David M. Anderson (ed): Leveraging. A Political, Economic and Societal Framework

Abstract

This book sprang from the well of a personal revelation of some kind and its main author does not play hide and seek about that. The opening sentence of the book reads: BI had an insight in the middle of the summer of 2010, almost 2 years after the onset of the financial crisis.^ (p.XI). It occurred to the author that the most talked about feature of the financial crisis, leveraging, was actually as relevant to our understanding of politics, international, relations, and family life as it was to our understanding of the U.S. economy and the global economy overall. The author thus discovered in one breath both the dominant theme of our times and a perennial basic principle of human conduct (p.XIII). This sudden and even quite unexpected discovery of a hitherto unknown ‘principle’ of human conduct is likely to meet with a healthy dose of skepticism. To this, the testimonials for the book just add leverage: one academic greets the book with asserting that it uncovers Bthe One Big Thing that explains many smaller things – like economics, national security, political gridlock, family structure, government regulation, diplomacy, information technology and labor relations.^ (p.VII). Indeed, all these domains and many more are touched upon, either in depth or in passing, by Anderson and his eight contributors. We are theoretically and practically familiar with the concept of leverage in physics. Here as well as in the other domains mentioned, leverage involves getting maximum effect from exerting a minimum effort. In societal spheres, Anderson distinguishes three different but related concepts of leveraging: bargaining leverage, resource leverage and financial leverage. In finance as in physics, the concept seems quite clear cut because it can be calculated and thus ‘exactly’ quantified as a ratio of a balance sheet. However, it is somewhat less obvious how this financial leverage relates to Bgetting maximum effect from exerting a minimum effort^. Any balance sheet needs to be fully funded anyway – in my mind, financial leveraging does not imply that less effort or less funding is involved; it consists in designing different pay off schemes for the different financial contributors to the company or to the project at hand. There Philosophy of Management (2016) 15:171–173 DOI 10.1007/s40926-016-0026-x