Steve keen debunking economics epub

Support me on Patreon Become a Patron! Click here for more information. Keep Russell Standish on the Minsky Project. Like his orthodox opponents, Keen has used a simplified model that yields the conclusion labor is exploited by capitalism that he wants.

Heterodox Schools Keen includes interesting sections on various heterodox schools, including Marxism, evo- lutionary economics, complexity theory, Post-Keynesian economics, Austrian economics, and Sraffian economics. He seems to come down on the side of evolutionary economics as having the most promising future p. However, Keen instead posits a real-cost theory of value, ignoring the Austrian insight that costs themselves are subjective. What in the world could Keen mean?

Keen is not unsympathetic to the Austrian School, but it does not seem to us that he fully understands it. Keen has later acknowledged that the section is in error [b]. He is also wrong in implying that the Austrians depend on an equilibrium analysis of returns to factors of production to defend distribution in the market economy.

In fact, the Austrian analysis of the return to entrepreneurs relies entirely on disequilibrium conditions. The work of Mill et al. Despite our criticisms, we are glad Keen wrote the book, and glad that we had the chance to read and review it. Keen is raising important questions, even if we cannot go along with him on all of his answers. Note 1. This destroys the basis for calculations of output and employment.

Chapter four analyses a mathematical flaw in the standard argument against monopolies often used to justify opposition to large firms. Following Sraffa, chapter five argues that labour is not just another commodity, and in particular that wages do not reflect contributions to productivity. This undermines models of the labour market that have been used to oppose minimum wage laws.

And, looking back to a debate in the s, chapter six explains how the rate of profit is not just the marginal productivity of capital: "there is no consistent relationship between factor productivity and factor incomes". Chapter seven turns philosophical.

Its primary target is the idea that the assumptions of a theory don't matter provided that it works, carried to a bizarre extreme in Milton Friedman's claim that the less realistic the assumptions of a model are the better. Keen also throws in a bit of Lakatos here and, as a distraction, a half-endorsement of Bohm's ideas about quantum mechanics. I think it's clear that economic theory is far from being so successful that its flaws can be ignored, but I also think that this is important, as those parts with significant practical successes need to be marked for salvage.

Chapter eight focuses on the failure of neoclassical economics to take time into account, through its insistence on equilibrium analysis. Keen argues for a fully dynamic economics, using tools such as differential equations and not just linear algebra. Chapter nine tackles Say's Law, that there has to be a balance between supply and demand, and its modern reworking as Walras' Law, that "the sum of all notional excess demands is zero".

Keen's book is a tour de force that grants its reader the chance of immunity from these, still dominant, economic superstitions. It could not have been written at a better time. Steve predicted the financial crisis as long ago as December , and warned that back in that a period of apparent stability could merely be 'the calm before the storm'. His leading role as one of the tiny minority of economists to both foresee the crisis and warn of it was recognised by his peers when he received the Revere Award from the Real World Economics Review for being the economist who most cogently warned of the crisis, and whose work is most likely to prevent future crises.

Please wait, loading table of contents Keen, Professor Steve.