Book Description

Building on a base of simple economic theory and elementary linear algebra and calculus, this broad treatment of static and dynamic optimization methods discusses the importance of shadow prices, and reviews functions defined by solutions of optimization problems. Recently revised and expanded, the second edition will be a valuable resource for upper level undergraduate and graduate students. ... Read more

Reviews (7)

Good Before Your First Year
If you haven't had a lot of math before entering an econ PhD program, this book is a great intro. I highly recommend if you need info on
- Lagrange's method & Shadow prices
- Value functions
- Convex sets
- Maximum Theorem
- Dynamic Programming
It's a quick read, but well worth your time.

Excellent supplement
This book is an excellent supplement for classroom lecture. I often used it to clarify methodology used in my graduate level macroeconomics course. The presentation of the maximum principle and Hamiltonians in dynamic optimization was most helpful. In about 10 pages he clarified what 6 hours of reviewing lecture notes could not.

I was very stupid to buy this book
Many people say this book is great. But donot be fool! They are trying to make you a fool!

The authors gets everything from the air! My impression is this book is a baby sersion of the Varian Microeconomic Analysis book. I learn absolutely nothing from this book.

elegant small book on economic theory
This book is a gem. Very clear exposition of the lagrange method and multipliers, and other optimization methods. Dixit finds economic intuition in every step of the math. I pick up this book anytime I need to remind myself how the mind of a clear economic thinker works. No personal economics library could be complete without it.

EXCELLENT BOOK......
ALL ABOUT OPTIMIZATION IN ECONOMIC. ONE OF THE BEST. ... Read more

Book Description

Does economic man exist? Do aggregates exist? Do markets have an essence? How are economic phenomena caused? Do economists believe in the theories they use? These essays seek to unearth the "ontological underworld" that shapes the criteria economists use in making choices among theories to understand economic behavior. These criteria include fundamental, unarticulated ideas regarding the basic constitutents and structure of social reality, that is, about human beings and the social arrangement of their lives. This important collection will be of great value to economists and philosophers of social sciences. ... Read more

Book Description

This compact, tightly argued, and eloquent book is the quintessential John Kenneth Galbraith, the manifesto of the "abiding liberal." In defining the characteristics of a good society and creating the blueprint for a workable agenda, Galbraith allows for human weakness without compromising a humane culture, and recognizes barriers that hinder but do not defeat a responsible, stable, and hopeful future. ... Read more

Reviews (8)

A practical advocate for a more humane economy
Galbraith's main point has less to do with any specific policy than with his belief that rigid ideologues advocate for flawed and potentially dangerous political and economic systems. He argues that capitalism is by far the most responsive and effective economic system given our nature and needs, but that pure market capitalism comes up short in many significant respects. He does exhibit his own bias in some chapters when he ignores matters of degree in favor of more dramatic claims, but his proposals are not controversial by most standards-we need a safety net, environmental regulation is necessary, etc. I couldn't relate to most of the negative reviews/remarks here. Among them: Galbraith, onetime speechwriter for presidents, editor of Fortune magazine, and prolific author, is inarticulate to the point of incoherence; Galbraith, a onetime Harvard economics professor and head of the American Economic Association, lacks any understanding of economics; Galbraith's ideas are silly; etc. This is a book arguing that capitalism must be tempered if it is to serve society well. Someone who believes that environmental regulations, zoning laws, a progressive income tax, and organizations like the SEC are unnecessary impediments to economic growth will have a hard time with Galbraith. Others will likely recognize that the criticisms of capitalism he levels here are, to some debatable extent, legitimate.

Interesting ideas poorly communicated
Galbraith's insight on society unfortunately gets lost in a maze of double negatives and confusing sentence structure. His ideas are sound, though he has a very off-putting pompous delivery. In fact, his verbosity and poor structure is so bad, that it turns what should be a slim read into a fairly mind-numbing experience. The book really needs to go back to an editor.

A Treatise for Economic Justice
This book is on my short shelf of most important books of this era, in that Galbraith takes the work of his earlier economic analyses over many books, and gives an all-humanity based outline to consider for the 21st century.

Those who dismiss this book as non-economic I fear are stuck within narrow definitions, as opposed to the more human-based origins of the word economics (from oikonomia, home management). It is this narrow definition that is prone to the boom-bust cycles Galbraith discusses in earlier historical works on the history of modern economics, and is part ofthe current recessional problem.

This book is a cry for human-based economics, and would be a good book study or resource for businesses, community organizations, or churches around North America.

Too bad Galbraith isn't much of an economist.
Galbraith is a very clear writer. He rarely uses technical jargon or mathematics. But unlike some other popular writers, it isn't because he is able to explain complex phenomena without them. He doesn't appear to understand them. This book reads like a fairy tale or child's letter to Santa Claus. Mr. Galbraith doesn't seem to understand economics well enough to pass economics 101. But he does have an excellent command of the English language.

It' s useful for his enemy
I have two reasons for putting a high value of this book, First, I truly appreciate Mr. Galbraith's style. Its sentence is compact, logic is clear, and expression is eloquent...in short, his style is incredibly excellent. Second, it's useful. Reading this compact book,you can understand 'liberal's good society.'I believe nobody can misunderstand Mr. Galbraith's opinion. If you are a 'liberal', to read this book must be a pleasure. And, if you belong to 'conservative', missing opportunity to know your enemy is not clever. ... Read more

Book Description

Why has capitalism produced economic growth that so vastly dwarfs the growth record of other economic systems, past and present? Why have living standards in countries from America to Germany to Japan risen exponentially over the past century? William Baumol rejects the conventional view that capitalism benefits society through price competition--that is, products and services become less costly as firms vie for consumers. Where most others have seen this as the driving force behind growth, he sees something different--a compound of systematic innovation activity within the firm, an arms race in which no firm in an innovating industry dares to fall behind the others in new products and processes, and inter-firm collaboration in the creation and use of innovations.

While giving price competition due credit, Baumol stresses that large firms use innovation as a prime competitive weapon. However, as he explains it, firms do not wish to risk too much innovation, because it is costly, and can be made obsolete by rival innovation. So firms have split the difference through the sale of technology licenses and participation in technology-sharing compacts that pay huge dividends to the economy as a whole--and thereby made innovation a routine feature of economic life. This process, in Baumol's view, accounts for the unparalleled growth of modern capitalist economies. Drawing on extensive research and years of consulting work for many large global firms, Baumol shows in this original work that the capitalist growth process, at least in societies where the rule of law prevails, comes far closer to the requirements of economic efficiency than is typically understood.

Resounding with rare intellectual force, this book marks a milestone in the comprehension of the accomplishments of our free-market economic system--a new understanding that, suggests the author, promises to benefit many countries that lack the advantages of this immense innovation machine. ... Read more

Reviews (2)

Packed with Knowledge!
This book should certainly be on every businessperson's reading list, and every legislator's, and every student's. It is a lucid, well-organized and admirably logical presentation of the role of innovation in capitalism, and the role of capitalism in innovation. Author William J. Baumol accomplishes something rare indeed by spanning the chasm between quantitative and qualitative economic writing. He has the verbal skill to write clearly and accessibly, explaining his points in plain if elevated and austere language, and illustrating them with interesting historical examples. His rigorous mathematical demonstration would satisfy the most demanding academic economist. Baumol's insight that capitalism's great achievement is to make innovation routine distinguishes this book from others on innovation, entrepreneurship and creativity. Although the lone inventor matters, ancient Rome and China had lone inventors and yet those empires did not produce economic growth on the scale that capitalism has produced it. Capitalism is distinctly productive because it makes innovation a self-sustaining and indispensable phenomenon, driving and driven by competition. We find this intriguing thesis well worth serious consideration.

Good Book on Necessity of Institutional Rules
"The thesis of William J. Baumol's latest book is articulated clearly at the start. The free-market growth engine depends ultimately on institutional rules. People may have a natural entrepreuneurial instinct, but that instinct can find outlet in criminal, rent-seeking, or other destructive activities as easily as in productive venues. Economic growth depends, however, on more than just rules and norms that channel such inclinations in the "right" direction. It depends also on rules governing the appropriation of intellectual property and on the precise trade-off a society makes between pricing information at its marginal cost (making it free) and providing incentives for invention and innovation by creating rules to allow appropriobility for fixed periods of time. We call this body of rules patent, copyright, and, in general, intellectual property law (although, as Baumol argues, antitrust is also relevant). The dilemma is that in the absence of such protection there are few private incentives for producing new information or discoveries, but in the presence of such protection we impose monopoly pricing and, consequently, static efficiency losses."

"The first section of the book, devoted to the "capitalist growth mechanism," is the most interesting. Here Baumol develops his vision of a capitalist economy as consisting of competitive price-taking sector and an oligopolistic sector in which competition occurs more often on the innovation margin rather than on the price margin. The pharmaceutical and computer industries are cases in point. This oligopolistic sector is the economy's engine of growth. Firms here must innovate or they die; they also must price discriminate or die because the heavy fixed costs of innovation cannot be covered if everyone pays a price equal to marginal cost. These costs must be recouped in the same way that railroads were forced to price discriminate to cover their fixed costs for rolling stock and permanent way. Baumol cautions antitrust authorities against jumping to the conclusion that departures from marginal-cost pricing are necessarily evident of monopoly power."

"As Baumol's book proceeds, it devotes a generally increasing share of space to formal models...[and] it was somewhat dissapointing...to discover how much of the second half of the book is devoted to model building as opposed to discussion..." ... Read more

Amazon.com

A collection of essays about international trade seems destined to be a snoozer, but Paul Krugman, an economics professor at the Massachusetts Institute of Technology, somehow manages to write about an arcane subject in a lively manner that is actually entertaining. Krugman contends that many who are famed as experts on world trade actually misunderstand the subject completely, and he provides a startling commentary on some notables, from Lester Thurow to Ross Perot. Yet Krugman comes not merely to destroy; a reader can gain from his essays some real insight into economics, not to mention which economic commentators know their stuff. ... Read more

Reviews (27)

International Economics made easier
This is an excellent book in the sense that it helps non economists see the truth about the effects of trade on the Economy. Normally, people tend to overestimate the effects of trade treaties such as NAFTA on the U.S. economy and Krugman helps you understand why this isn't true. Common knowledge normally doesn't coincide with economic truth and people are mislead by such things as trade wars between mayor superpowers or trade wars between develop and developing nations. Krugman has the ability of explaing such glamorous issues in layman's terms and that's why this book is great.

Economic doomsday prophets, hold on to your seats.
So you think that the Japanese and Koreans will eat us alive in the international trade arena, that in a few years all US jobs will move south of the border, or that we must protect our capital stock to prevent our prosperity to flow elsewhere in the world. Well, think again. With simple national accounts and basic trade theory, Krugman warns us against the doomsday prophets of international trade who fuel the paranoia of competitiveness in the open economy. It may not be fashionable in academic circles (specially around Lester Thurow and Robert Reich, against whom Krugman takes a particularly nasty swing), but the truisms of Ricardian economics still hold valid: Trade balances in the medium term, and we'll be just OK. Just think about comparative advantage, a concept pop internationalists have apparently forgotten about.

Krugman and Competition
Paul Krugman is an intellectual economist with a rebllious streak. In "Pop Internalionalism" Krugman denounces ideas by some of the most well known and respected economists of the 20th century. Krugman uses a plethora of statistics to prove his point.
Krugman tries to prove that there is no economic competition between nations, or if there is it is nominal. His theories are alway well thought out and expressed but it difficult to believe everything he says. He tries to write for the common man, and is writing is very well expressed, intelligent, yet readible by most. It is easy for one to find themeselves rereading paragraphs if he/she does not have a strong understanding of international trade and national business.
Some may say that he is ahead of his time, others may say that his theories are rediculous, but I'll just say he is worth reading.

Awesome book
This is a great book - applying sound economics to our real-world policy issues.

Krugman's successful attempt to expose the flawed argument of the likes of Lester Thurow is wonderful. People like Thurow are more interested in bashing certain countries (e.g., Japan, Europe) and/or apologizing for others (e.g., People's Republic of China), with no economic/academic consistency. Hard to believe Thurow passes as an "economist"...

Good, concise, but sometimes repetitive
I am no expert on economics, having only taken basic classes in college, but Paul Krugman SEEMS right in his book "Pop Internationalism." Krugman, the op-ed columnist for the New York Times and Slate magazine and also a professor at Princeton University, published this collection of essays, articles, and speeches back in 1996.

Perhaps the publishing date brings about the only weakness, as much of the talk seems less appropriate for today's economy. But the reviews of old topics like NAFTA and the Eastern economy is still good information, and presented clearly and concisely.
Krugman put this collection together to inform people of the latest trend of beliefs in international economics, a trend that is dead wrong in Krugman's eyes. And so we have his term of "pop internationalism."

The basic idea of pop internatiolism is that the U.S. does not depend on international trade as much as the "experts" portray. Very little of our GNP is actually in exports, and we are seemingly doing just fine as the world market becomes more "global." Krugman is so concise in this point that many of the essays actually repeat the point over and over. This is okay though (at least for me), because I understood it better reading it again.

The book is a quick read, and is divided into four secions: A Zero-Sum World, Economic Theory -- Good and Bad, The Emerging World, and Technology and Society.

As far as Krugman being correct in his economic thinking, get back to me after I read some of the "pop internaitionalism" literature from the likes of Reich and Thurow. ... Read more

Amazon.com

On Competition, a collection of works by Michael E. Porter, is a critical examination of the dog-eat-dog international economy. A Harvard Business School professor, Porter is one of the most respected and innovative economists of his time. Author of 15 books, he advises key elected officials and business leaders in all parts of the world. On Competition features 13 of his best articles over the past 15 years, including 2 new ones.The essence of Porter's message is that every company, country, and person must master competition to thrive in brutal international and domestic economies. Competition is the key to excellence. Worried about losing your job or your services becoming obsolete? Porter believes that a little fear is good for everyone. "Companies that value stability, obedient customers, dependent suppliers and sleepy competitors are inviting inertia and, ultimately, failure," he writes in his 1990 study and essay "The Competitive Advantage of Nations." Porter is a longtime critic of the short-term thinking on Wall Street that often stifles competition and hurts the economy. In "Capital Disadvantage: America's Failing Capital Investment System," he calls for much lower capital-gains rates for people who invest for the long term. He also urges investors and businesses to start thinking together. He contends that pension funds and institutional investors should get a greater say over the companies they own. It's wacky to have company directors with little expertise or financial interest in the company, he writes.

Porter is often unconventional and asserts that businessmen must be, too. In his essay "Green and Competitive," he shows little sympathy for businesses that complain about environmental regulations. Rules to protect the environment don't have to strangle companies--they can actually improve productivity with the right attitude and approach. Rhone-Poulenc, a French chemical and drug company, proved this when it stopped incinerating a certain byproduct and began selling it as an additive for dyes and tanning. Readable and provocative, On Competition is vital for business, government, and financial leaders as well as small-business people and investors. --Dan Ring ... Read more

Reviews (11)

Great, clear frameworks on competition
Michael E. Porter is a Harvard Business School professor and a leading authority on competition. This book consists of three parts - Competition and Strategy: Core Concepts, The Competitiveness of Locations, and Competitive Solutions to Societal Problems - and each of these parts consists of 4-to-5 Harvard Business Review articles which were published between 1979 and 1998. "The study of competition, in its full richness, has preoccupied me for two decades."

In Part I, the five HBR articles outline Porter's strategic concepts. "I have sought to capture the complexity of what actually happens in companies and industries in a way that both advances theory and brings theory to life for practitioners. My goal has been to develop both rigorous and useful frameworks for understanding competition that effectively bridge the gap between theory and practice." In the 1979-article 'How Competitive Forces Shape Strategy', Porter introduces the monumental five competitive forces (from existing competitors, new entrants, customers, suppliers, substitution). This article has had an extensive impact on the field of strategy and is still a starting point for strategic management at any MBA-course. 'What is Strategy?' was published in 1996 and is, in my opinion, a reply to all the critics of his frameworks and models. The 1985-article 'How Information Gives You Competitive Advantage', Porter and co-author Victor Millar write how information technology influences competition. The current impact of Internet and e-commerce provide excellent examples for this article. In the 1993-article 'End-Game Strategies for Declining Industries', Porter lines up with Kathryn Rudie Harrigan to discuss the last stage/final phase of a industry. This articles is largely based on Harrigan's 1980 book 'Strategies for Declining Businesses' and is a chapter in Porter's 1980-book 'Competitive Strategy'. Part I is finalised with the magnificent 'From Competitive Advantage to Corporate Strategy'. This article is truly a classic and discusses the radical rethinking of corporate strategy. "Corporate strategy is what makes the corporate whole add up to more than the sum of its business parts." This article is the basis of his book 'Competitive Advantage'.

In Part II, Porter kicks off with 'The Competitive Advantage of Nartions', which is also one of the titles of his books. In this 1990-article Porter argues that in a world of increasingly global competition, nations have become more, not less, important. In 'Clusters and Competition' (1998), Porter expands on the theme and discusses the new economics of competition - clusters. "A Cluster is a geographically proximate group of interconnected companies and associated institutions in particular fields, linked by commonalities and complementarities." Examples are the Italian fashion industry, the California Wine cluster, Silicon Valley's venture capital industry, and Massachusetts IT industry. In the next article, 'How Global Companies Win Out' (1992), Porter, Thomas Hout and Eileen Rudden discuss what a global industry is and how global companies can win out. In the next article, 'Competing Across Locations' (1995), returns on this subject and provides additional insights on global strategy, including a general framework.

Part III includes the latest works of Porter. Porter discusses environmental regulation and competition ('Green and Competitive', 1995), with a great case study of the Dutch flower industry, and the impact of these regulations on competition and industries. In the next article ('The Competitive Advantage of the Inner City', 1995), Porter introduces the economic distress of America's inner cities, whereby "the real need - and the real opportunity - is to create wealth" . In the 1990s, Porter also turned more towards government institutions. He discusses the American health care ('Making Competition in Health Care Work', 1994) and, the according to Porter, America's failing capital investment system ('Capital Disadvantage', 1992).

The advantage of this book is that it provides the a quick insight into the ideas and essential points of Porter's books 'Competitive Strategy', 'Competitive Advantage', and 'Competitive Advantage of Nations'. Part I and Part II are now essentials in the field of strategy and competition with fantastic frameworks and models. Part III are Porter's latest articles and discuss the connection between social issues and competition. A great book that is good to read (simple US-English).

Helpful Essays from a Corporate Strategy Icon
This book is a collection of essays and articles by Michael Porter alone or with others. Most of them are collected from his writings in the Harvard Business Review although two are new to this book. Think of this as a "Porter's Greatest Hits" kind of thing. That is a bit misleading because his HBR articles are not exactly the same thing as his Competitive Advantage books although the topics are definitely related.

The essays are grouped into three broad sections: 1) Competition and Strategy: Core Concepts, 2) The Competitiveness of Locations, and 3) Competitive Solutions to Societal Problems. Will you find each article of the same high quality? Probably not (again, like a greatest hits collection), but you will find them informative and thought provoking. It is impossible to study for an MBA nowadays without invoking "Porter's Five Forces" in your discussions of competitive and marketing strategy.

This book can help add to your thinking and understanding of how every aspect of our life is in some way part of a competitive context and the ways it improves our standard of living. It will also help you improve your thinking in how to best strategize for and participate in competitive situations.

It would be a mistake to think that Porter advocates for a Hobbesian nightmare of life being nasty, brutish and short. Rather, he is more or less helping us think through the nature of the way competition arises and how to best think about its sources and how to manage it and the traps to avoid.

While Porter's model is used by some as a hammer that sees everything as a nail, it really needn't be used that way and, in its proper context, is very helpful.

Great Aggregration Of Porter's Work
'Porter On Competition' is 'lighter' to read than his 'Trilogy', but it nicely consists the core ideas of his work and how it evolved during the past decades. The book provides reader a nice overview about how competitive strategy & competitive advantage are applicable to a wide range of areas: from corporation, industry & nation, to social issues such as health care and environment.

Ladies and Gentlemen please! time to get out the Porter
You can always tell when it's time to dust off the old Michael E. Porter books and to start to frantically search for better and sounder ways to do business and compete, it's when the economy starts to get a little tighter and begin to show signs of taking a down-turn, like about now.

So, before you fork out good money and time to read the next great and grandiose book on how to make a fast few million bucks on the internet read this first, and you will still be in business this time next year, and after that - maybe.

The Gospel on Competition
Prof. Porter's work on competition in industry is a milestone and after two decades still holds its ground. I had his textbook for my MBA class well over a decade ago. His recent (Harvard Bus. Rev - March 2001) article regarding 'Strategy and the Internet' shows that the fundamental principles of Competitive Strategy is still valid as ever in the "new economy". ... Read more

Book Description

The Boston Globe called the MacArthur Award-winning economist Nancy Folbre "a feminist outlaw challenging the orthodoxy in a discipline shaped almost entirely by men." The Washington Post Book World said she "is always a provocative analyst of important social problems." With The Invisible Heart, Folbre's thinking and agenda for change are distilled into what Library Journal describes as a "readable, well-documented, and thought-provoking" book. Written in a lively, personal style that Booklist finds "very accessible," The Invisible Heart is a pioneering reevaluation of the competitive market that explains why Adam Smith's invisible hand, if it reaches too far, can undermine the "invisible heart"—the values of love, reciprocity, and obligation on which our families and communities depend. Folbre addresses a basic problem in our society: balancing economic pursuits with care for others. The Invisible Heart outlines strategies for developing an economic system that rewards both individual achievement and care for others. ... Read more

Reviews (1)

You Gotta Have Heart
Anyone economist whom the Wall Street Journal takes a swipe at is doing something right in my book. I don't recall the exact quote but the Journal says something like Folbre is a "feminist economist who studies family economics (socialism)." Folbre wonders aloud if the Journal believes families are necessarily socialist. Judging from their characterization of Folbre's work, and their endorsement of strict neoclassical econonmic theory in their editorial section, it appears that the Journal and other business and economic theorists of their ilk would prefer to simply call families names than deal with their true economic and moral value in the realm of capitalism.

Folbre's thesis is that capitalism has been enjoying a "free ride" on families and communitites from very early on. She further argues that capitalism is changing the ways people and families concieve of themselves. Using memorable examples, she makes a convincing case for the inclusion of traditional women's work such as child rearing in such measures as the GDP. After all, don't corporations need smart well-trained workers? And don't smart well-trained workers grow up inside families who nuture, care, and educate them? Further, don't families and workers mostly pay for their training?

Most economists are uncomfortable thinking about how the social and moral structure of society underpins capitalism. This is because they can't find ways to measure this "natural resource." Conservatives know that capitalism encourages radical individualism -- that's why they are always trying to impose "traditional values" on workers. Conservatives know that capitalism depletes people's sense of obligation and responsibility -- that's why they talk about it so much. What they don't talk about is that the encouragement of economic self-interest plays havoc with social reciprocity and moral standards. As Folbre points out, business contracts are almost meaningless in and of themselves. They are based on mutually accepted customs of reciprocity and obligation that have developed over the course of Western history. They are a simply a more elaborate version of the handshake.

Witty, pithy, and astute, Folbre's "Invisible Heart" is the perfect antidote to inane blatherings of the Chicago School knuckleheads and their mealy-mouthed descendants. ... Read more

Book Description

This is a history of economic thought from Adam Smith to John Maynard Keynes--but it is a history with a difference. Firstly, it is history of economic theory, not of economic doctrines. Secondly, it includes detailed Reader's Guides to nine of the major texts of economics in the effort to encourage students to become acquainted at first hand with the writings of all the great economists. This fifth edition adds new Reader's Guides to Walras' Elements of Pure Economics and Keynes' General Theory of Employment, Interest and Money as well as major additions to the chapters on marginal productivity theory, general equilibrium theory and welfare economics. ... Read more

Reviews (4)

Good synopsis but poor analysis
I have always felt uneasy with this book since I was an under graduated student, 30 years ago. This is undoubtedly a quiet useful book for anyone who needs a bird's-eye view of the classics in economics. If you don't have time to read Smith's Wealth of Nations or Marshall's Principles, here you have the book you need. However, it is not here that you can look for a good analysis of the meaning and implications of the main schools of economic thought, as well as the relevance of the work of its most distinguished authors and their social and intellectual environment. That is reason why I always preferred Schumpeter's History of Economic Analysis. Today, that I am lecturing this course my dissatisfaction has increased, among other reasons because you have more and better textbooks, such as Lionel Robbins' History of Economic Thought, Mark Skoussen's Making of Modern Economics, or Jürg Niehams' History of Economic Theory, which I really enjoyed reading because they try to make a portrayal of the intellectual and human stature of the most important economists of all times and their background.

good for econ dudes
as an econ major i found this book highly informative and interesting. however, if you are not mathematically inclined you might find some of the models and graphs difficult to follow, especially the ones involving differential equations.
but if you are an econ dude, this book is great. lots of insight about how commonly used theories and models came about. well written for the most part, but somewhat wordy at times.

Too much lopsided for my taste.
The problem with this book is that it offers an astounding bibliography, being therefore a mandatory list to further readings, but unfortunately it is entirely teleological, as it considers neoclessic economics of the most conservative kind to represent the acme of all economic thinking.

Still the best of its type
The standard text for anyone who wishes to analyse economic theory. Blaug takes the approach that an economic theory can be criticised on two levels. It may have a mismatch with the environment and or it may be internally flawed as a theory. By concentrating on theory Blaug helps the reader acquire their own critical faculties for assessing economic theories without getting bogged down on endless details associated with, "but things were different then," or with defendants of marxist economic theory, "but things would be different." ... Read more

Book Description

This work uses recent developments in the theory of incomplete contracts to analyze a range of topics in organization theory and corporate finance. Beginning with a general model of the firm, Hart analyzes in greater depth the financial structure of firms, debt collecting and bankruptcy. Oliver Hart is a leading researcher in this area, and these Clarendon Lectures are an important contribution to contact theory. The work will be of interest to teachers, graduate students and advanced students of microeconomics, the theory of the firm, industrial organization, and finance. ... Read more

Reviews (4)

A classic on the theory of the firm
Consider an economic relationship where relationship-specific investments are important and transaction costs make it impossible to write a comprehensive long-term contract to govern the terms of the relationship. Consider also the nonhuman assets that, in the post-investment stage, make up this relationship. Given that the initial contract has gaps, missing provisions, or ambiguities, situations will occur in which some aspects of the use of these assets are not specified. Take the position that the right to choose these missing aspects of usage resides with the 'owner' of the asset. That is, ownership of an asset goes together with the possession of residual rights of control over that asset; the owner has the right to use the asset in any way not inconsistent with a prior contract, custom, or any law. Finally, identify a firm with all the nonhuman assets that belong to it, assets that the firms's owners possess by virtue of being owners of the firm. Included in this category are machines, inventories, buildings or locations, cash, client lists, patents, copyrights, and the rights and obligations embodied on outstanding contract to the extent that these are also transferred with ownership. Human assets, however, are not included. Since human assets cannot be bought or sold, management and workers presumably own their own human capital.

We now have the basic ingredients of a theory of the firm. This theory has become known as the property rights approach to the theory of the firm. In a world of transaction costs and incomplete contracts, ex post residual rights of control will be important because, through their influence on asset usage, they will affect ex post bargaining power and the division of ex post surplus in a relationship. This division in turn will affect the incentives of actors to invest in that relationship. Hence, when contracts are incomplete, the boundaries of firms matter in that these boundaries determine who owns and controls which assets. In particular, a merger of two firms does not yield unambiguous benefits: to the extent that the (owner-)manager of the acquired firm loses control rights, his incentive to invest in the relationship will decrease. In addition, the shift in control may lower the investment incentives of workers in the acquired firm. In some cases these reductions in investment will be sufficiently great that non integration is preferable to integration.

Note that, according to this theory, when assessing the effects of integration, one must know not only the characteristics of the merging firms, but also who will own the merged company. If firms A and B integrate and A becomes the owner of the merged company, then A will presumably control the residual rights in the new firm. A can use those rights to hold up the managers and workers of firm B. Should the situation be reversed, a different set of control relations would result in B exercising control over A, and A's workers and managers would be liable to holdups by B.

Hart's book gives us an introduction to this world of the property rights approach to the theory of the firm. In the first part Hart considers the traditional approaches to the firm and argues that these approaches can not explain why all production does not take place within one firm or even why firms matter at all. His answers to these problems are developed via the property rights approach to the firm. Development of this theory covers chapters 2-4. Chapter 2 outlines the property rights approach, chapter 3 looks at issues that arise from this approach and chapter 4 discusses the foundations of the incomplete contracting model. In part 2 of the book Hart considers the financial structure of firms. The nature of debt and equity, the capital structure decisions of public firms, bankruptcy procedures are all covered. The book is written in a very readable manner and is non-technical enough to mean that both (advanced) undergraduate and graduate students will be able to read it. For anyone with a interest in the theory of the firm this is a must read.

Abstract Theory at its ugliest
I had the unfortunate dislpeasure of having to read this as one of the required books for a PhD class in Managerial/Business Economics. Suffice to say...the book is a complete waste of time and not worth the trees it took to print it. I understand Hart is brilliant...teaches at Oxford & Harvard...receives full salary at both...he's tops in his field. Yet, what this book contains has absolutely nothing to do with reality. It is abstract theory at its finest...or rather, worst! PhD work is theoretical...that's a given. But this book is still worthless, even for someone like myself studying for my PhD in Business Economics. You learn nothing about corporations, business practices or strategy, finance...etc. What is the point to studying this theory of financial structure that is so far removed from reality that you finish the semester wondering..."gee, what have I actually learned in the last four months". If your aim is for applied work, your likely answer will be NOTHING. Even though the mathematics used are fairly basic,the book is very difficult to read. Turning the pages is a very slow process. You learn nothing about the workings of real world finance by reading through this intellectuals collection of useless writings. I'm sure it boosted his ego, but it does nothing for the business student to understand the reasons for different choices of capital structure. Your time would be much better spent reviewing the chapters in Brealy and Meyers on capital structure, or Damodoran's book on Corporate Finance: Theory & Practice.(now that is a good book). If you want to learn about the nature of contracts WITHIN firms and how they are used to accomplish managerial objectives and provide proper incentives where needed, read Milgrom & Roberts or any good book on Managerial Economics. Even for Phd students in Finance, this book is a waste of your time!

THE Classic
This book is regarded as THE classic by most professional economists. We can't talk about the theory of the firm without referring to this book, which is written with exceptional clarity and depth.

A THEORY of the firm
This book presents a theory of the firm. It is targeted for graduate students in Economics. It is a must have if you plan to research in this field and it is remarkably clear! The mathematics is incredibly easy compared to other 2nd year Econ PhD books. I think even undergraduates usually know enough Math to go through the main chapters.
The book is purely theoretical and only very abstract-minded people will like it. If your specialization is applied I.O. you still might want to read the book for background knowledge, but I doubt it will be of much use to you (no econometrics here, and very little econometrics to be done even if you wanted to)

On the other hand, it is probably not going to be of any use to you if you are not a graduate student in Economics. It is *far* too abstract for management.

Now briefly to the content:
The first chapter reviews previous approaches to the theory of the firm (transaction costs...)
Property right approach and incomplete contract approach are the main point of the book. The role and the boundary of the firm are explained using concepts such as "property rights", "residual power of control", "specific investments".
The second part of the book is mainly about financial structure. Of the second part, I studied only the last chapter on voting rights. It explains how the voting structure should be set up (how many votes per share, how many classes of shares, majority voting...) according to expected private benefits of control by the incumbent management and the management making the tender offer.

So why only two stars? The theories presented here seem to me less satisfactory than many others in Economics.
I think there are fields in Economics that convey the right intuition. Hart's book does not give that impression to me. Unfortunately, I don't have anything better to propose otherwise my dissertation would be done. ... Read more

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hurrah for heterodox economics
maybe i'm better read now, or maybe this work is more relevant, but i found this work tremendously more readable than the capitalist imperative, which i tackled last fall. in this work, storper asks why we still have cities and agglomerations in an era marked by increasing mobility of resources.

one reason i like storper is because he eschews traditional urban economics, which i too find rigid and at times anachronistic. to counter location theory, storper argues that cities and regions, given the recent changes to capitalism, evolve along a path of cumulative knowledge, such that knowledge and learning gain economic value and hence competitive advantage. individuals, firms, and public institutions are codependent. knowledge creation is a process unique to cities/regions and even more compelling unique to individual cities/regions. while a few cities might be technology or financial hubs, their culture and inhabitants influence the way activities are conducted such that their output is also unique. therefore no recipe for economic development and policy can be given - you have to use your brain and think. cities are not machines, but reflexive entities which assume the characteristics of their constituent parts. he concludes, "heterodox regional economics, like economics in general, continues to be controlled by the metaphor of economic systems as machines, with hard inputs and outputs... this focus on economic development must now be complemented by another focus, where the guiding metaphor is the economy as relations, the economic process as conversation and coordination, the subjects of the process not as factors but as reflexive human actors, both individual and collective..."

mérçi Michael Storper
A proactive and creative work A refer it for all who wants to have a new- nontraditional- view about The Regional Economy. For all who wants to think about the future out of stereotypes. ... Read more

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As an advocate of Distributism, an early 20th-century school of social thought developed by the author and his colleagues, Chesterton addresses the topics of concentration of wealth, poverty, work, agriculture, machinery, and capital in this famous work. He favored distribution of wealth while being antisocialist; he advocated ownership of private property while being anticapitalist. He argues that the economic order is bound by moral law and that man should be served by the economy rather than serving it. ... Read more

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A powerful vision that justly demands consideration
The Outline Of Sanity is a philosophical treatise on the social vision of renowned British author and Christian philosopher G.K. Chesterton (1874-1936), known as "distributism". Chesterton presents his antithesis to the impersonal bustle of increasingly fast-paced modern life, and offers a logical means for human beings swept by the tide to regain control over life and future. With a Catholic foundation yet meant to encompass people of all religious persuasions, Chesterton's vision of Distributism is a powerful one that justly demands consideration, particularly in this modern day and age where his concerns of a society of alienation multiply a thousandfold! ... Read more

Book Description

This history and analysis examines fifteen great inflations--from Ancient Rome to the French Revolution to post-World War I Germany to modern-day Brazil--to provide an understanding of the causes of inflation. A unique feature of the book is the evidence presented that a moderate degree of inflation is usually accompanied by increased economic activity. Contrary to the views of many, moderate inflation appears to be welcomed by most people and assists in returning incumbent political leaders to power. In addition, the money illusion, the belief that money has constant value over time, is shown by the author to be grievously in error. ... Read more

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I have read this book again and again for ten years.
Allow me to pay respect and compliment to Mr. Don Paarlberg here. Mr. Don Paarlberg has an insightful understanding of human nature and their behavior that his examination and explanations of inflation history grab my intention very time I read this book. They make a lot of senses and transform my knowledge of economics into a penetrating understanding of human behavior and reactions to certain events. Mr. Don Paarlberg elevates my perspective toward macro-economics to a higher level, that of a human behavioral one, and certainly broadens my eyesight with regard to how human nature and human behavior did not change over the past two thousand years or so in terms of what people would do in reaction to price drivers. Lastly, I appreciate Mr. Don Paarlberg's exquisite, precise, and concise way of writing, something much less seen nowadays. Thank you, Mr. Don Paarlberg. ... Read more

Book Description

Economic sociology is a rapidly expanding field, applying sociology's core insight--that individuals behave according to scripts that are tied to social roles--to economic behavior. It places homo economicus (that tried-and-true fictive actor who is completely rational, acts only out of self-interest, and has perfect information) in context. In this way, it places a construct into a framework that more closely approximates the world in which we live. But, as an academic field, economic sociology has lost focus. The New Economic Sociology remedies this.

The book comprises twenty of the most representative and widely read articles in the field's history--its classics--and organizes them according to four themes at the heart of sociology: institutions, networks, power, and cognition. Dobbin's substantial and engagingly written introduction (including his rich comparison of Yanomamo chest-beaters and Wall Street bond-traders) sets a clear framework for what follows. Gathering force throughout is Dobbin's argument that economic practices emerge through distinctly social processes, in which social networks and power resources play roles in the social construction of certain behaviors as rational or optimal. Not only does Dobbin provide a consummate introduction to the field and its history to students approaching the subject for the first time, but he also establishes a schema for interpreting the field based on an understanding of what economic sociology aims to achieve.

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The Tao of Economics
This is one of the truly great books produced by the Western world. Although much has been written on economics since, it considerably broadened my perspective to read it in the original.

I can't help feeling that those who pan Wealth of Nations as an apology for exploitation simply haven't read it. That's simply not what the book is about. For if you really do care about the underpriveleged masses -- and it's imminently clear that he really does -- then you better consciously organize your state in such a manner that money will flow naturally where it's most needed.

I'd been told before I read it by several people that AS was, for example, apologizing for the East India Trading Company? Does his apology for EIT include the lengthy chapter which discuss in full detail how and why the East India Trading Company was responsible for an wide array of abuses in the Far East, and why no similar company would be legal if a society were fully moral and knew its own best interest?

Nor is it a blind apology for laissez faire economics, though it does recommend non-intervention by the government insofar as that is possible. Still he fully recognizes the need for social services, rightly understood and rightly executed.

In fact, I can't see how anyone who reads it could view it as an apology at all -- it's simply a statement of fact. Adam Smith is not the one carrying an ideology around on his shoulder. You may not like it that the world works this way -- that's another matter. But that IS the way it works... you are made to see that for yourself. It is not imposed on you as dogma.

And after reading AS, I'm left feeling very happy that that's the way the world works.

I think the most fundamental idea I am left with after reading all those pages, is that wealth is a verb, not a noun. Land and labor (i.e. food and farming) are the bottom line of economics. Treat your farmers well. Unjust practices in trading will ultimately backfire.

The dynamo which runs the machine that creates wealth lies within each individual - it is the individual's will to better his or her condition. To the degree that this aspect of human nature is given the power to express itself , the nation will be vitalized internally.

A Classic Misinterpreted by Those Who Revere it Most
This Book is a classic. I would not go so far as to add it to the western Canon, but it contains the foundations of modern Economics. Its explaination for how economies work is still unsurpassed. Division of Labour, the invisible hand of consumer demand and the uses and mis-uses of taxation are all here. It should be stressed however, that this edition does not include books IV and V which concern the proper role of govt. It is also the section most ideologues forget to read and contains all the rudiments for a minimal welfare state and and active role for govt. in planning FOR competition, NOT the planning OF competition --- a very important distinction and one lost on those who see no positive role for the state in the economy.

It is unfortunately most used as a classic for those seeking a rationale for exploitation. Smith did not intend it as such and to see it as that is indeed to read it very selectively. The invisible hand is a useful interpretation for demand economics, but it is, like all other things only a description of market forces as they operate. It is not always the best way to organise everything as modern day ideologues would presuppose. It is of course the basis of business --- and it should be --- but Smith also has lots to say about how other economic factors operate in society.

One thing to make clear is this: Smith is not anti-State, as some ideologues in the US would like to think. He is balanced in his view of the state --- it is best left out of economic planning --- but it does clearly have an important role to play. The role of the State is to

1) create the conditions for the smooth flow of capital and its allocation into its most efficient uses and not to erect barriers in the process.

2) It also must necessarily collect taxes since the smooth and efficient operation of the state and the benefits its provide is in the interest of the accumulation of Capital.

3) The State also directly participates in the economy when projects which are obvious to the public benefit, but "which to no one would accrue an economic profit" --- he offers such examples as lighthouses and some roads and defence --- areas where there is an obvious public good, but to which no one would make a profit. Lighthouses are good examples, but like everything else in today's economy an interpretation for this could be made for universal health care and, of course, education; the mere fact that people do not have to worry about providing for education or health allows them to carry on in amassing capital in other endevours. Of course there is a slippery logic here but such is the rationale for the limited, but much greater role, the state provides in most developed economies outside of the United States.

4) Taxation policy is here as well. In the last book, Book V (not included in this edition), Smith describes the foundation of taxation and where it works best. He starts with the idea that "those who benefit the most from the smooth functioning of the state, should also be the ones who pay more." While not a prescription for progressive taxation policies it is the right way to think about tax and certainly would never excuse preferential taxation policies for the rich (such as in the US) but could be used as a foundation for a universal flat tax.

Such a tax is perhaps the best, but as Smith points out, where and how to collect it is always the difficulty. He comes out more or less in favour of a consumption tax policy since it would approximate the wealth the people earn in the first place and would not, for example overburden companies or people with high income taxes when they may not have high earnings.

There is however little in here about social policy, but Smith does see it as the right of the State to, in his time, provide welfare in the guise of work houses (19th Century hell holes). But that was as good as public welfare got in those days so we can posit that Smith would have carried his logic somewhat forward and provided for some social programmes --- though the extent of them would be a subject of no doubt fierce debate.

Overall a book that every thinking person should have on their shelf. Like most things it has some warts over time, but it is still the logical Tome on which capitalism rests its bones. Not until Marx did someone really challenge its dictates --- Smith basically won the argument on most points. But willingness for those with an inability to think critically, to use this book as justification for the domination of the weak by the strong, has little to do with Smith --- it has everything to do with those who are looking for justification of Greed --- and Gordon Gecko and Adam Smith have little in common.

The apology for exploitation
Two hundred years ago capitalism was really beginning to take over as the dominant economic system. Capitalism was at the time a system allowing an economic and scientific growth, much faster than under the feudal systems, and played a progressive role. However capitalism led to a new kind of oppression of the working class. Adam Smith gave the bourgoise a theory stating that their oppression of the working class was for the common good of all mankind, thus serving as an apology for oppression.

This book is a lousy apology. Capitalism is an old-fashioned economic system, ready to become buried on the scrapyard of history. Workers of all countries, Unite!

Read it, if you want to understand how the world works.
Two centuries ago, Adam Smith explained the modern free-market economy. More than that, he discusses the need for, advantages of, and limitations of a free markets.

The introduction in this printing is especially good. Almost a book in itself, it extend for 50 pages and connects the book to other philosophers and economists. Almost, you don't need to read the book after you've read the introduction -- but do it anyway, just to be amazed at Smith's prescience. ... Read more

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A Frenchman rents a Hollywood movie. A Thai schoolgirl mimics Madonna. Saddam Hussein chooses Frank Sinatra's "My Way" as the theme song for his fifty-fourth birthday. It is a commonplace that globalization is subverting local culture. But is it helping as much as it hurts? In this strikingly original treatment of a fiercely debated issue, Tyler Cowen makes a bold new case for a more sympathetic understanding of cross-cultural trade. Creative Destruction brings not stale suppositions but an economist's eye to bear on an age-old question: Are market exchange and aesthetic quality friends or foes? On the whole, argues Cowen in clear and vigorous prose, they are friends. Cultural "destruction" breeds not artistic demise but diversity.

Through an array of colorful examples from the areas where globalization's critics have been most vocal, Cowen asks what happens when cultures collide through trade, whether technology destroys native arts, why (and whether) Hollywood movies rule the world, whether "globalized" culture is dumbing down societies everywhere, and if national cultures matter at all. Scrutinizing such manifestations of "indigenous" culture as the steel band ensembles of Trinidad, Indian handweaving, and music from Zaire, Cowen finds that they are more vibrant than ever--thanks largely to cross-cultural trade.

For all the pressures that market forces exert on individual cultures, diversity typically increases within society, even when cultures become more like each other. Trade enhances the range of individual choice, yielding forms of expression within cultures that flower as never before. While some see cultural decline as a half-empty glass, Cowen sees it as a glass half-full with the stirrings of cultural brilliance. Not all readers will agree, but all will want a say in the debate this exceptional book will stir.

... Read more

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An Analysis of Tyler Cowen's Creative Destruction
Book Review For: Dr. Nicholas Capaldi
Loyola University New Orleans, Louisiana
BA705 Business Ethics-Spring 2004

In Tyler Cowen's Creative Destruction, he addresses the viability of diverse culture in a rapidly expanding global market economy. Most specifically, he focuses on "the particular aspects of culture consisting products which stimulate and entertain us." Cowan defines the following: "music, literature, cinema, cuisine, and visual arts, as the relevant manifestations of culture." The book attempts to answer, by his own account, the age-old question "dating back at least far as Greek civilization: Are market exchange and aesthetic quality allies or enemies?" He proposes that market economies and cross cultural trade have catapulted societies throughout history by facilitating the spread of scientific ideas, creative arts, and enabling isolated cultures to experience a "richer menu of choice" The author offers extensive detail concerning alternative arguments throughout the book as well as the fact that, as in all things, there are opportunity costs associated with each view and some resulting in tragic outcomes.
Cowen qualifies himself on this subject by defining his approach according to his "background as an economist" and his relevant studies of the "scholarly literature and diverse experiences as a cultural consumer", rather than an analysis based on a "single path of specialized study." He outlines his argument that the global economy fosters positive influences on the world's culture by subsequently analyzing the following three "primary lessons":
1. The concept of cultural diversity has multiple and divergent meanings.
2. Cultural homogenization and heterogenization are not alternatives or substitutes; rather, they come together.
3. Cross cultural exchange, while it will alter and disrupt each society it touches, will support innovation and creative human energies.
Cowan begins with the concept definition of cultural diversity as it can be understood in multiple contexts. He explains that diversity is not a single concept. First, "diversity within a society refers to the richness of the menu of choice in that society." The most fragile cultures, with respect to technology, also tend to respond in an explosive fashion to the introduction of new ideas and technologies. They have proven to adapt these technologies and innovations in ways their trading partners never anticipated.
Secondly, Cowan states, "Many critics of globalization focus on diversity across societies comparing whether each society offers the same "menu of choice" and whether societies are becoming more similar," through the process of globalization. He notes that generally, "diversity across societies is a collectivist concept because it does not consider the choices faced by an individual." A libertarian would allow "individuals to create their own meaning." For the purpose of Cowan's argument, libertarians foster individual creativity which is agreed by most to be the backbone of culturally diverse arts.
Limitations placed by government, or activists for that matter, on the market of exchange can significantly alter the outcomes, possibly even the survival of, poorer cultures. Cowan believes that poorer cultures especially, should be allowed to participate in cross cultural trade, even at a social cost, in order to experience the "gains from trade" with outside cultures. As Adam Smith argues in his, Wealth of Nations.., "the best vehicle for innovation is a free market system." Cowan's argument borrows from Smith's ideas and appropriately applies this concept to his claim that cultural diversity requires innovation for the survival of those poorer cultures which would otherwise cease to exist in the long run. As the adaptation process of the new technologies an innovations occur within a poorer culture; it becomes interwoven with aspects borrowed from foreign cultures. Cowan defines this concept later as "synthetic culture."
Synthetic culture refers to the fact that pure societies are mostly obsolete. For example, "The original ideas and inspirations of tribal groups of Zaire have been commodified, and shaped into new synthetic forms, for the purpose of courting outside markets Cowan retorts that the same "defenders of diversity decry the passing of previous cultures and implicitly oppose diversity-over-time," without regard to the necessity of innovations for survival. Cowan's argument has remarkable semblance to that of Cass Sunstein's "Paradoxes of the Regulatory State" where Sunstein argues that "redistributive regulation harms those at the bottom of the socioeconomic ladder." Here, Sunstein points out that often times regulations have "perverse effects" which serve opposite to the activist intended agendas. Likewise, Cowan argues that those who defend cultural diversity for the sake of "creative purity" will, if successful, risk eliminating the cultures they claim to be defending.
Cowan's final "primary lesson" states that "Cross-cultural exchange brings about value clashes that cannot be solved sc