5 comments about The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else.

1. The Mystery of Capital tackles one of the largest issues in development and comparative economics: non-convergence. Why is it that living standards do not converge? Is it because some nations have better technology? Is it because some nations simply have more capital? De Soto focuses on institutions rather than existing technology or capital. The reason why some nations succeed in developing a modern capital structure using modern technology is because their institutions protect the property rights of those who try to save and accumulate wealth.
   
   The discussion of American history is detailed enough to make a strong case, yet focused enough to make it easy reading. De Soto does a good job of relating American experience to modern development issues. This is what economics should be about: using valid and sensible theoretical propositions to explain real historical events. Consequently, I have found this book useful in my classes on Comparative Economic Systems, and Law and Economics. The Mystery of Capital certainly does not read like a textbook, but it should be used as one anyway.
   
   The main limitation of this book is that it tends to make observations about politics, rather than explaining it. In other words, De Soto does not get very far into Public Choice issues. This is a minor limitation, as no book can cover every angle. Read The Mystery of Capital and learn!



2. The mystery of capital? Property rights.
   
   Your reaction to this fundamental statement will probably determine your enjoyment level of this book: are you in the "Oh, really?" camp or the "Of course!" camp? Although de Soto seems to stake this out as his first "Eureka!" moment, this is far from a new insight--the role of property rights in economic development is well-known in a number of fields, including business, law, and economics. Therefore his claim that everyone has simply "forgotten" about the source of the mystery of capital requires some suspension of disbelief. To a large extent, de Soto undermines his claim to novelty by citing a number of renowned property rights scholars (such as Coase and Demsetz, and of course Marx) and noting that Latin American governments have recognized property rights as being key to economic development for the past 200 years. Somewhat shocking to me is the absence of reference to Douglass North, the Nobel Prize-winning economist who deals with virtually the same question ("why do some countries consistently outperform others?") and arrives at virtually the same conclusion: countries with institutions that foster property rights do better. De Soto rightfully concludes that culture is not to blame for everything, but North has a more developed framework that encompasses not only culture but other informal norms (such as those that allow the extralegal economy to function) as well as the formal institutions and their enforcement. What I'm trying to say is that if the "mystery of capital = property rights" part was at all surprising (or even if it wasn't), give North's 1990 book on institutional economics a read.
   
   Personally, what I found more interesting was the focus on the extralegal economy of developing & underdeveloped countries. Undoubtedly, this is a topic that does not garner much attention, and when it does it is more from a human rights standpoint than an economic standpoint. De Soto's point that these "extralegals" are often not extralegal by choice, and often productive members of society is well taken. So is his point that formal laws must be harmonious with informal customs (although it is interesting that he spends much time arguing this point, which is taken as a given--and starting point--for North and other institutional economists). As other reviewers have noted, however, a degree of skepticism is needed when de Soto treats his "legalize what is not extralegal" mantra as a panacea for all poor countries' ills. Not just because of the logistics necessary for such an endeavor (such as the simultaneous improvements in the many complementary institutions to property rights necessary in order to fully realize the economy's potential), although that is a key stumbling block. Nor is skepticism needed purely because of the fact that de Soto apparently expects a virtuous politician (or enlightened consultant) to implement in a series of fell swoops what it took the US and Europe many centuries to achieve in a gradual, organic evolution kind of way. Even the success of Japan was not as precipitous as de Soto and others claim--Japan's rise to power is best viewed as starting with the 19th century Meiji Restoration, not the post-war period. It's not even because de Soto doesn't seem to consider the situation where extralegal norms are inefficient or even run counter to capitalism (which is often a primary reason why reform is pushed by the IMF and other such actors).
   
   No, what concerns this reviewer even more is that the causality de Soto argues seems counter to what his actual US/Europe examples imply. In other words, de Soto argues that the economic potential of extralegals would be unleashed if only they were allowed into the formal economy. That is, legalization of what is extralegal leads to economic development. Yet, the example of US settlers suggests the exact opposite. Rather than the legalization of extralegal activities (like squatting) being instrumental to the release of economic potential, it was largely an irrelevant, post hoc adjustment to reality. Politics certainly figured in, but purely from an economic standpoint, the extralegal institutions trumped the outdated and inefficient legal institutions anyway. The squatters were going to squat and the gold diggers were going to dig, and the law was at worst a minor nuisance to them as they pursued their economic activities. Economic changes heralded legal changes, not the other way around. Not only that, but the decision to tolerate and even reward squatters--while an economically justified decision--actually undermined property rights in the traditional sense, ironically.
   
   In other words, it was the economic development that preceded legalization; this is not the causality for which de Soto argues. To that end, one cannot help but think that the economic potential of a Peruvian shantytown dweller--while positive, from a value-creation perspective--is dwarfed by that of a historical US frontiersman or UK suburban textile worker. In that case, the focus shifts to classic concepts like comparative advantage. The implication is that the question becomes: what sources of competitive or comparative advantage can be exploited to achieve sustainable economic development? The legality of these aspects becomes somewhat trivial. If economic development is fostered, the legal system will fall in line (case in point: China's meteoric economic rise is finally being accompanied--albeit slowly--by legal reform, but clearly it was not legal reform that drove China's economic ascent!). Don't get me wrong: improving a country's system of property rights can do nothing but good. But would legalizing what is currently extralegal propel a country like Peru into the ranks of the developed, "rich" countries? That's a little harder to believe. It also casts a shadow on de Soto's sunny optimism because it would then be possible for a country to "do all the right things" and still languish in poverty.
   
   De Soto's zeal is admirable, and he's clearly on the right path in general. And even though his examples suggest that economic change precedes legal change, while he argues that legal change precedes economic change, these are not mutually exclusive processes so he is not necessarily wrong (he just has less anecdotal support than he presumes). I just worry that even if his suggestions are implemented, 10, 50, or 100 years from now we'll still be asking the same basic question: why do the gods of economic prosperity smile on some places but not on others?



3. Life changing book, should be read by everyone. Very easy to comprehend and very easy to read in one or two settings. What is capitalism, what is a capitalist and what is capital? More importantly, why do some have the good fortune to be capitalists? And, why have so many missed the boat? DeSoto doesn't give the formula for alleviating world poverty. More importantly he provokes the reader to start looking for answers. The "Mystery of Capital" essentially becomes the source of knowledge capital in action. I've already started looking at the billions of humanity stuck at the bottom in a whole different way. Hopefully you will too after reading this book.



4. To what extent do private property rights--dividing up the earth among individuals, making everything a commodity which can be bought or sold--facilitate economic development? Are they absolutely required? Could a planned economy manage to guide development, perhaps with (nearly) as much speed, but a lot more consideration for humanity?
   
   This is an important question for Marxists as well as others. It's also a controversial one. Adherents of Trosky's theory of Permanent Revolution (Bolsheviks more generally, in fact), and of Che Guevara's theory of peasant-based rural guerrilla rebellion, insist that it is possible and desirable to make the transition directly from an underdeveloped, largely agrarian society to an advanced, industrial capitalist economy under the auspices of socialist planning. In terms of legal systems, they believe it is possible to bypass a system of private property and free enterprise, moving directly from feudalism (landlords and peasants) to socialism (collective ownership of the means of production, distribution and exchange) without capitalism (the private ownership and building up of small businesses into giant capitalists industries, aka the MoP).
   
   Classical Marxism--represented by Marx himself, most Marx scholars, and politically speaking, by (for instance) the Russian Mensheviks--holds instead that every society must pass through a long period of capitalist industrialization before it is ready for socialism. Private property rights must be granted and protected by the government, development must take place under the "guidance" of capitalists (they are really just seeking their own individual self-interest, but in the aggregate they guide things), productive capital must become ever more concentrated into fewer hands, until eventually the forces of modern production are too large and too concentrated to be held by any one person in a society that considers itself democratic, and control of them must be taken away from individuals and given to society as a whole.
   
   Like any honest Marxist, although I'm convinced of the need for a planned economy in any highly industrialized society, I'm torn on the question of third world development. On the one hand, the classical Marxist argument seems more compelling and more in tune with reality. On the other, there is a strong emotional impetus to accept the revisionists' theories about moving straight to socialism. Must all of humanity really pass through the ugly period that the West experienced while capitalism was developing here? Modern sweatshops, all over the world, are like Charles Dickens' London on a massive scale: child labor, starvation wages, dangerous conditions, 16-hour days. Is it really necessary to see all this suffering happen again? Surely it would be inexcusable to dogmatically hold to the classical Marxist view if there was indeed an alternate, more humane path to development.
   
   The Mystery of Capital takes the basically libertarian viewpoint that an extensive and rigidly enforced private property system is necessary for development to occur--roughly in line with the classical Marxist view about the capitalist development stage that must precede socialist planning. It makes the case rather well. Since 100+ reviewers have already summarized the book, I won't. Instead I'll suggest reading De Soto in conjunction with Law and the Rise of Capitalism by Michael Tigar, which documents the *actual* role that libertarian (bourgeois) property rights had in the *actual* development of capitalism in the West. It nicely rounds out De Soto's hypothetical argument about what is required for the *future* development of the third world.
   
   Even if the argument of De Soto/libertarians/classical Marxism is correct, no one should think that legally-enforced private property is all that is necessary for development today. For we live in a different age than the one in which classical Marxism was born. Today there is an unprecedented development gap between the industrialized and undeveloped world, something that wasn't faced by the early industrializers (Britain, Western Europe, and America). New and unique obstacles therefore face those who wish to industrialize in today's global economy.
   
   Even with extensive private property laws in place, no infant manufacturing industries are able to compete on the global free market with those of the advanced industrialized nations. Thus, pure free trade provides another stumbling block to development even if private property laws were extensive and thoroughly enforced. Sure, developing nations can freely compete and trade their agricultural products and raw materials, but if they do not protect their markets for *industrial* products, they won't ever develop their own industries. An Indonesian car is not going to be able to compete on the free market with Japanese and American ones. The industrially undeveloped countries must be protectionist about their manufacturing industries until they are sufficiently developed to compete against established global companies. To continue with the same example, protectionism would allow an Indonesian car maker to grow to the point where it was providing cars for the entire Indonesian domestic market. At this point, it would be robust enough to have at least a fighting chance should the Indonesian government open up the automobile market to free trade, allowing foreign companies to sell cars in Indonesia and the Indonesian company to sell cars in foreign countries. For a further development of this argument, check out books by Ha-Joon Chang (Kicking Away the Ladder) and Erik Reinert (How Rich Countries Got Rich...Why Poor Countries Stay Poor). Needless to say, this will require a political battle by common working people of the first world against the economic elites of their own countries. Overseas development can only help working people in the first world: as other countries develop, their wages rise, and Western capital stops going overseas to exploit super-cheap labor, so more jobs stay here in the West. However, Western economic elites--by which I mean to refer to that select group of people who are in a position to personally profit from lack of development overseas, the owners of the capital that is benefiting by exploiting cheap foreign labor--will continue to try and make free trade, which is an impediment to development, a condition of Western loans and aid. For them, development of industries in the undeveloped countries represents merely a loss of cheap labor and a bunch of new competitors.
   
   Finally, what about the revisionist Marxist view, that of Trotsky, Che Guevara and others? It is possible to empirically check up on that line of thinking: just examine the record of states which have attempted development under capitalist and socialist legal systems. Compare existing and formerly existing socialist states and their efforts at development against the efforts of *comparable* (you don't compare Cuba with the United States, obviously) nations who have followed the liberal capitalist model of development. Many books have been written on the Cuban case, putting it in comparative perspective against Latin American nations with similarly undeveloped economies who have followed the capitalist model, and looking at whether Cuba's policies can potentially serve as an alternative path to development. Hopefully these books also take into account the effect of the crippling American-led embargo, or else their conclusions will be flawed in favor of the libertarian/classical Marxist view. I personally haven't read any of these books on comparative development in Latin America, but I plan to do so soon. After all, the entire third world is just waiting on my answer about what it should do! :)



5. This book reveals what needs to be done to bring the third world out of poverty. The everyday American does not have a clue about what made America's economy the best in the world. Property rights are the key to advance any civilization out of poverty. Just look at china and how with their economy has exploded with the limited property rights they have granted.

5 comments about Small Is Beautiful: Economics as if People Mattered.

1. I've never been all that interested in macroeconomics, but intrigued by the title, I gave Small is Beautiful by E.F. Schumacher a try. It was a long read, but a good one, and I culled interesting insights from every chapter. Schumacher's visionary simplicity with the largest elements of society were radical 30 years ago, but incredibly relevant, then and today.
   
   A fair portion of the book is spent emphasizing the way our economy is unsustainable and how quickly we use up our natural resources. Schumacher also explains how little consideration was put towards pollution until it was too late. In the folksy way of a 60s radical, he speaks about the importance of the land in a way that is neither hollow nor flippant, but full of wisdom and grace.
   
   "The whole point is to determine what constitutes progress." What is progress? What should aid to the third world look like? These questions are where Schumacher particularly shines, explaining a need for intermediate technologies to improve the quality of life for everyone and not just investments which only improve the quality of life for the highest classes and leave the lower ones even more destitute.
   
   "No system or machinery or economic doctrine or theory stands on its own feet: it is invariably built on a metaphysical foundation, that is to say, upon man's basic outlook on life, its meaning and its purpose. I have talked about the religion of economics, the idol worship of material possessions, of consumption and the so-called standard of living, and the fateful propensity that rejoices in the fact that `what were luxuries to our fathers have become necessities for us.'" wrote Schumacher. What do our economic values say about us?



2. A bit outdated but given that it was written in the 70s this book is very inspiring ans still very applicable (if not even more applicable today than in the past). In any event it is truly a classic in ecological economics. There are certainly many critics of this book but its significance is immense. I must say that we economists really need to work on our writing abilities because not all of the works are easy to read for non-economist audience. Yet Schumacher manages just that.



3. This book offers some excellent insights but lacks something that all big picture political/economic books must have - humor. That weakness makes it a long, heavy slog that is nearly worth the time spent.



4. Put in simple pop culture terms, the argument against Small, is: Imagine a steady rock & roll diet of nothing but local bands. No Berry, no Beatles, No Stones, no Dylan, etc., etc. Except we cannot even imagine that ~ local bands are always recasting, if not outright imitating, the latest sounds from all over the country.
   
   Look, the Dark Ages were "green," too. Who hated industry and technology and science more than the Church? Even a 100 hundred years ago, before traffic jams, pollution, TV commercials and the Bomb, about 70% of this country was illiterate farm hands. With life expectancies of 50 years. But they had great banjo players.



5. Great book.....If you haven't read it and are considering a purchase, heed the wisdom in the title. Buy local, support small businesses. Amazon will do OK without you buying it from them. Otherwise, you could buy this book from Amazon to be "ironic".

5 comments about Competitive Advantage: Creating and Sustaining Superior Performance.

1. I understand what companies have to do about the creation and sostenibility of competitive advantege by this book.



2. The Porter trilogy: Best books on strategy ever written. The reference manual for competitive strategy. Anybody who is in the business of formulating strategy today uses the Porter framework. The only caveat is the distrupting force of the internet and its effects on businesses which is not covered. Jim Kayalar is a Certified Management Consultant with the Institute of Management Consultants USA (IMC-USA) with 20 plus years of experience in a myriad of industries. Jim Kayalar is the managing director and founder of Business Tune Up.



3. This classic work on competition is indicative of the importance of Michael Porter's pivotal contributions to management literature. The book seems as fresh and relevant today as when it was first published more than a quarter-century ago. Porter, a professor at the Harvard Business School, is the author of 16 books, and a leading authority on competitive strategy and economic development. His ideas have guided economic policy worldwide, which may account for his nine honorary degrees and numerous awards. This book demonstrates the reasons for his influence. He provides a clear, deftly written, very accessible guide to developing and implementing competitive strategy. He covers the fundamentals of value chains, costs, differentiation, technology, substitution, synergies and more. getAbstract assumes that they told you in business school to reread this frequently as a management touchstone.



4. The book is timeless and is an essential reference for marketing or planning executives and employees



5. A must have for every strategic management/ business/ MBA student.
   The book in a clear language describes the strategies a company can follow in order to create a competitive advantage. Also talks about the 5 forces, value chain and other key terms in business. Though the are some strategist who do not totally agree with Porter, his models have been widely used and its definitely a recommended reading.

5 comments about The Bridge at the Edge of the World: Capitalism, the Environment, and Crossing from Crisis to Sustainability.

1. The ideas presented are excellent, logical, and thought provoking!!!
   The book was sometimes hard for me to follow due to less than complete information. It is dull at times. The author is no Thomas Friedman.



2. The Bridge at the Edge of the World, by James Gustave Speth, is begins with an excellent review of the depth and immediacy of the environmental crisis that faces humanity. The initial graphs give a clear and sobering pictorial representation of the the growing calamity. Paper use, water consumption, species extinction, ozone depletion, CO2 concentration - all of these are on the rise along with our increasing population.
   
   Speth lays out the argument that our overuse of the finite resources of the planet is driven by our increasing population and our economic systems which reward expansion. His descriptions and explanations are solid and well-referenced.
   
   After laying out the problems, Professor Speth reviews some potential solutions. I was intrigued to read about "Promoting the Well-Being of People and Nature" rather than a continuing along our current paradigm of promoting the interests of huge corporations.
   
   Speth proposes changing the fundamental legal frameworks that regulate corporations, thus making them more accountable to the long-term needs of the citizenry and generations to come. This is a fairly radical idea, but the author lays out his arguments very clearly and with deep support.
   
   Still furthering his discussion of solutions, Speth discusses "a new consciousness" that we could achieve to view each other and our planet's resources in a whole new way. This discussion could have turned into new-age drivel, but Speth manages to keep the discussion rational and he reviews several examples of movements which have succeeded - e.g. the antislavery movement of the mid-1800s in the US and the civil rights movement in the same country.
   
   In summary, this is a dense and far-ranging book. Unlike many other current environmental books, Speth points an accusing finger at capitalism as a major contributor to our crisis. He ends, though, with a thoughtful review of some potential solutions and pathways to avoid our drift into the abyss.



3. The view from the Bridge at the Edge of the World is inspiring. Dean Speth offers hope if you are willing to work hard to make the world a better place for humans and all other life. He challenges the cultural values that lead us to avarice and greed and insists that we can do better, we can do much better. We can rise up to become proper stewards of the Earth.
   
   As a four decade environmentalist he is disappointed with the limited successes of the environmental movement. The movement has not even held its ground though it has won a few hard-fought battles. Dean Speth is a lawyer and educator who is dedicated to keeping humans from fouling the planet so that it is no longer viable to life as we know it. His foes have been greedy capitalists and corrupt politicians. He raises an important question about America, are we more in love with democracy or more in love with capitalism. The United States Constitution honors democratic rule but does not place the capitalist dogma above democracy.
   
   I agree with Dean Speth that this is a tough battle facing those who desire to change our values so we again love democracy as much as we did during the Revolutionary War. Speth suggests that those who cannot see the view from his imaginary bridge are unable to see the best future available for humanity. Those who cannot see this view are destined to continue along the path that is now destroying the air we breathe, the water we drink, and the soil that grows our food. Those without the vision to see from this bridge are taking us down a dangerous path that spells catatrophic results.
   
   Purchase this book. Study the extensive footnotes. Give a copy to a friend who also loves democracy more than capitalism.



4. Speth provides a critique of western social, economic and political models. While explaining the very real dangers of sustaining the present trend what is even more important is his ability to convey hope and a vision of what we might be able to achieve rather than mere doom-saying and. This is an important lesson critics of all political stripes need to learn - its not enough to warn of the impending disaster, its a vision of the future and how to get there that is the stuff that political change is made of. Martin Luther King Jr. nailed this when he offered up the phrase: "I have a dream ..." Speth also has a dream and he provides a rational, workable way to achieve it.



5. An Ivy League dean trained as a lawyer, James Gustave Speth lays out evidence to show that life on this planet is being pushed to an end. Marshalling sobering facts, he illustrates how humankind has taxed the Earth's resources beyond its capacity to regenerate. By creating a culture that worships consumption, capitalism has combined with political self-interest and misguided policies to hasten the environment's demise. An international community of scientists has provided staggering proof of global warming, yet U.S. political leaders have denied the problem and delayed action. Speth worked to protect the environment within the bureaucracy's sanctioned processes for years, but he now concludes that the environmental movement launched in the 1970s is a failure. He urges citizens and leaders to readjust their priorities. He also advocates public policies that provide financial incentives for sustainable practices, and says governments should hold corporations accountable for the true environmental costs of their products. getAbstract recommends this book to readers who are interested in economics and social trends, and who want their great-grandchildren to live here - on this planet.

5 comments about Capital: Volume 1: A Critique of Political Economy (Penguin Classics).

1. Reading the "reviews" of Capital here on Amazon.com, a person who has read the book can see that most "reviewers" have not even troubled themselves read the book! Instead of taking the time and energy to plow through this work, many would rather get on a soap box and ramble on about their own views thereby "reviewing" the work.
   I read the entire book from cover to cover. Not an easy task. It took me more than a year with persistence! But I did it.
   Socialism is not mentioned once the the actual work itself. (Of course it is mentioned in the 87 page Introduction which some of the "reviewers" might have bothered to skim through!)
   What is the name of the book? Capital! Not Communism or Socialism! One who has bothered to read this long book knows that the book has nothing to do with Communism. The book was supposed to form a scientific explanation of what the Capitalist mode of production was and how it formed and its' inner workings. Marx felt that after writing the pamphlet Manifesto of 1848, he owed it to the world tho explain what Capitalism was. It is a microscopic examination of the capitalist mode of production in mid-nineteenth century England. Granted that things have changed since 1850 England, the basic core of Capitalism hasn't changed.
   The man was brilliant, he obviously spent a lot of time formulating an understanding of what Capitalism is. It was an eye opener for me into what Capitalism really is. It was stimulating to see how Marx in the work slowly but surely synthesizes his successive points one by one thereby building a model of the Capitalist mode of production for one to examine.
   My only complaint was that it was too long. He could have said what he had to say in 200 pages rather than 800.



2. "When Volume 1 of Capital was first published, capitalist industry, though predominant in a few Western European countries, still appeared as an isolated island circled by a sea of independent farmers and handicraftsmen which covered the whole world, including the greater part even of Europe," writes Ernest Mandel in his introduction to 'Capital'.
   
   How did we advance to the present day?
   
   An *economic* text, this book is considerably distinct from much of Marx's preceding output. Capital stands a work of theoretical economics similar to the output of David Ricardo in many ways -- calls for action, the nature of the state, and philosophical concepts are given little treatment throughout the 2,500 pages. Marx *did* write about ideas like commodity production, use-values and exchange-values, theories of surplus-value, crisis theory, organic and technical compositions of capital, the transformation problem, changes in the rates of profit, and much more. It is an analysis of *capital*, and hence, *capitalism.* There is little information about the mechanics of a post-capitalist society. After investing the time to read it, readers will be baffled when critics argue "50 bujillion people DIED as a result of 'Capital!!!'" (Marx died in 1883) -- "therefore Marx is wrong!" To be objective, a thinker can imagine the absurdity of blaming World War One, slavery in America, and imperialism on 'The Wealth of Nations'.
   
   The volumes of this massive economic text were published successively in 1867, 1885, and 1894. Most economists feel marginalism has rendered it obsolete. At the end of the 19th century, Bohm-Bawerk argued since production occurs in a roundabout way, part of the product Marx attributed to workers needs to be employed to finance the roundaboutness. Workers would obtain the whole of what the produced only if production was instantaneous; as a result, interest must be paid no matter who owned the capital.
   
   This is a brilliant work. The tough part is understanding the meaning of Marx's terms, which was especially difficult for me, learning the neo-classical viewpoint first. The first chapters took a few days to understand with confidence. After that, the sheer length of the text is formidable, though rewarding and absolutely fascinating.



3. If :
   - Your mum has taught you lots of valuable things (eat your vegetables, be nice to old people and little dogs, don't be late to school, keep a clean nose) but she was never really able to explain why you had to WORK for a living - instead of, you know, just living;
   - Your teachers packed your head full with all kinds of useful knowledge (about prepositions and adverbs, mineralogy and astrophysics, the reproductive organs of plants, x+2-y=0) but they never told you how exactly PROFITS are made - and why anybody would want to make them anyway;
   - Your friends and lovers can spend hours yakking about various interesting topics (the latest music machine, videogames, designer shoes, imitation leather sofas, blockbuster movies, pink underwear and cherry flavoured bubble-gum) but they call you a bore and a nitpick whenever you wonder why you're all surrounded by so many COMMODITIES and publicity ads promising you bigger, better and faster useless things.
   - You often have the impression that some greater truth is lacking in your life (and you've tried all the legal/illegal drugs, exciting TV shows, gurus and psychoanalysts, help-yourself books and bestsellers about kid sorcerers)...
   
   ...Then the time may have come to have a long talk with good old Uncle Karl - the black sheep of the social sciences, the guy nobody likes to mention at social occasions (except in the form of a joke: "have you heard the one about Karl Marx in Las Vegas?"), the most misquoted and misinterpreted modern thinker.
   In "Capital", he kindly invites you to break on through to the other side (that's how countercultural he was) and check out what's really happening behind the glitzy appearances of everyday life. You don't even have to be a genius to understand him (it will be enough if you can count to ten without choking). And you might be surprised about how obvious some things will seem after he explains to you about the cage you're sitting in.
   
   Of course, mum will probably be broken-hearted and fear that you'll join the next anarcho-pinko-terrorist organization down the block. Your teachers might refer to a vast list of successful anti-Marx books and charity organizations. And your friends and lovers will find you an even greater bore than before.



4. I think one of the great misconceptions about Capital is that it is dry and difficult. Many people seem to think that reading it would be a chore. Not true. If you were to read it on your own or in a study group, you'd find it funny, engaging and not all that hard. It assumes perhaps a small amount of understanding of classical political economy (Malthus, Smith, Ricardo, etc) but not much. I'd say if you're going to read it, read it in a group, because some of the ideas need to be worked out, but four friends of average intelligence can understand this book with a minimal level of effort.
   
   That said, is it worth it for you to take the time? I'd say so. While I may think a number of Marx's ideas are just plain wrong and the ideas of many of those who followed in his footsteps to be even more misguided and destructive, I still think this is worth the time. Besides being a book by the man who has influenced world events more than anyone else in the last two hundred years, it is also just very well written and a goddamn good, and important, read.
   
   A friend of mine once described Capital by saying ,"this is literature". It definitely is, with all the complications that come with that classification. This book does not explain the workings of a capitalist economy. It is not a science textbook. It is a brilliant work that is part flawed history, part political theory and part a discussion of classical political economy. Everyone should read it, but no one should take it all at face value.



5. I could write 10 pages on my specific agreements and disagreements with Marx's economics analysis, but this isn't the place for that. I guess more than anything else I've got two lingering reactions. First, I wanna grab Karl Marx by the shoulders, shake him, and tell him that, however much physics envy he's got ("the rate and mass of surplus value"), he cannot make economics into a science, and that even if he could he wouldn't be able to write the authoritative foundational text for that science by just theorizing abstractly without doing any experiments. Second, I want to thank and congratulate him for his automatic, human and above all honest identification with the struggle of the working against the capitalist classes, which I found indescribably refreshing after earning an econ degree from a neoliberal department where the norm was to take the opposite orientation and then clothe it in depoliticizing claims of objectivity.
   
   I was surprised by how often the great anti-capitalist agreed completely with capitalist orthodoxy, for example on the production benefits and human costs of the division of labor or on the need for money as a medium of exchange. I thought Marx was at his best when he was most empirical: detailing the horrors of industrial wage slavery in Dickensian Britain and then tracing the contours of the debates on the Factory Acts, especially when he was righteously lacerating the apologists of the factory owners. And now, just for you, I'm gonna type out the full text of all the parts of this book that deal with Marx's vision for a post-capitalist society, all both of 'em:
   
   p. 515fn33: "The field of application for machinery would therefore be entirely different in a communist society from what it is in a bourgeois society."
   
   p. 739: "In this way he spurs on the development of society's productive forces, and the creation of those material conditions of production which alone can form the real basis of a higher form of society, a society in which the full and free development of every individual forms the ruling principle."
   
   And that's it, two sentences in 1,100 pages. So anyone who wants to blame Marx for Stalin must seek their evidence elsewhere, possibly in Bakunin.

5 comments about THEORY OF MONEY AND CREDIT, THE (Lib Works Ludwig Von Mises PB).

1. Von Mises' "The Theory of Money and Credit" is a great work in theoretical economics. Its key insight is that money has an influence on the real economy.
   
   Monetary financing of deficits leads to inflation, but this inflation is never proportional, that is variations in the money supply produce variations in relative prices and therefore have distributional consequences.
   
   MV = PT is an identity. The 'V' reflects the money demand of individuals for whom a $ has a subjective value. What happens to PT is dependent on who how the new money will ripple through the economic system. Every change in the amount of money is different. Apart from subjective factors the velocity of circulation will depend on trends in population growth, the division of labour and financial innovation all of these tending to accelerate it over time.
   
   A key price in any economy is the real interest rate. Within a stable monetary framework these would reflect time preference and the (perceived) profitability of investments. By artificially reducing the rate of interest investment booms are provoked by making longer processes of production seem more profitable than they are and when finally because of a intolerantly high rate of inflation the monetary growth is halted a sharp recession occurs, in which firms go bust and the some investments are liquidated. Hence business cycles.
   
   In essence it a manifesto for sound-money which in Mises' view amounts to adopting the gold standard. Inflationary deficit finance is dishonest and arbitrary on people's incomes and should be replaced by explicit taxation.



2. Murray Newton Rothbard has been quoted as saying this book is THE best book ever written on Money & Credit. So having found Rothbard's writings to be outstanding in their own right, I moved on to this Mises classic!
   
   The first thing to note is that this book was first published in 1912 and in German, and although the translation has been accomplished superbly, the style of writing has somewhat of an antequated feel to it; not quite the same free flowing prose you get with Rothbard. Once you get into the feel of it though, this in no way detracts from your understanding of the theory presented.
   
   It has an excellent new Foreward by Rothbard himself, extensive footnoting and index and is hardbound beautifully by the Liberty Fund Press, with dust jacket. There is also a nice Appendix: On The Classification of Monetary Theories, that is very useful and informative.
   
   The book itself is divided into four main Parts:
   Part One: The Nature of Money.
   Part Two: The Value of Money.
   Part Three: Money and Banking.
   Part Four: Monetary Reconstruction.(This part was added in 1952).
   
   For me the book really took on a story of two halves. In the first half of the book, Parts 1 & 2, the bulk of the theory is really laid out. It can be slow going as it is extremely in depth but I highly recommend you stick with it as this pays off in the second half of the book!
   
   In Part 3 Mises really starts putting flesh onto the theory when we get into Money & Banking proper with discussion of demand for money, credit, fiduciary paper, rate of interest etc. But towards the end in Chapters 19 & 20 things get MUCH more interesting as equilibrium rates and interest are discussed in detail and he finally talks about gold, the gold standard and banking freedom.
   
   Part 4 is where my heart lies. Here we have the discussion of the principles of sound money versus contemporary currency systems. There's then an excellent discourse on the Return to Sound Money, ie the Classical Gold Standard.
   
   The second half of this wonderful book certainly flowed better for me, but that may also be just because I am more of an investment manager/trader and less of an economist! You feel like you have had Mises teaching you in fine detail and that he has left no stone unturned in your understanding. Mises doesn't read as easily as the prose of Rothbard but that does not detract from the excellence of the material. Superb!
   
   It really IS a truly outstanding work and if not the best book ever written on the subject, it surely has to be at the very least, one of the very best, and as such is certainly a "must-read"!!!
   
   This wonderful, beautifully bound, classic is an absolute "steal" at $20. I still cannot believe it is sold for so little. My recommendation is to buy it while it is still available in this beautiful hardbound edition!
   
   Enjoy!



3. The Theory of Money and Credit is the foundation of modern Austrian Economics. The central contribution of this book is its application of marginal utility theory to money. Mises takes a micro-analytic approach to money that differs from the Hume-Fischer-Friedman Quantity Theory significantly. Of course there is some truth in the Quantity Theory. The Quantity Theory also teaches some lessons against inflation.
   
   Mises set the groundwork for Austrian Business Cycle theory, as later developed by Hayek and Garrison. Both the Quantity Theory and the Mises-Hayek theory of trade cycles point to the same root cause: inflation. However, the Mises-Hayek theory explains trade cycles in terms of intertemporal dis-coordination. Hayek owes his Nobel Prize the groundbreaking work of Mises.
   
   The Theory of Money and Credit also served as the basis for the calculation critique of socialism. Mises began to see the significance of monetary calculation in this book. The Austrian theories of the trade cycle and monetary calculation are the two main lines of modern Austrian research. These were the two critical debates of the Interwar Years. Also, Mises formulated his `Regression Theorem' in this book. Without this book, the modern Austrian paradigm would differ beyond recognition. Anyone who wants to learn Austrian economics should read this book.



4. This is a transformative work by von Mises. In the short time since I began reading I have come to a deeper understanding and appreciate the function and nature of money.
   
   This is NOT light reading, but all the same it is fascinating. I found myself wanting to be back in school again, for no other reason than to have a professor and classmates to explore these ideas with, and to better develop my own understanding of the subject.
   
   I have only two complaints, neither of which might really qualify as a complaint, since the original was written in German these is to be expected: first, most of the citations refer to the original German works. This makes it difficult for the English reader to cross-check citations and expand the reading list. However, thanks to the magic of Amazon, many of the cited authors are available in English. Second, von Mises assumes a very high level of understanding from his readers. Many of his ideas are built upon the work of others, and generally I found the background explanation a bit lacking (hence my want for a classroom environment). In all fairness, this book is so weighty that if he had ventured to give appropriate background for each element of support, the publishers might have been compelled to split the work into multiple volumes. The author rightly expects his readers to achieve a deep understanding of each supporting subject and and to research its origins on their own.



5. The edition of "The Theory of Money and Credit" from Signalman Publishing was specifically formatted and published for the Kindle. This specialized version enhances the readability and allows the reader to better focus on and understand the thoughts of von Mises. The Signalman edition will help students navigate through the text using the hyperlinked Table of Contents, unlike the Evergreen edition, which was not formatted specifically for the Kindle.

5 comments about The Age of Turbulence: Adventures in a New World.

1. Watch Video Here: http://www.amazon.com/review/R20DIAJDJEAJ0E Tadd Wood's review was made as part of a critical review assignment for the Fall 2008 Honors Colloquium on Creative Destruction at the University of Nebraska at Omaha, taught by Art Diamond. (The course syllabus stated that part of the critical review assignment consisted of the making of a video recording of the review, and the posting of the review to Amazon.)



2. This is an outstanding book by any standard. One might contest and even bitterly oppose some of the policies that Greenspan firmly believes in and passionately advocates in the book, but every page clearly brings out the rich experience and clarity of thought of the Maestro of US central banking.
   
   It is a refreshing feeling to read the pages, written in straight forward and simple text, demystifying the complex world of economics and finance. This is a book for the man on the main street as well as for the analyst on Wall Street.
   
   Greenspan starts with the story of the 9/11 attack, when he gets the news from his security staff and his aircraft had to return to Switzerland, since the US airspace was closed. The role of the Fed, and his position as Chairman of the most important financial institution of the United States of America, to steer the country and the world during such crisis is often underestimated.
   
   Greenspan is a firm believer in the "invisible hand" of free markets, as propounded by Adam Smith in his classic "The Wealth of Nations" over two and a quarter centuries ago. The great Scottish economist would be pleased to read this book that explains how his theory has actually become a reality during the most prosperous times of planet earth.
   
   For critics who are quick to point out that the current sub prime crisis, in most part is a creation of the Fed, I would recommend reading the chapter "Irrational Exuberance". Fed has its limitations, even if it can see overinflated asset prices and a frenzy that is unstoppable in markets that ignore good reasoning. Greed overrides sound economics. Just the reverse happens during the crash. Fear knows no limits and there is a stampede to get out of assets that looked so attractive just a few days ago. The Fed primarily restricts its role to monetary policies of determining interest rates and money supply to guide the economic activity to realistic and sustainable levels, with long term price stability. Markets, as free as they are will correct themselves, and have the resilience to absorb the aberrations. I am not sure of Greenspan's personal views on the recent economic bailout announced by the US Government. It is worthwhile to have an additional chapter in the next edition of this book or perhaps a separate book in itself.
   
   Apart from the core topic of the Fed's role in the US and global economy, Greenspan also covers many other interesting topics that have significant global macroeconomic impact. Energy for example is one such where, the analysis of the current scenario and forecasts for meeting future needs in a cost effective and environmentally sustainable manner makes very good reading.
   
   The deteriorating standards in teaching mathematics in primary and secondary schools in America is a topic that perhaps needs immediate attention if America has to maintain her lead in technology and innovation, the catalysts of productivity and economic growth.
   
   In the final chapter Greenspan tries to forecast the US economy in 2030, based on his deep knowledge of economics and his personal experience as chairman of the Fed for nearly two decades. While he is cautiously optimistic that the US economy would be three fourths larger in 2030, he also us warns of some potential landmines that can disrupt the trajectory.
   
   One may not fully agree with Greenspan, but would certainly begin to appreciate that free market economy, individual liberty and freedom, protection of property rights and democracy would be the nonnegotiable principles that would guide humanity towards global peace and prosperity in the twenty-first century.
   
   Five star rating for every page of the book.



3. The first part -- after the intro -- is a very engaging story of the winding path that lead him to macro economics and his role in trying to keep the wheels from coming off the world's biggest capitalist economy. He does not appear to be trying to inflate his own successes or to blame others for recessions. He has a unique perspective on Washington, D.C. The first part moves right along. It helps you to understand that no one has perfect knowledge or a crystal ball for the U.S. or world economy. Also, that the tools that the Fed has to guide the U.S. economy are not precise.
   
   The second part moves a bit slower as he gives some background on capitalism and covers the economies of specific countries. He still has a unique perspective and great insights, but a U.S. reader does not know the players as well.
   
   I listened to the book and the narrator was very good. He did a great job with Mr. Greenspan's wry humor. I might listen to the first part of the book again. Recommended. If you have never taken a class in macro econ, it might be hard to follow. On the other hand, it is a lot more engaging than a macro textbook, so maybe it is a good place to start. (I took macro in 1975 or '76. In 2008 macro might be sexy.)
   
   If you are in college, by all means take an introductory econ class with the best professor you can find, and then take macro. It is not easy stuff, but you will learn a lot more about how the world really works than you would learn in any other class for the same time and effort.



4. As a staunch advocate of free-market capitalism and deregulation, Greenspan has captured and reasoned the core economic beliefs and values he holds in this book - democracy coupled with capitalism improves quality of life.
   
   The first half of the book took us through Greenspan's journey from a child of being obsessed with keeping baseball statistics, to a Julliard music student and finally becoming the Chairman of FRS. Greepspan touched on his relationships with the Presidents he had served and gave a personal recounts of the crisis he had gone through.
   
   The second half of the book is an analysis on the working of economics and politics in the United States, as well as Russia, South America, China and other countries in Asia. Each page is full of insightful information.
   
   It is especially interesting to read it in the midst of election campaign, financial crisis and economic downturn, when skeptics of free-market, critics of deregulation and talks of protectionism begin to emerge. This book is like someone next to me explaining why we should not let a crisis to discredit the good things that free-market capitalism has brought upon us.



5. This book has three parts. First, Alan Greenspan tells us about his background, schooling, associations, intellectual influences, and business career. Then he tells us about his public life, from unpaid campaign aide to Nixon in 68 to chairman of the Federal Reserve for 18 years, ending in 2006. Finally, he explains his economic thinking, and how he envisions the world through 2030.
   The first part is lively. We see him as a young man playing the saxophone professionally in a big band before falling in love with math and later econometrics, while hanging out with people like Ayn Rand. Contrary to what the Times' critic is quoted as saying on the back cover, Alan Greenspan does not gossip. The people we meet in his autobiography are there for their influence on his thinking.
   What stands out about his involvement in government is his assessment of the 8 US presidents he interacted with, from Nixon to Bush-43, and the two that come out on top are Gerald Ford and Bill Clinton, the latter for his steady focus on economic policy.
   One requirement of his job as chairman of the Federal Reserve was to make long-winded, cagey public pronouncements that would meter out a calculated dose of information without spooking the markets. Greenspan himself calls it "fedspeak," and, while the first two parts of the book are free of it, the third is written in it.
   There are paragraphs you have to read several times to understand whether he expects a particular metric to go up or down. "Significantly" and "perceptibly" are used so often you end up skipping over them, and everything is impersonal. Translated into fedspeak, "Chinese workers keep prices down by accepting low wages" becomes "There is disinflationary pressure due to low labor costs." His most quoted phrase "irrational exuberance" is described as just happening, not as anything anybody felt.
   If Greenspan has any reservations about the validity of metrics like the GDP, the CPI, or the Dow-Jones, he does not share them with the reader. I wish he had.

5 comments about Freedomnomics: Why the Free Market Works and Other Half-Baked Theories Don't.

1. Do you think economics is boring? Do you struggle to understand economic principles? If you answered yes to either question, then check out Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt and Stephen J. Dubner. These two economists apply their knowledge to such a wide variety of subjects that it is hard to keep up.
   
   For example, did you ever wonder why drug dealers live with their moms or what schoolteachers and sumo wrestlers have in common? Levitt and Dubner address these and other equally unusual topics. By applying well-known, basic economic principles to unique circumstances, the authors help readers better appreciate the complex world of money matters. You'll have so much fun reading this book that you won't even realize you're learning something about economics.
   
   Considering the success of Freakonomics (it reached the number two spot on the New York Times nonfiction bestseller list), it is not surprising that Freedomnomics: Why the Free Market Works and Other Half-Baked Theories Don't by John R. Lott, Jr. was published a short time later. Freedomnomics, as the front cover tells us, is a rebuttal to Freakonomics and more. Although not as popular or as well written, Freedomnomics scored points with me because I am a firm believer in capitalism and the free market society. I also found some of Lott's economic research to be intriguing. For instance, in the chapter on women's suffrage and the growth of government, Lott tracks changes in government spending both before and after women finally obtained the right to vote.
   
   Freedomnomics does not rehash all of Levitt and Dubner's material, but it does attempt a point-counterpoint on several topics, including abortion and crime in the United States. Read both books and make your own decision about who is right and who is wrong.



2. The same flawed - and conservatively-biased - thinking that is behind the collapse of our economy. Smart guy with a questionable moral compass. Read and follow it at your own peril.



3. This books is a personal attack on Levitt (one of the authors of Freakonomics.) What do you expect from Regnery, logic?



4. If you think "Freedom-Fries" was an intelligent idea you will appreciate this book. Otherwise....don't bother.



5. Overall, this book was at its best when explicitly rebutting the bad arguments in Freakonomics. Levitt's main point in Freakonomics is that the market has a lot of inefficiencies and is rampant with dishonesty. Freedomnomics, though brief and simplified for the layman, successfully argues that markets function remarkably well and provide constant incentives for honest behavior.
   
   First off, the good: Lott demolishes four of Levitt's arguments. 1) that there's an adverse selection problem in used car markets. Lott shows empirically how prices on cars don't drop as precipitiously as claimed by Levitt and how reputation/warranties can solve the information problem here 2) that there's a principal-agent problem in the real estate market. (Levitt even compares real estate agent to Klansmen!) Lott shows how reputations function to keep such agents honest 3) that Lo-Jack is a public good. Lott shows that its "underproduction" in the market is really just a reflection of how it's not a good product and 4) most controversially, that abortion reduced crime in the 90s. Lott points to flaws in Levitt's methodology (ie assuming that there were no abortions in states where abortions were banned pre-Roe v Wade) and in ignoring that abortion decreased the "cost" of sex. "Cheaper" sex meant more children born out of wedlock and single parents. Hence, if anything, abortion increased crime rather than reduced it.
   
   Lott's book provides a few arguments that should be familiar to readers of free market literature by Sowell, Friedman, etc: ie how "price gougers" and speculators are socially valuable, how occupational licensure limits entry and hurts consumers, how price discrimination makes markets more efficient, etc. That being said, he makes a few more original arguments. For example, he argues that corporate criminals are excessively punished by the legal system because their blacklisting from well paying jobs after being convicted is a large enough deterrent. Moreover, he invokes stock shorting as a means of defending oneself from predatory pricing. One of his best sections of the book is his well-corroborated argument that governments are the most predatory pricers (because, unlike private firms, it doesn't care how much it loses).
   
   Now, the few reasons I can't give this book 5 stars: first of all, in the second half of the book (on crime and voting), Lott presents a lot of empirical arguments. (The first half of the book is more theoretical.) He invokes statistics to argue that concealed carry laws/the death penalty have cut crime whereas affirmative action has increased it. Moreover, he uses stats to say women's suffrage has increased the size of government. His theoretical explanations for the alleged results are very sound. However, though I like his willingness to challenge politically correct orthodoxy, I'd like to see regressions/more tables/a fuller explication of his methodology in reaching such conclusions.
   
   Now Lott is one of the best and most cited economists in America. So he's very capable of providing stronger empirical evidence. His legendary "More Guns, Less Crime" is that sort of meticulously researched, thoroughly defended, variable by variable, empirical masterpiece. However, Freedomnomics is a pop econ book that doesn't try to defend its stats/charts/assertions as vigorously. As a result, Freedomnomics is very short for a book of its breadth, but I found myself wanting a little more.
   
   However, Freedomnomics, unlike most of Lott's work, never pretends to be a serious academic work. The main reason I'm denying it 5 stars is its section on politicians' honesty. It tries to argue that politicians also, by and large, behave honestly. His methodology in reaching the claim is very shoddy. His theoretical explanation for honesty in markets makes sense: good reputations increase profits. That explanation is inapplicable however to government representatives shielded from the profit/loss system. Nonetheless, his attack on campaign finance reform that accompanies this argument on political honesty is strong anyway.
   
   Overall, this is a layman's book and it's meant to be a layman's book. Its thesis is a welcome antidote to Freakonomics' thesis. And it brilliantly demolishes four of the book's worst arguments. Moreover, it has enough fairly rare material, from how women's suffrage expanded government's role in the economy to the state's own predatory pricing, to keep the economically literate reader interested. Also, its attempt to apply economics to everything from crimonology to voting rivals Freakonomics application of economics to things like sumo wrestling.
   
   Overall, this is a strong refutation of Freakonomics. However, for a less direct yet much stronger refutation of Freakonomics' anti-market thesis, I'd advise the economically literate reader to pick up "Why Popcorn Costs So Much at the Movies" instead.

5 comments about Crowdsourcing: Why the Power of the Crowd Is Driving the Future of Business.

1. Jeff Howe has done an impressive job of gathering insight into the power of this old adage applied to today's Internet environment. The idea is that by opening up complex problems to the crowd in small chunks, solutions can be found and creative destruction can occur, in diverse industries.
   
   Take the example of iStockphoto, which allowed amateur photographers to undercut professional stock photography companies by opening up the market to anyone with a camera, or Innocentive, where tough research problems are posted and PhD's around the world work on them in their spare time.
   
   Crowdsourcing works, and has blossomed since Howe's original Wired article on the subject. This book has great ideas and case studies that can be applied to give your company, endeavor, or hobby a big leg up. Be the crowdsourcing champion at your organization and buy copies of this book to pass around! Everyone will be happy you did. :)



2. Every significant trend requires a book that defines its key concepts, pioneers and rational. Crowdsourcing is that book for the application of social and community capability to business and society. Jeff Howe has created a readable chronicle of the early adopters who use crowds to replace experts. Coupled with James Surowieck's "Wisdom of Crowds" the two books will be used in corporate offices and marketing teams to look at how to engage crowds in the future.
   
   Executives, marketing professionals, and product managers should read both books to better understand how to tap into this resource. However, do not expect a recipe book, specific solutions, or a road map to crowdsourcing.
   
   Readers will find the book very descriptive and illustrative, which is strength, but its analysis and recommendations are a weakness and hence the reason for a four star review. I still highly recommend this book, but recognize that it comes from a journalistic tradition, rather than a hard core business book. Given the subject matter, I believe that the journalistic approach is more fitting to the subject.
   
   This book is recommended to gain an understanding of this phenomenon, pick up examples and stories, and gain a new vocabulary. Strategists, executives, and marketing types will find examples that they will need to think about in order to gain the answers they are looking for and need.
   
   DETAILED REVIEW
   
   The book focuses on describing how to crowds are creating new sources of value than the specific ways to tap into that value. Chapters 1 through 5, the first half of the book, concentrates on providing examples of the crowd sourcing phenomenon. The second half focuses down on the impact of crowds to economic and business organization.
   
   Chapter 1: The Rise of the Amateur - discusses the shifting balance between individuals with deep expertise and communities of interest. These differences and the increasing amateur access to information and collaboration are changing the playing field in multiple disciplines for the better.
   
   Chapter 2: From So Simple a Beginning - traces the rise of crowd sourcing back to the open source software movement. Howe details the early history of open source software, an interesting tale, as well as its basic principles of self responsibility, community contribution, and breaking large problems into small units. Howe describes the start of Wikipedia, SETI and the USPTO's use of open software approaches in the chapter.
   
   Chapter 3: Faster, Cheaper, Smarter, Easier - looks at the results that come from employing diversity and crowds to solve complex problems. Examples here range from desktop publishing, viral video, and music. In each case, the shift from centralized to distributed production results in the transformation of markets and the creation of new opportunities.
   
   Chapter 4: The Rise and Fall of the Firm - puts together the principles of the first three chapters and describes their collective impact on modern business and market structures. Howe uses readily accessible examples, like CincyMoms, to illustrate how open access; amateur interest and aggregating intelligence upset traditional markets and organizations. This chapter is well researched and may be the best of the book as it bridges between academic studies (Benkler's "The Wealth of Networks') with real life examples.
   
   Chapter 5: The Most Universal Quality - discusses the role of diversity and the power of crowds to aggregate diversity to match or out perform experts in many different situations. This chapter is the most like the Wisdom of Crowds as Howe explains both socially and mathematically how a crowd of amateurs can be more accurate than an individual expert.
   
   Chapter 6: What the Crowd Knows is an extension of Chapter 5 and concentrates on the channeling of crowd wisdom into collective wisdom through prediction markets and other types of solutions. The chapter also introduces the idea of Marketocracy as a means to find talent in a crowd based on their results rather than their resumes.
   
   Chapter 7: What the Crowd Creates focuses on the creative aspects of communities that require a different set of solutions to the aggregation of collective intelligence. These chapter discuses the notion of user-generated content and its dynamics based on tools, incentives, rewards, and ownership. It dives deep into the operation of iStock as an example of a company that harnesses the creations of a community.
   
   Chapter 8: What the Crowd Thinks recognized the power of personal expression in terms of participatory decision making, reviews and visibility. Howe points out that about 10% of a community provides their opinions and views, setting the tone for the overall community. However those opinions operate as a significant filter for the community. BTW, Howe points out that Amazon reviews are an example of this - so welcome to the crowd. This chapter focuses on phenomenon such as American Idol and Digg as illustrations of crowd opinions.
   
   Chapter 9: What the Crowd Funds is a short chapter that discusses the application of crowd sourcing principles to finance with applications such as peer-to-peer lending, micro-lending and Barak Obama's appeal to large numbers of small individual donors.
   
   Chapter 10: Tomorrow's Crowd highlights the rise of the digital native and the fact that people growing up today expect to work more collaboratively than their parents. This chapter explores how this next generation works, multitasks and collaborates. These traits are largely explained through changes in the media industry, which makes sense since digital natives are currently the target audience in that market. It's just a matter of time before they are the target audience in every market.
   
   Chapter 11: Conclusion - the rules of Crowdsourcing summarizes the book, wrapping its ideas into a few simple and powerful rules:
   
   1. Pick the right model from among collective intelligence, creation, voting, or funding.
   2. Pick the right crowd from the participants to the people who will influence and usher the crowd.
   3. Offer the right incentives to the crowd that are often expressed in recognition rather just money.
   4. Keep the pink slips in the drawer - crowdsourcing is not outsourcing
   5. The dumbness of crowds, or the benevolent dictator principle - crowds need leaders who influence
   6. Keep it simple, break it down - give the crowd something each individual can work on, yet can aggregate into something great.
   7. Remember Sturgeon's Law - 90% of what is created is crap so you will need to allow the crowd to separate the cream from the crap
   8. Remember the 10 percent, the antidote to Sturgeon's law - related to #7 that the crow can do the sorting in a democratic and open forum better than the experts.
   9. The community is always right
   10. Ask not what the crowd can do for you, but what you can do for the crowd - a crowd forms and is most effective when it sis working on something it wants.
   
   Crowdsourcing is among the foundational books for the next generation of commerce, whether you call it Web 2.0, Social Production, or Crowdsourcing, - this book describes the core principles and examples of the way we will work in the future.



3. If you have been paying close attention to the subject of crowd sourcing, this book will contain few surprises. But you just might pick up an insight or two that will make the book of much value. That was my experience.
   
   While much of the book covered things I know in more detail than Jeff Howe describes, I began to see connections between how one aspect of crowd sourcing could be combined with other aspects to make more progress more rapidly. I intend to apply those insights into my global project for increasing the rate of global improvements by 20 times.
   
   Ultimately, crowd sourcing's significance is determined in the battle between the tendency of crowds to contain wisdom and the average results of crowds to be lousy. If you use crowd sourcing to get lots of ideas, you also need to rely a lot on crowd sourcing to get rid of the junk.
   
   Although Mr. Howe claims to be taking a journalist's approach to the subject, he comes across as more of an advocate than an observer. In particular, he fails to capture the ways that prolific production of content can overwhelm the accuracy of crowd sourcing votes. Highly ranked contributions often reflect popularity and the crowd's agreement with the conclusions more than the quality of the production. As a result, you can often end up with something that looks like what a lot of undisciplined teenagers would produce.
   
   Yet, even that problem can be solved by adding a layer of expert evaluation to the more popular entries. He mentions that point in passing, but misses its significance.
   
   For a book that aims to describe the fundamentals of how crowd sourcing will be used by business, the conclusion section is pretty limited and abstract. If that's why you want to read the book, borrow the book at the library (or read it standing up at a book store) because you'll finish that section faster than a cup of coffee.
   
   To me, the biggest economic impact will be on problem solving. There's plenty in the book on that point, but Mr. Howe fails to explain why so few companies are using crowds for that purpose.
   
   I conducted a worldwide contest two and a half years ago to gain answers, ran the contest for essentially no money, and was astonished at the quality of the results. But I started with no community, built no community, and don't plan to aim the findings back to establish a new community later. As a result, I seriously question his conclusion that crowd sourcing can only be done by people who get benefits from a community. I would argue, by comparison, that participants need to get some benefits . . . but they don't have to be community-based ones.
   
   I suspect that a better book on this subject would emerge from a crowd sourced methodology rather than relying on typical "professional" journalism methods.
   
   Want some good answers? Ask the world.



4. Finished this book up earlier this week and I have to say, I'm a bit disappointed. I feel as though a book by the man who defined the word `crowdsourcing' shouald give me more than just anecdotes about how companies have used crowdsourcing.
   
   I'm not disappointed in the content of the book...it was good. As was the writing. I can't quite put my finger on it but I felt like something was missing. The book is interesting and a good read...but left me looking for more.
   
   That said, there are some excellent stories of companies using crowdsourcing. There is some excellent ideas is this book, but very little actionable information. Well...except for the last chapter. The last chapter provides some `meat' to the ideas behind crowdsourcing.
   
   Before someone jumps on me for giving this book a bad review...I'm not doing that. I think people should pick up this book and read it, if only for the stories of iStockPhoto and other companies that have used crowdsourcing models.



5. The book is written from a journalist view and provides a good overview of the core principals of crowdsoucing using examples from companies that successfully use crowdsoucing. However, the conclusion conclusion was rather abstract and left me wanting more.

No comments about Stabilizing an Unstable Economy.