Customer Reviews

Everything for Sale: The Virtues and Limits of Markets

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Robert Kuttner's "Everything for Sale" does a fine job of criticizing unregulated markets. The author takes a look at how markets price themselves in various industries and discusses the relative strengths and weaknesses of the pricing model. Kuttner reveals that in most markets, the public good can be best served by both allowing the "virtues" of the market to work freely and by implementing regulations that correct whatever "limits" may be found in any particular market.

Kuttner also includes a moral dimension to his discussion, where appropriate. As we all know, markets respond only to money. But as a society, we have decided that it would be immoral, for example, to deny health care to seniors who can't afford to pay; consequently we have Medicare and Medicaid to fix this fundamental market flaw. Similarly, Kuttner shows us where pricing models in certain industries fail to take proper account of environmental, labor and social costs and suggests common-sense ways to correct them.

Opinions about the value of Kuttner's work vary widely. Laissez-faire idealogues have charged that the work amounts to "socialism" (see one of the reviews below). To judge for yourself, take a quick look at just one of the industries that Kuttner critiques in the book: airlines.

Kuttner calls the Reagan-era deregulation of the airline industry a "failed experiment". He points out the many problems that have occured since deregulation, including: declining levels of passenger service, airline consolidation and monopolistic pricing, loss of service to small cities, circuitous routing of flights, declining safety levels, etc. I think most people would agree with the accuracy of Kuttner's assessment and that indeed, air travel has become much less appealing today.

Kuttner's solution is to create a system of "regulated airline competition". Fares would be set at levels that would allow sufficient funds to be allocated to properly maintain planes, better serve passengers, restore service to under-served areas, increase competition, and so on. I found Kuttner's ideas to be reasonable -- not ideological -- in that they balance the needs of business and the public in a fair manner.

Of course, Kuttner wrote this in 1999. The terrorist attacks of 9/11 have only made a bad situation worse. Ironically, public funds were required to save the industry from insolvency. Therefore one could argue that Kuttner's recommendations for greater public accountability is far from unreasonable.

Again, the airline industry is just one example. Kuttner also has much to say that is useful about healthcare, energy, finance, labor, and more. As some of these industries currently seem to be imploding due to the excesses of laissez-faire (Enron, Arthur Andersen, WorldCom, etc.), Kuttner's thoughts on the dangers of unregulated behavior prevalent in these industries appears to be more valuable now than ever.

In the current climate of investor skepticism and high-profile corporate fraud, tighter controls over business behavior may be just the medicine our economy needs to heal itself, restore investor confidence and ensure that businesses become more responsive to people's needs. In that light, I don't view Kuttner's ideas as socialistic at all; rather, I think Kuttner helps us preserve capitalism by curbing its most destructive tendencies. To that end, "Everything for Sale" can provide guidance to citizens and policymakers who may be pondering how we can build an economy that works for everyone, and I highly recommend it.

Robert Kuttner takes on free trader's myth, which perpetuates the need for pure markets and limited government. He points out how this ideology, which has brought about the deregulation of many industries and continually pressures for reduced government spending -- on infrastructure, research and development -- has seriously retarded wide economic growth. The result of the U.S. economic policy over the last thirty years has created widening income inequality, limited access to universalities such as health care and basic economic security, and a breakdown of democracy that was established to protect American citizens from private tyranny. He challenges the free-market ideologues that continually influence politics and law by preaching the rhetoric of whatever the outcome of the market must be optimal if it is the result of the operation of the market. Kuttner explains that the myth is allowed to perpetuate not do to economic problems, but because of a lack of political power on the part of most Americans.

Kuttner makes a fine argument through his comprehensive survey of most sectors of the American economy and the social effects of unregulated capital. Moreover, he points out that pure market efficiency is only possible in spot markets, and rarely occurs in reality. He further faults the free market ideologues on their notion that everything can be reduced to markets, citing that markets in certain items are contrary to public policy or unlikely to be produced due to the theory of free-riders, such as with public infrastructure. Kuttner explains that the corporate call for "pure markets," freed from regulatory constraints, is really a corporate call for liberation from its extra-market commitments to community and charity.

Kuttner's position for alleviating most of these problems that have arisen through the "pure market" myth is to increase the size and stance of government to a more socialist form similar to those of Western Europe, with a mixed economy. He calls for the government to intervene by taking over administration of extra-market commitments and universalities such as health care and pension benefits, and provide incentives to corporations that are socially responsible to their employees. Moreover, Kuttner seeks a redistribution of economic and political power through a return to a progressive tax system that weighs heavier on persons with greater wealth and income. He contends that Americans need to display the habits of a strong democracy in order to keep markets in their place.

After reading this book, it is obvious that Mr. Kuttner is very passionate about the subject for which he writes. My only critism of his work is that it is a bit cumbersome.

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.

If you really want to understand how the economy works to create winners and losers, this book is the place to start. It is a dangerous book. Four hundred pages overflowing with historic detail. No simplistic models or mathematical equations. No easy answers. Savy analyses of real industries that will be helpful to any stock market operator. The book will be attacked by ideologues and some of its proscriptions are debatable. But no intelligent person can come away from it without a clearer understanding of our business system and the compelling need for mature political solutions to contemporary economic problems.

The point that Kuttner makes in this book is that laissez-faire markets are not always ideal in certain segments of society, and that in these areas, a combination of government regulation and market economics produces the best practical outcome. In the field of healthcare, for example, there are extra-market values--namely, the principle that no one should want of medical care because they can't afford it--that the market doesn't (indeed, CAN'T) account for. Another example is telephone regulation. If it were up to the market, rural populations would never receive telephone service, because the marginal cost of servicing these rural areas is too high. It is a valuable public good to ensure all citizens have access to a telephone in their own home. Laissez-faire economists (often unconsciously) use circular reasoning to find that markets are better. Or, more often, they simply take it for granted.

Well written but often less well thought out, this book gives a great introduction to some of the problems which arise under free-market conditions. "Everything For Sale" gives some very compelling arguments against the mindless worship of the free market which seems so prevalent among professional economists, but also gives some very bad arguments. I took particular issue with his argument against people acting as utility-maximizers, where he uses cigarette smoking as an example of something that people trying to maximize utility would never do - he argues that they would weigh the health risks 30 years down the road and the expense as outweighing the immediate pleasure which smokers derive from cigarettes. In other areas, though, like his discussion of the health-care system, his reasoning and writing is excellent.

The measure of a truly great, effective book is the amount of panic it inspires in its enemies. Judging by the vituperative rhetoric coming from some of the free-market zealots who have read the book, Capitalists must be devastated by Kuttner's clear, rational, and persuasive argument.

Everything For Sale is a powerful response to the wave of ideologically motivated free market boosterism that passes itself off as works of sophisticated scholarship. Notice the subtitle: The Virtues and Limits of Markets. Kuttner does, in fact, praise markets for their strengths. He has little patience, however, for the abstract ideal of a pure market, which is as illusory as Kant's thing-in-itself. He asks that discussions of markets and regulations bearing upon markets account for the way things really work, with conclusions supported by actual case studies.

Instead what Kuttner finds is the scholarship of those questing for the grail of a pure market relies primarily on deductive reasoning, tautologies, abstract models and unlikely presuppositions (the rational maximizer, for example), rather than sound historical analysis. Of course, it is easy to cherry pick regulatory failures, but ideologues that ignore or misrepresent counter examples of regulatory necessity and success disserve the cause of democracy -- they see only the virtues, not the limits of markets.

Kuttner effectively argues for a nuanced view of markets and regulation in his discussion of health care and money markets, in his discussion of democratic, human and environmental values, none of which can be reduced to market values, but all of which appropriately rely on markets to varying degrees to achieve communal and individual good. Kuttner does not argue that regulation is always the solution for market limits and failures, but he decisively rejects that dogma that no matter how bad things are, government involvement will always only make it worse. He rejects the market vs. regulation dualism, and the cynicism that says market values are all that matter.

Everything For Sale presents a well reasoned and well written case for reevaluating the public institutions upon which our democracy (and markets) depends. If anything, it is a more important book today than it was when written in 1996.

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." 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.

Free market zealots will find this book impossible to understand, because the author has a sophisticated ontological understanding of the human being that they can never have. Kuttner, like Freud, Veblen, Polanyi, Galbraith, Packard and many others before him, understands that the human is a vulnerable, emotional being driven by anxiety and susceptible to manipulation by a business class whose ruthlessness has never been in question. This contrasts starkly with the simple-minded utilitarian view of the individual as a free-willed rational calculator programmed to maximise his or her economic interests in a market system that circulates information purely and transparently. This view of the human being as an autonomous hedonist-rationalist has become a self-fulfilling prophecy amongst those who subscibe to it, and they have become in their everyday lives the narrow, simple, unethical and anomic creatures that the belief constructs. Tediously and predictably, all critiques of work such as Kuttner's are grounded in this one-dimensional depiction of the human being. Consequently, all the apparently sophisticated mathematical models constructed by the pseudo-scientists who call themselves 'free-market economists' - even though their internal logics seems to make sense to the simpletons who construct and apply them - are thus spectacular examples of mumbo-jumbo based on a single and catastrophically false ontological assumption. To me, books such as Kuttner's make a strong case for temporarily disbanding economics and reformulating its fundamental metaphysical assumptions under the guidance of more sophisticated social scientific and philosophical disciplines. Well done indeed, Mr. Kuttner, and someone now needs to take up the baton and write a comprehensible book that instructs these Hayekian-utilitarian simpletons about the psychological vulnerability of the emotional human being and the moral complexity of human intersubjectivity in its economic, political, social and ecological contexts.