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Title: The Market System: What It Is, How It Works, and What To Make of It by Charles E. Lindblom ISBN: 0-300-08752-7 Publisher: Yale Univ Pr Pub. Date: 01 April, 2001 Format: Hardcover Volumes: 1 List Price(USD): $35.00 |
Average Customer Rating: 3.75 (4 reviews)
Rating: 1
Summary: Rubbish
Comment: "Professor Lindblom's argument manifests a fundamental misunderstanding of the case for capitalism. Unless some people with money to spend wanted to read books critical of capitalism written by leftist intellectuals, our author would be unable to sell his book. But this does not weaken his claim to the money he is paid for the book: quite the contrary, that very fact is his claim to the money."
"Lindblom's abuse of logic in his argument goes further. Suppose one grants him that because the value of his book in large part depends on the preferences and actions of people besides him, he is not entitled to what people choose to pay him. It hardly follows that it is up to "society" to decide the issue. Lindblom has argued in this way: The value of what someone produces depends on the actions of everyone else, that is, on "the whole system." But this is to reify "the whole system" as if it were a separate entity with rights and entitlements of its own."
""Do you mean to tell me that in your society, other than a claim to liberty to work for wages and to hold and use assets if you can get any, no one has any claim on anyone else, on government, or on society other than what one can claim by offering something in return. . . . You call yourselves human beings?" (p. 114).
Clearly, the spaceman speaks for our author, who elsewhere bemoans the millions of people who would starve, were the market rule strictly applied. Would not all infants fail to reach adulthood, since they make no market contribution? "[T]he world would lie depopulated in a generation" (p. 120).
I venture to suggest that Lindblom has totally misapprehended the issue. The question is not whether people without assets or marketable skills should starve; of course they should not. But does it help these unfortunates to give them enforceable rights to sustenance? A legal enactment of this kind will not conjure into existence any resources, and these can be obtained only from the productive. Why will the poor fare better if they depend on the state to seize wealth from others, rather than rely on charity? Again Lindblom falls into the fallacy of thinking that a market society contains nothing but market transactions."
"Lindblom is for the most part content to repeat his arguments of fifty years ago. Perhaps in another half-century he will grasp what is wrong with them."
Quote: David Gordon,...
Rating: 4
Summary: A Calm but Caring Exploration
Comment: "Think society, not economy." Thus Lindblom, our author, urges the reader to think about the market system in a more inclusive context than we ordinarily are wont to do. To what end?
Well, the subtitle of this book is "What It Is, How It Works, and What to Make of It." As he says early on: "For at least 150 years many societies have been trapped in an ill-tempered debate about market systems. Now we have an opportunity to think about these systems with a new dispassion and clarity. Market ideologues have learned that there is little to fear from communism... For their part, socialist ideologues have realized that aspiring for a better society is not enough. They have to face the complexities of constructing one."
One way of bisecting the population is by distinguishing those who see an imperfect world and want to perfect it from those who see an imperfect world and want to live in it as well as its imperfections allow. Charles Lindblom, a professor of economics and political science, is of the first sort. His viewpoints become clear as the book goes along, and he makes no bones about the imperfections of the various market systems and their supporting political systems. At the same time he is not an ideologue, and does not fall into the trap of yearning for a utopia of the right, or of the left.
Basically, he sees the market system as inducing cooperation and preempting violent interaction over a vast range of social interactions. That these take place mostly with money as intermediary does not remove them from the social sphere: it is, he claims, a false distinction to place economic interactions in some separable sphere from social interactions. The real distinction that the market system makes is quid pro quo: interactions between people involve an exchange - of goods for money, of favor for favor, of dinner at your house for (maybe much later) dinner at my house. But the invention of money and credit has made possible society-wide cooperation (the chain of cooperators to get this computer to my desk runs into the millions, or the hundreds of millions, of cooperating humans). For this the market system gets full credit.
But, as we know from the history of the Industrial Revolution (still going on in speeded-up form in some parts of the world), unfettered capitalism (the unregulated market system, in our terminology) is a harsh sorter-out of its participants into a few big winners (the entrepreneurs), a large number of more-or-less-contented employees, and a large number (although, unless the society is in imminent danger of revolution, not so large as the second group) of "losers" for whom the system offers little but grinding toil and early death.
Excepting such as Robert Nozick and Ayn Rand, most people feel the government has a legitimate role in curbing the excesses of the market system and protecting the citizens from each other within it. For it is a particularly transparent sophistry that all participants in the system come to it as roughly equally competent. To consider just one sort of inequality: many participants cannot do the arithmetic (don't even know that there is arithmetic they should be doing!) that would tell them whether they are getting a reasonable value when they buy something on time. Nor, say, do they understand the savage rate of compounding that credit card debt, left unattended, incurs.
The great political schism of our time is not religious, but free-market vs. government intervention. It can take a vast number of forms, and debate can get bogged down in symbolically important issues of little practical consequence while other more important effects are ignored. It is the virtue of this book that it adopts a more neutral terminology ("the market system") and is able to discuss and evaluate a vast range of issues on which sides are taken without demonizing one side or the other.
The weakness of this book is its inconclusiveness. It can't be helped. One can read a book about welfare reform, for example, and come away convinced of the author's prescription, because he has carefully stage-managed his argument to minimize or hide difficulties. Lindblom does not have that luxury: every issue really does have two sides. His general views are not in doubt: the market system is a very good thing; it needs government controls; government can, does, and should use the market system when it can it further the collective goals of the society.
But: how much freedom, of what sort, is enough? Is a command political system that employs market incentives just about as good as democracy? What possible alternatives are there to a market system? What can be done about corporations, these vast engines of production that are increasingly out of the control of the political system?
I enjoyed this book, although I'm not sure what I now know that I didn't already tacitly know. There were a few epiphanies, but they went by so quickly that I suspect I could profit much from a second reading. There are no pictures, charts, or bold-faced claims: the book has no visual aids to highlight its points. The prose is calm, and the arguments for or against a position are spare, with little or no supporting evidence. One reason for this is the high level at which the points are discussed: Lindblom is not making policy, but rather pointing out the wide range of possible answers to many of the vexed questions of the day. One cannot doubt the truth of most of what he says. The question is, what is one to do with it?
If one is a person of the second type, the answer is, nothing. But reformers should be given pause: Perhaps, after reading this book they may be persuaded to make their solutions less sweeping, in keeping with a new appreciation of the subtlety and richness of the problems of organizing a society around a market system that is intertwined with a political system.
Rating: 5
Summary: The Market System: Understood Properly!!!
Comment: The main objective of Lindblom in this book is to elucidate the market system, not only in relation with the economic system but also in relation with the "social system", about what it does mean, how it does work, and what the alternatives it does have. Though the author is a supporter of the market system, he clearly demonstrates the efficiencies and inefficiencies, and accomplishments and failures of the market system in some important points for the society as a whole. At a point of time in history in which the alternative systems, including socialism, to market system have collapsed and the market rhetoric has pervaded all spaces of civic discourse, especially that regarding public sector management, Lindblom presents an excellent account of the market system that I believe will be very helpful to anybody who is interested in applying the market model to the public sector, and to anybody who believes (sometimes blindly) that the State is an impediment to the effective and efficient functioning of the market system.
The book is grouped into three parts. In the first part titled "How It Works" Lindblom examines the dynamics of the market system that lead to "great accomplishments". In the second part titled "What to Make of It" the author focuses on the operating rules of the market system, the relationship of the market system with and impact on democracy and culture. In the third part titled "Thinking About Choices" Lindblom envisages the alternative system to the market system that is expected to solve the problems of the market system. I will try to summarize some important points below.
To Lindblom, "a market system is a method of social coordination by 'mutual adjustment' among participants rather than by a central coordinator" (p. 23). To better grasp the role of the market system in coordinating the society, the author advises us to focus on and think the society, not the economy. In the market system, millions of people think and act without a great mind's planning and intention (say, central planning bureaucracy in socialist systems). "The market system is not a place but a web, not a location but a set of coordinated performances" (p. 40). The important point Lindblom tries to accomplish is that "it is a mindless and purposeless market system that accomplishes the great tasks of social cooperation" (p. 40). The market system wheel is rolled by intended and unintended behaviors of the individuals, but it creates an efficient functioning that was dreamed but could not yet have been accomplished by centrally intended systems such as socialist system. Lindblom approaches social coordination and "peacekeeping" in close relation to each other. Because of scarcity, according to the author, there is an inherent danger that people find themselves in fight to each other for determining who will get what and in what amount. "The market system", with the help of its formal and informal rules, "produces patterns of behavior that themselves reduce mutual injury and keep peace in the society, quite aside from inducing people to obey the law" (p. 44). Although "the market system makes societies peaceful, but that is not necessarily efficient, equitable, or humane" (p. 44), Lindblom cautions.
Lidblom believes that although enterprises and corporations are of critical importance in the market system in making proximate decisions (that transform inputs into outputs), he adds a caution that "the more the coordination by corporate management, the less by the market system", and he goes on to say that "The corporation is indeed an alternative to the market system" (p. 78). Why? Because the corporation can become an "island of command in market sea", by vertically integrating its production and by horizontally diversifying its mix of goods and services In these cases, multilateral cooperation among participants in the market system transforms itself into the unilateral hierarchical decision making of corporate managers, a form of decision-making that is more different than the market system's mutual adjustment, more similar to the central planning system's top-down decision making. This is a very important point that attracts our attention to the vital role of the State in ensuring the proper functioning of the market system and assuring fair competition.
Lindblom examines a large number of operating rules that lead the market system to producing efficient results in the domain in which it is mainly responsible and able to. This operating rules ranges from "quid pro quo" to "efficiency prices". Though generally market system is seen "completely" efficient as compared to "witch government", Lindblom demonstrates how the market system creates and feeds inefficiencies (negative spillovers, income inequalities are some among many others) and fails in many points that necessitate the State intervention to keep the "civilized" society get across the road.
One point in the book that impressed me deeply is how the market system, through its elite, creates (that I can call "anomalies in democratic system") what Lindblom calls "undemocracy". Lindblom also wages an effective critique on "granting the enterprise a citizen's rights (corporation as citizen) and demonstrates (with examples) how this "grant" can give (or gave) way to serious problems for the democratic system. In sum, Lindblom believes that "a society has to pay heavily for its market system in some loss of democracy (p. 250).
The inefficiencies and dangers of the market system constitute no reason, according to Lindblom, to abandon the market system. The alternative to the market system is not radically different from the market system itself today in function, but it is a state-supported market system that is oriented to detecting the problems and providing the solutions that the market system fails to do.
This book is supra-excellent that I cannot portray within limited lines. I believe that Lindblom is a great mind and a beautiful writer. Highly recommended for anybody who thinks that s/he knows the market system very well.
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