Summary of Econned

How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism

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Econned book summary
Misguided allegiance to theoretical “free markets” led to destructive deregulation of the financial services industry.

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8 Overall

8 Importance

7 Innovation

9 Style

Recommendation

Neoclassical economists contend that the economy naturally seeks equilibrium, an optimal point where the supply of goods and services equals the demand. This intellectual view has encouraged politicians to deregulate markets to make them more competitive and efficient. But deregulation of financial markets has been a failed experiment in freeing banks and investment firms, says financial writer Yves Smith. She argues, convincingly, that the global financial crisis that began in 2007 has provided ample justification for greater regulation of banks and other related institutions. This book went to press in late 2009, prior to the 2010 passage of the Dodd-Frank Act, a sweeping reform of the US financial services industry that embodies some of the author’s proposed changes. getAbstract suggests Smith’s book to all those affected by the 2008 meltdown for its incisive description of the symptoms, causes of and cures for the financial crisis.

In this summary, you will learn

  • How neoclassical economists promoted oversimplified economic models
  • Why “self-correcting” forces have failed to control deregulated financial markets
  • What lawmakers will have to do to avert another worldwide financial crisis
 

Summary

The “Self-Correcting” Economy
In his influential 1776 book, The Wealth of Nations, Adam Smith popularized the classical economic concept of market equilibrium. Smith is famous for comparing individual self-interest to an “invisible hand” that nudges each seller of goods and services...
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About the Author

Yves Smith (the pen name of financial writer Susan Webber) established Naked Capitalism, a website focused on economics and finance. Her articles have appeared on Slate and in The New York Times and The Christian Science Monitor.


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