The Market System: What It Is, How It Works, and What to Make of It

by Charles E. Lindblom

Book Overview

In this clear and accessible book, an eminent political scientist offers a jargon-free introduction to the market system for all readers, with or without a background in economics.

"A balanced and novel treatment of a very important set of questions. This is a book of grand scope by an outstanding scholar."--Samuel Bowles, University of Massachusetts, Amherst

"Anyone who wants to know more about the market system's plusses and minuses,...

• Format: Paperback
• Language: English
• ISBN: 0300093349
• ISBN13: 9780300093346
• Release Date: September 2002
• Publisher: Yale University Press
• Length: 308 Pages
• Weight: 0.55 lbs.
• Dimensions: 0.8" x 5.1" x 7.8"

Customer Reviews

A thoughtful, readable overview of how the market system works

As its subtitle suggestions, this book provides an overview of the workings of the "market system." By this, Lindblom does not merely mean price-making markets, but larger social organizations in which the market plays a key role in ordering society. Throughout, Lindblom compares markets with non-market coordination such as government, families, and the internal organization of the corporation. He gives us a fair-minded evaluation of each organization's strengths and weaknesses, though his sympathies lie near those of a market-oriented European social democrat. He avoids conclusions, strong evaluations or recommendations, which can be a bit frustrating for the reader at times. Much of the material will be familiar from readers of Lindblom's previous books. However, this is the most accessible of them - - though the others are pretty accessible too - - so if you're a general reader without a strong economics or social science background this will meet your needs well.

Markets are Human-Created

Lindblom does it again....his lucid, non-technical prose is SO clear and SO logical. He really explains, in relation to human nature as opposed to in relation to political dogma, why market systems are better than command and control systems for creating a society you or I might want to live in....AND he shows why "markets" and "government" are FRIENDS, not ENEMIES....if you truly believe in opportunity for all and a decent life for most....this should be compulsory reading for all college juniors, and for all MBA students.

Good, but a bit too optimistic

Charles Lindblom brings up several interesting issues about the Market System. While I agreed with the basic principles, I had the feeling that he sometimes oversimplified some issues and I was sometimes left with more questions than answers. Specifically, given the current environment of proposed nation building in the Middle East, I attempted (perhaps too ambitiously) to extrapolate his theories to this problem, and thus found Lindblom's explanation of the Market system as a peacekeeping force most interesting, and therefore also most troublesome. I was hoping to find some understanding of how the implementation of a healthy market system "does not simply flourish in peaceful societies; [but also how] it helps to make those societies peaceful." Also I was interested in how Lindblom defines `peaceful', as I believe the USA may have one of the most effective market systems in the world, yet at least compared to Europe, and in fact many other countries like China with central planning, the USA is far from peaceful (high crime rates, riots etc.). I found Lindblom's caveat that "the market system makes societies peaceful, but that is not necessarily efficient, equitable, or humane" perplexing. Does, as Lindblom claims, "higher income - and especially growing income - reduce frustration, conflict, and consequent mutual injury, making possible a peaceful and stable political order", and if so can this be projected at an international level to reduce incidents such as 911? Specifically, what can be done in a country like Afghanistan, with an arguably weak market system, which has been at the center of the `Great Game' for so long? Lindblom mentions the success of how "now conspicuously in Asia Q.E.D. The market system makes for social peace"; should Afghanistan attempt to follow the example export oriented example of the Asian Tigers, how would this be possible? Charles brings up some good points, but probably should read Huntingtons Clash of Civilizations. I think the glass is only half full. And globalization is somehting which our current governmental bodies and supranational organizations are, not yet equipped to deal with. I fear it is a society that small, especially economically challenged nation states fear, perhaps rightly so? This is what will give rise to further clashes of civilizations but not peace. Tom Anderson Anderson Analytics, LLC http://www.andersonanalytics.com

A Calm but Caring Exploration

"Think society, not economy." Thus Lindblom, our author, urges the reader to think about the market system in a more inclusive context than we ordinarily are wont to do. To what end?Well, the subtitle of this book is "What It Is, How It Works, and What to Make of It." As he says early on: "For at least 150 years many societies have been trapped in an ill-tempered debate about market systems. Now we have an opportunity to think about these systems with a new dispassion and clarity. Market ideologues have learned that there is little to fear from communism... For their part, socialist ideologues have realized that aspiring for a better society is not enough. They have to face the complexities of constructing one."One way of bisecting the population is by distinguishing those who see an imperfect world and want to perfect it from those who see an imperfect world and want to live in it as well as its imperfections allow. Charles Lindblom, a professor of economics and political science, is of the first sort. His viewpoints become clear as the book goes along, and he makes no bones about the imperfections of the various market systems and their supporting political systems. At the same time he is not an ideologue, and does not fall into the trap of yearning for a utopia of the right, or of the left.Basically, he sees the market system as inducing cooperation and preempting violent interaction over a vast range of social interactions. That these take place mostly with money as intermediary does not remove them from the social sphere: it is, he claims, a false distinction to place economic interactions in some separable sphere from social interactions. The real distinction that the market system makes is quid pro quo: interactions between people involve an exchange - of goods for money, of favor for favor, of dinner at your house for (maybe much later) dinner at my house. But the invention of money and credit has made possible society-wide cooperation (the chain of cooperators to get this computer to my desk runs into the millions, or the hundreds of millions, of cooperating humans). For this the market system gets full credit.But, as we know from the history of the Industrial Revolution (still going on in speeded-up form in some parts of the world), unfettered capitalism (the unregulated market system, in our terminology) is a harsh sorter-out of its participants into a few big winners (the entrepreneurs), a large number of more-or-less-contented employees, and a large number (although, unless the society is in imminent danger of revolution, not so large as the second group) of "losers" for whom the system offers little but grinding toil and early death.Excepting such as Robert Nozick and Ayn Rand, most people feel the government has a legitimate role in curbing the excesses of the market system and protecting the citizens from each other within it. For it is a particularly transparent sophistry that all participants in the system come to it as roughly

The Market System: Understood Properly!!!

The main objective of Lindblom in this book is to elucidate the market system, not only in relation with the economic system but also in relation with the "social system", about what it does mean, how it does work, and what the alternatives it does have. Though the author is a supporter of the market system, he clearly demonstrates the efficiencies and inefficiencies, and accomplishments and failures of the market system in some important points for the society as a whole. At a point of time in history in which the alternative systems, including socialism, to market system have collapsed and the market rhetoric has pervaded all spaces of civic discourse, especially that regarding public sector management, Lindblom presents an excellent account of the market system that I believe will be very helpful to anybody who is interested in applying the market model to the public sector, and to anybody who believes (sometimes blindly) that the State is an impediment to the effective and efficient functioning of the market system.The book is grouped into three parts. In the first part titled "How It Works" Lindblom examines the dynamics of the market system that lead to "great accomplishments". In the second part titled "What to Make of It" the author focuses on the operating rules of the market system, the relationship of the market system with and impact on democracy and culture. In the third part titled "Thinking About Choices" Lindblom envisages the alternative system to the market system that is expected to solve the problems of the market system. I will try to summarize some important points below. To Lindblom, "a market system is a method of social coordination by 'mutual adjustment' among participants rather than by a central coordinator" (p. 23). To better grasp the role of the market system in coordinating the society, the author advises us to focus on and think the society, not the economy. In the market system, millions of people think and act without a great mind's planning and intention (say, central planning bureaucracy in socialist systems). "The market system is not a place but a web, not a location but a set of coordinated performances" (p. 40). The important point Lindblom tries to accomplish is that "it is a mindless and purposeless market system that accomplishes the great tasks of social cooperation" (p. 40). The market system wheel is rolled by intended and unintended behaviors of the individuals, but it creates an efficient functioning that was dreamed but could not yet have been accomplished by centrally intended systems such as socialist system. Lindblom approaches social coordination and "peacekeeping" in close relation to each other. Because of scarcity, according to the author, there is an inherent danger that people find themselves in fight to each other for determining who will get what and in what amount. "The market system", with the help of its formal and informal rules, "produces patterns of behavior that themselves reduce