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Politics : American Presidential Politics and foreign affairs
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To: DuckTapeSunroof who wrote (38598)11/13/2009 6:46:45 PM
From: TimF  Read Replies (1) of 71588
 
But I believe that the recent mathematical work has pretty conclusively rejected the "random walk" Mythos that was taught as GOSPEL during the 'seventies, 'eighties, and early part of the 'nineties....)

That mathematical work is also to a large degree something that involves idealized models. But it is true that the strongest interpretation of "efficient markets"/"random walk" theories have taken a hit (not so much with the weaker formulations).

But those theories have little to do with Adam Smith or with the issue that we where discussing, that of the market being the most efficient way to allocated resources. "Efficient market theory" is different from "the theory that markets are an efficient way to allocate goods and services". Efficient-market theory, is about prices on traded assets reflecting all known information. Not about whether the profit motive drives economically efficient outcomes or whether the market does better than the government.
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