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In the 1980s America won the cold war.
In 1989 the Berlin Wall fell. The decade that followed proved
one of the most extraordinary periods in economic history.
The American business model -- the unrestrained pursuit
of self-interest, market fundamentalism, the minimal state
and low taxation -- offered its followers the same certainties
that Marxism had given its own adherents over the previous
century. There was a New Economy.
Bit it was all to end in a frenzy of speculation,
followed by recrimination and self-doubt. Corporations that
had never earned a cent of profit, and never would, were
sold to investors for billions of dollars. Corporate executives
would fill their pockets and invent revenues and profits
to support their accounts of their own genius. And every
international economic meeting would be besieged by demonstrators.
In this ambitious and wide-ranging book,
John Kay unravels the truth about markets. He explains why
market economies outperformed socialist or centrally directed
ones, but also why the imposition of market institutions
often fails. Kay's search for the truth about markets takes
him from the shores of Lake Zurich to the streets of Mumbai,
through evolutionary psychology and moral philosophy, to
the flower market at San Remo and Christies' saleroom in
New York. Through this range of material he shows that market
economies function because they are embedded in a social,
political and cultural context, and cannot work otherwise.
The Truth about Markets examines
the big questions of economics -- why some countries and
peoples are rich, and others poor; why businesses succeed
and fail; the scope of markets and their limits. Witty yet
profound, immersed in the most recent economic thinking
yet completely accessible, it is both a tract for our times
and a text for a new political economy.
John Kay is a Fellow of St. John's College,
Oxford, and a Visiting Professor of Economics at the London
School of Economics. He has been Professor of Economics
at the London Business School and Professor of Management
at the University of Oxford. He has been director of an
independent think tank, set up and sold a highly successful
economic consultancy business and has been a director of
several public companies. He now writes a fortnightly column
for the Financial Times.
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