I started reading _The Wealth of Nations_ a few months ago, preparing (as a good left-thinking liberal) to find all the places that Smith was wrong. I found a few -- he didn't think about externalized costs, "herd" behavior, imperfect information, or brokers gambling with other people's money -- but what really impressed me were the places that he was right but has been ignored.

Smith generally opposes government intervention in the market. But the KIND of government intervention that offends him the most is "mercantilism": using the power of government to favor one group of merchants at the expense of another group of merchants or the public. Which we've seen a lot of in the past few decades, sometimes supported by "liberals" and sometimes by "conservatives", depending on which group of merchants is being favored at the moment.

To me there seems to be two threads of free marketers, there are professional academic economists who believe free markets are useful in certain settings. And there is a second popular view among the general public (and almost all MBA students) who hold the more extreme view that pure free market economics is a unifying theory for all human thought, human behavior, and the natural world. It is the second group that drives policy. What can be done about this?

The CFA (Chartered Financial Analyst) Exams test Behavioral Economics in the Level 3 exam.

Also I would recommend the following book:

Todd A. Knoop (2008) Modern Financial Macroeconomics: Panics, Crashes, and Crises

Isn't this General Equilibrium Model (did I get that right?) exactly what George Akerlof, Joseph Stiglitz, Paul Krugman argue against with their examinations of asymmetries in information, etc.

And has there been a sea change in the Nobel Committee's tilt on economics. We had twenty years of right-wingers (Friedman, Becker, etc., winning the prize).

Now we've had ten-plus years of people like Akerlof, Amartya Sen, Stiglitz, etc., winning.