market limits2

The Limits of the Market: The Pendulum Between Government and Market, by Paul De Grauwe

Wise and sensible, but not particularly original. I would recommend this slim book to anyone without a lot of economics background but with a lot of enthusiasm for some of the bigger questions in economics – like markets vs. government and growth vs. inequality. Clearly written, well argued, I agreed with almost all of it – except was not persuaded that we should think of distributional issues through a behavioural lens (he views inequality as a problem because it upsets our primitive System I notions of fairness). Overall the argument is markets are powerful forces but suffer from “external limits” (mostly externalities) and “internal limits (mostly behavioural but also distributional) and that these can potentially be corrected by government – but that government suffers from problems too. All of this embedded in a larger narrative about shifts between more market-driven and state-driven economic models, the pendulum in the subtitle.

Category: BOOKS


Article by: Yiannis Misirlis