What We’ve Learned from the Financial Crisis

Source: Justin Fox, Harvard Business Review, Vol. 91 no. 11, November 2013

…Five years after the crash of 2008 is still early to be trying to determine its intellectual consequences. Still, one can see signs of change. I’ve been following academic economics and finance as a journalist since the mid-1990s, and I’ve researched academic debates going back much further than that. To me, three shifts in thinking stand out: (1) Macroeconomists are realizing that it was a mistake to pay so little attention to finance. (2) Financial economists are beginning to wrestle with some of the broader consequences of what they’ve learned over the years about market misbehavior. (3) Economists’ extremely influential grip on a key component of the economic world—the corporation—may be loosening.

These trends are within and on the fringes of elite academia; I won’t attempt to delve into politics or public opinion in this article. That’s partly because doing so would make it impossibly broad, but also because—for the past half century at least—economic ideas born at the University of Chicago, MIT, Harvard, and the like really have tended to trickle down and change the world. …