April 2009: A Tobin Project Conference on "Government & Markets: Ferment in the Face of Crisis"

America faces the worst financial crisis since the Great Depression. At the heart of this economic turmoil has been debate about the role of regulation and deregulation both in precipitating the crisis and finding possible remedies. Given the sheer scale of federal assets now entrenched in troubled corporations, and the new administration’s ambitious reform objectives, we need more than ever a long-term reevaluation of the relationships between the market and the state.

This intellectual moment may well resemble that which Professor James Tobin entered as a young economist. A teetering economy spelled “worldwide social and political disasters” and “crisis for an economic orthodoxy unable either to explain events or prescribe remedies.” Simultaneously, however, the Depression served as a trigger for the “scientific ferment and revolution in economic theory” that helped pave the way for an era of American prosperity later on (James Tobin, Nobel Autobiography 1981).

Our crisis similarly highlights not only the importance a new set of regulatory policies, but also, the urgent need for new theories.

With old orthodoxies crumbling, what ideas about the role of government and markets will take their place? Through what frameworks will policymakers design and evaluate reforms?

Sixty leading scholars and policymakers gathered from April 24–26, 2009 at The Conference & Residency Center at White Oak. Participants include political scientists and economists, historians and sociologists, legal scholars and academics from schools of business and public policy, all of whom possess expertise about the regulatory dynamics of modern capitalism.

While many who were present at our 2008 conference returned, our network is growing, and a significant number of new scholars and policymakers contributed their perspectives to this work. Another primary goal of the conference is to facilitate a process of community building among academics interested in rethinking the theory and practice of economic regulation, across disciplines and across the generations.

Key Themes

How the Crisis Challenges Prevailing Ideas 
How have dominant models and theories failed or succeeded in predicting and remedying the financial crisis? Can the crisis be explained within the standard rational actor model—does individual and institutional behavior leading up to it accord with the model? What was the role of norms? Which market mechanisms and incentives lived up to their promise? Did regulatory “capture” or deregulation contribute more to the crisis?

Toward New Theories of Regulation  
What elements and perspectives are largely missing in current regulatory theory? What missing variables may help explain what we’ve observed? What are the best alternatives from different disciplines? Are there core insights into regulatory processes and purpose that need better empirical foundations? Who is poised to approach these gaps in current understandings?

The Experiences and Needs of Governing Bodies
How did individual lawmakers and regulators make their decisions leading up to and into the financial crisis—what motivated them, and where did they get their information? What do policy-makers not yet know? If a federal research effort were mobilized (as has been done in the wake of past crises) where should it focus?

A Research Agenda and the University
Building on the research priorities collectively generated in the 2008 conference, "Government & Markets: Toward a New Theory of Regulation," what are the most pressing research needs today? How do we refine our agenda in light of the financial crisis, and the state of regulatory theory today, and how do we charter further research that is useful for prevention of crisis and future policy? How can the research agenda be better prioritized in universities?