The whole idea of efficient market hypothesis is an academic ivory tower fantasy, says George Soros, whose Institute of New Economic Thinking is out to change all that.

“The ideologists of free markets are still in command, and I think that they’ll be very difficult to remove because they have tenure,” Soros told the Financial Times.

“There’s been a pretty widespread recognition by professionals that something is fundamentally wrong in the prevailing doctrine about financial markets, that you need a new understanding that this whole idea of efficient market hypothesis.”

“I think there is a real need to change the curriculum and that’s why I’m actually sponsoring an Institute for New Economic Thinking,” said Soros, who is committing $5 million a year to the project and says he hopes others will follow suit.

The financial crisis wasn't due to blind faith in the efficient market hypothesis, according to economist Jeremy Siegel.

“The fact that risk premiums were low does not mean they were nonexistent and that market prices were right,” Siegel writes in The Wall Street Journal.

“The fact that automobiles today are safer than they were years ago does not mean that you can drive at 120 mph,” Siegel points out. “A small bump on the road, perhaps insignificant at lower speeds, will easily flip the best-engineered car.”

He adds that, “Our financial firms drove too fast, our central bank failed to stop them, and the housing deflation crashed the banks and the economy.”