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Today, more than a decade after the outbreak of the Great Recession, many economies are still struggling to get back on a prosperous track. Most countries were hit hard by the international crisis. The US, the EU and other countries have experienced low GDP growth rates and high levels of unemployment for a number of years. In the EU, and especially within the Eurozone, most member states have had to cope with the mainstream macroeconomic policy strategy of austerity (with Greece as the most significant recession case of the EU). As such, the neoclassical macroeconomics that became so dominant during the 1990s, and is still today by many seen as the only way to do macroeconomics, ruled the process of giving advice on economic policies to overcome the crisis. By using general equilibrium theory and models as the dominant analytical device, the focus point was at de-regulation, privatization and a balanced public sector budget to secure private sector optimization. No wonder that the vision of the beneficial welfare state and the egalitarian society was set on hold and in many cases rolled back on the political agenda. However, as we know as a fact today, prosperity did not come back to the many only to the few, already well off, in the US, in the EU and many other places. This misunderstood macroeconomics has taken a heavy political toll, because ‘[there is a] lack of correspondence between the results of their [the professional economists’] theory and the fact of observation; - a discrepancy which the ordinary man has not failed to observe’ (Keynes, 1936, p. 33). The Great Recession, initiated 10 years ago, began as an international financial crisis. It came as a surprise to mainstream macroeconomists. Accordingly, the policy recommendations were inconsistent and have been followed by stagnation, particularly of European economies, for a number of years. Consequently, many macroeconomic scholars have cast a critical eye on the content of the previously dominant new Macroeconomic Moderation (Bernanke, 2012) and the related Dynamic Stochastic General Equilibrium (DSGE) models.

The financial crisis that began in 2007 has generally shown the weaknesses of neoclassical theories and policies, in particular by highlighting the irrelevance of modern macro models such as the Dynamic Stochastic General Equilibrium (DSGE) model and its microfoundations, which has come under considerable attack in the last few years, even from the mainstream. Indeed, as Lavoie (2018, p. 15) observes, “there is considerable dissatisfaction with the current state of mainstream macroeconomics”, leading The Economist (2009) to refer to the “turmoil among macroeconomists”. As early as 2009, Krugman (2009a, Internet) was claiming “[t]he economics profession mistook beauty, clad in impressive-looking mathematics, for truth”. More recently, he once again criticised the quest for microfoundations (see 2013, Internet), arguing “so the truth was that microfoundations in macroeconomics had its moment, but failed utterly at the one thing it was sold, above all, as being able to do - namely, give a better explanation of why nominal shocks have real effects. Time, you might think, to reconsider the project”. A few years earlier, Solow, in a 2010 address to the United States Congress, disapprovingly claimed “I do not think that the currently popular DSGE models pass the smell test” (see Solow, 2010).