II. Reviews

Reviews

The Evolution of Cooperation

Reviewed by Roger Arnold

Robert Axelrod’s The Evolution of Cooperation is destined to find its way into hundreds of scholarly footnotes over the next decade. It is, quite simply, a book that will be widely read and discussed within the academic circles of many fields.

There is a reason for this. It is a book that in simple and straightforward language addresses a major and long-standing question that, it so happens, is peripherally related to a long list of interesting topics. The question, as Axelrod notes, is “Under what conditions will cooperation emerge in a world of egoists without central authority?” A few of the peripherally related topics include: trench warfare in World War I, biological systems, the golden rule, nuclear warfare, government’s raison d’etre, family feuds, stereotyping, economic protectionism, congressional politics, morality, taxes, and international cooperation.

The sum around which the book revolves is the game strategic prisoner’s dilemma. Prisoner’s dilemma, as Axelrod tells us, “is simply an abstract formulation of some very common and interesting situations in which what is best for each person individually leads to mutual defection, whereas everyone would have been better off with mutual cooperation.” The recognition of which has predictably led many persons to ask, “So, what is the solution?” Axelrod, armed with the computer tournament results of prisoner’s dilemma experts, answers that in iterated prisoner’s dilemma games it is Tit for Tat: the behavioral response that seeks to do to others (good or bad) what others have done to you.

A little background is necessary. Axelrod asked persons who had written on prisoner’s dilemma (persons in the fields of biology, computer science, economics, mathematics, physics, political science, psychology, and sociology) to submit a computer program they thought would obtain the most points when pitted against other computer programs within the prisoner’s dilemma setting. The winner was Tit for Tat, submitted by Anatol Rapoport.

This is interesting in and of itself. But there is more. First, and most importantly, there is the fact that the winner of prisoner’s dilemma is also the solution to it—Tit for Tat generates mutual cooperation, the slippery and supposedly unobtainable goal of prisoner’s dilemma. Second, Tit for Tat, while designed as a strategy for winning, appears to have admirable characteristics: it is nice (it is not the first to make trouble), it is retaliatory (thus providing an incentive to the person who starts trouble to desist), it is forgiving (which means it shows good faith, a key ingredient for mutual cooperation), and it is clear (thus making a communication foul-up between persons unlikely).

All this is interesting and simple enough, and Axelrod does an exceptionally good job at reporting the rsults of the computer tournament, describing some of the high-scoring strategies other than Tit for Tat, and bringing out the subtle points behind Tit for Tat. It is when he tries to interpret what Tit for Tat means for some important policy questions, though, that Axelrod does less than an exemplary job. In fact, here he might be faulted for muddled thinking.

One important case in point in his discussion of government. As no doubt many persons have heard by now, and Axelrod makes clear by citing Hobbes and quoting Rousseau, it has long been acknowledged that government is the solution to prisoner’s dilemma. The story line is familiar: (1) in some cases, individuals would be better off cooperating than not cooperating; (2) uncertainty and general human nature sometimes make cooperation a difficult outcome to achieve; and (3) government enters the picture, and through it individuals get what they want but could not obtain on their own.

In game theory language, government solves the prisoner’s dilemma by “changing the payoffs.” Axelrod notes that

Large changes in the payoff structure can transform the interaction so that it is no longer even a prisoner’s dilemma. If the punishment for defection is so great that cooperation is the best choice in the short run, no matter what the other player does, then there is no longer a dilemma.

Government’s “changing the payoffs” obviously does not disturb Axelrod, for in chapter 7, he advises the reader on how to promote cooperation—government is not one of the ways ruled out. On the contrary, it is one of the ways ruled in. Speaking of government-imposed taxes, Axelrod says: “But everyone may be better off if each person has to pay so that each can share the benefits of schools, roads, and other collective goods.”

This is a rather odd statement from one who, up until this point, appears to have been quite excited over the discovery that Tit for Tat offers a noncoercive way out of prisoner’s dilemma settings. Axelrod might be saying that there are two ways to remove oneself from the grasp of the prisoner’s dilemma: the coercive way and the noncoercive (or free) way. Or he might be saying that the noncoercive way only works in some prisoner’s dilemma situations and not in others—it might work when the goal is the removal of international trade barriers, but not when the goal is the provision of a public good. In either case, Axelrod leaves people hanging; he leaves them without information that directly relates to answering the question he starts his book with: “Under what conditions will cooperation emerge in a world of egoists without central authority?”

In Axelrod’s defense it needs to be said that he does say that in a prisoner’s dilemma setting, the more people believe that they will come into contact with each other in the future, the more likely cooperation is to naturally emerge. While this answer to his introductory question is better than no answer, it is not a full answser, and in that it is not, one is left with no more objective knowledge to aid in deciding where the line between government and the market should be drawn than one had before reading the book. To go one step further back, no answer is provided for Axelrod’s question, which is a proxy for what Robert Nozick calls the “fundamental question of political philosophy”—namely, should there be any state at all?

The Evolution of Cooperation ends up being a mixed bag. It is topical and well written; additionally, Axelrod is superb as reporter and analyzer of prisoner’s dilemma strategies and computer tournament results. It is only when Axelrod sets out (one senses somewhat timidly) to look at what prisoner’s dilemma and the winning strategy, Tit for Tat, mean within the larger context, that things come up short. This book would have been much improved if Axelrod had taken greater pains here, if he had only focused on answering the question that begins his book. Robert Axelrod needs to seriously think about writing The Evolution of Cooperation: Part II.

The Evolution of Cooperation by Robert Axelrod. New York: Basic Books, 1984.

Competition versus Monopoly: Combines Policy in Perspective

Reviewed by Roger Arnold

There are numerous well-known definitions of economics, but the one that best captures what economics is about is James Buchanan’s definition, namely: “Economics is the science of markets or exchange institutions.”

Sadly, most economists do not “do economics” with this definition in mind. They “do economics” in the same way that one would imagine an engineer “does engineering.” It is all very mechanical.

Donald Armstrong is not like most economists. He is an economist who knows that economics is first and foremost about markets, about exchange. And with that proper focus, he has created a splendid work—a work rich in the nuts and bolts of everyday economic life, a work that cannot be summarized (much to its credit) in a handful of equations and curves.

This book is about many things, but mostly it is, as the title notes, about competition and monopoly. Specifically, it is a constructive criticism of the neoclassical two-dimensional price theory which looms large in the discussions of the firm and market structures in the best-selling economics textbooks. More specifically, it offers a replacement for the orthodox structuralist theory of competition.

The replacement—the behavioral theory of competition—is grounded in an emphasis on process rather than outcome, a Hayekian view of competition, a rather Rothbardian view of monopoly, and a place (thankfully) for the entrepreneur. This is all new stuff to anyone who has not utilized his peripheral vision and looked beyond the mainstream discussion of the firm, perfect competition, and monopoly found in most economics textbooks. In fact, to this person it is an entirely new language. But it is a language that accurately conveys what is happening in the real world when it comes to the firm, competition, and monopoly.

One senses that if Donald Armstrong could have his way, the model of perfect competition would tomorrow disappear from center stage of the theory of prices and markets. It is too bad Armstrong cannot have his way. The model, as he points out, is not only totally artificial, but it is misleading. It implicitly emphasizes the number of firms in an industry (which is difficult to define) as the sole determinant of whether or not competition exists. In the limited framework of neoclassical two-dimensional price theory, more firms in the industry mean more competition. Nothing else matters. Nonsense. There are other dimensions to competition, as Armstrong clearly points out.

Furthermore, there is the fact that this totally artificial market structure of perfect competition—which, by the way, many orthodox economists will admit is not even close to being descriptive of the real world—is put forth by these same economists as the proper benchmark for other market structures to be measured up against. (How else could it be that economists speak about “dead weight losses”?) What must first-year economics students think when presented with all this hullabaloo?

What also must they think when they encounter monopoly? As Armstrong points out in his book, they probably think that monopoly is something that it is not. This is because the students’ teachers probably think that monopoly is something that it is not. Chapter 5, which deals with monopoly, is a must to read for anyone who thinks that a monopolist is a single seller of a good, is interested in the easy life, and can and will charge a price for his good that is above the competitive level. The theme here is: What you think monopoly is, and how you think it behaves, are probably all wrong.

An important message of this book is that government policy, based on a wrongheaded notion of competition and monopoly, is bound to create more problems than it solves. Take, for instance, the most common and blatant example. A government official, thinking that the model of perfect competition is the ideal, notes that in the model, in equilibrium marginal cost is equal to price, and that in the long run economic profits are zero. Greati What next? Well, armed with this information the government official can undertake a policy of search and destroy: search for those firms selling above marginal cost and making greater than zero economic profit, and destroy them. Either that, or get them to toe the perfect competition line—all in the name of economic justice and consumer sovereignty, of course.

Economics professors and university students have the most to benefit from this book. It offers a trenchant and correct criticism of much of what they are teaching and learning. One can only imagine how things might be different today on the economic front if Armstrong’s ideas had been taught in the colleges, universities, and law schools of this country over the past three to four decades. If one makes the reasonable assumption that ideas based on reality are better than those based on fantasy, then it follows that things would have been much better. And that should tell the person thinking of reading Armstrong’s book just how important it is to follow through.

Competition versus Monopoly: Combines Policy in Perspective by Donald Armstrong.

A Response to the Framework Document for Amending the Combines Investigation Act

Reviewed by Roger Arnold

It is sad that Walter Block had to write this essay. If politicians were less interested in power, if bureaucrats were less interested in meddling in the affairs of the economy, and if the majority of academic economists were less starry-eyed over statistics and more knowledgeable of the way free markets work, then this essay would not have had to have been written. But, alas, the world is what it is, so this essay did have to be written. Walter Block was certainly up to the task.

First, a little background. The Combines Investigation Act is one of those pieces of economic legislation seeking to bureaucratize and politicize the Canadian economy. It is part of the rationalist-constructivist mindset that implicitly assumes that if government officials do not have a hand in what happens in the economy, well then, nothing good can naturally happen. To the rationalist-constructivist, the only good hand is a visible hand. To them, Adam Smith’s invisible hand truly is invisible.

Specifically, the Combines Investigation Act addresses issues such as competition, industry concentration, mergers, price fixing, cartels, vertical integration, and price cutting.

In Spring 1981, along came the Canadian Minister of Consumer and Corporate Affairs, André Ouellet, who put forth his “Proposals for Amending the Combines Investigation Act: A Framework for Discussion.” Briefly, Minister Ouellet’s proposals for reform sought to make the Combines Investigation Act more interventionist and meddling.

Enter Walter Block, senior economist for The Fraser Institute. Block specifically set out to criticize Minister Ouellet’s proposals, to criticize the Combines Investigation Act in general, and to teach some good economics in the process. It is the latter goal that is likely to be the most interesting to the reader of this essay.

Walter Block is a master at destroying economic myths in a simple, understandable, and convincing way. He proved this beyond a doubt in his book Defending the Undefendable. No economic myth is left with an ounce of life in it after Block has taken aim at it. Just two of the many myths that Block pulverizes in “A Response to the Framework Document for Amending the Combines Investigation Act” are: (1) Economic concentration is the antithesis of economic competition; and (2) Government, manned with benevolent individuals and economics experts, promotes competition. (Yes, Virginia, there still are millions of individuals who believe this foolishness.)

As to the concentration-competition issue, Block convincingly shows that concentration ratios and the number of firms in an industry have nothing to do with competition. As he colorfully notes, “Industrial concentration is as much related to competition as fish to bicycles.” As Block points out, concentration ratios—statistical artifacts—overlook much of the nitty-gritty of real economic life. They, or rather the individuals who construct such things, either overlook or are ignorant of the facts that goods and markets can either be defined narrowly or broadly, that competition does not stop at a nation’s borders, that the size of the economy is relevant to the discussion, and most of all, that competitive behavior does not pay any attention to silly numbers that many academic economists and government bureaucrats come up with. It is motivated by something much more fundamental. As Block correctly points out, firms with high concentration ratios are some of the most competitive firms to be found. A quick glance at a good financial newspaper or magazine generally illustrates this fact. One would have thought that most politicians, who usually vie for office alongside only one or two other individuals, would have known this. Political competition, after all, is known for its ferocity.

As to the second myth, Block shows a series of government interventions in the economy which, although their stated intention many times is to increase competition, do just the opposite. Most of these interventions can be summarized by the phrase “barriers to entry.” The Block message: If the Canadian government is truly interested in promoting competition and in advancing the standard of living of its people, it should eliminate legal barriers to entry and forget all this nonsense about promoting competition by checking a firm’s concentration ratio and then acting (usually) in a rationalist-constructivist way.

It is the same message advanced by other economists who understand the workings of free markets. But Block advances the message particularly well. He does it in such a way that even if the government officials or politicians do not pay heed, at least they cannot walk away feeling smug in their ignorance or hypocrisy.

This is an essay that is of interest to the educated layman, the government bureaucrat, the politician, and the academic economist. The issues covered are of immediate and lasting importance. The essay is of particular interest to the person who wants to know what competition is and is not, how politicians behave, and why they behave as they do. With respect to the latter issue, there is enough public choice theory to make the entire discussion complete. There are few essays written today from which one can learn so much so quickly and be so thoroughly entertained along the way.

“A Response to the Framework Document for Amending the Combines Investigation Act” by Walter Block.

Writing History: Essay on Epistemology

Reviewed by Edward H. Kaplan

Readers of von Mises’s Theory and History or Epistemological Problems of Economics will find little to affront their sensibilities in this extended essay by a French historian on what historians ought to and (equally important) ought not to do when they write history. Veyne even cites von Mises and Hayek for some key aspects of his argument. Other aspects, though both plausible and vividly expressed, may leave many historians and economists uneasy.

Veyne denies that history can be a social science. Any true science creates a set of abstractions as its object. History fixes on concrete particulars. The historian composes these into “true novels,” and so resembles the novelist more than the scientist. Because the novelist creates fictions which strive for versimilitude—the form or appearance of truth—he may have to perform the kind of research into documents one normally associates with the historian. The historian, of course, must not make up characters or incidents, but like the novelist he has to decide upon a “plot” which fits his narrative. Various plots will, however, fit a given set of documents, depending on what sort of story the historian wants to tell, and different plots will send the historian scurrying off after different sets of documents. “Facts” do not lie around in documents like so many irreducible atoms. The needs of his plot determine what facts the historian will construe out of which documents.

The historian explains what he is writing about by giving an account of it—by unfolding the plot he has selected for that narrative. Abstractions as such cannot be historical explanations. Socrates was not killed by demagogy, not even Athenian demagogy. Particular demagogues did the deed and they did it not with demagogy but with hemlock.

As it was for Aristotle and Aquinas, the historian’s causation remains an uncertain mixture of physical or social law, chance, and human free will. History is, therefore, an open system, and neither the economist’s equilibrium nor historical laws are possible for it.

Even such “intuitive abstractions” as “enlightened despotism” are not approximations of historical laws, but mere verbal shortcuts, “only the summary of a plot.” (p. 118). Such historical types, unlike biological species, are wholly subjective. Any particular enlightened despotism, for example, surely has enough unenlightened aspects as to oblige the historian to create a new type should his plot require him to notice them. General labels for concepts such as “direct taxation” or “hereditary monarchy” are no more than building blocks for historical types. To make these types sufficiently general as to approximate scientific laws is to spill over into the ridiculous (for example, the Marshall Plan as an instance of potlatch).

Not even Max Weber’s “ideal types” are instances of historical laws. Ideal types are actual historical individuals or events rendered in the historian’s mind as perfect examples of themselves so as to lay bare their inner logic. Would-be social scientists have stripped away the rich vestments of historical context which Weber so carefully provided for such ideal types as the “Protestant ethic” or “capitalist spirit” and thereby reduced them to bland abstractions useful neither to history nor true social science.

The historian can at least use historical types to draw analogies to roughly similar events at other times or places for which more or better documentation exists, and can thereby help “retrodict” a past cause for some later event. As the historian broadens his “historical culture,” more and more apt analogies may occur to him, and his historical types may gradually turn into Weberian ideal types. By easy stages the history of specific events in particular places and times will evolve into the comparative history of what Veyne calls “non-events”—cities or direct taxes, for example—rather than “events”—Paris or direct taxation in modern France.

A science of man is possible and to some degree already exists, but history is not and cannot be that science. Such a science must, Veyne argues (citing von Mises, Hayek, and Schumpeter) be praxeological. If the objects of history are specific events (and nonevents), the objects of a true human science must be abstractions that can be manipulated in the mind independently of the world from which they were drawn. Veyne also believes they must be put into mathematical terms, a notion that he surely did not get from the Austrians, but otherwise his view is quite congruent with theirs: Just as Galileo did not infer the role of gravity from the unworkable and probably mythical experiment of simultaneously dropping a ball and a feather from the leaning tower of Pisa, but from a mental experiment conducted on the interaction of the abstractions “force” and “mass” on each other, so too economics does not base its law of declining marginal utility on data provided by psychological observations, but on the logic of a carefully delimited imaginary situation wherein people apply the firt unit of a good to the use they most favor, and each successive unit to less favored uses.

Veyne believes economics to be the best-developed human science, at least in its truly scientific neoclassical form (within which he places the Austrians), rather than in its historicist and institutionalist forms. But even economics is of mainly negative use to the historian—to explain (under certain narrowly defined circumstances) why some people did not obtain some results they expected. Laborers, for example, may never move toward actually obtaining their DMVPs for their wages because of any number of possible political interventions and/or customary freezings of relative wages; it is the historian’s main business to focus on these particular events rather than on the never-achieved tendency for wages to converge on DMVPs. Indeed Veyne quotes with approval (p. 254) von Mises’s dictum that the historian need only know as much of some science relevant to his topic as does an average educated man. The historian, Veyne keeps insisting, must always return to the specificities of his documents. Dwelling too long in the realm of even a valid science’s abstractions must either turn him from historian into scientist or tempt him into the vain search for valid historical types that are also scientific laws.

Truly praxeological sociology barely exists as yet, Veyne argues. “General sociology” of the sort done by writers such as Talcott Parsons is merely solipsistic. It uses nominally universal vocabulary merely to label entities without turning them into abstractions that could be meaningfully manipulated as such in people’s minds. To the extent that Marx attempted a general sociology, his work is no more valid than that of the Parsonians. Marx and Weber went beyond this to write “noneventworthy” history, and so both are still worth reading. Because noneventworthy history may appear to deal with abstract universals, it may fool the sociologist into thinking he is doing social science.

Veyne treats Marx as something of an extinct volcano, but Weber still excites his interest and admiration. Like Marx, Weber thought he was doing historical science. In the quarrel over methods between Carl Menger and the German historical school, Weber sided with the latter, arguing that classical economics was merely the ideal type of economic thought produced under liberal capitalism. But if economics was both ideal type and science, Weber implicitly reasoned, his own sociology of ideal types must also be a valid historical science. Weber’s work has survived, Veyne insists, because he was actually pioneering noneventworthy history.

Aside from noneventworthy history, about all that is validly left to the sociologist is contemporary history, usually also of the noneventworthy sort. The history of the present and of the noneventworthy past are often left to sociologists because historiography began as the community’s memory and as the handmaiden of kings and conquerors, the specific events of whose lives it commemorated. Veyne is content with this division of labor, though by calling comparative and noneventworthy history the logical completion of national and eventworthy history, he would clearly not object to either historians or sociologists poaching on each other’s territories.

There is little to criticize in this English-language edition of an early 1970s book. The translation occasionally falters, but even without the original French in hand, there is no real difficulty in surmising what Veyne must have intended. The translation nicely captures what must have been the epigrammatic touches of the original.

The most serious omission, which might serve Veyne as the topic for some subsequent essay, is that he introduces the notion of “plot” without discussing in any detail what that term implies. In a series of essays of the 1960s and 1970s collected in Topics of Discourse: Essays in Cultural Criticism (Baltimore: Johns Hopkins, 1978) and in detail in Metahistory: The Historical Imagination in Nineteenth-Century Europe (Baltimore: Johns Hopkins, 1973), the American scholar Hayden White approached this problem of the “emplotment” of factual historical narratives as an exercise in pure literary genre analysis, with results as intriguing as they are disconcerting.

Following Levi-Strauss (who is also one of Veyne’s prime sources) but also literary critic Northrop Frye and linguistic theorist Roman Jacobson, White suggested that, at least for Western man and perhaps for humanity at large, there are really only four basic kinds of plot: romance, comedy, tragedy, and satire, and that each of these is associated with its own characteristic “trope” (in the sense of figure of speech): metaphor, metonymy, synecdoche, and irony, respectively. White even linked these plots and tropes to specific ideological positions: anarchist, conservative, radical, and liberal, respectively. Only mediocre and doctrinaire historians, White hastened to add, stay rigidly within this pattern. The great historians always attempt to mediate between pairs of these tropes and plots because they can see how they can all be true.

The historian has to fit his work into one or another of these sets of categories or flit back and forth between them—first, because he is using language and these categories may in fact constitute the rules for using language; and, second, because his readers, however unconsciously, attempt to recognize one of these categories in his work, and it is only when they discover the plot he is using that they grasp his explanation of the story. “Aha,” in effect the reader exclaims. “Now I see what the historian is getting at here. He is recounting a tragedy. Now I understand what is going on.”

If only four basic plots exist, there may be at least rough limits to the degree of complexity that the historian need embrace. White even suggests that when a revisionist historian changes plots, he is doing what a Freudian analyst does when he encourages his patient to recast his subconscious emplotment of the events that cause his neurosis into some other, more innocuous, plot. This, however, may be of more comfort to beleaguered Freudians than to historians embarrassed by such company.

White’s analysis of particular historical narratives reads disconcertingly like the “deconstruction” or “unpacking” of literary texts of literati of the deconstructionist school. Flashes of insight often come wrapped in opaque technical jargon as barbarous as anything committed by the disciples of Talcott Parsons. Worse, judgments about which of two tropes dominates a particular segment of narrative sometimes seem arbitrary.

Though historians, like novelists and poets, can continue to do their jobs without benefit of literary deconstruction even if they are, in fact, writing true novels, one may wonder (to commit some trope or other) whether Professor Veyne’s intriguing book has snatched the historical profession from the palsied hands of the sociologists only to inadvertently drop it into the ravening jaws of the English professors.

Writing History: Essay on Epistemology by Paul Veyne (Trans. Mina Moore-Rinvolucri). Middletown, Conn.: Wesleyan University Press, 1984 (orig. French ed. 1971).

The Unseen Dimensions of Wealth: Towards a Generalized Economic Theory

Reviewed by Edward H. Kaplan

Despite the large claims implied by its subtitle, this is not a theoretical treatise. Nor does it succeed in laying bare the principles of how an economy behaves under normal, that is, nonequilibrium, conditions. That is just as well, since such principles almost certainly cannot be discovered anyway. Much better, it is a slightly disguised but interesting and useful economic history which succeeds in raising the economic experience of post-1949 Hong Kong almost to the level of a Weberian ideal type of a particular sort of market economy.

If Henry Woo, a talented Hong Kong economic journalist, is more nearly like George Gilder than Israel Kirzner, this is not to be despised. Like Gilder, he has read some of the Austrians, and appreciates them, at least for their understanding of the nonreality of equilibrium, but (also like Gilder) he has not entirely mastered Austrian principles. Sometimes this leads him to reinvent the wheel, at other times to reinvent the triangle and call it the wheel.

Woo’s notion of “human capital,” for example, is blessedly free of the narrow focus on formal education of Schulz or Becker, whose work has been so mischievously exploited by apologists for a bloated U.S. tertiary education system. Informal learning on the job and by thoughtfully scanning the evolving market is, for Woo, much more important. Indeed, without quite indicating whether he has derived it from the Austrians, he recapitulates the notion epitomized by von Mises and Rothbard that there is no homogeneous Labor, but only a congeries of particular laborers, most of whose services constitute unique goods.

Woo also incorporates the von Mises-Hayek theory of the business cycle into his analysis, but because he does so from the more visible perspective of demand for credit rather than central-bank-induced increased supply of credit, his argument is far less clear than the Austrian original both to the reader and (one suspects, from his neglect of the role of government-induced increases in the money supply as a cause of inflation) to himself as well.

Of course, the good parts as well as the theoretically murky parts of his general treatment are the consequence of Woo’s frankly announced decision to generalize from the modern Hong Kong experience. Hong Kong has barely enough land to stand on. The adaptability of its labor force has counted for far more than its relatively sparse and simple supply of capital goods. Its banks are relatively free to respond to domestic and foreign pressures to create money, so it is natural for Woo to focus on these pressures rather than on the increased money supply itself.

Though in principle it need not be so, in practice it is reasonable for Woo to emphasize the tendency of an unfettered market to spontaneously grow. Woo’s general stages of growth—a long stasis before the market is unchained, a relatively short burst of unconstrained growth, followed by a long period of constrained growth (caused by, first, compounding manipulation from outside the market and, second, a constantly shifting disequilibrium permitted by inefficient manipulation within the market)—all faithfully reflect the stages of Hong Kong’s actual economic history.

The book is also seeded with a number of bits of illuminating narrative, such as Woo’s suggestion that the recent appearance of better housing across the waters in the New Territories may be making for greater inefficiency because workers commuting so far to their jobs can no longer as easily carry piecework home during the busy season to be worked on by the grannies and children. A bit of comparative historicizing on this point (which Woo does not do) will allow one to recognize that the Hong Kong experience is not entirely unique, and that even diligent Chinese at some stage begin to favor the leisure of a decent apartment over labor, just as did diligent and then prosperous Jewish refugees from the Russian Pale after 1920, when they abandoned the slums of the Lower East Side of New York for the comparatively palatial apartment houses of the South Bronx.

The Unseen Dimensions of Wealth: Towards a Generalized Economic Theory by Henry K.H. Woo. Fremont, Calif.: Victoria Press, 1984.