The truth of an idea is not a stagnant property inherent in it. Truth happens to an idea. It becomes true, is made true by events. Its verity is in fact an event, a process: the process namely of its verifying itself, its veri-fication. Its validity is the process of its valid-ation.
William James, Pragmatism, 1907. As printed in Pragmatism: The Classic Writings, edited by H.S. Thayer.
If we think of free-market ideology as truth, we can say this truth was socially verified with the fall of the Soviet Union in the late eighties and early nineties. Following that event, the dominance of the free-market ethos became highly entrenched as recognized knowledge. But now, due to more recent events, the verity of the free-market is coming back into question. It is up to the human mind, the social mind, to decide again whether the truth of the free-market fits the reality of the events before our eyes.
In this way the debt crisis, the credit crisis, the housing crisis -- all these crises are simply, and complexly, a crisis of knowledge, wherein the truth we thought we knew about economic reality fails to meet the challenge of present-moment events.
The turmoil we are experiencing is the fact that we seem to be facing a situation in which our old truths are just that -- old. We must develop new truths, new knowledge, and thus new reality.
This is the pragmatist theory of how social change comes about -- when our mind recognizes that the truths we tell each other don't fit the fact of reality. We then develop new truths or new realities, or both.