David Brooks writes today about how economists failed to understand the behavior leading up to the crash — and why. Excerpt:

In Act IV, in other words, economists are taking baby steps into the world of emotion, social relationships, imagination, love and virtue. In Act V, I predict, they will blow up their whole field.
Economics achieved coherence as a science by amputating most of human nature. Now economists are starting with those parts of emotional life that they can count and model (the activities that make them economists). But once they’re in this terrain, they’ll surely find that the processes that make up the inner life are not amenable to the methodologies of social science. The moral and social yearnings of fully realized human beings are not reducible to universal laws and cannot be studied like physics.
Once this is accepted, economics would again become a subsection of history and moral philosophy. It will be a powerful language for analyzing certain sorts of activity. Economists will be able to describe how some people acted in some specific contexts. They will be able to draw out some suggestive lessons to keep in mind while thinking about other people and other contexts — just as historians, psychologists and novelists do.

Along these lines, my friend David Rieff, a man of the secular left, wonders why so many American social conservatives defend as a matter of dogma our current form of market capitalism, given what social conservatives believe about human nature. Excerpt:

After all, from the late 19th century on, one of the main currents in conservative thought has been either frankly anti-capitalist (usually on anti-modernist grounds–a strain that persisted in Salazar’s Portugal and Franco’s Spain until the 1960s) or has advocated a mixed economy. In Leo XIII’s Rerum Novarum of 1891, the Catholic Church’s first great modern social encyclical, and even more explicitly in Pius XI’s 1931 Quadragesimo Anno, the Church officially rejected the free market as Schumpeter and Hayek defined it and as the American Right has, overall, embraced it. These encyclicals were written in large measure to offer an alternative vision of the social contract to the one being advanced by Socialism. But the Church saw clearly that, in considerable measure, this rise was the product of the injustice of unbridled capitalism. As Pius XI put it in Quadragesimo Anno, “Just as the unity of human society cannot be founded on an opposition of classes, so the right ordering of economic life cannot be left to a free competition of forces. For from this source, as from a poisoned spring, have originated and spread all the errors of individualist economic teaching.”
Even today, much to the frustration of their American opposite numbers, European conservative politicians like Angela Merkel or Nicolas Sarkozy take for granted notions of social solidarity, and state responsibility for remedying egregious injustices in the market, as well as its right to impose constraints on capital that are in the direct line of this tradition. So why is America different? From Rerum Novarum forward, the Church emphasized the importance of individual private property rights, rejecting what Leo XIII called “the main tenet of socialism, the community of goods” as being opposed to natural law. But the American reverence for private property is in a league of its own…

As David concludes, “so many conservatives see the world as going to hell in a handbasket, and so few are willing to face up to why.” He’s right, and I would say the same thing about American liberals and their sexually libertarian views. But you knew I would.