The Great Crash of 2008 and the Reform of Economics

Abstract

The 2008 economic crash led to remarkable shifts of opinion among world leaders. Does this crisis create favourable conditions for the reform and revitalisation of economics itself-from a subject dominated by mathematical techniques to a discipline more oriented to understanding real-world institutions and actors? And why were warnings of financial collapse not heeded? Recent shortcomings are partly related to the global triumph of market individualist ideology and partly to the exaggerated roles of modelling and quantification. These failures of economics are partly peculiar to the discipline and also a result of other wider institutional and cultural forces.

Keywords: Reform of economics, Substance versus technique, Financial crisis, John Maynard Keynes, Hyman Minsky, Free markets, Individualism

JEL Classification: A11, A13, A20, B50, D80, G01