Few people saw the Global Financial Crisis coming. Steve Keen was one of them. He is a ferocious critic of the neoclassical school of economics, which continues to dictate thinking within governments, universities and the financial sector. Steve is a maverick and a contrarian, with an anti-authoritarian streak – labels you rarely hear applied to economics professors. In 2001, he published his central critique in a book, Debunking Economics. He now teaches at Kingston University in London.
In this episode, Steve offers the Swagmen an insight into his unique worldview. We discuss why economics is flawed, whether he actually ever lost the notorious housing market bet he made in 2010, and why the world, including Australia, is headed for another economic crash – within the next two years.
– Keynes’ General Theory of Employment
– Hyman Minsky’s Can ‘It’ Happen Again?
– Steve Keen’s Debunking Economics
– Thoman Kuhn’s The Structure of Scientific Revolutions
– John Anderson’s More is Different
– Steve Keen’s Can We Avoid Another Financial Crisis?
– Steve Keen’s DebtDeflation blog
– Hyman Minsky’s John Maynard Keynes
– John Blatt’s Dynamic Economic Systems
Neoclassical Economics (Friedrich Hayek): Neoclassical economics is an approach to economics focusing on the relationship of goods, outputs, and income distributions in markets through supply and demand.
Keynesian Economics: In the short run, and especially during recessions, economic output is strongly influenced by demand (total spending in the economy).
Supply/demand curves: Demand refers to how much (quantity) of a product or service is desired by buyers. Supply represents how much the market can offer.
Keynesian/Neoclassical Synthesis: A post WWII movement in economics that worked towards absorbing the theories of Keynes into Neoclassical Economics (see above).
First Principles Reasoning: A first principle is a basic, foundational, self-evident proposition or assumption that cannot be deduced from any other proposition or assumption. First principles do not make assumptions in their arguments.
2nd Law of Thermodynamics: The second law of thermodynamics says that when energy changes from one form to another form, disorder increases. Put simply, when a transfer of energy occurs, there is a residual amount of energy that is left redundant.