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Chapter 1 | Introduction to Market Society and Its Historical Context
Chapter 2 | The Rise of Market Economies in Pre-Industrial Europe
Chapter 3 | Dynamic Market Systems - Benefits and Pitfalls
Chapter 4 | The Role of Institutions in Shaping Market Societies
Chapter 5 | Patterns of Market Dominance - Comparative Study of Historical Societies
Chapter 6 | Lessons from the Past - Implications for Modern Market Economies
Chapter 7 | The Invisible Hand? Review
The Invisible Hand?: How Market Economies have Emerged and Declined Since AD 500 Hardcover – 29 June 2016
by van Bavel (Author)
4.9 4.9 out of 5 stars 10 ratings
Edition: 1st
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The Invisible Hand offers a radical departure from the conventional wisdom of economists and economic historians, by showing that 'factor markets' and the economies dominated by them -- the market economies -- are not modern, but have existed at various times in the past. They rise, stagnate, and decline; and consist of very different combinations of institutions embedded in very different societies. These market economies create flexibility and high mobility in the exchange of land, labour, and capital, and initially they generate economic growth, although they also build on existing social structures, as well as existing exchange and allocation systems. The dynamism that results from the rise of factor markets leads to the rise of new market elites who accumulate land and capital, and use wage labour extensively to make their wealth profitable. In the long term, this creates social polarization and a decline of average welfare. As these new elites gradually translate their economic wealth into political leverage, it also creates institutional sclerosis, and finally makes these markets stagnate or decline again. This process is analysed across the three major, pre-industrial examples of successful market economies in western Eurasia: Iraq in the early Middle Ages, Italy in the high Middle Ages, and the Low Countries in the late Middle Ages and the early modern period, and then parallels drawn to England and the United States in the modern period. These areas successively saw a rapid rise of factor markets and the associated dynamism, followed by stagnation, which enables an in-depth investigation of the causes and results of this process.
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Review
Bas Van Bavel has given both public policy and comparative institutional history a great boost by asking big questions about where we are in the history of economic development, looking at contemporary quandaries through the lens of long-term historical patterns. ― Hilton L. Root, Independent Review
Starting from a sharp focus on fundamental problems -- the long-term effects of society on market economies, the management of catastrophes -- Bas van Bavel tests existing theories and clearly formulates his innovative insights. ― Wim Blockmans, Emeritus professor of medieval history, Leiden University
Bavel is excellent in providing numerical estimates... It is not only the plausibility of the mechanism of decline that gives strength to Bavel's thesis; it is also that he lists the manifestation of the decline ― Branko Milanovic, globalinequality
A brief review...cannot do justice to wealth of material in this important new book, other than by noting that anyone interested in these issues should not miss it. ― Gene Callahan, Cardiff University, History: Reviews of New Books
This a beautifully written book, easy to read, which makes it adequate for a wide audience. Above all, it is an original and intellectually challenging piece of scholarly work that breaks new historical grounds. Van Bavel is one of the few scholars alive who is equally an expert on history, economics, politics. This characteristic enables him a truly subtle analysis of texts and ideas. I want to make clear at the outset that economists and economic historians neglect this book at their peril, since it represents a methodological challenge to research as usual ... this book is going to be a vital contribution to the advancement of economic discourse as well as a crucial intervention in current political debate. ― Stefano Zamagni, Journal of Economics
Van Bavel's deep expertise in the subject matter weaves an intricate web of connections of cultural, economic, and social aspects across time and space, and seamlessly draws the reader into a wonderful account ― Mauricio Drelichman, Journal of Economic Literature
any social scientist interested in "big think" questions will benefit greatly from reading The Invisible Hand? While it presents only a piece of the "great divergence" puzzle, it is an understudied piece that is an important complement to existing theories based on institutions, culture, and governance. ― Jared Rubin, EH.net
From the Publisher
Bas van Bavel is distinguished professor of Transitions of Economy and Society at Utrecht University. He acts as the academic director of the Utrecht University interdisciplinary priority area -- Institutions for Open Societies -- and he is a member of the Royal Dutch Academy of Sciences. His research activities focus on reconstructing, analyzing, and explaining economic development and social change, emphasizing long-term transitions and regional diversity, and using comparative analysis -- both over time and across regions -- as the main tool. More specifically, he aims to find out why some societal arrangements are successful in generating wealth, equity and resilience, and others not, and what drives the formation of these arrangements.
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gjk
5.0 out of 5 stars Shadow side of free marketsReviewed in Germany on 22 October 2020
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A fascinating book with a disturbing message: our current form of society is inherently unstable. This is the consequence of a free market for all sources of our existence: labor, capital, land and other property. The book is the result of a research program of more than ten years by Bas van Bavel's group at the University of Utrecht.
The group has studied economic developments in a number of historical societies, and from these selected three that at a certain stage of development had free markets for land, labor and capital. For these three detailed data were available.
Analysis of these societies, Iraq (500-1100), Italy (1000-1500) and the Low Countries (1100-1800) revealed the same pattern of rise, growth and decline, even though they differed in many ways. There is a compelling logic in this pattern (for this reader), which greatly enhances credibility. Below I try to briefly describe this pattern; unfortunately, this does not do justice to the wealth of historical and economic information in the book.
The periods described often started with unrest (uprisings, riots, etc.) which resulted in the societies becoming somewhat more egalitarian. Professional and interest groups, or cooperatives, played an important role in this. With the enforced regulations that affirmed and protected this greater equality (and some luck) further economic growth was possible in which a large part of the population shared. Surpluses of grown or manufactured products were traded in markets that grew with further development. Even more growth turned out to be possible when labor, capital and land also became readily available through suitable markets. For the initial period of this market development, the researchers from Utrecht still found positive effects for broad sections of the population, but these quickly diminished as soon as the markets were further liberalized. This liberalization was achieved by making the existing restrictive (protective) regulations less strict or even eliminating them. This created an uneven playing field on which already wealthy persons could easily (and legally) enrich themselves further. Their head start allowed them to hire expertise and perform all financial transactions on a larger scale. Even though total wealth was apparently still increasing, that was no longer the case for the common man. In the long run this led to the emergence of an elite that gained more and more influence through lobbying and sponsorship of political parties. This resulted in more regulations that favored this elite, gradually even succeeding in making the protection of their interests more and more paid by common means. The real economy suffered as a result, and investing in it became less profitable. The wealthy invested in places where a higher return could be achieved, e.g. in the financial sector, or in new markets abroad. In the end, the stagnation led to a return of society to where they started (for the common man, but usually not for the rich). This is what happened in the three extensively studied cases.
In Chapter 5, van Bavel also looks at developments in England, the United States and Western Europe (1500-2000). I'm not going to tell his conclusions; you may guess them, just like our current place in the cycle.
Although the book is definitely clear in terms of explanation, the readability could have been a little better for my taste. It is unfortunate that the message of the book receives so little attention in the press or public debate, it deserves an Old Testament thunder prophet, but the scientist van Bavel is anything but that. Although the author is pessimistic, I hope that this time the tide can still be turned. Read the book!
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Herman Schippers
5.0 out of 5 stars Wie neu und schnell gelieferdReviewed in Germany on 1 December 2016
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Very interesting historical research on the development and decline of markets. Markets aren't new to our age. They are born, live, grow and die. Thit has been going on for centuries.
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Günther Gerber
5.0 out of 5 stars Super BookReviewed in Germany on 21 April 2017
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Very well worth reading. One of the many good economic history books of the last 10 years.
Should be compulsory reading along with works by Werner Abelshauser for all WiWIs and VWlers.
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