The clash of financial institutions and public interests--and how to realign them for everyone's benefit
The great economist Adam Smith argued that private business interest serves the public good. He called it the Invisible Hand. According to Duke University professor John Staddon, there is another, darker force at work in the relationship between business and society--a malign hand, which also serves individual interests but causes collective harm.
In "The Malign Hand of the Markets," Staddon establishes a new theory that is more relevant in today's economy than Adam Smith's. He explains how financial markets have evolved into the unhealthy boom-and-bust system we now have and provides solutions based on behaviorial economics, psychology, evolutionary biology, and moral philosophy.
Staddon argues that by understanding the underlying psychological and social processes at work in financial institutions and the markets in which they operate, we can learn the real causes of the disasters that are an all too-regular feature of those same markets. By knowing the causes of collapse, we can then devise simpler and more realistic solutions than the well-intentioned but ultimately ineffectual regulation currently on offer.
John Staddon is James B. Duke Professor of Psychology and Professor of Biology and Neurobiology, Emeritus, at Duke University.