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He tries to break free of narrow specialization and cross the boundaries between scientific disciplines. Expeditions beyond economics’ borders and its connection to history, philosophy, psychology, and ancient myths are not only refreshing, but necessary for understanding the world of the twenty-first century.

Reality is spun from stories, not from material. Zdeněk Neubauer

Before it was emancipated as a field, economics lived happily within subsets of philosophy—ethics, for example—miles away from today’s concept of economics as a mathematical-allocative science that views “soft sciences” with a scorn born from positivistic arrogance. But our thousand-year “education” is built on a deeper, broader, and oftentimes more solid base. It is worth knowing about.

The study of the history of a certain field is not, as is commonly held, a useless display of its blind alleys or a collection of the field’s trials and errors (until we got it right), but history is the fullest possible scope of study of a menu that the given field can offer.

History of thought helps us to get rid of the intellectual brainwashing of the age, to see through the intellectual fashion of the day, and to take a couple of steps back.

“The separation between the history of a science, its philosophy, and the science itself dissolves into thin air, and so does the separation between science and non-science; differences between the scientific and unscientific are vanishing.”

we seek to chart the development of the economic ethos. We ask questions that come before any economic thinking can begin—both philosophically and, to a degree, historically. The area here lies at the very borders of economics—and often beyond. We may refer to this as protoeconomics (to borrow a term from protosociology) or, perhaps more fittingly, metaeconomics (to borrow a term from metaphysics).

stories; Adam Smith believed. As he puts it in The Theory of Moral Sentiments, “the desire of being believed, or the desire of persuading, of leading and directing other people, seems to be one of the strongest of all our natural desires.”

“The human mind is built to think in terms of narratives … in turn, much of human motivation comes from living through a story of our lives, a story that we tell to ourselves and that creates a framework of our motivation. Life could be just ‘one damn thing after another’ if it weren’t for such stories. The same is true for confidence in a nation, a company, or an institution. Great leaders are foremost creators of stories.”

contrary to what our textbooks say, economics is predominantly a normative field. Economics not only describes the world but is frequently about how the world should be (it should be effective, we have an ideal of perfect competition, an ideal of high-GDP growth in low inflation, the effort to achieve high competitiveness …). To this end, we create models, modern parables,

I will try to show that mathematics, models, equations, and statistics are just the tip of the iceberg of economics; that the biggest part of the iceberg of economic knowledge consists of everything else; and that disputes in economics are rather a battle of stories and various metanarratives than anything else.

That is the reason for this book: to look for economic thought in ancient myths and, vice versa, to look for myths in today’s economics.

is a paradox that a field that primarily studies values wants to be value-free. One more paradox is this: A field that believes in the invisible hand of the market wants to be without mysteries.

The History of Animal Spirits: Dreams Never Sleep

The more important elements of a culture or field of inquiry such as economics are found in fundamental assumptions that adherents of all the various systems within the epoch unconsciously presuppose. Such assumptions appear so obvious that people do not know what they are assuming, because no other way of putting things has ever occurred to them, as the philosopher Alfred Whitehead notes in Adventures of Ideas.

I argue that economic questions were with mankind long before Adam Smith. I argue that the search for values in economics did not start with Adam Smith but culminated with him.

We should go beyond economics and study what beliefs are “behind the scenes,” ideas that have often become the dominant yet unspoken assumptions in our theories. Economics is surprisingly full of tautologies that economists are predominantly unaware of. I

argue that economics should seek, discover, and talk about its own values, although we have been taught that economics is a value-free science. I argue that none of this is true and that there is more religion, myth, and archetype in economics than there is mathematics.

In a way, this is a study of the evolution of both homo economicus and, more importantly, the history of the animal spirits within him. This book tries to study the evolution of the rational as well as the emotional and irrational side of human beings.

I argue that his most influential contribution to economics was ethical. His other thoughts had been clearly expressed long before him, whether on specialization, or on the principle of the invisible hand of the market. I try to show that the principle of the invisible hand of the market is much more ancient and developed long before Adam Smith. Traces of it appear even in the Epic of Gilgamesh, Hebrew thought, and in Christianity, and it is expressly stated by Aristophanes and Thomas Aquinas.

This is not a book on the thorough history of economic thought. The author aims instead to supplement certain chapters on the history of economic thought with a broader perspective and analysis of the influences that often escape the notice of economists and the wider public.

Progress (Naturalness and Civilization)

The Economy of Good and Evil

from his beginnings, man has been marked as a naturally unnatural creature, who for unique reasons surrounds himself with external possessions. Insatiability, both material and spiritual, are basic human metacharacteristics, which appear as early as the oldest myths and stories.

the Hebrews, with linear time, and later the Christians gave us the ideal (or amplified the Hebrew ideal) we now embrace. Then the classical economists secularized progress. How did we come to today’s progression of progress, and growth for growth’s sake?

The Need for Greed: The History of Consumption and Labor

Metamathematics From where did economics get the concept of numbers as the very foundation of the world?

mathematics at the core of economics, or is it just the icing of the cake, the tip of the iceberg of our field’s inquiry?

idea that we can manage to utilize our natural egoism, and that this evil is good for something, is an ancient philosophical and mythical concept. We will also look into the development of the ethos of homo economicus, the birth of “economic man.”

All of economics is, in the end, economics of good and evil. It is the telling of stories by people of people to people. Even the most sophisticated mathematical model is, de facto, a story, a parable, our effort to (rationally) grasp the world around us.

Masters of the Truth

Originally, truth was a domain of poems and stories, but today we perceive truth as something much more scientific, mathematical. Where does one go (to shop) for the truth? And who “has the truth” in our epoch?

Our animal spirits (something of a counterpart to rationality) are influenced by the archetype of the hero and our concept of what is good.

The entire history of ethics has been ruled by an effort to create a formula for the ethical rules of behavior. In the final chapter we will show the tautology of Max Utility, and we will discuss the concept of Max Good.

The History of the Invisible Hand of the Market and Homo Economicus

We understand “economics” to mean a broader field than just the production, distribution, and consumption of goods and services. We consider economics to be the study of human relations that are sometimes expressible in numbers, a study that deals with tradables, but one that also deals with nontradables (friendship, freedom, efficiency, growth).

When we mention economics in this book, we mean the mainstream perception of it, perhaps as best represented by Paul Samuelson.

By the term homo economicus, we mean the primary concept of economic anthropology. It comes from the concept of a rational individual, who, led by narrowly egotistical motives, sets out to maximize his benefit.

the Epic of Gilgamesh bears witness to the opposite—despite the fact that the first written clay fragments (such as notes and bookkeeping) of our ancestors may have been about business and war, the first written story is mainly about great friendship and adventure.

is a story of nature and civilization, of heroism, defiance, and the battle against the gods, and evil; an epic about wisdom, immortality, and also futility.

Even today we live in Gilgamesh’s vision that human relations—and therefore humanity itself—are a disturbance to work and efficiency; that people would perform better if they did not “waste” their time and energy on nonproductive things.

But it is in friendship where—often by-the-way, as a side product, an externality—ideas and deeds are frequently performed or created that together can altogether change the face of society.19 Friendship can go against an ingrained system in places where an individual does not have the courage to do so himself or herself.

started with Babylonians—rural nature becomes just a supplier of raw materials, resources (and humans the source of human resources). Nature is not the garden in which humans were created and placed, which they should care for and which they should reside in, but becomes a mere reservoir for natural (re)sources.

To be human seems to be somewhere in between, or both of these two. We

The entire history of culture is dominated by an effort to become as independent as possible from the whims of nature.39 The more developed a civilization is, the more an individual is protected from nature and natural influences and knows how to create around him a constant or controllable environment to his liking.

The epic captures one of the greatest leaps in the development of the division of labor. Uruk itself is one of the oldest cities of all, and in the epic it reflects a historic step forward in specialization—in the direction of a new social city arrangement. Because of the city wall, people in the city can devote themselves to things other than worrying about their own safety, and they can continue to specialize more deeply.

“The chief thing which the common-sense individual wants is not satisfactions for the wants he had, but more, and better wants.”47

If a consumer buys something, theoretically it should rid him of one of his needs—and the aggregate of things they need should be decreased by one item. In reality, though, the aggregate of “I want to have” expands together with the growing aggregate of “I have.”

the Old Testament, this relationship is perceived completely differently. Man (humanity) is created in nature, in a garden. Man was supposed to care for the Garden of Eden and live in harmony with nature and the animals. Soon after creation, man walks naked and is not ashamed, de facto the same as the animals. What is characteristic is that man dresses (the natural state of creation itself is not enough for him), and he (literally and figuratively) covers52 himself—in shame after the fall.53

Nature is where one goes to hunt, collect crops, or gather the harvest. It is perceived as the saturator of our needs and nothing more. One goes back to the city to sleep and be “human.” On the contrary, evil resides in nature. Humbaba lives in the cedar forest, which also happens to be the reason to completely eradicate it.

Symbolically, then, we can view the entire issue from the standpoint of the epic in the following way: Our nature is insufficient, bad, evil, and good (humane) occurs only after emancipation from nature (from naturalness), through culturing and education. Humanity is considered as being in civilization.

The city was frequently (at least in older Jewish writings) a symbol of sin, degeneration, and decadence—nonhumanity. The Hebrews were originally a nomadic nation, one that avoided cities. It is no accident that the first important city57 mentioned in the Bible is proud Babylon,58 which God later turns to dust.

is enough, for example, to read the Book of Revelation to see how the vision of paradise developed from the deep Old Testament period, when paradise was a garden. John describes his vision of heaven as a city—paradise is in New Jerusalem, a city where the dimensions of the walls(!) are described in detail, as are the golden streets and gates of pearl.

Hebrews later also chose a king (despite the unanimous opposition of God’s prophets) and settled in cities, where they eventually founded the Lord’s Tabernacle and built a temple for Him. The city of Jerusalem later gained an illustrious position in all of religion.

this time Christianity (as well as the influence of the Greeks) does not consider human naturalness to be an unambiguous good, and it does not have such an idyllic relationship to nature as the Old Testament prophets.

If a tendency toward good is not naturally endowed in people, it must be imputed from above through violence or at least the threat of violence.

If we were to look at human naturalness as a good, then collective social actions need a much weaker ruling hand. If people themselves have a natural tendency (propensity) toward good, this role does not have to be supplied by the state, ruler, or, if you wish, Leviathan.

How does this affect economics?

us return for the last time to the humanization of the wild Enkidu, which is a process we can perceive with a bit of imagination as the first seed of the principle of the market’s invisible hand, and therefore the parallels with one of the central schematics of economic thinking.

Sometimes it is better to “harness the devil to the plow” than to fight with him. Instead of summoning up enormous energy in the fight against evil, it is better to use its own energy to reach a goal we desire; setting up a mill on the turbulent river instead of futile efforts to remove the current. This is also how Saint Prokop approached it in one of the oldest Czech legends.

Enkidu caused damage and it was impossible to fight against him. But with the help of a trap, trick, this evil was transformed into something that greatly benefited civilization.

By culturing and “domesticating” Enkidu, humanity tamed the uncontrollable wild and chaotic evil

Enkidu devastated the doings (the external, outside-the-walls) of the city. But he was later harnessed and fights at the side of civilization against nature, naturalness, the natural state of things.

A similar story (reforming something animally wild and uncultivated in civilizational achievement) is used by Thomas Aquinas in his teachings. Several centuries later, this idea is fully emancipated in the hands of Bernard Mandeville and his Fable of the Bees: or, Private Vices, Publick Benefits. The economic and political aspects of this idea are—often incorrectly—ascribed to Adam Smith.

Here the individual does not try anymore to maximize his goods or profits, but what is important is writing his name in human memory in the form of heroic acts or deeds.

immortality, one connected with letters and the cult of the word: A name and especially a written name survives the body.”77

After this disappointment, he comes to the edge of the sea, where the innkeeper Siduri lives. As tonic for his sorrow, she offers him the garden of bliss, a sort of hedonistic fortress of carpe diem, where a person comes to terms with his mortality and at least in the course of the end of his life maximizes earthly pleasures, or earthly utility.

In the second stage, after finding his friend Enkidu, Gilgamesh abandons the wall and sets out beyond the city to maximalize heroism. “In his (…) search of immortal life, Gilgamesh

The hero refuses hedonism in the sense of maximizing terrestrial pleasure and throws himself into things that will exceed his life. In the blink of an eye, the epic turns on its head the entire utility maximization role that mainstream economics has tirelessly tried to sew on people as a part of their nature.81

today remember Gilgamesh for his story of heroic friendship with Enkidu, not for his wall, which no longer reaches monumental heights.

the eleventh and final tablet, Gilgamesh again loses what he sought. Like Sisyphus, he misses his goal just before the climax

The very existence of questions similar to today’s economic ones can be considered as the first observation. The first written considerations of the people of that time were not so different from those today. In other words: The epic is understandable for us, and we can identify with it.

We have also been witnesses to the very beginnings of man’s culturing—a great drama based on a liberation and then a distancing from the natural state.

Let us take this as a memento in the direction of our restlessness, our inherited dissatisfaction and the volatility connected to it. Considering that they have lasted five thousand years and to this day we find ourselves in harmony with a certain feeling of futility, perhaps these characteristics are inherent in man.

with the phenomenon of the creation of the city, we have seen how specialization and the accumulation of wealth was born, how holy nature was transformed into a secular supplier of resources, and also how humans’ individualistic ego was emancipated.

For small acts (hunting together, work in a factory), small love is enough: Camaraderie. For great acts, however, great love is necessary, real love: Friendship. Friendship that eludes the economic understanding of quid pro quo. Friendship gives. One friend gives (fully) for the other. That is friendship for life and death,

less a civilized, city person is dependent on nature, the more he or she is dependent on the rest of society. Like Enkidu, we have exchanged nature for society; harmony with (incalculable) nature for harmony with (incalculable) man.

human nature good or evil? To this day these questions are key for economic policy: If we believe that man is evil in his nature, therefore that a person himself is dog eat dog (animal), then the hard hand of a ruler is called for. If we believe that people in and of themselves, in their nature, gravitate toward good, then it is possible to loosen up the reins and live in a society that is more laissez-faire.

For a concept of historical progress, for the undeification of heroes, rulers, and nature, mankind had to wait for the Hebrews.

Because nature is not undeified, it is beyond consideration to explore it, let alone intervene in it (unless a person was a two-thirds god like Gilgamesh). It

As early as the “dark” ages, the Jews commonly used economic tools that were in many ways ahead of their time and that later became key elements of the modern economy:

Gilgamesh’s story ends where it began. There is a consistency in this with Greek myths and fables: At the end of the story, no progress occurs, no essential historic change; the story is set in indefinite time, something of a temporal limbo.

For a nation originally based on nomadism, where did this Jewish business ethos come from? And can the Hebrews truly be considered as the architects of the values that set the direction of our civilization’s economic thought?

PROGRESS: A SECULARIZED RELIGION One of the things the writers of the Old Testament gave to mankind is the idea and notion of progress. The Old Testament stories have their development; they change the history of the Jewish nation and tie in to each other. The Jewish understanding of time is linear—it has a beginning and an end.

The observance of God’s Commandments in Judaism leads not to some ethereal other world, but to an abundance of material goods (Genesis 49:25–26, Leviticus 26:3–13, Deuteronomy 28:1–13) (…) There are no accusing fingers pointed at

There are no echoes of asceticism nor for the cleansing and spiritual effect of poverty. It is fitting therefore, that the founders of Judaism, the Patriarchs Abraham, Isaac and Jacob, were all wealthy men.12

about due to a linear understanding of history. If history has a beginning as well as an end, and they are not the same point, then exploration suddenly makes sense in areas where the fruits are borne only in the next generation.

however, the idea of progress itself underwent major changes, and today we perceive it very differently. As opposed to the original spiritual conceptions, today we perceive progress almost exclusively in an economic or scientific-technological sense.

Because care for the soul has today been replaced by care for external things,

This is why we must constantly grow, because we (deep down and often implicitly) believe that we are headed toward an (economic) paradise on Earth.

Only since the period of scientific-technological revolution (and at a time when economics was born as an independent field) is material progress automatically assumed.

Jewish thought is the most grounded, most realistic school of thought of all those that have influenced our culture.17 An abstract world of ideas was unknown to the Jews. To this day it is still forbidden to even depict God, people, and animals in symbols, paintings, statues, and drawings.

economists have become key figures of great importance in our time (Kacířské eseje o filosofii dějin [Heretical Essays in the Philosophy of History]). They are expected to perform interpretations of reality, give prophetic services (macroeconomic forecasts), reshape reality (mitigate the impacts of the crisis, speed up growth), and, in the long run, provide leadership on the way to the Promised Land—paradise on Earth.

REALISM AND ANTIASCETICISM Aside from ideas of progress, the Hebrews brought another very fundamental contribution to our culture: The desacralization of heroes, nature, and rulers.

Voltaire writes: “It certain fact is, that in his public laws he [Moses] never so much as once made mention of a life to come, limiting all punishments and all rewards to the present life.”21

As opposed to Christianity, the concept of an extraterrestrial paradise or heaven was not developed much in Hebrew thought.19 The paradise of the Israelites—Eden—was originally placed on Earth at a given place in Mesopotamia20 and at a given time,

The Hebrews consider the world to be real—not just a shadow reflection of a better world somewhere in the cloud of ideas, something the usual interpretation of history ascribes to Plato. The soul does not struggle against the body and is not its prisoner, as Augustine would write later.

The land, the world, the body, and material reality are for Jews the paramount setting for divine history, the pinnacle of creation. This idea is the conditio sine qua non of the development of economics, something of an utterly earthly making,

The mythology of the hero-king was strongly developed in that period, which Claire Lalouette summarizes into these basic characteristics: Beauty (a perfect face, on which it is “pleasant to look upon,” but also “beauty,” expressed in the Egyptian word nefer, not only means aesthetics, but contains moral qualities as well),

THE HERO AND HIS UNDEIFICATION: THE DREAM NEVER SLEEPS The concept of the hero is more important than it might appear. It may be the remote origin of Keynes’s animal spirits, or the desire to follow a kind of internal archetype that a given individual accepts as his own and that society values.

This internal animator of ours, our internal mover, this dream, never sleeps and it influences our behavior—including economic behavior—more than we want to realize.

Anthropology knows several archetypes of heroes. The Polish-born American anthropologist Paul Radin examined the myths of North American Indians and, for example, in his most influential book, The Trickster, he describes their four basic archetypes of heroes.

The Torah’s heroes (if that term can be used at all) frequently make mistakes and their mistakes are carefully recorded in the Bible—maybe precisely so that none of them could be deified.32

the Hebrew heroes correspond most to the Tricksters, the Culture Bearers, and the Twins. The divine muscleman, that dominant symbol we think of when we say hero, is absent here.

Undeification, however, does not mean a call to pillage or desecration; man was put here to take care of nature (see the story of the Garden of Eden or the symbolism of the naming of the animals). This protection and care of nature is also related to the idea of progress

For the heroes who moved our civilization to where it is today, the heroic archetypes of the cunning trickster, culture bearer, and sufferer are rather more appropriate.

the Old Testament strongly emphasizes the undeification of nature.37 Nature is God’s creation, which speaks of divinity but is not the domain of moody gods

in an Old Testament context, the pharaoh was a mere man (whom one could disagree with, and who could be resisted!).

RULERS ARE MERE MEN In a similar historical context, the Old Testament teachings carried out a similar desacralization of rulers, the so-called bearers of economic policy.

Ultimately the entire idea of a political ruler stood against the Lord’s will, which is explicitly presented in the Torah. The Lord unequivocally preferred the judge as the highest form of rule—an

The needs of future generations will have to be considered; after all humankind are the guardians of God’s world. Waste of natural resources, whether privately owned or nationally owned is forbidden.”39

Politics lost its character of divine infallibility, and political issues were subject to questioning. Economic policy could become a subject of examination.

44 God first creates with the word and then on individual days He divides light from darkness, water from dry land, day from night, and so forth—and He gives order to things.45 The world is created orderly— it is wisely, reasonably put together. The way of the world is put together at least partially46 decipherably by any other wise and reasonable being who honors rational rules.

THE PRAISE OF ORDER AND WISDOM: MAN AS A PERFECTER OF CREATION The created world has an order of sorts, an order recognizable by us as people,

From the very beginning, when God distances Himself from the entire idea, there is an anticipation that there is nothing holy, let alone divine, in politics. Rulers make mistakes, and it is possible to subject them to tough criticism—which frequently occurs indiscriminately through the prophets in the Old Testament.

Hebrew culture laid the foundations for the scientific examination of the world.

Examining the world is therefore an absolutely legitimate activity, and one that is even requested by God—it is a kind of participation in the Creator’s work.51 Man is called on to understand himself and his surroundings and to use his knowledge for good.

The Book of Proverbs emphasizes specifically several times that it was wisdom that was present at the creation of the world. Wisdom personified calls out:

The last act, final stroke of the brush of creation, naming of the animals—this act is given to a human, it is not done by God, as one would expect. Man was given the task of completing the act of creation that the Lord began:

MAN AS A FINISHER OF CREATION The creation of the world, as it is explained in Jewish teachings, is described in the Book of Genesis. Here God (i) creates, (ii) separates, and (iii) names [my emphasis]:

Naming is a symbolic expression. In Jewish culture (and also in our culture to this day), the right to name meant sovereign rights and belonged, for example, to explorers (new places), inventors (new principles), or parents (children)—that is, to those who were there at the genesis, at the origin. This right was handed over by God to mankind.

The Naming itself (the capital N is appropriate) traditionally belongs to the crowning act of the Creator and represents a kind of grand finale of creation, the last move of the brush to complete the picture—a signature of the master.

Without naming, reality does not exist; it is created together with language. Wittgenstein tightly names this in his tractatus—the limits of our language are the limits of our world.53

Reality is not a given; it is not passive. Perceiving reality and “facts” requires man’s active participation. It is man who must take the last step, an act (and we

A real-ization act on our part represents the creation of a construct, the imputation of sense and order (which is beautifully expressed by the biblical act of naming, or categorization, sorting, ordering).

God connects man with the task of guarding and protecting the Garden of Eden, and thus man actually cocreates the cultural landscape. The Czech philosopher Zdeněk Neubauer also describes this: “Such is reality, and it is so deep that it willingly crystallizes into worlds. Therefore I profess that reality is a creation and not a place of occurrence for objectively given phenomena.”61

The Jews believed the exact opposite. The world is created by a good God, and evil appears in it as a result of immoral human acts. Evil, therefore, is induced by man.66 History unwinds according to the morality of human acts.

GOOD AND EVIL IN US: A MORAL EXPLANATION OF WELL-BEING We have seen that in the Epic of Gilgamesh, good and evil are not yet addressed systematically on a moral level.

the epic, good and evil are not envisaged morally—they are not the result of an (a)moral act. Evil was not associated with free moral action or individual will.

Hebrew thought, on the other hand, deals intensively with moral good and evil. A moral dimension touches the core of its stories.65

discrepancy between savings and investment, and others are convinced of the monetary essence

The entire history of the Jewish nation is interpreted and perceived in terms of morality. Morality has become, so to speak, a mover and shaker of Hebrew history.

sunspots. The Hebrews came up with the idea that morals were behind good and bad years, behind the economic cycle. But we would be getting ahead of ourselves. Pharaoh’s Dream: Joseph and the First Business Cycle To

It is the Pharaoh’s well-known dream of seven fat and seven lean cows, which he told to Joseph, the son of Jacob. Joseph interpreted the dream as a macroeconomic prediction of sorts: Seven years of abundance were to be followed by seven years of poverty, famine, and misery.

Self-Contradicting Prophecy Here, let’s make several observations on this: Through taxation74 on the level of one-fifth of a crop75 in good years to save the crop and then open granaries in bad years, the prophecy was de facto prevented (prosperous years were limited and hunger averted—through a predecessor of fiscal stabilization).

The Old Testament prophesies therefore were not any deterministic look into the future, but warnings and strategic variations of the possible, which demanded some kind of reaction. If the reaction was adequate, what was prophesied would frequently not occur at all.

If the threat is anticipated, it is possible to totally or at least partially avoid it. Neither Joseph nor the pharaoh had the power to avoid bounty or crop failure (in this the dream interpretation was true and the appearance of the future mystical), but they avoided the impacts and implications of the prophecy (in this the interpretation of the dream was “false”)—famine did not ultimately occur in Egypt, and this was due to the application of reasonable and very intuitive economic policy.

Let us further note that the first “macroeconomic forecast” appears in a dream.

back to Torah: Later in this story we will notice that there is no reason offered as to why the cycle occurs (that will come later). Fat years will simply come, and then lean years after them.

Moral Explanation of a Business Cycle That is fundamentally different from later Hebrew interpretations, when the Jewish nation tries to offer reasons why the nation fared well or poorly. And those reasons are moral.

Only in recent times have some currents of economics again become aware of the importance of morals and trust in the form of measuring the quality of institutions, the level of justice, business ethics, corruption, and so forth, and examining their influence on the economy,

it is not within the scope of this book to answer that question; justice has been done to the question if it manages to sketch out the main contours of possible searches for answers.

THE ECONOMICS OF GOOD AND EVIL: DOES GOOD PAY OFF? This is probably the most difficult moral problem we could ask.

Inquiring about the economics of good and evil, however, is not that easy. Where would Kant’s “moral dimension of ethics” go if ethics paid? If we do good for profit, the question of ethics becomes a mere question of rationality.

He remains righteous, even if his only reward is death. What economic advantage could he have from that?

morals cannot be considered in the economic dimension of productivity and calculus. The role of the Hebrews was to do good, whether it paid off or not. If good (outgoing) is rewarded by incoming goodness, it is a bonus,99 not a reason to do outgoing good. Good and reward do not correlate to each other.

This reasoning takes on a dimension of its own in the Old Testament. Good (incoming) has already happened to us. We must do good (outgoing) out of gratitude for the good (incoming) shown to us in the past.

So why do good? After all, suffering is the fate of many biblical figures. The answer can only be: For good itself. Good has the power to be its own reward. In this sense, goodness gets its reward, which may or may not take on a material dimension.

the Hebrews offered an interesting compromise between the teachings of the Stoics and Epicureans. We will go into it in detail later, so only briefly

constraint. It calls for bounded optimalization (with limits). A kind of symbiosis existed between the legitimate search for one’s own utility (or enjoyment of life) and maintaining rules, which are not negotiable and which are not subject to optimalization.

In other words, clear (exogenously given) rules exist that must be observed and cannot be contravened. But within these borders it is absolutely possible, and even recommended, to increase utility.

To Love the Law The Jews not only had to observe the law (perhaps the word covenant would be more appropriate), but they were to love it because it was good.

the principle of doing good (outgoing) on the basis of a priori demonstrated good (incoming) was also taken over by the New Testament. Atonement itself is based on an a priori principle; all our acts are preceded by good.

THE SHACKLES OF THE CITY Owing to the Hebrew’s liberation from Egyptian slavery, freedom and responsibility become the key values of Jewish thought.

Laws given by God are binding for Jews, and God is the absolute source of all values,

The Hebrew ideal is represented by the paradise of the Garden of Eden, not a city.116 The despised city civilization or the tendency to see in it a sinful and shackling way of life appears in glimpses and allusions in many places in the Old Testament.

The nomadic Jewish ethos is frequently derived from Abraham, who left the Chaldean city of Ur on the basis of a command:

This way of life had understandably immense economic impacts. First, such a society lived in much more connected relationships, where there was no doubt that everyone mutually depended on each other. Second, their frequent wanderings meant the inability to own more than they could carry; the gathering up of material assets did not have great weight—precisely because the physical weight (mass) of things was tied to one place.

One of Moses’s greatest deeds was that he managed to explain to his nation once and for all that it is better to remain hungry and liberated than to be a slave with food “at no cost.”

SOCIAL WELFARE: NOT TO ACT IN THE MANNER OF SODOM

regulations is developed in the Old Testament, one we hardly find in any other nation of the time. In Hebrew teachings, aside from individual utility, indications of the concept of maximalizing utility societywide appear for the first time as embodied in the Talmudic principle of Kofin al midat S´dom, which can be translated as “one is compelled not to act in the manner of Sodom” and to take care of the weaker members of society.

In a jubilee year, debts were to be forgiven,125 and Israelites who fell into slavery due to their indebtedness were to be set free.126

Land at the time could be “sold,” and it was not sale, but rent. The price (rent) of real estate depended on how long there was until a forgiveness year. It was about the awareness that we may work the land, but in the last instance we are merely “aliens and strangers,” who have the land only rented to us for a fixed time. All land and riches came from the Lord.

These provisions express a conviction that freedom and inheritance should not be permanently taken away from any Israelite. Last but not least, this system reminds us that no ownership lasts forever and that the fields we plow are not ours but the Lord’s.

Glean Another social provision was the right to glean, which in Old Testament times ensured at least basic sustenance for the poorest. Anyone who owned a field had the responsibility not to harvest it to the last grain but to leave the remains in the field for the poor.

Tithes and Early Social Net Every Israelite also had the responsibility of levying a tithe from their entire crop. They had to be aware from whom all ownership comes and, by doing so, express their thanks.

“Since the community has an obligation to provide food, shelter, and basic economic goods for the needy, it has a moral right and duty to tax its members for this purpose. In line with this duty, it may have to regulate markets, prices and competition, to protect the interests of its weakest members.”135

In Judaism, charity is not perceived as a sign of goodness; it is more of a responsibility. Such a society then has the right to regulate its economy in such a way that the responsibility of charity is carried out to its satisfaction.

With a number of responsibilities, however, comes the difficulty of getting them into practice. Their fulfillment, then, in cases when it can be done, takes place gradually “in layers.” Charitable activities are classified in the Talmud according to several target groups with various priorities, classified according to, it could be said, rules of subsidiarity.

Do not mistreat an alien or oppress him, for you were aliens in Egypt.140 As one can see, aside from widows and orphans, the Old Testament also includes immigrants in its area of social protection.141 The Israelites had to have the same rules apply for them as for themselves—they could not discriminate on the basis of their origin.

ABSTRACT MONEY, FORBIDDEN INTEREST, AND OUR DEBT AGE If it appears to us that today’s era is based on money and debt, and our time will be written into history as the “Debt age,” then it will certainly be interesting to follow how this development occurred.

Money is a social abstractum. It is a social agreement, an unwritten contract.

The first money came in the form of clay tablets from Mesopotamia, on which debts were written. These debts were transferable, so the debts became currency. In the end, “It is no coincidence that in English the root of ‘credit’ is ‘credo,’ the Latin for ‘I believe.’”

To a certain extent it could be said that credit, or trust, was the first currency. It can materialize, it can be embodied in coins, but what is certain is that “money is not metal,” even the rarest metal, “it is trust inscribed,”

Inseparably, with the original credit (money) goes interest. For the Hebrews, the problem of interest was a social issue: “If you lend money to one of my people among you who is needy, do not be like a moneylender; charge him no interest.”

there were also clearly set rules setting how far one could go in setting guarantees and the nonpayment of debts. No one should become indebted to the extent that they could lose the source of their livelihood:

In the end, the term “bank” comes from the Italian banci, or the benches that Jewish lenders sat on.157

Money is playing not only its classical roles (as a means of exchange, a holder of value, etc.) but also a much greater, stronger role: It can stimulate, drive (or slow down) the whole economy. Money plays a national economic role.

In the course of history, however, the role of loans changed, and the rich borrowed especially for investment purposes,

In such a case a ban on interest did not have great ethical significance. Thomas Aquinas, a medieval scholar (1225-1274), also considers similarly; in his time, the strict ban on lending with usurious interest was loosened, possibly due to him.

As a form of energy, money can travel in three dimensions, vertically (those who have capital lend to those who do not) and horizontally (speed and freedom in horizontal or geographic motion has become the by-product—or driving force?—of globalization). But money (as opposed to people) can also travel through time.

money is something like energy that can travel through time. And it is a very useful energy, but at the same time very dangerous as well. Wherever

Aristotle condemned interest162 not only from a moral standpoint, but also for metaphysical reasons. Thomas Aquinas shared the same fear of interest and he too argued that time does not belong to us, and that is why we must not require interest.

MONEY AS ENERGY: TIME TRAVEL AND GROSS DEBT PRODUCT (GDP)

Due to this characteristic, we can energy-strip the future to the benefit of the present. Debt can transfer energy from the future to the present.163 On the other hand, saving can accumulate energy from the past and send it to the present.

labor was not considered degrading in the Old Testament. On the contrary, the subjugation of nature is even a mission from God that originally belonged to man’s very first blessings.

LABOR AND REST: THE SABBATH ECONOMY

The Jews as well as Aristotle behaved very guardedly toward loans. The issue of interest/usury became one of the first economic debates. Without having an inkling of the future role of economic policy (fiscal and monetary), the ancient Hebrews may have unwittingly felt that they were discovering in interest a very powerful weapon, one that can be a good servant, but (literally) an enslaving master as well.

It’s something like a dam. When we build one, we are preventing periods of drought and flooding in the valley; we are limiting nature’s whims and, to a large extent, avoiding its incalculable cycles. Using dams, we can regulate the flow of water to nearly a constant. With it we tame the river (and we can also gain

But if we do not regulate the water wisely, it may happen that we would overfill the dam and it would break. For the cities lying in the valley, their end would be worse than if a dam were never there.

If man lived in harmony with nature before, now, after the fall, he must fight; nature stands against him and he against it and the animals. From the Garden we have moved unto a (battle)field.

Only after man’s fall does labor turn into a curse.168 It could even be said that this is actually the only curse, the curse of the unpleasantness of labor, that the Lord places on Adam.

Both Plato and Aristotle consider labor to be necessary for survival, but that only the lower classes should devote themselves to it so that the elites would not have to be bothered with it and so that they could devote themselves to “purely spiritual matters—art, philosophy, and politics.”

Work is also not only a source of pleasure but a social standing; It is considered an honor. “Do you see a man skilled in his work? He will serve before kings.”170 None of the surrounding cultures appreciate work as much. The idea of the dignity of labor is unique in the Hebrew tradition.

Hebrew thinking is characterized by a strict separation of the sacred from the profane. In life, there are simply areas that are holy, and in which it is not allowed to economize, rationalize, or maximize efficiency.

the message of the commandment on Saturday communicated that people were not primarily created for labor.

This dimension has disappeared from today’s economics. Economic effort has no goal at which it would be possible to rest. Today we only know growth for growth’s sake, and if our company or country prospers, that does not…

the purpose of creation was not just creating but that it had an end, a goal. The process was just a process, not a purpose. The whole of Being was created so…

ancient Greek economic ethos, we will examine two extreme approaches to laws and rules. While the Stoics considered laws to be absolutely valid, and utility had infinitesimal meaning in their philosophy, the Epicureans, at least in the usual historical explanation, placed utility and pleasure in first place—rules were to be made based on the principle of utility.

CONCLUSION: BETWEEN UTILITY AND PRINCIPLE The influence of Jewish thought on the development of market democracy cannot be overestimated. The key heritage for us was the lack of ascetic perception of the world, respect to law and private…

poets actually went even further, and with their speech they shaped and established reality and truth. Honor, adventure, great deeds, and the acclaim connected with them played an important role in the establishment of the true, the real.

those who are famous will be remembered by people. They become more real, part of the story, and they start to be “realized,” “made real” in the lives of other people. That which is stored in memory is real; that which is forgotten is as if it never existed.

“epic and tragic poets were widely assumed to be the central ethical thinkers and teachers of Greece; nobody thought of their work as less serious, less aimed at truth, than the speculative prose treatises of historians and philosophers.”5 Truth and reality were hidden in speech, stories, and narration.

general? In the end, poetry could be more sensitive to the truth than the philosophical method or, later, the scientific method. “Tragic poems, in virtue of their subject matter and their social function, are likely to confront and explore problems about human beings and luck that a philosophical text might be able to omit or avoid.”8

Essentially, the “generalized friendship paradox” applies to all interpersonal networks, regardless of whether they’re set in real life or online.

Whenever we interact with other people, we glimpse lives far more glamorous than our own.

Dichotomy. Suppose a car is moving from to A to B . Let’s measure the distance between A and B by a scale according to which A is at point 0 and B is at point 1. Then before the car gets to point 1, it has to get half way there, point 1/2; and once it has got there, it has to get to a point half way between 1/2 and 1, 3/4; and so on… In other words, it has to get to every one of the infinite number of points 1/2, 3/4, 7/8

But you can’t do an infinite number of things in a finite time. So the car never get to point B.

At any rate, even after two and a half thousand years of trying to come up with an explanation of what is wrong with the argument in the Liar Paradox, there is still no consensus on the matter.

Interestingly, virtually everything else that Aristotle ever defended has been overthrown — or at least seriously challenged. The principle of noncontradiction is, it would seem, the last bastion!

A common suggestion of what it is for B to follow logically from A is that you can’t have A without having B. Given the principle of noncontradiction, if A is a contradiction, you can’t have it. And if you can’t have A, you certainly can’t have A and B. That is, everything follows from a contradiction.

Yet behavioral targeting is, in some ways, “push” marketing carried to its extreme, with the advertiser controlling not just the content of its message but also the audience for it. Even if privacy concerns are overcome, can targeting work once consumers realize they are being “pushed”?

Fractals and Infinity A fractal may be magnified over and over, to infinity, always revealing more detail. PhotoviewPlus / Getty Images A fractal is an abstract mathematical object, used in art and to simulate natural phenomena. Written as a mathematical equation, most fractals are nowhere differentiable. When viewing an image of a fractal, this means you could zoom in and see new detail. In other words, a fractal is infinitely magnifiable.The Koch snowflake is an interesting example of a fractal. The snowflake starts as an equilateral triangle. For each iteration of the fractal:Each line segment is divided into three equal segments.

Cosmology and Infinity Even if the universe is finite, it might be one of an infinite number of "bubbles.". Detlev van Ravenswaay / Getty Images Cosmologists study the universe and ponder infinity. Does space go on and on without end? This remains an open question. Even if the physical universe as we know it has a boundary, there is still the multiverse theory to consider. Our universe may be but one in an infinite number of them.

materialism is not the greedy desire for material goods, but rather the belief that the fundamental reality of the world is material;

idealism is not the aspiration toward lofty and laudable goals, but rather the belief that the fundamental reality of the world is mental or idea-like. English-speaking philosophers today tend to speak of “physicalism” or “naturalism” rather than materialism (perhaps to avoid confusion with the Wall Street sense of the term). At the same time, Anglo-American historians of philosophy continue to find the distinction between materialism and idealism a useful one in our attempts at categorizing past schools of thought. Democritus and La Mettrie were materialists; Hobbes was pretty close. Berkeley and Kant were idealists; Leibniz may have been.

And it was these paradoxes that led the Irish philosopher to conclude that talk of matter was but a case of multiplying entities beyond necessity. For Berkeley, all we can know are ideas, and for this reason it made sense to suppose that the world itself consists in ideas.

Soviet and Western Marxists alike, by stark contrast, and before them the French “vulgar” (i.e., non-dialectical) materialists of the 18th century, saw and see the material world as the base and cause of all mental activity, as both bringing ideas into existence, and also determining the form and character of a society’s ideas in accordance with the state of its technology, its methods of resource extraction and its organization of labor. So here to focus on the material is not to become distracted from the true source of being, but rather to zero right in on it.

one great problem with the concept of materialism is that it says very little in itself. What is required in addition is an elaboration of what a given thinker takes matter, or ideas, to be. It may not be just the Marxist aftertaste, but also the fact that the old common-sense idea about matter as brute, given stuff has turned out to have so little to do with the way the physical world actually is, that has led Anglo-American philosophers to prefer to associate themselves with the “physical” or the “natural” rather than with the material.  Reality, they want to say, is just what is natural, while everything else is in turn “supernatural” (this distinction has its clarity going for it, but it also seems uncomfortably close to tautology). Not every philosopher has a solid grasp of subatomic physics, but most know enough to grasp that, even if reality is eventually exhaustively accounted for through an enumeration of the kinds of particles and a few basic forces, this reality will still look nothing like what your average person-in-the-street takes reality to be.

The 18th-century idealist philosopher George Berkeley strongly believed that matter was only a fiction contrived by philosophers in the first place, for which the real people had no need. For Berkeley, there was never anything common-sensical about matter. We did not need to arrive at the era of atom-splitting and wave-particle duality, then, in order for the paradoxes inherent in matter to make themselves known (is it infinitely divisible or isn’t it?

Central to this performance was the concept of  “materialism.” The entire history of philosophy, in fact, was portrayed in Soviet historiography as a series of matches between the materialist home-team and its “idealist” opponents, beginning roughly with Democritus (good) and Plato (bad), and culminating in the opposition between official party philosophy and logical positivism, the latter of which was portrayed as a shrouded variety of idealism. Thus from the “Short Philosophical Dictionary,” published in Moscow in 1951, we learn that the school of logical empiricism represented by Rudolf Carnap, Otto Neurath and others, “is a form of subjective idealism, characteristic of degenerating bourgeois philosophy in the epoch of the decline of capitalism.”Now the Soviet usage of this pair of terms appears to fly in the face of our ordinary, non-philosophical understanding of them (that, for example,  Wall Street values are “materialist,” while the Occupy movement is “idealist”). One might have thought that the communists should be flinging the “materialist” label at their capitalist enemies, rather than claiming it for themselves. One might also have thought that the Bolshevik Revolution and the subsequent failed project of building a workers’ utopia was nothing if not idealistic.

Consider money. Though it might sometimes be represented by bank notes or coins, money is an immaterial thing par excellence, and to seek to acquire it is to move on the plane of ideas. Of course, money can also be converted into material things, yet it seems simplistic to suppose that we want money only in order to convert it into the material things we really want, since even these material things aren’t just material either: they are symbolically dense artifacts, and they convey to others certain ideas about their owners. This, principally, is why their owners want them, which is to say that materialists (in the everyday sense) are trading in ideas just as much as anyone else.

In the end no one really cares about stuff itself. Material acquisitions — even, or perhaps especially, material acquisitions of things like Rolls Royces and Rolexes — are maneuvers within a universe of materially instantiated ideas. This is human reality, and it is within this reality that mystics, scientists, and philosophers alike are constrained to pursue their various ends, no matter what they might take the ultimate nature of the external world to be.

As strange as it seems, being happier than average does not mean that one can’t also be unhappier than average.

In 2009, researchers from the University of Rochester conducted a study tracking the success of 147 recent graduates in reaching their stated goals after graduation. Some had “intrinsic” goals, such as deep, enduring relationships. Others had “extrinsic” goals, such as achieving reputation or fame. The scholars found that intrinsic goals were associated with happier lives. But the people who pursued extrinsic goals experienced more negative emotions, such as shame and fear. They even suffered more physical maladies.

the paradox of fame. Just like drugs and alcohol, once you become addicted, you can’t live without it. But you can’t live with it, either.

That impulse to fame by everyday people has generated some astonishing innovations.

Today, each of us can build a personal little fan base, thanks to Facebook, YouTube, Twitter and the like. We can broadcast the details of our lives to friends and strangers in an astonishingly efficient way. That’s good for staying in touch with friends, but it also puts a minor form of fame-seeking within each person’s reach. And several studies show that it can make us unhappy.

It makes sense. What do you post to Facebook? Pictures of yourself yelling at your kids, or having a hard time at work? No, you post smiling photos of a hiking trip with friends. You build a fake life — or at least an incomplete one — and share it. Furthermore, you consume almost exclusively the fake lives of your social media “friends.” Unless you are extraordinarily self-aware, how could it not make you feel worse to spend part of your time pretending to be happier than you are, and the other part of your time seeing how much happier others seem to be than you?Continue reading the main story

the bulk of the studies point toward the same important conclusion: People who rate materialistic goals like wealth as top personal priorities are significantly likelier to be more anxious, more depressed and more frequent drug users, and even to have more physical ailments than those who set their sights on more intrinsic values.

as the Dalai Lama pithily suggests, it is better to want what you have than to have what you want.

In 2004, two economists looked into whether more sexual variety led to greater well-being. They looked at data from about 16,000 adult Americans who were asked confidentially how many sex partners they had had in the preceding year, and about their happiness. Across men and women alike, the data show that the optimal number of partners is one.

This might seem totally counterintuitive. After all, we are unambiguously driven to accumulate material goods, to seek fame, to look for pleasure. How can it be that these very things can give us unhappiness instead of happiness? There are two explanations, one biological and the other philosophical.

From an evolutionary perspective, it makes sense that we are wired to seek fame, wealth and sexual variety. These things make us more likely to pass on our DNA.

here’s where the evolutionary cables have crossed: We assume that things we are attracted to will relieve our suffering and raise our happiness.

that is Mother Nature’s cruel hoax. She doesn’t really care either way whether you are unhappy — she just wants you to want to pass on your genetic material. If you conflate intergenerational survival with well-being, that’s your problem, not nature’s.

More philosophically, the problem stems from dissatisfaction — the sense that nothing has full flavor, and we want more. We can’t quite pin down what it is that we seek. Without a great deal of reflection and spiritual hard work, the likely candidates seem to be material things, physical pleasures or favor among friends and strangers.

We look for these things to fill an inner emptiness. They may bring a brief satisfaction, but it never lasts, and it is never enough. And so we crave more.

This search for fame, the lust for material things and the objectification of others — that is, the cycle of grasping and craving — follows a formula that is elegant, simple and deadly:Love things, use people.

This was Abd al-Rahman’s formula as he sleepwalked through life. It is the worldly snake oil peddled by the culture makers from Hollywood to Madison Avenue.

Simply invert the deadly formula and render it virtuous:Love people, use things.

It requires the courage to repudiate pride and the strength to love others — family, friends, colleagues, acquaintances, God and even strangers and enemies. Only deny love to things that actually are objects. The practice that achieves this is charity. Few things are as liberating as giving away to others that which we hold dear.

This also requires a condemnation of materialism.

Finally, it requires a deep skepticism of our own basic desires. Of course you are driven to seek admiration, splendor and physical license.

Declaring war on these destructive impulses is not about asceticism or Puritanism. It is about being a prudent person who seeks to avoid unnecessary suffering.

Going back is a creative process. The events of childhood are like the Hebrew alphabet; the vowels are missing, and the older self has to make sense of them

The person going back home has to invent a coherent tradition out of discrete moments and tease out future implications.

“Disingenuous is the adjective I had in my mind,”

“Fifteen years ago it would have been legitimate to propose this argument,” he added. “But it is no longer legitimate to ignore the behavioral problems and propose simply more transparency and controls.”

Professor Acquisti and two colleagues, Laura Brandimarte and the behavioral economist George Loewenstein, published research on this behavior nearly six years ago. “Providing users of modern information-sharing technologies with more granular privacy controls may lead them to share more sensitive information with larger, and possibly riskier, audiences,” they concluded.

the critical question is whether, given the tools, we can be trusted to manage the experience. The increasing body of research into how we behave online suggests not.

“Privacy control settings give people more rope to hang themselves,” Professor Loewenstein told me. “Facebook has figured this out, so they give you incredibly granular controls.”

This paradox is hardly the only psychological quirk for the social network to exploit. Consider default settings. Tons of research in behavioral economics has found that people tend to stick to the default setting of whatever is offered to them, even when they could change it easily.

“Facebook is acutely aware of this,” Professor Loewenstein told me. In 2005, its default settings shared most profile fields with, at most, friends of friends. Nothing was shared by default with the full internet.

By 2010, however, likes, name, gender, picture and a lot of other things were shared with everybody online. “Facebook changed the defaults because it appreciated their power,” Professor Loewenstein added.

The phenomenon even has a name: the “control paradox.”

people who profess concern about privacy will provide the emails of their friends in exchange for some pizza.

They also found that providing consumers reassuring though irrelevant information about their ability to protect their privacy will make them less likely to avoid surveillance.

Another experiment revealed that people are more willing to come clean about their engagement in illicit or questionable behavior when they believe others have done so, too

Those in the industry often argue that people don’t really care about their privacy — that they may seem concerned when they answer surveys, but still routinely accept cookies and consent to have their data harvested in exchange for cool online experiences

Professor Acquisti thinks this is a fallacy. The cognitive hurdles to manage our privacy online are simply too steep.

While we are good at handling our privacy in the offline world, lowering our voices or closing the curtains as the occasion may warrant, there are no cues online to alert us to a potential privacy invasion

Even if we were to know precisely what information companies like Facebook have about us and how it will be used, which we don’t, it would be hard for us to assess potential harms

Members of Congress have mostly let market forces prevail online, unfettered by government meddling. Privacy protection in the internet economy has relied on the belief that consumers will make rational choices

Europe’s stringent new privacy protection law, which Facebook has promised to apply in the United States, may do better than the American system of disclosure and consen

the European system also relies mostly on faith that consumers will make rational choices.

The more that psychologists and behavioral economists study psychological biases and quirks, the clearer it seems that rational choices alone won’t work. “I don’t think any kind of disclosure or opt in or opt out is going to protect us from our worst instincts,”

What to do? Professor Acquisti suggests flipping the burden of proof. The case for privacy regulation rests on consumers’ proving that data collection is harmful. Why not ask the big online platforms like Facebook to prove they can’t work without it? If reducing data collection imposes a cost, we could figure out who bears it — whether consumers, advertisers or Facebook’s bottom line.

As everyone in business knows, you manage what you measure. So although the replacing-GDP discussion may seem a little airy, its growing credibility in important circles could give it a real impact on economic policy

The story usually begins with Jeremy Bentham, an Englishman who in 1781 outlined a philosophy of utility that assessed the merits of an action according to how much happiness it produced. This was during the Enlightenment, when thinkers sought to replace religion-based rules with rational, scientific guides to decision making and life.

Economists, the most enthusiastic adopters of the concept, came to focus instead on the tangible expression of people’s needs and desires: what they were willing to spend money on.

For its original purpose—measuring short-term economic fluctuations—GDP is not likely to be supplanted anytime soon. It may even be gaining ground: A major discussion is under way concerning whether the U.S. Federal Reserve and other central banks should in times of crisis focus not on inflation but on GDP growth.

Compiling GDP involves making a lot of choices, and even reasonable choices can lead to skewed results. Statisticians understandably favor goods and services that are bought and sold—and thus easily valued by market price—over economic activities whose value must be estimated

Developing nations with lots of foreign direct investment saw GDP grow much faster than GNP would have—but didn’t necessarily reap the benefits, because the investments’ profits went mostly to multinational corporations.

It’s true that the challenges of tracking energy use or pollution aren’t huge. But the politics are extremely tricky. In its early days the Clinton administration pushed the Bureau of Economic Analysis—the agency that measures U.S. GDP—to develop a green GDP

Many things of value in life cannot be fully captured by GDP, but they can be measured by metrics of health, education, political freedom, and the like

The idea that economic and other data can be better presented with a dashboard of indicators than as a single number or ranked list is very much in the air among experts and policy makers.

In Sarkozy’s 2009 report on alternatives to GDP, the word “dashboard” appears 78 times. But the notion of dashboards hasn’t captured the public’s imagination. What has is a word that shows up just 29 times in the Sarkozy report (mostly in the bibliography): “happiness.”

In the 1950s and 1960s psychologists and sociologists reopened the question of whether it could be quantified. Opinion polls, then entering their heyday as measurers (and in some cases determiners) of the public mood, were an obvious vehicle for the attempt.

The economist Richard Easterlin imported the happiness discussion to his discipline with a 1974 paper pointing out that the results of national happiness polls did not correlate all that well with per capita income.

The interest in happiness surveys has also led to critical scrutiny of the Easterlin paradox. After reevaluating decades’ worth of polling data, the economists Betsey Stevenson and Justin Wolfers made headlines in 2008 by refuting the paradox—at least the part that said people in wealthy nations weren’t happier than those in poor nations

They were unable to conclusively debunk the argument that rises in income over time fail to deliver increased happiness, but the evidence they marshaled certainly muddied the waters

Money can’t buy happiness. But it could perhaps buy the ability to measure it.