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Written by: Kamran Mofid

Published: 12 February 2010

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“The day the world changed”, was how Adam Applegarth, Northern Rock’s chief executive described the beginning of the Financial Crash on August 9^th 2007. This was the day that the bank BNP-Paribas refused to allow withdrawals from its hedge funds, citing a “complete evaporation of liquidity” based on knock-on effects of the sub-prime mortgage crisis in the USA.

"However, August 2007 was preceded by HSBC announcing losses in February of that year again linked to the sub-prime crisis in the US property sector while in July 2007, two Bear Stearns-run hedge funds with large holdings of sub-prime mortgages ran into large losses and were forced to dump assets. The trouble spread to major Wall Street firms such as Merrill Lynch, JPMorgan Chase, Citigroup and Goldman Sachs which had loaned the firms money.  And contagion ensured…and the rest is history …."-Excerpts and photo credit Via A decade on from the global financial crash

I am now pleased that the "real-world economics review" has identified the top ten mad ones, including two in two-pairs. They have brought us indeed a very bad harvest and have destroyed economics as a wise subject for years to come.

Please see below for more and try to vote to see who the guiltiest of them is! This is very important, as the real-world economics review has noted:

"It is accepted fact that the economics profession through its teachings, pronouncements and policy recommendations facilitated the GFC (Global Financial Collapse).  We also know that danger signs became visible long before the event and that some economists (those with their eyes on the real-world) gave public warnings which if acted upon would have averted the human disaster.

With other learned professions entrusted with public confidence, such as medicine and engineering, it is inconceivable that their professional bodies would not at the very least censure members who had successfully persuaded governments and public opinion to ignore elementary safety measures, so causing epidemics and widespread building collapses.

To date, however, the world’s major economics associations have declined to censure the major facilitators of the GFC or even to publicly identify them.  This silence, this indifference to causing human suffering, constitutes grave moral failure.  It also gives license to economists to continue to indulge in axiom-happy behaviour.  Nor has the economics establishment offered recognition to those economists who were not taken in by fads and fashion and whose competence, if listened to, would have prevented the collapse.

These two silences reveal a continuing moral crisis within the economics profession. The Ignoble and Noble Prizes for Economics are being offered as small first steps towards a cure. Voting is now open for the Ignoble Prize for Economics The Ignoble Prize for Economics is to be awarded to the three economists who contributed most to enabling the Global Financial Collapse (GFC)

Voting is ultra quick and easy.  Click here and you will see the ballot. Click on your three choices and then the big yellow “vote” button.

22 economists were nominated for the prize. Through consultation with contributors to the Real-World Economics Review Blog, the following short list of ten, including two pairs of economists, has been selected for the ballot.

Dossiers of short-listed of nominees for the Ignoble Prize for Economics

Fischer Black and Myron Scholes

They jointly developed the Black-Scholes model which led to the explosive growth of financial derivatives.  The importance given to their hypothetical calculation of derivative prices was baneful not just because it was bogus, but also because it meant that relevant and often urgent real-world economic research was widely neglected by the profession. Eugene Fama  His “efficient market theory” provided the moral umbrella for all sorts of greed, predatory behaviour and incompetent corporate management. It also provided the rationale for deregulation.  And his theory’s widespread acceptance meant that “discussion of investor irrationality, of bubbles, of destructive speculation had virtually disappeared from academic discourse.”  In these three ways Fama’s work created the environment which made possible the GFC.

Milton Friedman

He propagated the delusion, through his misunderstanding of the scientific method, that an economy can be accurately modeled using counterfactual propositions about its nature.  This, together with his simplistic model of money, encouraged the development of the financial theories with unrealistic assumptions that facilitated the GFC.  In short, he opened the door for everyone subsequently to theorize without fear of having to be attached to reality.

Alan Greenspan

As Chairman of the Federal Reserve System from 1987 to 2006, he both led the over expansion of money and credit that created the bubble that burst and aggressively promoted the view that financial markets are naturally efficient and in no need of regulation.  Before a Congressional committee on 28 October 2008 Greenspan confessed that his theoretical beliefs of 40 years were now proven to be without foundation, hence his total confusion and failure at his job.

Assar Lindbeck

By working to make the Riksbank Prize in Economic Sciences (“Nobel Prize in Economics”) almost exclusively a prize for neoclassical economists, this Swedish economist has contributed significantly to the conversion of the economics profession and of world public opinion to market fundamentalism.

Robert Lucas

His development of the rational expectations hypothesis, which defined rationality as the capacity to accurately predict the future, both served to maintain Friedman's proposition that monetary factors do not affect the real economy and, in the name of “rigor”, distanced economics even further from reality than Friedman had thought possible.

Richard Portes

As Secretary-General of the Royal Economic Society from 1992-2008, he helped suppress worries expressed by non-mainstream economists about developments in the financial sector.  In 2007 he wrote a Report for the Icelandic Chamber of Commerce giving a clean bill of health to Icelandic banks only a few months before they collapsed.  When investigators called attention to the real state of Icelandic banking, he wrote a series of letters to the Financial Times defending the soundness of Icelandic banks and imputing professional incompetence to those who doubted it.

Edward Prescott and Finn Kydland

For jointly developing and popularizing “Real Business Cycle” theory, which by omitting the role of credit greatly diminished the economics profession’s understanding of dynamic macroeconomic processes.

Paul Samuelson

Through his textbook Economics: An Introductory Analysis (19 English language editions and translated into 40 languages), he popularized neoclassical economics, contributing more than any other economist to its diffusion and thereby to the deregulation of financial markets which made possible the GFC.

Larry Summers

As US Secretary of the Treasury (formerly an economist at Harvard and the World Bank), he worked successfully for the repeal of the Glass-Steagall Act, which since the Great Crash of 1929 had kept deposit banking separate from casino banking.  He also worked with Greenspan and Wall Street interests to torpedo efforts to regulate derivatives.

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Written by: Kamran Mofid

Published: 29 September 2009

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Announcing the 9th Annual International Conference
And
Call for Presentations

“In Search of the Virtuous Economy: A Plea for Dialogue, Wisdom, and the Common Good”

6-10 June 2010

California Lutheran University

Thousand Oaks, California

Globalization for the Common Good: An Interfaith Perspective
Ninth Annual Conference

California Lutheran University is delighted to announce that it will host
the ninth annual conference of Globalization for the Common Good

The Event will be a featured part of California Lutheran University’s
2010 celebration of 50 years as a university

The conference will also be the ninth in the annual international series, under the auspices of Globalization for the Common Good – An Interfaith Perspective 
(founded by Dr. Kamran Mofid)

This major global conference is being convened by Dr. Kamran Mofid, Founder, Globalisation for the Common Good and Dr. Jamshid Damooei, Co-director, Center for Leadership and Values, School of Business, California Lutheran University.

Previous conferences have been held in Oxford (2002), St. Petersburg (2003), Dubai (2004), Kericho, Kenya (2005), Honolulu (2006), Istanbul (2007), Melbourne (2008), and Chicago (2009).

For background information on the initiative and details of previous conferences, visit: http://www.globalisationforthecommongood.info/.

California Lutheran University: http://www.callutheran.edu/

Center for Leadership and Values, School of Business, California Lutheran University: http://www.callutheran.edu/CLV/

Globalisation for the Common Good, Chicago 2009: http://www.gcgchicago2009.info

To access the online Journal of Globalization for the Common Good, visit http://www.commongoodjournal.com/. 

Call for Presentations

Similar to previous conferences, the 2010 event promises to be especially significant and timely. Today, when global conditions can only be described as “complex and perplexing”, a combined effort and collective thinking is needed to find ways to overcome the challenge brought about by the global socio/economic and political crises.

Today, our world is challenged by a changing climate, financial and banking crisis, sleaze and lack of transparency in private and public life, hunger and pandemic disease, war and terrorism, armaments and unprecedented violence and insecurity, amongst others.

What can make a difference?  Good ideas, Creativity, Passion, Innovation, Wisdom, Prudence, Fortitude, Temperance, Justice, and notably knowing and serving the Common Good.

It is our task to ensure that people everywhere know that there are serious alternatives to the world’s present failing policies, rules and institutions, and that there are likeminded global citizens who share a vision of hope and the common good that can lift them out of the deep sense of powerlessness and despair that is now affecting so many parts of the world.

Moreover, while the central focus is on solutions to the global economic and financial crisis, we should keep in mind the deeper questions that rarely find their way into political debate or public discourse, matters that are deeply ethical and spiritual: What is the source of true happiness and well-being? What is the purpose of economic life? What is the good life? What does it mean to be a human being living on a spaceship with finite resources?

Conference Themes

The Conference main theme and focus is on our search of the virtuous economy, leading by wisdom, doing well by doing good, creating a world that works for all. Other thematic areas will also be addressed. They include (but are not limited to) the following:

• The meaning and Practice of wisdom, virtues and Service as the basis of a Trustful and affective Leadership.
• Various religions and spiritual philosophies on economy, globalisation, environment, peace and justice.
• Causes and Solutions of the Global Financial Crisis.
• Global Repercussions of the Financial Crisis.
• Fundamental Defects of the Free Market System.
• The Impact of the Financial Crisis on Developing Countries.
• Accounting & Financial Regulations.
• The US Domestic Financial System and the Need for Reform.
• Government and/or Private Sector Response to the Financial Crisis.
• Gender Equity.
• Human Health and Well-being.
• Environmental Stewardship.
• Rural Development.
• Cultural Diversity.
• Interreligious Dialogue.
• Human Security.
• Sustainable Urbanisation.
• Hunger, Poverty, Pandemic Disease.
• The Preservation and Replenishment of the Commons.
• Sustainable Production and Consumption.
• How to Harness Greed and How to Nurture the Common Good.

Instructions for Submission of Papers

We invite proposals from activists, organizers, officials, scholars, post-grad/ doctoral students, and others specializing in a range of disciplines, including, education, theology, philosophy, ethics, history, political science, international relations, conflict analysis and peace research, economics, business studies,  law, sociology, media studies and journalism, psychology, health sciences and medicine, environmental studies and geography. Contributions are also invited from persons in government, civil society, diplomacy, law, the media, the health professions and business, as well as those involved in religious and Interreligious dialogue. Proposals that adopt an interdisciplinary, intercultural or Interreligious perspective are especially welcome.

Proposals should be received no later than Sunday, February 21st, 2010. Of course, the earlier your proposal is received, the better your chances for acceptance. We are receiving submissions now.

Proposals should include:

• Title of proposed presentation.
• A 250-word abstract, highlighting the proposal’s relevance to one or other of the key themes outlined above.
• Author’s name and institutional affiliation; as well as an up-to 50 words biographical note on the presenter. Please include your website, if available.

All proposals will be assessed by an inter-disciplinary panel appointed by the joint conveners, and applicants will be informed of the Organizing Committee’s decision in March 2010.

Successful applicants will be given two weeks to confirm their participation.

The Conference Organizing Committee must receive by May 1, 2010 any written papers (approximate length 3,000 to 5,000 words) or other presentation materials for distribution to Conference delegates.  The Conference’s working language is English. It is planned to produce one or more international publications drawing on high quality papers selected by the joint conveners’ interdisciplinary panel.

Those selected to make a presentation will be required to pay the registration fee. Please note that travel arrangements and costs are the responsibility of participants or their sponsoring institutions. The Conference Conveners are not able to offer financial support. However, the overall costs will be subsidized, enabling many to attend.

Important Dates

• February 21st, 2010: Presentation proposals due. **Early submissions are very much welcomed.
• March 2010: Notification of accepted presentations. Final confirmation by presenters should be received within two weeks of notification of acceptance.
• May 1, 2010: Written papers to be received.

Please submit proposals, preferably as Word document, and any questions to:

Jamshid Damooei, PhD

Co-Convener, GCG 2010 Conference

Professor of Economics and Chair

Department of Economics, Finance, and Accounting

Co-director, Center for Leadership and Values

California Lutheran University

Ph: +1 805 493-3357

damooei@callutheran.edu and k.mofid@btopenworld.com