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Debunking Economics - Revised and Expanded Edition: The Naked Emperor Dethroned? Hardcover – 22 Sep 2011

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Product details

  • Hardcover: 350 pages
  • Publisher: Zed Books Ltd; Second edition (22 Sep 2011)
  • Language: English
  • ISBN-10: 1848139934
  • ISBN-13: 978-1848139930
  • Product Dimensions: 15.2 x 5.1 x 25.4 cm
  • Average Customer Review: 4.6 out of 5 stars  See all reviews (27 customer reviews)
  • Amazon Bestsellers Rank: 2,601,944 in Books (See Top 100 in Books)
  • See Complete Table of Contents

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Product Description


If you are interested in how the economy really works (and want to challenge an economist) then read this book --James Dick, Professional Members Division, The Economic Society of Australia

Praise for the first edition: ' Particularly useful to those, like myself, who are interested in economics but not formally trained in it. Debunking Economics reveals that neoclassical economic doctrines are faulty... because the fundamental assumptions from which such doctrines have been derived are less than self-evident' --Henry C.K. Liu, Chairman, Liu Investment Group

'Keen s serious but accessible look at the shaky logical and mathematical foundations of neoclassical economics will be of great interest to students and open-minded economists alike. And his insightful survey of alternative schools of thought lends substance to his call for a new economics. ' --Don Goldstein, Associate Professor of Economics, Allegheny College

About the Author

Steve Keen is Associate Professor of Economics & Finance at the University of Western Sydney. Steve predicted the financial crisis as long ago as December 2005, and warned that back in 1995 that a period of apparent stability could merely be 'the calm before the storm'. ----- He received the Revere Award from the Real World Economics Review for being 'the economist who most cogently warned of the crisis, and whose work is most likely to prevent future crises.'

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28 of 28 people found the following review helpful By Tim Chapman on 1 Nov 2011
Format: Paperback
Must admit that I missed the publication of the first edition in 2000, but I am certainly pleased to have picked up the second edition. This book is remarkable on several counts.
Firstly, it is an accurate, and quite objective, review of the state of neo-classical economics. At every turn the author backs up his observations and provides a clear analysis of the fundamental problems faced by the 'body of knowledge' taught to A level and under-graduate students. I really can't take exception to any of his points - they are well argued and patently true. His debunking of representative agent models, whilst not the most difficult thing in the world to carry out, is firmly based on logic and as mathematical in nature as the reprehensible models he rubbishes. Job done.
Secondly, it is a cogent argument for why disequilibrium models must form the foundation of economic's 'body of knowledge'. The exact form of those models can certainly be debated, but at the very least we must move away from pretending that a capitalist economy is, at any time, in equilibrium! The ease with which Steve Keen develops a working model of capitalism and its inherent instability should be sufficient to convince any rational person (so that excludes neo-classical economists).
Thirdly, it's simply a good read! Even when Steve Keen moves into "I told you so" mode, he's funny - when was the last time you read a humorous economics text (and I don't include Freakanomics in that set)?
Finally, it's refreshing to see Marx, Sraffa, Schumpeter, Keynes and Minsky portrayed in the kind light that they richly deserve - Keen is an excellent advocate for these 'sensible thinkers' and I thank him for this. The text's bibliography is worth the price of the book alone!
All in all, a great text which will probably get ignored or marginalised. At any rate, Steve, you get my vote for the clearest thinking economist since Minsky et al. I look forward to your next work.
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88 of 91 people found the following review helpful By Jasper Z on 12 Oct 2011
Format: Paperback
Read this book. Simply put, Keen's book should be required reading for economists, investors, and bankers, and most especially for central bankers. It should also be read by economics students, to street-proof them against neo-classical economics doctrine. The neo-classical synthesis has for some decades been so dominant that it is presented as fact, and most students will never even hear that there are alternative schools of economic thought. It is high time for people to realise that neo-classical economics is not a useful simplification, but rather, it is an irrealist dogma that is wrong root and branch, a dogma that has led and continues to lead to profound mistakes in outlook and policy guidance.

A crucial part of the book explains that the root of both the Great Depression of the 1930s and the crisis we are in today is a result of the fact that aggregate demand in the macro-economy is composed of income plus the change in debt. Prof. Keen explains (as has long been understood in specialist circles, and every central banker knows) that when banks make loans, they are actually creating new money, not merely redistributing money from depositors to borrowers. When too many loans are issued and a debt mountain gets too great (as it has recently throughout the OECD, driven by enormous quantities of "Ponzi debt", i.e. debt-money created by banks by loaning to each other and to non-bank financial companies for speculative investment in asset bubbles), then private citizens, as well as governments, begin "deleveraging" en masse, i.e. paying down debt instead of spending on consumption or investment in real-economy infrastructure. As a result, the economy goes into a tailspin.
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36 of 37 people found the following review helpful By Dr. A. Hussain on 18 Nov 2011
Format: Paperback
... but all the evidence around you says that their medicine isn't working, this book explains why.

For years and years, I've wanted to learn enough about economics to be able to take on those who say that markets are always efficient, that government is always bad, that regulation is always bad, and that the system we have is the best possible. This book gives you the ammunition to do that.

It shows that the foundations of neoclassical economics are a good deal less solid than its practitioners' self confidence. To be frank, I was actually pretty shocked at what he reveals about the huge self-contradictions, illogic and flakymathematics underpinning the economic conventional wisdom. I'm not the most distinguished scientist in the world, but with a Cambridge PhD in Theoretical Chemistry I hope I can appreciate how good science is *supposed* to work, and what Keen reveals shows that neoclassical economics is closer to a cargo cult than a science. The words "Seriously?!", "You're kidding?" and "No way!" emerged from my lips somewhat frequently when reading. One of the things Keen points out is that frequently the problems have been known for decades and ignored by the mainstream economic community; often the problems were pointed out by the theories' original authors themselves.

Many of the charges he levels would not be heinous sins in themselves: there's nothing wrong with making simplifying assumptions in a model, or favouring linear models over more complex ones *provided* you are fully aware of and honest about the simplification, *and* you test your theory against the evidence. If your model agrees with the facts and has predictive power then you are entitled to claim that the bits of reality that you simplified don't actually matter that much.
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