The resulting asymmetries of information give rise to market power so the markets are not efficient and an advantage accrues to those with the most information. For example, sellers usually know more about what they are selling than buyers. He argues that information is never perfect in any practical sense and certainly not in the theoretical sense necessary for Chicago style economics to work as predicted. Stiglitz showed that the Chicago School models did not work with even slight deviations from the assumption of perfect information. In order for the free market theory of the Chicago School to function as predicted, it must be assumed that information in the economic system is perfect. Instead, a massive transfer of wealth from those who need it the most to those who need it the least occurs. However, the result is not a transition to full employment and a productive society. When Chicago School economists are in charge of economic interventions, all of these aspects of the economy are attacked. Government regulation, taxes, unions, social services, Social Security, Medicare, the social 'safety net,' and regulation of all kinds are considered hindrances to the operation of free markets. In this view, the Great Recession is nothing to worry about because 'it was simply the efficient adjustment of the economy to shocks' (p. The purpose of economic shock therapy is to eliminate restraints on free markets so they will reach equilibrium of full employment. Hence the 'shock therapy' that Naomi Klein so graphically describes in The Shock Doctrine.

This means that restraints on the 'free' market such as unions and government intervention must be eliminated in order for the 'free' markets to work. The invisible hand of supply and demand creates a perfect balance and every asset is fairly priced including labor. It is the modern version of Adam Smith’s invisible hand.

The essential belief of the Chicago School, 'free market,' theory is that only a completely 'free' market will reach full employment equilibrium and efficient resource allocation. The story begins with the Chicago school of economics. Chicago School (Neoclassical, neoliberal, free market) Economics

Freefall by Joseph E. Stiglitz