Analyzing Market Failure: Adam Smith and John Maynard Keynes

There is very little literature that discusses the work of Adam Smith and John Maynard Keynes together. The two share, however, at least one aspect in their analysis of capitalist society that points to a common understanding of the potential for market failure. But because this shared aspect of their analytical systems lies far outside the contemporary modeling assumptions, it defines a form of “market failure” that does not exist in contemporary economics. It is, for both men, very definitely a failure of markets to work, but it might just as well be called a failure of market society.