Forthcoming book – a summary

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A flavour of John’s forthcoming book, ‘The Truth About Markets’.

The Truth About Markets will be published in the UK and Europe on 1st May 2003 by Penguin. Continuing information about it is available at thetruthaboutmarkets.com. It is intended to be a book about economics for people who wouldn’t normally read a book about economics. For the same reasons that they wouldn’t be pleased to hear their son or daughter was dating an economist. They would expect the individual concerned to be (a) boring (b) amoral (c) concerned with issues that are largely irrelevant to the real world, and (d) full of self-importance.

I hope that none of these things will be true of my book. I will try to persuade its readers that economics is not boring and that it does not embrace a value system which is cut off from the ordinary decencies of life. And that economics is relevant to everyday issues: that economists do have some answers to questions about how the economic systems of societies work but that there are also many aspects which are understood only very imperfectly. The book is aimed at the sorts of people who read the popular science books which have been so successful in the past decade. But it is also an attack on what I call the American business model – the view that economic success is best achieved by encouraging people to be extremely greedy and imposing as few restrictions as possible on their self-interested behaviour.

There are societies whose economies are organised in that way – Nigeria and Haiti come to mind – and they are very poor. My book talks of the “embedded market” because the reality of successful market economies – including the US economy – is that they operate within a complex social, political and cultural context, and could not operate outside that context. It is because markets have to be embedded in this way that attempts to transplant economic institutions – most recently and most strikingly in Russia – have failed. If the characteristics of successful economic institutions could be divorced from their context there would not still be so many poor countries in the world.

So much of the book will be devoted to explaining how the social institutions of market economies deal with managing information, securing risk, building organisations, and determining the rights, rules and regulations of economic society: questions which the American business model is, in the main, unable even to ask, far less answer. In doing so, it will answer many of the questions you didn’t even know you want to ask, like

– why Australian menus have the same meats as European ones but different fish?

and

– who paid to build lighthouses?

as well as questions you were afraid to ask, like

– isn’t much of what goes on in the City a waste of time?

and

– is the Portrait of Dr Gachet really worth $82.5 million?

You might think the book I am describing – which stresses that people are not always greedy and selfish and that competitive markets are neither the best of all possible worlds nor very common in real life – is an attack on mainstream economics. If my fellow economists don’t like it, it will be because it doesn’t contain enough equations. (It won’t contain any, I promise). My book will in fact try to make accessible much of the most recent thinking in economics – about information, about risks, about contracts. In revisiting the American business model I will be criticising a popular view of what economics is, rather than economics itself. As Keynes famously remarked “practical men, believing themselves exempt from any intellectual influence, are usually the slaves of some defunct economist.” This has never been so true as it is today.

John Kay

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