Pryor, Frederic L.

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Swarthmore College Works Economics Faculty Works Economics 9-1-2000 Review Of "The Economics Of The Good Society: The Variety Of Economic Arrangements" By J. S. Berliner Frederic L. Pryor Swarthmore College, fpryor1@swarthmore.edu This work is brought to you for free and open access by . It has been accepted for inclusion in Economics Faculty Works by an authorized administrator of Works. For more information, please contact myworks@swarthmore.edu. Follow this and additional works at: https://works.swarthmore.edu/fac-economics  Part of the Economics Commons Let us know how access to these works benefits you  Recommended Citation Frederic L. Pryor. (2000). "Review Of "The Economics Of The Good Society: The Variety Of Economic Arrangements" By J. S. Berliner". Journal Of Economic Literature. Volume 38, Issue 3. 681-682. https://works.swarthmore.edu/fac-economics/184 Next we are presented with a long chapter(almost one-quarter of the volume) profilingthe labor market. This is a rich empirical sec-tion, taking us competently through the laborforce and its composition, unemployment,domestic and international migration, esti-mates of earnings functions, and the institu-tional underpinnings. The authors supportthe consensus view that the labor market is“reasonably competitive” (p. 81), subject to thequalification that unemployment remainedquite high during the 1980s.The final chapter in this introductory sec-tion examines education and training systems.Here the evidence is somewhat mixed. Thecountry scores well with respect to the provi-sion of universal primary (and, increasingly,secondary) education, and in closing the colo-nially inherited gender and ethnic gaps in en-rollment ratios. Yet there are concerns: abouteducational quality; that enrolments in sci-ence and technology-based courses may beinsufficient; whether the disproportionate in-vestments (and subsidies) for elite bu-miputera schools and the tertiary system areappropriate; and about training and technol-ogy transfer in the foreign-dominated manu-facturing sector (especially the huge electronicsindustry).The four chapters in Part B of the volumedevelop these arguments with reference todetailed sectoral chapters, on agriculture,manufacturing, services, and the public sec-tor. The latter is particularly pertinent, givenits size and the government’s explicit affir-mative action policies. Part C switches to amore prescriptive approach, with a broad-ranging set of policy proposals, a number ofwhich have since been adopted.This is a well-presented and cogently ar-gued book. The exposition is clear, it is well-referenced (subject to one caveat below), andit achieves a nice balance between analytics,empirics, and country insights. Particularly wel-come are the microeconomic data on laborand education, much of which are not gener-ally available, even among the Malaysianacademic and policy communities.The major limitation of the volume is thedelay in its publication. It presumably drawson material the authors completed around1990 and, apart from some updating of mac-roeconomic series, little seems to have beenadded since then. Almost all the referencesstop at 1990, while the labor market and edu-cational data rarely go beyond the late 1980s.Delaying a publication by seven to eight yearsin the case of a very high growth economycan be a risky business. To give just one illus-tration, by around 1997 international mi-grants (many of them illegal) were thought tonumber as much as 24 percent of the work-force, about double the figures quoted in thisbook. (See Prema-Chandra Athukorala andChris Manning in 1999, Structural Changeand International Labour Migration in EastAsia. Ed. Chris Manning. Oxford UniversityPress.) Notwithstanding this limitation, theauthors have made a very useful contributionto our understanding of Malaysian economicdevelopment and of labor market adjustmentin developing economies.HAL HILL  Australian National UniversityP Economic SystemsThe Economics of the Good Society: The Varietyof Economic Arrangements. By Joseph S.Berliner. Malden, Mass. and Oxford: Black-well, 1999. Pp. ix, 448. $34.95, paper. ISBN0–631–20828–3; cloth; 0–631–20829–1, pbk.JEL 2000–0334In the preface the author writes (p. viii):“This book is written not for economists but forpeople generally who like to muse about a bet-ter world. It presumes no more knowledge ofeconomics than that which one acquires inthe process of keeping informed about publicaffairs.” Although the book is written on anelementary level, it contains much that is ofinterest to students and, in certain parts, toprofessional economists.After discussing how to assess economicsystems and the role that values play in sucha process, the author divides the remainderinto four major sections dealing with the dis-tribution of consumer goods, the distributionof work tasks, the coordination of an econ-omy, and the ownership of property. Such anorganization has the advantage of starting at avery concrete level of economic activity withwhich all are familiar and then workingBook Reviews 681toward more abstract problems. It has thedisadvantage of requiring a certain repetitionof materials, although this may be useful forhis intended audience.At every point of his analysis Berliner pro-vides a variety of examples from various eco-nomic systems to demonstrate how differenteconomic arrangements and institutions canaccomplish the same tasks. I found his dis-cussion of the manner in which kibbutzimhandled critical problems of distribution andproduction particularly illuminating. Such aconcrete approach also permits him to intro-duce various criteria of evaluation of eco-nomic performance of these institutions in anunderstandable manner.The clarity of the author’s prose, his reso-lute determination to argue his case withoutdiagrams or tables, and his judicious selectionof wide-ranging institutional materials makethis book a useful supplemental text in courseson comparative economic systems. It alsoprovides readers with a broad perspective oneconomic institutions and the way in whichthey can be evaluated using simple analyticaltools that will be useful to them in otherfields of economics.FREDERIC L. PRYOR Swarthmore CollegeFinancial Sector Transformation: Lessons fromEconomies in Transition. Edited by Mario I.Blejer and Marko Skreb. Cambridge; NewYork and Melbourne: Cambridge UniversityPress, 1999. Pp. vii, 403. $59.95. ISBN 0–521–64037–7. JEL 99–1482This volume is the collected outcome ofthe Second Dubrovnik Conference on Transi-tion Economies (1996) sponsored by the Cen-tral Bank of Croatia. It suffers from the usualproblems afflicting conference volumes witha great diversity of authors writing at bothmicro and macro levels, and trying to spanthe increasingly diverse financial experiencesof a variety of Eastern European econo-mies—not to mention China. Nevertheless,there are enough nuggets to make the bookpotentially interesting to scholars trying tounderstand the most difficult part of the tran-sition problem: the proper evolution of thedomestic financial sector, including bankingsystems which start under water.At the very end of the book, Mario Blejernicely summarizes the main conceptual di-lemma in undertaking financial reform intransitional economies.On one horn of the dilemma, the govern-ment itself needs to disengage from its unre-stricted and pervasive control over the flow offinance. It needs to withdraw from directcredit activities, from bank ownership, andfrom bank management. But simply “privatiz-ing” the banks may not be enough becausecommercial banks often remain politicizedwhoever owns them. Commercial banks maydepend on ongoing access to the central bankfor credit if they have a bad loan portfolio. Ifthe government is running a large fiscal defi-cit, commercial banks may be heavily taxedthrough high reserve requirements. So a fis-cal reform might well be necessary before thegovernment can safely liberalize.China is an example of an otherwise suc-cessful transition economy where large (im-plicit) fiscal deficits must still be covered bymassive borrowing from state-owned banks.Here, privatization of these state banks, orallowing unencumbered new banks includingforeign ones to compete with them, would beextremely unwise.On the other horn of the dilemma, the gov-ernment must remain a vigilant regulator ofthe financial system even as it disengagesfrom direct ownership and control. But latentor not-so-latent moral hazard, particularlyin the commercial banks with their carryoverof bad loans and (implicit) undercapitaliza-tion, makes prudential regulation difficult. Inthe presence of ongoing deposit insuranceand other bailout provisions, freeing interestrates—even in the interbank market—maybe problematic. But for primary securitiesmarkets, Poland’s Securities and ExchangeCommission has been most successful in en-forcing accounting standards, full disclosureof information on new security issues, cen-tralized trading, and the protection of minoritystockholders.In Chapter 3, Hillman and Ursprung pre-sent an interesting political economy modelof the relationship between banks and statefactories to which they had lent under social-ism and which still pay “rents” to the manag-ers of the bank. Although the loans of the682 Journal of Economic Literature, Vol. XXXVIII (September 2000)

Review Of  The Economics Of The Good Society: The Variety Of Economic Arrangements  By J. S. Berliner

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Review Of The Economics Of The Good Society: The Variety Of Economic Arrangements By J. S. Berliner

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