Product Description

Capitalism faltered at the end of the 1990s as corporations were rocked by fraud, the stock-market bubble burst and the American business model – unfettered self-interest, privatization and low tax – faced a storm of protest. But what are the alternatives to the mantras of market fundamentalism? Leading economist John Kay unravels the truth about markets, from Wall Street to Switzerland, from Russia to Mumbai, examining why some nations are rich and some poor, why ‘one-size-fits-all’ globalization hurts developing countries and why markets can work – but only in a humane social and cultural context. His answers offer a radical new blueprint for the future.

Product Details

• Amazon Sales Rank: #15153 in Books
• Published on: 2004-04-29
• Original language: English
• Binding: Paperback
• 496 pages

Review
Why does a country such as Switzerland with a population of 5 million have the same total productivity as India with a population of 600 million? In this book, economist John Kay sets out to explain this to the reader with no training in economics. His central theme is that economic systems are inextricably linked to their social and political environment, and that economic outcomes are largely the result of political structures. John Kay defines economic institutions functioning within a social, political and cultural context as embedded markets, and introduces the concept of the American Business Model as the most successful example of an embedded market. The Truth About Markets hits the mark by making a serious subject accessible without needless simplification. But just as economic systems are linked to political systems the message of the book is linked to the author's clear admiration for the American Business Model. Enron and WorldCom are viewed as minor traffic accidents on the financial superhighway, while inexplicably for a book written and published in the UK (although clearly heavily targeted at the US market) the problems of Equitable Life and the upheavals in the pension and life assurance markets pass unremarked. The relative coverage of European versus US economies is unbalanced; the arguable success of the French political economy is given two pages coverage out of a generous 479, and is summarized as 'social democracy's best shot'. Discussion of the emerging market for Intellectual Property is lightweight, while ethical topics such as the environmental impact of economic activity are not viewed as relevant. Markets are viewed as strictly for serious financial players; important experiments in creating micro-markets using alternative models such as Local Exchange Trading Systems are simply not covered. The author justifies these omissions with the disclaimer that 'this is not a book about moral philosophy or the ethics of markets'. But it is difficult to reconcile this with his description of opponents of the American Business Model in London on May Day 2000 as 'sandal-wearing, bicycling protesters'. John Kay has produced a spirited, informative and very readable justification for the American Business Model. But an economic system based on what the author defines as 'self-regarding materialism' depends heavily on internal checks and balances. More robust self-regulation in The Truth About Markets would have moved it from the 'recommended' to 'essential' market. (Kirkus UK)

Richard Lambert, The Times
'an ambitious and brilliantly executed book...It is accessible and witty, and it sheds light on the way the world works'

Martin Vander Weyer, the Telegraph
'written with wit and subtlety...an important contribution to the post-1990s reassessment of capitalism'

Customer Reviews

Great treatise on evolution of markets but no new frameworks
.
A very engrossing, thorough read for any student of economic paradigms. Kay's account of the unique evolution of markets in far-off places is most refreshing. For instance, he tours the flower market in San Remo for a locally grown version of perfect competition. He uses an auction of a painting by Van Gogh to illustrate how liberal economies allocate value to scarce goods. His analysis of electricity deregulation in Britain and the botched privatisations in Russia in the 1990s lead him to the same conclusion: that markets cannot be imposed, but are instead the sum of evolution and adaptation. They thrive within a society's laws and cultural norms; without them they fail.

But this review would be colourless without some grouses so lets point out what would have made this book even more satisfying. Kay lays bare evidence against mankind's extreme selfishness citing examples of tipping, child-rearing or charity. Yet, he skimps on any thoughts about whether more competition should be encouraged in the distribution of health care, for instance, or water supplies, or whether raising or lowering taxes improves economic growth. And what does he have to say when market competition collides with social solidarity? That "these are not always easy to reconcile". You bet.

As a very comprehensive and literate account of contemporary debates over economic models (primarily the vagaries of capitalism), this is a highly engaging read. But readers who are seeking answers to the more difficult and broader questions about the proper role of the state in economic affairs may be a little disappointed.

An excellent book
Professor Kay is one of the leading economists in the UK and writer of one of the best books on corporate strategy (“Foundations of Corporate Success”). In his latest book he aims to explain, describe and justify the requisite framework within which the market economy prospers.

Kay argues, that contrary to common belief, what we refer to as the American Business Model, characterized by unrestrained individualism and minimal government intervention, is not the characteristic framework of successful economies. Indeed the “genius of the market economies to achieve co-ordination without a co-coordinator” works effectively only by being “embedded” in a social, political and cultural context. It is the quality these latter factors which differentiates between poor and rich states. It follows that the principal role of the state should be to allow these conditions to prosper.

Apart from being an authoritative book making a convincing argument this is also an exceptionally well-written and entertaining book, which will appeal to wide range readers. Through a series of “little stories”, he accompanies the reader from the failures of the UK electricity industry to the flower market of San Remo, in order to make each point. This approach brings to life his arguments making it interesting and accessible, even to readers who might lack a background in economics.

Overall, I think this is a very informative and highly rewarding book and would definitely recommend it to people interested in gaining a deeper understanding into the way the markets operate.

Informative and entertaining
For the intelligent non-economist, this book is the ideal introduction to the key economic issues of our time. I have started, but not finished, several other books on economics - Kay's book not only kept me reading, its wit and lucidity also kept me interested and entertained. Highly informative and highly recommended.