The Market System.Pdf

The Market System

The Institution for Social and Policy Studies at Yale University
The Yale ISPS Series

The
Market
System
What It Is, How It Works,
and What To Make of It
CHARLES E. LINDBLOM

Yale University Press

New Haven & London

Copyright © 2001 by Yale University.
All rights reserved.
This book may not be reproduced, in whole or in part, including illustrations,
inany form (beyond that copying permitted by Sections 107 and 108 of the
U.S. Copyright Law and except by reviewers for the public press), without
written permission from the publishers.
Designed by James J. Johnson and set in Trump type by The Composing Room
of Michigan, Inc.
Printed in the United States of America by R. R. Donnelley & Sons,
Harrisonburg, Virginia.
Library of CongressCataloging-in-Publication Data
Lindblom, Charles Edward, 1917–
The market system: what it is, how it works, and what to make
of it / Charles E. Lindblom.
p. cm. — (Yale ISPS series)
Includes bibliographical references and index.
ISBN 0-300-08752-7 (alk. paper)
1. Capitalism. I. Title. II. Series.
HB501.L512 2001
330.12 2 —dc21

00-043865

A catalogue record for this book is available fromthe British Library.
The paper in this book meets the guidelines for permanence and durability of
the Committee on Production Guidelines for Book Longevity of the Council
on Library Resources.
10 9 8 7 6 5 4 3 2 1

Contents
1. Market System Ascendant 1

Part One: How It Works
2. Society’s Coordination 19
3. Market-System Coordination 35
4. Bones Beneath Flesh 52
5. Enterprise andCorporation 61
6. Maximum Reach 84
7. Chosen Domain 97

Part Two: What To Make of It
8. Quid Pro Quo 111
9. What Efficiency Requires 123
10. Market-System Efficiency 140
11. Inefficiences 147
12. Too Little, Too Late 166
13. Freedom? 178
14. Personality and Culture 193
15. Persuading the Masses 212
16. Necessary to Democracy? 226
17. Enterprise Obstructions to Democracy 236

PartThree: Thinking About Choices
18. Alternative Market Systems 253
19. An Alternative to the Market System? 265
Notes 279
Index 291

Acknowledgments
To explain and analyze the market system in such a way as
to interest and satisfy a wide audience, I asked a number of
people, young and old, well read and not, patient and less so,
pro market and anti, to read the manuscript and give me
theiradvice. I am grateful to them all—from those who read
a chapter or two to those who consented to read the entire
manuscript with sustained care. In acknowledging their
contributions, I would like to single out several of them
for their unusual and/or continuing help but cannot do
so without falling into invidious distinctions wherever I
might draw a line between the short and the long list.To all
contributors, my thanks both for their efforts and for what I
learned from them.
They are: Susan Rose-Ackerman, Michael Barzelay,
Hans Blokland, David K. Cohen, John Covell, Robert A.
Dahl, Susan Friedman, Laura Gilbert, Ronald L. Jepperson,
Ira Katznelson, Alvin K. Klevorick, Steven W. Lindblom,
Eric N. Lindblom, Richard R. Nelson, Bruce Nichols, Merton J. Peck, Howard R. Sacks, IanShapiro, Christopher D.
Timmins, James Tobin, Shaoguang Wang, Edward J. Woodhouse, Ross Zucker, and the late William N. Parker.
For many helpful discussions, my thanks to Robert E.
Lane.
For secretarial work, I happily acknowledge the intelligent and spirited help of Pamela A. Lamonaca and Pamela
A. Greene, as well as the support of the Yale Institution for
Social and Policy Studies,especially Donald Green and Barbara Dozier.

1

Market System Ascendant
The massive social changes with which the twentieth century gave way to the twenty-first have written the preface
to this book. Much of the world began an unexpected transformation. Communist systems are abandoning central
planning of their economies and struggling to establish the
market system in its place. China freed...