Markets: beyond AI

I remember hearing someone describe markets as “the first AI” and being impressed, but unconvinced by that declaration. Markets don’t approach or have the capacity to exceed human intelligence, they are even better than that – they are a virtual collective intelligence. This short course intends to convince you of this remarkable claim.

Part A: the foundational texts

In this part of the course you should become familiar with four key foundational texts that articulate the majestic properties of markets. Here is a PDF copy of the reading pack which should be read:

Download the reading pack here.

Here are short video explanations of the four key readings:

  • I, Pencil, by Leonard Reed, 1958

  • The Use of Knowledge in Society, by FA Hayek, 1945

  • Seen vs Unseen, by Frederic Bastiat

  • Origins of Money, by Carl Menger

Part B: the modern relevance

This isn’t strictly necessary for this course, but if you haven’t already seen this movie you probably should. Here is the trailer for Arrival (2016), which you should watch:

Read: Catching Crumbs from the Table, by Ted Chiang, 2000 (Nature, 405, 517)

  • Chiang’s work of science fiction takes place in a world where AI have grown beyond human’s ability to comprehend them, and scientific endeavour is simply an attempt to interpret what “metahumans” are doing. In this world, these intellectually superior beings are benign (he pointedly comments that “unlike most previous low technology cultures confronted with a high technology one – humans are in no danger of assimilation of extinction) but have no interest in communicating effectively with people like us (and indeed when you consider our attempts to explain scientific progress to ants, why should they?). He considers a technology that might help individuals to upgrade their cognitive capabilities to bridge this divide, but recognises that people are quite cautious about exposing children to any gene therapy that might lead towards assimilation. His vision is a technologically optimistic one, but where humans are resigned to “catching crumbs from the table” – to feed off the scraps of our superior machines, where our attempt to merely interpret and make sense of their findings is our limit.

Read: Catching Crumbs from the Market, by Ben Southwood, 2022

  • In his attempt to understand the financial market reaction to the UK government’s infamous mini-budget in September 2022, Ben Southwood (an Editor at Stripe Press, and a friend of mine) explains his affection for Chiang’s article. In doing so, he asks “Aren’t we already catching crumbs from the table?” Indeed, as the readings above demonstrate, the information content provided by market exchange is not always given to us in an entirely intelligible manner. We must interpret market data, and indeed speculate on what it means. Markets are arenas for such speculation to take place, and for contested claims to confront reality. Unlike an artificial intelligence, markets are a product of of human action, but they are not of human design. Markets help to assimilate dispersed and fragmented information into a single figure, which relates to an entire constellation of price signals. This communication system helps us to act and to plan, without having to understand where it has come from or what has happened to make it change. The implications are clear, but the interpretation is not.  We struggle to make sense of what we see, despite the awe we should have for the system.

“The market” isn’t a god or a weapon. It is neither something to worship nor something to deploy. It is much more magnificent and mysterious: it is a virtual collective intelligence. One of the oldest in the world, and one of the most technologically sophisticated social tools that man has ever created, our steps into the digital future might be trodden along a familiar path. How we understand and utilise markets are a useful way to practise and anticipate our relationship with the coming AI revolution.


For a complete list of posts within the Course Map Category, see my Course Map.

These are longer essays published on Medium:

(Medium hasn’t achieved what many lapsed bloggers had hoped. In future, I intend to publish articles on this site first, and then import into Medium).

These are my Guides:

Here are two offshoots from my chapter on “A Social Entrepreneur’s Toolbox” which featured in the CADI publication: An applied guide to social entrepreneurship.

Here is a list of my non academic work:

My theatre reviews are available here. Here’s my review of Saul Bellow’s Herzog.

I have 5 articles in the Research Category:

I have 4 articles in the Menu category:

Here is a complete list of the other articles published on this website:

My key reading lists:

Several of the posts above also appeared in my Newsletter

Finally, some links to my favourite Twitter threads:

and my favourite Twitter jokes:

For a complete list of posts on this website, see here.

Management reading list

Here are a few recommendations for managers.

  1. Sowell, T., 1987, A Conflict of Visions, William Morrow
    • Sowell makes a distinction between a constrained (i.e. human nature is stable and based on self-interest) or unconstrained (human nature is good or has the potential to be good) “vision”. He argues that most political beliefs fit into one of these categories, and that people’s judgements are often determined by their existing vision.
  2. Schwartz, Peter. (1997) The Art of the Long View: Planning for Future in an Uncertain World, John Wiley & Sons
    • The pioneer of scenario planning provides a user guide to their construction and use, and demonstrates their relevance for any decision making under uncertainty.
  3. Postrel, V., 1999, The Future and Its Enemies, Free Press
    • Postrel challenges the conventional wisdom that modern society isn’t delivering, and that we need to take coordinated action to change this trend. Instead, she articulates the case for competition and decentralised decision making, and identifies a “dynamism” world view that permits amazing innovation.
  4. Koch, Charles, G., 2007, The Science of Success, Wiley – especially SoS excerpts
    • This book outlines the concept of “Market-Based Management”, the framework that Koch credits as driving the incredible success of the American conglomerate Koch Industries. It attempts to apply the institutions of a free society and market economy within a firm, and provides an excellent case study on alternatives to hierarchical command structures.
  5. Burlingham, Bo, 2005, Small Giants, Penguin
    • A fascinating collection of case studies of companies that chose to be great rather that big. Most of them may be unfamiliar, but they are all inspirational for their pursuit of excellence as they define it.
  6. Cowen, T., 2009, Create Your Own Economy, Dutton
    • This is an eclectic look at how the internet has affected the way we engage with information. We have more choice, and more ability to cultivate our own consumption that ever before. This caters to people with autistic tendencies, and Cowen not only allows us to understand this condition, but also encourage our inner neural diversity.
  7. Deutsch, D., 2011, The Beginning of Infinity, Penguin – in particular “Optimism” (Chapter 9)
    • In a deep, mind bending work Deutsch argues that the enlightenment was built on the search for good explanations (which is different to attempts to test theories), and claims that a rediscovery of this effort will create the beginning of infinity. He touches upon his expertise as a Physicist to explain famous paradoxes and make a convincing argument in favour of the multiverse.
  8. Ridley, M., 2011, The Rational Optimist, Harper
    • Trade and specialisation have meant that things have never been better, and things will continue to be better provided we remain rational and optimistic.
  9. Poundstone, W., 2011, Priceless, Oneworld – especially the chapters on Prospect Theory and Ultimatum Games
    • Entertaining and accessible overview of behavioural economics and its impact on decision making.
  10. Ries, Eric, 2011, The Lean Startup, Penguin – especially the chapter on batches
    • The classic guide to creating a new organisation under conditions of uncertainty, including practical advice on strategy.
  11. Gleick, J., 2012, The Information, Fourth Estate
    • A somewhat daunting but wholly engrossing history of information, explaining critical innovations such as drum banging, Enigma, through to the internet.
  12. Fisman, R. and Sullivan, T., 2013, The Org: The Underlying Logic of the Office, Twelve – in particular “What Management is Good For” (Chapter 5)
    • A highly readable explanation for why organisations exist, and a defense of the important role they play in coordinating economic activity.
    • Also see “Why Managers Still Matter“, Foss, N.J., and Klein, P.G., MIT Sloan Management Review, September 2014.
  13. Leighton, W.A., and Lopez, E.J., 2014, Madmen, Intellectuals and Academic Scribblers, Stanford – especially the chapter on Public Choice theory
    • A scholarly level and yet enjoyable look at how ideas shape the world around us, with excellent examples of times when they can overcome vested interests. The authors identify policy entrepreneurs as key change agents and show how social change occurs.
  14. Skarbek, D., 2014, The Social Order of the Underworld, Oxford University Press
    • One of the very best attempts to study how governance emerges without government. Skarbek presents his academic work on how prisons are organised, cutting across all of the social sciences. He draws upon fascinating fieldwork to explain the role of gangs and destroys many myths about why they form and the functions they serve. This is one of the best contemporary examples of the applicability of economic theory to broad social issues and will change how you think about how people associate.
  15. Nelson, R., 1977, The Moon and the Ghetto, WW Norton & Co
    • A joint-Godfather of organisational studies, Nelson explores why incredible technical tasks (such as sending someone to the moon) are easier to solve than many mundane social tasks (such an ending poverty). He surveys different ways in which rational analysis has been applied (the “policy analysis” perspective, where the chief executive makes decisions; the “organization” perspective, which looks at institutional structure; and the “science and technology” perspective, which focuses on how R&D resources are allocated), and finds them mutually useful but incomplete. The focus is more on how to solve public policy questions rather than a clear tool kit on how to do so (i.e. the intended audience is social scientists rather than policymakers) but is relevant to anyone seeking to better understand complex problem solving in an organisational context.
  16. Weiner, E., 2016, The Geography of Genius, Simon and Schuster – in particular his advice to his daughter
    • A tender travel book that combines affectionate tales of interesting journeys, with a sharp identification of what causes certain locations, at certain points in history, to give rise to outrageous spells of creativity.

Business One Pagers

Sometimes I read a book and it leaves a big impression on me, but I worry that it will be transient. I already utilise “One Pagers” for recording brief thoughts on interesting books or articles, but thought I could create a template that focuses on business implications.

Although teachers like myself often think that providing a list of excellent resources is sufficient to aid someone’s learning, genuine learning needs to be reflective. Therefore my advice is to read the book and then write a Business One Pager.

The basic format is as follows:

  • Key information: (i.e. title of the book, name of the company, industry, era, etc)
  • Situation analysis/context
  • Key challenges faced
  • Legal and regulatory context
  • Sources of value creation
  • Successes
  • Failures
  • Lessons I can implement

Of course, this is incomplete and should be treated as a work in progress. But I hope you find it helpful.


MBA Library

Here are some (highly) recommended books that go deeper into the key principles behind each chapter of ‘Economics: A Complete Guide for Business‘.

1. Incentives matter

  • Becker, Gary, (1998) The Economics of Life, McGraw Hill

2. Cost and choice

  • Levinson, Marc (2006) The Box, Princeton University Press

3. Market exchange

  • Klemperer P., (2004) Auctions: Theory and Practice, Princeton University Press
  • McMillan, J., (2002) Reinventing the Bazaar, W.W. Norton & Co.
    • More of a storybook than a textbook, McMillan provides a fascinating tour of actual markets, and a thick description of the culture of commerce. Seminal concepts are illuminated with the deployment of eclectic literary quotes, and although the text is a little stilted, and lacks a market process perspective, there are not many better books on this theme. The examples may seem a little dated now, with eBay lauded as a cutting edge retailer, but there is no problem with reflecting on the important role that it played in the changing global economy. Indeed this is a perfect example of the value in producing social anthropological case studies of historic and contemporary marketplaces.

4. Prices and economic calculation

  • Swedberg, R., (2000) Entrepreneurship: The Social Science View, Oxford University Press
  • Fisman, R., and Sullivan, T., (2013) The Org: The Underlying Logic of the Office, Twelve Books

5. Competition and the market process

  • Mathews, John (2007) Strategizing, Disequilibrium and Profit, Stanford University Press
  • Dixit, A.K., Nalebuff, B.J. (1993) Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life, W.W. Norton

6. Capital theory and recalculation

  • Lachmann, L., (1956) Capital and its Structure, Sheed Andrews and McMeel

7. Public finance

  • Ferguson, Niall, (2002) The Cash Nexus: Money and Politics in Modern History, 1700 – 2000 ,Penguin
  • Frisby,  D., (2019) Daylight Robbery. How Tax Shaped Our Past and Will Change Our Future, Penguin Random House
    • A somewhat polemical but highly readable account of how important taxation has been in the affairs of the state. The account of the US civil war may need balancing with other views, but I particularly recommend the chapters that consider how future working styles (such as digital nomadism and the widespread adoption of AI) will affect tax collection, and this how governments organise their activities. Historically sweeping but continually interesting.
  • Narayanan et al. (2016) Bitcoin and Cryptopcurrency Technologies, Princeton University Press (see the website for videos, and an online draft version is here)

8. Monetary theory

  • Friedman, M., (1994) Money Mischief, Harcourt
  • Whalen, C.R., (2010) Inflated: How Money and Debt Built the American Dream, Wiley
    • I liked the historical perspective, focus on monetary theory, and link to public finance. But I felt it was one sided, US centred, and badly written. Am still trying to find a better option.

9. Fiscal policy

  • Buchanan, J., and Wagner, R.E., (1977) Democracy in Deficit: The Political Legacy of Lord Keynes, Liberty Fund

10. International economics

  • Blustein, P., (2006) And the money kept rolling in (and out), Public Affairs
  • Yeager, L., (1954) Free trade: America’s opportunity Liberty Fund.

11. Behavioural economics

  • Poundstone, William (2010) Priceless: The Hidden Psychology Of Value Oneworld
  • Kahneman, Daniel (2011) Thinking, Fast and Slow Farrar Straus and Giroux
    • There are a lot of books that attempt to explain the main findings of behavioural economics, but this is the best. Written by an expert in the field, it reads more as an intellectual biography and tender ode to his deceased co-author, Amos Tversky. We learn more about the genesis of those classic original experiments, and how to implement those behavioural “anomalies” into business decision making. The chapters are short and immersive, and gradually build the concepts and insights into an incredibly important resource.

12. Global prosperity

  • Bauer, Peter (2000) From Subsistence to Exchange Princeton University Press
  • De Soto, Hernando (1989) The Other Path Basic Books
  • Aslund, Anders (2007) How Capitalism was Built: The Transformation of Central and Eastern Europe, Russia, and Central Asia Cambridge University Press
  • Skidelsky, Robert (1996) The Road from Serfdom: The Economics and Political Consequences of the End of Communism New York: Viking Penguin

The Economist: an MBA reader

This version: August 2011

One of the best ways to learn economics is by regularly reading ‘The Economist’, but for those who want to develop a more comprehensive understanding this approach can seem a little hit and miss. This anthology contains articles spanning the last decade, selected for their ability to do one of two things: (i) provide a concise and understandable explanation of an important concept; or (ii) as an application that could be used as the basis for discussion.

For students: Printing out the complete list might seem daunting but will serve as an excellent primer. Alternatively, you could view this list as a menu rather than a recipe and simply pick and choose topics that are of interest to you.

For teachers: Whilst I have compiled it with my own students in mind, the structure should allow you to customise it to tie into your own classes.

Instructions: Simply scroll down the list and open each link in a new tab. Then go through each in turn printing them out (I suggest printing on both sides). Put them in a folder and voila – a primer. At some point I will try to link to the print version, to make it even easier, but consider this a beta version.

If you use this anthology and have any comments please do get in touch so that I can continue to modify it

Note: This anthology is not endorsed by ‘The Economist’ in any way and I am assuming that people who follow the links below have their own subscription. For Special Reports (in bold face) I have only linked to the first article, but the whole report is recommended.

1. Microeconomics

Price theory & comparative statics [1,2,3]

Entrepreneurship & information [4]

Prediction markets [5]

Competition policy [5]

Regulation [5]

Manufacturing [5]

2. Monetary policy

Causes of inflation

Inflation expectations & credibility

Inflation or price level targeting


Interest rates and capital misallocations


3. Output and employment

Aggregate demand & output gap

Price rigidity


Sovereign debt

4. Macroeconomics models

5. International trade

Forex determination [10]

Trade balance [10]

Balance of Payments [10]

Big Mac Index [10]

Trade policy [10]

Globalisation [12]

FDI [12]

6. Financial markets

Anomalies & applications [11]

EMH/news [11]

Investment vehicles [11]

CAPM [11]

7. Prosperity & development

Pre industrial growth [12]

Growth & productivity [12]

Poverty & inequality [12]

Migration [12]

Aid & microfinance [12]

Transition [12]

8. Country cases

9. Economic history

10. The state of economics & the role of economists

An undergraduate Austrian-school reading list

The best introduction to all aspects of the Austrian school, and how it differs from other approaches to economics is:




  • Shand, Alexander H., 1984, The Capitalist Alternative: An Introduction to Neo-Austrian Economics. New York: New York University Press
  • O’Driscoll, G.P., and Rizzo, M.J., 1985, The Economics of Time and Ignorance Routledge
  • Evans, Anthony J., 2020, Economics, A Complete Guide for Business, London Publishing Partnership


  • Littlechild, Stephen C., 1978, The Fallacy of the Mixed Economy. Hobart Paper 80. London: Institute of Economic Affairs
  • Kirzner, Israel M., 2001, Ludwig von Mises. Wilmington, DL: ISI Books
  • Butler, Eamonn, 2010, Austrian Economics – A Primer, London: Adam Smith Institute

Intellectual histories

Conference proceedings

  • Dolan, Edwin G., (ed) 1976, The Foundations of Modern Austrian Economics. Kansas City: Sheed & Ward Inc.
  • Spadaro, Louis M., (ed) 1978, New Directions in Austrian Economics. Kansas City: Sheed Andres & McMeel

If you like audio, here’s Ludwig Lachmann’s “History of the Austrian School” (1977). Here’s the short intro I wrote in 2005, and here’s “What Should an Austrian Economist Do?

The Austrian-school classics

  • Hayek, Friedrich A., 1948. Individualism and Economic Order. Chicago: University of Chicago Press
  • Mises, Ludwig von, 1949. Human Action: A Treatise on Economics. New Haven: Yale University Press
  • Rothbard, Murray N., 1962. Man, Economy & State. Princeton, N.J.: D. Van Nostrand Company
  • Kirzner, Israel M., 1978. Competition and Entrepreneurship. Chicago: University of Chicago Press

Also see this video series by Richard Ebeling and “What Austrian Economics IS and What Austrian Economics Is NOT” by Steve Horwitz.

Contemporary pathways in Austrian macroeconomics

One of the most common criticisms of the Austrian-school of economics is that it is stuck in the past. For me this inexcusably ignores some excellent work that has been done “post revival” (i.e. since 1974). Indeed my own research on monetary theory is grounded in the following books, which – read together – demonstrate the relevance of Austrian ideas for a progressive research programme:

  • O’Driscoll, Gerald and Rizzo, Mario, 1985. The Economics of Time and Ignorance, Routledge
  • Cowen, Tyler, 1997. Risk and Business Cycles: New and Old Austrian Perspectives, Routledge
  • Lewin, Peter, 1999. Capital in Disequilibrium: The Role of Capital in a Changing World, Routledge
  • Horwitz, Steve, 2000. Microfoundations and Macroeconomics, Routledge
  • Garrison, Roger, 2001. Time and Money: The Macroeconomics of Capital Structure, Routledge

Note that they have all been published as part of the “Foundations of the Market Economy” series edited by Mario Rizzo and Larry White through Routledge. This is testimony to the influence of the NYU programme and the power of the SDAE as a professional organisation. A thorough reading of these books provides an excellent understanding of the unique contributions of the Austrian school, but one that is embedded within the state of the professional debate. More importantly, they are bursting with ideas to take this research forward, and beg to be applied to the current economic climate. They provide fertile pathways for the future of the Austrian-school.

Austrian theory of the trade cycle

The classics:

Some recommended overviews: