In the wake of the 2008 financial crisis, George Soros convened more than two dozen notable scholars, including several Nobel laureates, to discuss the causes of the catastrophe. Over several days, a consensus emerged that the crisis had exposed not only grave weaknesses in policy and regulation, but also serious failings in basic economic theory. Aware that not only inertia but many powerful institutional forces in favor of “market fundamentalism” remained potent, many participants agreed on the desirability of establishing a new institution to champion new economic thinking and practice. Mr. Soros and, a little later, William Janeway, provided seed money to launch an organization capable of tackling the challenge.

At the time, the world economy was deep in the Great Recession. Students and scholars of all ages excitedly joined in reconsidering the critical role aggregate demand plays in national income determination, how finance and credit affect modern economies, and how economic theory deals with the reality of imperfect knowledge. But very soon a dark undertone became audible. Younger economists and graduate students repeatedly told us how stimulating they found these discussions, but they also confessed to deep seated fears: that if they inquired along these lines, their careers would suffer. The economics establishment, many thought, would not countenance dissent.

The full article is available at the INET website.