Everything for Sale: The Virtues and Limits of Markets [Paperback]

Recently, the theologian Harvey Cox published a tongue in cheek article in the Atlantic Monthly comparing free market economics to a religious sect. Judging from the reaction to Kuttner's book, Cox's article was right on the money. The book's detractors make dismissive ad-hominem attacks on Kuttner's credentials, inaccurately portray the thrust and substance of his arguments to make them appear ludicrous, or simply assert that any one who is against pure free market ideology is no more than a heretical imbecile. One user's review here - the one that accuses Kuttner of "bloviating" - was lifted verbatim and without citation from the Reason magazine review of the book, hardly a non-biased source of information. It is a prime example of this form of criticism. Clearly its author and I did not read the same book.

I found Kuttner's book to be a reasoned argument against pure laissez faire. Kuttner intentionally aimed the book at the educated general reader and has hit that mark well. His intention was to present empirical examples of non-market interventions that produced better outcomes than market alternatives and he has done that. I challenge the free market critics of the book to address these examples, the book's substance, rather than its theology.

Amazingly so. Although the book was written almost a decade ago, it addresses issues that are tumbling out of today's headlines. After relentless efforts to loosen the dreaded "regulation" in the housing market, America is treated to yet another "market failure," and the very pitchman who were proclaiming the supremacy of "pure, unfettered markets" are the first at the trough asking for a government bailout; if the government fails to act decisively, then it will be bad for the "economy." Or at least Bear Sterns economy. Kuttner's book foreshadows this outcome.

I saw strong parallels between this book, and Bjorn Lomborg's Cool it: The sceptical environmentalist's guide to global warming In Lomborg's book he states very clearly that he believes the earth is warming, and that man's actions are responsible. But his central theme is: How serious is this? And what are cost effective actions given the other problems that could be solved? And the man is pilloried by the ideologues of global warming, who, in their most extreme manifestation, place any equivocation on global warming in the "holocaust denial" category. Kuttner states emphatically that he is a believer in markets, in some sectors of economic endeavor, like supermarkets, they work quite well. But he makes the (to me) obvious point that in most sectors the markets must function in a framework of rules that are designed for the overall good of society, and not just for the narrow framework of a few people's "profit maximization."

Kuttner writes from the perspective of an economist. Yet there is not a single equation in the entire book, but there is the economic jargon, by in large explained well, such as "externalities," that the general reader must master. As a counterpoint to the advocacy of unfettered markets for food, he has an excellent chapter on markets and medicine, in which he carefully builds the case on how utterly inefficient and ineffective "markets" are in delivering health care - and makes the comparison with the much more efficient methods of all the other major industrial countries, who deliver universal health care much cheaper, with far less paperwork. Perhaps the most stunning chapter is on the financial markets themselves. Surely if one sector should flourish under the free market ideology, it should be this one. Yet they invariably swing from manic highs to depressing lows; and when they "crash" all the talk of "no government interference in the markets" goes out the window - and talk of government bailouts comes in.

Kuttner shows flashes of wry humor, as he deconstructs the tautologies of the unfettered free market advocates. The later invariable start with premises that clearly ignore real world activity, and assume that a market's outcome is the highest and most efficient outcome, and then proceed to "prove" various premises. In short, they are closed systems, much like many religions, or the Communist party, that have the "answers" to any real world situation, as long as you accept the initial premises - and ignore real world outcomes!

One of his strongest chapters is "Regulated Competition," in which he builds a solid case for the inevitability of rational regulation, focusing in particular on the airline, telecommunications and power industries. His subsequent chapter extends his arguments to the labor markets - the human dimension.

His views are pithily conveyed in nuggets of wisdom on virtually every page. A couple of examples: "The peculiarly American version of laissez-faire," Schlesinger dryly observed, meant "aid from the state without interference from the state." And "Once again, `revealed preference' turns out to be nothing but denied options."

What I saw as a major weakness of this book, as well as the advocates of unfettered markets that he covers is the complete omission of the rules governing the "military-industrial complex" which is the essential engine of all American economic activity. All the "economic rules" go out the window when dealing with the artificial demand the complex provides - and the ultimate question is: Where would we be if this demand disappeared through an outbreak of real peace?

In the meantime, as we watch the "housing crisis" continue to unfold, this book is an essential read.

(Note: Review first published at Amazon, USA, on August 20, 2008)

I give this book a 15 out of 10. It is an important contribution to a debate currently dominated by mindless zealots (brainwashed by libertarianism, maybe?) of the marketplace.