An Intellectual Bailout: We Must Add Another Field to the List of Those in Need of Rescuing-Economics Itself

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The financial crisis has killed the claim that economics deserves to be treated as a science. The measure of a science is its capacity to explain, predict, and prescribe. And most economists not only failed to anticipate the nature and evolution of the catastrophe, but their conflicting recommendations on how to stabilize the situation exposed the unreliability of their knowledge. As much as Wall Street and Main Street, the economics profession needs a bailout of its own.

Policy gyrations and faulty calls have revealed that economics itself is in crisis: The experts simply have no idea what to do. No less an expert than U.S. Federal Reserve Chairman Ben Bernanke repeatedly declared the worst was over, only to admit with chagrin much later that "I and others were mistaken early on in saying that the subprime crisis would be contained." As recently as mid-November, Bernanke told the …