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on 11 May 2009
For people, like me, who had almost given up entirely on the academic field of Economics when I first started reading on the topic 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 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. do NOT apply their pet theories is just the icing on the cake.

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, and his criticism of Marxist economics is incompetent and useless, done from a Sraffian perspective. 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.
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on 7 March 2010
Many years ago while I was studying economics, our tutor group was set an exercise framed as, "given that a firm's cumulative cost/output curve is S-shaped, show that it's average cost vurve is U-shaped". As a mathematics major I chafed at the lack of rigour in the terms "S-shaped" and "U-shaped" and set out to demonstrate that what I was asked to show was not true.

A polite request to my applied maths tutor elicited an old handbook of mathematical functions written in Polish. The Polish was no problem, since I could find what I wanted from the mathematical notation alone. Soon I found a curve based on two exponential functions, each with a parameter. By tweaking the parameters I could generate different S-shaped curves, two of which were of interest. Taking each as a cumulative cost curve, it was easy to show that one led to an average-cost curve that was downward-sloping over most of its domain while the other was upward-sloping over the same domain. Moreover, variation of the parameters enabled me to make the domains of positive or negative average cost curve slope as long as I wished. My conclusion was that what I was asked to prove could easily be false in many practical cases. This attracted the wrath of my economics tutor who duly berated me for being too cocky - and shortly after that I dropped economics as a subject.

Steve Keen's book tells me, after many years, that my scientific instincts about mainstream economics were very well founded. "Debunking Economics" is probably best read in conjunction with a single-volume standard economics textbook. (While I was reading it I referred to "Economics" 3ed by Begg Fisher and Dornbusch.) What Keen shows is that the assumptions unerlying the models used by neoclassical (i.e. mainstream) economics do not correspond to reality (bad science) and that their elaboration often contains logical contradictions (bad mathematics). In fact very little of neoclassical economics stands up to any rigorous scrutiny.

The sad thing about it is that many academic economists know that it's all a mess but have to teach it to students because neoclassical economists dominate in academic departments and economists who investigate models outside the neoclassical paradigm are often unable to get tenured university posts. (This situation parallels that described in relation to physics and string theory in Smolin's "The Trouble With Physics").

Given the extent to which the opinions of economists influence economic policy, this situation is very worrying and Keen has done sceptics a great service in writing this book. It should, IMO, be read by all students of economics, preferably *before* they start their university courses.

All intellectual progress depends on people who are prepared to denounce twaddle. If there were any justice, Keen should have got the Nobel Prize in Economics for this book - because it pulls the rug from under the worthless output of many others who did win it.
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on 14 February 2002
interesting review, VERY readable, the guy is a very good writer, i am not an economist so i can't really be dogmatic, but i liked it and believe it would complement well paul ormerods two books (death of economics and butterfly economics)
it also left me wanting to read this guy pierro sraffa in the original, but sadly he seems to be out of print
well worth aread anyhow
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on 5 October 2010
I bought this book on the understanding that it was written for a "educated lay person"... Educated in what? The Preface was interesting and insightful, but after that I was totally lost. I remember buying a book on economics at the age of 20, but found the subject incomprehensible. Thirty years on, and I still understand nothing of it. This book was disappointment.

If you have some understanding of neoclassical economics, then there MIGHT be SOMETHING (?) in the book for you, otherwise leave well alone (or borrow a copy). Written in 2001, before the current economic breakdown, all I can say is: I'm hardly surprised that current day economists are getting things so horribly wrong. One thing I can understand, and agree with, is Keen's statement that they all deserve the sack.

Keen's style of writing is not for me. Even basic concepts meant little to me. The book is stuffed full of jargon and poorly explained graphs. I guess the subject should stay as academic mumbo-jumbo sudo-science. An introduction to neoclassical economics is clearly an impossible task, "the proof of the pudding is in the eating" and I got a severe dose of indigestion!
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on 6 October 2011
This review is somewhat late in coming, considering that the second edition of this book has just been launched! However, I imagine that whichever edition you get a chance to read, either will enlighten you. If you've ever suspected that the simplistic assumptions and linear maths which are used to justify the foundation assumptions of modern economic theory are just too simple to be valid or useful, this is the book for you.

My background in engineering taught me that assumptions are at the heart of making models. So far, economics and engineering agree. While the assumptions are valid, the model can be used with some range of accuracy predicted by the model's assumptions. Here, engineering and economics differ greatly. Economics, for example, assumes personal preferences, for example, are independent. In certain limited and specific circumstances which most certainly don't apply to a lot of the real-world, these assumptions could be valid, to a certain degree of accuracy. Economic theory takes this assumption and runs with it, applying it as gospel to every market on earth and aggregates any number of people. Apparently, this nebulous idea of what an individual will do can be just added to that of all other people, with no concept of time, overshoot, etc.

While I had long thought the same, it was nice to read Steve Keen's book and have this confirmed by someone who trained as an economist but somehow didn't swallow the standard story. As such, I'm not sure if it would convince the die-hards. From other comments on this book, full as they are of confused arguments, it seems it would not.

My great bone to pick with this book is that the formulae should really have been presented as such. A formula expressed in english helps no one. The non-mathematical reader won't understand the formulae in "plain english", and the readers with a mathematical background will find it awkward to read and correspondingly harder to follow. Mathematics is all about the manipulation of symbols - boil it down to the minimum symbols and it's easier to absorb.

In any case, I'm looking forward to reading the second edition, which is always a good sign for a book!
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on 23 April 2010
A great book explaining for the interested layperson why economics 'talking heads' should be listened to with skepticism.
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on 2 March 2003
This book is amazing,Keen has compacted in one volume a completeand accurate account and case against the libertairian and free-market fundementalists that plague the established economic order of today. His tone is clear and although a difficult read his presentation and communication is no less tha sublime. For anyone whos suspected that those preaching the libertarian free-market ideal this book will give you the backing to stop them in their tracks. Recommend for those who have read books by Amartya Sen and Dr Chang who want a different view to the "new" right.
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