The crisis and its consequences for society and economic theory

The Financial Crisis (2007–09; FC) has shown that the assumptions of the neoliberal paradigm are not sufficient. The FC has also led to a Moral Crisis (MC). Ethical standards in business are deteriorating. Institutions and authorities have significantly lost their reputation due to the FC and right-wing populism has gained political influence worldwide. This political agenda will disappear due to its own contradictions. This paper will also show that the crisis is a crisis of theory. Economics as a science is stagnating since several decades, because of its institutionalization in economic journals and in the academic environment which is conserving old methods and thinking styles. Economic theories of today are not appropriate for the solution of the actual problems. Progress in economic theory is urgently needed, because the prevailing paradigm does not solve the problems of income inequality, high unemployment levels and the destruction of the ecological sphere. The doctrine of permanent economic growth as well as austerity measures have to be scrutinized. The constantly rising pressure of unsolved problems in economics resp. economic theory must lead to a change of the current paradigm.