Everything for Sale: The Virtues and Limits of Markets.

• Author: Buell, John

by Robert Kuttner Alfred A. Knopf. 410 pp. $27.50

Robert Kuttner is a modern-day Karl Polanyi. In 1944, Polanyi wrote The Great Transformation, which did more than any work of that generation to broaden and deepen the critique of market societies. Polanyi drew a distinction between a society that uses markets as one valuable tool, and a "market society" that places everything on the auction block, even labor. Polanyi argued that a market society risks both economic instability and moral degradation.

Like Polanyi, Kuttner warns against giving society over, whole hog, to free markets. He knows he's writing into the wind: Republicans and Democrats alike are ready to give the market full sway over the distribution of wealth and income, the availability of health care, the nature of basic research, and the quality of the workplace.

This is the new orthodoxy, and Kuttner challenges it piece by piece. He also offers a set of policy guidelines, based on socialdemocratic successes in Europe, that could pave the way to a more just society.

However, Kuttner begins with a celebration of free enterprise. Not for nothing is the modern grocery store called a supermarket, he says. The supermarket represents the triumph of free enterprise: incredible variety, supply and demand in balance, scarce resources efficiently allocated, and competition that keeps prices moderately low.

But the supermarket is not the model for all industries and activities, Kuttner argues. Free markets fail to keep the demand for labor anywhere near the supply, they maldistribute wealth and income, and they chronically underfund research and development.

The market has a "tendency to extreme inequality," he writes. Conservative policies, like deregulation and crackdowns on unions, have "acted like a solvent on each of the countervailing extra-market institutions" that could rein in that tendency.

Kuttner notes that labor markets differ fundamentally from others for two basic reasons. First, workers are not just a cost of production. They are also consumers; they buy the goods and services corporations produce. If companies underpay their workers, the demand for those goods and services will fall.

Second, the workplace is as much a social organization as an economic one. It cannot function smoothly unless most workers and managers internalize some common norms. Today those norms are ruthlessly imposed by the marketplace and increasingly resented by many workers. Far better that...