Those of us who have been somewhat “heterodox” economists have long argued that the neoclassical-neoliberal (really the same thing in economics), mainstream theories had long ago left the reservation for some other hypothetical universe not closely related to the one we actually live in. Unfortunately there are still far too many mainstream economists who don’t see the role flawed economic theories played in the global financial crisis and “Great Recession” of the last 4 years.
It is encouraging though to see at least one significant economist repents and is questioning what he previously assumed he “knew”. I quote Brad Delong’s beginning to a paper he presented at the American Economic Assoc. meetings in Denver, January 2011:
My name is Brad DeLong.
I am a Rubinite, a Greenspanist, a neoliberal, a neoclassical economist.
I stand here repentant.
I take my task to be a serious person and to set out all the things I believed in three or four years ago that now appear to be wrong…
He goes on of course, in detail yet in very readable prose (no technical math or highly technical jargon) to describe what’s changed in his post What Have We Unlearned from Our Great Recession? – Grasping Reality with Both Hands.
It’s only one and he’s only gotten to the “I have a problem” phase. But as they say in Alcoholics Anonymous, that’s the beginning.
By the way, anyone wanting a really good, easy read on the recent history of economic thought and how it was both wrong and contributed to the crisis should definitely read John Quiggin’s book, Zombie Economics.