The foundation of modern capitalist economies is the theory of the New Classical School (NCS). In spite of their success in the last two centuries, capitalistic economies have experienced several unpleasant developments, like highly uneven distribution of income, instability etc. The NCS theory considers these events as the inevitable side-effects of the function of the powerful economic system it advocates. Others question whether this is true, or the NCS just tries to justify the traditional conflict among economic classes with a sophisticated theory. This article intends to review in general the main points of this dispute, and specify the role of the financial sector on this matter. The NCs prescribes an individual and social framework that intends to make economics as precise as a natural science. In addition, it makes basic assumptions about the behaviour of the key economic agents. It concludes that agents have homogeneous expectations, and the economy tends automatically to general equilibrium and full employment Some of the shortcomings of the NCS theory are: First the way it prescribes the economic environment is not in line with the intellectual honesty of a science. Second, some of the assumptions of the NCS, lead to erroneous conclusions about the consumption patterns of the society. Third, it assumes that market failures can be corrected by the market mechanism itself. However some market failures create monopolies which damage the environment and deplete non-renewable resources. Fourth, real world markets are a wide mixture of market imperfections, which are bound to happen. In this environment the “second best theory” poses a serious doubt about the validity of the dictums of the NCS Fifth, under the framework of NCS there is strong evidence that production technologies evolve against the interests of the labour class. The role of the financial sector is to transfer funds from the surplus units to the units with deficit of funds This function has many beneficial results for producers and consumers For these reason, the New Classical School advocates that financial markets should be allowed to innovative as much as possible. The validity of this view depends on the realism of the assumptions of NCS concerning rationality and the availability of information. In the planning of projects, agents face complex inter-temporal problems, which render their strategic plans not optimal. The NCS theory, argues that business cycles occur because of the of shocks external-to-the-economic-system. Opposing theories, based on the real world environment, attribute several business cycles to monetary factors. In the text we deal with this claim extensively. Essentially, agents become optimistic during the expansion phase of the cycle, and banks practice “predatory lending” during the early downturn, in anticipation of economic policies intending to prevent the cycle and restore full employment. These practices create an inordinate stock of debt which over time leads to a financial crisis. The role of the financial sector, as described above, obscures the effects of corrupt actions that frequently take place. There is plenty of evidence on this claim from our experience before and after the onset of the crisis of 2008 The long term implications these actions are the weakening of the competitive spirit in the markets, and the threat to our democratic traditions. There are plenty of suggestions concerning the restraints that should be imposed on the financial sector. In my opinion the fairest suggestion is that the sector should be required to assume more of the risk it deals within the planning of investment projects, rather than be allowed to only take most of the advantages of its benefits. The investigation of this topic is a demanding obligation for the area of financial economics.