A decade on from the global financial crash: the role of mainstream economics, ideological groupthink and missed opportunities

Press/Media: Expert Comment

Period09 Aug 2017

Media contributions

1

Media contributions

  • TitleQPol article -A decade on from the global financial crash: the role of mainstream economics, ideological groupthink and missed opportunities
    Degree of recognitionRegional
    Media name/outletQPol
    Media typeWeb
    CountryUnited Kingdom
    Date09/08/2017
    DescriptionMuch attention, not least in the media, on the global financial crisis a decade ago, will focus on greed, lack of adequate financial regulation and the dangerous reality of the financial sector having such a dominant role in advanced capitalist economies, as key elements of the analysis of the causes and consequences of the crash. Here I want to focus on a rather less discussed but crucial part of the story of the great financial crash – mainstream economic theory and its application in practice. Not only did neoclassical economics not foresee the crash, but contributed to it. It did so in two ways.

    The first relates to how the dominance of neoclassical economics (one view of the economy and economic policy) ‘crowded out’ and marginalised dissenting economic perspectives. In actively discouraging pluralism in economics, alternative views, perspectives and strategies were excluded, removing possible sources of identifying systemic flaws in the global, financialised economy, and also excluding policy solutions.

    The second is about how neoclassical economics gave a false, but politically attractive, sense of intellectual security to theories such as the ‘efficient market hypothesis’, which were the knowledge and ‘evidence’ base underpinning policies of deregulation and buttressed a neoliberal policy ‘direction of travel’ that the market, if left to itself, would deliver economic growth, an efficient allocation of resources, employment and so on
    Producer/AuthorJohn Barry
    URLqpol.qub.ac.uk/decade-from-global-financial-crash/
    PersonsJohn Barry

Keywords

  • neoclassical economics
  • economics as ideology
  • 2007 global financial crash
  • pluralism in economics