The crisis that didn't change very much of anything

On the underwhelming response of the economics profession to the current economic crisis

A public lecture by Professor Philip Mirowski.

The 2008 financial crisis has had a seismic effect on the global economy. Governments spent the equivalent of a fifth of global income on bail-outs for banks and economic stimulus. Three years later the crisis has transmogrified into one of sovereign debt, austerity, and deepening recession, with no end in sight. No serious reform of international financial markets or of the Wall Street banks at the centre of the crisis has been contemplated.

But what has been the impact of the deepest economic crisis since the 1930s on those schools of economic thought that promoted the wonders of financial ‘evolution’ and self-regulating financial markets? How has it altered the economic theory that has dominated international policy-making for decades? Documenting the sometimes tragic, and often comical, responses of the senior economists and Nobellists of the profession to the crisis, Mirowski says 'not much'. Marvelling at the zombie-like resilience of neoliberal discourse and neoclassical doctrines - doctrines defended even by economists who claim the mantle of the Left – in the face of their resounding and on-going failure, he offers important insights into the confusion and disarray into which our governments have fallen.

Philip Mirowski is Carl E. Koch Professor at the University of Notre Dame, Indiana: a leading authority on the History of Economics and the Philosophy of Science. His most famous book, More Heat Than Light: Economics as Social Physics (1989) established his reputation as a formidable critic of the scientific status of neoclassical economics. His Machine Dreams: Economics becomes a Cyborg Science (2002) presents a history of the Cold War consolidation of American economic orthodoxy in the same intellectual milieu that produced systems theory, the digital computer, the atomic bomb, the strategy of Mutually Assured Destruction, and the ‘think tank’. The Road from Mont Pelerin: the Making of the Neoliberal Thought Collective (with Dieter Plewhe, 2009), drawn from the archives of the Mont Pelerin Society and the Chicago School, presents a scholarly history of neoliberalism: the political movement initiated by Friedrich Hayek and Milton Friedman in the 1940s, which has since become the world’s dominant philosophy of government. As a leading exponent of the Institutional school, he has published formal treatments of financial markets that update Mynsky’s ‘financial instability hypothesis’ for the world of computerised derivative trading. The lecture will preview material from his forthcoming book: Never Let a Dire Crisis Go to Waste.

This public lecture is hosted by the Cosmopolitan Civil Societies Research Centre (UTS) and the Australian Working Group on Financialisation (University of Sydney).