As announced this week, the John Lewis partnership is raising £50m to finance further expansion by issuing a savings bond to its ‘partners’ and customers. If it succeeds it would make a lot of expensive City activity seem rather unnecessary, and its success is not seriously in doubt. The bond will return 4.5% gross plus 2% in John Lewis vouchers which puts it slightly ahead of the field in terms of returns. City “experts” seem worried that this sort of thing might catch on. They advise investors to proceed with caution because the issue is not covered by the Financial Services Compensation Scheme. So, if John Lewis were to go bust over the next five years, investors might lose their money.

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When this blog started out it was intended to focus wholly on topics which were either raised in the book ‘The Rise and Fall of Management: a brief history of practice, theory and context’ or were relevant to those issues. Over time, the range of topics addressed on the blog have extended beyond that starting point, and it has been thought advisable to continue the postings under a more generic title which might also include coverage of further relevant publications. Hence the change of web address.

The archive of postings to this site has been transferred to the new address which will also have access to an extended set of pages and relevant information. It is hoped this change will not cause visitors inconvenience.

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Neoclassical free market orthodoxy, by which the world is still ruled, makes no distinction between real and speculative markets. Both are granted maximum freedom to grow. Speculative markets started as a strand within the financial sector which itself was brought into existence to support investment in the first industrialisation. But while the size of real markets is limited by the ‘appetite’ of potential customers, speculative markets have no such limit. Their growth has been phenomenal; the market for derivative securities has already been estimated as close to the GDP of the planet and many times the value of the world’s stocks and shares. But that is only the start.

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Despite their much vaunted economic expertise, the leading national and global institutions failed to prevent the financial and economic crisis they’re now arguing over how to clear up. The IMF’s Independent Evaluation Office (IEO) reported last month on why the IMF, as one such institution, failed to identify the risks and give clear warnings. The prime causes of that failure were identified as ‘analytical weaknesses’, which were actually shared by all relevant institutions. These analytical weaknesses included a tendency, among IMF economists, to be dominated by neoclassical free market dogma, and so to believe ‘market discipline and self-regulation’ would be sufficient to avoid financial disaster, and to trust the new mathematically based techniques for spreading financial risk, and to conflate the financial and industrial sectors, thus ignoring the influence of finance over the real economy. ‘Perhaps the more worrisome was the overreliance by many economists on models as the only valid tool to analyze economic circumstances that are too complex for modelling.’ (Paragraph 46).

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Eras of rapid change come and go. Schumpeter, Kondratiev, Piatier and others, studied waves of fundamental innovations. We are in the middle of the 4th wave at the moment (comprising ICT, electronics, internet, biotechnology, molecular engineering and the applications of quantum mechanics, etc), still with new innovations being developed, some still growing, some already maturing and some even starting to decline.

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