On Monday, December 16, the Federal Reserve celebrated its centennial. Among those who delivered speeches were current Fed chairman Ben Bernanke and former chairmen Paul Volcker and Alan Greenspan. Greenspan focused his remarks on the stock market crash of October 19, 1987, which marked the steepest one-day drop in stock prices in U.S. history. At the time Greenspan was credited with successfully diverting the economy from a deeper financial crisis, but his role in the financial crash that would occur 20 years later proved less positive.

In a new review of Greenspan’s book, The Map and the Territory: Risk, Human Nature, and the Future of Forecasting, RSF Robert K. Merton Scholar Robert Solow assesses Greenspan’s theory of how people can better predict the economic future. “Greenspan’s new book is obviously intended to show that his errors were only partial and that he has found useful ways to correct them, and thus to refurbish his reputation as oracle-in-chief,” Solow writes. “It fails.”

Solow elucidates the shortcomings of Greenspan’s “Iron Law,” or the claim that whenever the U.S. adds money to programs such as Social Security or Medicare, it also forces a reduction in family and business savings, or an increase in government deficits. Solow points out that many of the linear regressions Greenspan offers in his book are too general to provide solid proof for the claims of his theory. As Solow puts it, “Greenspan’s Iron Law is built not so much on evidence as on ideology.” That ideology is the argument that an unregulated or only lightly regulated market is the solution to the failures of the economy.

As Institute Professor Emeritus at M.I.T. and the Robert K. Merton Scholar at the Russell Sage Foundation, Solow is widely known for his theories on economic growth, for which he won a Nobel Prize in Economics 1987. With Alan Blinder and Andrew Lo, he co-edited the 2012 RSF book Rethinking the Financial Crisis, in which renowned economists share their assessments of the 2008 crisis and reconsider the way we think about the financial system and its role in the economy.

Click here to read Solow’s review of Greenspan’s book in full at The New Republic.