How Markets Fail: The Logic of Economic Calamities by John Cassidy

How Markets Fail: The Logic of Economic Calamities

by John Cassidy

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Business & Finance

At their best, markets let people trade to mutual benefit, the ideal economists call Pareto efficiency. That said, Cassidy's case is that an idealized model of self-correcting markets came to dominate economics and policy, and you see where that led in the housing bubble, as individually rational choices added up to the 2008 collapse.

Core ideas
  • Utopian economics: From Adam Smith to Milton Friedman and Alan Greenspan, theory assumed rational actors and perfect information, and Greenspan treated markets as inherently stable.
  • Reality-based economics: Keynes, the prisoner's dilemma, behavioral economics and Hyman Minsky's work on financial instability explain the crash far better than the idealized model.
  • Crony capitalism: Easy money plus deregulation wasn't a genuine free market, he argues, and mortgage lenders exploited their information advantage over borrowers.
Published2009
Pages400
ISBN9780374173203
ReadMar 2024

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