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on 18 June 2003
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.
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VINE VOICEon 26 February 2009
John Kay's The Truth About Markets is a bold title which had the whiff of the spurious "what THEY don't want you to know" nonsense about it but when the book got an endorsement from Joseph Stiglitz (a Nobel Prize for Economics winner, author of Globalisation and its Discontents), I bought the book and had no regrets. Kay's background is as a Fellow of St John's College, Oxford, Visiting Professor of Economics at the London School of Economics and a regular contributor to the Financial Times.

Perhaps this book is too shallow for those with an academic background in the subject but for this reader who has only stuck his toe in the waters of economic literature (i.e. basically Stiglitz and Paul Krugman), The Truth About Markets provided a rounded approach to a subject that could be considered dense, inward looking and unapproachable.

The subject matter covers quite a range of topics, such as pluralism, production and exchange, General Equilibrium, rationality and adaption; I would have preferred a much lengthier section on how markets manage risk but that is only because of the times we are currently living through - Kay wrote this book in a pre-Credit Crunch 2003. Kay also dismisses the anti-globalised corporatism protesters without seriously considering their grievances, though, as he quotes Naomi Klein's No Logo, he can hardly claim to be unaware of the validity of many of the arguments.

Despite minor criticism, John Kay's book has provided me with much to consider. Exceptionally light on number crunching but filled with involving arguments and practical examples, The Truth About Markets is certainly well worth a read for those, like myself, lacking an understanding of the many general economic theories and frameworks.
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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.
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on 4 January 2011
A marvellous book. It is very well written and it can be easily understood even by people who have not studied any economics before.
He writes very convincingly of the power of markets and demonstrates just why capitalist economies have been a lot more successful than the economies of communist countries. He also brilliantly shows the limits to free a markets and details the areas where they fail.
As a framing device he uses the examples of individuals from different countries and explains why for example a highly educated scientist in Russian earns less than a much less educated farm worker in Sweden.

Occasionally I would have liked him to have gone into more detail on specific points of his arguments and sometimes he is perhaps a little glib but mostly it is excellently argued and quite witty in places.

He is very persuasive in his criticism of the "American Business Model" that the IMF has traditionally forced countries to adopt and that is constantly praised in Business magazines like Forbes and also in Wall Street Journal editorials. He explains the problems it can cause and also that it is basically a fantasy with the USA being in no way an actual example of an extreme free market system with almost no regulations.

There is an interesting section where he discusses adaptive behaviour. If you treat all your workers as being completely self interested, than they will be as that is the best behaviour for them to adopt. The same is true for self sustaining bureaucracies.

The book is extremely prescient in warning of problems in the financial sector. It is a shame that he and many other commentators were not listened to.
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on 12 May 2003
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.
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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.
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on 3 May 2003
I thoroughly enjoyed John Kay’s new book, “The Truth about Markets”. After reading the comments by Joseph Stiglitz and Mervyn King I could not wait to begin the book.
I was not disappointed; this was a carefully researched and highly informative book with a very ambitious goal; to provide readers with an insight into how markets operate in an effective manner. This is accomplished to a great degree and I genuinely felt that I had a better understanding of a wealth of general economic issues.
What is perhaps more surprising is the fact that it is done in a way that makes the book very accessible (by using a wide range of different examples). You can expect this to be as witty and interesting as Kay’s Financial Times column. Fun and easy to read I would definitely recommend this book to people like me, who even though they don’t have a background in economics, share a keen interest in understanding issues such as the collapse of the stock market and the difference in wealth across the world.
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on 13 January 2012
There aren't that many books about economics written in 2003 that still read fine after the financial crisis - but this is certainly one. The only place where I think this book is a bit dated is in its references to China, which looms larger in our world view now that it does in this book.

This is the book on economics I wish I had read before taking my degree. It is a wonderful explanation of economics, and its successes and failures. It's very well written. It uses the device of trying to make sense of economics by comparing the lives of various (fictional?) characters from across the world - which is a very powerful.

I think he is a bit too harsh on the shareholder value revolution of the 1990s - which in at least part was the result of technoogical change and intense competition - and not just wanton destruction.

An immensely enjoyable and enlightening book, even 9 years after it was written.
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on 22 September 2004
Every page has something that makes you say: "Hey! That's really interesting".
Even if you are not interested in Economics, the book is fascinating as it looks at the human nature behind markets.
It is also incredibly well written. It's a page turner and you quickly forget that you a reading a work on non-fiction.
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on 17 May 2014
I found this incredibly hard to read, perhaps I do not understand the basics enough, but this is one of the slowest reads I have ever had, which is a shame because I find the content very interesting, I am on part four but I am not sure if I will ever finish it, I end up re-reading it quite a lot because I get lost in the complexities of what he is saying. I think it is probably designed for people who had studied Economics, I just like to read interesting books about Economics like Freakonomics and Armchair Economist which I find much easier reads.
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