problem---uses the same theory. [more bio]. Quote on 'The master-economist': "He must be a mathematician, historian, statesman (...)". What of his intellectual legacy in economics? It dominated the field in the US from 1940 to the 1960s. It declined because of (1) failure to find a way to reconcile Keynes' macro view and 'animal spirits' of investors, with the Marshallian 'micro' view emphasizing rationality, and (20 a resurgence of interest in inflation-related questions of money and dislike of large government ideology.
=== X. The Contradictions of Joseph Schumpeter ===
* 288-291: transition: Keynes' Economic Possibilities for Our Grandchildren (1930), speculating on what a future looks like by extrapolating the LT rate of economic growth, predicting abundance of leisure and 'solving' the problem of scarcity. Heilbroner notes a transition in the book from history to thinking about the future of the economic world.
* 291-293: short character introduction/sketch and early bio from 1883 birth to 1911 publication of The Theory of Economic Development (1911). 
* 293-294: asks: how does capitalism develop its propensities for growth? Schumpeter starts from a model without capital accumulation, where workers are paid their marginal product and there is are no profits.
* 294-296 profits arise when the static flow is disrupted. When technological or organizational innovations create cheaper ways to make things, or to make new things, this creates a cost differential that forms a rent for the entrepreneur. This new flow is not permanent, but depends on when other firms catch up.
* 296-297: note that the entrepreneur is not necessarily a profit receiver, even though he is the profit generator. Profits go to the owner of the enterprise. The reason for the entrepreneur to innovate is taken as give, a type of pride, drive for success, or 'instinct of workmanship' (veblen).
* 297-298: bio
* 298-300: the depression was a test for Schumpeter's ideas, for with his theory it begs the question: why did new innovations not arrive? In Business Cycles (1938) he gives two reasons for the severity of the depression: (1) there are three business cycles with different cadences (short, ~7-11 years, ~50 years) all bottoming out simultaneously, and (2) negative external factors. [FOLLOWS A NOTE ON FAIT BEING PIVOTAL FOR THE SYSTEM WHERE i DON'T SEE HOW IT FOLLOWS/CONNECTS-just here for transition?]
* 300-303: Capitalism, Social, and Democracy (1942) is framed in opposition to Marx as the intellectual antagonist. He places the cause of dynamism in the desire of the capitalist to substitute labor, where Schumpeter sees the upstart entrepreneur—who may not have any capital at all—as the source. After the first four chapters (Marx the Prophet, Sociologist, Economist, and Teacher) he shocks with: "Can capitalism survive? No. I do not think it can." The reason it not because its not an economic success, but because its not a sociological one: he makes a [very] unclear assertion about how the rational mindset of capitalism will turn on itself somehow. In this way, he reaches the same conclusion as Marx, but through a different reasoning.
* 303-305: Does his view carry out? The text is reads as authoritative, but becomes less impressive on closer examination. The arguments are quite speculative and have not come true as of now. His vision does not emerge from the preceding development of the system with the same logic as other economists as Smith or Marx, but this is because Schumpeter's prognosis is not ultimately an economic one. The businessman who decides that the game is not worth it is bowing to cultural, not economic pressures.
* 305-308: There is a last twist to his thought. Schumpeter's entrepreneurs do not come from any particular class—they are simply the possessors of talent. Capitalist 'development' is not therefore intrinsic to capitalism as such, it is the dynamization of society at the hands of a non-capitalist elite. [SOME PART HERE ABOUT COMPOSITION OF THE ELITE AND DISTRIBUTION OF TALENT WHERE I FAIL TO SEE THE LINK].
* 308-310: Is this economics? No. Followed by some reflection on how personal experience influences how one thinks. Quote on the 'pre-analytic process': "Analytic work embodies the picture of things as we see them, and wherever there is any possible motive for whishing to see them in a given rather than another light, the way in which we see things can hardly be distinguished form the way in which we wish to see them."
=== XI. The End of the Worldly Philosophy? ===
* 311-312: "end" has two meanings: termination and purpose. What is economics ultimately about? At its core it is an explanation system whose purpose it is to enlighten us to the workings of the complex social entity we call the economy. Given the wide array of thinkers in the foregoing chapters, it may seen un-unifiable, but we can see a common structural core within. As from Ch2, systems of tradition and command did not require economics to understand them. A new social order arose called capitalism; its means of organizing material life an economy, and its new explanation system economics.
* 312-313: Capitalism brought three main changes: (1) a dependency on the acquisitive drive as the principal means of organizing the production and distribution of material needs, (2) the guidance of production and its distribution to the incentives of the market, and (3) it placed society's guidance under two authorities, one public (government) and one private (profit-seeking individuals). For all the changes from Smith to Keynes and Schumpeter, there is not mistaking that the social formation of capitalism is their common core, worldly philosophy/econ could not exist without it.
* 313-315: What does this have to do with the end(s) of econ? First, the 'termination' part. The answer to this lies in a changing vision of economists. This is not the mathematization of economics. The deeper and more significant change is the increasing appearance of the vision of science and corresponding disappearance of the vision of capitalism.
* 315-318: It makes some sense that economics has looked to fields like physics, as the 'lawlike' behavior of individuals responding to prices bears a resemblance to the natural processes of science like the law of gravity. Why then, should we not applaud the vision of econ as a science? Two reasons. First (1), econ deals with the ever-changing forces of human nature and while we talk of 'behavior' of atoms we do not think about these as 'choosing/deciding': human behavior cannot be understood without the concept of volition, if econ was a science humans would be analyzable as robots/deterministic. Second (2), social life is political: are crucial economic matters as poverty the counterpart to gravity, or are they mutable determinations of the sociopolitical order we live in?I think poverty is a bad example? He was previously comparing the law of gravity to the law of price responses. 'poverty' is not a 'behavior'. Nonetheless—albeit possibly slightly tempered—the argument stands as such behavior is endogenous to the sociopolitical order in which we live.
* 318-319: [something like the object of study is not a product of nature but of society, which in turn is influenced by the study. Hence, there is a type of endogeneity to the findings that is not present in natural sciences?]
* 319: Second, the 'purpose' part. IF econ is not to be a science of society, what is its usefulness?Note here the distinction between science of 'society' or of 'capitalism'. In the former, the aforementioned lawlike behavior could be different in a different sociopolitical system, which would call for a different explanation system. It is to help us better understand the capitalist setting in which we will most likely have to shape our collective destiny for the foreseeable future.
* 320-321: There is a spectrum of possible capitalisms that result can result in cultures of greed and social indifference. It is with respect to these social aspects of capitalism that a reborn worldly philosophy can play its most useful role. Its purposeful end should be to develop a new awareness of the need for and the possibility of socially and economically successful capitalisms. This will involve an enlarged conception of its purview combining different disciplines.
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== Book Club notes ==
=== Meeting 1: Q's (Ch 1,2; 24-feb-2023) ===
* Ants/social instincts, don't humans have this as well?
* The solutions:
** How does tradition relieve the tension between cooperation and self-interest? It seems a coordination device, but without any authoritarian aspect what keeps one from deviating? (tradition is not binding? social pressure?)
** 4th solution to the problem; religion?
* Equating market system to freedom. How else can one be allowed to do whatever they like? Makes sense, but never framed it for myself. (never realized this is why AS called it system of natural liberty)
* markets: "the lure of gain, not the pull of tradition or the whip of authority steered the great majority to their task. And yet, although each was free to go wherever his acquisitive nose directed him, the interplay of one person against another resulted in the necessary tasks of society getting done." Makes me ask: other than markets not functioning well (externalities, etc), are there things that we want/are good for us that we are not willing to pay for individually? E.g. free-riding, public goods, etc. (market failure = non-PO allocation).
=== Meeting 2: Q's (Ch 3,4; 17-mar-2023) ===
* I am not sure I understand his distinction between the 'laws of the market/mechanism by which society hangs together' and the 'laws of motion'. The one is a description of how a market system 'functions'/what are its regularizable mechanisms, and the latter is how it makes society change over time/what the world tends towards in the limit?
*p.59: "But the laws of the market are only a description of the behavior that gives society its cohesiveness. Something else must make it go." what does he mean by this? Don't the laws of the market explain how things go? 
*p.64 bottom: see notes, did he not consider the possibility for investment/R&D in technology/machinery? This seems surprisingly naïve. Did he see division of labor as a limited space for growth, after which there is no continuous technological progress? Odd.
*Under what conditions can collusion be sustained in a dynamic setting? He seems to posit it is the inevitable consequence of self-interest.
*Can see law of accumulation and law of population and driving the laws of motion?
=== Meeting 3: Q's (Ch 5; 2-apr-2023) ===
* I suppose the 'ideological reaction' to industrialization makes sense as the theme of a chapter, and is fitting chronologically. Nonetheless, the chapter was less appealing to me. It is more skewed towards biographical information than putting the ideas front and center. This made it more of an effort to read for me. 
* I did not know anything about such 'utopian groups'. The fact that there were 178+ of them in the US makes it surprising I never heard of these.
=== Meeting 4: Q's (Ch 6; 18-apr-2023) ===
* p.144-148: dialectical materialism: I see three types of levels: ideas, social structures, and economic reality. As far as I can tell each affects each other except for ideas affecting economic reality? Or do they all just affect each other?
*How exactly are the base (industrial production) and superstructure (private property) of capitalism incompatible? If a (single!) factory requires social planning, why would the party owning the factory abhor it? Does it instead mean more that the needs to be coordination between factories at a higher level to reach the right level of output? If so, where does Marx disagree with Smith's reasoning that this solves itself? From the 'first' part on p.147, it seems to disagree with Smith on this point. Why does the price mechanism not work according to Marx? (granted, it won't be stable, but why would it not adjust?)
* p.156: capitalist not money hungry from greed, but because strive for accumulation to not be accumulated? How do you guys understand this?
*p.157: Since price(x) = #labor hours(x), surplus value(x) = #labor hours(x) - #labor hours(subsistence consumption), total surplus value in society would be: avg(#labor hours(working day production) - #labor hours(subsistence consumption) * #people in society? So the extra-subsistence productivity of the worker, combined with the ratio of workers-to-capitalists determines the rate of accumulation of the capitalist class? Since profits of a single capitalist, are proportional to number of workers employed, there would be a competitive dynamic to hire workers away for other capitalists? This would create a way out, even if capitalists have a monopoly on the supply of jobs.
*Does this imply there is no possibility for technology driven productivity increases? If we build a machine to produce more products for a given amount of labor, it will produce exactly as much extra as it took to develop the machine? (with fixed cost development/investment costs, and a production-cost-per-machine this becomes very shaky?) 
*p.157 bottom: capitalists can extract all value because they monopolize access to means of production; they are the only ones who can 'supply jobs'. Given the above, if machines are worth exactly their labor production costs, what stops laborers from creating their own machines/means of production? They don't have any savings/capital, and therefore if machines are expensive, they can't bridge the time it takes to build one without starving? They can't do this next to their work, because there is no 'free time': the working-day is exactly as long as one is able to labor in a day? So kind of only works in an equilibrium where all workers have exactly zero capital? As soon as they have some, they can 'supply themselves a job', and this would be as 'profitable' as any other job since the price of any machine/tool is exactly the cost of labor hours to produce it. Hinges on this sort of discrete ability to 'supply themselves a job' or not.
*How do you guys understand the move on p.159 of introducing laborsaving machinery? How does this 'rescue his profits'?