"One drawback of this book is this black and white division of economics, especially since a number of chapters are devoted to a specific economist. Thus, one might infer that this book also provides a list of 'good' and 'bad' economists. However, a thorough reading shows that the author praises the achievements of a number of “utopians”, including Friedrich August von Hayek. This book is not a tombstone to free markets; it just wants to show that we do not need free markets all the time and in every situation. [...] John Cassidy firmly believes that the main cause of this crisis was not 'bad' bankers but a 'bad' system, which distorted incentives and rewarded excessive risk taking over prudence."

"Much has been written about the failures of bankers, rating agencies, and regulators leading up to the financial crisis of 2008. This highly readable book focuses on the ideas that informed the actors who contributed to the debacle. It heavily implicates the profession of economics of recent decades, with its discovery and refinement of notions such as perfect financial markets (all available information is reflected in the current prices of financial assets) and rational expectations (all actors accurately know how the economy works and have unbiased forecasts of the future), along with its claim that all markets are stable and self-equilibrating. This ideology questioned the need for government regulation. And it resonated strongly with parts of the business and financial communities -- and with some legislators -- leading to the extensive deregulation of financial markets. Cassidy offers a clear and occasionally colorful exposition of the evolution of relevant economic thought in a way that is accessible to non-economists."

"John Cassidy is no undertaker at the funeral of capitalism; nor is How Markets Fail an obituary. His thesis is not that the system must fail, in a terminal way, but that markets can fail, in a way that only government intervention can remedy. If this sounds like common sense, well and good. Why on earth would anyone ever suppose differently? Because they have studied economics in Chicago is one answer, as readers of this engaging book will discover. [...] Too sensational for Oscar Wide’s Miss Prism, issues of economic theory remain notoriously intractable. But anyone who enjoys a good read can safely embark on this tour with Cassidy as their guide. [...] Cassidy makes a fundamental distinction between what he calls 'utopian economics', which is the problem, and 'reality-based economics', which is the solution. [...] How Markets Fail does not claim to have all the answers, but it deftly illuminates some crucial problems in the light of our recent experiences."

"Author John Cassidy has done something that one rarely sees in American thought, which usually falls into the Scylla of meaningless jargon on one side, and into the Charybdis of chronicling what it sees as the leading actors on the other. He has examined the concepts that helped determine what the actors did, and he shows how those concepts fail. In this he is brilliantly successful. He also proposes a different conceptual view, which would take better account of the same actors and events—here we think he fails. But he provides a discussion that merits the attention of anyone who is seriously interested in economy and business. Cassidy’s book, a mixture of classic investigative journalism and economic thought, starts out with a bang. [...] Cassidy’s prose lacks something in style—it would benefit enormously from a bit of Attic salt. But the logic is ironclad, and that makes the book very readable. [...] This reviewer applauds part three. Loves part one. It’s part two, about reality economics, that raises issues, although the mere fact that it could generate serious discussion makes it worth reading."

"The recent debacle demonstrated the foolishness of one theory of capitalism: a utopian version of free-market theology that happens to have dominated American economic thinking for two generations. [...] Cassidy traces ideas about capitalism from Adam Smith’s 18th-century 'invisible hand' through Alan Greenspan’s hands-off philosophy toward regulating banks as chairman of the Federal Reserve from 1987 to 2006. The theory that Greenspan inherited from Milton Friedman, high priest of the Chicago School, 'says simply: self-interest plus competition equals nirvana,' Cassidy writes. [...] Many sensible economists and business leaders — advocates of capitalism, all — have acknowledged the perilous aspects of self-interested financial enterprise without suggesting a switch to Soviet-style central planning or preindustrial feudalism. Cassidy’s favorite is the redoubtable Hyman Minsky [...] With the pithiness of a talented journalist, Cassidy translates Minsky’s scholarship into the helpful theory of 'rational irrationality.' The individual, short-term actions of a bond trader or subprime lender may make sense in that they will yield a quick profit, but taken together and unchecked by stern rules and a public-­spirited overseer, the behavior of the herd can destabilize the entire system in a manner that, in retrospect, seems pretty crazy."