Ping Chen’s Comments on Justin Fox’s Book
“Myth of the Rational Market”

On The New York Times Book review
Aug. 8, 2009
http://www.byjustinfox.com/2009/08/paul-krugman-calls-myth-of-the-rational-market-amustread-in-nyt-book-review.html

Justin Fox did a great job in documenting a series of intellectual failures in a recent book on the myth of rational markets. He laments the lack of any alternative "grand new theory" and finds that the debate has resulted in a "muddle."

However, Fox’s complaint is not quite true. His bounded knowledge is a good example of incomplete information or even distorted information in the mainstream media.

There are viable alternatives which are developing for more than two decades. They are known only within a small community of economic complexity or evolutionary economics. But their ideas are rarely heard among mainstream literature and university textbooks.

Even Paul Krugman, a mainstream dissident, had very limited knowledge of the emerging science of complexity and evolutionary economic dynamics.

Please see Ping Chen’s Comment on Lucas defense of the dismal science
(The Economist, August 6, 2009)at:
http://www.economist.com/businessfinance/displaystory.cfm?story_id=
14165405&mode=comment&intent=readBottom

Posted by: Ping Chen, CCER at Peking University | August 08, 2009 at 10:05 AM

Thanks for the comment, Prof. Chen. I actually do devote several pages near the end of the book to nonlinear, evolutionary economic models,and speculate that they may be where financial market theory is headed.I didn''t give them more play simply because I was writing an intellectual history of modern financial economics, not a treatise on where I think
economics ought to go.

Posted by: Justin Fox | August 08, 2009 at 10:51 AM