A Review of "Economics for the Common Good"

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The argument of Economics for the Common Good can be synthesized as follows: We act according to our interest, defined in turn by our preference function, which may be egotistic or altruistic. Our actions will have consequences for others; these consequences may be expected and accepted (for example, in a market exchange with perfect information, in which both parties gain) or not (for example, the pollution caused by a factory, which has harmful effects on third parties). This reduction of the other person's well-being, which is not accepted and may even be unknown, constitutes a failure of the common good. Economics for the common good tries to identify these failures and avoid them. The book is organized in five parts, plus an introduction. The introduction asks what has happened to the concept of the common good, which seems to have disappeared from our analyses and recommendations. The first part explains what economics is, what the market economy is and what its moral limits are. The second part explores the tasks performed by the economist. The third part explains the institutional framework of economics: the state and the firm. The fourth part is devoted to the major macroeconomic challenges currently facing the world: climate change, the job market, the future of Europe and the euro, the role of finance, and the financial crisis of 2008. Finally, the fifth part delves into a number of subjects to which Tirole has made very important contributions, such as competition policy, digitization, innovation and intellectual property, and industry regulation. The chapters can be read separately, depending on the reader's interests.
Bibliographic citation: Argandoña, Antonio, "A Review of "Economics for the Common Good"", IESE, OP-306-E, 12/2018
Date: 14/12/2018
Author(s): Argandoña, Antonio
Document type: Occasional Paper
Department: Business Ethics
Languages: English