LAUSR

Abstract The Capital Asset Pricing Model and the Efficient Markets Hypothesis, two central aspects of the theorizing of contemporary financial economics, have been subject to a barrage of specific criticisms but remain resilient and indeed centerpieces of the theorizing and highly influential policy advice of leading contemporary financial economists. This article seeks to bring together all of these various criticisms to show that while the closely related twin theories might be able to withstand many of the specific criticisms taken individually, when all are taken together in a critical philosophical assessment, the verdict on them is damning; they are clearly empirically falsified (in the Popperian sense) and harbor, moreover, some highly challengeable if not incoherent presumptions regarding human rationality. It will be concluded that their persistence, despite these manifest defects as central theories of financial economics, is due to the ideological role they play in the mythology of Market Fundamentalism. The originality of the article lies not so much in the long list of criticisms of the twin theories (since these are well rehearsed); it lies in taking all of these criticisms together and seeing them through an epistemological and political philosophical perspective.