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32 of 33 people found the following review helpful
5.0 out of 5 stars An excellent book
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...
Published on 18 Jun 2003 by elina155

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1 of 1 people found the following review helpful
3.0 out of 5 stars The Whole truth, and Nothing but the Truth?
What are markets? If you watch CNN and Bloomberg TV, you would be forgiven for thinking that markets are restricted to Wall Street, and that their performance is measured by opaque numbers like the Dow Jones or the FTSE 100. John Kay, a professor of economics at the London school of Economics, examines the meaning of markets, where they work and the theory that underpins...
Published on 19 Dec 2009 by A. O. P. Akemu


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32 of 33 people found the following review helpful
5.0 out of 5 stars An excellent book, 18 Jun 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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29 of 31 people found the following review helpful
4.0 out of 5 stars Great treatise on evolution of markets but no new frameworks, 7 May 2003
By 
Shashank Tripathi (Gadabout) - See all my reviews
(VINE VOICE)    (REAL NAME)   
.
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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1 of 1 people found the following review helpful
3.0 out of 5 stars The Whole truth, and Nothing but the Truth?, 19 Dec 2009
By 
A. O. P. Akemu "Ona" (Rotterdam, The Netherlands) - See all my reviews
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This review is from: The Truth About Markets: Why Some Nations are Rich But Most Remain Poor (Paperback)
What are markets? If you watch CNN and Bloomberg TV, you would be forgiven for thinking that markets are restricted to Wall Street, and that their performance is measured by opaque numbers like the Dow Jones or the FTSE 100. John Kay, a professor of economics at the London school of Economics, examines the meaning of markets, where they work and the theory that underpins them; his main thesis is that markets are the products of a long process of political, social and economic evolution. Indeed, markets can only exist within a certain political context; therefore, it is very difficult--if not impossible--to export market mechanisms from one culture to another.

He explains that with the fall of communism, "capitalism" became ascendant. But what is capitalism? Professor John Kay, using the lives of (fictitious) people in Switzerland, Russia, Sweden, Mexico, Indian and South Africa, explains there is no one-size-fits-all capitalism. By examining, the international division of labour that the various countries enjoy, he shows that the Swiss, with no natural resources to speak of, are the richest people on the planet because they enjoy the benefits of a highly educated population, access to international markets, and have developed a comparative advantage in chemicals, pharmaceuticals, high-value manufacturing and financial services. On the other hand, the life of a rural South African farmer is miserable because his country does not participate in the international division of labour; the farmer could be living on the moon for all intents and purposes.

More importantly, Professor Kay challenges market fundamentalism, a close relative of the Washington Consensus, a school of thought prevalent in the World Bank and caricatured in a typical freshman Republican. He typifies this thinking in the American Business Model (ABM), an acronym for deregulation, privatisation, low taxes, and unfettered self-interest. For John Kay, the American Business Model is a shabby description of the way markets--even the American economy--works; the only place on earth where the ABM holds sway is in failed states like The Congo and Sierra Leone.

No, markets and economic systems in every developed country are not based on unfettered self-interest; there is a remarkable degree of trust in the most developed countries like Norway, Sweden and Switzerland. Moreover, these economies are high-tax, high regulation economies and they still outperform the poster child of the ABM: the United States. Professor Kay argues that the ABM is very limited conception of markets and how they work. Foisting the ABM of unsuspecting Third World countries--via the IMF and World--was predictably disastrous.

According to Professor Kay, even though a well-trained Russian scientist may be `smarter', and more hard-working than his Swiss counterparts, he (the Russian scientist) cannot dream of commanding the same salary as the Swiss simply because of the society into which he was born. The implication of this argument is that a person's economic fate is largely a product of the country into which he/she was born. The subtext to this position--and John Kay also makes this case--is that rich countries have always been rich and will continue to do so, whereas poor countries because of their historical inability to participate in the international division of labour will always be poor. In effect the answer to the question, why are some nations poor and others rich, is: the rich are rich because they have always been rich and the poor are poor because they have always been poor. To my mind, Professor Kay's position is unsatisfactory.

How then can we explain the dramatic rise of the Asian Tigers (Singapore, South Korea, Indonesia, Thailand and Malaysia), and more recently, India and China? Forty years ago, these countries were dirt-poor, but they have staked a place in today's international economy by building new comparative advantages in manufacturing and services.

Professor Kay only got it half-right. Poor countries today are indeed poor largely because they do not participate in the international market place. However, the evidence from Asia suggests that poor countries are not condemned by their histories, but that they--through visionary leadership--can change their fates by participating in the international market place. For challenging the prevailing concept of markets and globalisation (the ABM), but failing to tell the whole truth, I think The Truth About Markets deserves three stars. If you want a credible account of how the poor countries in Asia transformed into Tigers in the space of three decades, then I suggest Michaels Schuman's The Miracle.
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1 of 1 people found the following review helpful
5.0 out of 5 stars An excellent book., 12 May 2003
By A Customer
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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42 of 48 people found the following review helpful
5.0 out of 5 stars Informative and entertaining, 27 May 2004
This review is from: The Truth About Markets: Why Some Nations are Rich But Most Remain Poor (Paperback)
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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7 of 8 people found the following review helpful
5.0 out of 5 stars Highly recommended., 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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27 of 32 people found the following review helpful
5.0 out of 5 stars Incredibly well written, 22 Sep 2004
This review is from: The Truth About Markets: Why Some Nations are Rich But Most Remain Poor (Paperback)
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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37 of 45 people found the following review helpful
3.0 out of 5 stars Having your cake and eating it, 27 Mar 2007
By 
Chuck E (UK) - See all my reviews
(VINE VOICE)   
This review is from: The Truth About Markets: Why Some Nations are Rich But Most Remain Poor (Paperback)
John Kay has little time for the ultra-free market madcaps that seem to have taken a stranglehold on US economic and political ideology arguing, as does John Gray (albeit from a different perspective), that as an ideology it promises to be as destructive of society as Marxism. As he points out, the belief that a company's paramount responsibility is to its shareholders ends in the graveyard marked Enron.

As M&S shareholders were to find, when a CEO decides that his focus should be on the company's share price rather than the product or service it's offering, it's time to sell!: "It is not true that profit is the purpose of a market economy, and the production of goods and services is a means to it: the purpose is the production of goods and services, profit the means." The fact that such a truism needs repeating shows just how completely the lunatics have taken over the asylum.

The promotion of self-interested, self-regarding capitalism at the expense of the other factors that influence human behaviour becomes a self-fulfilling, but ultimately destructive dead-end: "Market economies are not about harnessing greed, and the elevation of greed as their dominant value undermined them." Unfortunately, Kay talks about this in the past tense - as if the `American Business Model' is past its sell-buy date. While this may be true in terms of theory, in practice it remains in the ascendant and is in the process of cutting swathes through the provision of public services.

Kay is very good at presenting the paradox that `market failures' are, in fact, a sign of the triumph of `disciplined pluralism'. It's a kind of `heads I win, tails you lose' argument for those who are not as enamoured of the power of markets. When the dot.com bubble burst, or Enron imploded this was proof of the robust nature of the market. Market failures prove just how invincible the market really is.

As a defence of market capitalism it is well worth reading (and John Kay is an excellent writer with an engaging sense of humour - which is a bonus), but Kay's emphasis on the `small stories' in reaction to the meta-theories of the neoliberal fantasists leaves a lot of questions unanswered. He rightly points out how health insurance will struggle to survive the advent of genetic testing but can't bring himself to endorse a publicly funded service. He rejects comprehensive education but doesn't suggest an alternative. He extols US-style higher education (which he curiously claims remains accessible to those on low incomes), despite the fact that grafting a system from one economy, with its own particular history/culture, onto another seems to run counter to his central thesis.

He seems to accept that unemployment insurance, pensions and the relief of poverty have to be addressed by the state, without quite endorsing it. He rejects state planned energy policy, but accepts that private provision will mean the lights can go out. His optimism convinces him that the market will provide alternatives to fossil fuels. He seems to accept the case for a minimum wage, but argues that the norms and values of a society can never be substituted by statutory controls. It doesn't take much thought to consider instances where statute has proactively shaped the norms and values of a society (slavery, seat belts, drink driving, drugs, homosexuality), just as a minimum wage can both reflect and reinforce acceptable standards.

This is indicative of his downplaying of the role of the state in the emergence of many of the major developments in 19th/20th century economies (road/rail/aircraft/communications/the space programme/information technology/protecting emerging sectors and so on). Certainly, as he argues, history is littered with govt-sponsored failures, but another reading would give more credit to the power of govt. to institute and encourage nascent economic development than he allows.

Ultimately, the author is much better at saying what he's against: neoliberalism, socialism, social democracy, the Third Way, Will Hutton, than what he is for - a kind of woolly laissez-fairism that seems to plump for the rather circular argument that what works is what works! I suppose my gripes are down to the fact that I was hoping the book might, as Joseph Stiglitz claims on the dust cover, tell us what should be the role of the state, it's never quite that clear cut. We are told that there are things the market won't (indeed can't) do, but Kay isn't quite able to advocate state intervention.

Oh... and the answer to why some countries are rich and others poor? That's just the way it is. No need to feel guilty about it. They'd be poor anyway. Dr Pangloss is alive and well!
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1 of 1 people found the following review helpful
5.0 out of 5 stars Excellent book for leisure and as a text book., 29 Aug 2013
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I first read this when I was a fund manager. nowadays I use it as text book for a master's course in my university and it has been great for students to understand this profound subject. No other book covers these issues as good as Mr Kay does and I have read many...
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1 of 1 people found the following review helpful
5.0 out of 5 stars Fantastic, 19 May 2013
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This review is from: The Truth About Markets: Why Some Nations are Rich But Most Remain Poor (Paperback)
This is a well written, very informative and well rounded book by John Kay. I thought the fact it was written over 10 years ago (thus missing the whole recent financial crisis) may have resulted in it seeming a little out of date, but it really doesn't. From the fall of planned economies in the Soviet Union to unbridled free-market capitalism, it's all here and described delightfully well.

Certainly well worth the penny (plus postage) that I paid for it!
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