ABSTRACT
Since its beginning, the primary subject matter of economics has been what enables economies to produce prosperity. Adam Smith, often cited as the father of economics, titled his great 1776 treatise An Inquiry Into the Nature and Causes of the Wealth of Nations. The title reveals that Smith’s primary interest was to explain how economies produce prosperity. That topic remains at the forefront of economic analysis up into the twenty-first century, but economists’ views on how prosperity can be produced have changed substantially from the late twentieth century to the early twenty-first. Until the fall of the Berlin Wall in 1989, followed by the dissolution of the Soviet Union in 1991, conventional wisdom among economists leaned toward the idea that economic planning by government was the surest road to prosperity. Despite the fact that market economies were more prosperous during the twentieth century than centrally-planned economies, much of the economics profession perceived central planning as a more rational way to organize an economy. A belief common among professional economists was that centrally-planned economies would grow faster and eventually overtake market economies. By the beginning of the twentieth century, the overwhelming evidence on the failure of central planning reversed that conventional wisdom. Market economies, not central economic planning, are now seen as the way to produce prosperity.
