We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Utopian Economy and Markets - Book Report/Review Example

Comments (0)
Utopian economy is fundamentally based on the assumption of ideal conditions where produced goods are consumed by people. The idealistic format of economy is based on free market economy and favors capitalistic approach with little regulation from the state…
Download full paper
Utopian Economy and Markets
Read TextPreview

Extract of sample
Utopian Economy and Markets

Download file to see previous pages... Utopian Economy and Markets

While Adam Smith promotes regulation of market by government, his concept of self-regulatory market is idealist and does not incorporate externalities within the scope of market that requires changes. Reality based economy supports changes within the environment and incorporates them within the market fundamentals to enhance equity and development. This is the major difference between the Utopian economy and Reality based economy. Indeed, the efficient market hypothesis becomes outdated primarily because of its belief that economic agents use rational approach to regulate market. The self-interest behavior of agent in market economy becomes the important element that helps create maximum benefit for the society. The hypothesis fails when market reacts differently to the crisis situation which could be due to myriad reasons like change in economic policy, rising unemployment, increased rate of bank credit rates etc. Hayek’s economic philosophy emphasizes the role of information within the market hypothesis and says that market prices convey information that is asymmetrical because different stakeholders might have different types of information or perceived value. Hence, government cannot fix prices. The market’s self-regulation depends on the information that is available which is used by firms to make appropriate decisions, reflecting the needs of the market. The information cascade from different sources provides vital inputs for market. Hayek has raised critical issue of wrong market signals that can jeopardize market fundamentals. The main reason is the spillover effect due to wide differences in the social and individual cost and benefit. While the individual cost could be lower resulting in improved financial benefit, the social cost could be huge vis-a-vis environment degradation, adverse impact on society etc. impacting long term benefits to society. Thus, market price based on private cost could give wrong signal leading to market crash. Minsky’s criticism of Utopian economy clearly demonstrates the utility of reality based economy as people tend to invest as per the prevailing market conditions. So if financial markets are doing well, people tend to take more risks with their investment. The meltdown of current American economy is an example which has happened due to bubble burst, leading to withdrawal of funds from the market. He asserts that market stability relies on instability because stable markets attract more investors which drive up the prices to unrealistic proportion. This leads to destructive speculation resulting in crash. Cassidy’s claim that individual rational decisions often lead to collective irrational outcome mainly because individuals work on self interest and wider welfare of society or nation is ignored. Hence, these are critical parameters of reality based economy that emphasize the differences against the Utopian economy. Answer 2 The six main causes of 2008 financial crisis are as below: 1. Deregulation Deregulation leading to increased liberalization of the market and free trade policies of the government became one of the most important reasons for the meltdown. 2. Financial innovation The financial innovation for private benefit was also critical issue that led to the crash of US economy. 3. Insurance The inability of government to meet the expenses Medicare and pension of the people was the key reasons that ...Download file to see next pagesRead More
Comments (0)
Click to create a comment or rate a document
Political Economy of International Trade
Primarily, trade is an exchange of goods and it involves many factors such as policies and trade regulations. The exchange of goods can occur within a country or goods transported into another country—international markets. In the later, we refer to this as international trade.
8 Pages(2000 words)Book Report/Review
Issues In Global Economy
Asset liquidity is mainly a measure of the ability to convert the asset into money once a money demand arises. Global liquidity is mainly enabled by the IMF and other international funding institutions according to Landau J. P (2011), private banks and other financial institution control the liquidation rate through the changes in the interest rates and commercial assets.
4 Pages(1000 words)Book Report/Review
Eurozone Economy
The interest rate has come down from 4.25% in October 2008 to 1% in May 2009. The bank further decided to pump 60 Billion Euros to the economy through purchase of covered bonds as they are less risky. This action was taken as the European Central Bank was forced to decide either to follow the US and Britain lead to increase the purchase of assets.
3 Pages(750 words)Book Report/Review
Global Economy
The discussion reveals that rapid growth and economic convergence are not what globalisation has trailed even then and that of the current time. Rather, Nayyar argues that the gap between the industrialised and developing nations widened through the globalisation trend with growth slowing down and income levels diverging.
18 Pages(4500 words)Book Report/Review
Markets and the Economy
This mechanism is summarized underneath: The deficit that is created in the recession period stabilizes the economy through built-in stabilizers. These stabilizers provide a ground to make appropriate fiscal policy with the help of which the economy starts recovering
4 Pages(1000 words)Term Paper
Sustainable economy
mited to the political realm and on the other, the world has not yet been able to design and evolve viable institutions for global governance, especially on the economic front. With the UN and its Secretary-General having become no more than figureheads and the credibility of
4 Pages(1000 words)Book Report/Review
Markets and Environment
However, this fact is not in line with economic planning. A firm has to put in place structures for production, promotion, distribution, selling and pricing. All these factors considered will define the nature of a
6 Pages(1500 words)Book Report/Review
Utopian planners - Howard, LeCorbusier, and Wright
rank Lloyd Wright, and Le Corbusier-gave themselves over to task of developing models for new cities, devoid of the urban, political, economic and social crisis that plagued their day. Excessive population growth of the nineteenth century societies made many people live under
3 Pages(750 words)Book Report/Review
Political Economy of Race, Class and Gender
In this theory, Karl Marx discusses capitalism economic system which has two main classes. These are the capitalists who own the means of production and the majority working class who offer their labor power
1 Pages(250 words)Book Report/Review
Global Political Economy Outline & Presentation
The author identifies a number of mutually dependent characteristics that stakeholders should change to enable the initiation of reforms. The system is a centralized planning, implemented administratively through the issuing of detailed and extensive coordinating
1 Pages(250 words)Book Report/Review
Let us find you another Book Report/Review on topic Utopian Economy and Markets for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us