Debunking Economics: Closing Notes

This is my final post on Steve Keen’s Debunking Economics, just to close the series and give some thoughts on the book as a whole.

The main aim of blogging Keen’s book was really to provide a platform for people to discuss the numerous inconsistencies (whether purported or real) that have arisen in neoclassical economics over time. Generally a Google of Keen will, predictably, contain outright (often vitriolic) dismissals from economists, coupled with some cheer leading from those on his side. Rarely, in my experience, will you find much substantive discussion of his ideas. Hopefully I’ve communicated these ideas in a (relatively) digestible way, and they can now be discussed openly.

I would encourage people who have enjoyed the series to read the actual book. My presentation of each chapter was necessarily shortened, omitting certain prongs of criticism: discussions of the history of thought; numerical examples; plain leaving out certain parts (for example Keen’s firm simulation model and his discussion of Von Neumann on utility). For this reason, anyone truly interested in Keen’s criticisms should read the book first hand. However, I would not recommend it alone for anybody not already versed in some basic economics and mathematics. Keen does a good job of explaining the concepts he is going to critique, but the fact is that both explaining and ‘Debunking’ Economics perfectly in a single book is simply not possible.

There is a largely superficial criticism of Keen that you will see floating around (so superficial that I am loath to address it formally): that he claims to become sort of mathematical genius blessed with insights that economists have missed for 100+ years. Of course, this is nonsense – there is not a single area in the book where Keen claims outright originality. Every critique he channels was either first noticed, else fully elucidated by, another economist or academic (often neoclassical economists themselves). Keen’s book is a culmination of a century of criticisms, all of which have been swept under the rug or dismissed, often without due justification.

Keen’s approach of critiquing each area on the grounds of internal inconsistency certainly has both advantages and drawbacks. The main advantage is that the critiques are not interdependent, so even if one fails to hold then it can still be shown that there are significant flaws in neoclassicism. The main disadvantage with this approach is that it requires Keen to assume concepts he criticises elsewhere are actually sound. Such an approach is almost bound – by probability – to be hit and miss. Can we really hope to show that absolutely every facet of neoclassical economics is internally inconsistent? In my opinion, Keen’s quest to dismantle neoclassicism from every angle might at times leads him astray from the overall goal. (The approach also necessitates some repetition, and I felt that some of the chapters could have been better arranged – for example, chapters 11 and 15 could surely have been merged).

Nevertheless, the match must be scored to Keen overall. His approach is helpful insofar as it sheds some light into what can often be a ‘black box’ of assumptions and mechanics that comprise many neoclassical models. What is really needed now is for someone to build a ‘ground up’ critique that combines discussion of conceptual errors, contradictions, and empirical irrelevance. Keen does not really talk about conceptual errors, and only really discusses empirical evidence in his section on alternatives. For me, a sustained critique would reject key areas of neoclassicism on various grounds, building up a positive heterodox view based on alternatives along the way. But I understand that was not really Keen’s intent.

I’m sure I will be drawn back to commenting on Keen’s work in the future, hopefully because economists continue to pay attention to it, whether civil or not. But this post concludes my comments on Debunking Economics.

Update: some commenters seem to have interpreted this post as me ending the blog. That is not so! The blog existed for 6 months prior to this series and will continue after it.