Mainstream economists defended theory by scapegoating Greenspan-style market fundamentalism

Evidence

I don’t accept the criticism that economic theory failed to provide a framework for understanding this crisis. Indeed, the papers we’re discussing today show pretty clearly why the crisis occurred and what we can do about it. The sort of economics that deserves attack is Alan Greenspan’s idealized world, in which financial markets work perfectly well on their own and don’t require government action. There are, of course, still economists—probably fewer than before—who believe in that world. But it is an extreme position and not one likely to be held by those who understand the papers we’re talking about. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 700

Categorization

• XREF: This defense mirrors the broader move Mirowski documents elsewhere of ‘denial by displacement’ — attributing the crisis to fringe extremism rather than core doctrine. Connects to how orthodoxy absorbs crisis by re-drawing its own boundary. — connects to: Friedman armed finance theorists against ‘unrealistic’ critiques of their models. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 62; Many financial economists treat Modigliani-Miller as benchmarks rather than empirical claims — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 390; Orthodox economists retaliate against critics while never being held accountable themselves — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 2032 (+7 more)

Broader Connections

• The economics profession used crisis theory as calculated doubt-pumping to defend orthodoxy #complicates (0.80) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 665