Reinventing the Bazaar: A Natural History of Markets

by John McMillan

Book Overview

From the wild swings of the stock market to the online auctions of eBay to the unexpected twists of the world's post-Communist economies, markets have suddenly become quite visible. We now have occasion to ask, "What makes these institutions work? How important are they? How can we improve them?"

Taking us on a lively tour of a world we once took for granted, John McMillan offers examples ranging from a camel trading fair in India to the...

• Format: Paperback
• Language: English
• ISBN: 0393323714
• ISBN13: 9780393323719
• Release Date: November 2003
• Publisher: W. W. Norton & Company
• Length: 288 Pages
• Weight: 0.65 lbs.
• Dimensions: 0.8" x 5.5" x 8.3"

Customer Reviews

The Best Begginers Guide to Markets

Mc Millan's book makes it easy to understand how markets work, as well as their bennefits. Although it is not a book advocating free markets, it puts some sense into the idea through fun examples, stories and quotes. Anyone toying with the idea that free market economies are bad should read this book. As an imparial comment it might show a thing or two about why it is that free market policies don't seem to work for some countries(because they are not all that free)while in others they seem miracuolous. The secrets of economic growth and sensible pro market policy can be extracted, although I wouldn't base a government's development plan on it. The book is fun to read, easy to understand and highly illustrative. A must read for anyone (for or aginst free markets)

Essential Information and Wisdom

Wherever buyers and sellers get together, there is a market. In the absence of currency, trades have been consummated by assigning relative value to items (e.g. livestock, weapons, clothing) or services (e.g. plowing, medical care, harvesting). Throughout human history, there have been markets in one form or another at which people exchanged or purchased goods of various kinds, usually in a centrally located area such as a crossroads, harborside, village center, or town square. Buyers and sellers (or traders) gravitated to markets where and when there would be the most people. At least to some extent, all that remains true today even with the emergence of cybermarkets. Effective marketing in the 21st century creates or increases demand first by attracting interest. Hence the importance of visibility. It must also provide a convincing argument as to why a given product or service is preferable to other options, including not purchasing anything. Supply and demand often come into play. Pricing is frequently a decisive issue. For centuries, be it in an ancient bazaar or modern market, buying/selling/trading is among the most dynamic of human activities.In this lively as well as informative book, McMillan offers "a natural history of markets" which helps us to gain a better understanding of how markets work as well as of what they can and can't do. "Markets do what they are supposed to do, however, only if they are we structured. Any successful economy has an array of devices and procedures to enable markets to work smoothly. A workable platform has five elements: information flows smoothly; property rights are protected; people can be trusted to live up to their promises; side effects are curtailed; and competition is fostered." I agree with McMillan that, as a result of innovations made by participants, "spontaneous evolution is the main driver of [private sector] markets" if and when provided with assistance from the public sector (i.e. government). Because throughout history the strength of markets has been their adaptability and their "restless reinvention," McMillan argues, shaping new markets is both a task for governments and an opportunity for entrepreneurs. Appropriate involvement by the former ensures, for example, the protection of intellectual property; appropriate involvement by the latter ensures that the process of adaptability and reinvention is sustained. There are so many excellent books now in print which discuss the most effective marketing strategies and tactics. Secondarily, McMillan examines several of them but his primary purpose, as I understand it, is to explain how and why the market economy ("...the worst form of economy, except for all the others which have been tried from time to time") "solves some all but intractable problems...[because] it admits variety and permits criticism" This book will be of greatest interest and value to decision-makers with responsibility for marketing within organizations which either have

A balanced look at markets

This timely book describes the market systems of today's world. He is an advocate of what he calls the "market design approach" of economic systems. He has five things that a market needs to be effective: social trust, property rights protections, negative externality prevention, free flow of information, and competition. He makes a strong case for a `middle way' in economic development when it comes to government involvement. He argues that the controlled and command economies of the far left, and the laissez-faire libertarian approach of the far right are both equally garbage. He tells some interesting stories of the worldwide pharmaceutical industry and critiques it's free market effects on society and world health. His discussion of information and technology are somewhat simplistic in my opinion, and his conclusions that for economic development these two forces need to be free to innovate and profit seemed the same pedantic old story that is peddled by Gates and co. He makes a strong case for honesty in business and describes some very interesting approaches for regulating and policing business behavior. His discussion of patents and intellectual property rights seemed balanced in its look at how they can help and hinder business and society. He also describes (convincingly in my opinion) how individual and company behavior creates all kinds of negative externalities that cannot be left to the market to take care of. The last couple of chapters described the very different methods of economic transitions used by New Zealand, Russia, and China, and he has some interesting conclusions to offer. He also addresses a chapter to the anti-globalization movements, and to the Marxists and Libertarians, where he takes what they argue, and looks at statistical evidence, and pretty much negates their arguments without really addressing the sociological and political grievances and seems to take a more simplistic model that economic growth is the best way to improve the lot of everyone everywhere, which I found annoying. But overall, he makes a strong argument for markets and their abilities to supply the most efficient system of providing goods and services to a society, but also recognizes significant weaknesses inherent in it that must be balanced by government activity.

Market Design and Market Theory

Through a diverse set of examples, John McMillan illustrates how markets work -- and how in other cases they fail to work. McMillan's book, Reinventing the Bazaar, builds a case for market design through anecdotal evidence rather than economic theory. The first half of the book describes -- using clear and apt examples -- the ... basic features of market design; the balance of the book illustrates how the elements of market design are implemented.McMillan's examples are reminiscent of business school case studies -- focused, self-contained, realistic, and practical. The illustrations that McMillan offers are the strength of the book. (McMillan gives especially compelling examples from fields where he has a personal interest -- like football/soccer -- and where he has firsthand experience -- the design of auction markets.) But the illustrations also are a weakness. After reading Reinventing the Bazaar, you are left with a craving to know more about the theoretical underpinning of market design. In classical free market theory, a market functions best in a "hands off" environment, with only the the Smithian "invisible hand" at work. In contrast, McMillan's market design is very much "hands on." Competition is a key component of McMillan's market design theory; and the elements of proper market design promote competition. But the McMillan designed market is carefully regulated and circumscribed by detailed rules (insulated from the excesses of the "free for all" of the Smithian invisible hand market).Inevitably market design theory clashes with classical free market theory (and accepted free market ideology). As McMillan illustrates well, normative rules are necessary to a healthy well-functioning market system. It is time to acknowledge that Adam Smith's invisible hand theory is just plain wrong (as Walter Schultz proves at the theoretical level in The Moral Conditions of Economic Efficiency). Although theory is not as engaging as anecdote, it is important to connect the obscure jargon of economic theory with the real life practice of market design.

Fascinating treatise on the role of supply & demand

Professor John McMillan (Stanford GSB) has done a tremendous job in sharing his knowledge of markets and the economic theory underlying them in this book. Part economics, part psychology, part history, this book has something for the business student, professional trader, or those looking for a satisfying explanation for why certain things are better left to market forces.McMillan does a commendable job in discussing such things as healthcare and why it's so expensive in the US, why New Zealand underwent painful economic reforms in the 1980s and why the reforms took so long, why California's electricity markets lead to ridiculously high consumer prices in 2001, why patents act as a tax on information, why centrally-planned economies just don't, and won't ever, work, and why corruption seemed to work in Indonesia under Suharto and why it is strangling Japan.The chapters are:1. The Only Natural Economy2. Triumphs of Intelligence3. He Who Can't Pay Dies4. Information Wants To Be Free5. Honesty Is The Best Policy6. To the Best Bidder7. Come Bid!8. When You Work for Yourself9. The Embarrassment of a Patent10. No Man Is An Island11. A Conspiracy against the Public12. Grassroots Efforts13. Managers of Other People's Money14. A New Era of Competition15. Coming Up For Air16. Antipoverty Warriors17. Market ImperativesI wholeheartedly recommend this book, both to Americans and foreigners, as there is enough of interest to satisfy both audiences.