Phillips, Peter J. (2010) Financial crisis of metaphor. Review of Austrian Economics, 23 (3). pp. 223-242. ISSN 0889-3047
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Abstract
This paper presents an analysis of the mathematical models of the prevailing orthodoxy within the field of financial economics in light of the financial crisis. The financial crisis presents a challenge to the language of orthodox financial economics. From an Austrian perspective, this challenge to the language of orthodox financial economics is centred on a small number of pressure points stemming from the mathematical-quantitative nature of the prevailing orthodoxy, especially the distortion of or obstruction to the communication of pertinent 'knowledge' by the adoption of a formalism that pushes aside many of the most important aspects of the human action represented in financial markets. The result is a crystalline structure of mathematical models that suffer from serious salience imbalance. The highly salient features of mathematical objects are not directly applicable to and have a low salience in the list of features of the financial economic reality. The financial crisis has accentuated this salience imbalance. The orthodoxy has experienced a financial crisis of metaphor.
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| Item Type: | Article (Commonwealth Reporting Category C) |
|---|---|
| Refereed: | Yes |
| Item Status: | Live Archive |
| Additional Information: | © 2010 Springer Science+Business Media, LLC. Permanent restricted access to published version due to publisher copyright policy. |
| Faculty / Department / School: | Historic - Faculty of Business - School of Accounting, Economics and Finance |
| Date Deposited: | 21 Apr 2010 02:37 |
| Last Modified: | 02 Feb 2015 05:35 |
| Uncontrolled Keywords: | orthodox; financial economics; language; Austrian; Austria; formalism; salience imbalance; financial crisis |
| Fields of Research : | 01 Mathematical Sciences > 0102 Applied Mathematics > 010205 Financial Mathematics 15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150205 Investment and Risk Management 14 Economics > 1499 Other Economics > 149903 Heterodox Economics |
| Socio-Economic Objective: | E Expanding Knowledge > 97 Expanding Knowledge > 970114 Expanding Knowledge in Economics |
| Identification Number or DOI: | 10.1007/s11138-010-0104-6 |
| URI: | http://eprints.usq.edu.au/id/eprint/7383 |
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