Financial Crisis of Metaphor

20 Pages Posted: 1 May 2009 Last revised: 19 Feb 2018

See all articles by Peter J. Phillips

Peter J. Phillips

University of Southern Queensland - Faculty of Business

Date Written: April 30, 2009


This paper presents an analysis of the mathematical models of the prevailing orthodoxy within the field of financial economics in light of the financial crisis. The financial crisis presents a challenge to the language of orthodox financial economics. From an Austrian perspective, this challenge to the language of orthodox financial economics is centred on a small number of pressure points stemming from the mathematical-quantitative nature of the prevailing orthodoxy, especially the distortion of or obstruction to the communication of pertinent ‘knowledge’ by the adoption of a formalism that pushes aside many of the most important aspects of the human action represented in financial markets. The result is a crystalline structure of mathematical models that suffer from serious salience imbalance. The highly salient features of mathematical objects are not directly applicable to and have a low salience in the list of features of the financial economic reality. The financial crisis has accentuated this salience imbalance. The orthodoxy has experienced a financial crisis of metaphor.

Keywords: Orthodox, Financial economics, Language, Austrian, Formalism, Salience imbalance, Financial crisis

JEL Classification: B40, B41, G00

Suggested Citation

Phillips, Peter J., Financial Crisis of Metaphor (April 30, 2009). Review of Austrian Economics, Vol. 23, No. 3, 2010. Available at SSRN: or

Peter J. Phillips (Contact Author)

University of Southern Queensland - Faculty of Business ( email )

Toowoomba 4350, Queensland

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