The question of the proper role of government in the marketplace is an old and fundamental one. In the search for objective standards by which such decisions can be made, public officials increasingly have turned to the concept of market failure. Use of the market-failure concept is widespread...

Adam Smith turned economic theory on its head in 1776 when he declared that the pursuit of self-interest mediated by the market itself--not by government--led, via an invisible hand, to the greatest possible welfare for society as a whole. The Hesitant Hand examines how subsequent economic...