Oxford Business Books

The day monetarism died!
’ The Trouble with Markets'

by Roger Bootle

A book review by Nicholas Newman  25 October 2009

The recession has certainly sparked an opportunity for people to make money from publishing books about the crisis. Roger Bootle’s new book ‘The Trouble with Markets’ is so unlike other books on the market that I have read, in being packed with well considered observations and arguments, delivered in a witty but well structured and authoritative manner.

Roger Bootle is one of Britain’s preeminent economists, who advises leading city firms and governments about the economy. This book covers the main causes and consequences of the current recession, together with suggested solutions for mitigating its impact and managing the road to recovery.

It is clear from reading this book it will destroy many of the monetarist illusions about the free market, including its principal tenant that the market is always right and any form of government intervention is wrong.

The book is divided into three main parts; the first is concerned with the possible causes of the recession, the second the consequences and the third possible solutions to the recession.

The first examines the causes, and in doing so it criticises the almost child like mantra that the solution to all market problems is deregulation and that all markets are the same and efficient. It is clear from Roger’s analysis that this belief is illusory. The fact is that not all markets are the same, or even equally efficient, so it becomes clear that dissimilar markets need different degrees of regulation to ensure market efficiency and protect the greater public good. Also the economic consequences are greater in some markets than others when they fail due to market conditions, fraud or incompetence.
Roger argues that China’s scepticism of the Western fever for virtual money and financial deregulation has proved correct. China was the first major world economy to recover from the recession, due in large part to the protection afforded it by its sensible economic policies and regulatory systems, which had been long derided by many experts before the recession.

Roger contends that this belief that the market is always right resulted in an increase in irresponsible risk taking behaviour that affected many parts of the world economy. This ‘cowboy capitalism’ culture of irresponsible behaviour affected all aspects of the world economy including banks, business and whole countries such as Ireland and Iceland having to be rescued.

Part two provides a useful analysis of the consequences of the recession, the rise of world economic regulation, the rise of the new economic powers, together with advice on how to mitigate the impact of the recession.

The third part provides useful Keynesian like economic policy solutions that should enable the world to recover quicker from this recession than any monetarist solution. In fact, clearly, much of what Roger has suggested has been already adopted by world governments, whatever there political view point.

Overall, Roger’s writing is packed full of useful observations and questions about the last ten years which have been dominated by cowboy capitalism and the ethics of the Wild West. It is clear from Rogers’ observations that facilitation of cowboy capitalism was not good for encouraging a dramatic increase in long term capital investment. Instead the increased uncertainty it produced caused many Western industrialists not to scale up their capital investment to take advantage of the booming world economy of the past decade.

On the whole it is clear that the recession has proved monetarism and the cowboy capitalism it encouraged is bad for capitalism, the public good and society. This book should prove essential reading for any aspiring government minister, regulator, lobbyist or anyone involved in the real world of business, who wishes to avoid the mistakes of the past and bring the world economy back to health as soon as possible.

Hardcover: 282 pages
Publisher: Nicholas Brealey Publishing (15 Oct 2009)
Language English
ISBN-10: 1857885376
ISBN-13: 978-1857885378
Product Dimensions: 23.4 x 16.2 x 2.8 cm