Abstract

Standard economic theory has told us for more than half a century that, to attain a high level of social welfare, there is no viable alternative to a market economy regulated by a powerful state. Critics often represent standard economic theory as a doctrinal defense of the free market. The truth is quite the opposite. Free market ideology is unfounded. Standard economic theory provides the proper framework for analyzing market failure. This theory must of course be supplemented by a theory of state failure, as well as a theory of nonstate solutions to market failures. Standard economic theory offers a poor approach to macroeconomic dynamics, but we complexity and evolutionary theorists are working on correcting this situation.