A Book Critique

How Markets Fail – The Logic of Economic Calamities
John Cassidy

BMBA 9202NB

Professor Salvatore F. Cordo

February 16, 2011

Samir Hadzic
Professor Salvatore F. Cordo
BMBA 9202NB
February 16, 2011

How Markets Fail: The Logic of Economic Calamities

In 2009, John Cassidy, noted journalist at The New Yorker published the book, How Markets Fail: The Logic of Economic Calamities. In How Markets Fail, John Cassidy describes what he calls utopian economics and how the utopian thinking has led to economic crisis such as job losses, bank bailouts, and corporate greed. Cassidy attempts to convince that utopian economics does not capture the true behaviors of humanity collectively leading to unanticipated and adverse economic outcomes. He presents the history of economics and contrasts the idea of utopian economics with reality based economics. Reality based economics encompass people’s behaviors and thinking identifying irrational self-interests (Cassidy, 9). Cassidy then explains in detail how economic theory and practice influenced the “Great Crunch” (i.e. collapse in sub-prime mortgage lending during last decade). The timeliness of Cassidy’s publication of a book to address how markets fail is certainly ideal in light of the recent crash in sub-prime mortgages. The financial impact of this economic crisis continues to dictate the pace of the current economy. Not only is the topic stimulating to a graduate MBA student, but has value to inform and enlighten individuals in all disciplines. Cassidy uses the history of economics over the last few decades to demonstrate that his idea of utopian economics versus reality based economics is not new, but has been forgotten and/or consciously overlooked in the interest of other gains causing historical cycles of economic crisis. Cassidy’s political views are evident and he does not