In An Engine, Not a Camera, Donald MacKenzie argues that the emergence of modern economic theories of finance affected financial markets in fundamental ways. These new, Nobel Prize-winning theories, based on elegant mathematical models of markets, were not simply external analyses but intrinsic parts of economic processes.

Paraphrasing Milton Friedman, MacKenzie says that economic models are an engine of inquiry rather than a camera to reproduce empirical facts. More than that, the emergence of an authoritative theory of financial markets altered those markets fundamentally. For example, in 1970, there was almost no trading in financial derivatives such as "futures." By June of 2004, derivatives contracts totaling $273 trillion were outstanding worldwide. MacKenzie suggests that this growth could never have happened without the development of theories that gave derivatives legitimacy and explained their complexities.

MacKenzie examines the role played by finance theory in the two most serious crises to hit the world’s financial markets in recent years: the stock market crash of 1987 and the market turmoil that engulfed the hedge fund Long-Term Capital Management in 1998. He also looks at finance theory that is somewhat beyond the mainstream--chaos theorist Benoit Mandelbrot’s model of “wild” randomness. MacKenzie’s pioneering work in the social studies of finance will interest anyone who wants to understand how America’s financial markets have grown into their current form.

An Engine, Not a Camera: How Financial Models Shape Markets

So begins the postcrash push, when all of this investment begins to pay off. Broadband Internet use in the United States jumped from 6% in June 2000 to more than 30% in 2003. Today, more than half of us have access to broadband at home or work. (Most of us, significantly, signed up for it after the dotcom crash.) Now, instead of engaging in theoretical thumb sucking about "what broadband will mean," we're doing something with it. And unlike the 1990s, when experiments failed because entrepreneurs misunderstood the Internet's usefulness, or because it simply wasn't ready, we're working with a known quantity. It took 30 years for electricity to have a serious impact on the U.S. economy, after all, but by 1930, virtually every home had juice and it was driving refrigerators, toasters, lamps, radios, and other appliances. As Henry Blodget put it, our exuberance, irrational or otherwise, builds industries.

I think the collective group here on Memestreams has been saying this for oh, about 5 years now.

Technology: Boom, Bust, and Beyond

First, technology adoption has continued at a torrid pace (and even accelerated at times) despite the bust. The dotcom business models of the 1990s may have been based on wild projections of broadband, advertising, and ecommerce trends. But the funny thing is, even after the bubble burst, those trends continued. These days, it's hard to find a technology-adoption projection from 1999 that hasn't come true. Meanwhile, the digital-media boom sparked by the iPod and iTunes has blown through even the most aggressive forecasts.

Amen. Despite the fact that it's in Wired's best interest to proclaim that we're entering (in?) a new boom, I have to agree that they are right.

The New Boom

A fairly serous reading list - directed more at the corporate revolutionary than at the corporate drone...If you find the range too broad and the selection on other pages too eclectic to be believeable...chances are you took the blue pill.

Business Books - for the corporate revolutionary

Peter F. Drucker, 95, who was often called the world's most influential business guru and whose thinking transformed corporate management in the latter half of the 20th century, died Nov. 11 at his home in Claremont, Calif.

A very sad day indeed.

Management Visionary Peter Drucker Dies

How concerned are you about Internet upstarts like Google (GOOG ), MSN, Vonage, and others?
How do you think they're going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?

Thank you FCC for assisting innovation, competition, and growth. Please line up here to pay your transit tax to ATT.

At SBC, It's All About 'Scale and Scope' (read: monopoly power)

Still, another problem for investors is that nearly all of the major alternative-energy pure-play firms are early-stage companies with relatively small, albeit rapidly growing, sales and no history of earnings or expectations of profitability in the near future.

So the prices for these stocks look frothy to say the least. Capstone Turbine, for example, has a market value of $347 million even though sales are expected to reach just $24 million next year. So it's trading at 14.5 times estimated revenue.

14.5x isn't that bad when compared with tech stocks or healthcare right now.

Alternative energy stocks have soared during the past month.

For almost an entire decade, innovators in digital media distribution were chilled by the aggressive tactics of the entertainment industry to protect their analog interests. For many years, we essentially saw a lockdown on Internet distribution of media. Practical licenses for legitimate Internet distribution were forbidden, while lawsuit after lawsuit was wielded as a blunt tool and a stern warning against those creators (aka innovators) who had their sights set on staking a claim in the wild west of online digital media.

I hope Travis is correct. He's wrong about broadband penetration (it's not quite 50% of internet users, and it's woeful compared to total population in the US). But he makes a great point about $100M in content purchasing = $1B in technology purchasing. That's a *very* interesting data point.

Fighting the final digital battle

The Federal Communications Commission ruled Friday that big telephone companies no longer have to lease their high-speed Internet lines to competitors, giving the companies more power over the delivery of popular fast Internet services.

The final nail in the coffin that is competition and progress. I'd say that if you aren't outraged, then you haven't been paying attention. But frankly there's so many more important things that fall into that category.

FCC ruling gives telecoms power over Internet access

GM is considering moving both of the Saturn vehicles assembled at the massive plant here to other GM factories, but it would build different vehicles in Spring Hill for other GM brands, according to Automotive News, an industry trade journal.

Here it comes...

Spring Hill braces for life after Saturn