We were promised that... markets would provide solutions. A lot of my book is a defense of markets. The Supreme Court says a market is where independent parties, neither under duress or coercion, and with knowledge of the facts, come to an agreement on a price. That's not what a lot of our new markets do. We now have markets designed to thwart competition... Adam Smith's invisible hand of the market, in which there are lots of sellers, and smart consumers who can compare prices, and this drives prices down... to the lowest level at which businesses can continue to operate. We've replaced that, through government policies, with practices that artificially restrict competition... raise prices... inflate profits; all under the guise of conservatism, and "the markets will solve our problems."

Adam Smith's invisible hand does exist, but as an emergent property of a complex system. It has a fuzzy tendency to reduce big price discrepancies, but it acts in a rather haphazard way.

The Rich Man's Banquet, which was to last for a decade, had now begun: the feast, it was recognised, went to the greediest.

Congress had rich gifts to bestow — in lands, tariffs, subsidies, favors of all sorts; and when influential citizens made their wishes known to the reigning statesmen, the sympathetic politicians were quick to turn the government into the fairy godmother the voters wanted it to be. A huge barbecue was spread to which all presumably were invited. Not quite all, to be sure; inconspicuous persons, those who were at home on the farm or at work in the mills and offices, were overlooked; a good many indeed out of the total number of the American people. But all the important persons, leading bankers and promoters and business men, received invitations. There wasn't room for everybody and these were presumed to represent the whole. It was a splendid feast. If the waiters saw to it that the choicest portions were served to favored guests, they were not unmindful of their numerous homespun constituency and they loudly proclaimed the fine democratic principle that what belongs to the people should be enjoyed by the people.

The theories that I (and others) helped develop explained why unfettered markets often not only do not lead to social justice, but do not even produce efficient outcomes. Interestingly, there has been no intellectual challenge to the refutation of Adam Smith’s invisible hand: individuals and firms, in the pursuit of their self-interest, are not necessarily, or in general, led as if by an invisible hand, to economic efficiency. The only question that has been raised concerns the ability of government to remedy the deficiencies of the market. Within academia, a significant fraction of economists are involved with developing and expanding on the ideas of imperfect information (and imperfect markets) that I explored. For instance, Edmund Phelps, this year’s Nobel Prize winner, belongs to this "school" of thought. But in political discourse, simplistic “market fundamentalism” continues to exert enormous influence.

Adam Smith is, of course, justly lauded for his advocacy of free markets and limited government. Particularly famous is his idea that each person’s pursuit of self-interest leads, as if by an invisible hand, to socially efficient outcomes.

Foundational to our exceptional nation’s sacred private property rights, a business must have freedom to locate where it wishes. In a free market, if a business makes a mistake (including a marketing mistake that perhaps Carrier executives made), threatening to move elsewhere claiming efficiency’s sake, then the market’s invisible hand punishes. Thankfully, that same hand rewards, based on good business decisions. But this time-tested truth assumes we’re operating on a level playing field. When government steps in arbitrarily with individual subsidies, favoring one business over others, it sets inconsistent, unfair, illogical precedent. Meanwhile, the invisible hand that best orchestrates a free people’s free enterprise system gets amputated. Then, special interests creep in and manipulate markets. Republicans oppose this, remember? Instead, we support competition on a level playing field, remember? Because we know special interest is one big fail.

[A] lot of people have looked around after 28 years, from when they were promised all these things by Ronald Reagan... [and] realized that for the bottom 90% of Americans incomes are unchanged... even though the country is more than twice as wealthy in real terms, and productivity per capita is up 70%; for every dollar the economy put out back then, per person, in real terms, it puts our $1.70 today. And they've said, "Where's the beef?" ...[T]hat disconnect is ...opening up an opportunity to get people to see what the government has done that's contrary to their interests, because Adam Smith said "Any policy that benefits the majority of the people must be a good thing for the society."

Adam Smith saw what had happened to markets and societies for millennia. Winners are never satisfied with success in the latest market battle, with a cool product or financial or political achievement. As humans, we use any recent advantage to ensure that competitors will fail in future struggles.

The standard neoclassical model the formal articulation of Adam Smith's invisible hand, the contention that market economies will ensure economic efficiency provides little guidance for the choice of economic systems, since once information imperfections (and the fact that markets are incomplete) are brought into the analysis, as surely they must be, there is no presumption that markets are efficient.

Throughout his writings Smith warned of the damage done when government interferes in the market by guaranteeing profits or by handing out gifts. This damage can exceed that caused when government taxes unwisely or imposes rules that needlessly obstruct commerce.

Although Adam Smith is today often regarded as a “conservative” figure, he in fact attacked some of the dominant ideas and interests of his own times. Moreover, the idea of a spontaneously self-equilibrating system — the market economy — first developed by the Physiocrats and later made part of the tradition of classical economics by Adam Smith, represented a radically new departure, not only in analysis of social causation but also in seeing a reduced role for political, intellectual, or other elites as guides or controllers of the masses.