Is economics a busted flush?
Has this global crisis shown that economics is a load of rubbish? If you think the answer is "yes", you might be interested to hear that the Economist magazine - that bastion of free market economics - agrees with you.
Okay, so I'm exaggerating. It doesn't think economics is ready for the bin. But in a series of articles published today, the magazine says the profession has a lot of lessons to learn - and humble pie to eat - as a result of the past few years.
Some in the profession have come out better than others, either because they warned early of trouble ahead (the likes of Nouriel Roubini, Avinash Persaud, and several economists at the Bank of International Settlements), or because they were working far from the scene of the crime - people like the behavioural economist, Richard Thaler, the co-author of Nudge.
But crucial parts of the dismal science have come out of all this, well, pretty dismally - notably macroeconomics and the financial economics.
As the Economist notes, the criticisms levelled against macro and financial economists are:
"[T]hat they helped cause the crisis, that they failed to spot it, and that they have no idea how to fix it."
That's a pretty comprehensive charge sheet. And none is entirely wrong.
In their different ways, both the macroeconomists beavering away at the major central banks and the financial economists in academia and Wall Street took for granted a certain kind of market efficiency which simply didn't hold.
In the case of the macro-economists, famously, the assumption by the Federal Reserve and others was that asset price bubbles could take care of themselves - and even if they didn't, it would be less costly to let them run their course and clean up afterwards than to try to take the air out on the way up. Oops.
Macroeconomists in academia also tended to assume away the financial sector in their models of the economy.
They thought very hard about imperfections in the product and labour markets - imperfections which might cause unemployment, inflation, or both. These, after all, had been the macro concerns of the 1960s and 1970s.
But when it came to the financial market - perfection was the order of the day. Markets always cleared. All information was built into current prices. And all markets were always liquid. In other words, if things got tough you could always sell your troublesome assets to somebody else.
I'm not being entirely fair. There were exceptions. But it's striking how little the profession prepared its students for any of the big issues we face today.
I remember, while studying graduate macroeconomics at Harvard in the mid-'90s, asking a question relating a certain piece of theory to a recent decision by the Federal Reserve. It was like I'd said a bad word.
Introducing real world policy issues to the discussion was considered to be in bad taste. And I should say, this was a class about monetary policy.
And if monetary economics was too abstract, at least there was plenty of it. After the disasters of the 1970s, economists came to an agreement that fiscal policy was more or less useless for short-term management of the economy. So they basically stopped thinking about it and left it to the political scientists.
Paul Krugman reckons that of the 7,000 or so papers published by the National Bureau of Economic Research in Boston between 1985 and 2000, only five mentioned fiscal policy in their title or abstract.
The NBER is responsible for dating US recessions and is the central clearing house for macroeconomic research in the US.
As it turns out, a few more papers on fiscal policy would have come in handy in the past year, as policy-makers gradually came round to the view that fiscal policy was the only economic lever left to pull.
I won't go into the detailed case against financial economics, and the debate over whether economics can really be blamed for rise and fall of credit derivatives, the subprime disaster and the other financial market messes of the past few years.
If you want to read more on the interplay between theory and practice in this area, I would point you in the direction of Gillian Tett's recent book, Fool's Gold - or better, perhaps, Donald McKenzie's superb recent review in the London Review of Books.
(His book, An Engine, Not a Camera, published before the crunch, provides a more academic but hugely readable survey of the topic for those that want to get in deeper.)
I did explore some of these issues in a film shown on Newsnight the day of the run on Northern Rock.
At the most basic level, the defence of the high theorists is that their models were only as good as the data that went into them - too many practitioners on Wall Street decided that 20 years' worth of data was enough to tell you that house prices could never fall, and stock prices would never go down by more than 5%.
But they can't get off entirely. For one thing, they also assumed that markets were always liquid. Which of course they were, right up until they suddenly weren't, and all those banks and other institutions were stuck with impossible-to-value assets which were equally impossible to sell.
Also, and related, these models assumed that assets - and the risks attached to them - could be valued on their own, without reference to all the other people in the market holding those assets. They didn't think enough about the fact that if one model said "sell", chances are everybody else's would be saying the same thing.
So, all in all, not an edifying list of complaints. But does that mean economics is a busted flush? I'm afraid not, because even if you think economics got a lot of this stuff wrong, you'd be hard-pressed to understand - or to fix - what's happening in the global economy today without it.
Maybe it's not such a good time to be an economist. But it's one helluva time to study economics.