While the marketing and timing of this book's appearance may suggest that it explains the current economic meltdown, Gerald Davis's real aims are more general: to outline and explore the implications of a major shift in the world's economies (with emphasis on the United States), from a corporate-centered model to a finance-centered model, from an America whose economic and social life is dominated by major corporations and where individuals think of themselves as employees and consumers of goods, to an America whose economic and social life is dominated by the stock market and where individuals think of themselves as investors. The current meltdown is a symptom of these changes, but the systematic changes themselves and the failure to consider or grasp their widespread implications are the real culprit.
The view that corporate greed or generosity, or CEO brilliance, determines the fate of markets, or that employees can work hard and have a guaranteed livelihood, obviously belongs to a bygone era. Still, in the face of the current market collapse we tend to want to put the blame on individuals. What Davis aims to show is that corporations no longer rule the world, but markets and do. Especially in the United States, what drives the economy is no longer manufacturing of products but the buying and selling of stock options and derivatives and the like, and everything else is increasingly thought of in terms of its market potential. For example, houses become means to leverage investments and manage credit rather than investments into a community. Development of relations with friends become investments in social capital.
While this book can get somewhat technical for those not well versed in the lingo, it is a readable and clear account of both the reasons for and the significance of the shift. I found it to be quite useful, especially for the upshot, the clarification of the move from a "commodity fiction" to a "capital fiction." First, in order for modern economics to take hold, people had to learn to think about everything (labor, land and money) as commodities, things to be bought and sold in a market. It took a long time for the implications of this shift to take hold to the point where what was a metaphor became descriptive fact. Similarly, we now live in a world increasingly dominated by the "capital fiction," that holds all domains of social life (friends, community, homes, time - think social networking as a potent example) to be objects for investment, elements of a portfolio that each individual invests in, but whose value is determined by market forces. A very useful book.
The thesis of this book is that "the shift from a manufacturing to a service (or post-industrial) economy in the United States has been decisively shaped by finance." People, labor, houses, and bank accounts are now treated as commodities to be bought and sold in the marketplace, which is itself increasingly free of governmental control. In the final chapter, the author outlines several deleterious effects of this shift: "less mobility, more inequality"; "educational insecurity"; "the end of the … more