Free Market Economics

This book is an account of one of the central issues in economics, namely the potential of the free market system to solve social and economic problems. It explains the basic assumptions of the free market argument, examines their historical development, presents the standard criticisms of them and demonstrates how they can lead to social outcomes unacceptable to a consistent free market advocate. The author argues that while markets do work in many situations, they are not panaceas, and for some problems, non-market institutions organized and co-ordinated by the state are essential.

Preface to Second Edition vii Preface to First Edition xi 1 The Free Market Argument 1 2 Standard Criticisms of the Free Market Argument 17 3 Why Are Free Markets So Good? 39 4 Rationality and Market Failure 47 5 Free Market Policy Prescriptions 65 6 Free Market Assumptions: Some Experimental Evidence 89 7 Blame-Free Justice 121 8 Rational Expectations and Newcomb's Problem 133 9 Why Is the American Free Market System So Stable? 151 10 Conclusion 163 Glossary 165 Bibliography 169 Index 175