The Atlantic is running an excerpt from Sebastian Mallaby’s new book, More Money Than God: Hedge Funds and the Making of New Elite, which is out on June 14. The excerpt covers the famous moment when George Soros broke the pound in 1992. (It was then that I went to work for him, as general counsel to his charities, but mostly I remember people running in and out of rooms bringing him faxes while he was holding simultaneous meetings on assisting Eastern Europe.) Mallaby is a terrific writer, and if you have any interest at all in the topic – and Mallaby is outstanding at bringing together the matters of finance and money with politics and power – you are likely to be interested in this book. It is definitely on my summer reading list, although I am desperately hoping for a Kindle version, as I will be traveling and can’t haul around a lot of stuff.
On hedge funds and private equity in a different direction, I received an examination copy of a new textbook, An Introduction to Investment Banks, Hedge Funds, and Private Equity: The New Paradigm, by David P. Stowell. It is excellent – clear, informative, well-written. It is aimed at an undergraduate course audience, perhaps in the upper classes, but would also be perfectly useable in business school as an intro text, as well as in law school as an introductory class in these topics, if the professor were able to supplement it with legal materials. (In fact, that might make an easy way to create something that does not now seem to exist for law school – a private equity-hedge fund text that covers both the business and legal aspects. A fix for that might be to use this book, with a detailed supplement with examples and legal documents to illustrate the business descriptions in the text.)
I decided to stop teaching my introductory law school course on venture capital, private equity, and hedge funds, and instead return to the basic Business Associations class in the fall, after 7 or 8 years away from it. I did so for two reasons – one, I find the whole private equity-hedge funds field too unsettled at the moment to teach with a lot of confidence that what I say now will reflect the industry in even just a couple of years, and I also think that at this moment, it has become so much just part of the deal industry that I can safely leave most of it to the M&A class, at least for now. Second, though, I also wanted to return to BA, because my interests in business and finance law are shifting back towards the deeply embedded concepts of trust, agency, fiduciary duty, duty of care and duty of loyalty, and away from my long time focus on financial instruments and derivatives.
The latter goes to my scholarly interest in what I have called the “moral psychology of finance,” and somtimes called “virtue economics” – not in the sense of distributional justice in the economy, but instead the Aristotlean sense of “virtue ethics” and its intersection among practical reason, attitudes and rationality, and affective behavior and rational choice. I am slowly re-reading Theory of Moral Sentiments, alongside Ian Simpson Ross’s exemplary Life of Adam Smith, a book I read with insufficient attention when it first appeared, but which I am re-reading with a great deal of care.
And finally, in this same broad area, I am also re-reading with intense care and considerable respect the papers in Ruth Chang’s 1997 volume, Incommensurability, Incomparability, and Practical Reason – with particular attention to Chang’s excellent introductory paper, and then Elizabeth Anderson’s contribution on practical reason (I’ll let the library locate me her later 2001 book, Making Comparisons Count, at over $100). Partly this has to do with how this notion of virtue ethics intersects with practical reason – with every passing week, especially as I acquire and mostly skim an ever growing pile of books on the roots and solutions to the financial crisis and regulation, I am convinced that there is a lot more work to be done on the philosophy of economics, the philosophy of value and even the philosophy of valuation. If I were advising a young person where to make a mark today, that would be a good starting point – where philosophy, economics, and intellectual history come together on these topics.
But, interestingly, the whole question of incommensurability and incomparability is at the center of a new paper I am completing on the vexed issue of proportionality in the laws of war. Reading the examples in Chang’s book, I am much struck that the question of incommensurability and proportionality are far more real and unavoidable, as far as I can tell, in the ethics of war, and the classic calculation in the ethics of war between the demands of military necessity, on the one hand, and civilian harm, on the other.