China, not Europe

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Yesterday – the morning after the Brexit vote – it was too painful to think about what had happened. I’m horrified by the outcome. At least for my train journal I had a completely absorbing book to read. It’s Rob Schmitz’s [amazon_link id=”1444791052″ target=”_blank” ]Street of Eternal Happiness: Big city dreams along a Shanghai road[/amazon_link]. Schmitz is the China correspondent for Marketplace, a speaker of Mandarin and has spent many years living in the country.

[amazon_image id=”1444791052″ link=”true” target=”_blank” size=”medium” ]Street of Eternal Happiness: Big City Dreams Along a Shanghai Road[/amazon_image]

The book uses stories about different characters living on or near the street to illustrate some broader themes. The owner of a not-very-successful sandwich bar opens up the aspirations and culture of young people whose life experience has been so different from that of their parents, who suffered the Cultural Revolution, grew up with siblings, above all conformed. A flower seller has lived the rural-urban migration to work in a factory story, before setting up her small business and bringing her sons to Shanghai. An elderly couple scraping by on pension and a street food stall are victims of a fraudulent pyramid scheme.

The themes are familiar, but here are woven into the fabric of everyday life, and made human. I’ve only been to China once (Beijing) & would love to return, although am not at all sure I’d want to live there as Rob Schmitz has. It’s pretty clear now that America is in its post-imperial decline, the European dream is disintegrating, and the next century will be the Chinese one. Anyway, I really enjoyed reading [amazon_link id=”1444791052″ target=”_blank” ]Street of Eternal Happiness[/amazon_link] and if it could keep me from brooding over the UK’s historical (not in a good way) decision, that’s real testament to how interesting it is.

The Wealth Project

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On Monday & Tuesday I attended an absolutely terrific conference, The Wealth Project, which is about “changing how we measure economic progress,” to quote the conference strapline. The aim is to develop concepts and measures of different kinds of wealth so that policies and decisions take due account of the future potential for consumption and well-being, as well as the short term. This has been a preoccupation of mine since at least writing [amazon_link id=”0691156298″ target=”_blank” ]The Economics of Enough[/amazon_link] as well as my [amazon_link id=”0691169853″ target=”_blank” ]GDP book[/amazon_link]. The Wealth Project will produce a book around the end of 2016 or start of next year.

Meanwhile, it’s always interesting to see what books people cite at conferences. This week I noted: C.A.Bayly, [amazon_link id=”0631236163″ target=”_blank” ]The Birth of the Modern World[/amazon_link]; David Hume, [amazon_link id=”1511985208″ target=”_blank” ]A Treatise on Human Nature[/amazon_link]; Karl Polanyi, [amazon_link id=”080705643X” target=”_blank” ]The Great Transformation[/amazon_link]; Dieter Helm, [amazon_link id=”0300210981″ target=”_blank” ]Natural Capital: Valuing the Planet[/amazon_link]. I referred back to the recent crop of GDP books and the Inspector Chen novel featuring GDP growth as villain.

[amazon_image id=”0631236163″ link=”true” target=”_blank” size=”medium” ]The Birth of the Modern World, 1780-1914: Global Connections and Comparisons (Blackwell History of the World)[/amazon_image]  [amazon_image id=”0140432442″ link=”true” target=”_blank” size=”medium” ]A Treatise of Human Nature: Being an Attempt to Introduce the Experimental Method of Reasoning into Moral Subjects (Penguin Classics)[/amazon_image]  [amazon_image id=”B017LCJ8XE” link=”true” target=”_blank” size=”medium” ]Natural Capital: Valuing the Planet by Dieter Helm (2015-05-01)[/amazon_image]

Early modern finance, central planning and technology

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Self-indulgently, I read *another* novel this week, Francis Spufford’s [amazon_link id=”0571225195″ target=”_blank” ]Golden Hill[/amazon_link]. It has some relevance to this blog, with fascinating insight into early modern (18th century London-New York) finance. Unlike his brilliant [amazon_link id=”0571225241″ target=”_blank” ]Red Plenty[/amazon_link], however – which was about the formal equivalence of a centrally planned economy and a decentralised competitive general equilibrium (under certain assumptions, naturally) – [amazon_link id=”0571225195″ target=”_blank” ]Golden Hill[/amazon_link] is only tangentially about economics, to be transparent about it. It is, though, a rattling good read, highly recommended, and impossible to say more about without spoilers.

[amazon_image id=”0571225195″ link=”true” target=”_blank” size=”medium” ]Golden Hill[/amazon_image]

Anybody who hasn’t yet read [amazon_link id=”0571225241″ target=”_blank” ]Red Plenty[/amazon_link] should make it a priority. I also adore Spufford’s [amazon_link id=”0571214975″ target=”_blank” ]Backroom Boys[/amazon_link], a hymn to the otherwise unsung heroes of British engineering. And his volume with Jenny Uglow, [amazon_link id=”0571172431″ target=”_blank” ]Cultural Babbage: Technology, Time and Invention[/amazon_link].

[amazon_image id=”0571225241″ link=”true” target=”_blank” size=”medium” ]Red Plenty[/amazon_image] [amazon_image id=”0571214975″ link=”true” target=”_blank” size=”medium” ]Backroom Boys: The Secret Return of the British Boffin[/amazon_image] [amazon_image id=”0571172431″ link=”true” target=”_blank” size=”medium” ]Cultural Babbage: Technology, Time and Invention[/amazon_image]

Because we all need more books to read…

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Friday evening is a time for settling on the sofa with the magazines and catalogues that have arrived during the week, and last night it was the next season’s catalogue for Harvard University Press. There are some terrific upcoming offerings. Top of my list will be Richard Baldwin’s [amazon_link id=”067466048X” target=”_blank” ]The Great Convergence: Information Technology and the New Globalization[/amazon_link]. His papers on the successive ‘unbundlings’ in production driving global trade are wonderful.

[amazon_image id=”067466048X” link=”true” target=”_blank” size=”medium” ]The Great Convergence: Information Technology and the New Globalization[/amazon_image]

Plenty of others look enticing too. [amazon_link id=”0674743806″ target=”_blank” ]Capital Without Borders: Wealth Managers and the One Percent [/amazon_link]by Brooke Harrington – a study of the professional advisers who make global inequality possible. [amazon_link id=”0674659686″ target=”_blank” ]The Market as God[/amazon_link] by Harvey Cox looks intriguing, theology meets economics. [amazon_link id=”0674059786″ target=”_blank” ]Once Within Borders: Territories of Power, Wealth and Belonging Since 1500[/amazon_link] by Charles S Maier – “territorial boundaries transform geography into history,” says the blurb. [amazon_link id=”0674737296″ target=”_blank” ]China’s Crony Capitalism: The Dynamics of Regime Decay[/amazon_link] by Minxin Pei will be a must-read for China-watchers. Also interesting-looking is [amazon_link id=”0674971132″ target=”_blank” ]Unlikely Partners: Chinese Reformers, Western Economists, and the Making of Global China[/amazon_link] by Julian Gewirtz.

[amazon_image id=”0674743806″ link=”true” target=”_blank” size=”medium” ]Capital Without Borders: Wealth Managers and the One Percent[/amazon_image] [amazon_image id=”0674659686″ link=”true” target=”_blank” size=”medium” ]The Market as God[/amazon_image] [amazon_image id=”0674059786″ link=”true” target=”_blank” size=”medium” ]Once Within Borders: Territories of Power, Wealth, and Belonging Since 1500[/amazon_image] [amazon_image id=”0674737296″ link=”true” target=”_blank” size=”medium” ]China’s Crony Capitalism: The Dynamics of Regime Decay[/amazon_image] [amazon_image id=”0674971132″ link=”true” target=”_blank” size=”medium” ]Unlikely Partners: Chinese Reformers, Western Economists, and the Making of Global China[/amazon_image]

[amazon_link id=”0674545478″ target=”_blank” ]VIrtual Competition: The Promise and Perils of the Algorithm-Driven Economy[/amazon_link] by Ariel Ezrachi and Maurice Stucke will be one for competition policy and IO folks. So too a recent title, [amazon_link id=”0674971426″ target=”_blank” ]Antitrust Law in the New Economy: Google, Yelp, LIBOR, and the Control of Information[/amazon_link] by Mark Patterson.

[amazon_image id=”0674545478″ link=”true” target=”_blank” size=”medium” ]Virtual Competition: The Promise and Perils of the Algorithm-Driven Economy[/amazon_image] [amazon_image id=”0674971426″ link=”true” target=”_blank” size=”medium” ]Antitrust Law in the New Economy: Google, Yelp, Libor, and the Control of Information[/amazon_image]

One for all newshounds, [amazon_link id=”0674545508″ target=”_blank” ]Democracy’s Detectives: The Economics of Investigative Journalism[/amazon_link] by James Hamilton. And for all Camus fans, I spotted the backlist title [amazon_link id=”0674724763″ target=”_blank” ]A Life Worth Living: Albert Camus and the Quest for Meaning[/amazon_link] by Robert Zaretsky.

[amazon_image id=”0674545508″ link=”true” target=”_blank” size=”medium” ]Democracy’s Detectives: The Economics of Investigative Journalism[/amazon_image] [amazon_image id=”0674724763″ link=”true” target=”_blank” size=”medium” ]A Life Worth Living: Albert Camus and the Quest for Meaning[/amazon_image]

The platform era

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The economics of digital platforms, including the sharing economy, has become a hot topic – not only among researchers but also with several new books for the non-specialist reader. Yesterday I took part in the Digital Forum organised by the Toulouse School of Economics – home of Nobel Laureate Jean Tirole, one of the first economists to analyse platforms (or two-sided or multi-sided markets). It was a packed event with some fascinating contributions. And on the train to and from Paris, I read [amazon_link id=”1633691721″ target=”_blank” ]Matchmakers[/amazon_link] by David Evans and Richard Schmalensee. This follows on from [amazon_link id=”0393249131″ target=”_blank” ]Platform Revolution[/amazon_link] by Geoffrey Parker, Marshall Van Alstyne and Sangeet Paul Choudary (which I reviewed here), and [amazon_link id=”0262034573″ target=”_blank” ]The Sharing Economy[/amazon_link] by Arun Sundararajan (here).

[amazon_image id=”1633691721″ link=”true” target=”_blank” size=”medium” ]The Matchmakers: The New Economics of Multisided Platforms[/amazon_image] [amazon_image id=”0393249131″ link=”true” target=”_blank” size=”medium” ]Platform Revolution: How Networked Markets are Transforming the Economy–and How to Make Them Work for You[/amazon_image]

[amazon_image id=”B01F26CC4S” link=”true” target=”_blank” size=”medium” ]The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism[/amazon_image]

All three are well worth reading – they all clearly explain the economic characteristics of digital platforms, with lots of examples. Inevitably there is some overlap but in fact the books complement each other nicely and also include different examples. [amazon_link id=”0393249131″ target=”_blank” ]Platform Revolution[/amazon_link] takes more of a business design perspective, while [amazon_link id=”B01BG90H9W” target=”_blank” ]The Sharing Economy[/amazon_link] is specifically focused on peer-to-peer markets. [amazon_link id=”1633691721″ target=”_blank” ]Matchmakers[/amazon_link] has more about the economic analysis and public policy questions including competition – David Evans’ earlier book, a collection of papers, [amazon_link id=”1468102729″ target=”_blank” ]Platform Economics[/amazon_link], was quite heavily focussed on the competition issues.

Some of the examples in [amazon_link id=”B01BO6QMCI” target=”_blank” ]Matchmakers[/amazon_link] are very nice. I particularly liked the case of the US trucking industry. There’s also a chapter on M-Pesa, which I know a bit about; it is a nice description of how it worked in Kenya, although I’d have been interested to read about why mobile money platforms have failed in so may unbanked countries – regulatory barriers in my view. One of the questions about platforms’ success or failure is the extent to which they take advantage of opportunities for regulatory arbitrage on the one hand and can be killed by hostile regulation on the other hand.

Marshall Van Alstyne was one of the participants in the Toulouse School of Economics event and gave a great talk including this chart; he and I agreed that there is a huge research agenda on this subject as we’re entering the era of platforms. I have an issues paper out soonish, sketching some of the questions.

Marshall Van Alstyne at the TSE Digital Forum 16/6/2016

Marshall Van Alstyne at the TSE Digital Forum 16/6/2016