Her Majesty The Queen
\nBuckingham Palace
\nLondon
\nSW1A 1AA
\n29 July 2009
\nMADAM,<\/p>\n
In response to your question why no one predicted the crisis you have recently received a letter from Professors Tim Besley and Peter Hennessy<\/a>, sent on behalf of the British Academy. They claim economists\u2019 failure to foresee the crisis was the result of a \u201cfailure of the collective imagination.\u201d That claim is tendentious and will mislead you.<\/p>\n The failure was due to the sociology of the economics profession. This failure was a long time in the making and was the product of the profession becoming increasingly arrogant, narrow, and closed minded. One was compelled to adhere to the dominant ideological construction of economics or face exclusion. That was the mindset of the IMF and the World Bank with their \u201cWashington Consensus\u201d, and it was the mindset of central bankers (including your own Bank of England) with their thinking about the sufficiency of inflation targeting and hostility to regulation.<\/p>\n The crisis was predictable and was predicted. See, for example:<\/p>\n (1) \u201cThe Weak Recovery and the Coming Deep Recession<\/a>,\u201d Mother Jones, March 2006.<\/p>\n (2) \u201cDebt and Lending: A Cri de Coeur<\/a>,\u201d Levy Institute, April 2006.<\/p>\n