Paradoxes of Prosperity: Why the New Capitalism Benefits All

Rating:
Summary: My impression about this book.
Review: I will probably fail miserably if I attempt to make a learned analysis of this book, rather, I will share my impression on this work (purely subjective) with whomever cares to read this review. I found this book by Diane Coyle exquisite. I am no fan of Capitalism, yet, found her arguments very persuasive and full of common sense. I have an already admitted weakness for books of this sort (economic related matters for the layman). Ms. Coyle makes a powerful argument of why the new brand of Capitalism will be good for the masses after a transitional period and why it will remove from power most of these days' entrenched powers that be. This book is worth your time and money. Enjoy it. Somehow related to it is another good book I am reading at this time that is entitled: The Sovereign Individual (James Dale Davidson and Lord William Rees-Mogg)

Rating:
Summary: Highly Recommended!
Review: Diane Coyle, a consultant and columnist, presents an in-depth and optimistic look at modern capitalism. Dubbing our current age a transitional period, she predicts that the result of our recent bout of high-tech fueled economic growth will be even more growth and a better society. Coyle refers to historical parallels and many texts to make her case that technology has transformed society in significant ways that even experts are only beginning to understand. We [...] recommend this compelling and authoritative book to executives and managers, and to serious readers and academics, all of whom will enjoy the way it makes sense of today's contradictory financial and social developments.


Rating:
Summary: COyle enters the ranks of the greats
Review: Paul Krugman. Bradford De Long. There are few economists able to make complex ideas sing for the general reader. With her latest book The Paradoxes of Prosperity, her follow-up to 1999's The Weightless World, Diane Coyle has entered their ranks.

That the book succeeds so well is a testament to Coyle's ability to keep two conflicting ideas in the reader's head at the same time. Thus the central, unwritten paradox at the heart of the book: she is a whistleblower on the whole global capitalism game while managing at the same time to be its strongest champion.

What makes Coyle so engaging is her fearlessness in grappling with the very biggest concerns of our times: Is free-market economics really the only game in town? What is the role of government? What is the future of the nation state? What do you do about inequality? Inevitably there are no glib answers to these questions, and the core of the book is given over to Coyle's explanation for a series of paradoxes: Wealth generation is good, but relies on change, which people don't like. Why, in a weightless world, have places become more important than ever? Why is it that the technology that permits empowerment and has the potential to boost democratic control is in fact generally felt to be disempowering and facilitating central control? Why do we have a love-hate relationship with government in which we value certain services but vote for tax-cutting platforms? She tackles these issues with huge verve and intelligence.

There are any number of reasons to like Coyle. For one thing, she walks the walk. She argues that new companies must speak to the heart and head (p166) and she does exactly that in her text: how can you not like a heavyweight economist who admits to having been an adolescent cooped up in a darkened room listening to the Clash? She follows her own Just Do It advice by setting up her own company, Enlightenment Economics. She has an exquisite feel for the apposite anecdote and the telling example. So, when arguing that physical assets are not as important for a company as its `network' or licensing assets, as well as the obvious example of Nike she mentions Topsy Tail, a $100 million hair products company which has three employees. And while she can be wonderfully breathy ("The struggle is now on for the distribution of the benefits that will be generated by a surge in prosperity thanks to economic growth driven by the new technologies"), she has a great line in invective: "A lot of management advice is of course complete twaddle. Empty intellectual calories pandering to the hunger for advice of managers aware of the pressures for change".

The Paradoxes of Prosperity is a no-holds-barred riposte to anti-globalists, luddites and those who believe in the need for worldwide economic change but reject capitalism as the engine for doing so. She is quick to point out the obvious paradox that anti-globalisation campaigners are globalisation's biggest beneficiaries, and the less obvious one that globalisation of a product (like sushi) doesn't homogenize it, but grows the franchise. Coyle is profoundly and sometimes hilariously unapologetic in her belief in technology-led `turbo-capitalism'. It's all over this book. "What is it that increases human prosperity?" she asks rhetorically on page 7: "Technological progress seems to be the answer" booms the next line. You can almost feel Naomi Klein flinch. Coyle places herself firmly in the camp of free-market mavens like Luuk van Middelaar and Matt Ridley. "The technology driven capitalist economy is the only reason any of us has a comfortable home, plentiful food....and children who have a good chance of surviving infancy". (p3) In order for the book to succeed, she has to convince us that her basic argument is watertight: That there is such a thing as New Capitalism, that it really is new, and, most controversially, that it really is good for us.

Coyle is on firm ground with the first two. She takes us very effectively through the productivity paradox: why the ICT revolution has surprisingly little to show for itself in growth terms. So far only The US, with its vastly greater computer infrastructure and investment, shows evidence of post 1973 growth due to technical progress. Partly it is to do with measurement difficulties, and partly to do with the fact that technological revolutions are `sleepers' - they don't make their effects felt for some fifty years after their introduction.

And is this the New New Thing? It would appear so. There is mounting evidence (from R&D budgets, patents registrations and so on) that developed economies rely on brains more than brawn. She subscribes to Arnold Harberger's denomination of ICT as a yeast technology, meaning that it seeps into other business areas and catalyses change there. Biotechnology, alternative energy and nanotechnology all get a look-in. She makes excellent examples to make parallels with the past. Especially effective is the reminder that each generation is woefully myopic about the potential for its new technologies - it is hard to believe that the telephone was once envisaged as a broadcasting device, for example.

Inevitably it is where Coyle tries to argue the benefits of all this that she will find her toughest critics. Her argument, which she returns to again and again, is that New Capitalism is great because its raw currency is us, or at least the creative stuff flowing between our ears. We are, as never before, owners of our means of production. And that's not all. Because the cogs of this new economy are oiled by personal trust, healthy open societies will be hewn from bureaucratic or despotic misery by the `human capital' and social context they engender. "It is not going to be possible to build a vigorous modern economy without building a fair society" (xix)

It sounds too good to be true, and not even a book this good can dispel all the doubts. For one thing, Coyle never quite convinces that the New Capitalism is not simply parasitic on the institutions of the bad old capitalism. The fortunes made in the weightless economy depended on the apparatus of capital funding, enlightened credit arrangements and trust. The ultimate beneficiaries of unfettered techno-capitalism are still shareholders, just as they were in the bad old days, so Coyle's talk of 'usurping elites' rings hollow (xvii). The assumption about trickle-down effects is based on a rose-tinted view of the capitalist structures in place in the developing world. The economist Hernando de Soto is just one of those who worry that wealth creation where corruption or nepotism is the norm may be at the expense of the majority, and no amount of faith in `human capital' will change that.

There is also the feeling that, well, no-one seems to be having all that much fun in Coyle's brave new world. Even the supposed winners of all this, the intra-urban uber yuppies, feel insecure and unsettled, as sociologist Richard Sennett has pointed out. She notes that "the US job market might have the right kind of flexibility to make possible large scale switches from one kind of occupation to another". Worker flexibility is the vital ingredient. Middle managers become technologically redundant. Ouch. Coyle tells us that freedom of people to move is the missing link of globalisation. Small wonder that there is such opposition to the whole idea.
Coyle admits there is huge potential for conflict, especially between rich and poor countries (foreign direct investment) and is honest about the shocks of deindustrialisation and downsizing. She is clear about the growing gap between rich and poor, but doesn't apologise for it: in the long run we all benefit from a generally improved standard of living. She marshals Amartya Sen, and says "Those countries excluded from the postwar process of economic liberalisation and trade have plainly fared less well than those engaged in the world economy".

But in the end this is a mesmeric and hugely insightful read. The value of Coyle's work is that it sets out clearly the parameters for intelligent debate on a subject that is clouded with fear and false assumptions. It knocks down the shibboleths of anti-globalisation and yet squares up honestly to the slightly disquieting future that awaits us: Get ready for constant change. Paradoxes of Prosperity is a litany of creepy stuff for conservatives: Institutions built for national industrial societies are inadequate for the global, weightless society; the authority of the professions will be undermined because bodies of knowledge will become common; and it's harder and harder to find effective cultural signifiers of dissent and rebellion, meaning we face a future dominated by nihilistic atrocities by the disenchanted. Coyle's message is that this is still infinitely preferable to pinchbeck bureaucratic control. If global capitalism is the only game in town, a clear understanding of the power balance between technology, markets and governments is vital, and Coyle's contribution is outstanding.

Rating:
Summary: COyle enters the ranks of the greats
Review: Paul Krugman. Bradford De Long. There are few economists able to make complex ideas sing for the general reader. With her latest book The Paradoxes of Prosperity, her follow-up to 1999's The Weightless World, Diane Coyle has entered their ranks.

That the book succeeds so well is a testament to Coyle's ability to keep two conflicting ideas in the reader's head at the same time. Thus the central, unwritten paradox at the heart of the book: she is a whistleblower on the whole global capitalism game while managing at the same time to be its strongest champion.

What makes Coyle so engaging is her fearlessness in grappling with the very biggest concerns of our times: Is free-market economics really the only game in town? What is the role of government? What is the future of the nation state? What do you do about inequality? Inevitably there are no glib answers to these questions, and the core of the book is given over to Coyle's explanation for a series of paradoxes: Wealth generation is good, but relies on change, which people don't like. Why, in a weightless world, have places become more important than ever? Why is it that the technology that permits empowerment and has the potential to boost democratic control is in fact generally felt to be disempowering and facilitating central control? Why do we have a love-hate relationship with government in which we value certain services but vote for tax-cutting platforms? She tackles these issues with huge verve and intelligence.

There are any number of reasons to like Coyle. For one thing, she walks the walk. She argues that new companies must speak to the heart and head (p166) and she does exactly that in her text: how can you not like a heavyweight economist who admits to having been an adolescent cooped up in a darkened room listening to the Clash? She follows her own Just Do It advice by setting up her own company, Enlightenment Economics. She has an exquisite feel for the apposite anecdote and the telling example. So, when arguing that physical assets are not as important for a company as its 'network' or licensing assets, as well as the obvious example of Nike she mentions Topsy Tail, a $100 million hair products company which has three employees. And while she can be wonderfully breathy ("The struggle is now on for the distribution of the benefits that will be generated by a surge in prosperity thanks to economic growth driven by the new technologies"), she has a great line in invective: "A lot of management advice is of course complete twaddle. Empty intellectual calories pandering to the hunger for advice of managers aware of the pressures for change".

The Paradoxes of Prosperity is a no-holds-barred riposte to anti-globalists, luddites and those who believe in the need for worldwide economic change but reject capitalism as the engine for doing so. She is quick to point out the obvious paradox that anti-globalisation campaigners are globalisation's biggest beneficiaries, and the less obvious one that globalisation of a product (like sushi) doesn't homogenize it, but grows the franchise. Coyle is profoundly and sometimes hilariously unapologetic in her belief in technology-led 'turbo-capitalism'. It's all over this book. "What is it that increases human prosperity?" she asks rhetorically on page 7: "Technological progress seems to be the answer" booms the next line. You can almost feel Naomi Klein flinch. Coyle places herself firmly in the camp of free-market mavens like Luuk van Middelaar and Matt Ridley. "The technology driven capitalist economy is the only reason any of us has a comfortable home, plentiful food....and children who have a good chance of surviving infancy". (p3) In order for the book to succeed, she has to convince us that her basic argument is watertight: That there is such a thing as New Capitalism, that it really is new, and, most controversially, that it really is good for us.

Coyle is on firm ground with the first two. She takes us very effectively through the productivity paradox: why the ICT revolution has surprisingly little to show for itself in growth terms. So far only The US, with its vastly greater computer infrastructure and investment, shows evidence of post 1973 growth due to technical progress. Partly it is to do with measurement difficulties, and partly to do with the fact that technological revolutions are 'sleepers' - they don't make their effects felt for some fifty years after their introduction.

And is this the New New Thing? It would appear so. There is mounting evidence (from R&D budgets, patents registrations and so on) that developed economies rely on brains more than brawn. She subscribes to Arnold Harberger's denomination of ICT as a yeast technology, meaning that it seeps into other business areas and catalyses change there. Biotechnology, alternative energy and nanotechnology all get a look-in. She makes excellent examples to make parallels with the past. Especially effective is the reminder that each generation is woefully myopic about the potential for its new technologies - it is hard to believe that the telephone was once envisaged as a broadcasting device, for example.

Inevitably it is where Coyle tries to argue the benefits of all this that she will find her toughest critics. Her argument, which she returns to again and again, is that New Capitalism is great because its raw currency is us, or at least the creative stuff flowing between our ears. We are, as never before, owners of our means of production. And that's not all. Because the cogs of this new economy are oiled by personal trust, healthy open societies will be hewn from bureaucratic or despotic misery by the 'human capital' and social context they engender. "It is not going to be possible to build a vigorous modern economy without building a fair society" (xix)

It sounds too good to be true, and not even a book this good can dispel all the doubts. For one thing, Coyle never quite convinces that the New Capitalism is not simply parasitic on the institutions of the bad old capitalism. The fortunes made in the weightless economy depended on the apparatus of capital funding, enlightened credit arrangements and trust. The ultimate beneficiaries of unfettered techno-capitalism are still shareholders, just as they were in the bad old days, so Coyle's talk of 'usurping elites' rings hollow (xvii). The assumption about trickle-down effects is based on a rose-tinted view of the capitalist structures in place in the developing world. The economist Hernando de Soto is just one of those who worry that wealth creation where corruption or nepotism is the norm may be at the expense of the majority, and no amount of faith in 'human capital' will change that.

There is also the feeling that, well, no-one seems to be having all that much fun in Coyle's brave new world. Even the supposed winners of all this, the intra-urban uber yuppies, feel insecure and unsettled, as sociologist Richard Sennett has pointed out. She notes that "the US job market might have the right kind of flexibility to make possible large scale switches from one kind of occupation to another". Worker flexibility is the vital ingredient. Middle managers become technologically redundant. Ouch. Coyle tells us that freedom of people to move is the missing link of globalisation. Small wonder that there is such opposition to the whole idea.
Coyle admits there is huge potential for conflict, especially between rich and poor countries (foreign direct investment) and is honest about the shocks of deindustrialisation and downsizing. She is clear about the growing gap between rich and poor, but doesn't apologise for it: in the long run we all benefit from a generally improved standard of living. She marshals Amartya Sen, and says "Those countries excluded from the postwar process of economic liberalisation and trade have plainly fared less well than those engaged in the world economy".

But in the end this is a mesmeric and hugely insightful read. The value of Coyle's work is that it sets out clearly the parameters for intelligent debate on a subject that is clouded with fear and false assumptions. It knocks down the shibboleths of anti-globalisation and yet squares up honestly to the slightly disquieting future that awaits us: Get ready for constant change. Paradoxes of Prosperity is a litany of creepy stuff for conservatives: Institutions built for national industrial societies are inadequate for the global, weightless society; the authority of the professions will be undermined because bodies of knowledge will become common; and it's harder and harder to find effective cultural signifiers of dissent and rebellion, meaning we face a future dominated by nihilistic atrocities by the disenchanted. Coyle's message is that this is still infinitely preferable to pinchbeck bureaucratic control. If global capitalism is the only game in town, a clear understanding of the power balance between technology, markets and governments is vital, and Coyle's contribution is outstanding.