qatsi (qatsi) wrote,

The Blind Watchmaker

Book Review: The Truth About Markets - Why Some Nations are Rich, but Most Remain Poor, by John Kay
I found this book quite patchy; some of it is very well written, but several key sections failed to really keep my interest. It's also become rather dated; published in 2003 and written in the fallout of the dot-com boom and Enron (remember that?); it's interesting that there are one or two prescient points about things like Moral Hazard that we're all so familiar with now, but there's also quite a lot that's been superseded.

Kay begins by sketching a number of personas in developed and developing countries, and refers back to them while mixing in economic theory, highlighting in particular the way working market structures emerge spontaneously from disorder. It's plain that he has a distaste for the American Business Model, highlighting that it is only applied in emerging and developing countries, with generally disastrous results. (America doesn't follow the "American Business Model", according to Kay. I'm sure some would dispute that, but it sounds fair enough to me. There wouldn't be farm subsidies in the ABM, for a start.)

The book takes a behavioural view of economics as well as a logical one, and time and again Kay highlights that the combination of good governance and "disciplined pluralism" is probably what has made the rich countries rich, though he also points out failures of both (Microsoft being an obvious failure of pluralism; the rise of the "shareholder value" philosophy and the ABM pushing companies to failure of governance). He offers no "big solutions" - indeed, his view is that big solutions in economics probably cause more problems.
Tags: books, economy, money, politics
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