Book Review of The Commanding Heights: The Battle for the World Economy by Daniel Yergin and Joseph Stanislaw

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Genre: Economics
Author: Daniel Yergin and Joseph Stanislaw
Title: The Commanding Heights: The Battle for the World Economy (Buy the Book)

Summary

During the mid-20th century, state power over the economy increased markedly for three primary reasons: the utter devastation engendered by War World War II, the apparent failure of the market system in the 1930s, and economic prestige and respect that the Soviet Union enjoyed in the West.

In post-war Europe, the mixed economy established itself as the incumbent system, with the state either in control of the commanding heights or managing levers of fiscal policy. With this change came a powerful record of success, in that by 1955 all the Western European countries had exceeded their prewar levels of economic output amid heavy government involvement.

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Indeed, the world’s prevailing view at the time – particularly in the Third World – was that the state was best positioned to serve as the primary driver of development. Many observers believed that the lack of capital and infrastructure needed to serve as the foundation of a modern economy could only be solved by governments making investments with long-term payback periods.

While America did adopt more regulation in the wake of the Great Depression, it remained far more market-oriented than Europe. Likewise, World War II created a far different view of capitalism in America than it did in Europe.

The planning boards that managed the wartime economy emerged blackened with criticism, while businessmen contributed mightily to the war effort and were seen as patriots and heroes.

During the Vietnam War, international opinion shifted against the US —and against the economic system identified with it. At the same time, Third World confidence grew. National control and national champions were lauded while multinational companies became symbols of humiliation. Many liberals supported the movement, seeing moral virtue in the Third World and its solidarity against the first.

However, by the late 1970s, this idea began to falter as state control did little to help ordinary people but instead produced stifling bureaucracy and corruption. The 1980s saw three drivers begin to turn the tide: the debt crisis in developing markets, the revelation of Marxism’s failure, and the rise of the Asian tigers.

The “lost decade” in the developing world forced governments to stop subsidizing unprofitable state companies. This march to market would continue with the Soviet Union’s fall: almost instantaneously, Eastern Europe would transition from communism to capitalism while Russia would undergo its own massive transformation. Prices were allowed to float, the economy was opened up, and many government-owned companies privatized.

Next up were China and India, whose economies expanded massively as they opened up to market, driving growth both in Asia and throughout the world. Growth became the new gospel, and the international market was the way to achieve it. The value of world trade doubled in the 1990s to $8 trillion, and foreign direct investment accelerated just as rapidly.

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While the balance of power has clearly shifted from the state towards the market, a key question remains: is this the fulfillment of a long historical trend, or the swinging of a pendulum? Many forces have driven the shift to a market consensus, but fundamentally it has occurred through a reshaping of beliefs and ideas.

The future of the market/state relationship will lie in how the cumulative judgments and experiences will orient beliefs and shape the new balance of confidence—for this balance drives both the flow of ideas and the course of history.

INTRODUCTION

Daniel Yergin is an author and economic researcher who is best known for his Pulitzer Prize-winning work, The Prize: The Epic Quest for Oil, Money, and Power. He taught at both Harvard Business School and the Kennedy School of Government before founding Cambridge Energy Research Associates (CERA) with Joseph Stanislaw.

Joseph Stanislaw was a professor at Cambridge University before co-founding CERA. He currently serves in numerous advisory roles with organizations such as Deloitte & Touche Worldwide and the Nicholas Institute for Environmental Policy Decisions at Duke University, where he is an adjunct professor.

In The Commanding Heights: The Battle for the World Economy, Yergin and Stanislaw study the global shift towards capitalism and examine the battle for position between market and state that took place. They ask why this shift occurred—how did national governments that once sought to control the commanding heights of their economies shift to embracing ideas such as competition, openness, privatization, and deregulation?

THE COMMANDING HEIGHTS

In November of 1922, Vladimir Ilyich Lenin spoke to the Fourth Congress of the Communist International in St. Petersburg. He had suffered heavy criticism for his New Economic Policy, which permitted the resumption of small trade and private agriculture in the Soviet Union.

Lenin defended himself forcefully, assuring the audience that the state would control the “commanding heights,” the most important elements of the economy. This, he said, was what counted.

His view would spread throughout the world, from Britain in the British Labour Party to Jawaharlal Nehru and the Congress Party in India. In the United States, the government exerted control over the commanding heights not through ownership, but through regulation. Still, the overall advance of state influence was pervasive globally.

This advance of power had three primary causes: the utter devastation engendered by War World War II, the apparent failure of the market system in the 1930s, and economic prestige and respect that the Soviet Union enjoyed in the West.

Henry Stimson, the U.S. Secretary of War, said the situation after World War II was “worse than anything probably that ever happened in the world.”

Countless millions were short of food—with many on the edge of starvation. Homes and factories were rubble, machinery obsolete, and transportation disrupted. The emotional trauma was just as vast. There was no functional private sector to rebuild. Governments were forced to fill the vacuum and take charge.

The Great Depression of the 1930s and the mass unemployment that went with it destroyed faith in capitalism. British historian A. J. P. Taylor wrote at the time, “Nobody in Europe believes in the American way of life—that is, in private enterprise.”

All policy became focused on one structural problem—unemployment. Capitalism began to be considered morally objectionable; it appealed to greed rather than idealism and promoted inequality.

The Soviet Union claimed to have full employment, a stark contrast to the employment struggles of capitalistic countries in the 1930s. It had ambitious five-year plans for industrial development, and its economic system was credited with the USSR’s successful resistance to the Nazi war machine.

In many ways, it seemed an antidote to all that was wrong with the market- system. The Soviet model became a rallying point for the left and influenced thinking across the political spectrum.

THE MIXED ECONOMY IN EUROPE

In Britain, the management of the economy during World War II provided positive proof of what government could do; they had squeezed more production out of the industrial machine than its capitalist owners had accomplished before the war. The ruling Labour party thought that the country’s capitalists had failed them.

Businessmen were considered greedy profit hoarders and innovation avoiders whose action had created the mass unemployment of the 1930s. Influential intellectuals such as George Bernard Shaw wanted incrementally to replace this “scramble for private gain” with the achievement of “Collective Welfare.” This view became widespread.

Under the recommendations of a report by the head of the London School of Economics, William Beveridge, the Labour Government created a social program to slay the “five-giants”: want, disease, ignorance, squalor, and idleness (i.e., unemployment).

The implementation of this plan transformed Britain into the first major welfare state. Simultaneously, major industries, including iron, steel, coal, railroads, and utilities—were nationalized. The goal was to provide scale, mobilize resources, and ensure investment in the commanding heights.

Most importantly, however, nationalization would allow a focus on achieving the national objectives of economic development and growth, full employment, and equality. The public ownership of major economic forces and the planned control in other areas would be the catalysts towards reaching these ambitious goals.

By the late 1940s unemployment had decreased to as low as 1.3 percent. In the words of the British Prime Minister, Clement Attlee, they had created “a mixed economy developing towards socialism.”

Each European country would take a slightly different path in this direction.

France would also control, in the word of Charles de Gaulle, “the levers of command.” His French state nationalized industries from oil to banking. Italy inherited a mixed economy, passed-down from the fascist government of Benito Mussolini. Government-owned companies were widespread and often the driving forces in the rebuilding effort.

Germany did not fully move towards a mixed economy. They believed the state should do much, including supporting a system of subsidies and transfer payments to the weak and disadvantaged. They did not believe, however, that the state should interfere with the market mechanism.

German economic adviser, Alfred Muller-Armack, termed this the “social market economy.” Hyperinflation terrorized Germany in the post-World War I years—as a result, the central bank, the Bundesbank, was deeply committed to maintaining a stable currency.

The theories of John Maynard Keynes became dominant.

His writing assaulted classical economic theory and introduced a range of tools that emphasized the government’s ability to act within the economy—focusing on the government’s use of fiscal policies such as spending, deficits, and taxation.

His vision was the use of fiscal policy to create a managed capitalism. At the core of his theory was the view that government knowledge was superior to that of the marketplace. These views were accepted throughout Europe; in time, they would help draw its countries together in the European Union.

The general shift towards increased governmental control delivered an extraordinary degree of success. In 1957, British Prime Minister Harold Macmillan told a heckler, “Most of our people have never had it so good.” It was true. The 1950s and 1960s became known as the golden age of the welfare state in Britain.

In France, the period became known as Les Trente Glorieuses—“the thirty glorious years.”

French unemployment averaged 1.3 percent between 1945 and 1969. Germany, powered by its social market economy, became the country of the “economic miracle.” Its unemployment rate dropped to 0.5 percent by 1970.

By 1955, all the Western European countries had exceeded their prewar levels of production. In each, the state was either in control of the commanding heights or managing levers of fiscal policy. The mixed economy established itself as the incumbent system with this powerful record of success.

REGULATORY CAPITALISM IN AMERICA

America’s expansion of governmental control would be in the form of a shift towards regulatory capitalism. Much of the Great Depression’s suffering was attributed to the greed and wrongdoing of tycoons. America, however, was far more market-oriented than Europe.

As a result, its solution was to seek to control the key parts of the economy not through ownership, but through economic regulation. This view differed from that of Europe and the developing world. Still, the government would hold considerable sway over the market.

The Roosevelt administration created the SEC, the FCC, the Civil Aeronautics Board, and the National Labor Relations Board.

It bolstered the Interstate Commerce Commission, the Federal Trade Commission, and the Federal Power Commission. Between 1938 and 1940, Keynesian fiscal policies also began to be applied in the United States, and they quickly become prevalent.

World War II, however, created a far different reaction to capitalism in America than it did in Europe. War planning boards responsible for managing the economy emerged blackened with criticism. Even American liberals backed away from supporting the direct management of economic institutions after their first-hand wartime experience.

Businessmen, on the other hand, contributed mightily to the war effort. They were seen as patriots and heroes in America, in glaring contrast to their negative perception in Europe.

America’s economy would take off on a great boom after the end of the war; the war’s destructive forces had devastated its competition.

This increasing prosperity diluted the regulatory zeal of the New Deal. Economic expansion was in full swing—there was no need to dampen it. The administration of regulation became inefficient and slow.

By 1960, James Landis, a man instrumental in creating the regulatory system under Roosevelt, denounced it for its rigidity and incapacity while reviewing it for President Kennedy. His report said, “Delay had become the hallmark of federal regulation.” Regulation’s positive luster had been tarnished; it would fall to the background in public concern.

Keynesian fiscal policies, however, were in full swing. Its emphasis on managing the overall economy, not the specific workings of the marketplace, meshed perfectly with American capitalistic sensibilities.

It seemed to be fulfilling its promises of economic growth and full employment. Keynes made the cover of Time magazine in 1965, nineteen years after his death. His views on fiscal management were so widely respected; they became considered closer to scientific fact than theory.

THE DEVELOPING WORLD

In India, Jawaharlal Nehru and the Congress party would create a mixed economy. Nehru envisioned a modern, planned, industrial, socialist economy. The government would have pervasive influence over the commanding heights. The Indian government resultantly embraced extensive planning and control in their economy.

Their prevailing view, which was the world’s prevailing view at the time, came down to a single point: the state would have to generate development. This view was called “development economics,” and it would have a far-reaching impact within the developing world.

It assumed that the Third World desperately lacked capital and the necessary infrastructure to serve as the foundation of a modern economy.

Governments could solve this problem by making investments that benefitted the long-term good since they would not be bound by the market necessity of short-term paybacks. Governments would assume the risks and bear the responsibilities of these investments. Most economists did not think growth was possible without this intervention and central governmental role.

Surprisingly, according to the wisdom of the time, the Indian economy did not act as their rational models predicted. Instead, India developed a thoroughly complex and completely cumbersome system. Its economy stagnated, and growth slowed.

In the late 1960s and 1970s, the Vietnam War shifted international opinion against the United States—and against the economic system identified with it. At the same time, Third World confidence grew. National control and national champions were emphasized; multinational companies became symbols of humiliation.

Voting blocs formed in the United Nations to attempt to bypass the Cold War and foreign oil companies were nationalized worldwide. Liberals supported the movement, seeing moral virtue in the Third World and its solidarity against the first.

By the late 1970s, this idea started to flounder. The state-led emphasized by the developmental economists did little to help ordinary people. Promised growth did not always occur, but in its place was bureaucratic harassment, corruption, and often broken promises. The development— and the dream of catching up with the first world—had not happened.

DOES THE GOVERNMENT REALLY KNOW BEST?

After their extraordinary initial success, the mixed market economies hit a wall in the 1970s. America had many sources of affliction, from the toll of two oil crisis in the Middle East to the bitter legacy of the Vietnam War.

Overall, the decade was characterized by chronically poor economic results.

In 1974, inflation reached its highest level since the end of World War 1; unemployment reached 9.2 percent shortly afterward. The balance of power had been shifting from the market to the government, and for the first time, it was starting to receive blame.

Herbert Stein said, “Nothing was more natural than the conclusion that the problems were caused by all these government increases and would be cured by reversing, or at least stopping them.”

America was not an exception. In Britain, inflation was running at 24 percent, and marginal tax rates were up to 98 percent, destroying incentive. Unemployment was rising. State-owned companies struggled as well.

Protectionism had created inflexible companies and hampered innovation. Many only survived because of increasingly larger and larger government subsidies. Economies throughout Europe struggled in step.

Faith in government knowledge plunged. The levers of fiscal policy were much more difficult to manage than anticipated; some critics would argue that Keynesianism itself was inherently inflationary. Public spending was not picking up the slack—it was crowding out private spending completely.

Protectionism had created inflexible companies and hampered innovation. Many only survived because of increasingly larger and larger government subsidies. Economies throughout Europe struggled instep.

Faith in government knowledge plunged. The levers of fiscal policy were much more difficult to manage than anticipated; some critics would argue that Keynesianism itself was inherently inflationary. Public spending was not picking up the slack—it was crowding out private spending completely.

Keynesian demand management had assumed that low unemployment and a low, managed rate of inflation was sustainable. This assumption failed. Deficit spending, in an attempt to buy a way out of the crisis, proved futile. The growth of the preceding decades was over.

THE BATTLE OF IDEAS

The Keynesian view of governmental management had never been completely unchallenged. In 1944, Friedrich von Hayek wrote The Road to Serfdom. Hayek believed that Keynes’s approach would institutionalize inflation. In contrast, he believed in the market’s price system, calling it “a mechanism for communicating information” and “a marvel.”

He would write that government had one clear role: to ensure the development and maintenance of laws and rules—these rules would ensure a competitive economy.

Keynes had won the first round in the global battle of ideas, but the fight was far from complete.

In America, this opposition was centered at the University of Chicago. Economic faculty emphasized free markets and argued against government intervention—in stark contrast to the prevailing theories of the day. They rigidly focused on economic science.

Milton Friedman emerged as both an active proponent of laissez-faire economics and the leader of an all-out assault on Keynesian theory. As economies struggled, these views started to be taken seriously.

RISING STARS, SINKING SHIPS

The 1980s were strongly impacted by three major global sequences: the debt crisis in the developing markets, the revelation of Marxism’s failure, and the rise of the Asian “tigers.”

In the second half of the 1970s, the world’s money centers were flush with deposits from oil producers. Banks rapidly recycled these deposits with loans, many to developing countries in Latin America. Both governments and government-owned companies received enormous amounts of money.

Some worried about the governments’ and state companies’ ability to service their increasing levels of debt, but their concerns were ignored. These Third World countries were viewed as the rising tide of the future—in short, everyone was loaning money, and no one wanted to miss the train.

Between 1972 and 1981, the external debts of developing countries increased six fold.

At first, this investment led to higher economic growth. Much money, however, was squandered through graft—bribery, expensive imports, extravagance, and numbered bank accounts for government officials. When floating interest rates rose in the 1980s, these countries could not pay their debts.

The resulting crisis caused the “lost decade” in the developing world. Growth rates shrunk, currencies were devalued, and wage increases restrained. Governments were forced to stop spending and stop subsidizing unprofitable state companies. Austerity became the new normal.

The economic arrangements and the guiding ideas derived from development economics would have to be changed; fiscal reality left no other choice.

The Soviet Union had been credited with high growth rates, non-existent unemployment, and a central planning system that served as the catalyst to a powerful developmental model.

In the 1980s, this illusion faded. Their economy was a failure; although a military superpower, the Soviet Union was in many aspects an underdeveloped country. This failure extended to Eastern Europe, from which the Soviet Union was starting to disengage.

Mao’s leadership in China had similarly created economic failure.

China had suffered through starvation as agricultural and industrial production plummeted during the ironically named, Great Leap Forward program. Under the leadership of Deng Xiaoping, however, China was starting to reorient itself towards the markets; he would say, “It doesn’t matter whether a cat is black or white so long as it catches mice.”

Agricultural collectivism was eliminated, and production increased as a result. Deng would move China closer and closer to the market as the decade continued.

Simultaneously, the “Asian Miracle” was taking place. Nations were growing, transforming themselves industrially, and undergoing a lifestyle revolution that reached all economic classes. Japan was the leader, followed by the “tigers”: South Korea, Taiwan, Hong Kong, and Singapore.

Following these leaders, came the “new tigers”: Malaysia, Indonesia, Thailand, the Philippines, and the Guangdong province of China. These countries were more open to commerce and entrepreneurship than most parts of the world.

They focused on the fundamentals of low inflation, low deficits, high savings, education, consistency, institutional and legal frameworks that encouraged trade, and, most importantly, on becoming part of the global system of trade.

Governments did intervene to differing degrees in their economies—often through the process of picking winning companies and directly encouraging their growth. These actions, however, were less the drivers of growth than the economic principles discussed. Market and state each played a role—coordinating towards a common purpose, motivated by a drive to work. Together, they created tremendous growth.

THE WESTERN SHIFT TO MARKET

Britain would lead the shift in Western thinking. By the late 1970s, the country was falling apart—all incentive for initiative had been eliminated. Change was needed, and a British politician named Keith Joseph would fuel it while his most important student, Margaret Thatcher would enact it.

Joseph believed in the market system: in enterprise, initiative, and entrepreneurship.

He thought there was nothing wrong with starting a business—in fact, Joseph believed that it was entrepreneurs who actually created society’s wealth. Joseph was closely associated with a right-of-center think tank, the Institute for Economic Affairs (IEA), which did intensive academic research on market policy and governmental involvement.

Milton Friedman would later say, “Without the IEA, I doubt very much whether there would have been a Thatcherite revolution.” Their research would become the textbook for the Thatcher programs of the 1980s. To make this research actionable, Joseph created the Center for Policy Studies; the organization’s goal was political—to influence opinion makers. With a goal of first converting his political party, Joseph created reading lists for officials, gave hundreds of speeches, and blazed a trail of ideas.

In 1979, Margaret Thatcher became Prime Minister of Britain. Her government pursued a program that became known as Thatcherism—it rejected Keynesianism, constrained the welfare state and government spending, reduced direct government economic intervention, sold off government-owned businesses, drove to reduce high and punitive tax rates, and committed to deficit reduction.

Her government would last until 1990 and reshape global attitudes toward state and market. Its examples would establish a new economic agenda around the world.

During the same period, Ronald Reagan would impact the United States. Reagan used vocabulary from the pre-New Deal era of the United States; he talked about cutting government, promoting free enterprise, and celebrating the market.

His administration believed in the law of unintended consequences. For example, they thought that many well-intentioned government programs, such as public housing, actually created slums, while bulldozing previously affordable homes.

Reagan inherited a country struggling with inflation.

The Chairman of the Federal Reserve, Paul Volcker, fought inflation by controlling the supply of money. After three years of soaring interest rates, the Fed would win. A key point in this struggle was Reagan’s unwavering stance during the air traffic controller’s strike of 1981; this would help change the character of labor relations.

Reagan supported tax cuts, believing that the lowered rates would fuel development that would make up for the lost revenue. The top marginal tax rate was reduced from 70 percent to 28 percent, the tax base was broadened, and many loopholes were eliminated.

However, it was unpopular to cut spending, and the Democratic Congress bridled at proposals. Reagan made few cuts and increased defense spending; the expected increases in revenue from tax cuts did not occur. As a result, the annual deficit almost tripled, and the gross debt went from $995 billion to $2.9 trillion.

It was not until the Bill Clinton administration (paired with a Republican Congress) that the Reagan revolution of less government intervention was truly completed. The deficit was reduced from 5 percent of GDP in 1992 to 1 percent in 1997. This evolution did not play out quite how Reagan would have planned; taxes were increased slightly, and defense spending cut, but monetary policy was steadied and the Keynesian impact diluted.

Furthermore, in many areas, America experienced deregulation—withdrawing or relaxing many restrictions over economic areas. There were obvious exceptions, such as environmental and consumer rights regulations, but the pendulum had swung away from interventionism.

THE OPENING OF EUROPE

The march to market would continue with the Soviet Union’s fall; almost instantaneously, Eastern Europe would transition from communism to capitalism. Poland had its first free elections in 1989; in its Upper House, the Communist opposition party, Solidarity, won ninety- nine out of a hundred seats. Hungary, Czechoslovakia, and Romania threw off communism in quick succession.

Throughout the process, Poland would lead the way in economic reform. With their economy in a state of hyperinflation, they did not have time for gradualism. Instead, Poland employed a transition technique that would be known as “shock therapy”—it consisted of a rapid and massive transition to market. Prices were freed, taxes reformed, and a restrictive monetary policy put into place.

By 1992, the new private sector was generating over half of the entire GDP. People started to talk about Poland as Europe’s “new tiger.” Similar changes and successes occurred at differing speeds throughout the rest of Eastern Europe. Germany was unified, and after a rough of transition would become an increasingly powerful force in Europe.

Russia would undergo its own massive transformation. Prices were freed, the economy was opened up, and government-owned companies privatized. Throughout the period, social discontent was high; there was a massive separation between the old, state-controlled military- industrial system and the new, ambitious market-based society.

Privatization was a contentious process. Often, concentrated share ownership ended up in the hands of a few. The wealthiest of this emerging class of business people were known as the oligarchs. Russia had entered the market-system, but it had a bumpy road ahead.

THE EUROPEAN PROJECT

In December 1991, European leaders met in Maastricht to conclude a treaty on a single currency and establish common foreign, security, and internal policies. Their decisions would define the course of European unity into the twenty-first century. They decided to create a common currency and a central bank to manage it.

The European Central Bank (ECB) was to be modeled on the German Bundesbank, and its strong anti-inflationary policy. Its goal was according to Karl-Otto Pohl, “the denationalization of money.” They set goals for congruence, limiting deficits and inflation. Europe would become a single market, with a common currency.

Europe had embraced a common market, but not limited governments.

Many Europeans see the welfare state as one of the continent’s greatest achievements and a foundation of truly civilized society. Still at question is whether these benefits can be funded long-term. Much of Europe seemed to have adopted the national motto of Belgium: Unity makes strength.

They sacrificed their national sovereignty over their economies, believing that what was good for the continent would also be good for their individual interests.

GLOBALIZATION AND THE NEW RULES OF THE GAME

As national economies opened up and technology advanced, the world economy went global. Both China’s and India’s economies expanded massively as they opened up to market, driving growth both in Asia and throughout the world. Growth became the new gospel, and the international market was the way to achieve it.

The value of world trade doubled in the 1990s to $8 trillion.

Foreign direct investment—productive investment across borders—accelerated just as rapidly. Cross-border investment rapidly expanded the web of global interconnections. Global financial markets became continuously more and more interwoven.

This did not always lead to positive results—a currency crisis that began in Asia turned to a global contagion with Russia’s default and devaluation in 1998. What began as a regional issue lasted two years and affected countries all over the globe. Interconnectivity had brought tremendous benefits, but it also was bringing significant risk.

Despite the risk, the market focus that had seemed so radical when Margaret Thatcher had initiated her revolution had become the new consensus in the world. It was no longer a choice, but a necessity. Capital now sweeps across the world at an unimaginable speed, services flexibly move across countries and ideas, insights, and techniques all disperse with astonishing ease.

Borders are becoming obsolete to trade as markets interweave. As government intervention has shrunk, companies have grown. Multinational companies that span the globe have multiplied as markets have opened. The sense of corporate responsibility has also shifted with it; companies are now expected to engage in the communities they impact.

IS THE MARKET SHIFT PERMANENT?

The balance of power had shifted from the state towards the market, but a key question remains: is this the fulfillment of a long historical trend, or the swinging of a pendulum? At stake are not only the boundaries between government and market but also the very nature of the borders between countries and a globalized world. For many, the embrace of the market has simply been practicality.

Lee Kuan Yew, the progenitor of modern Singapore, when asked about the turn to market, said, “Communism collapsed, and the mixed economy failed. What else is there?” In the same way, the market consensus will be evaluated on its results. Five tests are likely to be decisive:

1. Delivering the Goods?

Will market economies deliver on their promises of measurable economic goods: economic growth, higher standards of living, better-quality services, and jobs?

2. Ensuring Fairness?

Will success be widely distributed—or disproportionately shared? Will there be equity, fair play, and opportunity?

3. Securing the Environment?

Can securing environmental health be accomplished through the market, or will significant government intervention be needed?

4. Coping with Demographics?

How will market systems cope with the cost of disproportionately elderly or the employment of disproportionately young populations?

5. Upholding Identity?

How will values, national identities, and ethnic and religious sensibilities be affected by these global shifts?

In the end, the shift to market will be sustained based upon its ability to handle both these—and yet-unimagined stressors. Many forces have driven the shift to market consensus, but fundamentally, it has been through a reshaping of beliefs and ideas.

A new view of the state has been cast, and new credibility for the market has been developed. The outlook for the market/state relationship will lie in how the cumulative judgments and experiences of the future will orient beliefs and shape the new balance of confidence—for this balance drives both the flow of ideas and the course of history.

HookedtoBooks.com would like to thank the Titans of Investing for allowing us to publish this content. Titans is a student organization founded by Britt Harris. Learn more about the organization and the man behind it by clicking either of these links.

Britt always taught us Titans that Wisdom is Cheap, and principal can find treasure troves of the good stuff in books. We hope only will also express their thanks to the Titans if the book review brought wisdom into their lives.

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