Stiglitz’s information models cannot explain 2008 because the information itself was deliberately corrupted.

Evidence

Perhaps the most distressing aspect of Stiglitz’s designated models that he believes starkly refuted neoliberalism has been that, when you really take the trouble to understand them, they end up having nothing cogent to say about the current crisis whatsoever. Start with Grossman and Stiglitz. The problems with the financial system in 2007 had nothing to do with participants lacking correct incentives to purchase enough “information” that would have revealed the dodgy nature of the CDOs and other baroque assets which clogged the balance sheets of the financial sector. Rather, the reams of information they did purchase, from ratings agency evaluations to accounting audits to investment advice, was all deeply corrupted by being consciously skewed to mislead hapless clients and evade the letter of the law. Perhaps the “information” was corrupted by the mere fact of being bought and sold. Since Stiglitz never comes within hailing distance of confronting epistemology in any of his models—he disdains philosophy as much as the next neoclassical economist—he never really deals with matters of truth and falsehood. Agents are just machines buying unproblematic lumps of information (or not). — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 774

Categorization

• XREF: Connects to the broader critique that post-2008 mainstream economics failed because it treats knowledge as cheap and unproblematic — echoes the reader’s earlier work on information costs in extralegal markets, where information was bought and sold but quality was carried by reputation.