Another day, more news of financial malfeasance. SAC Capital Advisers gets accused of insider trading, MF Global of bad C-suite oversight, the London Whale of youthful overreach. Why do such shortfalls inexplicably keep swirling up out of the market?

Here’s why: economists and their followers need to pay far more attention to the market’s imperfections, far less to its perfection. If they reverse their analytic angle, they’d get a better grip on market deficiencies and how to fix them.

John Maynard Keynes famously wrote in 1936, “Practical men, who believe themselves to be quite exempt from any intellectual influence are usually the slaves of some defunct economist.” Policy and action run on the tracks university economists have laid for them decades earlier, in their youth. Much contemporary economic thinking appears still, wittingly or unwittingly, stuck in the neoliberal free-market era thinking exemplified by Milton Friedman.

Economics as a field has historically centered on the market: everything starts, proceeds and ends with competition there. But competitive transactions, especially in large markets or with large parties, dependably do not work freely or perfectly.

Parties in the market may have unfairly large or small shares of it, information about it, wages in it, barriers to entry into it or other ways to shape it. The exchanges between buyers and sellers may harm third parties, outcomes economists call negative externalities. Economics does not reliably explain why, how or under what conditions these imperfections regularly appear.

Economists of the perfect-market vision, by far the majority, argue that the parties to the market can often self-regulate to rectify its imperfections. When they do not or cannot, government may intervene to regulate or otherwise reorder the market to restore its previous perfection.

Yet the lively subfields of behavioral, experimental and green economics--the work of Amos Tversky, Daniel Kahneman, Herman Daly and their successors—have been upending the perfect-market idea for at least a generation. This research has added complex motives, behaviors and previously missing perceptual and environmental factors to the larger field that all the same keeps fixating on the market.

Their work suggests a full-on reversal of the perfect-market idea: instead of positing a perfect market consistently faltering, why not assume that the market’s main characteristic is near-permanent imperfection? Imperfection becomes a feature, not a bug.

Now we see why financial scandals, near-scandals, fiascos, and misjudgments emerge repeatedly, and why categorizing and resolving them is confusing. Intellectually they stem from homo economicus run amok. Practically they spring from a muddled market that is almost always deformed.

Corporations and wealthy individuals often manipulate the market in ways that make them and certainly others search queasily for clear separation of legal from illegal, ethical from unethical, fair from unfair. The manipulators, embedding themselves in the market, understandably take political action to defend their entrenchment. They lobby, donate to politicians, resist anti-trust laws, capture regulatory agencies, get government subsidies or try to sway public opinion. Economists call these market strategies rent-seeking.         

Many others react to the market by giving it relatively little thought. Their actions hugely invalidate the standard academic model of homo economicus fully immersed in it. Their choices emphasize community, family, religion, art, sociability, sex and nature: all life’s generous intangibles that the market prices poorly or not all. They value calm, altruism, tradition, friendship and fun more than market power, money or conventional ambition. They prize cooperation over competition, and the market often bores them. To reduce its sway over them, they may voluntarily limit their wants once—a big if for many—they can reach a minimum economic status comfortable for them.

This low-attention style explains why many people dislike or pity those who seem near-exclusively focused on the market: the commodifiers, incentivizers, leveragers, monetizers and frequently workaholics too, noisy strivers all. In their private lives even such supposed money-grabbers usually seek respite from the market’s rigors.

Keynes, always perceptive, wrote in 1930 that a one-dimensional love of money is “a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease.” Economics has misunderstood the market in a fundamental but reversibly wrong way. Turn the dismal science inside-out and cheer it up.

The Poppers teach together at Princeton’s Environmental Studies Program. He teaches at Rutgers’ Bloustein School of Planning and Public Policy. She teaches at the City University of New York’s College of Staten Island and Graduate Center. They are members of the American Geographical Society’s Writers Circle.