Have Economists Led Us Astray About How The World Works?

In the first half of the twentieth century, especially after the calamity of the Great Depression, the conventional wisdom held that the power of corporations must be held in check by other comparably sized organizations—churches, unions, and, above all, a strong national government. But in the decades that followed, a new generation of economists argued that tweaks to how companies operated—more hostile takeovers, more reliance on corporate debt, bigger bonuses for executives when stock prices increased—would enable the market to regulate itself, obviating the need for stringent government oversight. Their suggestions soon became reality, especially in a newly deregulated financial sector, where they precipitated the emergence of junk bonds and other questionable innovations. – Foreign Affairs