According to Richard K. Armey, a former Republican leader in the U.S. House of Representatives, “markets are smart, government is dumb.” Though many conservatives would presumably decline to buy this proposition wholesale, the cultural penetration of words to that effect has transformed both intellectual debate and policy practice in the American public sector over the last three decades. That private interests harnessed to market strategies should and can be deployed in the service of public ends has become an article of faith among many of the conservative and moderate political leaders who have largely dominated Washington, D.C., and many state capitals since 1968. Even members of that endangered species formerly known as liberals often refrain from quarrelling with this received wisdom. The hot pursuit of market alternatives to government has powerfully shaped both how policy is conceived and how it is practiced.
This little book is a caveat emptor, an invitation to think twice about the supposedly broad-ranging benefits of the public use of private interests. It is by no means a general critique of the introduction of market mechanisms into public policies, and still less an indictment of markets per se and their role in the “coordination of human activities not by central command [but] by mutual interactions in the form of transactions” (Lindblom 2001, p. 4). Deregulation of airlines, for example, contributed to competition among carriers and a sharp decline in fares, transforming air travel into a common form of transport for millions of middle-class Americans.
Our book's more modest aim is to explore the central institu-