On the back on that admission, David Brooks' column in NYT echoes a theme I have written about a few weeks ago here, but goes a step further and takes it to the level of policy.
My sense is that this financial crisis is going to amount to a coming-out party for behavioral economists and others who are bringing sophisticated psychology to the realm of public policy.
As I continue thinking along that path of reasoning, I have to wonder what will this shattering of the market axiom mean for all of us? After the crash of 1929 and the Depression we saw the economic philosophies of Marxism rise to prominence in many countries around the world. Have we come full circle?
Growing up in post-Communist Slovakia, I was a part of a young generation that was never fully indoctrinated with the theories of Marxism and Leninism. Anxious to be as western as possible, we embraced the ideas of the free market like a religion. Capitalism was cool, it was the only way to be. Today, as I listen to Greenspan, and read more about behavioral economics, I am increasingly aware that what may have previously seemed like an axiom was really just a doctrine. Maybe it is right, maybe not, but still nothing more than a doctrine.