Abstract and Keywords
The global financial crisis, when it first emerged in 2007–2008, appeared to be a silver bullet aimed at the heart of neoliberal macroeconomics and efficient-markets financial theory. Several years later, the United States and many Eurozone nations are loaded with cascading debt flows that apparently exceed repayment capacity. Why has the neoliberal approach to financial governance and macroeconomic policy not been repudiated by an economics mainstream whose collective reputation is clearly at stake amid the warning signs of a looming global depression? And what does this turn of events mean for the future of heterodox economic theory? This chapter explores why the twin global crisis has not transformed economics. It first differentiates among three perspectives that shape much thinking in economics: neoliberal economics, neoclassical economics, and heterodox economics. It then looks at the subprime crisis and argues that the subprime crisis and financial market meltdown clearly pointed to failure of government regulation.
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