Steve Keen’s DEBUNKING ECONOMICS EXTRACTS - SIZE MATTERS - WHY I DID SEE “IT” COMING

1. Steve Keen’s DEBUNKING ECONOMICS EXTRACTS- SIZE MATTERS - WHY I DID SEE “IT” COMING GLENN LAUREN MOORE, BARBARA WESTERVELD EPOG_10 OCTOBER 2014

2. SUMMARY – SIZE MATTERS Focus: Neoclassical Theory of the Firm. Main idea: The competitive environment, revenue and costs of real firms are nothing like those presented by the neoclassical school of thought.

3. SUMMARY – SIZE MATTERS

4. SUMMARY – SIZE MATTERS

5. SUMMARY– SIZE MATTERS

6. SUMMARY- WHY I DID SEE “IT” COMING Focus: Neoclassical microeconomic-based equilibrium and “representative agent” models can in no way capture the destabilizing nature of finance and finance-dominated capitalism. Main idea: We live in a dynamically monetised, debt-based, cyclical, financially unstable capitalist world. Models that reflect this inherent nature must replace the unrealistic models.

7. SUMMARY- WHY I DID SEE “IT” COMING

8. EVALUATION/CRITICISM • The work contributes greatly to the critical evaluation of neoclassical economics by going into the details of its theories and mathematical reasoning. • The models are extremely useful, to what extent do complicated models fight power structures, profit motive etc, which lead to the excessive, destabilising debt in the first place? Must debt be destabilising? • It does not explain the link between dominance of neoclassical economics and lack of/narrowness of critical thinking, intellectual stimulation/curiosity, narrowness of education systems and epistemology • For better understanding the flaws of neoclassical economics, a comparable discussion of comparable length and quality of heterodox schools would be extremely useful • The material is difficult to understand for the non-economically trained reader, thus his critique might also not be fully appreciated as one must study an economics textbook to fully understand and test Keen's critique.

9. DISCUSSION (1) : NEOCLASSICAL HEGEMONY • Great Recession has againshown the serious flaws of neoclassical economics, but it did not imply the bankruptcy of it. Neoclassical economics is still the mainstream in economic research, teaching and policy. • We need a radical re-examination of economics (all schools) and social science altogether for the sake of representing reality, practical knowledge and the common good. An influential socio-political consensus on this is lacking. • Economics as a social science has been subject to a sort of divide and conquer - schools of thought are divided and the one with the most potential for political manipulation has conquered the others->brings us back to power structures and class interests. • The upcoming movements for Pluralism in economic teaching aim for changes in the economic education system, that is currently characterized by a non-critical, mathematized, neoclassical homogeneity.What is the aim of economic pluralism? Explaining economies to maintain stability, GDP growth, employment- what about change? • Danger of focus on pledging allegiance to a specific school of thought-> should be on selecting the framework that can best deal with the economic problem at hand - eg. building on Minsky for financial markets, building on Marxist imperialism/dependency theories for “developed”/“developing” countries gap • How does neoclassical economics maintain its dominance? And how can or should it be challenged? Does it have any value at all?

10. DISCUSSION (2) : REINVENTING ECONOMICS • ‘Mainstream economics in recent years has abandoned the original topics of economics such as ethics, morals, and on the contrary became somewhat lost in the refuge of analytical-technical apparatus. But mathematics is also only a language. Should the focus of our attention change just because we start to use this different language?’ (Tomas Sedlacek) • Iron curtain separating ethics and morality from economics on the whole-> linked to wider decadence of ethics and morality in social values - what do we value today as a society? Intellectual curiosity, creativity, evaluation of society replaced by consumerism, materialism, strive for a narrow notion of competitive “success” which sidelines ethics and morality. • ‘The very statement, that economics should be a positive science (value free and stating what is and not what should be) is a normative statement (a statement that carries a subjective judgement, stating how things should be). It obviously does not describe the way economics is, but the way those who say it want it to be.’ (ibid.) • The economic issues that researchers and policy makers in this globalized world deal with are inseparable from political and social, but also technical, issues that all convey ethical problems and challenges. To be able to contribute to finding answers to these topics, economists should not be afraid of studying what should be and should search for the connection with other fields of knowledge. • What should economics be about and what should it measure?

11. SUGGESTIONS FOR BROADER “ECONOMIC” KNOWLEDGE “The master-economist must possess a rare combination of gifts .... He must be mathematician, historian, statesman, philosopher -- in some degree. He must understand symbols and speak in words. He must contemplate the particular, in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man's nature or his institutions must be entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood, as aloof and incorruptible as an artist, yet sometimes as near to earth as a politician.” (Keynes) Tomas SedlacekDavid GraeberDavid Harvey Alan Watts Giovanni Arrighi Slavoj Žižek Antonio Gramsci Samir Amin Karl Polanyi Eric Hobsbawm Amartya Sen Ha-Joon Chang

12. OTHER INTERESTING ATTEMPTS Similar attempts exist: 1. Deductive Irrationality.A Commonsense Critique of Economic Rationalism by Stephen McCarthy and David Kehl 2. The Economics Anti-Textbook by Rod Hill and Tony Myatt; 3. The Skeptical Economist by J. Aldred; 4. Economics for the Rest of Us by Moshe Adler; 5. How Markets Fail by John Cassidy; 6. Animal Spirits by George Akerloff and Robert Schiller.

13. END THANK YOU!