The reader might reflect that an awful lot of supposing has to take place in order for the quantity theory of money to be true.

The behavior of the economy as a whole, at the aggregate, macro-level, is built up from the individual equations at the micro-level.

Even in financial markets, the concept of market efficiency does not hold.

But Adam Smith was a philosopher as well as well as an economist, famous in his time as much for his Theory of Moral Sentiments as for The Wealth of Nations. And as he understood so well, society is more than the sum of its individual parts.

The second part of the New Right's policy package has been the belief that free-market solutions are always best. It is this latter view which is profoundly mistaken. Markets and profits are crucial, but the pure free-market model itself is deeply flawed.

By any reasonable criteria, the discipline of economics as a whole, in its present state, is sadly lacking.

Keynes tried to show that market economies could settle in equilibrium states in which the labour market did not clear, and in which the level of unemployment was high. He believed that this was due to a particular example of market failure, developed in his concept of effective demand.