(WASHINGTON POST) Most economists believe that markets work. They believe that to a large extent, markets are efficient, self-regulating, and they produce what is best for society. The idea is seductive because it seems to excuse greed, or even celebrate it — the alchemy of the invisible hand turning all of our selfish impulses into goodness and bounty.
Of course, there are limits to what markets can accomplish. Economists George Akerlof and Robert Shiller have each made their careers — and won Nobel prizes — for investigating how laissez faire fails us. Akerlof analyzed the problems that arise when we don’t know enough about what we’re buying. Shiller showed that the stock market often moves irrationally, in ways that reflect human fallibility.