John Kay

The dynamism of a market economy comes from innovation in products and processes, and radical innovation in products and processes often – in fact usually – comes from outside the existing market structure.

The housing market is like other financial markets: price expectations create momentum that drives prices arising from normal affordability ratios. But they must eventually return to these norms through “mean reversion”, creating the endemic booms and busts of cycles.

Wherever there is uncertainty, market prices reflect the beliefs of those who are more than averagely sanguine. The result is a reserve of illusory value, constantly depleted by events and replenished by fresh uncertainties.

Anonymity is often the most effective means of telling truth to power: and sometimes the only one.

The Independent Commission on Banking headed by Sir John Vickers which the coalition Government has established will be told that such a separation between utility and casino can’t be done – although it was done in Britain for most of the 20th century.

Was there a “third way”, a politics which reconciled the market economy with the values of compassion and fairness that had traditionally motivated the political left? When was government interference with the operation of free markets justified, even necessary, and when did such intervention reduce choice and welfare?

Insurance is partly a market in securities, partly a mechanism for collective action; a means by which risks are traded, but also a means by which risks are socialised.

Tailgaters think the view that their behaviour is dumb is based on a purely theoretical analysis, which is refuted by the tailgater’s practical experience. And so the culture of self-confident, self-congratulatory tailgaters perpetuates itself.

In the name of free markets, we created a monster that threatens to destroy the very free markets we extol.

All our experience of the development of information technology starts from what the customer might want rather than what the technology might do.