Business Organization and the Myth of the Market Economy

by William Lazonick

This book explains the changes in industrial leadership from Britain to the United States earlier in this century and from the United States to Japan more recently, in terms of the changing business investment strategies and organizational structures in these nations. The author criticizes economists for failing to understand these historical changes. The book shows that this intellectual failure is not inherent in the discipline of economics; there are important traditions in economic thought that the mainstream of the economics profession has simply ignored.

Genres: Economics, Business

388 pages, Hardcover

First published January 31, 1992

About the author

William Lazonick is a Canadian economist who studies innovation and competition in the global economy. His research seeks to understand how, on the basis of innovative enterprise, a national economy can achieve stable and equitable economic growth. Lazonick is the originator of "the theory of innovative enterprise", which, he argues, provides both an essential intellectual foundation for understanding economic performance and a fundamental critique of the neoclassical theory of the market economy. Much of his current work focuses on how the financialization of the U.S. industrial corporation, manifested in massive distributions of corporate cash to shareholders and the explosion of stock-based executive pay, results in employment instability and income inequity, while undermining the innovative capability of the U.S. economy. He also conducts cross-national comparative research on the social conditions that enable or proscribe innovative enterprise, focusing in particular on the economies of Britain, Japan, and China as well as the United States.

Reviews

[Emre Poyraz · Rating 5 out of 5]

This books, while somehow repetitive, should be read by every intelligent economist.

In economics, there are two opposing schools of thought, in my opinion. One is the market-based approach, which believes that the MARKET is the central institution of economic activity. Followers of this approach include the Classics (to a large extent), neo classics, Keynesians, New Classics, Friedman, etc. While under attack from different directions, these are the guys who make up most of the economic curriculum in schools.

Then there are the "others". They basically do not agree that economics is "the science of the market". While extremely diverse in themselves, many economists and students of economics feel they have a point. These include people from Marx to Schumpeter, Veblen to Hirschmann, whom you only hear in passing in an economics curriculum.

So, in my opinion, this book makes the best case defense YET on why economics is not a "science of the market". The efficiency of the busines organizations is the main determinant of economic growth (in terms of access to economic resources and resources utilization) and the writer makes a very solid argument using a comparitive historical analysis of UK, USA and Japan.

(the first chapter is available from googlebooks)

I strongly suggest that every economist reads this book IF they want to know more about economics than statistics and mathematical models.