Development and Finance from issue 2009/4

Péter Gál - Csaba Moldicz - Tamás Novák

Accuracy of Economic Thinking. Principles, Views, Analyses and the Crisis

- Abstract -

JEL A-11

One key issue of today’s global economic problems is why were economic analyses and assessments along with economic theories and economic philosophy approaches unable to predict the depth of the crisis, and why were appropriate responses rooted in economic policy not given in time? Why is it that when there is almost complete agreement among economists that the indulgent behaviour of credit rating agencies played a major role in the specific phenomena of the crisis and in the collapse of the mortgage market, the economics profession that is rather incapable of providing adequate economic principles for the globalised world is equally unwilling to confront its own responsibility? And why were the economic theories and systems of economic philosophy on globalisation unable to pave the way for a more stable and secure economic policy mainstream, or at least, instead of deepening the causes of the crisis, offer solutions based on mechanisms of economic tools aligned with global conditions? One of the main reasons for this is the parallel drawn by Galbraith above, since both then and now, economics and the mainstream opinion of economists misled economic participants: they were led to believe that the neoliberal economic revolution is capable of formulating adequate economic philosophy responses.

Péter Gál, professor of economics (Corvinus University of Budapest)
Csaba Moldicz, associate professor (Budapest College of Management)
Tamás Novák, associate professor (Budapest Business School)

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