Like Tony Wikrent, I too found Yves Smith's article, Why so Little Self-recrimination Among Economists"" singularly enlightening, but for a couple of different reasons.

1. Smith says:

We have just witnessed [economists] make a massive failure in diagnosis. .... – the authorities took the "everything is for the best in this best of all possible worlds" posture until the wheels started coming off. And even when they did, the vast majority were constitutionally unable to call its trajectory.

Now of course, a lonely few did sound alarms. ...., but the bigger point is that these warnings were often ignored.

[Peter] Shiller has offered a not-very-convincing defense, claiming that economists were subject to "groupthink" and no one wanted to stick his neck out.....

In other words, economists themselves behaved exactly as social psychology -- but not neoclassical economics -- predicts!

2.

....[T]he AEA schedule ... did not [have] anything that questioned existing paradigms. And one paper that did was released recently, "The Crisis of 2008: Structural Lessons for and from Economics," fell so far short of asking tough questions that it proves Madrik's point. The analysis is shallow and profession serving. And that is not to say the author, Daron Acemoglu, is writing in bad faith, but to indicate how deeply inculcated economists are.
....
We also have this:
A deep and important contribution of the discipline of economics is the insight that greed is neither good nor bad in the abstract.

....
, greed is the id without restraint. Psychiatrists, social workers, policemen, and parents all know that unchecked, conscienceless desire is not a good thing. Acemoglu calls for external checks ('the right incentive and reward structures"), when the record of the last 20 years is that a neutral to positive view of greed allows for ambitious actors to increasingly bend the rules and amass power.... Like it or not, there is a role for social values, as nineteenth century that may sound. The costs of providing a sufficiently elaborate superstructure of rules and restrictions is far more costly than having a solid baseline of social norms.....

Because of neoclassical economic theory's ridiculous assumptions about human behavior, they completely miss the cornucopia of human behavior that is not governed by external reinforcement, but instead is governed by the "internalization" of reinforcement. i.e., the person has learned to like doing the deed. Thus economists need to call for expensive and ungainly "incentive and reward structures" when internalized social norms are virtually free (viz: in Japan it would be unheard of for a corporate executive to earn anything like the ungodly sums habitually made by American financiers and senior management. The reason is, in Japan such uncooperative behavior is social anathema).

So long as neoclassical economics attempts to deduce "rational" behavior and refuses to adopt the rules long known by behavioral psychologists, it will continue to be as false a science as Ptolemaic physics -- calculating refinement upon refinement of nonexistent inaccurate epicycles.