What We Can Do about It
Quite apart from the fact that we do not know the
future, the future is objectively not fixed. The future
is open: objectively open.
—Karl R. Popper, A World of Propensities
I confess that I prefer true but imperfect knowledge
… to a pretense of exact knowledge that is likely to
—Friedrich A. Hayek,
“The Pretence of Knowledge,” Nobel Lecture
Instability is an inherent feature of capitalist economies, perhaps nowhere more markedly so than in modern financial markets. Asset prices and risk tend to fluctuate, and, as recent experience in housing, equity, currency, and commodity markets around the world has shown, upswings in prices sometimes become excessive, eventually ending in abrupt and dramatic reversals.
These boom-and-bust fluctuations in asset values often lead to painful shifts in consumption and investment patterns that