Economics escaped crisis blame because the banking sector it protected escaped unscathed

Evidence

I have spent inordinate time on the Federal Reserve in this chapter for one very salient reason: If it was indeed the case that the orthodox economics profession was heavily integrated with the formal financial sector, which means both the banking and allied spheres and the major governmental institutions tasked with their regulation, then in the eventuality that both spheres will have managed to come through the crisis intact, then the economics profession would also be sheltered from the storm. The evasion of consequences from the crisis by the banking sphere, however achieved, translates directly into evasion of contumely by orthodox economists. In a counterfactual world, had the reaction been instead the breaking up of the big banks and cleaning up the shadow banking sector, say by some new resolution authority, not to mention the sweeping purge of the Augean stables at the Fed and (say) the SEC and CFTC and even the IMF, then the economics profession would have acutely discovered a badly exposed and vulnerable flank. Once heads started to roll, the press would have been more inclined to discover economists’ craniums skittering hither and yon, and then it would have proven far more difficult to maintain the pretense of serving as detached spectators, guarantors of the public weal. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 555

Categorization

• QUESTION: The counterfactual — had banks been broken up, would economics really have faced accountability? — is testable against the more recent record of post-2010 bank fines.
• XREF: Connects to how regulators’ failure to discipline banks in 2008 produced no reset of the orthodoxy, versus moments of genuine disruption (e.g., 1930s). — connects to: Eastern European austerity in 2009 existed to protect Western banks — Mark Blyth, Austerity: The History of a Dangerous…, 601; Austerity may have impoverished millions to save a dying banking sector. — Mark Blyth, Austerity: The History of a Dangerous…, 630; The Day of Reckoning narrative collapsed when bankers were bailed out and prospered — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 468 (+9 more)

Broader Connections

• Finance escaping crisis consequences legitimated the economics profession dodging blame #corroborates (1.00) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 583
• Orthodox macroeconomics masked crisis buildup and blocked repairs afterward #complicates (0.80) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 662
• Orthodox economics models structurally excluded the possibility of major crises #complicates (0.72) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 491