The Surprising Design of Market Economies (Constructs Series) [Hardcover]

Alex Marshall (Author)

Book Description

Publication Date: September 1, 2012 | Series: Constructs Series

The "free market" has been a hot topic of debate for decades. Proponents tout it as a cure-all for just about everything that ails modern society, while opponents blame it for the very same ills. But the heated rhetoric obscures one very important, indeed fundamental, fact—markets don't just run themselves; we create them.

Starting from this surprisingly simple, yet often ignored or misunderstood fact, Alex Marshall takes us on a fascinating tour of the fundamentals that shape markets and, through them, our daily economic lives. He debunks the myth of the "free market," showing how markets could not exist without governments to create the structures through which we assert ownership of property, real and intellectual, and conduct business of all kinds. Marshall also takes a wide-ranging look at many other structures that make markets possible, including physical infrastructure ranging from roads and railroads to water systems and power lines; mental and cultural structures such as common languages and bodies of knowledge; and the international structures that allow goods, services, cash, bytes, and bits to flow freely around the globe.

Sure to stimulate a lively public conversation about the design of markets, this broadly accessible overview of how a market economy is constructed will help us create markets that are fairer, more prosperous, more creative, and more beautiful.

Editorial Reviews

Review

Marshall’s thoughtful critique accounts for social dynamics often ignored by modern economists and is grounded in a multitude of fascinating examples, underscoring his thesis that we can, and should, debate the powers allotted to our creations, rather than let them, falsely, set the terms of their own existence. (Publishers Weekly 20120706)

Review

This book debunks the free market orthodoxy that markets are ‘natural’ things that should not be meddled with. Taking us through history from the Athenian ‘owl’ coin to the Founding Fathers, from the American Civil War to Korean economic development, from Gone with the Wind to the Sundance Film Festival, the book shows how all markets are actually built upon carefully designed ‘artificial’ structures. Having read the book, you will not be able to spread Land O’Lakes butter on your bread or drive along Route 66 in the same way as you used to. An eye-opener. (Ha-Joon Chang, University of Cambridge, author of Bad Samaritans and 23 Things They Don’t Tell You About Capitalism )

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Product Details

• Hardcover: 288 pages
• Publisher: University of Texas Press (September 1, 2012)
• Language: English
• ISBN-10: 0292717776
• ISBN-13: 978-0292717770
• Product Dimensions: 6.1 x 1.2 x 9.1 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 5.0 out of 5 stars  See all reviews (4 customer reviews)
• Amazon Best Sellers Rank: #569,387 in Books (See Top 100 in Books)

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Most Helpful Customer Reviews

8 of 8 people found the following review helpful

5.0 out of 5 stars We Design the Markets, Not the Other Way Around August 25, 2012

By Shepherd Siegel

Format:Hardcover

Alex Marshall has written an important book that comes at a critical time, a time when Americans are developing--finally--a more sophisticated and deeper sense of economics, class, and politics. Nothing like a bad economy to make us all a little wiser. Marshall's basic premise is all too true: that the `market economy' is a complex concept that has multiple interpretations, manifestations, and designs. He reminds us of the fact that corporations and private enterprise operate with the permission of government, and thus that permission can be withdrawn, can be neglected, and most importantly, can be designed with rules and regulations that draw a market into service of the common good. So that if--and admittedly a big if--a government is a democratic one, that is exactly what should happen, once the will of the people prevail over the influence of lobbies and special interests. It is precisely this kind of thinking that can foster solutions that reach across the political divide and bring Americans to a more broadly held common intention. By providing multiple examples of working cooperatives like Land O' Lakes, Ocean Spray, Borden, and energy and communication cooperatives; European models of more democratic governance of corporations; Madison's proposal of a National Companies Act; and many others, we can, as Marshall states, discover that "Our hands are on the steering wheel, more than we usually recognize."

10 of 11 people found the following review helpful

5.0 out of 5 stars You wont think about markets the same way after reading this. September 12, 2012

By Robert H. Clark

Format:Hardcover

After reading "The Surprising Design of Market Economies", I was reminded of the saying (whose author escapes me at the moment) to the effect that the primary role of wise men is to remind the rest of us of the obvious. I don't see how an intellectually honest person can read this book and not have the way they think about economics shift in significant ways. For me it cleared some major conceptual clouds that I think are at the root of a lot of the ineffectual economic thinking, especially on the Right. We tend to think and talk about the economy as if it is a separate entity onto itself; that if you peeled away all the government regulation that is artificially imposed on it, you could see it in its ideal, pristine form, the way God or Human Nature intended it to be, ie "The Free Market".

What this book makes abundantly clear, through interesting every day and historical examples, is that in reality if you peeled away all the government regulation and looked, there would be nothing left to see. Well maybe 2 guys in animal skins trading potatoes and hoping the other isn't hiding a bigger knife than he is.

In essence there are as many "Free Markets" possible as there are variations in the laws that define everything involved in human interaction, and in the government entities that enforce these laws. The devil is in the details. Economies are designed and constructed by governments (hopefully through democratic process), there is no alternative. This is obvious once you think about it but has been completely obscured by the way we frame our thinking about the topic. And it is a profoundly important idea because it reveals that somebody is always writing these laws and designing our economy.... In a society like ours that allows unlimited wealth concentration and doesn't restrict political contributions, those people are overwhelmingly the rich. Since the late 1970's they have been designing an economy that progressively benefits them at the expense of the rest of us, while without irony, bemoaning government regulation. After reading this book you will know that economics is not a simple choice between "The Free Market" designed to be what most benefits the wealthy and Socialism.

An eye opening example of this is the material comparing corporations and cooperatives. The joint stock, limited liabilty, legally a person, corporation as an institution is the heart of our economy, this institutional design overwhelmingly determines how economic wealth is created and distributed. Yet there is nothing "natural" about it. The laws governing the specifics of its details and function are complicated and have changed a lot over time. Different corporate laws or a different business institution design would result in a very different economy that was no less "Free Market". We could just as easily have an economy based on the Cooperative institutional model which has been around just as long. Cooperatives are significant but relatively minor players not because they don't work, but because we have purposely designed our economy through our laws around the corporate form. And over the last hundred years corporations have used their financial influence to make sure continued changes in law promote their interests. You can agree with me or not that an economy of co-ops would be as much of a market economy as our own, but vastly more equitable in how wealth is shared; but the point that Mr. Marshall makes so well is that we choose exactly what businesses look like as corporations or cooperatives. The details of their design and the outcomes that result just don't happen.

I think a strong case can be made when one fully grasps the implications of this, that the conceptual viability of Libertarianism disappears. It is revealed as worldview that sees a separation between government and economy that can not exist. What does "minimal government intervention in the economy" really mean in the face of the infinite number of ways the laws defining companies and property etc.. can be written? Note this is my conclusion, not the author's.

The last point I want to make about the book is that it is a great read. Mr. Marshall is a journalist not an economist and his eye for illustrative, fascinating historical and current day examples make his arguments that much more intuitively persuasive.

Highly recommended. Read more ›

1 of 1 people found the following review helpful

5.0 out of 5 stars Surprisingly Good! January 10, 2013

By J Doyle

Format:Hardcover

I have to say, I haven't read much in the arena of markets and economics in general, and picked this book up with only mild interest. At first. I quickly found the book to be a really fascinating foray into the whole myth of the 'free' market. I suppose that I've always assumed that markets were, in the U.S. anyway, pretty-sorta-kinda- free, but Mr. Marshall eloquently disabused me of that notion in a hurry. What I found, much to my shock, was that markets are actually largely controlled by laws and regulations that favor large corporations and the rich. I suppose, now that I look at it, I shouldn't have been surprised! But I had no idea that markets were so manufactured, so contrived- and not so much a matter of if, but how, and by whom.

Marshall shows us that we don't really have a choice in all this- markets are inherently in need of good design and intelligent regulation- and that despite libertarian ideals and hopeful illusions, our economy and it's markets are designed and set up from the get-go. There's no way around it- the best we can do is to do it consciously and skillfully. But by whom and for what ends? There is no getting around the reality that we, as a democracy, have an obligation to educate ourselves in the mechanics of how our markets are manipulated and tweaked to favor the powers that be. There's a lot of good story-telling here- real life examples of how companies, such as Ocean Spray ( I thought this section especially telling) are affected, and in turn affect, the markets they are part of.

We need to get involved- all of us- in taking a look at the regulations, or the lack thereof, that have allowed Big Business to take advantage of the myth of the 'free market'.... Marshall has done a great job in opening my eyes to a subject I had been taking for granted. It's never too late to do what we can to educate ourselves, and get involved with making good government- and healthy markets. For instance, the Cooperative Institutional model discussed in this book deserves a fair hearing and further investigation, hopefully even implementation- that much is very clear to me after reading this fine eye-opener. It's not too late!!!

If you only read one book on economics this year, here's your boy! Reading it, I completely forgot it's a subject I'd been disinterested in, and will look forward to Mr. Marshall's future endeavors in this field. Read more ›

5.0 out of 5 stars It Takes Government to Create Markets: Alex Marshall's The Surprising Design of Market Economies June 17, 2013

By Mary Cleveland

Format:Hardcover

When the US Army blasted into Baghdad in 2003, expelling Saddam's Baathist regime, Defense Secretary Donald Rumsfeld expected "free markets" to pop up all over. Instead, he got looting, murder, and chaos. So much for the neocon myth that markets are "natural," requiring only the absence of "government interference."

In The Surprising Design of Market Economies, urban journalist Alex Marshall shows how in fact it always takes government--even bad government--to create and maintain markets. The idealized "free market" we meet in Ec. 1, with its large numbers of well-informed competing buyers and sellers--that kind of market would not exist without intensive government support and regulation. I provided an example in my post on Public Meat Markets in Old New York.

From the earliest times, government--at first perhaps just the local warlord--has at least provided a safe physical space for trade. Before 2000 BC, Chinese, Egyptian, and Babylonian governments not only established market places; they also built roads and canals to them. They created and enforced systems of weights and measures, and even forms of money. They also drew up sets of rules, such as the Code of Hammurabi, and provided courts to resolve disputes. Later, under the Roman Empire, of course Christ found money-changers in the temple courtyard, along with all sorts of other merchants--because that was a nice, safe, central location for a market.

As Marshall points out, government creates and enforces titles or "rights" to property. If we don't have the right to own something, we can't trade it.... Most critically, rulers of early civilizations created land titles, that is, they arbitrarily carved the earth's surface into parcels, assigned owners, recorded them in central registries--and used the information to collect taxes. When William I conquered England in 1066, he recorded his new property in the Domesday Book. This allowed him to grant lands to his nobles as a privilege, conditioned on their military support. Only in the last two centuries did private citizens of developed countries gain the right to hold, buy and sell real estate "in fee simple." (Or rather men gained the right--most women had to wait.)

In Ec. 1, we study markets in a spaceless, timeless vacuum. In the real world, infrastructure precedes markets. Hurricane Sandy reminded us that markets and even life in New York screech to a halt when we lose electricity, telephone, water, sewers, subways, roads, police, fire protection, or hospitals. In the longer run, public schools ensure another market essential: a literate and skilled population sharing basic values. Marshall notes that English language requirements in schools, much as they may offend multiculturalists, teach us a common vocabulary and foster the rapid inclusion of immigrants.

Corporations are no more "natural" than markets. Originally, governments chartered corporations only for specified public purposes. William I chartered the City of London in 1075; James I chartered the colony of Jamestown in 1606. In the US, only in the 19th century did state governments begin to grant private owners a right to incorporate--setting off a race to the bottom in lax requirements--a race won by Delaware. Yet, corporations aren't the only viable form of economic organization. Marshall examines cooperatives like Land O'Lakes, which thrive especially well in Wisconsin and neighboring states with a German or Swedish heritage. I myself spent a summer studying cooperatives in the ancient northern Italian city of Bologna, center of the Emilia-Romagna region. Cooperatives big and small dominate this original "Red" region of Italy, making it among the most productive and prosperous parts of the European Union.

Like Adam Smith, Marshall decries the excess of government-granted monopolies like patents and copyrights. While these may or may not have some short term justification as rewards to innovators, today they enable the One Percent to block competition and vacuum up wealth. Surprisingly, unlike Smith, Marshall does not address another powerful way governments shape markets: taxation. Smith opposed tariffs and excise taxes, which "obstruct the industry of the people." Smith favored "the most equitable of all taxes": taxes on land--which he regarded as just payment to the state for the privilege of secure titles. Henry George and later economists argued that land taxes actually make markets function better by counteracting resource monopolies.

As for international markets, a few years ago my step-daughter, a US State Department attorney, spent a year at the Hague Conference on Private International Law. There she helped draft the 2005 Convention on Choice of Court Agreements. Since 1893, the Hague Conference has been churning out conventions--which become international treaties when adopted. These are just a small part of what Marshall calls "the dense forest of rules and regulations" that make possible international trade. We couldn't even send Christmas cards to our English nephews without the Universal Postal Union of 1878!
If government creates markets, then we the people should force government to create better markets, ones that serve us all. Marshall offers a number of proposals. For example, shouldn't large corporations have national charters? A "US National Companies Act" could require companies operating in the US to meet certain standards--putting an end to tax evasion via Bahamian post office boxes.

Conventional economics wittingly or unwittingly provides cover for the One Percent, by professing that "the market" operates benevolently on its own. Alex Marshall gives us an entertaining, thoughtful, and well-written antidote to this dangerous abstraction.

This review appeared on the Huffington Post at http://www.huffingtonpost.com/mary-manning-cleveland/it-takes-government-to-cr_b_3436714.html Read more ›