Beyond Mechanical Markets

"This important book addresses fundamental questions about macroeconomic and financial modeling that too often are sidestepped. It challenges assumptions that are routinely made, both by orthodox theory and by popular 'behavioral' alternatives; still more provocatively, it proposes a way forward, under which economic analysis remains possible, though shorn of some of its pretensions. These are issues with which all students of macroeconomics and finance will have to grapple, and Frydman and Goldberg provide a lively and impassioned opening to what will surely prove one of the crucial debates of our time."--Michael Woodford, author of Interest and Prices
"This is a brilliant, subtle, and powerful book, by far the best work of economic theory that the global financial crisis has yet produced. If any account deserves to rescue formal economics from the dead end that it has reached, and restore the connection between what economists tell you and what actually happens, this is it."--Robert Skidelsky, author of Keynes: Return of the Master
"The economy is not just mechanical; much change is nonroutine. In turn, many important economic decisions are also nonroutine. Based on this insight, Frydman and Goldberg give us a new theory of the business cycle. In market after market, they convincingly argue its realism. What's more, Beyond Mechanical Markets gives us a doctor's prescription for dampening--and possibly even avoiding altogether--the next economic crisis."--George A. Akerlof, Nobel Laureate in Economics
"This book is a milestone. It breaks important new ground in the refoundation that macroeconomics and finance so badly need. The authors' rereading of Keynes will come as a revelation both to Keynesians and behavioralists ."--Edmund S. Phelps, Nobel Laureate in Economics
"The year 2008 saw not only financial failure but the failure of an idea, the economic theory in which financial markets are mechanically determined to settle at equilibrium and economically efficient prices. Roman Frydman and Michael Goldberg demonstrate clearly the fallacy of that idea. Their powerful analysis provides insights which can help us reduce the probability and severity of future crises."--Adair Turner, chairman of Britain's Financial Services Authority
"Beyond Mechanical Markets is a potential turning point in economics. Frydman and Goldberg offer a view that is not only new but almost certainly correct--and that has far-reaching implications. After reading Beyond Mechanical Markets, other economics books seem old-fashioned."--Richard Robb, Columbia University

Roman Frydman & Michael D. Goldberg