Ever since the 2008 financial crisis, it has been common to chastise economists for not having predicted the disaster, for having offered the wrong prescriptions to prevent it, or for having failed to fix it after it happened. The call for new economic thinking has been persistent – and justified. But all that is new may not be good, and that all that is good may not be new.

The 50th anniversary of China's Cultural Revolution is a reminder of what can happen when all orthodoxy is tossed out the window. Venezuela's current catastrophe is another: A country that should be rich is suffering the world's deepest recession, highest inflation, and worst deterioration of social indicators. Its citizens, who live on top of the world's largest oil reserves, are literally starving and dying for lack of food and medicine.

While this disaster was brewing, Venezuela won accolades from the United Nations Food and Agricultural Organization, the Economic Commission for Latin America, British Labour Party leader Jeremy Corbyn, former Brazilian President Luiz Inácio Lula da Silva and the US Center for Economic Policy Research, among others.

So what should the world learn from the country's descent into misery? In short, Venezuela is the poster child of the perils of rejecting economic fundamentals.

One of those fundamentals is the idea that, to achieve social goals, it is better to use – rather than repress – the market. After all, the market is essentially just a form of self-organization whereby everyone tries to earn a living by doing things that others find valuable. In most countries, people buy food, soap, and toilet paper without incurring a national policy nightmare, as has happened in Venezuela.

But suppose you do not like the outcome the market generates. Standard economic theory suggests that you can affect it by taxing some transactions – such as, say, greenhouse-gas emissions – or giving money to certain groups of people, while letting the market do its thing.

An alternative tradition, going back to Saint Thomas Aquinas, held that prices should be "just." Economics has shown that this is a really bad idea, because prices are the information system that creates incentives for suppliers and customers to decide what and how much to make or buy. Making prices "just" nullifies this function, leaving the economy in perpetual shortage.

In Venezuela, the Law of Just Costs and Prices is one reason why farmers do not plant. For that reason, agro-processing firms shut down. More generally, price controls create incentives to flip goods into the black market. As a result, the country with the world's most extensive system of price controls also has the highest inflation – as well as an ever-expanding police effort that jails retail managers for holding inventories and evencloses the borders to prevent smuggling.

Fixing prices is a short dead-end street. A longer one is subsidizing goods so that their price remains below cost.

These so-called indirect subsidies can quickly cause an immense economic mess. In Venezuela, subsidies for gasoline and electricity are larger than the budget for education and health care combined; exchange-rate subsidies are in a class of their own. With one daily minimum wage in Venezuela, you can buy barely a half-pound (227 grams) of beef or 12 eggs, or 1,000 liters (264 gallons) of gasoline or 5,100 kWh of electricity – enough to power a small town. With the proceeds of selling a dollar at the black market rate, you can buy over $100 at the strongest official rate.