The dismal science rendered undismally, even spryly, by economist Chang (Economics/Cambridge Univ.; 23 Things They Don’t Tell You About Capitalism, 2011, etc.).
A certain online bookseller, news reports will tell you, is behaving monopolistically. That’s not strictly accurate: There are other places to buy books, but few are as powerful in the marketplace, so much so that publishers walk in fear of it. That makes the bookseller something between an oligopsony and a monopsony. Writes Chang, “Oligopolistic firms cannot manipulate their markets as much as a monopolistic firm can, but they may deliberately collude to maximize their profits by not undercutting each other’s prices—this is known as a cartel.” Conversely, he notes, oligopsonistic and monopsonistic firms were “considered to be theoretical curiosities even a few decades ago,” but they’re very real today—and more important than monopolies in shaping economies. In other words, it’s not your grandfather’s economic scene out there, far less Karl Marx’s. That makes Chang’s note on historical schools particularly important: He observes that most economic schools, from the right-leaning Austrians to the centrist Keynesians to the leftist Marxists, “all share a class-based vision of society.” He helpfully adds that no one school holds a monopoly on the truth, though the free-market school has increasingly been proved out of touch thanks to the development of the idea of asymmetric information—in a situation when buyer knows something that seller doesn’t and vice versa, no market can be truly free. This leads Chang into the currently hot area of inequality, on which he takes a measured stance that won’t displease followers of Thomas Piketty’s recent critique of predatory capitalism. In the end, Chang urges readers to become “active economic citizen[s],” which, he adds, isn’t as hard as it might seem.
Economics for the 99 percent who don’t know moral hazard from opportunity cost: lively, intelligent and readily accessible.