The Truth About Markets: Why Some Nations are Rich But Most Remain Poor
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Capitalism faltered at the end of the 1990s as corporations were rocked by fraud, the stock-market bubble burst and the American business model – unfettered self-interest, privatization and low tax – faced a storm of protest. But what are the alternatives to the mantras of market fundamentalism?
Leading economist John Kay unravels the truth about markets, from Wall Street to Switzerland, from Russia to Mumbai, examining why some nations are rich and some poor, why ‘one-size-fits-all’ globalization hurts developing countries and why markets can work – but only in a humane social and cultural context. His answers offer a radical new blueprint for the future.
itself been selected for. Attempts within rich states to subvert it have sooner or later failed, although the most extensive subversion – in Germany from 1933 to 1945 – was protracted and horrific in human and material cost. A complex modern economy cannot be managed through participative democracy. Modern democracies do not have mass involvement in decision-making; they use pluralist and disciplined processes to establish the legitimate authority of those who do make decisions. Social
Autonomous bodies tend to define their own values and purposes. These may – as with MacIntyre’s fishing crew – match their objectives but may equally – as with Havel’s bureaucracy – be self-generated and self-sustaining. Autonomy is only possible in conjunction with the processes of audit and selection, and these function most effectively in conditions of disciplined pluralism. Disciplined Pluralism Market economies are not about harnessing greed, and the elevation of greed as their dominant
centre of this new world was found. ‘If 100 years ago you had come to a visionary geo-architect and told him that in the year 2000 the world would be defined by a system called “globalization”, what sort of country would he have designed to compete and win in that world? The answer is that he would have designed something that looks an awful lot like the United States of America.’6 The US economy performed well in the 1990s. Business Week proclaimed the ‘new economy’ – technology had transformed
Yes, they look at the expected rate of return on the investment or the deposit. When businesses decide where to put their plants, they look at the level of prices and wages and assess the political, social and economic infrastructure. When treasurers decide where to hold liquid assets (or liabilities) they look at interest rate differentials and what they expect to happen to exchange rates over the next few months. MIRB: So your recommendation is turn on, tune in… SM: The exchange rate at any
a share of what the diner pays. The revenues of the organization become the incomes of individuals – employees, investors, shareholders.7 Figure 3.1 The distribution of world income Box 3.1 Inequality in world income distribution Is the world distribution of income becoming more or less equal? The answer to this central economic question is hotly disputed, in academic discussion, among international agencies and in popular debate.* Yet the main disagreement is not about the facts – most