>"Economic theory, like the physics on which it is based, is in essence an extended exercise in perturbation theory. Solvable and simplified frictionless markets are populated by rational agents which are then all subjected to perturbations in an effort to recover economic realism. Thus while it is false that economists believe idealized models to be exactly accurate as outsiders contend, it is fair to say that they implicitly assume deviations from the ideal are manageably small."
When Smith wrote "The Wealth of Nations", he had no such theory of frictionless markets populated by rational actors."The Wealth of Nations" was written based on what Smith observed in the world around him, not some thought experiment, and most of the examples in the book were based on real markets and policies, such as the corn laws. Smith had in fact written another book which made it clear that he believed humans were complex moral and emotional beings.
Throughout the history of economics, many (if not most) of the notable contributions were made by people addressing the situations they found themselves in, such as Bastiat responding to protectionism he saw in the French national assembly.
>"Even die-hard proponents of market capitalism will cede that this public sector represents “market failure” where price and value become disconnected. Why should one elect to pay for an army when he will equally benefit from free riding on the payments of others? Thus in a traditional market economy, payment must be secured by threat of force in the form of compulsory taxes."
This is another example of the author's complete misapprehension of economics. I have never heard any economist argue that all externalities should be compensated or penalized, because everything has externalities. Many have come to different conclusions based on the abundance of externalities; there are Marxists who believe the government must control everything to properly allocate resources, and there are anarcho-capitalists who believe that externalities should either be paid for voluntarily (perhaps after social pressures) or not at all.
I could go on to list many of the rest of the egregious errors in this post, but wouldn't want to further tax your patience.