Debunking Economics – Revised, Expanded and Integrated Edition: The Naked .. (nbafinals.info), while my. This supplement to Debunking Economics – Revised and Expanded. Edition: The Naked The first edition of debunking economics was first published in the. Debunking Economics is a bold attempt to shake the foundations of the neoclassical economic mainstream. Embarking on this review, we had suspected we.
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Debunking Economics – Revised and Expanded Edition: The Naked Emperor Dethroned? by Steve Keen (Zed Books, London/New York. These are "selected'' or. "built in'' from the basic forms. I call the basic drawings “ Blooks,'' after myself. PART Economics for Everyone: a Short Guide to the. Debunking Economics - Revised and Expanded Edition, now including a downloadable supplement for courses, exposes what many non-economists may have.
You'll need some math but it's not too awful. As an example of a Keen argument and the rebuttal try this. Keen says that there is a mathematical error in the description of perfect competition. When we set this model up we say that in such a model firms are price takers.
There's an infinite number of producers perhaps, meaning that no one producer is going to change prices either by entering the market or leaving it.
Keen leaps on this and points out that this simply isn't true. There is never an infinite number of producers therefore this assumption is wrong. Any entry into or exit from the market will change the total amount of production of that good.
Since demand curves do indeed slope thus entry or exit changes prices: And to one level of accuracy Keen is correct in this observation.
There aren't infinite suppliers so the presence or not of an additional one does change supply and thus prices. However, we don't actually want to know if our theories are perfect. We actually want to know whether they're good enough.
Just to switch subjects we do know that Newton's Laws of Motion are not perfectly correct. In certain extreme circumstances for example, intense gravitational fields we need to use Einstein's rules instead. But this doesn't stop us using Newton's rules to work out who hit who in a car crash, what direction they were traveling in or how fast they were going when they hit.
Check it out on his author profile. In summary, he explains that the last 30 years of growth have been fueled by a credit bubble where banks basically went wild making money from lending. Where credit is used to fund speculation i. We were assured by the economists it was all stable because the banks knew what they were doing and wouldn't do anything stupid.
Don't we know now how untrue that was. The only way to recovery is for the bad debt to be worked out of the system. This means either 20 years of destroyed lives waiting for the debt to be worked out that way or do an Argentina and just refuse to pay the banks who were responsible for this fucking mess in the first place. Then we need to rebuild the financial system to stop banks from doing it again. Update 17 November Keen has come up with the second edition of this book.
He was interviewed for the blog, naked capitalism. Part I of the interview can be read here. But this process requires a degree of dispassionate separation between the empirical data and the theories. What I can say, however, is that he does explain clearly and logically why neo-classical economics is a complete bunk.
First he explains them and then goes on to show their internal contradictions and mathematical inaccuracies. Finally, he points us to actual published economic work written by real-life or now dead economists working out these concepts.
Maths you say? Sounds like a real snore fest. He keeps it to a minimum, and you can keep the damage to a minimum by just skimming it. He shows that more so than a science, and despite its own claims to the contrary, modern neoclassical economics operates as an ideology or even a religion that refuses to acknowledge its own shortcomings and inconsistencies. In addition to his fierce Debunking Economics offered an excellent and thorough dressing down of modern neoclassical economics.
In addition to his fierce condemnation of neoclassical economics and its many follies, Keen provides an exciting snapshot of the alternative economic schools of thought that are beginning to emerge and how each compares to the neoclassical mainstream.
View 1 comment. May 19, Miguel Buddle rated it really liked it. Fascinating book. It would have helped to have more of a grounding in economics at even the undergrad level, but slow consumption and re-reading 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.
Jan 13, Justin rated it it was amazing Shelves: A manifestly important book. If, like me, you sat in undergrad economics classes thinking or even saying 'but Eagerly await his next book. Jun 17, Karl H. Debunking Economics is a non-Marxist, non-neoclassical portrait of the field of economics. It attempts to explain why economics is a field filled with unproven and erroneous assumptions. While his prediction of the present economic crisis is impressive, I feel the rest of the work is merely okay.
The style of Debunking Economics alternates in feel between an off-handed chumminess and the dryness of an economic textbook. The introductions and conclusions are too familiar in tone to feel impartial Debunking Economics is a non-Marxist, non-neoclassical portrait of the field of economics.
The introductions and conclusions are too familiar in tone to feel impartial. At one point, he exhorts us to pour a cup of coffee, because the next chapter will be boring.
None of the other chapters were any less or more boring though. The actual meat of the arguments is fairly technical. There are still tons of graphs, charts, jargon, technical arguments, and, yes, equations. They are phrased in word format, which if anything is even more confusing and tedious than reading a bunch of variables. I guess they seemed plausible where I understood them but not everything was completely persuasive.
Okay, makes sense. The average household with 2. Another critique argues that neoclassical models of supply have marginal costs increasing as more and more units are produced. Keen argues that in fact, marginal costs remain constant or decrease past a certain point, and assuming you could sell widgets at a constant price, you would produce an infinite number of them. Therefore production is only limited by marketing. After all, at some point you must download a limited resource that simply exists land, raw resources, etc.
Each new widget you produce must have these inputs and therefore each new widget made increases the demand for these inputs and consequently the price.
In addition, I found many of its arguments to be not quite as clear cut as the author presents them. Mar 29, Elinor Hurst rated it really liked it.
This book was not an easy read, but it gets four stars 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 mathemati This book was not an easy read, but it gets four stars from me as in many ways I found it an utter eye opener.
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. 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, non-equilibrium system: 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 so-called "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 non-economist 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 book'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.
Sep 14, tom bomp rated it it was ok Shelves: Not very clear or convincing.
Constantly feel like I need a glossary uses "marginal productivity", "marginal product of labour" and "marginal revenue product" near interchangeably for example. No idea what makes each different. I fully admit this is at least partially my own fault - it would be ridiculous to expect to understand a huge amount of economics just reading straight through. But I felt it could have been made easier. I felt often like I could see how a neoclassical economist would r Not very clear or convincing.
I felt often like I could see how a neoclassical economist would rebut what's being said, although obviously not the details.
I'm no friend of neoclassical economics but he seems to sell it a bit short - teaching ridiculously simplistic assumptions to undergrads and then teaching stuff closer to reality later is sadly pretty typical. He shows that the basis of neoclassical economics is crap but a lot of what he says is "right" feels remarkably similar.
A lot of the time it didn't feel like it was hitting the right mark between "teaching neoclassical economics and showing the problems" and "sketching out an alternative".
Why is it taken as a given that capital makes a profit in and of itself? It's just stated with no evidence chapter 7, while explaining Sraffa. Coming from a Marxist perspective it feels pretty pathetic.
He apparently knows a lot about Marx but he makes a few criticisms which are just absurd - for example, the idea he quotes of a "commodity residue", which should somehow "prove" the labour theory of value is incorrect by showing that there's always a commodity that labour has to work with.
This ignores that capitalism is presented by Marx as historical therefore not everything previously made has been a capitalist commodity for a start. This article gives a lot of criticism of this particular section. He thinks science can be non-ideological but economics isn't and seems to think that the reason for this has nothing to do with the role of economics or anything, just that economists are stubborn or something.
Really it's not my ideological problems that are frustrating me, it's just that I'm not really building up a super clear picture either of neoclassical economics or his alternative because it's tough going with little help from the text in terms of either a glossary, summaries of concepts or anything like that.
I don't know if I'm expecting too much but I guess it's important to point out that if you're looking for an intro to economics combined with a criticism of it you'll have a lot of trouble most likely.
Aug 23, Patrick rated it liked it. A review of Debunking Economics: The basic message Keen is trying to send is a vitally important one: Neoclassical economics is failing. Models based around rational agents and static equilibrium simply fail to represent the real world, and and as a result give policymakers a false sense of security against economic crisis.
The way Keen delivers this message is by avalanche: Page after page, chapter after chapter, he tears apart neoclassical economics piece by piece.
His goal, indeed, is not to show that the theory is wrong—refuting even a few assumptions or equations would do that—but rather to show that it is rotten to the core, that virtually every assumption and every equation is defective. And this, I think, is Keen's greatest failing.
Some of the walls he tries to tear down are stronger than he imagines them to be, and this draws attention away from the very real gaps in the walls of the citadel. He also has this weird obsession with "what they originally meant"; he clearly knows a great deal about the history of economics and economists, and so I'm inclined to think he's basically right about what Keynes, Marx, Von Neumann, etc. These men were brilliant, and many of their insights are useful, but they were still wrong about a lot of things.
Even Darwin and Einstein made mistakes, and Marx was no Darwin. All the way throughout the book, Keen seems intent on showing that neoclassical economics is wrong, wrong, wrong, about everything, in every possible way. But this was not necessary; reversed stupidity is not intelligence.
Neoclassical economics does not get everything wrong; in fact, it probably gets more things right than the general folk notions most people have about economics.
I doubt most people realize that sales taxes create deadweight loss, for example, or that the money supply is largely created by bank loans and isn't backed by any commodity; yet these are things that neoclassicists definitely do understand quite well.
Neoclassical economics is wrong not at the core, but at the margins; but isn't it neoclassicists most of all who taught us that margins are everything? My complete review was too long for Goodreads and will be posted at pnrj. A crucial work for understanding the failures of neoclassical economics: For people, like me, who had almost given up entirely on the academic field of Economics because of ridiculous theories and poor teaching, there is fortunately still Steve Keen.
In this book, the Australian Keen shows the errors of the standard views of neoclassical orthodox economics. Not just some side aspects of the theory, but the actual core views of economics as it is taught in universities everywhere unravels befor A crucial work for understanding the failures of neoclassical economics: Not just some side aspects of the theory, but the actual core views of economics as it is taught in universities everywhere unravels before your eyes.
Keen masterfully applies both economic models and historical analysis to show that orthodox economists not only do not know what theories exist in their own field, but they also have no inkling of the history of economics and what this means for their approach.
This, combined with a possibly even poorer understanding of the philosophy of science Keen uses Milton Friedman as the main example, but more could have been named , leads to a series of ridiculous assumptions and even more ridiculous results.
That the economists consistently ignore the way industrial managers and market analysts etc. The book is heavy reading for those with no knowledge of economics or maths, but certainly not impossible.
A basic understanding of economics and mathematics as taught at high school level at least in The Netherlands goes a long way, and Keen fortunately writes well and attempts to avoid long mathematical proofs as much as possible.
The only downside to the book is that his treatment of alternative theories, especially the quite closely linked Austrian school of economics, is very short and vague. This leads to the impression that Keen knows what's wrong with neoclassics, but not what is to be done instead. Therefore, start by reading this book, but don't end there. From a review by Joe McCauley "This book provides a far more clear explanation of the ideas of standard economic theory neo-classical economics than do the standard texts compare with Samuelson, Mankiw, or Barro, e.
The book explains utility maximization, indifference curves, and the assumptions underlying the standard economic model that is used by the IMF, the World Bank and all major western governments. Keen uses simple language that even the lay person can follow. The text should be s From a review by Joe McCauley "This book provides a far more clear explanation of the ideas of standard economic theory neo-classical economics than do the standard texts compare with Samuelson, Mankiw, or Barro, e.
The text should be standard reading for every student of elementary economics, but even an experienced economist like Alan Greenspan might benefit from the clarity of thought displayed therein. Macroeconomic theory is covered from the right perspective, from the result of Sonnenshein et el - all which shows the basis in microeconomic theory for the standard macroeconomic model.
Kirman is mentioned but his seminal connection of liquidity demand with uncertainty is not discussed. The work of Radner should have been included, but then Samuelson and Varian do not discuss Radner's contribution either. Chapter 7 presents the correct perspective on general equilibrium theory, with good advice for students of econ Chapter 8 on Keynes is outstanding, presenting the clearest and even correct!
Marx's contribution to the basics of capitalism, the recognition of the central role played by the profit motive, is also made apparent in the Keynsian context. Hicks' interpretation of Keynes' ideas is also correctly presented.
All in all, students of economics would be well advised to make Keen's book their main econ text. Jun 22, Kevin Varney rated it really liked it Shelves: I am only part way through at the moment, but he has convinced me.
I've never studied economics properly but I have read a few books. It seems that neo-classical economics is a mathematical theory that relies on some assumptions, but the maths is wrong and the assumptions are unrealistic.
Substituting an infinitesimal for zero seems like a really invalid thing to do in a mathematical equation. Then, if someone does deduce a grand theory as a thought experiment, someone else should at least be ab I am only part way through at the moment, but he has convinced me. Then, if someone does deduce a grand theory as a thought experiment, someone else should at least be able to verify it against real data. It seems the theory is useless to businesses, but is still used to set policy.
I have to say, although it is interesting, I am having quite a lot of difficulty in following it. Update - it's weird, absolutely weird. Whenever you hear an economist on a current affairs programme, they sound like they know what they are talking about. However, according to Keen, even the fundamentals of this discipline are pretty shaky.