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Making Globalization Work (Reprint)
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Pakistan on the brink: politics, economics, and society
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Understanding International Conflicts: An Introduction to Theory and History (New Edition)
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TUCH, Hans N., ed. COMMUNICATING WITH THE WORLD IN THE 1990s: A Commemorative Symposium . USIA Alumni Assoc. and The Public Diplomacy Foundation. Wash. DC 1994
TUCH, Hans N. COMMUNICATING WITH THE WORLD: U.S. PUBLIC DIPLOMACY OVERSEAS .
St. Martins Press, N.Y., 1990
Diplomatic Theory From Machiavelli To Kissinger (Studies in Diplomacy)
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A Dictionary of Diplomacy
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Beliefs and Leadership in World Politics
Methods and Applications of Operational Code Analysis
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Purpose and Policy in the Global Community
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Modeling Bilateral International Relations
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Civil-Military Dynamics, Democracy, and International Conflict
A New Quest for International Peace
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Integrating Cognitive And Rational Theories of Foreign Policy Decision Making
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A Comparative Analysis of United States, the United Kingdom, Canada, France and Japan
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Nationalism in International Relations
Norms, Foreign Policy, and Enmity
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Studies in Foreign Policy Analysis
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Trevor C. Salmon and Mark F.Imber eds, Issues in International Relations, (Routledge 2008 2nd ed.)
Joseph S. Nye,Understanding International Conflicts, (Pearson 2006 6th ed)
William R. Keylor ,The Twentieth-Century World and Beyond :An International History since 1900
(OUP 2006 5th ed.)
John Baylis, Steve Smith,, Patricia Owens (Eds) The Globalization of World Politics
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Chris Brown with Kirsten Ainsley ,Understanding International Relations,
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Realism in International Relations and International Political Economy: The Continuing Story of a Death Foretold (The New International Relations) by Stefano Guzzini (Paperback - May 6, 1998)
The Wealth of States: A Comparative Sociology of International Economic and Political Change (Cambridge Studies in International Relations)
by John M. Hobson
International Relations: A General Theory by J. W. Burton
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The International Relations Dictionary (Clio Dictionaries in Political Science) by Jack C. Plano (Paperback - Mar 1988)
The Emergence of the Global Political Economy (International Relations and History Series) by Willia Thompson (Paperback - Jan 31, 2000)
Research Methods: A Process of Inquiryby Anthony M. Graziano, Michael L. RaulinAmr G.E. Sabet (Author)
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MODERN POLITICAL IDEOLOGIES 3RD ED
KHAN
DIPLOMATIC DIVIDE
AMIN
PAKISTAN'S FOREIGN POLICY A REAPPRAISAL
February 6, 2003
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CONTEMPORARY SOUTHEAST ASIA 2ND ED
GOLDSTIEN
INTERNATIONAL RELATIONS 8TH ED
SINGH
JINNAH INDIA-PARTITION INDEPENDENCE
BURNHAM
RESEARCH METHODS IN POLITICS 2ND ED COMPREHENSIVELY REVISED AND PDATED
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MODERN DIPLOMACY 3RD ED
Saturday, October 10, 2009
Saturday, June 6, 2009
State of the economyPublished: June 6, 2009 THE third quarterly report of the State Bank of Pakistan on the state of the economy indicates a bumpy road ahead and should serve as a warning against complacency. Despite a number of positive developments, the message delivered is that the economy is still not out of the woods and faces a number of vulnerabilities. The country has reaped bumper wheat and rice harvests and there is a likelihood of good production in the minor crops also, thanks to good weather and, in the case of wheat, timely announcement of the new support price. It is heartening to note that the headline inflation, measured by CPI, dropped to 17.2 percent on Year on Year basis in April 2009 from its peak of 25.3 percent YoY in August 2008. What is real good news is that there has been a sharp downturn in food inflation, which fell from its YoY peak of 34.1 percent in August 2008 to 17.0 percent in August 2009. This would provide a modicum of solace to low-income groups. It is also good to learn that current account deficit narrowed substantially with a corresponding stability in the exchange rate. Further, fiscal discipline was maintained leading to hopes that GDP growth would narrow to 4.0 to 4.5 percent this financial year from 7.4 percent last year, though the report notes that the target might be tough to meet. There are however numerous deficiencies that need to be overcome if the growth rate, lowered to between 2.0 and 3.0 percent from the previous estimate of 2.5-3.5 pc, is to be met. Three major indicators point to underlying weaknesses which, if not addressed, could hamper economic recovery. These include a stubbornly high inflation, a massive deterioration in the external account and a declining industrial output, especially in the Large Scale Manufacturing sector which has suffered an output fall of 7.7 percent over the last nine months. Besides the internal vulnerabilities, there are other possible shocks that the economy would find hard to bear. Foremost among these is any big rise in the price of oil, an issue that continues to worry even the US and was taken up by President Obama with Saudi King Abdullah early this week. The State Bank rightly underlines that any reduction in the social sector development would be detrimental to human and physical infrastructure. The NEC on Thursday approved the highest ever Rs 621 billion PSDP for 2009-10. What is worrisome is that the Chairman Planning Commission hopes to use foreign inflows of around $2 billion to further enhance the PDSP. Relying on promises of foreign assistance is like skating on thin ice. One hopes the government will not this time treat the PSDP as the first item to be axed in case of a revenue shortfall.
Tuesday, April 14, 2009
Diplomacy
Reviving Public Diplomacy: An Opportunity for the Next President By Lauren B. Movius
We have all heard of the dismal levels of international public opinion of the U.S. and the increasing levels of anti-Americanism. Some respond with a ‘so what?’ attitude, and question the need for more positive perceptions. But international public opinion has very real consequences for the U.S and its people. Foreign public opposition to the Iraq war has weakened U.S. alliances, U.S. companies face hostility across the globe, and international terrorism is an ever-constant threat. Public diplomacy needs to be a key issue for the future President’s foreign policy, as a change in administration creates a strategic opening of significant proportions for U.S. diplomacy.
Related ContentAnnalsLink: "New Technologies and International Broadcasting" [pdf]AnnalsLink: "Moving from Monologue to Dialogue" [pdf]AnnalsLink: "Hard Power, Soft Power, Smart Power" [pdf]
The upcoming presidential election is already positively changing global public opinion. A recent BBC World Service poll found that the U.S. image abroad has begun to improve for the first time, following years of decline. The elections have drawn substantial media coverage from foreign journalists, thereby explaining American politics to the world, and hopefully presenting the country in a new light. That said, the U.S. is still viewed more negatively than the European Union, Brazil, China, India and Russia. If we are to restore our “beacon on the hill” status, the next president must capitalize on the goodwill the elections have brought and rejuvenate public diplomacy efforts.
While the Bush administration brought in several undersecretaries of state for public diplomacy and public affairs over the last seven years, all left office, and their public diplomacy efforts were largely unsuccessful. (Failures could be partially attributed to the position itself: With the dismantling of the U.S. Information Agency in 1999, the financial and organizational support for public diplomacy was greatly diminished. The current public diplomacy position is under secretary of state for public diplomacy and public affairs, though public affairs and public diplomacy are quite different matters and should be overseen separately.) Given these failures, some have questioned if a public diplomacy position is even needed. But public diplomacy is more important than ever and needs to be revived.
The recent failures to boost perceptions of the U.S. are not because public diplomacy is itself a bad idea, but because the policies being promoted were not accepted by foreign publics. Take the efforts of former-Under Secretary for Public Diplomacy and Public Affairs Karen Hughes as an example. Hughes’ strategy was to sell U.S. foreign policy, assuming that communication would lead to understanding and then admiration. But public diplomacy is not public relations for world powers. Citizens of other countries understand U.S. policies, but they do not agree with them. Future public diplomacy efforts must move beyond the outdated Cold War public diplomacy structure and work to enhance understanding between America and various publics around the world.
Second, while it is true that effective public diplomacy is vital to a successful American foreign policy, we cannot forget that smart foreign policy is vital to a successful public diplomacy. Hughes’ public diplomacy efforts were unsuccessful because our words did not align with our actions. The best public diplomacy is not a substitute for bad policy; the championing of human rights does not sit comfortably with Abu Ghraib or Guantanamo. Years of unilateralist foreign policy have diminished goodwill towards the U.S. The next president must ensure the U.S. lives up to the high standards it has traditionally set. Only then can we work on how our message is communicated to foreign publics.
Specifically, the next administration’s public diplomacy strategy should make U.S. foreign policy more sensitive to concerns of public diplomacy, as well as improve communication strategies and increase Congressional support for public diplomacy efforts. Fortunately, it seems that the remaining presidential candidates are aware of the power of public diplomacy and how to improve upon it. All three explicitly call for public diplomacy efforts to be increased, especially in combating violent extremism. And while they hold somewhat competing foreign policy philosophies, it is clear that the candidates all value the role public diplomacy can play in strengthening U.S. national interests across the globe.
We have all heard of the dismal levels of international public opinion of the U.S. and the increasing levels of anti-Americanism. Some respond with a ‘so what?’ attitude, and question the need for more positive perceptions. But international public opinion has very real consequences for the U.S and its people. Foreign public opposition to the Iraq war has weakened U.S. alliances, U.S. companies face hostility across the globe, and international terrorism is an ever-constant threat. Public diplomacy needs to be a key issue for the future President’s foreign policy, as a change in administration creates a strategic opening of significant proportions for U.S. diplomacy.
Related ContentAnnalsLink: "New Technologies and International Broadcasting" [pdf]AnnalsLink: "Moving from Monologue to Dialogue" [pdf]AnnalsLink: "Hard Power, Soft Power, Smart Power" [pdf]
The upcoming presidential election is already positively changing global public opinion. A recent BBC World Service poll found that the U.S. image abroad has begun to improve for the first time, following years of decline. The elections have drawn substantial media coverage from foreign journalists, thereby explaining American politics to the world, and hopefully presenting the country in a new light. That said, the U.S. is still viewed more negatively than the European Union, Brazil, China, India and Russia. If we are to restore our “beacon on the hill” status, the next president must capitalize on the goodwill the elections have brought and rejuvenate public diplomacy efforts.
While the Bush administration brought in several undersecretaries of state for public diplomacy and public affairs over the last seven years, all left office, and their public diplomacy efforts were largely unsuccessful. (Failures could be partially attributed to the position itself: With the dismantling of the U.S. Information Agency in 1999, the financial and organizational support for public diplomacy was greatly diminished. The current public diplomacy position is under secretary of state for public diplomacy and public affairs, though public affairs and public diplomacy are quite different matters and should be overseen separately.) Given these failures, some have questioned if a public diplomacy position is even needed. But public diplomacy is more important than ever and needs to be revived.
The recent failures to boost perceptions of the U.S. are not because public diplomacy is itself a bad idea, but because the policies being promoted were not accepted by foreign publics. Take the efforts of former-Under Secretary for Public Diplomacy and Public Affairs Karen Hughes as an example. Hughes’ strategy was to sell U.S. foreign policy, assuming that communication would lead to understanding and then admiration. But public diplomacy is not public relations for world powers. Citizens of other countries understand U.S. policies, but they do not agree with them. Future public diplomacy efforts must move beyond the outdated Cold War public diplomacy structure and work to enhance understanding between America and various publics around the world.
Second, while it is true that effective public diplomacy is vital to a successful American foreign policy, we cannot forget that smart foreign policy is vital to a successful public diplomacy. Hughes’ public diplomacy efforts were unsuccessful because our words did not align with our actions. The best public diplomacy is not a substitute for bad policy; the championing of human rights does not sit comfortably with Abu Ghraib or Guantanamo. Years of unilateralist foreign policy have diminished goodwill towards the U.S. The next president must ensure the U.S. lives up to the high standards it has traditionally set. Only then can we work on how our message is communicated to foreign publics.
Specifically, the next administration’s public diplomacy strategy should make U.S. foreign policy more sensitive to concerns of public diplomacy, as well as improve communication strategies and increase Congressional support for public diplomacy efforts. Fortunately, it seems that the remaining presidential candidates are aware of the power of public diplomacy and how to improve upon it. All three explicitly call for public diplomacy efforts to be increased, especially in combating violent extremism. And while they hold somewhat competing foreign policy philosophies, it is clear that the candidates all value the role public diplomacy can play in strengthening U.S. national interests across the globe.
Wednesday, April 1, 2009
Hardwork does pay in life
A successful businessman was growing old and knew it was time to choose a successor to take over the business. Instead of choosing one of his Directors or his children, he decided to do something different. He called all the young executives in his company together.
He said, "It is time for me to step down and choose the next CEO. I have decided to choose one of you.
"The young executives were shocked, but the boss continued.”I am going to give each one of you a SEED today – one very special SEED. I want you to plant the seed, water it, and come back here one year from today with what you have grown from the seed I have given you. I will then judge the plants that you bring, and the one I choose will be the next CEO."
One man, named Jim, was there that day and he, like the others, received a seed. He went home and excitedly, told his wife the story. She helped him get a pot, soil and compost and he planted the seed. Everyday, he would water it and watch to see if it had grown. After about three weeks, some of the other executives began to talk about their seeds and the plants that were beginning to grow. Jim kept checking his seed, but nothing ever grew. Three weeks, four weeks, five weeks went by, still nothing. By now, others were talking about their plants, but Jim didn't have a plant and he felt like a failure…
Six months went by -- still nothing in Jim's pot. He just knew he had killed his seed. Everyone else had trees and tall plants, but he had nothing.
Jim didn't say anything to his colleagues, however. He just kept watering and fertilizing the soil. He so wanted the seed to grow.
A year finally went by and all the young executives of the company brought their plants to the CEO for inspection. Jim told his wife that he wasn't going to take an empty pot. But she asked him to be honest about what happened. Jim felt sick to his stomach, it was going to be the most embarrassing moment of his life, but he knew his wife was right. He took his empty pot to the board room.
When Jim arrived, he was amazed at the variety of plants grown by the other executives. They were beautiful -- in all shapes and sizes. Jim put his empty pot on the floor and many of his colleagues laughed, a few felt sorry for him!
When the CEO arrived, he surveyed the room and greeted his young executives.
Jim just tried to hide in the back. "My, what great plants, trees, and flowers you have grown," said the CEO. "Today one of you will be appointed the next CEO!"
All of a sudden, the CEO spotted Jim at the back of the room with his empty pot. He ordered the Financial Director to bring him to the front. Jim was terrified.
He thought, "The CEO knows I'm a failure! Maybe he will have me fired!"
When Jim got to the front, the CEO asked him what had happened to his seed Jim told him the story.
The CEO asked everyone to sit down except Jim.
He looked at Jim, and then announced to the young executives, "Behold your next Chief Executive Officer! His name is Jim!" Jim couldn't believe it. Jim couldn't even grow his seed.
"How could he be the new CEO?" the others said.
Then the CEO said, "One year ago today, I gave everyone in this room a seed. I told you to take the seed, plant it, water it, and bring it back to me today. But I gave you all boiled seeds; they were dead - it was not possible for them to grow. All of you, except Jim, have brought me trees and plants and flowers. When you found that the seed would not grow, you substituted another seed for the one I gave you. Jim was the only one with the courage and honesty to bring me a pot with my seed in it.
Therefore, he is the one who will be the new Chief Executive Officer!"* If you plant honesty, you will reap trust* If you plant goodness, you will reap friends* If you plant humility, you will reap greatness* If you plant perseverance, you will reap contentment* If you plant consideration, you will reap perspective* If you plant hard work, you will reap success* If you plant forgiveness, you will reap reconciliation
So, be careful what you plant now; it will determine what you will reap later.
"Whatever You Give To Life, Life Gives You Back"
He said, "It is time for me to step down and choose the next CEO. I have decided to choose one of you.
"The young executives were shocked, but the boss continued.”I am going to give each one of you a SEED today – one very special SEED. I want you to plant the seed, water it, and come back here one year from today with what you have grown from the seed I have given you. I will then judge the plants that you bring, and the one I choose will be the next CEO."
One man, named Jim, was there that day and he, like the others, received a seed. He went home and excitedly, told his wife the story. She helped him get a pot, soil and compost and he planted the seed. Everyday, he would water it and watch to see if it had grown. After about three weeks, some of the other executives began to talk about their seeds and the plants that were beginning to grow. Jim kept checking his seed, but nothing ever grew. Three weeks, four weeks, five weeks went by, still nothing. By now, others were talking about their plants, but Jim didn't have a plant and he felt like a failure…
Six months went by -- still nothing in Jim's pot. He just knew he had killed his seed. Everyone else had trees and tall plants, but he had nothing.
Jim didn't say anything to his colleagues, however. He just kept watering and fertilizing the soil. He so wanted the seed to grow.
A year finally went by and all the young executives of the company brought their plants to the CEO for inspection. Jim told his wife that he wasn't going to take an empty pot. But she asked him to be honest about what happened. Jim felt sick to his stomach, it was going to be the most embarrassing moment of his life, but he knew his wife was right. He took his empty pot to the board room.
When Jim arrived, he was amazed at the variety of plants grown by the other executives. They were beautiful -- in all shapes and sizes. Jim put his empty pot on the floor and many of his colleagues laughed, a few felt sorry for him!
When the CEO arrived, he surveyed the room and greeted his young executives.
Jim just tried to hide in the back. "My, what great plants, trees, and flowers you have grown," said the CEO. "Today one of you will be appointed the next CEO!"
All of a sudden, the CEO spotted Jim at the back of the room with his empty pot. He ordered the Financial Director to bring him to the front. Jim was terrified.
He thought, "The CEO knows I'm a failure! Maybe he will have me fired!"
When Jim got to the front, the CEO asked him what had happened to his seed Jim told him the story.
The CEO asked everyone to sit down except Jim.
He looked at Jim, and then announced to the young executives, "Behold your next Chief Executive Officer! His name is Jim!" Jim couldn't believe it. Jim couldn't even grow his seed.
"How could he be the new CEO?" the others said.
Then the CEO said, "One year ago today, I gave everyone in this room a seed. I told you to take the seed, plant it, water it, and bring it back to me today. But I gave you all boiled seeds; they were dead - it was not possible for them to grow. All of you, except Jim, have brought me trees and plants and flowers. When you found that the seed would not grow, you substituted another seed for the one I gave you. Jim was the only one with the courage and honesty to bring me a pot with my seed in it.
Therefore, he is the one who will be the new Chief Executive Officer!"* If you plant honesty, you will reap trust* If you plant goodness, you will reap friends* If you plant humility, you will reap greatness* If you plant perseverance, you will reap contentment* If you plant consideration, you will reap perspective* If you plant hard work, you will reap success* If you plant forgiveness, you will reap reconciliation
So, be careful what you plant now; it will determine what you will reap later.
"Whatever You Give To Life, Life Gives You Back"
Sunday, March 15, 2009
Julius Caesar
Caesar, Julius - (Caius Julius Caesar), 100? b.c.–44 b.c., Roman statesman and general.
Rise to Power
Although he was born into the Julian gens, one of the oldest patrician families in Rome, Caesar was always a member of the democratic or popular party. He benefited from the patronage of his uncle by marriage, Caius Marius. In 82 b.c., when Caesar refused to obey Sulla's order to divorce Read More...
Caesar, Julius - (Caius Julius Caesar), 100? b.c.–44 b.c., Roman statesman and general.
Rise to Power
Although he was born into the Julian gens, one of the oldest patrician families in Rome, Caesar was always a member of the democratic or popular party. He benefited from the patronage of his uncle by marriage, Caius Marius. In 82 b.c., when Caesar refused to obey Sulla's order to divorce Cornelia, the wealthy daughter of Lucius Cornelius Cinna, he was proscribed and subsequently fled from Rome (81 b.c.).
On Sulla's death, Caesar returned (78 b.c.) and began his political career. He quickly gained popularity with his party and a reputation for oratory. In 74 b.c. he went into Asia to repulse a Cappadocian army. Upon his return, he agitated for reform of the government on popular lines and helped to advance the position of Pompey, the virtual head of the popular party. Caesar was made military tribune before 70 b.c. and was quaestor in Farther Spain in 69 b.c.; he helped Pompey to obtain the supreme command for the war in the East. He returned to Rome in 68 b.c., and in Pompey's absence was becoming the recognized head of the popular party. His praise of Marius and Cinna made him popular with the people, but earned him the hatred of the senate.
In 63 b.c. he was elected pontifex maximus [high priest], allegedly by heavy bribes. His later reform of the calendar with the help of Sosigenes, was one of his greatest contributions to history. In Dec., 63 b.c., Caesar advocated mercy for Catiline and the conspirators, thereby increasing the enmity of the senatorial party and its leaders, Cato the Younger and Quintus Lutatius Catulus (see Catulus, family). In 62 b.c., Clodius and Caesar's second wife, Pompeia, were involved in a scandal concerning the violation of the secret rites of Bona Dea, and Caesar obtained a divorce, saying, "Caesar's wife must be above suspicion."
The First Triumvirate
Having served in Farther Spain as proconsul in 61 b.c., he returned to Rome in 60 b.c., ambitious for the consulate. Against senatorial opposition he achieved a brilliant stroke—he organized a coalition, known as the First Triumvirate, made up of Pompey, commander in chief of the army; Marcus Licinius Crassus, the wealthiest man in Rome (see Crassus, family); and Caesar himself. Pompey and Crassus were jealous of each other, but Caesar by force of personality kept the arrangement going.
In 59 b.c. he married Calpurnia. In the same year, as consul, he secured the passage of an agrarian law providing Campanian lands for 20,000 poor citizens and veterans, in spite of the opposition of his senatorial colleague, Marcus Calpurnius Bibulus. Caesar also won the support of the wealthy equites by getting a reduction for them in their tax contracts in Asia. This made him the guiding power in a coalition between people and plutocrats.
He was assigned the rule of Cisalpine and Transalpine Gaul and Illyricum with four legions for five years (58 b.c.–54 b.c.). The differences between Pompey and Crassus grew, and Caesar again moved (56 b.c.) to patch up matters, arriving at an agreement that both Pompey and Crassus should be consuls in 55 b.c. and that their proconsular provinces should be Spain and Syria, respectively. From this arrangement he drew an extension of his command in Gaul to 49 b.c. In the years 58 b.c. to 49 b.c. he firmly established his reputation in the Gallic Wars.
In 55 b.c., Caesar made explorations into Britain, and in 54 b.c. he defeated the Britons, led by Cassivellaunus. Caesar met his most serious opposition in Gaul from Vercingetorix, whom he defeated in Alesia in 52 b.c. By the end of the wars Caesar had reduced all Gaul to Roman control. These campaigns proved him one of the greatest commanders of all time. In them he revealed his consummate military genius, characterized by quick, sure judgment and indomitable energy. The campaigns also developed the personal devotion of the legions to Caesar. His personal interest in the men (he is reputed to have known them all by name) and his willingness to undergo every hardship made him the idol of the army—a significant element in his later career.
In 54 b.c. occurred the death of Caesar's daughter Julia, Pompey's wife since 59 b.c. She had been the principal personal tie between the two men. During the years Caesar was in Gaul, Pompey had been gradually leaning more and more toward the senatorial party. The tribunate of Clodius (58 b.c.) had aggravated conditions in Rome, and Caesar's military successes had aroused Pompey's jealousy. Crassus' death (53 b.c.) in Parthia ended the First Triumvirate and set Pompey and Caesar against each other.
Civil War
After the First Triumvirate ended, the senate supported Pompey, who became sole consul in 52 b.c. Meanwhile, Caesar had become a military hero as well as a champion of the people. The senate feared him and wanted him to give up his army, knowing that he hoped to be consul when his term in Gaul expired. In Dec., 50 b.c., Caesar wrote the senate that he would give up his army if Pompey would give up his. The senate heard the letter with fury and demanded that Caesar disband his army at once or be declared an enemy of the people—an illegal bill, for Caesar was entitled to keep his army until his term was up.
Two tribunes faithful to Caesar, Marc Antony and Quintus Cassius Longinus (see under Cassius) vetoed the bill and were quickly expelled from the senate. They fled to Caesar, who assembled his army and asked for the support of the soldiers against the senate. The army called for action, and on Jan. 19, 49 b.c., Caesar with the words "Iacta alea est" [the die is cast] crossed the Rubicon, the stream bounding his province, to enter Italy. Civil war had begun.
Caesar's march to Rome was a triumphal progress. The senate fled to Capua. Caesar proceeded to Brundisium, where he besieged Pompey until Pompey fled (Mar., 49 b.c.) with his fleet to Greece. Caesar set out at once for Spain, which Pompey's legates were holding, and pacified that province. Returning to Rome, Caesar held the dictatorship for 11 days in early December, long enough to get himself elected consul, and then set out for Greece in pursuit of Pompey.
Caesar collected at Brundisium a small army and fleet—so small, in fact, that Bibulus, waiting with a much larger fleet to prevent his crossing to Epirus, did not yet bother to watch him—and slipped across the strait. He met Pompey at Dyrrhachium but was forced to fall back and begin a long retreat southward, with Pompey in pursuit. Near Pharsalus, Caesar camped in a very strategic location. Pompey, who had a far larger army, attacked Caesar but was routed (48 b.c.) and fled to Egypt, where he was killed.
Caesar, having pursued Pompey to Egypt, remained there for some time, living with Cleopatra, taking her part against her brother and husband Ptolemy XII, and establishing her firmly on the throne. From Egypt he went to Syria and Pontus, where he defeated (47 b.c.) Pharnaces II with such ease that he reported his victory in the words "Veni, vidi, vici" [I came, I saw, I conquered]. In the same year he personally put down a mutiny of his army and then set out for Africa, where the followers of Pompey had fled, to end their opposition led by Cato.
Dictatorship and Death
On his return to Rome, where he was now tribune of the people and dictator, he had four great triumphs and pardoned all his enemies. He set about reforming the living conditions of the people by passing agrarian laws and by improving housing accommodations. He also drew up the elaborate plans (which Augustus later used) for consolidating the empire and establishing it securely. In the winter of 46 b.c.–45 b.c. he was in Spain putting down the last of the senatorial party under Gaeus Pompeius, the son of Pompey. He returned to Rome in Sept., 45 b.c., and was elected to his fifth consulship in 44 b.c. In the same year he became dictator for life and set about planning a campaign against Parthia, the only real menace to Rome's borders.
His dictatorial powers had, however, aroused great resentment, and he was bitterly criticized by his enemies, who accused him of all manner of vices. When a conspiracy was formed against him, however, it was made up of his friends and protégés, among them Cimber, Casca, Cassius, and Marcus Junius Brutus. On Mar. 15 (the Ides of March), 44 b.c., he was stabbed to death in the senate house. His will left everything to his 18-year-old grandnephew Octavian (later Augustus).
Legacy
Caesar has always been one of the most controversial characters of history. His admirers have seen in him the defender of the rights of the people against an oligarchy. His detractors have seen him as an ambitious demagogue, who forced his way to dictatorial power and destroyed the republic. That he was gifted and versatile there can be little doubt. He excelled in war, in statesmanship, and in oratory.
His literary works are highly esteemed. Of Caesar's literary works, his commentaries on the Gallic Wars (seven books) and on the civil war (three books) survive. They are masterpieces of clear, beautiful, concise Latin, and they are classic military documents. Caesar wrote poetry, but the only surviving piece is a poem on Terence.
Bibliography
A literary classic on Caesar is Shakespeare's tragedy, Julius Caesar. See biographies by M. Gelzer (tr. 1968, repr. 1985), S. Weinstock (1971), and C. Meier (1996).
The Columbia Encyclopedia, Sixth Edition Copyright© 2004, Columbia University Press. Licensed from Lernout & Hauspie Speech Products N.V. All rights reserved.
Caesar, Julius - (Caius Julius Caesar), 100? b.c.–44 b.c., Roman statesman and general.
Rise to Power
Although he was born into the Julian gens, one of the oldest patrician families in Rome, Caesar was always a member of the democratic or popular party. He benefited from the patronage of his uncle by marriage, Caius Marius. In 82 b.c., when Caesar refused to obey Sulla's order to divorce Read More...
Caesar, Julius - (Caius Julius Caesar), 100? b.c.–44 b.c., Roman statesman and general.
Rise to Power
Although he was born into the Julian gens, one of the oldest patrician families in Rome, Caesar was always a member of the democratic or popular party. He benefited from the patronage of his uncle by marriage, Caius Marius. In 82 b.c., when Caesar refused to obey Sulla's order to divorce Cornelia, the wealthy daughter of Lucius Cornelius Cinna, he was proscribed and subsequently fled from Rome (81 b.c.).
On Sulla's death, Caesar returned (78 b.c.) and began his political career. He quickly gained popularity with his party and a reputation for oratory. In 74 b.c. he went into Asia to repulse a Cappadocian army. Upon his return, he agitated for reform of the government on popular lines and helped to advance the position of Pompey, the virtual head of the popular party. Caesar was made military tribune before 70 b.c. and was quaestor in Farther Spain in 69 b.c.; he helped Pompey to obtain the supreme command for the war in the East. He returned to Rome in 68 b.c., and in Pompey's absence was becoming the recognized head of the popular party. His praise of Marius and Cinna made him popular with the people, but earned him the hatred of the senate.
In 63 b.c. he was elected pontifex maximus [high priest], allegedly by heavy bribes. His later reform of the calendar with the help of Sosigenes, was one of his greatest contributions to history. In Dec., 63 b.c., Caesar advocated mercy for Catiline and the conspirators, thereby increasing the enmity of the senatorial party and its leaders, Cato the Younger and Quintus Lutatius Catulus (see Catulus, family). In 62 b.c., Clodius and Caesar's second wife, Pompeia, were involved in a scandal concerning the violation of the secret rites of Bona Dea, and Caesar obtained a divorce, saying, "Caesar's wife must be above suspicion."
The First Triumvirate
Having served in Farther Spain as proconsul in 61 b.c., he returned to Rome in 60 b.c., ambitious for the consulate. Against senatorial opposition he achieved a brilliant stroke—he organized a coalition, known as the First Triumvirate, made up of Pompey, commander in chief of the army; Marcus Licinius Crassus, the wealthiest man in Rome (see Crassus, family); and Caesar himself. Pompey and Crassus were jealous of each other, but Caesar by force of personality kept the arrangement going.
In 59 b.c. he married Calpurnia. In the same year, as consul, he secured the passage of an agrarian law providing Campanian lands for 20,000 poor citizens and veterans, in spite of the opposition of his senatorial colleague, Marcus Calpurnius Bibulus. Caesar also won the support of the wealthy equites by getting a reduction for them in their tax contracts in Asia. This made him the guiding power in a coalition between people and plutocrats.
He was assigned the rule of Cisalpine and Transalpine Gaul and Illyricum with four legions for five years (58 b.c.–54 b.c.). The differences between Pompey and Crassus grew, and Caesar again moved (56 b.c.) to patch up matters, arriving at an agreement that both Pompey and Crassus should be consuls in 55 b.c. and that their proconsular provinces should be Spain and Syria, respectively. From this arrangement he drew an extension of his command in Gaul to 49 b.c. In the years 58 b.c. to 49 b.c. he firmly established his reputation in the Gallic Wars.
In 55 b.c., Caesar made explorations into Britain, and in 54 b.c. he defeated the Britons, led by Cassivellaunus. Caesar met his most serious opposition in Gaul from Vercingetorix, whom he defeated in Alesia in 52 b.c. By the end of the wars Caesar had reduced all Gaul to Roman control. These campaigns proved him one of the greatest commanders of all time. In them he revealed his consummate military genius, characterized by quick, sure judgment and indomitable energy. The campaigns also developed the personal devotion of the legions to Caesar. His personal interest in the men (he is reputed to have known them all by name) and his willingness to undergo every hardship made him the idol of the army—a significant element in his later career.
In 54 b.c. occurred the death of Caesar's daughter Julia, Pompey's wife since 59 b.c. She had been the principal personal tie between the two men. During the years Caesar was in Gaul, Pompey had been gradually leaning more and more toward the senatorial party. The tribunate of Clodius (58 b.c.) had aggravated conditions in Rome, and Caesar's military successes had aroused Pompey's jealousy. Crassus' death (53 b.c.) in Parthia ended the First Triumvirate and set Pompey and Caesar against each other.
Civil War
After the First Triumvirate ended, the senate supported Pompey, who became sole consul in 52 b.c. Meanwhile, Caesar had become a military hero as well as a champion of the people. The senate feared him and wanted him to give up his army, knowing that he hoped to be consul when his term in Gaul expired. In Dec., 50 b.c., Caesar wrote the senate that he would give up his army if Pompey would give up his. The senate heard the letter with fury and demanded that Caesar disband his army at once or be declared an enemy of the people—an illegal bill, for Caesar was entitled to keep his army until his term was up.
Two tribunes faithful to Caesar, Marc Antony and Quintus Cassius Longinus (see under Cassius) vetoed the bill and were quickly expelled from the senate. They fled to Caesar, who assembled his army and asked for the support of the soldiers against the senate. The army called for action, and on Jan. 19, 49 b.c., Caesar with the words "Iacta alea est" [the die is cast] crossed the Rubicon, the stream bounding his province, to enter Italy. Civil war had begun.
Caesar's march to Rome was a triumphal progress. The senate fled to Capua. Caesar proceeded to Brundisium, where he besieged Pompey until Pompey fled (Mar., 49 b.c.) with his fleet to Greece. Caesar set out at once for Spain, which Pompey's legates were holding, and pacified that province. Returning to Rome, Caesar held the dictatorship for 11 days in early December, long enough to get himself elected consul, and then set out for Greece in pursuit of Pompey.
Caesar collected at Brundisium a small army and fleet—so small, in fact, that Bibulus, waiting with a much larger fleet to prevent his crossing to Epirus, did not yet bother to watch him—and slipped across the strait. He met Pompey at Dyrrhachium but was forced to fall back and begin a long retreat southward, with Pompey in pursuit. Near Pharsalus, Caesar camped in a very strategic location. Pompey, who had a far larger army, attacked Caesar but was routed (48 b.c.) and fled to Egypt, where he was killed.
Caesar, having pursued Pompey to Egypt, remained there for some time, living with Cleopatra, taking her part against her brother and husband Ptolemy XII, and establishing her firmly on the throne. From Egypt he went to Syria and Pontus, where he defeated (47 b.c.) Pharnaces II with such ease that he reported his victory in the words "Veni, vidi, vici" [I came, I saw, I conquered]. In the same year he personally put down a mutiny of his army and then set out for Africa, where the followers of Pompey had fled, to end their opposition led by Cato.
Dictatorship and Death
On his return to Rome, where he was now tribune of the people and dictator, he had four great triumphs and pardoned all his enemies. He set about reforming the living conditions of the people by passing agrarian laws and by improving housing accommodations. He also drew up the elaborate plans (which Augustus later used) for consolidating the empire and establishing it securely. In the winter of 46 b.c.–45 b.c. he was in Spain putting down the last of the senatorial party under Gaeus Pompeius, the son of Pompey. He returned to Rome in Sept., 45 b.c., and was elected to his fifth consulship in 44 b.c. In the same year he became dictator for life and set about planning a campaign against Parthia, the only real menace to Rome's borders.
His dictatorial powers had, however, aroused great resentment, and he was bitterly criticized by his enemies, who accused him of all manner of vices. When a conspiracy was formed against him, however, it was made up of his friends and protégés, among them Cimber, Casca, Cassius, and Marcus Junius Brutus. On Mar. 15 (the Ides of March), 44 b.c., he was stabbed to death in the senate house. His will left everything to his 18-year-old grandnephew Octavian (later Augustus).
Legacy
Caesar has always been one of the most controversial characters of history. His admirers have seen in him the defender of the rights of the people against an oligarchy. His detractors have seen him as an ambitious demagogue, who forced his way to dictatorial power and destroyed the republic. That he was gifted and versatile there can be little doubt. He excelled in war, in statesmanship, and in oratory.
His literary works are highly esteemed. Of Caesar's literary works, his commentaries on the Gallic Wars (seven books) and on the civil war (three books) survive. They are masterpieces of clear, beautiful, concise Latin, and they are classic military documents. Caesar wrote poetry, but the only surviving piece is a poem on Terence.
Bibliography
A literary classic on Caesar is Shakespeare's tragedy, Julius Caesar. See biographies by M. Gelzer (tr. 1968, repr. 1985), S. Weinstock (1971), and C. Meier (1996).
The Columbia Encyclopedia, Sixth Edition Copyright© 2004, Columbia University Press. Licensed from Lernout & Hauspie Speech Products N.V. All rights reserved.
Wednesday, March 11, 2009
Now is the time for a less selfish capitalism
March 11, 2009 11:16pm 1 comment
By Richard Layard
What is progress? The Organisation for Economic Co-operation and Development has been asking this question for some time and the current crisis makes it imperative to find an answer. According to the Anglo-Saxon Enlightenment, progress means the reduction of misery and the increase of happiness. It does not mean wealth creation or innovation, which are sometimes useful instruments but never the final goal. So we should stop the worship of money and create a more humane society where the quality of human experience is the criterion. Provided we pay ourselves in line with our productivity, we can choose whatever lifestyle is best for our quality of life.
And what would that involve? The starting point is that, despite massive wealth creation, happiness has not risen since the 1950s in the US or Britain or (over a shorter period) in western Germany. No researcher questions these facts. So accelerated economic growth is not a goal for which we should make large sacrifices. In particular, we should not sacrifice the most important source of happiness, which is the quality of human relationships – at home, at work and in the community. We have sacrificed too many of these in the name of efficiency and productivity growth.
Most of all we have sacrificed our values. In the 1960s, 60 per cent of adults said they believed “most people can be trusted”. Today the figure is 30 per cent, in both Britain and the US. The fall in trustworthy behaviour is clear in the banking sector but can also be seen in family life (more break-ups), in the playground (fewer friends you can trust) and in the workplace (growing competition between colleagues).
Increasingly, we treat private interest as the only motivation on which we can rely and competition between individuals as the way to get the most out of them. This is often counterproductive and does not generally produce a happy workplace since competition for status is a zero-sum game. Instead, we need a society based on positive-sum activities. Humans are a mix of selfishness and altruism but generally feel better working to help each other rather than to do each other down.
Our society has become too individualistic, with too much rivalry and not enough common purpose. We idolise success and status and thus undermine our mutual respect. But countries vary in this regard, and the Scandinavians have managed to combine effective economies with much greater equality and mutual respect. They have the greatest levels of trust (and happiness) of any countries in the world.
To build a society based on trust we have to start in school, if not earlier. Children should learn that the noblest life is the one that produces the least misery and the most happiness in the world. This rule should apply also in business and professional life. People should do work that is useful to society and does not just make paper profits. And all professions – including journalism, advertising and business – should have a clear, professional, ethical code that its members are required to observe. It is not for nothing that doctors form the group most respected in our society – they have a code that is enforced and everyone knows it.
So we need a trend away from excessive individualism and towards greater social responsibility. Is it possible to reverse a cultural trend in this way? It has happened before, in the early 19th century. For the next 150 years there was a growth of social responsibility, followed by a decline in the next 50. So a trend can change and it is often in bad times (such as the 1930s in Scandinavia) that people decide to seek a more co-operative lifestyle.
I have written a book about how to do this and there is room here for three points only. First we should use our schools to promote a better value system – the recent Good Childhood report sponsored by the UK Children’s Society was full of ideas about how to do this. Second, adults should reappraise their priorities about what is important. Recent events are likely to encourage this and modern happiness research can help find answers. Third, economists should adopt a more realistic model of what makes humans happy and what makes markets function.
Three ideas taught in business schools have much to answer for. One is the theory of “efficient capital markets”, now clearly discredited. The second is “principal agent” theory, which says the agents will perform best under high-powered financial incentives to align their interests with those of the principal. This has led to excessive performance-related pay, which has often undermined the motive to work well for the sake of doing a good job and introduced unnecessary tension among colleagues. Finally, there is the macho philosophy of “continuous change”, promoted by self-interested consulting companies, which disregards the fundamental human need for stability – in the name of efficiency gains that are often not realised.
We do not want communism – as research shows, the communist countries were the least happy in the world and also inefficient. But we do need a more humane brand of capitalism, based not only on better regulation but on better values.
Values matter and they are affected by our theories. We do not need a society based on Darwinian competition between individuals. Beyond subsistence, the best experience any society can provide is the feeling that other people are on your side. That is the kind of capitalism we want.
Lord Layard is at the London School of Economics Centre for Economic Performance. He has written ‘Happiness’ (2005) and co-authored ‘A Good Childhood’ (2009)
March 11, 2009 11:16pm 1 comment
By Richard Layard
What is progress? The Organisation for Economic Co-operation and Development has been asking this question for some time and the current crisis makes it imperative to find an answer. According to the Anglo-Saxon Enlightenment, progress means the reduction of misery and the increase of happiness. It does not mean wealth creation or innovation, which are sometimes useful instruments but never the final goal. So we should stop the worship of money and create a more humane society where the quality of human experience is the criterion. Provided we pay ourselves in line with our productivity, we can choose whatever lifestyle is best for our quality of life.
And what would that involve? The starting point is that, despite massive wealth creation, happiness has not risen since the 1950s in the US or Britain or (over a shorter period) in western Germany. No researcher questions these facts. So accelerated economic growth is not a goal for which we should make large sacrifices. In particular, we should not sacrifice the most important source of happiness, which is the quality of human relationships – at home, at work and in the community. We have sacrificed too many of these in the name of efficiency and productivity growth.
Most of all we have sacrificed our values. In the 1960s, 60 per cent of adults said they believed “most people can be trusted”. Today the figure is 30 per cent, in both Britain and the US. The fall in trustworthy behaviour is clear in the banking sector but can also be seen in family life (more break-ups), in the playground (fewer friends you can trust) and in the workplace (growing competition between colleagues).
Increasingly, we treat private interest as the only motivation on which we can rely and competition between individuals as the way to get the most out of them. This is often counterproductive and does not generally produce a happy workplace since competition for status is a zero-sum game. Instead, we need a society based on positive-sum activities. Humans are a mix of selfishness and altruism but generally feel better working to help each other rather than to do each other down.
Our society has become too individualistic, with too much rivalry and not enough common purpose. We idolise success and status and thus undermine our mutual respect. But countries vary in this regard, and the Scandinavians have managed to combine effective economies with much greater equality and mutual respect. They have the greatest levels of trust (and happiness) of any countries in the world.
To build a society based on trust we have to start in school, if not earlier. Children should learn that the noblest life is the one that produces the least misery and the most happiness in the world. This rule should apply also in business and professional life. People should do work that is useful to society and does not just make paper profits. And all professions – including journalism, advertising and business – should have a clear, professional, ethical code that its members are required to observe. It is not for nothing that doctors form the group most respected in our society – they have a code that is enforced and everyone knows it.
So we need a trend away from excessive individualism and towards greater social responsibility. Is it possible to reverse a cultural trend in this way? It has happened before, in the early 19th century. For the next 150 years there was a growth of social responsibility, followed by a decline in the next 50. So a trend can change and it is often in bad times (such as the 1930s in Scandinavia) that people decide to seek a more co-operative lifestyle.
I have written a book about how to do this and there is room here for three points only. First we should use our schools to promote a better value system – the recent Good Childhood report sponsored by the UK Children’s Society was full of ideas about how to do this. Second, adults should reappraise their priorities about what is important. Recent events are likely to encourage this and modern happiness research can help find answers. Third, economists should adopt a more realistic model of what makes humans happy and what makes markets function.
Three ideas taught in business schools have much to answer for. One is the theory of “efficient capital markets”, now clearly discredited. The second is “principal agent” theory, which says the agents will perform best under high-powered financial incentives to align their interests with those of the principal. This has led to excessive performance-related pay, which has often undermined the motive to work well for the sake of doing a good job and introduced unnecessary tension among colleagues. Finally, there is the macho philosophy of “continuous change”, promoted by self-interested consulting companies, which disregards the fundamental human need for stability – in the name of efficiency gains that are often not realised.
We do not want communism – as research shows, the communist countries were the least happy in the world and also inefficient. But we do need a more humane brand of capitalism, based not only on better regulation but on better values.
Values matter and they are affected by our theories. We do not need a society based on Darwinian competition between individuals. Beyond subsistence, the best experience any society can provide is the feeling that other people are on your side. That is the kind of capitalism we want.
Lord Layard is at the London School of Economics Centre for Economic Performance. He has written ‘Happiness’ (2005) and co-authored ‘A Good Childhood’ (2009)
The consequence of bad economics
The consequence of bad economics
March 10, 2009 12:51pm Comment
FT editorial
As a shell-shocked world tries to fathom how its economic collapse happened, commentators are busily outbidding each other with claims about the exceptional nature of this crisis. But the most astounding fact is how familiar its physiognomy and physiology look compared to past financial crashes.
No one can read the chronicles of those earlier crashes without sensing – with a chill – that history is repeating itself. The story of the modern capitalist economy is a rhythmic repetition of cycles, syncopated by eerily similar crises. These crises, while their details differ, are but variations on the same theme. Easy money, geared up by leverage, floods the financial system through innovative products. This simultaneously pumps up asset prices and obscures their speculative nature, with euphoria usurping the place of analysis. Until, one day, something triggers a loss of confidence in the continued rise of prices, and the whole leveraged edifice crumbles.
Today’s collapse has followed the same pattern – as outlined on Tuesday in the FT’s series on the future of capitalism. Easy money came from global macroeconomic imbalances that generated enormous capital inflows into deficit countries. Those flows helped drive interest rates down and increase access to credit, fuelling a leveraged asset bubble. Many leaders in the affected countries – in particular the US – knew this: Alan Greenspan himself spoke of “irrational exuberance”. And yet they did not understand how they had to act to prevent a replay of the past.
Today’s disastrous outcome is testimony to those leaders’ intellectual failure. Most fundamentally to blame is their unwillingness to see (or their wilful ignorance of) what markets need in order to produce good outcomes for society.
Every first-year economics student learns the conditions for an unregulated market, in theory, to function efficiently. The most important are full information, enforceable property rights and contracts, and the absence of “externalities” – effects of economic transactions on third parties. These conditions are never fulfilled, but many markets come close enough that participants’ self-interested actions achieve good outcomes for all.
When these conditions are absent, markets malfunction; the way they do so is one of the great topics of economic theory. It tells those who care to listen that when a market is too opaque, or when the effects of market transactions are too inter-dependent, the pursuit of self-interest can make everyone worse off, or unfairly land some with the losses caused by others, or – in extremis – make markets disappear altogether. Nowhere are these problems greater than in financial markets.
Finance expands our economic possibilities by enabling us to shift funds between the present and the future, and between different outcomes of risky ventures. For that reason, confidence in future values is everything for a financial product: if confidence is lost, the market collapses. But in a non-transparent financial sector, unwarranted valuations will often occur, which, when they fail, can destroy confidence throughout the financial system. And the more implicated the economy is in the financial sector, the wider are the repercussions of such dysfunctions – to the point where financial failures can threaten the economic system as a whole.
Economic policymakers could have limited these dangers, but they did not do so. Instead, they allowed the bubble to inflate and let financial transactions become increasingly opaque and ever more leveraged. As in previous bubbles, value came to rely on the perception of value itself: growth pulling itself up by its own leveraged bootstraps. Many assets were not even priced through market trading but valued by complex formulas – akin to peddling tulips with equations.
People were not unaware of the risks, but both regulation and private risk management were based on the faulty premise that if each entity looks after its own risk, no one needs to worry about systemic risk. The great mistake was to rely merely on self-interest in as imperfect and as important a market as the financial sector. The huge profits bankers reaped reinforced their collective blindness to the illusory value of the assets they traded.
Those who sound the death knell of market capitalism are therefore mistaken. This was not a failure of markets; it was a failure to create proper markets. What is to blame is a certain mindset, embodied not least by Mr Greenspan. It ignored a capitalist economy’s inherent instabilities – and therefore relieved policymakers who could manage those instabilities of their responsibility to do so. This is not the bankruptcy of a social system, but the intellectual and moral failure of those who were in charge of it: a failure for which there is no excuse.
March 10, 2009 12:51pm Comment
FT editorial
As a shell-shocked world tries to fathom how its economic collapse happened, commentators are busily outbidding each other with claims about the exceptional nature of this crisis. But the most astounding fact is how familiar its physiognomy and physiology look compared to past financial crashes.
No one can read the chronicles of those earlier crashes without sensing – with a chill – that history is repeating itself. The story of the modern capitalist economy is a rhythmic repetition of cycles, syncopated by eerily similar crises. These crises, while their details differ, are but variations on the same theme. Easy money, geared up by leverage, floods the financial system through innovative products. This simultaneously pumps up asset prices and obscures their speculative nature, with euphoria usurping the place of analysis. Until, one day, something triggers a loss of confidence in the continued rise of prices, and the whole leveraged edifice crumbles.
Today’s collapse has followed the same pattern – as outlined on Tuesday in the FT’s series on the future of capitalism. Easy money came from global macroeconomic imbalances that generated enormous capital inflows into deficit countries. Those flows helped drive interest rates down and increase access to credit, fuelling a leveraged asset bubble. Many leaders in the affected countries – in particular the US – knew this: Alan Greenspan himself spoke of “irrational exuberance”. And yet they did not understand how they had to act to prevent a replay of the past.
Today’s disastrous outcome is testimony to those leaders’ intellectual failure. Most fundamentally to blame is their unwillingness to see (or their wilful ignorance of) what markets need in order to produce good outcomes for society.
Every first-year economics student learns the conditions for an unregulated market, in theory, to function efficiently. The most important are full information, enforceable property rights and contracts, and the absence of “externalities” – effects of economic transactions on third parties. These conditions are never fulfilled, but many markets come close enough that participants’ self-interested actions achieve good outcomes for all.
When these conditions are absent, markets malfunction; the way they do so is one of the great topics of economic theory. It tells those who care to listen that when a market is too opaque, or when the effects of market transactions are too inter-dependent, the pursuit of self-interest can make everyone worse off, or unfairly land some with the losses caused by others, or – in extremis – make markets disappear altogether. Nowhere are these problems greater than in financial markets.
Finance expands our economic possibilities by enabling us to shift funds between the present and the future, and between different outcomes of risky ventures. For that reason, confidence in future values is everything for a financial product: if confidence is lost, the market collapses. But in a non-transparent financial sector, unwarranted valuations will often occur, which, when they fail, can destroy confidence throughout the financial system. And the more implicated the economy is in the financial sector, the wider are the repercussions of such dysfunctions – to the point where financial failures can threaten the economic system as a whole.
Economic policymakers could have limited these dangers, but they did not do so. Instead, they allowed the bubble to inflate and let financial transactions become increasingly opaque and ever more leveraged. As in previous bubbles, value came to rely on the perception of value itself: growth pulling itself up by its own leveraged bootstraps. Many assets were not even priced through market trading but valued by complex formulas – akin to peddling tulips with equations.
People were not unaware of the risks, but both regulation and private risk management were based on the faulty premise that if each entity looks after its own risk, no one needs to worry about systemic risk. The great mistake was to rely merely on self-interest in as imperfect and as important a market as the financial sector. The huge profits bankers reaped reinforced their collective blindness to the illusory value of the assets they traded.
Those who sound the death knell of market capitalism are therefore mistaken. This was not a failure of markets; it was a failure to create proper markets. What is to blame is a certain mindset, embodied not least by Mr Greenspan. It ignored a capitalist economy’s inherent instabilities – and therefore relieved policymakers who could manage those instabilities of their responsibility to do so. This is not the bankruptcy of a social system, but the intellectual and moral failure of those who were in charge of it: a failure for which there is no excuse.
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