How Markets Fail: The Rise and Fall of Free Market Economics
In How Markets Fail, veteran New Yorker staff writer John Cassidy offers a provocative take on the misguided economic thinking that produced the 2008 financial crisis—now with a new preface addressing how its lessons remain unheeded in the present.

A Pulitzer Prize Finalist

An Economist Book of the Year

A Businessweek Best Book of the Year

For fifty years, economists have been developing elegant theories or how markets facilitate innovation, create wealth, and allocate society's resources efficiently. But what about when they fail, when they lead us to stock market bubbles, glaring inequality, polluted rivers, and credit crunches?

In this updated and expanded edition of How Markets Fail, John Cassidy describes the rising influence of "utopian economies"—the thinking that is blind to how real people act and that denies the many ways an unregulated free market can bring on disaster. Combining on-the-ground reporting and clear explanations of economic theories Cassidy warns that in today's economic crisis, following old orthodoxies isn't just misguided—it's downright dangerous.

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How Markets Fail: The Rise and Fall of Free Market Economics
In How Markets Fail, veteran New Yorker staff writer John Cassidy offers a provocative take on the misguided economic thinking that produced the 2008 financial crisis—now with a new preface addressing how its lessons remain unheeded in the present.

A Pulitzer Prize Finalist

An Economist Book of the Year

A Businessweek Best Book of the Year

For fifty years, economists have been developing elegant theories or how markets facilitate innovation, create wealth, and allocate society's resources efficiently. But what about when they fail, when they lead us to stock market bubbles, glaring inequality, polluted rivers, and credit crunches?

In this updated and expanded edition of How Markets Fail, John Cassidy describes the rising influence of "utopian economies"—the thinking that is blind to how real people act and that denies the many ways an unregulated free market can bring on disaster. Combining on-the-ground reporting and clear explanations of economic theories Cassidy warns that in today's economic crisis, following old orthodoxies isn't just misguided—it's downright dangerous.

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How Markets Fail: The Rise and Fall of Free Market Economics

How Markets Fail: The Rise and Fall of Free Market Economics

by John Cassidy
How Markets Fail: The Rise and Fall of Free Market Economics

How Markets Fail: The Rise and Fall of Free Market Economics

by John Cassidy

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Overview

In How Markets Fail, veteran New Yorker staff writer John Cassidy offers a provocative take on the misguided economic thinking that produced the 2008 financial crisis—now with a new preface addressing how its lessons remain unheeded in the present.

A Pulitzer Prize Finalist

An Economist Book of the Year

A Businessweek Best Book of the Year

For fifty years, economists have been developing elegant theories or how markets facilitate innovation, create wealth, and allocate society's resources efficiently. But what about when they fail, when they lead us to stock market bubbles, glaring inequality, polluted rivers, and credit crunches?

In this updated and expanded edition of How Markets Fail, John Cassidy describes the rising influence of "utopian economies"—the thinking that is blind to how real people act and that denies the many ways an unregulated free market can bring on disaster. Combining on-the-ground reporting and clear explanations of economic theories Cassidy warns that in today's economic crisis, following old orthodoxies isn't just misguided—it's downright dangerous.


Product Details

ISBN-13: 9781250781284
Publisher: Picador
Publication date: 06/01/2021
Pages: 432
Product dimensions: 5.30(w) x 8.20(h) x 1.00(d)

About the Author

John Cassidy is a journalist at The New Yorker and a frequent contributor to The New York Review of Books. He is the author of How Markets Fail and Dot.con: How America Lost Its Mind and Money in the Internet Era and lives in New York City.

Table of Contents

Preface to the 2021 Edition vii

Introduction: The Great Financial Crisis 3

Part 1 Utopian Econonics

1 Raghuram Rajan's Prescient Warning 17

2 Adam Smith's Invisible Hand 25

3 Friedrich Hayek's Telecommunications System 37

4 Markets and Welfare: Walras and Pareto 49

5 Arrow and Debreu's Famous Proof 61

6 The Market Evangelist: Milton Friedman 72

7 Eugene Fama and the Efficient Markets Hypothesis 85

8 Robert Lucas and the Triumph of Utopian Economics 97

Part 2 Reality-Based Economics

9 Climate Change, Spillovers, and Professor Pigou 111

10 Francis Bator's Taxonomy of Market Failures 125

11 The Prisoner's Dilemma and Rational Irrationality 139

12 George Akerlof's Market for Lemons 151

13 Keynes's Beauty Contest Theory of Investing 166

14 Herd Behavior and the Dot-Com Bubble 177

15 Psychology and Economics: Kahneman and Tversky 192

16 Hyman Minsky and Ponzi Finance 205

Part 3 The Great Crunch

17 Alan Greenspan Shrugs 221

18 The Lure of Real Estate 235

19 The Subprime Chain 251

20 In the Alphabet Soup 268

21 A Matter of Incentives 285

22 London Bridge Is Falling Down 299

23 Socialism in Our Time 317

Conclusion 335

Afterword: The Great Disconnect 347

Notes 363

Acknowledgments 391

Index 393

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