A Response to John Kay by Roger Guesnerie

There is little doubt that the crisis is a phenomenon that belongs to the intellectual category of “market failure”. It is also the case, as argued in the stimulating text by J. Kay, that it is associated with some kind of “economic theory failure”. John Kay makes a long list of points and an exhaustive comment is hopeless and probably counterproductive. Let me make three types of remarks. The first one (1) concerns the core assumptions of modern economic theory. The second (2) addresses John’s discussion of the “efficient market hypothesis”. My final comments (3-4) are a response to his criticism of the present scientific style of economic theory…

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