Federal Reserve exculpatory logic transformed herding and iron-hand discipline into rational consensus

Evidence

The “dog ate my homework” level of self-exculpation here is quite extraordinary, especially coming as it did from within the Fed. It went: First off, you can’t blame us just because the neoclassical orthodoxy we actively help enforce is pathetically empty in its ability to discriminate such matters. Moreover, we assert those who were adamant in sounding the alarm were cranky Cassandras and perennial moaners, which means mostly pariahs exiled outside the orthodoxy, so we, the Fed, were fully justified in ignoring them. When in doubt, always err on the side of Pollyanna optimism. Finally, the supposed consensus enforced at the Fed was clearly not based on any demonstrable intellectual discernment, so much as herding behavior and the chairman’s visible iron hand, but not to worry, because it is eminently “rational” to stick with the herd. People whine about the parade of economists being unable to come to a conclusion, but soothing their anxieties concerning dissention and disputation is the main reason we were right to persist in our stubborn errors. We simply channel the cultural zeitgeist. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 533

Categorization

• DEEPTHINKING: Mirowski’s reconstruction of the Fed’s implicit self-justification is a compact example of how institutions rationalize epistemic failure by converting enforcement dynamics into ‘rational herding’ — a dense, reusable mechanism.
• XREF: connects to: The Fed’s amnesty extended to shielding economic theory itself from blame — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 513; Reagan-era appointments turned the Fed into a channel for neoliberalizing economics — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 529; Technical rationality makes irrational social control appear reasonable and rational — Herbert Marcuse, One-Dimensional Man: Studies in the…, 124

Broader Connections

• Technical rationality makes irrational social control appear reasonable and rational #expands (0.75) — Herbert Marcuse, One-Dimensional Man, 124