What is the market system?
What is the market system? In this understandable and comprehensible book; “The Market System” the author Charles E. Lindblom answers this question and continues to explain how the market system works, including the positive and negative aspects of it. Lindblom is able to provide his readers with a reasoned and logical discussion on the market systems restrictions, what it can do and how it affects us and the state we live in. This book takes its readers back to the fundamentals of the market system to give reason to its acclaim. Lindblom views the system as a basic organizing devise that changes as a result of the wants and requests of the governments, corporations and the collective groups. Lindblom explains in his book both the praise and criticism followed with the market system, which will be discussed in further detail in the following paragraphs.
In this book three main parts are discussed; How it works, What to make of it, and What it is. In the first part, the market system is examined to see the dynamics of what lead to its important achievements. In the second part Lindblom focuses on the rules for how the market system operates, the impact it has on culture, democracy, and the relationship it has with it. In the third part the author considers an alternative system to the market system, which is predicted to resolve problems of the current system today. These parts will be summarized in the below paragraphs.
In this book, to Lindblom a market system is “a method of social coordination by mutual adjustment among participants rather than by a central coordinator” (p.23). Lindblom recommends that instead of focusing on the economy, we must think and focus on the society. This then gives a better understanding of what role the market system plays with organizing a society. The author believes that the market system is not a place or location, but a network of coordinated occurrences (p.40). The market system causes millions of people to believe, consider, and operate without even planning to, or the intention to think or act in that certain way. This is an important point Lindblom tries to illustrate. He describes the market system today as mindless and purposeless that somehow achieves the large task of social cooperation (p.40). The market system is created by the individual behaviours of people, intentional and unintentional, that generates a well- organized and functioning wheel which continues to roll by the
individuals (p.45). According to the author, people seem to find themselves fighting for power, deciding on who will get what and how much of it (p.80). This has become a natural danger for people due to the shortages of wealth in the state.
This causes Lindblom to approach social coordination and “peacekeeping” closely in common with each other (p.100). The market system creates peace in a society and reduces reciprocal injury because of the patterns of behaviour it produces due to its official and unofficial rules (p.105). Although the market system does create peaceful societies it does not automatically make it efficient, just or civilized (p.44). Even though important decisions made in the market system are helped by corporations and enterprises and are a critical significance, Lindblom cautions that the more organization from a corporate management, the less coordination there will be by the market system because of this corporations become a substitute for the market system (p.78). This happens because a corporation can become an “island of command in market sea”, meaning that market system participants among joint cooperation's changes itself into a one-sided ranked hierarchy of corporate managers, making all the decisions (p.80). These types of decisions are different than the mutual changes of the market system and are more similar to the decision making of a top-down core planning system (p.85). This point shows the importance of how the State attracts our attention towards making sure that the market system is creating fair competition and is performing properly.
The major concern the author discusses is the unbalance of power in the market system given to the elites, and the large impact this has on democracy and freedom
(p.113). It is clear the governmental elites, businesses and entrepreneurs are the leaders and runners of the market systems. Due to this, it is apparent that the public market and political behaviour are being controlled and manipulated with one-way communication, due to continuously being attacked by the political elites and market, causing “consumer sovereignty” to be ridiculed and mocked (p.122). These controls are made to seem normal and accepted in society that is supposedly democratic.
In this book many operating rules are examined by Lindblom, which guides the market system to create well-organized results in the market field. These rules can vary from “efficiency prices”, liberty, and property, production of sale, money, and most importantly “quid pro quo”. Lindblom spends a significant about of time analyzing the source of “quid pro quo” in the market system. When entering the market system the common rule is that anyone who has a request for goods or benefits is worthless or invalid unless an equal match or offer is made in that market.
The author demonstrates how inefficiencies, such as income inequalities are produced and created in the market system and how it fails in many ways that require the States involvement to help a society to continue to cross barriers and hurdles (p.127). These inefficiencies and threats, according to Lindblom, signify no reason to desert the market system. An alternative to this system is not extremely different from the way today's market system functions, but is placed and directed by a market system supported by the state to find the problems and give possible solutions that the current systems falls short of (p.203). Throughout the book Lindblom stresses that the market system is a
social coordinator that reaches past economic behaviour (p.205). Lindblom points out that each market system can choose how much control they want and have over investments, monopoly, spillovers, political and corporate powers, executive authority in enterprises, and the division of wealth and income (p.208). To make the system livable tax, purchase and financial support can be handled by the state (p.208). In the end, even though many problems in the market system remains, Lindblom stay's confident that society can best benefit from the market system defined in the beginning.
The author Charles E. Lindblom's main purpose of writing the book “The Market System” is to explain how the market system works, what it means, the alternatives it has and its relations to the economic system and social system. In this book, the author clearly is a supporter of the market system and effectively shows its crucial points for our society through its accomplishments, failures, efficiencies and inefficiencies in the system. Lindblom demonstrates helpful, interesting and understandable guidelines on the market system to anyone who is curious of how it operates, or interested in applying his model to their own life. As well, this book can be applied to anybody who considers our State crucial to the efficiency and successful function of our market system. Especially, in today's time where socialism or any alternative systems relating to the market system have collapsed, Lindblom helps to organize this chaos into an arranged and control book.
A point in the book that I found to be interesting and informative was how the market system, through elites, generates “undemocracy” (p.233). As well Lindblom
discusses a valuable critique on “granting the enterprise citizens rights” and how for the democratic system this “grant” can cause severe problems. To sum this up, the author believes that “a society has to pay heavily for its market system in some loss of democracy” (p.250).
It has been criticized that markets have caused negative effects on culture and personality, and that through persuasion, market systems cause circularity. Other complaints of the market system are that the system creates an “assault on the mind” of misrepresentation, obfuscation, advertising distraction and the chance of a “political
circularity” (p. 128). Therefore the market system continues to be maintained and as a result the elites benefit from it.
In this book no specific ideas or opinions stick out as innovative or original, but over all Lindblom depicts a well written overview of the market system from a unique perspective. He clearly and effectively combines the social, and the economic in an expansive overview. Lindblom has an academic background both in economics and political science and remains relaxed, unemotional and detached throughout the book. It is free of slang and gets straight to the point, so you don't need a background in economics to understand it. It is clear and straightforward and like the cover says it tells you exactly what a market system is, how it works and what to make of it.
One weakness that I found in this book is how it doesn't come to a resolution. It is very inclusive and indecisive, but it is understandable because every argument and issue had two sides and two opinions to it. Everyone is going to look at this issue with a
different view. The general view that Lindblom does have is that overall the market system is positive. In order to work and function properly it needs the government to help control it. The government does and should use the system in order for the benefit of the society and the goals for the people living in it. Even though I did enjoy the book, I am not sure if I learned anything more that what I had already known. There were no pictures or charts and had no illustration to help emphasize his points and give example to.
Politics and the market system play hand in hand. The role that the government has with the market system is needed and helps to improve the system. The intervening of the government improves the situation of the market system depending on the economy of the state (p.176). This can help us to understand how societies and governments are becoming progressively more connected with each other due to globalization. The relationships between politics and the economics have become increasingly complicated caused by the trade beyond the states borders (p.193). In order for these states to operate properly the economies need to be strong enough to control these liberal trades. Large corporations are increasingly moving beyond the limits of the designated state areas, therefore the state is unable to control their own economy and the worlds economy at the same time.
Lindblom points out that the governments cannot tell businesses and companies to invest in the market, instead over the years, the government has thought up of or invented different types of motivations for these companies to be pushed towards diverse business enterprises (p.185). This can be done through the state supporting these companies financially through many types of subsidy, like loans or grants. Another way is when governments give these businesses incentives by offering support or help in new projects the company is interested in, determining allowable employment practices, providing tax breaks or loans with low interest for people who are starting up a new business and are receiving welfare for it (p.190).
In conclusion, the summarization and opinions of my self and the author was stated clearly with consideration, judgment and reflection. Lindblom states that although the market system creates cooperation and peace between the society as a whole, national and global. It can as well cause issues and challenges within a society when in introducing the “quid pro quo” rule. In summary Lindblom wants us not to solely think of the economy when introduced to the market system, but as well wants us to have a greater focus on the society. We can only understand the market system by how great and convincing the States structure and society is. Without that there is no system. Lindblom's general claim in the end is that the market system does not solve all our problems. But, it does have great value when placed with the institutions and communities around us and when added with the state, corporations, and family it can create immense power. This book's issues were summarized accurately, succinctly and fairly and were given with truthful evidence, ideas, and argumentation. Overall, this book was well written and was able to inform others easily and straightforwardly.