A Random Walk in the History of Economic Thought, 1900–1950
A book that deals with investing should contain warnings to readers about what to expect from its author. Here is mine: I am not a financial analyst, economic statistician, or financial economist. To be sure, I am interested in all of those areas, as anyone trained in economics would be, but primarily my research has specialized in the history of economic thought and institutional economic history. Consequently, for most of my career I have focused on issues such as Adam Smith’s theory of the natural rate of wages and the effect the public finance methods of the American colonies during the revolution had on the framing of the US Constitution. This background did little to prepare me to write this book, except to give me a healthy respect for the thinking of pre-modern economists and to help me recognize good thinking when I saw it. Three factors influenced me to write this book. First, as often happens at small liberal arts colleges, in fall 1999 it became necessary for me to teach the course in corporate finance in the economics department here at St. Mary’s College. I had taken finance as an undergraduate and worked for two years at Standard & Poor’s writing about the financial details of major corporations and was always interested in the subject. Through the rigor of mastering the details of the course and presenting them to a group of very capable students, I gained a basic understanding of and appreciation for the ideas behind modern financial...