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Reinventing the Bazaar: A Natural History of Markets
Clear, insightful, and nondogmatic, this book gives us a new appreciation for one of our most ubiquitous institutions. From the wild swings of the stock market to the online auctions of eBay to the unexpected twists of the world's post-Communist economies, markets have suddenly become quite visible. We now have occasion to ask, "What makes these institutions work? How important are they? How can we improve them?" Taking us on a lively tour of a world we once took for granted, John McMillan offers examples ranging from a camel trading fair in India to the $20 million per day Aalsmeer flower market in the Netherlands to the global trade in AIDS drugs. Eschewing ideology, he shows us that markets are neither magical nor immoral. Rather, they are powerful if imperfect tools, the best we've found for improving our living standards. A New York Times Notable Book.
278 pages, Paperback
First published January 1, 2002
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February 23, 2020
This book was recommended on Twitter by Diane Coyle, who has herself written some excellent books bringing economics to a general audience.
This book can be seen as a non-technical introduction to micro-economics: the economic analysis of individual markets. When non-economists want to dismiss an economic approach to a specific problem, they often say that "economists have a blind faith in markets".
To economists, this always sounded as a very strange claim. After all, take any intermediate textbook in microeconomics, and you will find that a very significant part is dedicated to the analysis of "market failures" and what policy should do about it. Maybe one reason why people think that economist "believe" in market, is that, in economics, the analysis of policy instrument also often considers the possibility of "government failure", which may be annoying to people who, well, "believe" in government intervention.
The great merit of McMillan is that he succeeds in perfectly summarizing how most independent economists "really" think about markets: as powerful mechanism for decentralized decision making, that provide strong incentives for people to exploit local and specialized knowledge. However, McMillan also points out there are also numerous reasons why markets can "fail": when efficiency increases with scale, monopoly may be the natural outcome; sometimes people don't bear all the costs of their economic activity themselves (think of pollution), sometimes there is a strong information asymmetry between buyer and seller, allowing one market party to cheat on the other.
McMillan shows how market can unravel when the correct side conditions are not in place, and that those side conditions are often set by... the government.
The central thesis in the book is thus that markets can only function when government function as well. The question is not a "market versus government" dichotomy, but about ensuring that governments set the right context for the markets to function well.
McMillan uses numerous examples for a wide range of context to illustrate that this is not a trivial question, and that what works or works not is often very context specific.
I would highly recommend this book to any non-economist with a serious interest in understanding how economists really think about markets, or to economists who are interested in finding more real-world illustrations of the issues they discuss in their academic papers.
The book is not very recent (first published in 2003). In the meanwhile, there has been an increased effort from great economists with real scientific credentials (rather than celebrity economists) to write for a general audience. But this book remains rather unique in its scope and balance.
This book can be seen as a non-technical introduction to micro-economics: the economic analysis of individual markets. When non-economists want to dismiss an economic approach to a specific problem, they often say that "economists have a blind faith in markets".
To economists, this always sounded as a very strange claim. After all, take any intermediate textbook in microeconomics, and you will find that a very significant part is dedicated to the analysis of "market failures" and what policy should do about it. Maybe one reason why people think that economist "believe" in market, is that, in economics, the analysis of policy instrument also often considers the possibility of "government failure", which may be annoying to people who, well, "believe" in government intervention.
The great merit of McMillan is that he succeeds in perfectly summarizing how most independent economists "really" think about markets: as powerful mechanism for decentralized decision making, that provide strong incentives for people to exploit local and specialized knowledge. However, McMillan also points out there are also numerous reasons why markets can "fail": when efficiency increases with scale, monopoly may be the natural outcome; sometimes people don't bear all the costs of their economic activity themselves (think of pollution), sometimes there is a strong information asymmetry between buyer and seller, allowing one market party to cheat on the other.
McMillan shows how market can unravel when the correct side conditions are not in place, and that those side conditions are often set by... the government.
The central thesis in the book is thus that markets can only function when government function as well. The question is not a "market versus government" dichotomy, but about ensuring that governments set the right context for the markets to function well.
McMillan uses numerous examples for a wide range of context to illustrate that this is not a trivial question, and that what works or works not is often very context specific.
I would highly recommend this book to any non-economist with a serious interest in understanding how economists really think about markets, or to economists who are interested in finding more real-world illustrations of the issues they discuss in their academic papers.
The book is not very recent (first published in 2003). In the meanwhile, there has been an increased effort from great economists with real scientific credentials (rather than celebrity economists) to write for a general audience. But this book remains rather unique in its scope and balance.
October 4, 2011
My review is divided into (two) parts: Abstract and Reaction (e/ part 500-600 words long). Don't let my critique fool you: it is a very well-supported book in the parts that it is strong (he analyzes hundreds of engaging examples). My academic "shit-talking" is due to the fact that this paper was for school, where "critical thinking" is encouraged. In fact, I think it was the book with the strongest case yet for markets and efficiency. I wish that McMillan were still alive today. Anyways, read on.
Abstract:
Establishing how markets are inexorable, McMillan argues that they need to be well-designed in order to promote efficiency and maximum social good. The five elements required for markets to run smoothly are: 1) free flow of information, 2) property rights protection, 3) trust and enforcement of promises, 4) controlling for externalities to third parties, and 5) competition. Markets arise and adapt as needed from the bottom-up – and innovations by participants are their drivers – but often need the the government's help to reach their full potential. However, balance is important, because an economy cannot be planned from above, and central planners can stagnate “distort, and even destroy markets'” ability to raise or maintain living standards.
Markets need support from a set of rules, customs, and institutions that set up mechanisms ensuring full benefits are delivered (13). Market participants' need decision-making autonomy to voluntarily exchange according to their preferences – and competition fosters this autonomy, by restricting disproportionate distribution of market power between participants (6). But choices by themselves do not ensure competition, because people need to be able to compare their choices (44). Search costs weaken competition, e.g. sellers can charge higher, so there are profit and entrepreneurial opportunities in helping information flow (44-6, e.g. Consumer Reports). Thus, the internet age has facilitated trade for both sides (e.g. eBay, Amazon), while also shifting bargaining power toward buyers. Trust and confidence that contracts and property rights will be protected is established through private and public sectors. Trade associations, intermediary firms, and credit bureaus, and “signals” like advertising, brand names, and trademarks, can help by spreading information, or producing collective blacklists of breachers. Thus, market participants can substitute or complement the legal system (or lack thereof) by developing their own self-enforcing mechanisms (61, China agricultural reform 94-101), but the law is often needed for transactions that require large upfront investments and for economic growth. Finally, externalities like pollution or resource depletion need to be collectively-enforced, regulated top-down through appropriately-set taxes or quotas, or through privatization (Marshall Islands fisheries, 125). Even better, quotas can be made tradable to achieve efficient allocation of caps, and alleviate government micromanaging burden (184).
Markets generate value through trade, i.e. participants gain from buying and selling. Thus, markets are resilient and can even form in refugee camps, prisons, and under Communist regimes (16). The decentralization of markets are the source of its dynamism (7), as participants use local knowledge and make adaptations and innovations through trial and error to optimize efficiency. Innovating economic organization can be as productive as technological innovations (21). The internet revolution is an obvious: limited-liability corporations (171), outsourcing (62-64), and the NYSE (22) are but a few other examples.
Markets and government have an uneasy relationship. Patents and intellectual property rights are an example of imperfect solutions maintained by the government at cost to users. Cost-benefit can be weighed to achieve optimum (e.g. Big Pharma v.s. patented AIDS drugs for Africa). Top-down price-setting without the use of market forces, e.g. well-designed auctions, cause market inefficiencies – the market allocates resources to those who value it the most and can use it best. Communism does not work because central planners lack the omniscience of the massive amounts of information from the ground needed to manage every aspect of the economy. However, market-supporting institutions are necessary for markets to be workable. NZ already had them – however, their state price controls caused distortions that required shock therapy, despite the societal pain. Poor countries need to foster markets and minimize inequality to achieve growth, but fail to do so because their markets, even if existent, are underperforming. Further, in both cases, corruption can inhibit growth through lack of investor confidence (Russia) – although self-restrained and strategic corruption, can sometimes help growth (e.g. Suharto's Indonesia, 140). McMillan maintains that market design does not control what happens in the market, but it shapes and supports the process of transacting (9), and that well-designed markets have to protected from both anti-market and free-market ideologues (epilogue Ch).
Reaction:
“In the Price Mechanism We Trust”
This book really beat home for me how (inexorable) markets elicit information on value through the price mechanism, and what it takes to ensure that markets are work most efficiently toward maximizing benefit – but is this necessarily the case? McMillan makes a very strong case for a market economy, as long as it is well-designed. However, the assumption that goods will go to those who “value” it most and to best use, by which he meant to those who would incur the least cost both to self and to society (and benefit all), needs to be examined in more depth. Some additional macroeconomic perspectives on net social benefit may also have strengthened the book.
“Most efficient use” may leave over more resources for more productivity or innovation (or profit). Cutthroat pricing can hardly be good for competition, as it may cause markets to fall into the trap of Gresham's law (51). There can be externalities that aren't always so easily regulatable as his treatment on cap-and-trade may make it seem (e.g. the global overfishing is problematic, but what about contamination with bioaccumulated mercury and millions of other, sometimes yet-tested toxins?). Or it can mean production of lower quality goods – freer information is not a guarantee of quality, as can be apparent by comparing many American products with say, Japanese or German (electronics, auto, home appliances, etc – Demming was a guru in Japan but unfortunately ignored when he came home to the U.S.). It can also mean skimping on labor costs (i.e. lowering wages) or worker health and safety, or otherwise cheating trade partners through disproportionate bargain power (e.g. unfavorable trading terms for third-world producers of raw materials). There was scant mention of worker rights in his entire treatise. This book seems to almost assume that everyone is an entrepreneur, or at least that efficient entrepreneurs or market participants should win most (if not all) of the time. In fact, there is ample validation of markets helping poor people throughout the book (e.g. farmers' markets in Communist Vietnam, p.15, or farmland allocation in Communist China), but class struggle arising from market systems was hardly a feature in this book (there were one-sentence allusions to fisher unions, p.125). Ultimately McMillan, whether in his attempt to maintain his “scientific objectivity” or “neutrality” as an economist, lacks the political and moral courage to take sides on sociopolitical issues, or make any assertions about any redistributive policies, even if their net social “value” may outweigh economic “costs” in the narrower sense (Marylin Waring, 88). The only moment he comes close, is in discussion of compulsory licensing for patented AIDS drugs in low-income countries (36-38), but even then, this is only the result of finding justification through cost-benefit analysis, in the strict financial sense.
Also, his authoritative grasp of microeconomic issues overshadows his perspective on macroeconomics, as evidenced for example by his extremely-superficial treatment of all that is needed to end poverty in developing countries, or further considerations on how so many social investments can indeed, if designed well, lead to economic growth later in many indirect ways. It seems that Keynesian perspectives may be rather foreign to microeconomists' rationales, providing for an incomplete picture on the limits of well-designed markets' abilities to maximize growth and net social benefit. Sometimes it also takes well-designed fiscal policies. For example, information flow may cause students or workers to get training in less-marketable disciplines, but a well-functioning market by itself is very far from solving unemployment. Also, where is there mention taxing other “externalities,” like property tax (the wealthy outcompete the majority in bidding for them), on profits, or on excessively-rich individuals? But perhaps these are all macroeconomic issues, and political courage required balancing macroeconomic expertise. This ahistorical account of markets had a little bit of a misnomer for the second half of its title, and may be better called, Reinventing the Bazaar: In Defense of Well-Designed Markets. Hence, the title of this reaction.
Abstract:
Establishing how markets are inexorable, McMillan argues that they need to be well-designed in order to promote efficiency and maximum social good. The five elements required for markets to run smoothly are: 1) free flow of information, 2) property rights protection, 3) trust and enforcement of promises, 4) controlling for externalities to third parties, and 5) competition. Markets arise and adapt as needed from the bottom-up – and innovations by participants are their drivers – but often need the the government's help to reach their full potential. However, balance is important, because an economy cannot be planned from above, and central planners can stagnate “distort, and even destroy markets'” ability to raise or maintain living standards.
Markets need support from a set of rules, customs, and institutions that set up mechanisms ensuring full benefits are delivered (13). Market participants' need decision-making autonomy to voluntarily exchange according to their preferences – and competition fosters this autonomy, by restricting disproportionate distribution of market power between participants (6). But choices by themselves do not ensure competition, because people need to be able to compare their choices (44). Search costs weaken competition, e.g. sellers can charge higher, so there are profit and entrepreneurial opportunities in helping information flow (44-6, e.g. Consumer Reports). Thus, the internet age has facilitated trade for both sides (e.g. eBay, Amazon), while also shifting bargaining power toward buyers. Trust and confidence that contracts and property rights will be protected is established through private and public sectors. Trade associations, intermediary firms, and credit bureaus, and “signals” like advertising, brand names, and trademarks, can help by spreading information, or producing collective blacklists of breachers. Thus, market participants can substitute or complement the legal system (or lack thereof) by developing their own self-enforcing mechanisms (61, China agricultural reform 94-101), but the law is often needed for transactions that require large upfront investments and for economic growth. Finally, externalities like pollution or resource depletion need to be collectively-enforced, regulated top-down through appropriately-set taxes or quotas, or through privatization (Marshall Islands fisheries, 125). Even better, quotas can be made tradable to achieve efficient allocation of caps, and alleviate government micromanaging burden (184).
Markets generate value through trade, i.e. participants gain from buying and selling. Thus, markets are resilient and can even form in refugee camps, prisons, and under Communist regimes (16). The decentralization of markets are the source of its dynamism (7), as participants use local knowledge and make adaptations and innovations through trial and error to optimize efficiency. Innovating economic organization can be as productive as technological innovations (21). The internet revolution is an obvious: limited-liability corporations (171), outsourcing (62-64), and the NYSE (22) are but a few other examples.
Markets and government have an uneasy relationship. Patents and intellectual property rights are an example of imperfect solutions maintained by the government at cost to users. Cost-benefit can be weighed to achieve optimum (e.g. Big Pharma v.s. patented AIDS drugs for Africa). Top-down price-setting without the use of market forces, e.g. well-designed auctions, cause market inefficiencies – the market allocates resources to those who value it the most and can use it best. Communism does not work because central planners lack the omniscience of the massive amounts of information from the ground needed to manage every aspect of the economy. However, market-supporting institutions are necessary for markets to be workable. NZ already had them – however, their state price controls caused distortions that required shock therapy, despite the societal pain. Poor countries need to foster markets and minimize inequality to achieve growth, but fail to do so because their markets, even if existent, are underperforming. Further, in both cases, corruption can inhibit growth through lack of investor confidence (Russia) – although self-restrained and strategic corruption, can sometimes help growth (e.g. Suharto's Indonesia, 140). McMillan maintains that market design does not control what happens in the market, but it shapes and supports the process of transacting (9), and that well-designed markets have to protected from both anti-market and free-market ideologues (epilogue Ch).
Reaction:
“In the Price Mechanism We Trust”
This book really beat home for me how (inexorable) markets elicit information on value through the price mechanism, and what it takes to ensure that markets are work most efficiently toward maximizing benefit – but is this necessarily the case? McMillan makes a very strong case for a market economy, as long as it is well-designed. However, the assumption that goods will go to those who “value” it most and to best use, by which he meant to those who would incur the least cost both to self and to society (and benefit all), needs to be examined in more depth. Some additional macroeconomic perspectives on net social benefit may also have strengthened the book.
“Most efficient use” may leave over more resources for more productivity or innovation (or profit). Cutthroat pricing can hardly be good for competition, as it may cause markets to fall into the trap of Gresham's law (51). There can be externalities that aren't always so easily regulatable as his treatment on cap-and-trade may make it seem (e.g. the global overfishing is problematic, but what about contamination with bioaccumulated mercury and millions of other, sometimes yet-tested toxins?). Or it can mean production of lower quality goods – freer information is not a guarantee of quality, as can be apparent by comparing many American products with say, Japanese or German (electronics, auto, home appliances, etc – Demming was a guru in Japan but unfortunately ignored when he came home to the U.S.). It can also mean skimping on labor costs (i.e. lowering wages) or worker health and safety, or otherwise cheating trade partners through disproportionate bargain power (e.g. unfavorable trading terms for third-world producers of raw materials). There was scant mention of worker rights in his entire treatise. This book seems to almost assume that everyone is an entrepreneur, or at least that efficient entrepreneurs or market participants should win most (if not all) of the time. In fact, there is ample validation of markets helping poor people throughout the book (e.g. farmers' markets in Communist Vietnam, p.15, or farmland allocation in Communist China), but class struggle arising from market systems was hardly a feature in this book (there were one-sentence allusions to fisher unions, p.125). Ultimately McMillan, whether in his attempt to maintain his “scientific objectivity” or “neutrality” as an economist, lacks the political and moral courage to take sides on sociopolitical issues, or make any assertions about any redistributive policies, even if their net social “value” may outweigh economic “costs” in the narrower sense (Marylin Waring, 88). The only moment he comes close, is in discussion of compulsory licensing for patented AIDS drugs in low-income countries (36-38), but even then, this is only the result of finding justification through cost-benefit analysis, in the strict financial sense.
Also, his authoritative grasp of microeconomic issues overshadows his perspective on macroeconomics, as evidenced for example by his extremely-superficial treatment of all that is needed to end poverty in developing countries, or further considerations on how so many social investments can indeed, if designed well, lead to economic growth later in many indirect ways. It seems that Keynesian perspectives may be rather foreign to microeconomists' rationales, providing for an incomplete picture on the limits of well-designed markets' abilities to maximize growth and net social benefit. Sometimes it also takes well-designed fiscal policies. For example, information flow may cause students or workers to get training in less-marketable disciplines, but a well-functioning market by itself is very far from solving unemployment. Also, where is there mention taxing other “externalities,” like property tax (the wealthy outcompete the majority in bidding for them), on profits, or on excessively-rich individuals? But perhaps these are all macroeconomic issues, and political courage required balancing macroeconomic expertise. This ahistorical account of markets had a little bit of a misnomer for the second half of its title, and may be better called, Reinventing the Bazaar: In Defense of Well-Designed Markets. Hence, the title of this reaction.
September 27, 2011
Reinventing the Bazaar was written by the late John McMillan, a professor of economics at Stanford and an expert on government procurement. This is a book about the economics of markets (with a focus on market design), not an economic history, as I believed when I purchased the book.
Prof. McMillan devotes the first half of the book to what he identifies as the five basic components of market design: information flow, enforcement of promises, competition, property rights, and externalities. He devotes the second half of the book to implementation of those five basic components.
Overall, Prof. McMillan does a good job explaining economic concepts in plain English. Reinventing the Bazaar gets into a lot of the “guts” of markets that are typically not covered in basic economics classes. In particular, Prof. McMillan recognizes the importance of law and legal institutions to markets, something economists sometimes gloss over.
Unfortunately, Prof. McMillan has a tendency to make some rather questionable statements. For example, there is a rather blatant error (or omission) in his discussion of the preference of book agents’ for sealed-bid auctions over open auctions (which net their clients higher advances). Prof. McMillan identifies the agents’ position as “mistaken.” But this preference is not due to mistake, it is due to agency costs. The agents are acting in their own self-interest in a scenario in which their interests conflict with those of their clients. Agents reap only a fraction of the benefit of the final bid, but perform the bulk of the extra legwork necessary to run a successful open auction (which also takes longer). This creates the divergence in interests.
Other statements look more like sloppiness than error. If it were true that the conventional wisdom is that “markets cannot exist without private ownership underpinned by the legal system,” then the term “black market” would not exist and be in widespread use (Prof. McMillan claims this despite discussing the shadow economy a few chapters later). He states that “street vending has even gone global” as if it were invented in New York City a few decades ago and has not existed for thousands of years.
Inexplicably, Prof. McMillan fails to mention a grave error in U.S. spectrum auctions (which he apparently helped design) that allowed telecom companies to collude and buy spectrum for a fraction of its true value. By not forcing companies to bid only in large increments, the U.S. gave them an avenue to signal each other during the auction. Tim Harford covers this design flaw in chapter 7 of The Undercover Economist.
In his otherwise excellent discussion of tradeable emissions allowances, Prof. McMillan correctly notes that they only work if the total amount of pollution matters more than where it originates, but he fails to note in his implication that local pollution should be handled by government command-and-control action that local pollution is more susceptible to Coasian bargaining than national pollution due to lower transaction costs.
Prof. McMillan argues that government action is needed for effective markets (ordo-liberalism), and that is an important argument to make, but he fails to address its limitations. He recognizes that property rights are expensive to establish, for example, but any discussion of regulation without a discussion of regulatory capture is incomplete. Public choice theory is woefully absent, a fatal flaw for a book so concerned with designing efficient markets.
Reinventing the Bazaar is at its strongest when covering deregulation and privatization. Capitalism is clearly superior to command-and-control direction of the economy, but we have come to learn that even where there is an obviously better alternative, the transition itself can be problematic. Post-Soviet Union Russia is contrasted with China. Russia tried to used command-and-control methods to privatize its economy; China used more decentralized methods. Not surprisingly, China’s efforts were more successful. I would remind advocates of deregulation and privatization that they are also government action and subject to the same limitations.
The final chapter puts things into a more political perspective. According to Prof. McMillan, neither free market and anti-market ideologues have an empirical leg to stand on. Where we come down in the middle must be determined by core values but, more importantly, also by the facts. I would add that this is good encouragement to look a little closer at the economic merits of public policy proposals (beyond what sponsoring politicians claim they are).
There are, I think, some fairly serious issues with Reinventing the Bazaar, which is why I gave it only 3 stars, but it is not without merit. It is probably as good a basic survey of economics for laymen as I have found (sadly, a largely disappointing sub-genre). I think it could still be an excellent choice if coupled with a survey of public choice, such as Gordon Tullock’s Government Failure, to fill in its deficiencies.
Prof. McMillan devotes the first half of the book to what he identifies as the five basic components of market design: information flow, enforcement of promises, competition, property rights, and externalities. He devotes the second half of the book to implementation of those five basic components.
Overall, Prof. McMillan does a good job explaining economic concepts in plain English. Reinventing the Bazaar gets into a lot of the “guts” of markets that are typically not covered in basic economics classes. In particular, Prof. McMillan recognizes the importance of law and legal institutions to markets, something economists sometimes gloss over.
Unfortunately, Prof. McMillan has a tendency to make some rather questionable statements. For example, there is a rather blatant error (or omission) in his discussion of the preference of book agents’ for sealed-bid auctions over open auctions (which net their clients higher advances). Prof. McMillan identifies the agents’ position as “mistaken.” But this preference is not due to mistake, it is due to agency costs. The agents are acting in their own self-interest in a scenario in which their interests conflict with those of their clients. Agents reap only a fraction of the benefit of the final bid, but perform the bulk of the extra legwork necessary to run a successful open auction (which also takes longer). This creates the divergence in interests.
Other statements look more like sloppiness than error. If it were true that the conventional wisdom is that “markets cannot exist without private ownership underpinned by the legal system,” then the term “black market” would not exist and be in widespread use (Prof. McMillan claims this despite discussing the shadow economy a few chapters later). He states that “street vending has even gone global” as if it were invented in New York City a few decades ago and has not existed for thousands of years.
Inexplicably, Prof. McMillan fails to mention a grave error in U.S. spectrum auctions (which he apparently helped design) that allowed telecom companies to collude and buy spectrum for a fraction of its true value. By not forcing companies to bid only in large increments, the U.S. gave them an avenue to signal each other during the auction. Tim Harford covers this design flaw in chapter 7 of The Undercover Economist.
In his otherwise excellent discussion of tradeable emissions allowances, Prof. McMillan correctly notes that they only work if the total amount of pollution matters more than where it originates, but he fails to note in his implication that local pollution should be handled by government command-and-control action that local pollution is more susceptible to Coasian bargaining than national pollution due to lower transaction costs.
Prof. McMillan argues that government action is needed for effective markets (ordo-liberalism), and that is an important argument to make, but he fails to address its limitations. He recognizes that property rights are expensive to establish, for example, but any discussion of regulation without a discussion of regulatory capture is incomplete. Public choice theory is woefully absent, a fatal flaw for a book so concerned with designing efficient markets.
Reinventing the Bazaar is at its strongest when covering deregulation and privatization. Capitalism is clearly superior to command-and-control direction of the economy, but we have come to learn that even where there is an obviously better alternative, the transition itself can be problematic. Post-Soviet Union Russia is contrasted with China. Russia tried to used command-and-control methods to privatize its economy; China used more decentralized methods. Not surprisingly, China’s efforts were more successful. I would remind advocates of deregulation and privatization that they are also government action and subject to the same limitations.
The final chapter puts things into a more political perspective. According to Prof. McMillan, neither free market and anti-market ideologues have an empirical leg to stand on. Where we come down in the middle must be determined by core values but, more importantly, also by the facts. I would add that this is good encouragement to look a little closer at the economic merits of public policy proposals (beyond what sponsoring politicians claim they are).
There are, I think, some fairly serious issues with Reinventing the Bazaar, which is why I gave it only 3 stars, but it is not without merit. It is probably as good a basic survey of economics for laymen as I have found (sadly, a largely disappointing sub-genre). I think it could still be an excellent choice if coupled with a survey of public choice, such as Gordon Tullock’s Government Failure, to fill in its deficiencies.
June 10, 2020
I've always had an interest in economics but never been entirely sure where to start. Now I can confidently say that this is a very good jumping off point. McMillan's style is understandable, and reasonable, and even if his views are biased at times, you can see the logic behind them and at least respect that. Of course this isn't an all encompassing book, but I definitely feel like I have the basics of market economics under my belt now, which is all I really wanted.
To be clear, I'm giving this 4 stars because it did what it was supposed to do. If I had to rate this purely on the basis of my enjoyment, it would get 3, but I find it unlikely that any book about market economics could be riveting so in light of that, this gets a bit of a higher rating. Overall, just a very solid book that does what it sets out to do in a methodical and clear way. I won't be recommending this as light reading to my friends, but I will be recommending it to anyone who wants to take their first dive into economics.
To be clear, I'm giving this 4 stars because it did what it was supposed to do. If I had to rate this purely on the basis of my enjoyment, it would get 3, but I find it unlikely that any book about market economics could be riveting so in light of that, this gets a bit of a higher rating. Overall, just a very solid book that does what it sets out to do in a methodical and clear way. I won't be recommending this as light reading to my friends, but I will be recommending it to anyone who wants to take their first dive into economics.
March 24, 2015
It is a book that explains the various auction.
By applying a game theory,
it will explain principle of various auctions.
When I really read the book, I had a large amount of harvest about auctions.
I get how to think "game theory".
By applying a game theory,
it will explain principle of various auctions.
When I really read the book, I had a large amount of harvest about auctions.
I get how to think "game theory".
November 23, 2019
کتاب "بازآفرینی بازار" اثر جذاب و خواندنی از اقتصاددان نیوزلندی، جام مکمیلان است که در آن سعی شده تا روشهایی برای داشتن یک بازار "خوب" توضیح داده شود.
از نظر مکمیلان هیچ کشوری فاقد بازار نیست. تنها تفاوت کشورها در این است که بعضی کشورها دارای بازار خوب هستند و بعضی دارای بازار بد. این تفاوت میزان فقر و غنا، شکاف طبقاتی و رشد اقتصادی کشورها را رقم میزند.
یکی از نکات مثبت کتاب قبول این نکته است که بازار اصل نیست بلکه اصل رسیدن به رشد اقتصادی و رفاه است. از این رو برخلاف بسیاری اقتصاددانان نئولیبرال دنیا به جای تاکید بر دولت حداقلی و کاهش تمرکز دولت به تاثیرگذاری هدفمند و بهرهور دولت تاکید دارد. مکمیلان (مانند اکثر افراد دنیا) معتقد است بازار به تنهایی توانایی اثرگذاری مطلوب بر زندگی افراد را ندارد پس دولت باید به صورت هدفمند داخل شده و قوانین بازار را به گونهای موثر بچیند. از طرفی دولت هرگز حق ندارد بیش از حد دخالت کرده و قوانین محدود کننده وضع کند تا باعث اصطکاک در بازار نشود.
این کتاب یکی از معدود کتابهای مفید در زمینهی دفاع از بازار آزاد بود که مطالعه کردهام. نویسنده ضمن تاکید بر کاستیهای بازار سعی در ایجاد یک سلسله مراتب مدون برای تعیین حدود و ثغور بازار کرده است تا افراد متوجه باشند که بازار مشخصا شر نیست بلکه نوع استفاده از بازار است که میتو��ند خیر یا شر باشد. همچنین نقد چندانی نمیتوان به متن وارد کرد بجز موضوع مناقشه برانگیز فقر که در کتاب به آن اشاره شده است. در کتاب فلاکت مردم، بیماری، مرگ و شکاف طبقاتی را ناشی از فقر میداند. به عنوان مثال میگوید اگر یک فرد مبتلا به بیماری ایدز در آفریقای جنوبی نمیتواند داروی این بیماری را خریداری کند دلیل آن فقر در آفریقای جنوبی است نه شرکتهای داروسازی که این دارو را به 10 برابر قیمت به فروش میرسانند. اگرچه برای این موضوع استدلالی نیز در ارائه میدهد اما تصور نمیکنم این استدلال حتی خود نویسنده را نیز متقاعد کرده باشد چه رسد به خوانندگان.
بیش از این در مورد کتاب صحبت نمیکنم و شما را دعوت میکنم به خواندن قسمتهایی از کتاب.
(مثالی خواندنی حاوی اطلاعاتی مفید در مورد اینکه صداقت در بازار بهترین سیاست است)
واسطهها در تجارت عمدهفروشی الماس در نیویورک کیسههای الماس را که میلیون ها دلار ارزش دارند بدون قرارداد کتبی بین خودشان ردوبدل میکنند. دست دادن و گفتم :موفق باشی و خدا برکت بدهد" قراردادی تعهدآور ایجاد میکند. قراردادهای شفاهی به این دلیل پایدار می مانند که واسطه ها عموما یهودیان ارتدکسی هستند که دیدگاه های مشترکی دارند ولی زمانی که چنین مبالغ هنگفتی در خطر است ارتباطات فردی نمی تواند بایکوت مناسبی ایجاد کند. بازار الماس به نحوی طراحی شده که اگر کسی فرارداد را زیر پا بگذارد نه تنها امکان تجارت با فردی که مورد تقلب واقع شده بلکه امکان کار با دیگر واسطه های الماس را از دست می دهد. باشگاه فروشندگان الماس این بایکوت را سازمان می دهد. با عضویت در این باشگاه فرد می پذیرد که حل و فصل تمامی اختلافات باید بر عهده باشگاه باشد. اعضایی که قرارداد را زیر پا می گذارند جریمه می شوند یا به صورت مادام العمر از خرید و فروش الماس کنار گذاشته می شوند.
(مثالی جالب در مورد احترام پیامبر اسلام (ص) به حقوق مالکیت فردی.)
حضرت محمد(ص) از اولین حامیان حق مالکیت بوده است. زمانی در مدینه قحطی شدیدی بروز کرد و قیمت ها شدیدا افزایش یافت. مردم به ایشان شکایت کردند و از او خواستند که با تثبیت قیمت ها از رنج آنها بکاهد. او درخواست مردم را نپذیرفت. زیرا او که خود سابقا بازرگان بود می دانست که انتخاب آزادانه خریداران و فروشندگان را نباید از میان برد. محمد (ص) به مردم گفت: نمی خواهم که در روز قیامت، کسانی که حق مالکیت و معیشت آنان پایمال شده از من به درگاه خداوند شکایت برند.
(تفاوت بین کشورهای ثروتمند و فقیر در مقیاس کارخانههای آنها نمودار میشود)
در آمریکا کارخانه های با بیش از پنجاه کارکن حدود 80 درصد از کل اشتغال صنعتی را به خود اختصاص می دهند در تایلند این نسبت 30 درصد اس. در اندونزی و غنا این نسبت 15 درصد است. در ایالات متحده کارخانه های با کمتر از 10 نفر کارکن فقط 4 درصد اشتغال را به خود اختصاص داده اند. درحالی که این نسبت برای تایلند 40 و برای اندونزی و غنا 80 درصد است. کشورهای ثروتمند، شرکت های بزرگتری دارند.
زمانی که نیروی کار ارزان و سرمایه کمیاب است. شرکت ها از تجهیزات ساده استفاده می کنند که برای تولید در مقیاس کوچک مقرون به صرفه است بنگاه ها در کشورهای فقیر، کوچک هستند به عبارت دیگر بنگاه ها در این کشورها باید کوچک باشند. این بخشی از توضیح مسئله است اما همه آن نیست. بخش دیگر توضیح این است که کشورهای فقیر فاقد نهادهای حامی بازارند که عامل رشد بنگاههاست و اگر بنگاهها رشد میکنند سبب کارآمدی آنان می شود. در اقتصادی که عملکرد خوبی دارد دولت تداوم رقابت در بازار و عملکرد صحیح در بازارهای مالی را تضمین می کند.
(مثالی بسیار جالب در مورد رویکرد دولت در اقتصاد. میدانیم که هدف دولت در اقتصاد اشتغالزایی است آن هم به هر قیمتی)
دولت (نیوزلند) به منظور اشتغالزایی دستور داده بود تلویزیون در داخل کشور مونتاژ شود. مانی که گیبز به منظور مذاکره بر سر قیمت قطعات تلویزیون به ژاپن رفت، ژاپنی ها از خواسته او حیرت کردند. زیرا براساس روش خاص تنظیم خط تولید، تلویزیون سازان ژاپنی می توانستند فقط با قراردادن کارگران در انتهای خط مونتاژ و جداسازی قطعات تلویزیون های تکمیل شده این قطعات را عرضه کنند. شرکت گیبز مجبور بود برای قطعات 5 درصد بیشتر از یک دستگاه تلویزیون کامل پول پرداخت کند. قطعات با کشتی به نیوزلند منتقل و در کارخانهای مونتاژ و تلویزیون مجددا تولید می شد به دوبرابر قیمت جهانی به فروش میرفت.
احتمالا مورد بالا در بسیاری صنایع ایران نیز درحال انجام است.
کتاب مملو از این مثالهای واقعی است که خواندن آن را جذاب میکند. همچنین طوری نگاشته شده است که هرکس متوجه آن میشود.
از نظر مکمیلان هیچ کشوری فاقد بازار نیست. تنها تفاوت کشورها در این است که بعضی کشورها دارای بازار خوب هستند و بعضی دارای بازار بد. این تفاوت میزان فقر و غنا، شکاف طبقاتی و رشد اقتصادی کشورها را رقم میزند.
یکی از نکات مثبت کتاب قبول این نکته است که بازار اصل نیست بلکه اصل رسیدن به رشد اقتصادی و رفاه است. از این رو برخلاف بسیاری اقتصاددانان نئولیبرال دنیا به جای تاکید بر دولت حداقلی و کاهش تمرکز دولت به تاثیرگذاری هدفمند و بهرهور دولت تاکید دارد. مکمیلان (مانند اکثر افراد دنیا) معتقد است بازار به تنهایی توانایی اثرگذاری مطلوب بر زندگی افراد را ندارد پس دولت باید به صورت هدفمند داخل شده و قوانین بازار را به گونهای موثر بچیند. از طرفی دولت هرگز حق ندارد بیش از حد دخالت کرده و قوانین محدود کننده وضع کند تا باعث اصطکاک در بازار نشود.
این کتاب یکی از معدود کتابهای مفید در زمینهی دفاع از بازار آزاد بود که مطالعه کردهام. نویسنده ضمن تاکید بر کاستیهای بازار سعی در ایجاد یک سلسله مراتب مدون برای تعیین حدود و ثغور بازار کرده است تا افراد متوجه باشند که بازار مشخصا شر نیست بلکه نوع استفاده از بازار است که میتو��ند خیر یا شر باشد. همچنین نقد چندانی نمیتوان به متن وارد کرد بجز موضوع مناقشه برانگیز فقر که در کتاب به آن اشاره شده است. در کتاب فلاکت مردم، بیماری، مرگ و شکاف طبقاتی را ناشی از فقر میداند. به عنوان مثال میگوید اگر یک فرد مبتلا به بیماری ایدز در آفریقای جنوبی نمیتواند داروی این بیماری را خریداری کند دلیل آن فقر در آفریقای جنوبی است نه شرکتهای داروسازی که این دارو را به 10 برابر قیمت به فروش میرسانند. اگرچه برای این موضوع استدلالی نیز در ارائه میدهد اما تصور نمیکنم این استدلال حتی خود نویسنده را نیز متقاعد کرده باشد چه رسد به خوانندگان.
بیش از این در مورد کتاب صحبت نمیکنم و شما را دعوت میکنم به خواندن قسمتهایی از کتاب.
(مثالی خواندنی حاوی اطلاعاتی مفید در مورد اینکه صداقت در بازار بهترین سیاست است)
واسطهها در تجارت عمدهفروشی الماس در نیویورک کیسههای الماس را که میلیون ها دلار ارزش دارند بدون قرارداد کتبی بین خودشان ردوبدل میکنند. دست دادن و گفتم :موفق باشی و خدا برکت بدهد" قراردادی تعهدآور ایجاد میکند. قراردادهای شفاهی به این دلیل پایدار می مانند که واسطه ها عموما یهودیان ارتدکسی هستند که دیدگاه های مشترکی دارند ولی زمانی که چنین مبالغ هنگفتی در خطر است ارتباطات فردی نمی تواند بایکوت مناسبی ایجاد کند. بازار الماس به نحوی طراحی شده که اگر کسی فرارداد را زیر پا بگذارد نه تنها امکان تجارت با فردی که مورد تقلب واقع شده بلکه امکان کار با دیگر واسطه های الماس را از دست می دهد. باشگاه فروشندگان الماس این بایکوت را سازمان می دهد. با عضویت در این باشگاه فرد می پذیرد که حل و فصل تمامی اختلافات باید بر عهده باشگاه باشد. اعضایی که قرارداد را زیر پا می گذارند جریمه می شوند یا به صورت مادام العمر از خرید و فروش الماس کنار گذاشته می شوند.
(مثالی جالب در مورد احترام پیامبر اسلام (ص) به حقوق مالکیت فردی.)
حضرت محمد(ص) از اولین حامیان حق مالکیت بوده است. زمانی در مدینه قحطی شدیدی بروز کرد و قیمت ها شدیدا افزایش یافت. مردم به ایشان شکایت کردند و از او خواستند که با تثبیت قیمت ها از رنج آنها بکاهد. او درخواست مردم را نپذیرفت. زیرا او که خود سابقا بازرگان بود می دانست که انتخاب آزادانه خریداران و فروشندگان را نباید از میان برد. محمد (ص) به مردم گفت: نمی خواهم که در روز قیامت، کسانی که حق مالکیت و معیشت آنان پایمال شده از من به درگاه خداوند شکایت برند.
(تفاوت بین کشورهای ثروتمند و فقیر در مقیاس کارخانههای آنها نمودار میشود)
در آمریکا کارخانه های با بیش از پنجاه کارکن حدود 80 درصد از کل اشتغال صنعتی را به خود اختصاص می دهند در تایلند این نسبت 30 درصد اس. در اندونزی و غنا این نسبت 15 درصد است. در ایالات متحده کارخانه های با کمتر از 10 نفر کارکن فقط 4 درصد اشتغال را به خود اختصاص داده اند. درحالی که این نسبت برای تایلند 40 و برای اندونزی و غنا 80 درصد است. کشورهای ثروتمند، شرکت های بزرگتری دارند.
زمانی که نیروی کار ارزان و سرمایه کمیاب است. شرکت ها از تجهیزات ساده استفاده می کنند که برای تولید در مقیاس کوچک مقرون به صرفه است بنگاه ها در کشورهای فقیر، کوچک هستند به عبارت دیگر بنگاه ها در این کشورها باید کوچک باشند. این بخشی از توضیح مسئله است اما همه آن نیست. بخش دیگر توضیح این است که کشورهای فقیر فاقد نهادهای حامی بازارند که عامل رشد بنگاههاست و اگر بنگاهها رشد میکنند سبب کارآمدی آنان می شود. در اقتصادی که عملکرد خوبی دارد دولت تداوم رقابت در بازار و عملکرد صحیح در بازارهای مالی را تضمین می کند.
(مثالی بسیار جالب در مورد رویکرد دولت در اقتصاد. میدانیم که هدف دولت در اقتصاد اشتغالزایی است آن هم به هر قیمتی)
دولت (نیوزلند) به منظور اشتغالزایی دستور داده بود تلویزیون در داخل کشور مونتاژ شود. مانی که گیبز به منظور مذاکره بر سر قیمت قطعات تلویزیون به ژاپن رفت، ژاپنی ها از خواسته او حیرت کردند. زیرا براساس روش خاص تنظیم خط تولید، تلویزیون سازان ژاپنی می توانستند فقط با قراردادن کارگران در انتهای خط مونتاژ و جداسازی قطعات تلویزیون های تکمیل شده این قطعات را عرضه کنند. شرکت گیبز مجبور بود برای قطعات 5 درصد بیشتر از یک دستگاه تلویزیون کامل پول پرداخت کند. قطعات با کشتی به نیوزلند منتقل و در کارخانهای مونتاژ و تلویزیون مجددا تولید می شد به دوبرابر قیمت جهانی به فروش میرفت.
احتمالا مورد بالا در بسیاری صنایع ایران نیز درحال انجام است.
کتاب مملو از این مثالهای واقعی است که خواندن آن را جذاب میکند. همچنین طوری نگاشته شده است که هرکس متوجه آن میشود.
December 31, 2020
A great book, providing a detailed study of the power of market forces and the importance of market design. The author, noted economist John McMillan (RIP), provides a clear analysis of what a market is, as understood within the field of Economics. He presents a series of case studies to show what functional requirements a market has, using examples from around the world and in different periods of time. McMillan also demonstrates what a market is not, and makes a strong case that many of the decisions taking place within and between private firms are not, in fact, market driven. I especially appreciated the balanced nature of the book. The author plainly states, at many points, that his job, as with any economist, is not to make value-driven decisions but rather concentrate on the facts. He holds true to this throughout the work, showing how we can both lean on markets to better our lives but must also accept their limitations. McMillan’s emphasis is on smart market design, especially as regards the flow of information. He points out that market forces can be expected to act the way they do (to include moving to a non-market state) no matter the environment, but that the right structure and human control can correctly harness their power and avoid many possible pitfalls. My one quip with the book was its consistent belief in the ‘rational human’ being involved in market processes. Though behavioral economics are mentioned in the book, their full scope in understanding market dynamics is left unsaid. However, I believe most of that behavioral work only arrived after the book was published (2002), so I present this issue more as a heads-up to readers than as a negative of the work itself. All in all, a great book for my fellow ”armchair economists,” seeking to better understand how humans interact with each other. Highly recommended for those wanting to know what is meant by “let the market decide.”
January 18, 2021
I really enjoyed reading this book. I’m not one for reading economics, but the integrated history in story form made it interesting and applicable. Great book for anyone and helpful in rethinking market economy and future policy changes in the US.
March 29, 2009
I would definitely recommend this as an alternative to Wheelan's Naked Economics.
McMillan's main point is that markets are tools; and like all tools, they can have better and poorer designs, and can be used well or less well to achieve their end. They are socially constructed. He critiques both Ayn Rand-style conservatives and libertarians whose faith in markets endows them with some moral purposes and those on the left with similarly religious tenets that markets are evil.
I think there are still plenty of assumptions that McMillan makes with which I disagree. Like too many economists, he sees growth as an imperative, and no thoughts about ecology or sustainable natural resource use interrupt this. And I strongly disliked his tendency to regard people as consumers first and citizens second. Still, he seems to have considered a wide range of viewpoints, and comes to some interesting conclusions about when strong property rights are effective and when they are not. (He argues that they intellectual property rights in the U.S. have become counterproductive; and that for some goods, like AIDS drugs, new legal mechanisms need to be adopted to ensure their necessary distribution.)
McMillan's main point is that markets are tools; and like all tools, they can have better and poorer designs, and can be used well or less well to achieve their end. They are socially constructed. He critiques both Ayn Rand-style conservatives and libertarians whose faith in markets endows them with some moral purposes and those on the left with similarly religious tenets that markets are evil.
I think there are still plenty of assumptions that McMillan makes with which I disagree. Like too many economists, he sees growth as an imperative, and no thoughts about ecology or sustainable natural resource use interrupt this. And I strongly disliked his tendency to regard people as consumers first and citizens second. Still, he seems to have considered a wide range of viewpoints, and comes to some interesting conclusions about when strong property rights are effective and when they are not. (He argues that they intellectual property rights in the U.S. have become counterproductive; and that for some goods, like AIDS drugs, new legal mechanisms need to be adopted to ensure their necessary distribution.)
November 11, 2017
Gloriously rich examination of markets around the world, from market stalls to broadcast auctions. The author combines elements of ethnography with economic analysis. Cannot recommend highly enough.
February 11, 2021
چقدر خوندن این کتاب بهم چسبید
عالی بود
بازآفرینی بازار، تاریخ طبیعی بازارها
ترجمه زهرا کریمی/ساعده عزیزی ثالث/جواد اقدس طینت
نشر نی
23.11.1399
عالی بود
بازآفرینی بازار، تاریخ طبیعی بازارها
ترجمه زهرا کریمی/ساعده عزیزی ثالث/جواد اقدس طینت
نشر نی
23.11.1399
January 9, 2019
This is a well written pop-economics books that takes as its main topic the benefits that markets bring and the limits of markets left to themselves. Disappointingly, there is actually very little history in this book. I was kind of hoping for a bit more of an anthropological take on markets, but it's not a bad read if you go in with the right expectations.
The author rightly views markets as systems of exchange that depend on the definition of property rights for various types of goods. He deftly points out the central planning fails do to decision makers not having (and potentially being unable to obtain) the proper information to make decisions that lead to efficient outcomes. He also makes the astute observation that property rights (such as patents) can be defined in such a way to make the market less efficient than otherwise. For the author, it's not the false dichotomous choice of markets of government. The problem is one of market design. He views the essential role of government as defining and defending property rights (sometimes used to address various externalities), though he also notes that this goes beyond just the justice system. When addressing tradable fishing quotas, he notes that monitoring by officials is still necessary.
I am of the same opinion of the author, but I had this feeling that this nuanced take on markets was still slightly under nuanced. Every time he talked of market failure (either from externalities, informational asymmetries, etc.), it was always in relation to the perfect competition model used in econ 101. This is usually the reference for how market failure is defined, but it also has the underlying assumption that markets are supposed to address certain things. And while the author clearly believes government does have a role to play and constantly asserts that markets need governments, most of the examples of market failure he cites are due to bad government policies.
I really enjoyed the chapter on economies transitioning to be more "market-oriented". He takes New Zealand, Russia, and China as examples and gives enough detail to allow the reader to understand that economies are complex enough to show the suggestions that the market is a panacea are false and that successful markets are underpinned by a complex interaction of formal and informal rules.
The position at the end is that intervention must be decided on a case by case basis, and that we should eschew standing on principle. As an economist, this seems right from the perspective the blackboard models that assume an efficient government. Certainly markets can be under-regulated, but stepping down from ideal theorizing and noting that government failure is probably more widespread than market failure and that the incentives for government actors is almost always to intervene, a government bureaucracy that takes less intervention as its default principle is probably better on average. I would like to see someone with McMillan's sensibilities write a book on defining the proper role of government (which would probably include a little bit of redistribution) and how to keep it from extending too far after being granted so much power.
The author rightly views markets as systems of exchange that depend on the definition of property rights for various types of goods. He deftly points out the central planning fails do to decision makers not having (and potentially being unable to obtain) the proper information to make decisions that lead to efficient outcomes. He also makes the astute observation that property rights (such as patents) can be defined in such a way to make the market less efficient than otherwise. For the author, it's not the false dichotomous choice of markets of government. The problem is one of market design. He views the essential role of government as defining and defending property rights (sometimes used to address various externalities), though he also notes that this goes beyond just the justice system. When addressing tradable fishing quotas, he notes that monitoring by officials is still necessary.
I am of the same opinion of the author, but I had this feeling that this nuanced take on markets was still slightly under nuanced. Every time he talked of market failure (either from externalities, informational asymmetries, etc.), it was always in relation to the perfect competition model used in econ 101. This is usually the reference for how market failure is defined, but it also has the underlying assumption that markets are supposed to address certain things. And while the author clearly believes government does have a role to play and constantly asserts that markets need governments, most of the examples of market failure he cites are due to bad government policies.
I really enjoyed the chapter on economies transitioning to be more "market-oriented". He takes New Zealand, Russia, and China as examples and gives enough detail to allow the reader to understand that economies are complex enough to show the suggestions that the market is a panacea are false and that successful markets are underpinned by a complex interaction of formal and informal rules.
The position at the end is that intervention must be decided on a case by case basis, and that we should eschew standing on principle. As an economist, this seems right from the perspective the blackboard models that assume an efficient government. Certainly markets can be under-regulated, but stepping down from ideal theorizing and noting that government failure is probably more widespread than market failure and that the incentives for government actors is almost always to intervene, a government bureaucracy that takes less intervention as its default principle is probably better on average. I would like to see someone with McMillan's sensibilities write a book on defining the proper role of government (which would probably include a little bit of redistribution) and how to keep it from extending too far after being granted so much power.
June 30, 2019
Probably the best modern “pop-economics” book I’ve read (not that I have read that many). Some of the chapters were fairly repetitive from other things I’ve read, but a number of them offered more complex and insightful analysis on market issues than I have yet come across. Reading this book really helped me internalize the importance of information discrepancies (and how they relate to search frictions), trust norms, and think about incentive design in new ways. Examples are put to use in expert fashion, and I particularly thought the use of sports organizations was illuminating in multiple areas. Thinking about competitive balance in sports as an analogue for societal inequality issues is fascinating. More than anything else the book provides stimulus for thinking about trade-offs between top-down/authoritarian control and bottom-up markets, and the way that same question occurs in political institution design, market design, and theory-of-the-firm. The book consistently instigated thinking about the issues it discusses while improving my understanding of the questions.
June 12, 2020
کتاب بازآفرینی یازار در فصول ابتدایی نظریهی محوری کتاب را به صورت توصیفی به همراه مثالهای واقعی از سراسر جهان بیان میکند.
نکتهی برجستهی کتاب برای من، تاکید بر روی این نکته است که در اقتصاد، به صورت خاص، طراحی بازارها و الگوی توسعه برای کشورها، هیچ نسخهی مشخص و از پیش تعیین شدهای وجود ندارد. کتاب برای بازار خوب ۵ ویژگی تعیین میکند و ذکر میکند که تنها با اعمال قدرت از طرف دولت است که این ۵ ویژگی محقق خواهد شد.
بر خلاف دیدگاه مقدسی که طرفداران بازار آزاد یا بر خلاف ایشالان طرفداران اقتصاد دولتی (یا حتی کمونیستی) دارند، هیچ دیدگاه کاملا صحیحی برای طراحی بازارها وجود ندارد و اخلاقی، عادلانه، محیط زیستی کار کردن یک بازار تنها با طراحی صحیح آن بازار با ابزارهای مختلف صورت خواهد گرفت.
کتاب در مجموع برای علاقمندان به اقتصاد به خصوص در رشتهی نو ظهور طراحی بازار (Market Design) جذاب خواهد بود.
نکتهی برجستهی کتاب برای من، تاکید بر روی این نکته است که در اقتصاد، به صورت خاص، طراحی بازارها و الگوی توسعه برای کشورها، هیچ نسخهی مشخص و از پیش تعیین شدهای وجود ندارد. کتاب برای بازار خوب ۵ ویژگی تعیین میکند و ذکر میکند که تنها با اعمال قدرت از طرف دولت است که این ۵ ویژگی محقق خواهد شد.
بر خلاف دیدگاه مقدسی که طرفداران بازار آزاد یا بر خلاف ایشالان طرفداران اقتصاد دولتی (یا حتی کمونیستی) دارند، هیچ دیدگاه کاملا صحیحی برای طراحی بازارها وجود ندارد و اخلاقی، عادلانه، محیط زیستی کار کردن یک بازار تنها با طراحی صحیح آن بازار با ابزارهای مختلف صورت خواهد گرفت.
کتاب در مجموع برای علاقمندان به اقتصاد به خصوص در رشتهی نو ظهور طراحی بازار (Market Design) جذاب خواهد بود.
June 20, 2022
Loved it! A great introduction to markets and economics. The book easily introduces you to main market concepts and demonstrates how humanity is just many micro-markets. Crucial reading if you are casually into economics or seek to understand how the capitalist states function in a very layman's terms. The book comes from a moderate perspective and does not avoid criticism of the markets. It is also very easy to read if you do not know anything about economics.
Read
February 8, 2022Read a many years ago. I remember that i was very excited back then about it. Made me understand economics as living systems and some ways in which "economic interventions" can have other effects than the intended ones. While i don't remember the details i remember i appreciated the book for making me think.
May 16, 2019
An good account of how markets interact with buyer and seller. If you are well versed with Mr. Charlie Munger mental model of incentive caused bias then there are many examples of how human behaviour is influenced by the incentives it receives.
October 17, 2020
ترجمه می توانست روان تر باشد و امیدوارم در چاپ ها بعدی مورد بازبینی قرار گیرد. از خواندن کتاب و مخصوصا مثال همایش لذت بردم. بخصوص با مطالعه این کتاب می توان به اهمیت نگاهی اجرایی به مسائل اقتصادی پی برد. از نگاه من که خواننده ای با اطلاعات اقتصادی کم هستم، پیام کتاب می تواند در سایر عرصه های اجتماعی هم مورد استفاده قرار بگیرد. اینکه هیچ نگاه تئوریک به مسائل اجتماعی نمی تواند به تنهایی تمام نیازها و کاستی ها اجتماعی را بر طرف کند. رویکرد به این مسائل باید بصورت تنظیم و اجرا باشد. ننوشتم امتحان کردن و خطا کردن، چون به نظرم جنبه تنظیم بگونه ای باید باشد که از خطاهای احتمالی جلوگیری کند.
خواندن کتاب را به کسانیکه به دنبال راه حل های عملگرایانه برای گرفتاری های اقتصادی امروز جامعه ایران هستند، توصیه میکنم.
خواندن کتاب را به کسانیکه به دنبال راه حل های عملگرایانه برای گرفتاری های اقتصادی امروز جامعه ایران هستند، توصیه میکنم.
July 2, 2023
I read this mostly because it had been on my bookshelf for years and I figured I should read it before tossing it. It was pretty mediocre: a somewhat outdated neoliberal paean to markets combined with an attempt to teach some introductory economics without math.
May 13, 2017
For someone who has never taken any class in Economics, this book makes me understand about markets very well.
January 4, 2020
A bit tedious, and doesn't really break any ground you haven't already encountered if you've read a bit of economic history. But it's a fine package and a decent summary of ideas.
March 17, 2020
Very approachable book to read. Analyses a range of international examples of market economy systems
August 22, 2020
A minimally interesting breakdown of markets.
February 14, 2021
Good for students interested in economics
January 2, 2022
خلاصه این کتاب رو در پادکست بیپلاس گوش کردم. به نظر کتاب جا��بیه.
لینک پادکست:
https://bpls.me/-m-cle
لینک پادکست:
https://bpls.me/-m-cle
March 16, 2013
Below are key excerpts from the book that I found particularly insightful:
1- "A definition of a market transaction, then, is an exchange that is voluntary: each party can veto it, and (subject to the rules of the marketplace) each freely agrees to the terms. A market is a forum for carrying out such exchange."
2- "Markets are too important to be left to the ideologues. In fact, markets are the most effective means we have of improving people's well-being. For poor countries they offer the most reliable path away from poverty. For affluent countries they are part of what is needed to sustain their living standards."
3- "The key feature of markets of all kinds is brought home when we look at the growth of new market mechanisms. Benefiting both buyer and seller, any transaction creates value. Buying and selling is therefore a form of creation. Elementary at this point is, its importance cannot be overstated. There are gains from trade, and people are relentless in finding ways to realize them."
4- "Two kinds of market frictions arise from the uneven supply of information. There are search costs: the time, effort, and money spent learning what is available where for how much. And there are evaluation costs, arising from the difficulties buyers have in assessing quality. A successful market has mechanisms that hold down the costs of transacting that come from the dispersion of information."
5- "Well-designed markets have a variety of mechanisms, formal and informal, to ensure there is indeed money in being honest. marketplace confidence rests on rules and customs that give even unscrupulous people reason to keep their word...Contracting rests not only on the courts but also on informal devices based on reputation. Information must flow in reputational incentives are to work."
6- "Some externalities can be corrected by defining and enforcing property rights. In other cases the harmful activity can be taxed. In extreme cases the only solution is to ban it."
7- "A workable platform for markets has five elements: information flows smoothly; people can be trusted to live up to their promises; competition is fostered; property rights are protected but not overprotected; and side effects on third parties are curtailed."
8- "Governments sometimes conspire to undermine markets. Corruption cuts into productivity because firms that fear they will be at the mercy of bribe-takers are reluctant to invest. Price-fixing also cuts into productivity by preventing the price system from doing its job of allocating resources. Constructive government actions are needed...to help the market system work as it is supposed to. But there is a risk that government intervention will be perverted in counterproductive directions."
9- "Well-functioning markets rely on a judicious mix of formal and informal controls. While the government helps to set the rules for the market, so do that market participants. an economy cannot be designed from above. If it were possible to plan the reforms, if would have been possible to plan the economy."
10- "Those on the far left of the political spectrum, who abhor poverty, espouse policies that would entrench it. The fervent proponents of laissez-faire, who esteem market, advocate a system that would trigger their collapse."
11- "The market system is like democracy. It is the worst form of economy, except for all the others that have been tried from time to time. It succeeds because, precisely as in Forster's view of democracy, it admits variety and permits criticism. We should cheer it because it solves some all-but-intractable problems, which have been tackled by none of the alternative forms of economic organization. It generates wealth. It alleviates poverty. But it has its limits. There are things it cannot do. It does not necessarily do even what it is supposed to; it works well only if it is well designed. Two cheers are enough."
1- "A definition of a market transaction, then, is an exchange that is voluntary: each party can veto it, and (subject to the rules of the marketplace) each freely agrees to the terms. A market is a forum for carrying out such exchange."
2- "Markets are too important to be left to the ideologues. In fact, markets are the most effective means we have of improving people's well-being. For poor countries they offer the most reliable path away from poverty. For affluent countries they are part of what is needed to sustain their living standards."
3- "The key feature of markets of all kinds is brought home when we look at the growth of new market mechanisms. Benefiting both buyer and seller, any transaction creates value. Buying and selling is therefore a form of creation. Elementary at this point is, its importance cannot be overstated. There are gains from trade, and people are relentless in finding ways to realize them."
4- "Two kinds of market frictions arise from the uneven supply of information. There are search costs: the time, effort, and money spent learning what is available where for how much. And there are evaluation costs, arising from the difficulties buyers have in assessing quality. A successful market has mechanisms that hold down the costs of transacting that come from the dispersion of information."
5- "Well-designed markets have a variety of mechanisms, formal and informal, to ensure there is indeed money in being honest. marketplace confidence rests on rules and customs that give even unscrupulous people reason to keep their word...Contracting rests not only on the courts but also on informal devices based on reputation. Information must flow in reputational incentives are to work."
6- "Some externalities can be corrected by defining and enforcing property rights. In other cases the harmful activity can be taxed. In extreme cases the only solution is to ban it."
7- "A workable platform for markets has five elements: information flows smoothly; people can be trusted to live up to their promises; competition is fostered; property rights are protected but not overprotected; and side effects on third parties are curtailed."
8- "Governments sometimes conspire to undermine markets. Corruption cuts into productivity because firms that fear they will be at the mercy of bribe-takers are reluctant to invest. Price-fixing also cuts into productivity by preventing the price system from doing its job of allocating resources. Constructive government actions are needed...to help the market system work as it is supposed to. But there is a risk that government intervention will be perverted in counterproductive directions."
9- "Well-functioning markets rely on a judicious mix of formal and informal controls. While the government helps to set the rules for the market, so do that market participants. an economy cannot be designed from above. If it were possible to plan the reforms, if would have been possible to plan the economy."
10- "Those on the far left of the political spectrum, who abhor poverty, espouse policies that would entrench it. The fervent proponents of laissez-faire, who esteem market, advocate a system that would trigger their collapse."
11- "The market system is like democracy. It is the worst form of economy, except for all the others that have been tried from time to time. It succeeds because, precisely as in Forster's view of democracy, it admits variety and permits criticism. We should cheer it because it solves some all-but-intractable problems, which have been tackled by none of the alternative forms of economic organization. It generates wealth. It alleviates poverty. But it has its limits. There are things it cannot do. It does not necessarily do even what it is supposed to; it works well only if it is well designed. Two cheers are enough."
September 27, 2009
In an extraordinary attack launched on the BBC, News Corporation's James Murdoch recently proclaimed that a 'dominant' BBC threatens independent journalism in the UK and that free news on the web provided by the BBC made it 'incredibly difficult' for private news organizations to ask people to pay for their news.
'It is essential for the future of independent digital journalism that a fair price can be charged for news to people who value it,' said Murdoch. "Governments and regulators are wonderfully crafted machines for mission creep. For them, the abolition of media boundaries is a trumpet call to expansion: to do more, regulate more, control more...we must have genuine independence in news media..there is an inescapable conclusion that we must reach if we are to have a better society: the only reliable, durable, and perpetual guarantor of independence is profit."
It is by now fairly well established that it was in large part by allowing markets to be overly de-regulated that has brought the current economic climate upon us, requiring governments and central banks to intervene through financial bailouts of private firms, stimulus packages, deficit spending and low interest policies. A pure free-market system would have allowed private firms to collapse; instead reluctant tax-payers now find themselves majority share-holders in firms that are 'too big to be allowed to fail'. In the circumstances, you would think Murdoch would be more circumspect in his promotion of the profit motive as a societal good. Of course, what Murdoch really was arguing for was for changing the market design for news provision, and in a manner such that private firms such as his stand to gain.
A large part of this book is devoted to precisely that - market design - after having established the more conventional economic wisdom: that there are gains to be made from trade, and that markets can evolve with little encouragement; that governments have an important role in keeping markets efficient by helping ensure that contracts are enforced, property rights are protected, negative externalities are penalized and competition is facilitated.
The emphasis on market design is not out of place, because it is certainly of great importance, and full of challenges, particularly where the commodities to be traded do not have a historical trading precedent. But despite what the title of the book suggests, this is not really a history of the evolution of modern markets - there is no discussion of non-currency backed transactions; the word barter, for instance, does not even occur in the text.
It also suffers from another significant affliction that ails many non-academic books on economics - the complete absence of any of the aids that are commonplace in the textbook such as demand-supply curves and other diagramatic representations. It has long been a prevalent misconception in editorial circles of popular science books that every equation cuts down the potential readership in half, and it appears that the thinking is spreading into the economic sphere as well. On the positive side, there are a great many examples provided by the author to highlight the points being made which mitigates these disadvantages somewhat.
'It is essential for the future of independent digital journalism that a fair price can be charged for news to people who value it,' said Murdoch. "Governments and regulators are wonderfully crafted machines for mission creep. For them, the abolition of media boundaries is a trumpet call to expansion: to do more, regulate more, control more...we must have genuine independence in news media..there is an inescapable conclusion that we must reach if we are to have a better society: the only reliable, durable, and perpetual guarantor of independence is profit."
It is by now fairly well established that it was in large part by allowing markets to be overly de-regulated that has brought the current economic climate upon us, requiring governments and central banks to intervene through financial bailouts of private firms, stimulus packages, deficit spending and low interest policies. A pure free-market system would have allowed private firms to collapse; instead reluctant tax-payers now find themselves majority share-holders in firms that are 'too big to be allowed to fail'. In the circumstances, you would think Murdoch would be more circumspect in his promotion of the profit motive as a societal good. Of course, what Murdoch really was arguing for was for changing the market design for news provision, and in a manner such that private firms such as his stand to gain.
A large part of this book is devoted to precisely that - market design - after having established the more conventional economic wisdom: that there are gains to be made from trade, and that markets can evolve with little encouragement; that governments have an important role in keeping markets efficient by helping ensure that contracts are enforced, property rights are protected, negative externalities are penalized and competition is facilitated.
The emphasis on market design is not out of place, because it is certainly of great importance, and full of challenges, particularly where the commodities to be traded do not have a historical trading precedent. But despite what the title of the book suggests, this is not really a history of the evolution of modern markets - there is no discussion of non-currency backed transactions; the word barter, for instance, does not even occur in the text.
It also suffers from another significant affliction that ails many non-academic books on economics - the complete absence of any of the aids that are commonplace in the textbook such as demand-supply curves and other diagramatic representations. It has long been a prevalent misconception in editorial circles of popular science books that every equation cuts down the potential readership in half, and it appears that the thinking is spreading into the economic sphere as well. On the positive side, there are a great many examples provided by the author to highlight the points being made which mitigates these disadvantages somewhat.
February 6, 2015
Mr. McMillan, the author of this book, bills this book for those uninitiated into the mysteries of economics and attempts to explain the study and science of economics by looking at different examples around the world of what has happened in markets and explain them using economic theory. Most of the examples he brings up are very interesting, but where this book ultimately falters is in its ability to define economic terms for those who have never taken an economics class. After giving an example, he will then explain it through economics terminology, but usually forgets to define those terms for average readers or makes a sort of aside definition that is easy to miss. Thus, the reader is left to sort out what it all means. Also, his subtitle, "A Natural History of Markets" is misleading. You assume that Mr. McMillian will take you on a point A to point B history of how the world economy developed, like what
Niall Ferguson did in
The Ascent of Money: A Financial History of the World, but he doesn't. On the plus side, for those who know anything about economics, you will appreciate how Mr. McMillan avoids the economic dogmas of the political right and left and even shows how both sides are either wrong or right in certain circumstances. Ultimately, this book is just a series of interesting economic case studies that fails to achieve its intended purpose of making economics understandable to the masses.
Niall Ferguson did in
The Ascent of Money: A Financial History of the World, but he doesn't. On the plus side, for those who know anything about economics, you will appreciate how Mr. McMillan avoids the economic dogmas of the political right and left and even shows how both sides are either wrong or right in certain circumstances. Ultimately, this book is just a series of interesting economic case studies that fails to achieve its intended purpose of making economics understandable to the masses. January 18, 2014
95% of this book is very good or excellent. And then you reach the last chapter and he treats libertarianism as if it were the same thing as anarcho-capitalism. Libertarians don't necessarily want to live under anarchy. But they don't necessarily want to live under a "designed" market.
The example of the dysfunctional EPA auction he gives - and how it gets fixed by private actors in a secondary market - seem to slip right by him - even as he writes about them in his own book. The private market frequently fixes the stupidity of government would be designers. As Adam Smith said, there is a lot of ruin in a nation.
Externalities are largely the result of failures of the government to enforce adequate property rights regimes. That's not a market failure - it's a government failure. There's clearly a role for government in the economy. And sometimes government actors have to try designs. But most of the time they just need to create property rights and enforce contracts. The market, as McMillan does get right, does a much better job of allocation than selfish government actors.
If he had just deleted the last six pages of the book, I would have given it another star.
The example of the dysfunctional EPA auction he gives - and how it gets fixed by private actors in a secondary market - seem to slip right by him - even as he writes about them in his own book. The private market frequently fixes the stupidity of government would be designers. As Adam Smith said, there is a lot of ruin in a nation.
Externalities are largely the result of failures of the government to enforce adequate property rights regimes. That's not a market failure - it's a government failure. There's clearly a role for government in the economy. And sometimes government actors have to try designs. But most of the time they just need to create property rights and enforce contracts. The market, as McMillan does get right, does a much better job of allocation than selfish government actors.
If he had just deleted the last six pages of the book, I would have given it another star.
May 16, 2011
The book makes solid ground as a layman's guide to Economics. It goes on to describe by observational experiments rather than laboratory experiments how, why and when markets have worked. And when they've not worked. This example by example storytelling is one of the strengths of this book.
However, I found the balanced narrative between free-market and controlled markets a little too bland for my taste though. That probably has something to do with my Libertarian views of a Utopia than anything else. What the book came close to saying, but eventually didn't say it was, "Markets are not evil, it's the implementation of markets above the existing system that makes people falter." So again, I wish the book had better personality than trying to balance out the two extremes. Pursing the middle way might be academically safe, but it doesn't do justice to the reader.
Bottom line: read the book. If not for the underlying message, at least for the examples.
However, I found the balanced narrative between free-market and controlled markets a little too bland for my taste though. That probably has something to do with my Libertarian views of a Utopia than anything else. What the book came close to saying, but eventually didn't say it was, "Markets are not evil, it's the implementation of markets above the existing system that makes people falter." So again, I wish the book had better personality than trying to balance out the two extremes. Pursing the middle way might be academically safe, but it doesn't do justice to the reader.
Bottom line: read the book. If not for the underlying message, at least for the examples.
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