He describes his star character, the academic elaboration of market rationality, as
Resolutely apolitical and in this conventional, this history thus becomes a tale of the interesting, quirky, sometimes quarrelsome men who invented and reinvented academic finance.
The book is gossipy and predominantly good fun -- and for most the period, perhaps as late as the 1980s and 90s, its subject had little effect on the real economy in which most of us live and struggle to get along. The big casino was the playground of the rich, usually divorced from Main Street trends and troughs. (Yes, that includes the Great Depression which was not a follow-on from the 1929 stock market crash, but a much more general failure of dysfunctional interwar capitalism.)
The Reagan era substitution of 401k plans for defined pensions dragged far more of us into the financial arena -- and added distortions created by pension fund managers trying to navigate the market. At that point, the behavior of financial markets became clearly something far more people needed to concern themselves with -- and at that point the hegemony of rational market theory did work as a bulwark against society's democratic impulse to regulate an arena upon which the general welfare had come to depend.
Interestingly, in an aside to his story, Fox quotes the 18th century forefather of conventional economics saying something that many a contemporary victim of the recent financial follies would concur with:
Yes, Smith would have understood about bankers and bonuses.
In a similar vein, Fox charts the evolution of an important recent theorist of rational financial markets, Michael Jenson. Jenson was a vigorous exponent of a certainty that markets worked out their own kinks and executives could manage well by simply working to increase short-term stock prices of their companies -- until intellectual honesty led him to conclude differently.
Fox's final chapter, "The anatomy of a financial crisis," includes as clear a short description of the operation of the house of cards that was the housing bubble, its associated flimsy mortgages that were securitized, and the incentives of drove even suspicious bankers to jump into trading what are now the scorned "toxic" fictional assets.
Fox makes this roller coaster ride of theory and practice pretty accessible -- and holds this reader's interest with frequent doses of pure snark.
His regular commentary on matters financial can also be found at at Time Online's blog The Curious Capitalist. Recommended.