Steve Keen – Australia

Linked with Steve Keen’s Deptwatch – The blog, and with The Roving Cavaliers of Credit.

Dr Steve Keen is an Associate Professor in economics and finance at the University of Western Sydney. He identifies as post-Keynesian, criticizing both modern neoclassical economics and (some of) Marxian economics as inconsistent, unscientific and empirically unsupported. The major influences on Keen’s thinking about economics include Hyman Minsky, Piero Sraffa and Joseph Alois Schumpeter. His recent work mostly concentrates on mathematical modeling and simulation of financial instability … // … Debunking Economics:  Keen’s full-range critique of neoclassical economics is contained in his book Debunking Economics. Keen collects and popularizes a wide variety of critiques of numerous aspects of neoclassical economic theory and argues that together they show that neoclassical assumptions are badly flawed. Keen’s book closes with a survey of various schools of heterodox economics, concluding « None of these is at present strong enough or complete enough to declare itself a contender for the title of ‘the’ economic theory of the 21st century. » However, he argues that neoclassical economics is a degenerative research program, not generating new knowledge but growing a belt of protective auxiliary hypotheses to shield its core beliefs from critique … (full text).

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Steve Keen – Australia

Watch these videos:

Steve Keen’s (free online) Lectures on Economics and Finance:
If you are new to economics?or my approach to it?then I suggest you start with the History of Economic Thought lectures, and/or the Managerial Economics lectures, which evaluate conventional economics against the empirical data. All lectures are in Powerpoint format (which Linux users can now access using OpenOffice.org), and quite a few are supported by simulations … (full text … and much more … ).

He says also: Australia’s private debt has been growing more than 4 per cent faster than our GDP for over 50 years.

His book Debunking Economics is now available as an eBook. He writes about: … Debunking Economics takes you behind the sanitized, airbrushed view of economics given by its textbooks, and details the many critiques which have been made of economic theory by economists, in a fashion which is accessible to the intelligent non-economist. This site provides my presentations, lectures and academic papers on economics, as well as supplementary materials for the book Debunking Economics. By far the largest resource here is my collection of lectures on economics and finance that I give at the University of Western Sydney … (full long text).

… Keen’s outspoken views have made him a controversial figure in a profession dominated by those who believe in the essential equilibrium of capitalism. So does he feel vindicated in witnessing the subprime disaster and its fallout? « It’s nice to be right but when what you’re right about is saying that there’s going to be a serious catastrophe that will damage the lives of hundreds of millions of people, it’s very hollow … You don’t want to win like this. » He thinks many in the industry, including reserve banks around the world, should have foreseen the crisis but chose not to … (full long text, Aug. 27, 2008).

Find him and his publications on the Debunking Economics website; on amazon; on Google Video-search; on Google Group-search; on inauthor Google-search; on Google Book-search; on Google Scholar-search; on Google Blog-search.

AUSTRALIA is facing its own version of the US sub-prime housing crisis, with thousands of young homeowners risking bankruptcy as a result of Kevin Rudd’s economic stimulus package. That is the grim warning from the economic expert who first called the debt crisis that is driving the global financial meltdown. Dubbing the looming crisis « Sub-Prime Lite, » Professor Steve Keen told The Sunday Telegraph Australia was making the same mistakes as the US. Professor Keen said in trying to avoid an economic crisis caused by too much borrowing, Australia was in effect encouraging the poorest in the community to take on even more debt. « Yet these low-paid first homebuyers are the people who are most vulnerable to the economic downturn, » he said … (full text, March 22, 2009).

He writes:

  • … On this basis, the current Australian house price bubble is about 75% more extreme than the USA’s, which is now clearly in free-fall. A fall in Australian house prices is inevitable, and it will be driven by the household sector’s attempt to de-lever from its currently unprecedented level of debt. This de-leveraging will drive the economy down, taking employment with it–and especially the jobs of First Home Buyers, who are definition have less secure employment than older, established home owners. As I argued when The Boost was first announced (Rescuing the Economy or the Bubble? Debtwatch Blog October 19 2008), the policy is a mistake that will backfire on the Rudd Government when the global financial crisis finally comes home to roost here. Despite the bleatings of the property lobby, it should not be extended past its current termination date. (full text, Mar 23, 2009);
  • … At some point debt will not continue to increase. It will turn negative, and change in debt will therefore subtract from aggregate demand rather than adding to it. Given that at its peak, debt financed almost 20 percent of demand, even stabilising debt at its current level–$1.85 trillion, compared to a GDP of $1.1 trillion–would result in a 20 percent fall in aggregate demand. This hit will be felt by both asset and commodity markets: asset prices will fall, as will output and employment. The government’s attempts to counter this–by running a deficit rather than a surplus–will initially be swamped by the sheer scale of the turnaround in debt-financed spending. Even if the government runs a deficit of A$20 billion–the same scale as this year’s intended surplus–it will make up for less than a tenth of the fall in debt-financed spending. The current « credit crunch » is, therefore, only the first act in a long-drawn out process of reducing debt levels. The second act will be « the recession we can’t avoid ». That recession–which will affect most of the OECD, since all major OECD nations bar France have suffered a similar blowout in private debt levels–will only add to the current decline in asset prices. (full text, August 6th, 2008);
  • … Economics would have us believe that it is a science, fully able to stand tall beside the more conventional physical sciences and mathematics. After the preceding chapters, you may be inclined to doubt that belief. Surely, whatever ‘science’ is, one might hope that it is undertaken with more impartiality, regard for the facts and logical consistency than economics has displayed. However, the critiques of conventional economics which form the substance of this book were devised by critical economists (and sometimes, inadvertently, by conventional economists themselves) and some of these critiques have been acknowledged as valid by some conventional economists. There is also a small but robust minority working on other approaches to economic analysis, as you’ll find in Chapter 14. There are thus some systematic and logical aspects to what economists in general do, which could qualify as scientific behaviour. The position I favour is that economics is a science, but a rather pathological one. I am particularly critical of what has occurred since 1950, but I still hold out hope of better behaviour in the future. But before better behaviour can take widespread root, economics will have to wean itself from a methodological myth. This is the proposition, first put by Milton Friedman, that a theory cannot be judged by its assumptions, but only by the accuracy of its predictions. Leaving aside the question of whether economics has ever accurately predicted anything, the argument that “the more significant the theory, the more unrealistic [are] the assumptions” is simply bad philosophy. The kernel: … (full long text).

links:

The real-world economics review, newsletter, issue no. 49: How should the
collapse of the world financial system affect economics? Part II – downloadable as the whole issue, 94 pdf-pages;

To download articles individually by clicking on their pdf link, subscribe first the free newsletter, you’ll find the links in it … see also its Back issues;

Paul Ormerod;

The Levi Economics Institute of Bard College, its database … and on wikipedia;

First-home grant should be free loan, March 24, 2009;

Dismal science of economics faces dilemma, March 25, 2009;

Categories on wikipedia: