Like a puppy playing with the long stick which is the risk-uncertainty conundrum, we chew energetically on the risk end, letting the uncertainty end drag in the dust. The stick is shaped, I argue, by Newtonian humanism. It combines the scientific and humanist stances that have co-evolved in modern times, constituting a commonsensical, internally inconsistent, worldview. And that view bends the analysis of the political world toward controllable risk, sidestepping or silencing unruly uncertainty.

Bankers rely on sophisticated risk models when they place their bets, informed by what they understand to be the rational beliefs they and others hold about the world. In a financial crisis, however, on a moment’s notice those beliefs can morph into panics, revealing unacknowledged uncertainties that had existed all along (section 1). What bankers, traders, government officials, and many of us do all too rarely is to acknowledge the pervasiveness of an uncertain future that we may intuit but cannot know. Without firm knowledge about the future, actors are guided by confidence-instilling conventions. Social conventions, such as risk-management models, were widely believed in and adopted to control uncertainty. These models generated endogenously a systemic crisis (section 2). The complementarity of the small world of risk with the large world of uncertainty is reflected in economic practices such as accounting and arbitrage (section 3). The Federal Reserve has relied heavily on story-telling (section 4). Going beyond the analysis of finance this chapter ends by discussing the denial of the risk-uncertainty conundrum by the reigning theory in the field of international political economy (section 5).

What happened when people did not pay their debts? Debts Unpaid argues that conflicts over small-scale unpaid debts were a stress test for the economic order. To ensure the wheels of petty commerce continued to turn in Mexico, everyday debtors and creditors had to believe that their interests would be protected relatively fairly when agreements soured. A resounding faith in economic justice provided the bedrock of stability necessary for the expansion of capitalism over the longue durée. Introducing the two-hundred-year period of massive economic transformation explored throughout the book, this chapter presents the text’s key historical and theoretical interventions from the late eighteenth century to the first decade of the twenty-first. As the capitalist credit economy grew, especially through modern financial institutions, ordinary people used new financial tools and navigated increasingly opaque and impersonal credit relations. This Introduction outlines the dynamics of change and the challenges and opportunities they posed for the world of small-scale debtors and creditors.

The power struggle between debtors and creditors in the 1860s and 1870s signalled a time when face-to-face economic relationships showed signs of strain. Economic life was expanding in more impersonal ways, and debt litigation was increasing as debtors and creditors alike found themselves navigating risk without the long-standing close social ties that once characterised their relationships. Chapter 2 studies legal conflicts and legal codes to understand the risks people took when making contractual agreements and illuminates how they decided to trust each other. It shows debtors attempting to evade their obligations in myriad ways and depicts creditors transmitting their anxieties to the courts through the use of providencias precautorias (precautionary petitions) to sequester goods or people before the initiation of a formal civil suit. Examining legal codes from mediaeval Iberia to nineteenth-century civil law, this chapters shows how jurists, working in a long tradition, attempted to balance the interests of both parties. Although creditors generally prevailed in legal conflicts, the prospects of debtors were on the rise.

Decision theory and decision making are multidisciplinary topics. Decision theory includes psychology, especially cognitive psychology, because decisions are cognitive processes. Decision theory also includes math, especially probability, as people often make decisions based on likelihood. Decision making is an applied topic pertaining to business, engineering, science, politics, other disciplines, and of course to personal decisions.

Descriptive models of decision theory explain decisions as cognitive processes, how and why people make the choices they do. Normative decision models describe how people should conceptualize a decision. Prescriptive models include mathematically based analyses that provide actionable solutions to real-world problems.

Decisions are made in one of three environments. Under certainty, the decision maker can make a choice and be sure what the outcome will be. Under risk, the decision maker will make a choice knowing in advance the probabilities of various outcomes. Under uncertainty, the possible outcomes and probabilities are unknown.

This chapter develops a view that casts moral heroism as a specific kind of moral achievement and argues it is superior to the virtue approach to moral heroism. I begin the discussion with J. O. Urmson’s account of moral heroism as overcoming fear, registering the limitations of that account before moving on to Gwen Bradford’s account of achievement as such, which centers on overcoming difficulty. She defends a view of difficulty that consists in the expending of effort, rather than in the surmounting of complexity. Her highly developed account is a good model for analyzing moral achievement, yet it is in need of significant modification in order to function in a specifically moral context. In order to give an account of moral achievement, I argue that Bradford’s key notion of difficulty should be replaced by sacrifice. Moral heroism consists in making high-stakes sacrifices. I develop an account of what sacrificing consists in, identifying features of actions that constitute sacrifices. I show how this concept offers us an account of moral heroism as a kind of moral achievement. I then argue that it significantly outperforms the virtue approach according to the desiderata from Chapter 2: accuracy, related phenomenon, and fitting responses.

The purpose of our book is to chronicle and analyze Morgan’s interventions in financial crises, telling the story of how he learned the art of last resort lending by trial and error, and finding its relevance to issues that last resort lenders still face in the early twenty-first century. We classify Morgan’s last resort loans into three types.

This chapter provides an overview of young people with mental health needs and the development of forensic mental health and youth justice services for young people. The provision of inpatient and community forensic child and adolescent mental health services is outlined in more detail, including referral criteria, characteristics of the young people who access the service and outcomes of the provision.

This chapter introduces the reader to the big picture of what analytics science is. What is analytics science? What types does it have, and what is its scope? How can analytics science be used to improve various tasks that society needs to carry out? Is analytics science all about using data? Or can it work without data? What is the role of data versus models? How can one develop and rely on a model to answer essential questions when the model can be wrong due to its assumptions? What is ambiguity in analytics science? Is that different from risk? And how do analytics scientists address ambiguity? What is the role of simulation in analytics science? These are some of the questions that the chapter addresses. Finally, the chapter discusses the notion of "centaurs" and how a successful use of analytics science often requires combining human intuition with the power of strong analytical models.

This chapter discusses the problem that most of the information we have about merchants’ character in this period comes from sources written not by merchants, but by critics of various kinds, many of them churchmen, but others secular poets and playwrights whose texts circulated among ordinary people. It also reviews two studies that have tried to discover and analyze merchants’ “self-perception” using, for the most part, sources produced by non-merchants.

This chapter analyzes the Selbstzeugnisse of the eight merchants at the center of this study, along with a few others still in manuscript or not available in the source collection deployed in this book, to sketch the model of mercantile honor the men claimed. The chapter emphasizes that the training the merchants received was fundamental to their sense of self and that they fashioned a model of mercantile honor based on their hard work, courage, skill, honesty, and prudence. As they described their life in trade, the merchants also often took the opportunity to describe the dishonorable behavior of other merchants, thus drawing a clear contrast between themselves and the men who failed to meet their standards.

This chapter introduces the major themes of the book. Insurance practices and related metaphors began expanding rapidly from a European base some 500 years ago. The simultaneous emergence of the modern state was hardly coincidental. Increasingly complex societies energized by market economies required protection from risks of various kinds. This required mobilizing and organizing private capital to achieve common goals. The deepening of markets and development of financial technologies now increases demands for protection beyond conventional borders. But where the fiscal power of the modern state underpinned national insurance and reinsurance systems, the absence of a global fiscal authority is exposed by rising cross-border, systemic, and global risks. That the background condition for necessary innovation in governance is uncertainty has also become undeniable.

In order to understand how urban disaster risk changes, it is essential to understand how cities change. This chapter argues that cities are continually evolving entities whose past and present dynamics provide insights into future trends and possibilities. The chapter first reviews global trends in disaster losses, along with well-established definitions and frameworks about disaster risk. It explains why these are inadequate for understanding how a city’s disaster risk changes over time. It then proposes a simple conceptual framework, the Urban Risk Dynamics framework, to help guide empirical study of evolving disaster risk in any city. The framework is based on several premises: that local geography, or landscape, is vital to understanding urban disaster risk; that cities must be understood as economic entities; and that technological change is a key driver of urban change. The chapter then introduces and justifies the selection of the six case studies to be analyzed using the framework in Chapters 3–5.

The chapter examines the legal regulation and governance of ‘generative AI,’ ‘foundation AI,’ ‘large language models’ (LLMs), and the ‘general-purpose’ AI models of the AI Act. Attention is drawn to two potential sorcerer’s apprentices, namely, in the spirit of J. W. Goethe’s poem, people who were unable to control a situation they created. Focus is on developers and producers of such technologies, such as LLMs that bring about risks of discrimination and information hazards, malicious uses and environmental harms; furthermore, the analysis dwells on the normative attempt of EU legislators to govern misuses and overuses of LLMs with the AI Act. Scholars, private companies, and organisations have stressed limits of such normative attempts. In addition to issues of competitiveness and legal certainty, bureaucratic burdens and standard development, the threat is the over-frequent revision of the law to tackle advancements of technology. The chapter illustrates this threat since the inception of the AI Act and recommends some ways in which the law has not to be continuously amended to address the challenges of technological innovation.

Although there is a substantial body of research addressing the economic motivations for drug crime, fewer studies have also considered the social influences that shape individuals’ involvement in the illicit drug economy. This chapter will draw on interviews conducted in prisons in Indonesia with people convicted of drug offences. Analysis suggests that many offenders do have economic motivations for entry into the drug trade. However, personal and relational motivations for drug use and drug trading must not be ignored, given that most of our participants were not in absolute poverty when they decided to offend. Moreover, in making decisions about participation in the drug trade, they were clearly influenced by trusted peer groups. The chapter presents this empirical data within the context of increasingly punitive penalties for drug offences in Southeast Asia, including the judicial execution of drug traffickers.