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By standardization is meant the reduction of any one line to fixed types and sizes. Thus in the case of the manufacturer of shoes he selects a few types that, in his opinion, will find favor in the market. But each foot is not measured and a shoe of the required type made to these measurements. A limited number of sizes of each type is manufactured, these sizes being selected, by previous experience, so that any average man can find a pair that will fit him. The same holds true for the case of electric motors discussed above, and in fact for the entire field of manufactured products.
[In] economics... you can disguise charlatanism under the weight of equations and nobody can catch you since there is no such thing as a controlled experiment. Now the spirit of such methods, called scientism by its detractors, continued into the discipline of finance as a few technicians thought their mathematical knowledge could lead them to understand markets. The practice of financial engineering came along with massive doses of pseudoscience.
What people "want" is a function of what they learn is available. If you wish to sell something, you'd better understand that you can't give people what they want in the market today, because what they want today is what they can already get. You have to discover what they really want, and find some way to give that physical shape.
The absurdity of monetary system which robs people first of their fair share in the "free market economy" and then - through some of the most inefficient procedures imaginable - returns some of this money in the form of welfare payments to the same people, has rarely been exposed by the "experts" nor been discussed in public.
Since 1954, the raw speed of computers, as measured by the time it takes to do an addition, increased by a factor of 10,000. That means an algorithm that once took 10 minutes to perform can now be done 15 times a second. Students sometimes ask my advice on how to get rich. The best advice I can give them is to dig up some old algorithm that once took forever, program it for a modern workstation, form a startup to market it and then get rich.
The free market may be a good, bad or insufficient idea, but, in any case, it is just a crude commercial code. Now it is regularly equated with or given credit for or even precedence over the freedom of man. But the freedom of man is a moral statement on the human condition, both in the practical and in the humanist sense. To equate it with a school of business is to betray a certain confusion. An unconscious unease.
As financial market players know, advantage comes from reacting to news first. The same thing is true for all companies. When you start the conversation, you are recognised as someone who is plugged into the marketplace of ideas. If you talk about an idea early, you naturally get more exposure because the threads of conversation stem from what you have said. If you're in late you get lost in the cacophony.
Socialism is, essentially, the tendency inherent in an industrial civilization to transcend the self-regulating market by consciously subordinating it to a democratic society. It is the solution natural to the industrial workers who see no reason why production should not be regulated directly and why markets should be more than a useful but subordinate trait in a free society. From the point of view of the community as a whole, socialism is merely the continuation of that endeavor to make society a distinctively human relationship of persons which in Western Europe was always associated with Christian traditions.
Soviet-style communism failed, not because it was intrinsically evil, but because it was flawed. It allowed too few people to usurp too much power. Twenty-first century market capitalism, American-style, will fail for the same reasons. Both are edifices constructed by human intelligence, undone by human nature.
They went to the Moon and they brought back rock. Trouble is, we've got rock. That was the one thing we didn't need, wasn't it? "Rock, Neil? I don't know whether you looked at the planet before you took off, but it's made of fucking rock!" "But it's Moon rock …" "Oh, fucking hell, this is Earth rock, Neil, come on! Have you heard, on the stock market, rock's gone up three points? No, it hasn't, has it? 'Cause it's fucking rock!"
So I am skeptical about the argument that the subprime mortgage problem will contaminate the whole mortgage market, that housing construction will come to a halt, and that the economy will slip into a recession. Every step in this chain is questionable and none has been quantified. If we have learned anything from the past 20 years it is that there is a lot of stability built into the real economy.