WASHINGTON (MarketWatch) — Economists still have a lot to learn about how the recent economic and financial crisis unfolded, Federal Reserve Chairman Ben Bernanke begrudgingly acknowledged Friday.

However, in spite of the failures of economists to predict the crisis or to prevent it, Bernanke largely defended his profession in a speech on Friday at an economic research institute he helped found at Princeton University. Read our full story on Bernanke’s remarks.

It was not economic theory that failed us, he said, it was economic management and engineering. Economists have workable theories about how bank runs can erupt and how they can be stopped, and theories about how misaligned incentives or moral hazard can lead to excessive risk-taking.

The crisis was mostly a failure of design, not theory, he said.

Think of Bernanke’s argument this way: If a bridge collapsed, no one would think we should re-examine the theory of gravity; they’d blame the disaster on the designer or the builder, not on Isaac Newton.

But, of course, economic science is not as developed or as precise as physics. Even if economists can explain in hindsight how it happened, or suggest remedies for crisis management, the profession still has a lot to answer for.

We were assured from the highest authority that such a crisis was impossible.

Bernanke suggested to his former colleagues at Princeton some fruitful areas for further study, such as explaining under what conditions human behavior does not fit the quaint assumptions of perfect rationality, or how asset bubbles rise and fall.

Bernanke said standard models of the economy seem to work most of the time. Most of the time, he said, “serious financial instability is not an issue.” Most of the time, cancer isn’t an issue for physicians, either.

It is precisely in those rare circumstances that we need doctors and economists most. What we do not need in those circumstances is quacks.

To prove they are not quacks, economists must refine a theory of financial instability that can help us prevent the next crisis, not just explain it afterwards.

--Rex Nutting