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Title: Whither Socialism? (Wicksell Lectures) by Joseph E. Stiglitz ISBN: 0-262-69182-5 Publisher: MIT Press Pub. Date: 31 January, 1996 Format: Paperback Volumes: 1 List Price(USD): $25.00 |
Average Customer Rating: 3.75 (4 reviews)
Rating: 5
Summary: Economics of the Real World
Comment: Stiglitz shows how much things can change, when you drop assumtions like costless information, zero transaction costs etc. According to the general equilibrium theories he crizices, a central planner could archive an outcome that is at least as efficient or better than the market, by imitating perfect competition (Lange-Lerner-Taylor Theorem). Stiglitz shows that by dropping unrealistic assumptions both real markets and market socialism aren't that efficient as the perfect competition paradigma predicts. What is needed is competition and some state regulation. He makes a good case for a third way between neoliberalism and central planning.
There is no math in the book, so it can be read at many levels. It covers a broad range: Competition policy, privatization theory, forms of competion and much more. After reading it, I had a much better understanding of real world problems economies face.
On a side note: Nicholas review is simply wrong. Stiglitz employs almost only rational choice models. Problems occur because information is costly, not because people are dumb.
Rating: 1
Summary: Silly simplicity
Comment: An interesting book, perhaps worth more than a single star, but, please, how silly are people according to great economists? The premise of the market failures of the book is the inability of writing complex contracts. A smoking at home paradox disappears if you can contract with the insirance company about fires from smoking. A race-to-the-bottom collective action problem between lessors and lessees disappears if the lessee can be induced to use specific types of care--type of paint when refinishing or type of fertilizer when planting, for example.
Rating: 4
Summary: Exposes informational shortcomings of Neo-classical model
Comment: Joseph Stiglitz makes a powerful argument that neither capitalism nor socialism can achieve the economically efficient outcome suggested by the neo-classical model. Neither markets nor central planners can optimally direct resources to their most productive uses. The information required to do so is simply not available.
The neo-classical model suggests that the forces of supply and demand result in equilibrium, market clearing prices - a single price for each commodity. We see all around us evidence that real world processes to not achieve this optimal end. The same items sell for different prices at different stores; it is possible for significant numbers of workers to remain unemployed for long periods of time. Stiglitz explains that this outcome reflects informational imperfections in market generated prices. It is costly for shoppers to compare prices in every store before they make purchases. Employers may pay employees higher than market clearing wages to increase worker productivity, resulting in prolonged unemployment. If market generated prices and wages were as informationally efficient as the neo-classical model suggests, Stiglitz argues that market socialism could be just as efficient as free market capitalism. Markets could be permitted to function to the degree necessary to generate prices, which central planners could use to direct the economy. Stiglitz further argues that the most critical information planners need, to plan large scale investments, are not generated by markets anyway, because the appropriate futures markets (where investors could insure against bad investments) can not exist.
Stiglitz's explanation of how the neo-classical model of constrained optimization cannot describe real world phenomena is compelling, as is his argument that both market socialism and market capitalism face problems of information and incentives. Where Stiglitz is weakest is when he casually asserts, as he often does in this book, that government intervention could resolve some of these problems under either system. He routinely asserts that government intervention could address, for instance, problems of externalities through the application of Pigouvian taxes. He does not, however, discuss how government might determine the proper tax,(in the absence of a market in the externality), or how it might insure its application in the face of special interest political pressure. In his calls for government intervention, government is treated as benevolent, omnipotent and omniscient.
Stiglitz presents a coherent argument of why market socialism failed in the real world, and further, why market capitalism, as we see it practiced around us, does not live up to the promise of the neo-classical model.
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Title: The Roaring Nineties: A New History of the World's Most Prosperous Decade by Joseph E. Stiglitz ISBN: 0393058522 Publisher: W.W. Norton & Company Pub. Date: October, 2003 List Price(USD): $25.95 |
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Title: The Rebel Within: Joseph Stiglitz and the World Bank by Joseph E. Stiglitz, Ha-Joon Chang ISBN: 1898855536 Publisher: Anthem Press Pub. Date: 25 February, 2002 List Price(USD): $24.95 |
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Title: Towards a New Paradigm in Monetary Economics by Joseph E. Stiglitz, Bruce Greenwald ISBN: 0521008050 Publisher: Cambridge University Press Pub. Date: 04 September, 2003 List Price(USD): $22.00 |
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Title: The Great Unraveling: Losing Our Way in the New Century by Paul Krugman ISBN: 0393058506 Publisher: W.W. Norton & Company Pub. Date: September, 2003 List Price(USD): $25.95 |
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Title: Globalization and Its Discontents by Joseph E. Stiglitz ISBN: 0393324397 Publisher: W.W. Norton & Company Pub. Date: April, 2003 List Price(USD): $15.95 |
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