Why Do Markets Work So Well? asks Chris Leithner, in an essay comparing the Misesean conception of markets to that of the neoclassical view. Leithner argues that the attempts to model markets mathematically requires a series of assumptions that in the end have removed everything about markets that makes them work in the real world.
Yet a fundamental – and very surprising – void lurks at the very heart of the mainstream conception of markets. As an experiment, ask a conventional economist how a real-life market (as opposed to the abstract and stylised version that inhabits the textbooks and journals) actually operates. In response, you will likely receive an arcane explanation that is riddled with caveats. Contemporary mainstream economists can explain with great sophistication the operation of imaginary markets that conform to stringent assumptions. But they offer startlingly few insights into real-world markets that mock these assumptions.
