book was not an easy read, but it gets four from me as in many ways I found it an utter eye opener.
Steve Keen analyses and documents in methodical detail the flaws in neoclassical economics, While there are many other books that have done this before, his is the only one that I am aware of that takes the economic academic profession head on, and plays them at their own game.
He exposes their flawed thinking and gross mathematical incompetence, which to anyone who has studied mathematics and science at tertiary level is deeply shocking.
I would personally call it corruption, but Keen gives them the benefit of the doubt and prefers to put it down to ideological zeal and a closed shop academic culture.
Certainly it is a brave book,
I am highly impressed with Keen's trail blazing work in bringing the science of complexity into economic modelling, and his efforts to bring monetary factors into those models.
It is absolutely appalling that mainstream economists so resolutely ignore the impact of money and debt in their economic theories.
Apparently Keen is planning to write another book on Finance and Economic Breakdown, which I greatly look forward to reading.
"Debunking Economics" makes it clear that it is private debt and uncontrolled financial speculation that causes financial crises, not government spending.
In fact, governments have a role to play in regulating finance and ameliorating economic crises by appropriate spending and intervention.
The Rudd government interventions to address the GFC come out much better in this analysis than the US "quantitative easing" of gifts to the banks.
To me it is blindingly obvious that an economy needs to be modelled as a complex, nonequilibrium system: there are too many variables at play and feedback loops.
Physicists, biologists and other scientists have been aware of the difficulties of modelling these types of nonlinear systems for decades, or more.
So why has economics, the socalled "dismal science", been protected or blind to these insights Can it not be that there are class interests involved Keen tiptoes around this issue somewhat, but this is understandable considering his desire for academic credibility.
He is passionate about doing justice to a "real" economics, but careful to avoid potential claims of bias or polemic in his writing.
Keynes' reputation has been resurrected by this book as well, I was very interested to read of the way this great economist's ideas had been distorted and misrepresented to suit a neoclassical economst's view of the world.
As a noneconomist myself who is nevertheless mathematically literate, I would have appreciated equations and diagrams being fully included in the book.
It suffered from a lack of clarity as a result, and while I read every word of the book, I had to skim over some parts without a full understanding.
I did check the web links provided, but the PDF with the diagrams was not clearly linked to the Debunking Economics's sections, and the debunking economics website was a subscription website with rather unaffordable rates.
Overall, highly recommended to anyone wanting to better understand the economic forces at play in the world today.
Be prepared for some intellectual work though, It took me quite a few weeks to get through this book, and at times it gave me a headache, but I'm really glad I made the effort.
Every adult living in a democracy should read this book,
The next time someone tells you that rewards for the rich are the way to fix the economy, ask them what the relationship is between private debt and the supply curve.
If they cannot answer they will likely tell you that private debt is not an important factor in a capitalist economyinsane as that sounds then you can whip out some Keen and leave them backpedaling.
Even if they do answer, you will be prepared to pummel their simplistic, static and imaginaryworld arguments into the ground.
We constantly hear that the economic choices for our economies are lamentably going to result in some short term pain in order to provide longterm stability, and it is simply too bad that some people are going to get rich off these measures while ordinary people are going to face unemployment, poverty and uncertainty.
It's just the way things have to be, we read, This book proves such neoclassical hogwash to be unscientific, illogical and completely at odds with reality,
Keen, though at times a challenge to follow, brings together different disciplines to critique the lunacy of neoliberal economics.
He knows economics better than nonprofessionals, he knows economic history better than most historians, He knows, applies and explains advanced mathematics, He brings philosophy and history of ideas to bear on the problem, In short, he is able to look at economic processes as they actually happen in the real world, using the tools that educated people have available to us.
I read Marx inand, though I'm no Marxist, I've found that a Marxist economic analysis serves far better than the Wall Street Journal or Planet Money for explaining what is happening.
This is the first book since I read Alexander Berkman inthat has added to my understanding of Marx and given me better tools to analyze and understand economics.
sitelink net Debunking Economics exposes what a minority of economists have long known and many of the rest of us have long suspected: that economic theory is not only unpalatable, but also plain wrong.
When the first edition was published in, economists basked in the limelight of a seemingly invincible market economy.
But the economys performance, as Steve Keen argued, had nothing to
do with neoclassical economic theory and gave policymakers the false confidence to begin to dismantle the very institutions designed to limit market instability.
That instability exploded with the devastating financial crisis of, and now haunts the global economy with the prospect of another Depression.
In this updated and expanded edition, Keen builds on his scathing critique of conventional economic theory whilst explaining what mainstream economists cannot: why the crisis occurred, why it is proving to be intractable, and what needs to be done to end it.
Essential for anyone who has ever doubted the advice or reasoning of economists, Debunking Economics is a signpost to a better future.
This book is a fantastic critique of the neoclassical synthesis and an exploration into the world of heterodox economics.
Keen bravely attacks static economics at its mathematical roots and assumptions, revives Marx' theory of value and crowns him the greatest of Classical economists, defends Keynes against his opponents and heirs, and introduces the elegance and irrationality of dynamic analysis into the inherent instability of the market.
The author succeeds in trashing the NeoLiberal argument of supremacy of free markets by discrediting the equilibrium assumption of Walrasian markets and other restrictions of the SonnenscheinMantelDebreu conditions.
Keen's basic position is a MarxKeynesSchumpeterSraffaMinsky synthesis that firmly holds that markets are inherently unstable due to the complex nature of the dynamics of capitalists and financial capital.
While exploding Marx' labor theory of value, Steve Keen lauds Marx' theory of value and his dynamic perspective on the nature of economics.
He integrates this dynamism into the creative nature of Schumpeter's entrepreneurs and the speculation of financial markets so that the nature of the business cycle becomes clearly not balanced to any stable point derived from Minsky's legacy.
Having read both the first and second edition I would strongly recommend referencing the graphics from the first edition and now available online in order to provide a nonnarrative basis for analyzing Keen's work.
This is a book that any serious student of economics and the Great Recession needs to read immediately.
Fascinating book. It would have helped to have more of a grounding in economics at even the undergrad level, but slow consumption and rereading make this possible because of Keen's clear language.
My basic takeaway is that all of those things that seem a bit ridiculous about economics perfectly rational consumers, assumed equilibrium are actually, provably ridiculous.
The why and how was definitely the interesting part here, I agree with other reviewers that is book is one of the most accurate and brilliant criticisms of mainstream/neoclassical economics.
Some of the points Mr, Keen makes are very original, and if you are looking for "ammo" to shoot at mainstream economics, this book will give you plenty.
However,I am not sure how much this book will appeal to the noneconomist reader.
Much of it is discussion of the existing economic theories, and without a knowledge of these theories, much of the book would be imcomprehensible to the reader.
Thus, I am taking statements like "the only economics book you need to read" with a grain of salt.
Economics is a fairly complex subject, I believe more complex than most of the sciences, So, noneconomist readers should not be frustrated if they feel that the book is difficult, " had the internet been around when I was a student, someone somewhere would have posted an essay I wrote while in my first year calling for the abolition of both unions and monopolies.
. . What enabled me to break away from that delusional analysis was what Australians call 'a good bullsht detector'.
At a certain point, the fact that the assumptions needed to sustain the vision of the Invisible Hand were simply absurd led me to break away, and become the critic I am today.
" As someone whose first real introduction to economics was one of those standard econclasses, which I found essentially an exercise in switching your brain off and making a bunch of imaginary lines intersect on a sheet in order to prove that our current society is the best of all possible worlds, my disappointment with mainstream economics led me to explore alternative ways of understanding and analysing our political economy.
As of today, this is a path that sooner or later leads you to bump into Steve Keen.
sitelinkDebunking Economics Revised and Expanded Edition: The Naked Emperor Dethroned is one of those instances of a book truly delivering on its title.
Keen methodically debunks each and every single tenet of neoclassical economics, or what is also called the mainstream or orthodoxy.
Ever since the Great Recession more on more of these types of books and articles have been published, but what sets Keens work apart from the rest is that he doesnt simply highlight how neoclassical theories are based on unrealistic assumptions, yields wrong predictions, etc.
, but also shows how a great deal of them are logically contradictory and senseless, While neoclassicals like to charge that their detractors just dont understand math, Steve Keen in fact demonstrates the problem is that their models are based on bad maths, and that neoclassicals, unlike mathematicians and physicists, dont understand the limitations to mathematics chaotic systems.
I must admit that most of what he presented in his debunking of micro was new to me, and it made me realize just how fundamentally rotten the orthodoxy of the discipline is.
All their tenets have already been disproven, often by neoclassicals themselves, But what happens with these discoveries Well, like in any completely and absolutely scientific field of study, you ignore it of course! Or best case scenario you add a bunch of nonsensical assumptions so that the economy you end up modelling is:
“A model of the macroeconomy as consisting of a single consumer, who lives for ever, consuming the output of the economy, which is a single good produced in a single firm, which he owns and in which he is the only employee, which pays him both profits equivalent to the marginal product of capital and a wage equivalent to the marginal product of labor, to which he decides how much labor to supply by solving a utility function that maximizes the utility over an infinite time horizon, which he rationally expects and therefore correctly predicts.
And there are no banks, no debt, and indeed no money in this model, ”
If that excerpt alone isnt enough to make you go and read this book, I dont know what is.
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