Clever Geek Handbook
22 December 2025

Economics of Good and Evil

Recommendation

This exploration of the philosophical history of economic analysis illuminates and enlivens the field. Mathematics has reduced economics to formulaic amorality instead of robust debate over what distinguishes the right economic ideas from the wrong ones. Mythical and religious beliefs and the limits of scientific discovery bred many preconceptions that molded the modern economy. Professor Tomas Sedlacek contends persuasively that economists usually do not measure the impact of emotion as a driving force in decision making. He shows why society would benefit from a better understanding of the nonquantitative concepts that historically have characterized economic thought: good and evil. BooksInShort recommends this rich, meaty (but not so easy) read to those who know economic concepts and want to balance their mathematical base with a historical review of economics’ roots in philosophy, religion, theology and other fields.

Take-Aways

  • Economics’ mathematical analysis de-emphasizes the ethical content of its output.
  • Philosophers and poets – not mathematicians – made the biggest contributions to economic thought prior to the 1700s.
  • Unlike earlier civilizations, the Old Testament Hebrews did not deify nature or rulers who set economic policy.
  • They pioneered viewing history as a linear set of events recording social progress, and their story conveys the tradition of protecting society’s most vulnerable people.
  • Plato believed rational abstractions of reality above empirical observations.
  • Christianity employs words like “sin” with related economic connotations.
  • Adam Smith’s “invisible hand” drove markets and motivated provision of public welfare.
  • Light regulation of commerce stems from religious acknowledgement that evil is an intransigent counterpart of goodness.
  • Economics should reconnect with less-quantitative areas such as sociology.
  • Mathematics is a human language that exists outside the natural world. Economics is the most mathematical of the social sciences, but it is not a natural science.

Summary

The Ethics of Economics

Economists’ analytical disconnection from reality is one reason they consistently fail to predict the future, let alone explain past events. For instance, disagreements still continue over what caused the 1930s Great Depression. The 2008-2009 global financial crisis also shows economists’ inability to foresee massive perils and find ways to avoid them or soften their impact. Returning to reality would require economics to go back to its philosophical roots and de-emphasize its mathematical branches. Today, numerical elegance demands simplified models of reality. For example, economists often use only a few variables to elucidate mathematically intensive work. For analytic purposes, they assume that when just one or two variables change, the set’s other variables don’t change. This belief – called ceteris paribus or “all else being equal” – ignores “the living world.” Universal utilitarianism, which says people act only for self-benefit, is another debatable modern analytical assumption. As a frame, it negates the impact of selfless behavior.

“Even the most sophisticated mathematical model is, de facto, a story, a parable, our effort to (rationally) grasp the world around us.”

Mathematics buries the meaning of economics – that is, its ethical content, its good and evil – in a landslide of numbers. Economists use math to produce analyses that seem objective because they are numerical, yet they embody such subjective assumptions as universal utilitarianism and ceteris paribus. Historically, reducing complex economic queries to numbers was uncommon. Until 300 years ago, philosophers and poets – and not mathematicians – were the greatest contributors to economic thought. The field has emerged as the most mathematical of the social sciences, but economics’ long history is more qualitative than quantitative. Mathematics obscures the extent to which modern economic theories draw from “myths, religion, theology, philosophy and science.”

Gilgamesh and the Burden of Humanity

The oldest known literary work, The Epic of Gilgamesh, was written in Mesopotamia 4,000 years ago. It begins and ends with a tale of economic development concerning a great wall the citizens of Uruk are building, directed by Gilgamesh, their part-human, part-god ruler. He takes extraordinary, inhumane action to push the builders. Evil symbolically resides in nature outside the wall, while goodness lives in urban society. Enkidu, part human and part animal, arrives to oppose Gilgamesh, but their growing friendship turns them both more human and humane. After befriending Enkidu, Gilgamesh halts the wall project, Uruk’s main productive activity. Enkidu dies and Gilgamesh restarts the wall, resuming his futile pursuit of immortality. His legacy is the idea “that humanity comes at the expense of efficiency” or humanity is “only a drag on work.”

Economic Legacies of the Torah

Increasing social progress and improving standards of living require scientific inquiry and discovery. But thousands of years ago, nature’s unpredictable forces inspired mythical or religious explanations, not scientific rational ones. For example, in the Jewish Torah (the first five books of the Old Testament), the presence of weather that helps crops grow signifies God’s favor. This link between moral behavior and material reward still matters. The 2008 global fiscal crisis suggests that the economy may work better with ethical rules and enforcement than without them.

“Economics tries, as if in a panic, to avoid terms such as ‘good’ and ‘evil.’ It cannot.”

The 2008-2009 government-led rescue of the US banking industry also recalls the Torah’s instructions about debt forgiveness: Once every 49 years, lenders had to forgive debtors to protect the least fortunate people from fiscal burdens that could affect families for generations. For that reason, once every seven years, Hebrews who had been enslaved because of debt were freed. The Hebrew tradition of observing the Sabbath, ceasing work one day of every seven, helped define today’s workweek and weekend. It urges people to give time to nonmaterial pursuits. The Hebrews also pioneered viewing history as a sequence of events and social progress. Torah time is linear, unlike Gilgamesh, which starts and ends with the wall’s construction, implying “history heads nowhere.” The Hebrews shaped practical progress by refusing to deify their rulers or nature or to portray abstractions like God or heaven visually in their art.

Turning Toward a Platonic World

Ancient Greek philosophers still influence economic analysis. Pythagoras said mathematics could reduce nature to numbers and that numbers have power. This belief still affects mathematically driven economic analysis. Athenian economist Xenophon wrote that government could increase tax revenue more easily with expanded trade than with extended war, a market-based preference that still prevails. He advocated dividing labor into specialized tasks, now common practice. Plato, perhaps more than any other ancient Greek philosopher, influenced modern economic analysis. He said reason and rationality ruled over empirical observation in the search for truth. If an observation failed to match his mental preconception of the outside world, Plato rejected it as an oddity outside of rationality. He derided physical objects as “shadows” of the real world, which he defined as the knowledge held in every individual’s ideas. Aristotle’s approach to finding truth differed in that it was based more on empirical discovery than abstractions.

The Coexistence of Good and Evil in Economics

Christianity also shaped economics. Of Jesus Christ’s 30 New Testament parables, 19 have a context based on economic or social matters. One of Christianity’s central terms is “redemption,” stemming from the verb “to redeem” – that is, “to purchase a slave…to set him or her free.” Christians also focus on “sin,” which translates to the Greek word for “debt.” This shows that some important elements of Christianity “would not make sense without economic terminology.”

“Anyone who has read the Old Testament must have noted how frequently the text lays out special orders to protect the socially weakest people.”

Good and evil both exist in the New Testament. To some extent, Christianity teaches tolerance of their coexistence. Jesus advises people not to pull weeds out of a wheat field because they might also pull the wheat’s roots, a metaphorical message about the evil’s intransigence despite good works. Theologian Thomas Aquinas saw goodness and the potential for evil in every form of creation, believing that evil exists only because goodness does. In Summa Theologica, he said it’s wrong to destroy “the common good…in order that individual evil be avoided.” Such Christian recognition of the omnipresence of good and evil are religious guideposts and ethical pillars in the intellectual foundation of laissez-faire government and lightly regulated commerce. Relaxed governance works for handling something good, but something evil requires more regulation.

The Ethics of Excessive Consumption

Greed, a desire for something unnecessary, is an old human flaw. In Eden, Eve – and then Adam – eat forbidden fruit they don’t need for survival. They commit the original sin, or, in economic language, the first satisfaction of excessive want. Their penalty is having to work to satisfy their wants as well as their needs, which God had fulfilled until then. A Greek myth tells a similar tale of the first woman, Pandora. Though forbidden, she opened a box releasing hitherto unseen good and evil into the world. Worry about the human tendency to want too much has persisted for centuries. In the 1600s, Thomas Malthus’s Principles of Population predicted very insufficient food and resources, because humans have limitless wants but Earth has limited resources.

“Hebrew culture laid the foundation for the scientific examination of the world.”

In contrast, long before Malthus wrote of possible disastrous shortages, others said lightly regulated, “liberal” markets could cure any shortage for the right price. In 1776, in An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith used the term “invisible hand” to describe this price-driven market mechanism. The unofficial father of classic liberal economics, he took two different views in his writings. He defended self-centered pursuits as essential to social progress through labor specialization and industrial diversity in Wealth of Nations, but in 1759 in The Theory of Moral Sentiments, he warns against excess egoism, saying that only selfless benevolence propels social progress. He cites the invisible hand as an unseen market maker in Wealth of Nations, but in Moral Sentiments, he says it’s an ephemeral force of wealth redistribution that leads governments to protect the most vulnerable citizens.

“In the past 20 years, real US GDP per capita has risen by 37%. Impressed? Perhaps. But are we appreciative or satisfied? Hardly.”

Smith is best known for his treatise on free-market mechanics, but his analysis of the economy and society allowed for emotional decision making, not purely rational choice. His friend economist David Hume also believed emotion is stronger than the practical desire for utility. Hume felt “rationality itself is not enough” to inspire actions. Yet these nonquantitative theories quickly faded. The late 1700s ended the era of ethically driven economics and launched a more scientific era where mathematics obscures the assumptions behind economic models of reality.

The March to Rationality and Amoral Markets

Philosopher René Descartes, a scientific rationalist in the Platonic tradition, believed reason trumped empirical observation in the search for truth. He strived to eliminate subjectivity from scientific study and to promote greater objectivity through “a unification of points of view.” His goal remains unmet because “science is overflowing with doubts.” Yet his rationalist approach dominates modern economic modeling and analysis. In ancient Egypt and Greece, mathematics’ development was tied to philosophical study and mystical experience. But Descartes played a pivotal role in transforming mathematics to “the personification of reason and rationality.” Now, the more mathematics that goes into solving a problem, the truer the solution seems to be.

“Let us give up efforts to find one school that is ‘right’ or is ‘closer to the truth,’ and rather let us order them according to their usefulness for a particular reality.”

In the early 1900s, Alfred Marshall, a founder of math-based economics, called economics the “engine of enquiry” but said that mathematical problem solving is only a language. He relegated equations and graphs to the appendix of Principles of Economics to emphasize the field’s underlying assumptions. Moral choices support economic assumptions, even if analytics can render these choices amoral by expressing them in numbers rather than words. Philosopher Immanuel Kant said only unrewarded actions are moral. The Stoics, strict rule-followers, saw nothing wrong with taking a reward for a laudable act, if reward was not the motive. Christian beliefs reflect the Stoic insistence on morality with “indifference to utility, pleasure and sorrow” as a personal practice.

“We have given lawyers and mathematicians too large a role at the expense of poets and philosophers.”

But other schools of philosophical thought are more inclined to equate morality and economic utility. Bernard Mandeville poetically contended that individual vice is actually a source of social welfare. Mandeville, who once earned money writing fairy tales, gained prominence in economics in 1714 when he published a poem called “The Fable of the Bees: or, Private Vices, Publick Benefits.” It depicts a beehive where bees do whatever they want, including cheating each other and committing fraud and bribery. This flawed but productive society closely resembled England in Mandeville’s day. Life inside the beehive was good, despite the incidence of evil. But when evil disappeared, the quality of life in the hive declined, because the elimination of evil also eliminated the work of many bees who tried to prevent it or mitigate its effects. Critics condemned Mandeville for imbuing private vices with so much public value, but his salute to unimpeded commerce has resonated for centuries with opponents of overregulation.

Why Economics Should Become Less Quantitative

Economists who compare their work to that of physicists forget that mathematics is a human language that exists outside the natural world, not in it. Economics is the most mathematical of the social sciences, but it is not a natural science. Mathematical models of the physical world do not affect nature itself. However, the science of economics does affect the economy, so giving mathematics a proper analytical role is essential to achieving better forecasting results. Truth defies mathematical explanations. Mathematician Kurt Gödel is famous for his incompleteness theorem, stating that certain questions are irreducible to mathematical analysis. His theorem purports a lack of mathematical proof for everything that seems true. Mathematics can also masquerade as proof. In 1980, David Hendry amusingly compared the incidence of rain and inflation in England in his book Econometrics: Alchemy or Science? and found a correlation.

“How much of economics is mythmaking?”

Economic study should shift to cover the social value of behavior like philanthropy, not just greed and consumption. Giving is an altruistic activity modern economic models don’t capture due to their shaky assumption that each person’s behavior is utilitarian. Economics could gain from stronger intellectual linkages with anthropology, history, philosophy and sociology, and should stop seeing self-love as human nature’s “only driving force.”

About the Author

Tomas Sedlacek, a member of the National Economic Council in Prague, lectures at Charles University.

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Economics of Good and Evil

Book Economics of Good and Evil

The Quest for Economic Meaning from Gilgamesh to Wall Street

Oxford UP,
 


22 December 2025

The New Deal

Recommendation

You may think of Franklin Roosevelt as a sepia-toned hero who smoothly guided the United States out of the Depression. As this captivating history makes clear, that is partly true – but not entirely. Roosevelt was a hero in some ways, but his path was decidedly messy. Pulitzer Prize-winning journalist Michael Hiltzik guides readers through the fits and starts of “New Deal” policies. It turns out that New Deal program ideas could spring from anywhere, whether Roosevelt’s avid imagination or the writings of an obscure economist. A few New Deal programs were miserable failures. And while FDR’s landslide victories paint a distant, historic picture of an overwhelmingly popular president, Hiltzik points out that Roosevelt had to overcome plenty of opposition to enact his policies. BooksInShort recommends this revealing history to readers seeking a fresh look at a seminal chapter – and a seminal man – in American politics and economics.

Take-Aways

  • Elected in 1932, Franklin D. Roosevelt pledged to reverse the US’s laissez-faire approach to business.
  • His first act was a bank holiday that stabilized the financial system and ended bank runs. He then instituted a series of “New Deal” programs.
  • Social Security was the New Deal’s most enduring and successful venture.
  • The introduction of federal deposit insurance caused bank failures to all but disappear.
  • The Civilian Conservation Corps put 275,000 young men to work in forests and parks.
  • The Tennessee Valley Authority brought electricity to rural areas.
  • Not all New Deal programs succeeded; efforts to control agricultural surpluses and to mandate maximum hours and minimum wages flopped.
  • Roosevelt’s attempt to boost commodity prices by setting the price of gold also failed.
  • His programs were dictated not by ideology but by pragmatism and a willingness to try strange strategies.
  • New Deal policies drew backlash from populists, progressives and conservatives, but FDR was re-elected in 1936 in a landslide.

Summary

Roosevelt Charts a New Path

In 1932, with the US economy in shambles, Franklin D. Roosevelt won the race for the Democratic Party’s nomination, making him hot favorite for the presidency. Republicans had controlled the White House for 12 years, overseeing a giddy boom and a calamitous crash. President Herbert Hoover seemed out of touch and unable to deal with the crisis, although the occasional signs of recovery in 1931 and 1932 improved his chances. Stocks spiked and fell again; bank failures ebbed. Hoover believed he had led the nation through the worst. But his confidence proved misplaced, and signs of life soon faded. Roosevelt won big in 1932, but he came to regret promising to cut federal spending by 25%.

“The presidential election campaign of 1932 had resembled a sporting contest between adversaries playing toward a preordained conclusion.”

Roosevelt pledged to reverse Hoover’s laissez-faire approach. During his 1933 inaugural speech, Roosevelt delivered his famous line, “The only thing we have to fear is fear itself.” Not everyone was taken with the speech. Political essayist Edmund Wilson found it full of “vagueness” and “abstractions.” Lawyer Thomas Corcoran judged it “an empty collection of platitudes.” Yet FDR chose Corcoran as a top adviser, eventually nicknaming him “Tommy the Cork.”

“Roosevelt’s grip on the popular imagination began with his first campaign for the presidency and steadily intensified through his term in office.”

Moving quickly as president, Roosevelt declared an emergency four-day bank holiday starting March 6, to stop bank runs by forbidding depositors to withdraw cash. With nearly a quarter of US banks insolvent, runs were common. The first day, banks could make change, cash government checks and give depositors access to safe-deposit boxes. On March 7, customers could withdraw cash for food and medicine. For some, the short bank holiday was just an inconvenience. But in Detroit, where banks had been closed for weeks, economic activity ground to a paralyzing halt.

“Roosevelt’s flawless delivery, his pausing for dramatic effect before the words ‘fear itself,’ invested the phrase with his own confidence and assurance.”

With currency in short supply, bartering became popular. Some employers began to issue scrip. The Chicago Tribune paid employees with currency featuring the face of Theodore Roosevelt, FDR’s distant Republican cousin. Popular scrip could have undermined the Federal Reserve’s power, so the Treasury Secretary quietly ordered the printing of $200 million of crisis currency. Thanks to Roosevelt’s first “Fireside Chat” on March 12, the Treasury never had to inject that cash into the economy. FDR assured Americans that the banks allowed to reopen would be sound. He implored them not to hoard cash and blamed the banking crisis on a few reckless actors, not the entire system. The speech worked. As banks reopened in stages, people lined up not to withdraw cash but to deposit their hoarded gold and currency, totaling $1.2 billion in deposits by the end of March. Later in 1933, the Glass-Steagall Act created the Federal Deposit Insurance Corporation. Insuring deposits had a near-miraculous result. Some 4,000 banks failed in 1933. The FDIC took effect on Jan. 1, 1934; that year, only 61 banks failed.

New Deal Successes

After stabilizing banking, Roosevelt moved to other parts of the economy. The Economy Act, passed in March 1934, let him cut government wages 15% and slash veterans’ benefits. As complaints rolled in, FDR decided he had made a mistake. The episode marked an early end to his time as a fiscal conservative. From then on, he was a free spender. During his first “Hundred Days” in office, he called for legalizing 3.2%-alcohol wine and beer, thus ending Prohibition. Then he moved on to the Civilian Conservation Corps (CCC), designed to put young men to work in forests and national parks for $1 a day, plus food and lodging. Despite Cabinet objections, the CCC was recruiting workers by April. The first recruit, age 19, came from a family of 13 kids. Within months, 1,300 camps housed 275,000 workers. In its decade of existence, the CCC built 125,000 miles of road, nearly 47,000 bridges and more than 300,000 dams. Thanks to regular meals, its workers gained as much as 30 pounds each despite their long days of labor.

“To restore confidence, it was essential to impute the crisis to a discrete group of miscreants, rather than to fundamental flaws in the system.”

Roosevelt also turned his attention to the nation’s housing crisis. Home values shot up in the 1920s but plummeted during the Depression. Borrowers typically took out short-term, interest-only, three-to-five-year mortgages. With unemployment rampant and prices falling, foreclosures soared. Typical home prices fell from $5,000 in 1926 to $3,300 in 1932, creating pressures that are all too familiar now. To stabilize the market, Roosevelt set up the Home Owners’ Loan Corporation to convert banks’ bad mortgages to 15-year amortizing mortgages with interest rates capped at 5%. The measure was a success, but Roosevelt soon lost interest in the housing market.

“For many boys [the CCC offered] more abundant fare than they had ever seen, a full stomach being as novel an experience as the indoor plumbing and electricity of the CCC barracks.”

Another victorious New Deal program focused on bringing electricity to some of the nation’s poorest areas. In the Tennessee Valley, for instance, fewer than 10% of residents had access to power. Per capita income in the region was $163, well below the national average. Much of the Tennessee Valley had no power lines. Residents in electrified areas paid steep rates to private power firms. Despite opposition from private utility executives such as Wendell Wilkie, the federal government’s Tennessee Valley Authority sought to break private power companies’ monopolies. The gambit worked. Utilities cut rates in Memphis and Chattanooga, and voters in Knoxville approved a $3.2 million bond issue to build power lines to connect with the TVA’s grid. The TVA built or bought 29 dams, one of the most lasting New Deal accomplishments.

“The entire Tennessee Valley, transformed by this vast program, would be the grandest tangible legacy of the New Deal.”

Roosevelt tried to rein in the securities industry, where loose regulation and opaque disclosure left investors at the mercy of shady operators. The Securities Act of 1933 was designed to address stock promoters’ unscrupulous practices by introducing new disclosure and transparency rules. Unfortunately, the Act assigned regulatory duties to an overwhelmed, unprepared bureaucracy. The Securities Exchange Act of 1934 added new rules so that executives who cooked the books would face criminal prosecution. FDR named former Wall Street profiteer Joseph Kennedy to head the new Securities and Exchange Commission (SEC); he proved to be an effective regulator.

Amid the Successes, Several Missteps

While the SEC, the CCC, the TVA and the Home Owners’ Loan Corporation were big successes, another Hundred Days initiative – the Agricultural Adjustment Act – proved unseemly. To stem mounting farm failures and foreclosures, the AAA addressed plummeting prices for hogs and cotton by paying farmers to slaughter piglets and plow under 3.5 million bales of cotton. Farmers grasped at the $120-million payment for their cotton, but the spectacle left many uncomfortable.

“The gold scheme was not Roosevelt’s worst miscalculation in office, but for the business community it was the first.”

The next initiative was also flawed. The National Industrial Recovery Act (NIRA) required employers to limit workers’ weekly hours, assuming that employers would then hire more workers. The NIRA also sought to set minimum wages and to reduce competition in some industries. For instance, the government told textile mills, where 55-hour weeks were common, to limit workers to 40 hours a week. The National Recovery Administration awarded “Blue Eagle” awards to employers who abided by NIRA’s rules, though not everyone jumped on board. In the end, NIRA’s minimum wages were too low to matter much, and the entire effort did little to improve the plight of workers.

“The short-term, permanently renewing loan that kept the borrower at the mercy of his lender was relegated to history’s dustbin.”

Roosevelt moved on to another odd episode in which he personally manipulated the price of gold. The program was based on the theories of Cornell University economist George Frederick Warren, who thought that boosting the price of gold could increase overall commodity prices. Most economists considered the conclusion ridiculous, but FDR decided to try it. Starting in October 1933, Roosevelt and two top advisers set the price of gold each morning. The President attempted to be unpredictable, so that speculators couldn’t divine a pricing pattern. One morning, Roosevelt decided to change the price by 21 cents, since 21 was “a lucky number.” When it rapidly became clear that presidential manipulation of gold prices did not boost commodity prices, Roosevelt dropped the program nearly as quickly as he had started it. But the misguided scheme turned the business community into his unrelenting foe, leaving ill will that fostered constant opposition to subsequent New Deal initiatives.

“The Midwest and South produced a truculent populism closely identified with two masters of radio oratory, the Reverend Charles E. Coughlin and Huey Long.”

Business leaders weren’t the only source of dissent. Members of the administration also disagreed with each other. Tension grew between Harry Hopkins, head of the Civil Works Administration (CWA) and Works Progress Administration (WPA), and Harold Ickes, who ran the Public Works Administration (PWA). Hopkins believed in quickly pushing money out to those in need, but Ickes wanted to drive a hard bargain with contractors. Believing that paychecks boosted morale, Hopkins eagerly doled out money for many projects. CWA installed water and sewer service in thousands of schools and built 150,000 public bathrooms in destitute rural areas. WPA put more than four million people on government payrolls, but Republican critics saw its projects as wasteful, coining the word “boondoggle” to describe its largesse. The conservative Chicago Tribune slammed Hopkins’s “ability to waste more money in quicker time on more absurd undertakings than any other mischievous wit in Washington.” Criticism didn't deter Hopkins, although his programs remained under political attack.

A Populist Backlash

While people now remember Roosevelt as a populist, two influential populists of his day made a career of lambasting him. The Rev. Charles E. Coughlin and Sen. Huey Long used their radio shows to criticize the New Deal. Coughlin served up a steady stream of nonspecific discontent. He criticized everyone from Wall Street titans to Federal Reserve currency manipulators. Long promoted a more specific agenda: He proposed capping family wealth at $5 million and income at $1 million a year, and he recommended taxing and redistributing any other earnings so every US family would receive at least $2,000 a year. Long’s “Share Our Wealth” program drew supporters nationally. Roosevelt ignored both men, but they gained a wide enough following that administration insider Hugh Johnson felt compelled to decry them publicly for pandering to “the emotional fringe.” The criticism backfired, drawing more attention to Long, who was killed in 1935, and to Coughlin, who stepped up his attacks on the New Deal, but his rhetoric soon devolved into anti-Semitic, pro-Hitler ravings, and his church forced him off the air in 1942.

Roosevelt's “Haphazard” Accomplishments

Roosevelt’s critics gained traction in part because he achieved so much in his first term. His grandest accomplishment was Social Security, a pension plan he first began to push in June 1934. As the Depression descended, men older than 65 faced a dire situation, including 50% or more unemployment in their age group. Many had seen their life savings evaporate in the previous years’ banking collapse. The patchwork of state pension plans did little to help. Many state plans went bust, and the average monthly payment from the remaining plans was a paltry $14. As New York’s governor, Roosevelt had activated a comparatively generous state pension plan, and he wanted such a program nationwide. But the hodgepodge of state plans offered no ready template.

“Technically speaking, the Depression may have run its course by the end of 1933, but conditions at ground level remained beyond dismal.”

A committee working on a federal pension plan wrestled with many issues, such as whether to base benefits on earnings or to give everyone the same amount, and how to help the “near retired,” ages 45 to 65. The committee settled on the now-familiar sliding scale of benefits based on wages. Congress mandated investing the pension funds in US Treasury securities, not stocks. When FDR introduced the Economic Security Act in 1935, Sen. Thomas P. Gore of Oklahoma saw it as a socialist-style redistribution of wealth. Despite such opposition, Congress enacted Social Security, still “the single most successful government program in American history.”

“The man on the street had yet to see the return of a robust job market, farm prices were still depressed and economic activity was still heavily dependent on relief programs.”

Roosevelt continued crusading, proposing the 1935 Public Utility Holding Company Act to end abuses in the electrical industry. His first-term New Deal proposals drew a great backlash, and not just from Coughlin and Long. Progressives thought Roosevelt squandered an opportunity to remake Wall Street. Conservatives said the New Deal introduced too much new regulation and spent far too much. While Roosevelt heard the criticism, it scarcely affected his political popularity. His landslide re-election in 1936 put the citizenry’s stamp of approval on his New Deal programs. Historians often portray Roosevelt as a canny politician and principled progressive who approached the New Deal with high-minded values and an overarching ideological vision. In truth, he improvised, attacking problems however he could. In some cases, he failed. One administration insider described even his best policies as “a series of haphazard accidents.” Another suggested that to call the New Deal an organized program would be like seeing the chaos of a boy’s bedroom as the work of an interior decorator.

About the Author

Los Angeles Times journalist Michael Hiltzik won the 1999 Pulitzer Prize for stories uncovering corruption in the entertainment industry. He is the author of Colossus: Hoover Dam and the Making of the American Century.

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The New Deal

Book The New Deal

A Modern History

Free Press,
 


22 December 2025

Plan B

Recommendation

In business, as in war, you can expect the unexpected, but how do you react when it happens? Can your company seamlessly pivot to confront new realities? Can it move from “Plan A” to “Plan B”? If not, you haven’t hardwired your business plan to evolve. But never fear: In this entertaining, easily understandable and highly applicable guide to “adaptive management,” business consultant David Kord Murray tells you how to prepare and execute your plans – or an alternate set of plans, if circumstances demand a switch. Murray uses compelling examples from the real world of business – Sam Walton at Walmart, Steve Jobs at Apple and Mark Zuckerberg at Facebook – to illustrate his points. He draws handy tips from Dwight Eisenhower’s performance on D-Day and General Robert E. Lee’s work for the Confederacy at the Battle of Chancellorsville. To join these legends in the pantheon of great business strategists, follow Murray’s 11 principles and nine processes of adaptive management. BooksInShort recommends his book to any entrepreneur or corporate titan looking to achieve the next level of excellence.

Take-Aways

  • Outmoded business methods often are at the heart of corporate failures.
  • Companies need to be able to adopt new methods quickly. They need a “Plan B.”
  • Hardwire your “Plan A” so you can evolve to a Plan B as circumstances shift.
  • Companies with successful Plan Bs practice “adaptive management”: the ability to adjust your business plan as the world around you changes.
  • Businesspeople who apply adaptive management build on a set of strategic principles to make smart, canny judgments.
  • They define problems and solutions, and then work with a variety of goals, metrics, and scenarios based on careful planning, strategic debate, and willingness to change.
  • Implement these strategies by using tactics and resources that work together.
  • Adaptive management’s principles support the use of nine active processes:
  • “Scenario planning, tactical inventory, learning, defining the problems, strategic alignment, strategic planning, tactical optimization, alterations” and “debating.”
  • Leaders who practiced adaptive management include Dwight Eisenhower, Sam Walton, Steve Jobs and Mark Zuckerberg.

Summary

Things Change: Adapt!

Many businesspeople are not ready for change. Companies that hit rough waters often can’t navigate well because their leaders cling to outmoded ways of doing business. They never learn that they can move away from “Plan A” and activate a “Plan B.” Having an entrenched, top-down administrative structure makes it hard to switch to new tactics when circumstances take a turn.

“Adaptive management is the process of making real-time modifications to the original plan so that it survives and thrives as the business environment demands.”

Instead, govern your company according to “adaptive management” – being nimble enough to alter your business plans as shifts occur to ensure that your organization can outlast change and profit from it.

To practice effective adaptive management, follow these 11 principles:

1. “The Principle of Problems”

To establish the basis of your business plan, first identify your challenges. For example, General Dwight Eisenhower had to devise a “grand strategy” for D-Day; invading Normandy presented a series of “cascading problems” he had to solve. Mark Zuckerberg determined that Facebook, unlike MySpace, would be a tool to augment users’ existing connections, not to develop new ones. Sam Walton believed Walmart had to offer the best bargains, always, on everything.

“Adaptive management is both a way of thinking – a psychology – and a way of doing – a series of processes and procedures.”

Describing your “core business problem” logically leads to selecting a method for addressing it. Draft a hypothesis of what you will do, align your strategies and tactics, and ensure that you’ll be able to measure your progress on the road to fulfilling your hypothesis. Your tests will tell you whether you’re going in the right direction or if you need to change course. But before you can develop your hypothesis, you must discover the root of the problem you’re trying to solve.

“A grand strategy in business, as in warfare, aligns our resources and tactics so that our tactics work in unison to solve the problems we’ve identified.”

For example, health care provider and insurer Kaiser Permanente determined that diagnosing diseases in a timely way improved care and reduced costs. The company developed an “integrated managed care model” to address that need. Problems exist in a hierarchy. Understanding this hierarchy may make it possible for you to see how issues relate to each other. If you solve your high-level problems, you will probably spur changes in related areas. But don’t try to solve lower-level issues by taking your eye off the “primary problem.”

2. “The Principle of Solutions”

Determine what tactics you have available to solve the problems you identify. Take a “tactical inventory” of your available resources, much as NASA did when the Apollo 13 moon mission went awry. The astronauts had to assess what tools they had with them to do the work necessary to get home safely. Many businesses attempt to tackle challenges without knowing the contents of their arsenals. Creating your tactical inventory shouldn’t be just a one-time effort. Update your inventory by reassessing your resources and seeking new ones. Observe what tactics other firms use; consider establishing the job of “vice president of tactical development.”

3. “The Principle of Force”

In his classic book On War, Carl von Clausewitz explained, “The larger army will always defeat the smaller one.” But General Robert E. Lee of the Confederacy proved him wrong. Lee won the Battle of Chancellorsville by dividing his men and attacking the Yankee army on its weak right side. Similarly, if your firm is competing against larger companies, site your battles where you are strongest and can win. Your objective is to “dominate your category.”

“In business, warfare, science and mountaineering, tactics reign supreme.”

Additionally, as von Clausewitz made clear, protecting what you’ve seized is less complicated than taking over new areas; customers are less willing to change brands than to stick with what they know.

4. “The Principle of Concurrent Thinking”

This principle flows from the identification of the problem you’re addressing, and the strategy and tactics you’ll use. In “top-down thinking,” you start with your challenge and then develop the methods for resolving it. In “bottom-up thinking,” your solutions come first. “Strategic thinking” involves using both approaches at the same time. For example, H&R Block opened many retail storefronts when it attempted to offer expanded, year-round financial advice. The project failed because the firm didn’t know that clients wanted only seasonal, pre-deadline tax help. H&R thought from the top down, but not from the bottom up. Using strategic thinking, ensure that your strategy and tactics intertwine. They should be “inseparable because one is made up of the other.”

5. “The Principle of Cascading Objectives”

This principle helps you determine if your strategies are working. Implement only strategies that support your objectives based on your identified goals and metrics. Describe your goals verbally and identify measurements to assess your progress. Such metrics make up a “dashboard” of measurements that can demonstrate whether you’re heading in the right direction. Your firm’s annual report doesn’t measure whether the company is fulfilling its objectives; it is merely a one-time picture. To measure your work, use a metric associated with your strategy. Your “primary metric” should tie more closely to your company’s goals than your secondary metrics. Walmart’s primary metric is whether its prices are lower than its competition’s.

6. “The Principle of Paper Plans”

Every business should have a business plan. Be sure to write your plans properly so that you can see where your strategies are incomplete.

“You need to sense the opportunities that lie in the business, in your subject, even if they’re not the original opportunities you foresaw.”

A good business plan has six sections:

  1. An “overview,” or outline, of the document.
  2. “Background” information about your company’s playing field, what’s happening in it now and what you expect will take place in the future.
  3. Your “strategy,” which is your statement of the problem you’re attempting to solve and your hypothesis about how you will solve it.
  4. The strategically aligned “tactics” you will utilize.
  5. Your “business model,” a worksheet detailing steps three and four, plus your metrics.
  6. The “implementation plan” or dashboard.
“Fate is the opposite of what you think it is: You make fate, it doesn’t make you.”

Do not assume that once you’ve written your plan your work is done. Your plan will go out of date almost as soon as you finish it. The business plan’s purpose is to keep you focused on “how all the pieces fit together,” and to guide you as your business and its environment change.

7. “The Principle of Multiple Futures”

When you write your business plan, you’re making predictions. Frequently, entrepreneurs are wrong in their forecasts, because business can be so complex and because they base their predictions on history. However, people tend to believe that their predictions are sound. This is called “hindsight bias.” Although adaptive management utilizes “scientific” methods and numerical measurements to gauge a company’s success, business itself is not scientific. Business operates in the real world, a “chaotic system” full of chance events. Because of the possibility of many futures, leaders should use scenario planning to prepare for a variety of positive and negative situations. Being ready for negative events is particularly important.

8. “The Principle of Doubt”

Because the future is so unpredictable, businesspeople must constantly acclimatize to change. “Organic adaptation” occurs in nature and is inadvertent. In business, adaptation is “intentional”; managers steer course corrections as needed. Adaptive leaders must make strategic alterations, such as redefining objectives, and tactical adjustments, such as adopting different methods but sticking with the same goal. To stay on top of this process, know what you would do if your tactics fail. Upbeat thinking is an advantage, but you also need to be wary. Regularly quiz yourself on your choices and their potential outcomes.

9. “The Principle of Correlation and Causation”

When you need to change your business plan, don’t panic. Reassess your tactics, because they help you achieve your objectives. Test them to ensure that they’re working and underscoring your hypothesis. When you review your metrics, you will see three potential readings: “an increase in effectiveness, a decrease in effectiveness or no change.” Ideally, you want to see an increase, but you can learn a great deal from a decrease, or a “failed test.” You don’t want to see that nothing has changed, because that would mean you’re standing still. Remember that factor A will not necessarily lead to factor B. They might have some relationship but not definitely a causal one. Do not succumb to “confirmation bias,” where you discount results that don’t support your hypothesis. Coca-Cola committed this error when it developed New Coke, which succeeded in focus groups but famously flopped in the marketplace.

10. “The Principle of Alterations”

Your firm can adapt its business plan using two different methods. Intel used a “strategic evolution,” to move from manufacturing memory chips to making microprocessors. Walmart uses the second method, “tactical evolution,” to respond to changing environments. The world never stays the same, so you must stay concentrated on the effectiveness of your tactics. Polaroid went out of business because it didn’t focus on how to respond to the advent of digital technology. Evolving strategically and tactically can be tough, but you must master these phases to survive.

11. “The Principle of Strategic Debate”

While metrics yield extremely valuable details, do not accept them blindly. Marketing research is worthwhile, but it can unintentionally send you in the wrong direction. For example, flawed findings can emerge from focus groups because the participants know someone is watching them and so they adjust their behavior artificially. Focus groups also don’t reflect the gut feelings that seize consumers when they make purchases. Again, New Coke provides the perfect example. Because data can be deceptive, encourage a culture of adaptive management, where you and your workers can move forward with self-assurance plus healthy doubt. Be both positive and negative as you put your business plan into practice. Urge your team to discuss and debate.

The Process of Adaptive Management

The methods you use to run your company are processes, and they comprise your culture. Adaptive management employs nine such processes:

  • The “scenario planning process” – Make multiple predictions of the future.
  • The “tactical inventory process” – Regularly assess your methods.
  • The “learning process” – Review last year’s plan to see what worked and what didn’t.
  • “Defining problems” – If you do this effectively, your team can create methods for addressing new challenges on their own.
  • The “strategic alignment process” – Ensure that your strategy and tactics are in sync.
  • The “strategic planning process” – Sit down and write your actual plan.
  • “Tactical optimization” – Measure and evaluate progress using your dashboard.
  • The “alteration process” – After measuring, assess any changes you need to make in your strategy or tactics.
  • The “debating process” – Bring your team together regularly to discuss honestly what you can or should change or adapt.

Lucky or Smart? Both

Good businesspeople don’t just run their firms intelligently; they also benefit from a certain amount of luck. Although you may use adaptive management to govern your firm, recognize that business is somewhat similar to gambling. In gaming, you “bet on...many different numbers” to increase the possibility that you’ll win. You do something similar in business. Yet, at the same time, your business success or failure is not entirely out of your hands. While fate plays a significant role, you can influence it by crafting business plans that evolve, being flexible and open to change. Strive to go nimbly from Plan A to Plan B.

About the Author

David Kord Murray is an engineer, businessman and consultant. He also wrote Borrowing Brilliance.

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