Product Description

Clear, insightful, and nondogmatic, this book gives us a new appreciation for one of our most ubiquitous institutions. 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 $20 million per day Aalsmeer flower market in the Netherlands to the global trade in AIDS drugs. Eschewing ideology, he shows us that markets are neither magical nor immoral. Rather, they are powerful if imperfect tools, the best we've found for improving our living standards. Peter Bernstein's Against the Gods enabled us to see risk in a whole new light. McMillan's book will do the same for markets.

Product Details

• Amazon Sales Rank: #749421 in Books
• Published on: 2002-06
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 256 pages

Amazon.com Review
John McMillan's Reinventing the Bazaar is an extremely accessible description of markets large and small, as well as an explanation of their underlying mechanisms. An "absolutely free market," he says, is a "free-for-all brawl," while a "real market" is an "ordered brawl." Sprinkling his analysis with hundreds of anecdotes and examples--prison camps, eBay, the American experiment with alcohol prohibition, the Tokyo fish market, and traditional Ghanaian bazaars--and pertinent quotes from the likes of Chekhov, Twain, and Steinbeck, McMillan animates his subject. Why do banks build showcase headquarters? Which "frictions" brake, and which spur, various markets? Is the "invisible hand" attached to a clothed arm? Why are both pro- and antimarket absolutists, in McMillan's view, the economics equivalent of "flat-earthers"? Is there such an animal as a "perfect" market? Reinventing the Bazaar answers these questions, and many more, in an eminently wise, entertaining, and instructive way. --H. O'Billovich

From Publishers Weekly
An economics professor at the Stanford University Graduate School of Business, McMillan views this historical moment as a unique living laboratory for observing how technology, globalization and changing expectations of buyers and sellers have brought changes to everything from the international flower market based in the Netherlands to national economies. The sheer number of ingenious schemes that have surfaced over the last decade has had an intoxicating effect on McMillan; he skips from the 1994 FCC auction of the electromagnetic spectrum for pagers to the hugely popular Internet auction sites and the effects of intellectual property rights on innovation in this anecdotally rich survey of world markets and new trading opportunities. McMillan looks at a wide variety of industries including interstate trucking and fishery management and lays out the elements he regards as necessary for a smoothly operating market. An illuminating chapter comparing the deregulation and privatization experiences of New Zealand, Russia and China will leave readers wishing that McMillan had concentrated on just a few examples to establish in-depth his primary points: that good design of a market is crucial to its success, that a market develops over time by trial and error, and that government plays an indispensable role in providing public goods and acting as rule setter and referee in the best of all market-based worlds. As it is, the book feels scattered, and McMillan's tone is by turns condescending and frustratingly abstruse. Many readers will be disappointed.
Copyright 2002 Cahners Business Information, Inc.

From Library Journal
Readers looking for a basic primer on how our "market economy" works will find no better treatment than this first book by Stanford University professor McMillan. Taking the long view, he examines how markets in ancient times evolved and shows how countries experimented with markets, some successfully and some not. Not surprisingly, he judges countries like Russia and China with their centralized economies as not being truly market driven, but he lauds them for recent changes. Although he does raise the flag on "free markets" a bit much, he takes a refreshingly commonsense approach to his subject, doesn't talk down to his readers, and refrains from excessive economic jargon. The Internet is praised for breaking down barriers, and he terms the eBay web site "a high-tech flea market." Government deregulation is a good thing, but California, in his opinion, made a mess of it resulting in the energy crisis of last year. The bottom line for McMillan is that "the market system is like democracy. It is the worst form of economy, except for all the others that have been tried from time to time." Recommended for academic and larger public libraries. Richard Drezen, Washington Post/New York City Bureau
Copyright 2002 Cahners Business Information, Inc.

Customer Reviews

A fantastic primer on markets that leaves you begging for more!
Professor McMillan has written an eminently readable book on the markets. He uses short sentences, rarely makes use of technical jargon and has thrown in numerous real world examples. As a reader, you will be surprised with the sheer depth of material that he covers.

It is a real pity that he passed away in March, 2007. Perhaps, if he were alive today and were inclined to update this book, he might have added a chapter on Google and its search/ads market place; maybe, even commented on the recent brouhaha surrounding on "Cap and Trade" systems (which have been installed to reduce carbon emissions but in turn might reduce growth!); and most important to me, he might have thrown in an analysis of the role of speculators in oil markets. But all of this is mere speculation on my part because Professor McMillan is no longer with us.

He spends the first half of the book exclusively on the five aspects that are needed for designing a market. They are:

1. Information must flow smoothly.
2. Competition must be fostered.
3. People who form the market must be honest and stand up to their end of the bargain.
4. Property rights must be protected but not overprotected.
5. Side effects on third parties must be reduced.

I've decided to commit these principles to memory as I design my market simulator.

I loved this book.
I hope I can express how excited I am about this book. As an economics amateur, I recommend this book to anyone with even a sliver of interest in politics, international development, or contemporary social issues. John McMillan's book, Reinventing the Bazaar, presents in a logical and detailed manner the inner workings of markets: both their strengths and weaknesses. McMillan demonstrates very compellingly the idea that markets and all of their necessary appendages are simply tools used to facilitate efficiency. In his words, "the market system is not an end in itself, but an imperfect means to raise living standards. Markets are not magic, nor are they immoral." Usually the goal is increased economic efficiency and therefore increased standards of living, but those same principles which promote efficiency in markets will increase efficiency almost anywhere they're properly applied.
The key, he explains, is to establish the framework and the rules in such a way that the principles acting through the actions of the market participants can work to create an efficient outcome. It's basic economic theory to state that markets are the best way to coordinate the actions of millions of people, but McMillan explains further. Those essential building blocks of market economies, that is prices, and the pursuit of profit, and competition, are necessarily sustained by a good market design. Good "market design" he explains, entails well defined property rights, the free flow of information, and other critical ingredients. In today's modern and incredibly complex economy, more often then not this requires that the government take some hand in establishing this efficient market design.
One of the most exciting things about this book is that I truly feel it gave me a rational basis on which to judge government policies. If anyone, from the right or left, has any desire to gain a greater grasp of what constitutes good public policy, I recommend they read this book. For example, both China and Russia have privatized in the past several decades but with completely different results; chaos and economic stagnation in Russia while smooth growth in China. The difference is how they implemented their market policies. The same with an example of California's privatization of energy in the 1990s; inefficiency and price gouging because of stupidly designed government policies. McMillan's point is that some things work, and other things don't. The key is to have the right supporting market conditions, either by government policy or by culture, or else the market economy can't work.
Anyways, this book is amazing. Click the button, buy it, read it, ponder it deeply, and walk away with a new perspective on the world around you.

Finally, a reasonable, non-ideological book about markets
I had never expected to give a 5-star review to a book about markets. But this book is a very even-handed description, favoring a case-by-case approach to "market design". Government is neither all bad nor all good, and markets are neither all good nor all bad, in this view. Nor does McMillan wrap markets in the mantles of politics and/or religion, a la Milton Friedman, George Gilder and others. The writing style isn't as felicitous as Tim Harford's "The Undercover Economist", which covers a lot of the same economics theory as this book; nor is this book quite as quick a read. But it has more real-life examples and more intellectual depth overall, while still being very much a popular, non-technical book. Like Harford's book, this one gives orthodox neoclassical economics theory (Arrow-Debreu, equilibrium, supply and demand, and other "Econ 101" stuff) more credence than it merits, but McMillan's pragmatism and professional humility somewhat compensate for this defect. Sadly, John McMillan passed away in March 2007 from cancer while still in his 50s. This book assures us that such a reasonable voice won't vanish completely -- which is lucky for us, since such voices have always been in short supply.