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From the first edition: '... well written. The reader is not burdened with lengthy accounts and lots of plots of outdated data ... This is an important contribution to the understanding of how financial markets actually perform and both students and researchers interested in econophysics should study this book carefully.' Jan Sladkowski and Edward W. Piotrowski, Mathematical Reviews '... a refreshing text about the main ideas of econophysics.' F. H. Berkshire, International Statistical Institute '... excellent little book ... fully takes on board the volatility of the markets.' Steven Bishop, University College London 'A thought-provoking book. It does not only argue convincingly that the 'King - of orthodox economic theory - is naked', but offers a challenging economic alternative interpretation regarding especially the dynamics of financial markets.' Giovanni Dosi, Sant'Anna School of Advanced Studies, Pisa 'The heart of McCauley's book is a closely-reasoned critique of financial-economic mathematical modeling practice. McCauley's demonstration of the incompatibility between the assumptions of market-clearing equilibrium and informational efficiency is stunning, and sheds much-needed light on the mathematical modeling failures revealed by the financial melt-down. His unvarnished criticisms of neoclassical economic doctrine deserve equal attention. McCauley opens the windows of the self-referential world of economics to the fresh air of a mathematical physics point of view grounded in economic history and common sense. Neither monetarist, neoclassical, nor Keynesian schools of economics will take much comfort from McCauley's work, but they all have a lot to learn from it.' Duncan K. Foley, Leo Model Professor, New School for Social Research and External Professor, Santa Fe Institute 'McCauley's mathematically and empirically rigorous Dynamics of Markets is one of those rare works which is challenging, not only to an intellectual orthodoxy (neoclassical economics), but also to its fledgling rival (econophysics). Neoclassical economics and finance theory receive justifiably dismissive treatments for failing empirically, but some econophysics contributions also distort empirical data - notably McCauley shows that 'fat tails' in data can be the result of applying an unjustified binning process to nonstationary data. McCauley's essential messages for the future of economics after the global financial crisis is that 'There is no statistical evidence for Adam Smith's Invisible Hand', and that the hand that does exist and must be understood is both non-stationary and far from equilibrium.' Steve Keen, University of Western Sydney

From the first edition: '... well written. The reader is not burdened with lengthy accounts and lots of plots of outdated data ... This is an important contribution to the understanding of how financial markets actually perform and both students and researchers interested in econophysics should study this book carefully.' Jan Sladkowski and Edward W. Piotrowski, Mathematical Reviews '... a refreshing text about the main ideas of econophysics.' F. H. Berkshire, International Statistical Institute '... excellent little book ... fully takes on board the volatility of the markets.' Steven Bishop, University College London 'A thought-provoking book. It does not only argue convincingly that the 'King - of orthodox economic theory - is naked', but offers a challenging economic alternative interpretation regarding especially the dynamics of financial markets.' Giovanni Dosi, Sant'Anna School of Advanced Studies, Pisa 'The heart of McCauley's book is a closely-reasoned critique of financial-economic mathematical modeling practice. McCauley's demonstration of the incompatibility between the assumptions of market-clearing equilibrium and informational efficiency is stunning, and sheds much-needed light on the mathematical modeling failures revealed by the financial melt-down. His unvarnished criticisms of neoclassical economic doctrine deserve equal attention. McCauley opens the windows of the self-referential world of economics to the fresh air of a mathematical physics point of view grounded in economic history and common sense. Neither monetarist, neoclassical, nor Keynesian schools of economics will take much comfort from McCauley's work, but they all have a lot to learn from it.' Duncan K. Foley, Leo Model Professor, New School for Social Research and External Professor, Santa Fe Institute 'McCauley's mathematically and empirically rigorous Dynamics of Markets is one of those rare works which is challenging, not only to an intellectual orthodoxy (neoclassical economics), but also to its fledgling rival (econophysics). Neoclassical economics and finance theory receive justifiably dismissive treatments for failing empirically, but some econophysics contributions also distort empirical data - notably McCauley shows that 'fat tails' in data can be the result of applying an unjustified binning process to nonstationary data. McCauley's essential messages for the future of economics after the global financial crisis is that 'There is no statistical evidence for Adam Smith's Invisible Hand', and that the hand that does exist and must be understood is both non-stationary and far from equilibrium.' Steve Keen, University of Western Sydney

Author Information

Joseph L. McCauley is Professor of Physics at the University of Houston, and is an advisory board member for the Econophysics Forum. He has contributed to statistical physics, the theory of superfluids, nonlinear dynamics, cosmology, econophysics, economics and finance theory.

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