What Economists Are to Learn from the Economic Crisis?
What Economists Are to Learn from the Economic Crisis?

Summary/Abstract: The paper discusses whether the current economic downturn calls for a “major rethinking” of economic theory. While it could have shocked some economists and prompted them to revise their views, it have not contradicted what modern economics – especially microeconomics – contains. Contemporary mainstream economics has been heavily influenced by so-called Industrial Organization which analyzes how economic agents co-operate in order to reach their objectives, and whether any optimality criteria are met in this process. Thus, for well-trained economists, it is not surprising that firm managers may not act in the interest of shareholders, or banks may consistently miscalculate the risk of financial operations. Also the 2009 Nobel Prize nominations suggest that the mainstream economics does not need to be revised in response to the turmoil in global financial markets. On the contrary, both Elinor Ostrom and Oliver Williamson’s works are deeply rooted in standard economic theories, and they prove that these theories, when confronted with empirical evidence, can convincingly explain development patterns. An open question, however, remains how to promote in the real world all the efficiency-enhancing solutions developed by economists.

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