aku-aku: v.. To move a tall, flat bottomed object (such as a bookshelf) by swiveling it alternatively on its corners in a "walking" fashion. [After the book by Thor Heyerdahl theorising the statues of Easter Island were moved in this fashion.] source: LangMaker.com. Aku Aku also has another meaning to the islanders: a spiritual guide.
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Dr. Strangelove's Game: A Brief History of Economic Genius
Posted by dav at 2005 June 25 05:27 PM
File under: FinishedReading

I forget where I picked up A Brief History of Economic Genius by Paul Strathern, but I'm glad I did. It is an entertaining and engaging romp through the history of the study of Economics. This was a big hole in my education thus far in life and I thoroughly enjoyed running through the cast of characters (and there were some real characters) that have contributed to the development of economic theories.

After finishing reading it, I decided to go back and take notes in outline form. I never quite finished this project and I reasonably don't expect to finish it any time soon. So what I'm going to do here is paste in the notes for how far I have gotten and then link to the Wikipedia entries for the people whom I have not filled out details for.

See, I'm only half slack.

Actually, I also thought of taking the Wikipedia entries for these folks and parsing out just the bits about their contributions to Economics and releasing that as a wholly-derived wikipedia online "book". I need to look into the licensing issues with that.

Here it goes:

concept of zero
arrived in europe c. 1200 from the Levant

Luca Pacioli
b. 1445
double-entry bookkeeping
- caused rise in the understanding that "Everything has a price"

Leonardo da Vinci
learned maths from Pacioli (housemate c.1497)

Rise of Mercantilism
response to economic troubles
- Run the country like a business
- a countries wealth == how much gold it has
- foreign trade, but not with neighbors

Spain sees first Inflation
- discovers mile wide mountain of gold in Potosi, Bolivia
- increased coinage in Spain causes prices to rise 400%

John Becher, Mercantilist
b. 1635 in Germany
- phlogiston theory (negative weight)
- turn beaches of Holland to gold

Tulip Mania
- 1500's, vienesse ambasador returns from turkey with tulips
- 1562 amsterdam goes into tulip business
- prices of tulips skyrocket
- in 1611 Bourse established (first modern stock exchange)
- concept of buying options introduced (buy an option to buy at specific price at a later date)
- 1635 single bulb of Semper Augustus sells for 3000 florins
- 1637, as Europe's Thirty Years War was reaching its heaight, and money was starting to dry up, some dealers started quietly cashing in their profits
- market collapsed, first specualtion bubble in history
- "Gambling must always have winners and losers. Speculation can temporarily separate this conjunction. It is possible
for everyone to win (as the bubble expands) but this means it is also possible for everyone to lose (when the bubble bursts)."

John Graunt, Father of Statistics
b.1620 London
- haberdasher
- studied details from City of London Bills of Mortality to learn the extent, age and composition of his market
- Bills of Mortality started being generated during the plague, when officials wanted to determine if the plague was increasing or decreasing
- Bills of Mortality also included numbers of all children christened
- invented staisitcal infernece to reason the infant mortality rate
- began studying maps of london, made further inferences to determine number of people living in every 100 sq yards
- thus was able to calculate population of London at 384,000, which today is thought to be more accurate than the contemporary official # of 2M
- created life expectancy chart
- 1162 published Natural and Political Observations made upon Bills of Mortality (regarded as the founding of demography)
- Londoners feared lightning, he showed them they were twice as likely to die by mad dog bite
- Elected to Royal Society at the insistence of King Charles II

William Petty
b.1623 Hampshire
- studied medice and became professor of anatomy at oxford at age 28
- a year later he became Chair of Music at Gersham College in London
- a year later became chief medical officer for the army in Ireland
- soon talked his way into leading an expedition to map all of ireland
- recorded every scrap of land, the owner, and the land's worth which was set as 20x the annual income it produced from farming or rent
- three years after completing this venture he owner <50k acres of land all over ireland
- wasn't very popular and had bad eyesight. once when challenged to a duel he chose a dark cellar and great battle axe as format
- became very wealthy from land/rents
- joined parliment
- became interested in economic theory and translating it into a field of mathematics, as newton had done for astronomy
- he recognized the moral effect of economics, but cared more for ultimate results than who might suffer in the mechanism
- was first to try to calculate wealth as a factor of Labour. much as land, he was to say a Man was worth 20x his annual production
- this allowed the value of either to be expressed in terms of the other
- could calcualte the loss of a nation in terms of deaths (from plague or war)
- felt that money was "the measure of society and could be used to control it"
- meaning there was no need for kings or priests
- introduced Graunt to High Society
- familiar with anatomy and the circulation system, felt money was the blood of the nation
- money must flow to all parts, and parts ignored can harm the whole body, hence employement should be created by the government in the forms of public works
- Petty's Law: as an economy develops, the percentage of the population in service jobs will increase
- believed that too much money in the economy was like too much fat in the body, unhealthy
- a worker who had surplus money often ceased to work in pre-industrial age times
- contrary to mercantilists, he judged a nations wealth by the flow of money rather than savings
- published Quantulumcunque Concering Money which outlined his views
- tested his theories on his irish estates

John Law
b. 1671 Edinburgh
- by 1720 the richest man in history!
- known as Father of Paper Money or Founder of our Monetary System
- was born son of a goldsmith
- goldsmiths of the time provided simple banking services like cash on deposit and loans
- "the notes given by these goldsmiths to depositors were earliest form of paper money in british isles, though not legal tender"
- grew up wealthy, with expensive tastes and a skilled gambler
- killed a man in a duel over a dispute about the kings mistress and was arrested, then snuck out of jail and the country
- moved about the continent (probably under assumed names) in high society gambling circles, womanizing over the next decade
- he was free with his money (he won a lot) and considered unspent money only a potential. money (still coins of metal) was meant to be used
- in Paris met Lady Catherine Knollys and eloped (although she was already married)
- travelled to Amsterdam (then the financial cetnre of europe) and observed the latest mechanisms:
- banks issuing loans secured by titles to land
- much about international trade (Dutch East India Company)
- returned to scotland (where he was not wanted like in England) which was reeling from the failure of the Darien Expedition to build a canal in Panama
- published Money and Trade Considered with a Proposal for Suppluing the Nation with Money
- money needed to be used/spent to keep economy healthy
- when there is not enough money credit notes can be used
- land can be used to back these paper notes (since scotland had no mines for precious metals)
- was accused of plagarism by Chamberlen who had run a land bank in England and had run out on it, becoming also wanted south of the border
- Chamberlen had powerful friends so Law came up with a new idea, back the notes by the confidence of the gorvernment to repay in the future
- such as by taxation
- this type of money know called Fiat Money, from fiduciary issue (fiduciary from latin for "confidence"), is what all money is in modern times
- the new idea was also rejected, and soon Scotland joined with England causing Law to run back to the continent
- eventually he was able to bring his idea to the Regeant of France Phillipe II
- France was in bad shape from the reign of Louis XIV (wars, building of Versailles, etc)
- May 1716 Law opened the Banque Royale with a grant of 6M livres from the throne (only 350,000 in actual coins, the rest in notes and state bonds)
- started a checking account system for xfer of money between accounts
- was allowed to print paper money which could in theory be exchanged for coins
- the paper money was extremely popuplar: it was easier to carry and hide
- people rushed to the bank to change coins for paper, law was forced to print more money
- government used paper notes to pay its debts, law printed more money
- this money flooding the economy caused a consumer spending revival
- Law started the Mississippi Company with a grant from Phillippe II of the entire Lousiana Purchase
- in 1718 he sold shares in the company with the intent to mount expeditions to the New World to recover the vast gold deposits of Lousiana (ha)
- Rue Quincampoix (the street for small bankers and loan sharks) became awash with investors trading in stocks of Mississippi Company from all over
- by late 1719 over 380M livres of paper money had been printed, with less than 1/10 of that in the bank as solid assets
- by mid 1719 the original 500 livre shares of Miss Co were trading for 5000 livres, eventually reaching 12000
- so many people, even commoners, became wealthy in the stock exchange the word "millionnaires" was coined to describe the new rich
- Law's methods soon became known as the System
- he eventually controlled all of the governments finaces including tax collection
- the influx in cash had provided full employment for all french people
- the extra money pursuing limited goods started to raise prices, as much as 75-300%
- people spent cash unlike they had spent coins, theaters and the like prospored, consumerism ruled
- Law tried some tricks
- first he declared a 10-livre note was worth twice a 10-livre coin
- later as things got worse he announced notes would be devalued by 50% over 6 months
- he also declared Miss stock would be reduced from 9k to 5k
- people flocked to buy shares as they were reduced less, but since price was fixed, they became in effect money
- pretty quickly people panicked and the bubble burst
- The System failed but it succeeded in some ways, debts were repaid, seeds of democracy were sown, there were more property owners. France was better off
- Law left France in fear of his life, was granted pardon in England but had to leave Lady Catherine behind. Died soon later supporting himself as a gambler in Venice

John Blunt and the South Sea Company

Bernard Mandeville

De Moivre

Francois Quesnay

Adam Smith

David Hume

Condorcet

Robert Malthus

Jean-Baptiste Say

David Ricardo

Comte de Saint-Simon

Robert Owen

Jeremey Bentham

John Stuart Mill

Karl Marx
- sold his pants for a box of cigars

Friedrich Engels

Karl Friedrich Gauss

Francis Edgeworth

Leon Walras

Vilfredo Pareto

William Jevons

Alfred Marshall

Knut Wicksell

Thorstein Veblen
- Wrote The Theory of the Leisure Class

Joseph Schumpeter
- Kitchin Cycle
- Juglar Cycle
- Kondratieff Cycle

John Maynard Keynes

John von Neumann

George Marshall

John Nash

Milton Friedman

Comments:

You may also want to check out "The Worldly Philosophers" by Robert L. Heilbroner if you've not already done so. Really interesting read. I need to go back and review it again. I'm also currently in the middle of "Freakonomics" by Steven D. Levitt & Stepen J. Dubner. Levitt is a brilliant young economist who asks really interesting questions and sees alot of things in very different ways.

Posted by: Thomas on June 25, 2005 09:03 PM

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