The crisis narrative blaming government interference absorbed leftwing grievances to defend market orthodoxy

Evidence

Actually, I need to credit Rajan with a bit more ingenuity than he claims for himself in these interviews. His book Fault Lines has managed to amalgamate what had by then become the neoliberals’ favorite stories about the crisis into one neat and tidy package. In caricature, it combines: fingering the Asian economies for seeking to accumulate dollar reserves after the Asian crisis of 1997, and therefore creating a world “savings glut”; luxuriant financial innovation (a phenomenon that was “natural”), which lulled bankers and others into taking on “excessive risk”; and technological innovation, which lowered wages and worsened income distribution in the United States, which in turn lured the government to ineptly try to counter it by screwing around with the household mortgage market. The financial sector got frisky, investors bought it, and the government foolishly sought to lean against the wind. The beauty of this narrative is that it mentions some of the major bugaboos of the left, but deftly subordinates them to the time-honored litany that the markets worked as they should, and it was all, in the final analysis, the fault of the government. This ingenious commingling of complaints about worsening income distribution and rapacious bankers with what is at bottom a unilateral denial that economists got anything wrong has been so effective that it often has inserted Rajan into critical leftish campaigns where the audience was oblivious to the true character of the analysis. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 496

Categorization

• XREF: Connects to the broader ‘thought collective’ thesis of the book and to the 2008 crisis blame-shifting literature (e.g., Stiglitz, Krugman on the ‘savings glut’ debate). Also echoes the ‘blame government, not markets’ framing common to Chicago-school defenses. — connects to: German anti-stimulus stance stems from a belief that government policy failures cause crises — Mark Blyth, Austerity: The History of a Dangerous…, 166; The orthodox crisis narrative by 2010 blamed government policy for the crash. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 1763; Rogoff’s ‘all crises are alike’ discourse shifted blame from private sector to sovereign debt — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 475 (+10 more)
• DEEPTHINKING: The mechanism described here — co-opting leftwing grievances into a market-vindicating narrative — is a dense, paradigm-level insight about how hegemonic paradigms absorb and neutralize critique, genuinely in the top tier of the book’s argument.
• SEED: An essay angle: how ‘centrist’ crisis narratives co-opt the left’s own rhetoric (income inequality, banker recklessness) to immunize the underlying market paradigm — Rajan as ‘the tolerable face of orthodoxy.‘

Broader Connections

• The crisis-as-government-fault narrative was engineered to justify austerity #corroborates (0.90) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 950
• Neoliberals pathologised political struggle by framing the market as peaceful and politics as violent #expands (0.85) — Jessica Whyte, The Morals of the Market, 64
• Ideology shapes economic crisis rather than merely reflecting it #corroborates (0.80)
• The 2008 crisis disoriented the left instead of vindicating its economic worldview #qualifies (0.75) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 46