Markets or Governments: Choosing Between Imperfect Alternatives

by Charles Wolf Jr.

Provides a formal theory of nonmarket failure, analyzing such problems as redundant costs, monopoly, frequency of unanticipated externalities, and bureaucracy in such nonmarket institutions as foundations, universities, and government. A theory of market failures is well established in economics, but the same has not been true for the study of nonmarket failures. Markets or Governments remedies this situation by providing a formal theory of nonmarket failure, analyzing such problems as redundant costs, monopoly, frequency of unanticipated externalities, and bureaucracy in such nonmarket institutions as foundations, universities, and government. This new edition updates the data and results contained in the first edition and includes references and applications of the theory to the ongoing process of system transformation in Russia, Ukraine, and Eastern Europe. The discussion of earlier literature that is relevant to the theory of nonmarket failure has been expanded.

Genres: Economics

256 pages, Paperback

First published August 1, 1990

About the author

Charles Wolf Jr. was an American economist, diplomat and educator. During the late 1940s and early 1950s, after receiving his PhD in economics from Harvard University (where he had previously earned his bachelor's degree, also in economics), he served with the U.S. State Department as a Foreign Service Officer. He then taught at Cornell University, and also at the University of California, Berkeley. Professor Wolf joined the RAND Corporation in 1955, where he led the Economics Department from 1967 to 1981; he was a senior economic advisor at RAND for the rest of his career. In addition, he was a senior research fellow at the Hoover Institution at Stanford University and was a member of the American Economic Association, the Econometric Society, the Council on Foreign Relations, and also the International Institute for Strategic Studies in London. He was the founding dean of the Frederick S. Pardee RAND Graduate School, an appointment he held from 1970 to 1997; he taught at that school until his death in 2016. Perhaps his greatest claim to fame was his prediction, in the 1980s, of the economic collapse of the Soviet Union.

Reviews

[Ryan M. · Rating 1 out of 5]

I was required to read this book for a class I'm taking towards a masters degree, and to be honest I'm completely baffled that the professor is still assigning this book. Its general argument--that both market and non-market actors are imperfect and should be balanced against each other--seems painfully obvious in the wake of the 20th century. Its specific arguments seem either dubious (e.g., the contention that educators always-or at least typically-resist technological innovation) or very dated (e.g. the extended discussion of post-Soviet economies). The writing style was dull and taxing, even for an academic book. There was enough math to be distracting but not enough to provide insightful analysis of the issues raised. I won't be recommending this book, and will likely raise my concerns in the student survey at the end of the course.

[Richard · Rating 5 out of 5]

Critical foundation for making broad policy judgments.