How Markets Fail

  • by John Cassidy
  • Narrated by Ralph Cosham
  • 13 hrs and 15 mins
  • Unabridged Audiobook

Publisher's Summary

Behind the alarming headlines about job losses, bank bailouts, and corporate greed, there is a little-known story of bad ideas. For 50 years or more, economists have been busy developing elegant theories of how markets work - how they facilitate innovation, wealth creation, and an efficient allocation of society's resources. But what about when markets don't work? What about when they lead to stock-market bubbles, glaring inequality, polluted rivers, real-estate crashes, and credit crunches?In How Markets Fail, John Cassidy describes the rising influence of what he calls utopian economics, thinking that is blind to how real people act and which denies the many ways an unregulated free market can produce disastrous unintended consequences. He then looks to the leading edge of economic theory - including behavioral economics - to offer a new understanding of the economy, one that casts aside the old assumption that people and firms make decisions purely on the basis of rational self-interest.Taking the global financial crisis and current recession as his starting point, Cassidy explores a world in which everybody is connected and social contagion is the norm. In such an environment, he shows, individual behavioral biases and kinks - such as overconfidence, envy, copy-cat behavior, and myopia - often give rise to troubling macroeconomic phenomena, such as oil-price spikes, CEO greed cycles, and boom-and-bust waves in housing. These are the inevitable outcomes of what Cassidy refers to as "rational irrationality" - self-serving behavior in a modern market setting.Combining on-the-ground reporting, clear explanations of esoteric economic theories, and even a little crystal-ball gazing, Cassidy warns that in today's economic crisis, conforming to antiquated orthodoxies isn't just misguided - it's downright dangerous. How Markets Fail offers a new, enlightening way to understand the force of the irrational in our volatile global econ...


What the Critics Say

"[A]n elegant, readable treatise on economics, swathed in current headlines....Cassidy writes with terrific clarity and a finely tuned sense of moral outrage, yielding a superb book." (Kirkus Reviews)


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Customer Reviews

Most Helpful

Three books in one.

Both this book and Alan Greenspan's book "Age of Turbulence" have some stories that blend economics with politics. However, this author and Alan have different economic views. If you are new to economics then I recommend reading or listening to Alan's book first since it is an easier read. Both books touch on Adam Smith's "invisible hand" and John Maynard Keynes' idea of government spending during recessions.

This book is like reading three books in one. The first four hours covers some economists and how their ideas have influenced economic thinking. The next four hours covers examples like spillovers, the prisoner's dilemma, the market for lemons, and Keynes beauty contest. The rest covers musical chairs, the Millennium Bridge, and some of the major events that surround the current housing bubble. For me, I found the middle to be the most enlightening.

Our government has run between the extremes of de-regulation of the airline industry and the "nationalization" of Fannie Mae and Freddie Mac. This book is not a history of bubbles and crashes. While the latest crash is not in tulip bulbs, the ability of governments since then to smooth out the bubbles and crashes appears to be limited.
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- Donald

Way more than I expected

I bought this book thinking it would be another book on the current financial crisis; after all, there are so many. I was pleasantly surprised when after a few chapters I realized that this was not at all what the book was about. It does not chronicle the crisis or even how markets have failed catastrophically in the past. Rather it articulates various ways in which free markets can fail to produce efficient outcomes. If you want a history of the current crisis, read "Too Big to Fail" by Andrew Ross Sorkin. It's essentially a blow by blow chronology and a comprehensive one at that. It's worth reading. But this book very skillfully presents a case for how markets are not always the best solution to economic problems. I've learned more from this book than I have from anything I've read in quite a while. I plan to purchase a physical copy and read it again at least once.
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- Ben

Book Details

  • Release Date: 11-17-2009
  • Publisher: Blackstone Audio, Inc.