Economists’ ethics in the build-up to the Great Recession

This chapter argues that mainstream economists – mainly American and British contributed to the build-up of the financial fragility which tipped into the Great Recession through their implicit assumption of epistemic asymmetry (hubris) and epistemic sufficiency (close-mindedness, or selective inattention to data and arguments which would upset their way of seeing things). They also contributed, secondarily, through the failure to disclose conflicts of interests, involving collusion between economists and financial organizations. Both these contributions reflect the discipline’s failure to formulate and teach ethical principles for guiding economists as they prescribe policies that may affect the welfare of millions of people and the health of the biosphere. In the absence of ethical restraints economists have too often advocated policies on the assumption that the optimal outcomes will materialize, only to find that their prescriptions bring about unanticipated, harmful effects that catch them off guard.