INTRODUCTION
Philip Mirowski, known for his book More heat than light – economics as social physics, physics as nature’s economics in which he criticizes neoclassical economics for adopting methods from the natural sciences, recently published a book on neoliberalism and the economic profession during the financial crisis. In Never Let a Serious Crisis go to Waste his main thesis is that the economic profession utterly failed in predicting and explaining the financial crisis. Nevertheless mainstream economists did not suffer any negative consequences but continue with business as usual.
In Mirowski´s view neoclassical economics, neoliberalism and the political right came out of the crisis stronger thanks to a complicated propaganda efforts and an intricate lobbying machine headed by the Mont Pelerin Society (MPS). According to Mirowski, the Mont Pelerin Society functions at the heart of a complex web of conservative and free market think tanks and neoliberal academics that controls politics.
Mirowsky´s analysis is interesting even though it comes from a far left and egalitarian perspective. Especially his analysis and critique of neoclassical economics is pertinent. This review essay is structured into three parts. First, I will comment on the issues where Mirowski is right. Second, I will discuss Mirowski´s fundamental mistake of not distinguishing clearly between Austrian economics (and libertarianism) and neoclassical economics (and neoliberalism). Lastly, I will respond to some myths and errors on the market economy held by Mirowski and typical for socialists.
WHERE MIROWSKI IS CORRECT IN HIS ANALYSIS
The lamentable state of the mainstream economic profession
The neoclassical mainstream profession was unable to predict the Great Recession. As neoclassical economists believed in a new age of macroeconomic stability, dubbed the Great Moderation, in which central banks had basically abolished harsh recessions, they were taken by surprise by the immense problems the financial system and the world economy started to experience in 2008.
…click on the above link to read the rest of the article…
