The Best Book on the Market is nearly as good a title as a “A heart Breaking Work of Staggering Genius” but Dr Eamon Butler’s book,subtitled “How to stop worrying & love the free economy” really is about The Market and, given the provenance of the author as a multi-degree garlanded director of The Adam Smith Institute, might well stake a claim to that best position.
Butler starts with an enforced visit to a market in a Chinese industrial city because his trouser hems became undone. He uses this to look at the what constitutes a a market & how markets generate their own internal rules that work.
Central to trade is the win/win of subjective pricing. Two people trade because each of them values the exchanged goods differently. Butler valued having his hems sown higher than the 5 yuan the lady at the market charged for doing the job, she valued the 5 yuan higher than her time & effort.
The thesis of the book is simple: markets work. Markets make us all better off. Markets help create both quantity & quality required by us, the customers. If you sell shoddy goods customers will walk away & you’ll go broke. Competition or even the threat of competition sharpens any trader. Price is a signal, high prices signal shortage & a demand to meet, falling prices a glut or lack of demand for a particular item. Solder up that price mechanism with controls & you deprive the market of its messaging system so it cannot see,blinded, cannot react to need. Not by coincidence Dr Butler is co-author of “40 Centuries of Price Control” available as a free down load from us here.
Markets can only work where there are property rights. The right to exclusively hold, enjoy & resell property of any kind is central to making capitalism worth while. Lack of those rights produces poverty.
Along the way Dr Butler fires a few well aimed salvoes at some of the more egregious errors in economics text books. “When you see the word equilibrium in your economic text book take a marker pen and blot it out” or even better “If you own an economics text book you should rip out the section on perfect competition”. Oh those Austrians!
Butler is making very serious points in a light & readable way. Information, competition & markets are NEVER perfect but markets work.
Simple as these under lying truths are they need to be made and made as forcefully & eloquently as Dr Butler does here. We might well ask why rules that underlie human action & prosperity need not just re-stating but re-discovery? What is wrong with our society & education system that the fundamental simple rules of the market remain not just a mystery but an alien horror to so many? Why do politicians insist time and time again in making the same stupid mistakes? The answers to those questions would make another book but Dr Butler has written a book that should be in every house, school & library. The “best Book on The Market” may well be just what it says on the tin.