Monday, September 7, 2009

The "Causes of the Crisis" blog

Welcome to "Causes of the Crisis." It is an experiment in scholarly discourse using what is usually the worst venue for careful discussion--the blog.

The Critical Review Foundation, the nonprofit foundation that is the blog's sponsor, hopes to encourage reflection on what caused the financial crisis, and on what the implications are for the financial system, the economy, the study of economics, the polity, and the study of politics. We hope to discourage polemics and ideological posturing, so these will be ruthlessly hunted down if they appear in the Comments section.

The distinguished contributors to this blog published articles in CRITICAL REVIEW vol. 21, nos. 2-3 (Spring-Summer 2009), a special issue on the causes of the crisis. Consistent with an ancient editorial policy of CRITICAL REVIEW, the special issue focused only on the past--what caused the crisis?--not on the future--what should be done about it? This self-imposed constraint is consistent with Max Weber's view of the proper role of social science, which is to understand, not to advise.

That will be the aim here, too. There is all too much policy advocacy in the world today, and it tends to engage emotions and "priors"--pre-existing beliefs about what has caused major social problems. So we shall confine ourselves to addressing the basis of future "priors" about the crisis by asking what did, in fact, cause it. We will leave the policy recommendations to the pundits.

This does not mean that our focus will be narrow or inaccessible, however. Factors that have been identified as possible causes of the crisis range from glitches in financial technology to normal business-cycle movements to major problems in financial capitalism and/or in attempts to regulate it. Big factors as well as small ones will be our concern.

The authors of articles in the special issue of Critical Review, all of whom have been given authorization to post blogs, are:

Daron Acemoglu (MIT)
Viral V. Acharya (NYU)
Amar Bhide (Columbia Univ.)
David Colander (Middlebury Coll.)
Michael Goldberg (Univ. of New Hampshire)
Steven Gjerstad (Chapman U.)
Michael Goldberg (U. of New Hampshire)
Armin Haas (Postdam Inst.)
Juliusz Jablecki (Polish Central Bank)
Katerina Juselius (U. of Copenhagen)
Alan Kirman (Univ. d'Aix Marseille III)
Thomas Lux (U. of Kiel)
Mateusz Machaj (U. of Wroclaw)
Matthew Richardson (NYU)
Brigitte Sloth (U. of Southern Denmark)
Vernon L. Smith (Chapman U.)*
Joseph E. Stiglitz (Columbia U.)*
John B. Taylor (Stanford U.)
Peter J. Wallison (American Enterprise Inst.)
Lawrence J. White (NYU)

* = Nobel laureate in economics

--Jeffrey Friedman (U. of Texas, Austin)
Editor, Critical Review


Alan said...

Thank you for promoting this blog, which looks really promising.

One aspect of the crisis that I found insufficiently addressed in the special issue of Critical Review is a fuller explanation of why and how the regulators allowed banks to use off balance sheet entities, which seem to be the complete antithesis of the very idea of financial reporting. I hope you will encourage further discussion of this topic.

Mitchell said...

A genuinely analytical discussion would be helped by defining exactly what it is that we are supposed to be explaining. A large number of things happened over the past 18 months - precisely which of them constitute the crisis that we are seeking to explain? Are we trying to explain every last headline event in the past year of finance and political economy? Of course not. But unless there is some sort of focus regarding what it is that is being explained, there is a strong possibility that people will simply fail to engage with each other's ideas, while they go about focusing on different aspects of the whole.