Free markets are not rational

By Aetius Romulous

The markets are rational. From that inviolate truth, a pillar of economic thought for 233 years, flows all else economics understands about markets, men, and money - an unalterable belief that markets can be measured, quantified, cut and pasted in mute acceptance that under it all lies the consistent and undeniable force of rational behavior, a religion gone unquestioned.

The theory of rational markets - that buyers and sellers will always act in their best interests - was given life by Adam Smith in his Wealth of Nations in 1776. The new study of economics, born into a moment between ages, grew and developed with its gospel already written and sanctified. Economics became nothing more than competing studies that tried to squeeze the maximum utility out of the blandness of rational, human behavior. The competition reached a turning point at the end of two brutal wars and an economic depression that sent buildings full of newly minted economists running for their slide rules.