The ever-excellent Boston Review has in its current issue an essay on this subject by Eliot Spitzer, with a number of  responses. I hope and expect this will be turned into one of its book series, with a few more contributions perhaps.

Spitzer addresses three questions:

• What are the parameters of
government intervention in the marketplace? What rules should we use in
deciding when the government should act, and when it should let the
market take its course?

• Has our response to the immediate
crisis been successful?

• How might we restore an effective
structure for corporate governance? The failures of corporate governance
account for much of our economic troubles over the past 30 years.
Getting out of the current mess will require addressing these underlying
failures.

There are several responses and the whole adds up to an immensely thoughtful debate on the difficulty of achieving anything, and especially anything good, in public policy. Too rich to sum up in a blog post – read the whole issue. Highly recommended.

The most recent in the Boston Review books series (published by MIT Press) is Dean Baker's Taking Economics Seriously. Baker is one of the respondents to Spitzer's essay. As the cover blurb puts it:

Modern markets are highly regulated, although
intrusive regulations such as copyright and patents are rarely viewed
as regulatory devices. If we admit the extent to which the economy is
and will be regulated, we have many more options in designing policy
and deciding who benefits from it.