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Adam Smith's notion of the ‘invisible hand’ is countered with Chandler's notion of a ‘visible hand’ that replaces market mechanisms in coordination and allocation of resources. Firms continued to grow through the internalization and centralization of their processes until developments in computing and communications offered opportunities for decentralization, cost cutting, and less administrative complexity. Soon after that, the application of IT allowed improved coordination and production. Firms continue to grow and shrink simultaneously. This chapter discusses the types of transactions a firm will make, trends in employment, patterns of ownership, and control in a knowledge economy.

Consideration is given to the impediments to economic development and the social dysfunctions that market mechanisms cannot cure because the large number of collective actions required cannot emerge spontaneously. The focus of the chapter is to a large extent on differing emphases on (1) institutional impediments as outcomes of distributive conflicts, (2) the collective action problems these impediments exacerbate, and (3) in view of the critical need for coordination, a more complex and nuanced role of the state, which many (but not all) states fail to adopt. Recent Indian economic history provides the context of the discussion.

The effects of several different land tenure systems particularly on insurance and on equity, and some of the non-market mechanisms of land allocation have often been ignored by economists, except perhaps in some attempts to understand the implications of these on wealth distribution of inheritance practices, specifically in primogeniture. Non-market mechanisms play no small part in land allocation across developing countries, and it is important to note that one of the most frequently used methods of this in African countries is inheritance. As such, we have to be aware of how these non-market mechanisms evolve when agricultural commercialization and population growth increases land pressure. This chapter looks into how inheritance practices and rules vary across different cultures and social classes through comparing the situation of Sub-Saharan Africa with the those in Europe's the lower rural classes.

The fourth and last part turns on the role of market mechanisms in regulation. The commercial military sector falls short of being a fully developed market in several areas. This chapter examines the emergence of this market, focusing on the peculiarities of the industry — in particular the lack of competition and transparency, and the tendency of individuals to move easily between firms — and the limitations of market mechanisms when applied to extreme situations where the security of a state is threatened. The lack of other regulatory tools has increased the importance of the market, but this potential tool is too weak to maintain specific standards, since clients tend to disagree about the relevant benchmarks. The diversity of interests among PMC clients therefore significantly diminishes the importance of reputational costs of the industry.

This chapter provides an account of liberal economics in Germany during the Weimar period. It presents a history of the economic activity of Germany from the late 15th and 16th century to the present century. In the first half of the 19th century, German liberals hoped that unification would lead to the abolition of restrictions on industry and trade. The free-market mechanism had no sense of liberation when the new currency was introduced, on the contrary, stabilization brought drastic cuts in public spending and large-scale unemployment. Germany's financial and economic problems came to the fore after the humiliating terms imposed on Germany by the Versailles Treaty in June 1919, which as a result lead to protectionist trade-policies to be temporarily abandoned when the treaty forbade Germany to erect tariff barriers against her former enemies. German economic depression after 1929 attacked all forms of government intervention, including unemployment benefit. Despite these unfortunate political circumstances, there were many economists who defended the old canons of laissez-faireliberalism.

This chapter analyzes the level of unemployment in a market economy and classifies the debates of the orthodox market-mechanism group with imperfectionists on the problem of unemployment. It begins by examining various interpretations of the notion of a self-adjusting market with respect to John Maynard Keynes’ own view of the market mechanism, followed by a description of the imperfectionist argument that implies unemployment is attributed to rigid or sticky money wages. The chapter concludes with a consideration of the debate over the natural rate/rational expectations hypothesis, in which the theoretical poverty of the imperfectionist position is revealed.

Several types of philosophical arguments have been offered as to why some things should not, or cannot, consistently be bought and sold, such as human organs, Nobel Prizes, or democratic votes. Starting from the debate about so-called ‘contested commodities’, this chapter deals with the commodification of law itself and discusses whether philosophical criticism regarding the commodification of certain types of goods and practices is applicable in the context of law as a product as well. The argument’s starting point is that regulatory competition leads to the law being perceived as a commodity that is subject to the market mechanism. It proceeds with a discussion of the premise that the market mechanism comes with its own kind of valuation, with the price mechanism serving as the primary indicator of value. Criticism of commodification and commercialization is often based on the perception that market valuation tends to be dominant over other evaluative standards, sometimes ‘crowding out’ considerations that cannot be directly translated into market vocabulary. Under conditions of regulatory competition, there is a case to be made that some of the normative considerations, the values and principles that underlie legal rules would in case of conflict be ‘crowded out’ by the imperatives of success in a global law market.

At the start of this chapter the author posits that it is simply not feasible to summarise into a single comparative framework the diverse ways in which the unique characteristics of childcare have been addressed in governmental policies and strategies. Instead, this chapter draws together the economic elements to assess the role of the market in childcare provision and the case for government intervention. After describing the advantages of a private market, it then summarises the evidence presented in Childcare Markets on the problems in the operation of this market, the social objectives that have driven government intervention and the policy solutions that have been used around the world. It concludes that the evidence suggests any policies mitigating market failures and promoting social objectives need to be multidimensional and critically need to command sufficient support from the wider population to pay their cost. The chapter concludes that there is considerable scope for countries to learn from the experiences of others on the best mechanisms for childcare provision. However, given the variation in social objectives for childcare and in cultural conditions, a considerable degree of international diversity in the role of the market and government in childcare provision will likely remain.

This chapter looks into the effectiveness of land markets in the process of land acquisition by discussing two case studies. The first includes the land acquisition in Foshan New Town, Guangdong (China), and the second is GIGC Sanand project, Gujarat (India). In these two cases, land acquisition for urban/industrial development did not result in furious confrontations between the government and landowners due to the creative measures taken by the local authorities. The landowners got adequate compensations and in some instances even enjoyed a share of the developmental benefit. They thus welcomed rather than resisted the developmental projects. I argue that effective land markets contribute to a more inclusive development, which provides a direction for further improvement in land acquisition regimes.

This chapter discusses the market mechanisms of regulation, specifically the extent to which indicator producers provide reasons, participation opportunities, review mechanisms, and transparency in their activities. It then assumes two means by which the levels of these kinds of accountability in indicator generation are resolved where some type of market for the indicators exists, namely the Demand Hypothesis and the Supply Hypothesis. Finally, this chapter tests these two hypotheses and looks at how they explain observed levels of accountability in the creation of three specific indicators.

This chapter deals with a variety of criticisms of the RTB and tries to answer them. It looks at what might be called the old criticisms of the RTB, even those that date back to the 1980s. This is followed by a section on the notions of property ownership as a false consciousness. The financial issues surrounding the RTB are also examined, along with the concept of ‘friendly fire’. This is criticism that views the RTB as a form of social engineering, or any form of subsidy to owner occupation as a skewing of market mechanisms. The chapter ends with a section on the new criticisms of the RTB that were brought about by the collapse of the housing market in 2008.

This chapter examines neoclassical theory of credit demand, which suggests that there are many conditions in which employing consumer credit increases both amount and satisfaction with consumption, both of which are consistent with wealth maximization. This argues that many consumers will use credit over their economic life cycles, which is entirely consistent with even casual observation. Such credit use often involves purchase of goods and services such as automobiles, appliances, home repairs, and education that provide intertemporal services. This is not to say that some consumers will not sometimes miscalculate or behave irrationally, but even in these cases, there are market mechanisms that limit credit use. These mechanisms include equity costs and liquidity constraints up to and including credit rationing.

The homeowner must choose the best insurance coverage offered in the market. The lowest prices are generally offered by “preferred insurers,” or insurers with more stringent underwriting standards, whereas the highest prices are offered by “standard” and “nonstandard” insurers. This chapter examines the supply and demand for homeowners’ insurance in the United States and discusses within-feature changes (for example, various deductible levels) and across-features trade-offs (such as deductible levels versus type of coverage). It shows that demand for insurance is more or less unit elastic at the county level. Insurance premiums are higher in Florida, Texas, and South Carolina than in New York. The chapter concludes with an analysis of the impact of various interventions, including price controls and residual market mechanisms, on the market.

This chapter outlines controversies in the theory of employment. It focuses on four elements that characterize the approach to examining the debate of distinction between short-run and long-run analyses of unemployment. The first approach explains that unemployment is based on rigidities or imperfections in the operation of the price mechanism, while the second approach implies that unemployment must be expressed in terms of either short-period equilibrium or disequilibrium. The third and fourth approach affirms that rigidities are imposed on a perfectly functioning market mechanism and that the long-run equilibrium for the economy is characterized by long-run normal prices and dual long-run normal outputs.

This chapter focuses on John Maynard Keynes’ General Theory of Employment, Interest and Money and analyzes varioius views and responses by economists to Keynesian theories and models. It focuses on two arguments that questions Keynes’ claim of the General Theory replacing the traditional analysis of employment. The first argument draws on the work of Joan Robinson, which examines the whole idea of the equilibrium argumentation in economics, while the second argument focuses on the nature of the market mechanism and the theoretical explanation for its operation.

This chapter studies global economic history. Until quite recently, two perspectives have almost monopolized thinking about economic development: ‘Smithian’ and ‘Marxian’. They functioned as explanatory framework and theoretical support for almost all master narratives in global economic history. The first perspective is called after Adam Smith and covers the views of all those who regard the market mechanism as the necessary and sufficient condition for economic development. Meanwhile, the second perspective has been inspired by Karl Marx’s ideas on economic development. However, the hitherto dominant approaches of Marx and Smith have recently been challenged. Economic historians, stimulated by the successive economic miracles that have occurred in East Asia, are now more than ever taking non-European historical experience into account, while developing new models that are better contextualized and themselves have the potential to influence the Western economic discourse.