James Kwak has a great post about cultural transmission between Wall Street and the Treasury. It could just as easily have been written about the City and Westminster for the UK. Krugman also has a deflating piece saying: "First, there’s no longer any reason to believe that the wizards of Wall Street actually contribute anything positive to society, let alone enough to justify those humongous paychecks.". John Kay has a similar point about the infection of public service by the banking lobby: "But the illusion was at its most influential at the highest levels of government. Investment bankers had become the most powerful political lobby in the country and there was no vestige of political support for action to restrain City excess. Light touch regulation was not just a matter of policy but a matter of pride."
Why this flurry of meta-economic pieces? It used to be the ultra-liberals from West Virginia who were preoccupied with the process by which lobbies turned policy to their advantage. When centrist economists start to blog about Bourdieu, the French structuralist Marxist sociologist, something important is happening.
I think these pieces reflect two undercurrents. The most immediate is that the bankers seem to have won. They have been bailed out, they can now grow again, and, importantly, so can their bonuses. This seems extraordinary: while we have been waiting for reform of this value-destroying sector to churn slowly out of the political process, the banks have been rebuilding their balance sheets and now claim a return to profitability.We may have a generation of high taxes to payfor the bail-out, but it seems the party is back. In disbelief, the economists are searching for tools that can analyse the causes of this scandal, and Bourdieu is a pretty good start.
The second undercurrent is the realisation from within the profession of economics that it is powerless. When push comes to shove, wonga rather than right wins. A crisis for a discipline makes it turn to others who had a better theory of the role of knowledge in society.
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