303 Steve Keen

Steve Keen

Australian economist and author

Steve Keen is an Australian economist and author. He considers himself a post-Keynesian, criticising neoclassical economics as inconsistent, unscientific, and empirically unsupported.

Source: Wikipedia

  • Born: 1953 , Sydney, Australia
  • Education: UNSW Sydney (1998), UNSW Sydney (1990), Sydney Teachers' College (1977), and more
  • Contributions: Mathematical models of financial crises and debt-deflation
  • School or tradition: Post-Keynesian economics, Ecological economics

The Main Arguments

  • Critique of Modern Economics: Steve Keen argues that modern economics has become overly mathematical and disconnected from real-world applications, leading to ineffective responses to economic crises. He emphasizes that economics should focus on understanding and sustaining human civilization, rather than adhering strictly to abstract theories. This critique highlights the need for a more human-centered approach to economic theory.

  • Role of Debt in Economic Cycles: Keen discusses the significance of private debt in economic dynamics, asserting that rising levels of private debt can lead to financial crises. He explains that when credit turns negative, it can cause a slump in aggregate demand, which is often overlooked by neoclassical economists. This perspective challenges traditional views that downplay the role of credit in economic stability.

  • Energy and Economic Growth: Keen emphasizes the critical role of energy in economic theory, arguing that societies must focus on how they utilize high-grade energy sources to advance civilization. He posits that without energy exploitation, modern society would not exist, advocating for an integrated approach to economics that considers environmental sustainability.

  • Marx's Contributions and Limitations: While Keen admires Karl Marx's insights, particularly the labor theory of value, he critiques Marx for neglecting the value added by machinery in production. He suggests that both labor and machinery should be considered as sources of value, highlighting the need for a more nuanced understanding of value creation in economic systems.

  • Chaotic Dynamics in Economics: Keen introduces the concept of chaotic dynamics in economic systems, explaining how periods of stability can lead to instability. He references his own modeling work, which suggests that economic cycles can diminish over time before leading to significant downturns. This perspective challenges the notion of a stable economic equilibrium and underscores the importance of understanding the inherent instability in capitalist economies.

Any Notable Quotes

  • "Economics should be about understanding how human civilization comes about and how it can be maintained."

  • This quote encapsulates Keen's belief that economics must focus on real-world applications rather than abstract theories.

  • "The soul of economics really is to explain how do we manage to build a civilization that elevates us so far above the energy and consumption levels of the base environment of the earth."

  • Keen emphasizes the fundamental role of energy in economic theory, suggesting it is often overlooked.

  • "Economists have been using entirely the wrong mathematics to start with."

  • This statement underscores Keen's critique of the mathematical foundations of modern economics, advocating for a paradigm shift.

  • "Money is fundamentally the liabilities of the banking sector."

  • This quote reflects Keen's perspective on the nature of money, challenging traditional views that see money as a commodity.

  • "The more debtors pay, the more they owe."

  • This quote highlights the paradox of debt deflation, illustrating how attempts to repay debt can lead to greater financial burdens.

Relevant Topics or Themes

  • Complex Systems and Economics: The episode explores the complexity of economic systems, emphasizing that traditional economic models often fail to capture the dynamic and unstable nature of real-world economies. Keen advocates for a systems engineering approach to economics, which could better account for these complexities.

  • Historical Context of Economic Theories: Keen provides a thorough historical analysis of economic thought, discussing how different schools of thought have shaped contemporary economics. This theme connects to broader societal issues by illustrating how economic theories influence policy and practice.

  • Role of Money in the Economy: The discussion on money, particularly Keen's assertion that money is a liability of the banking sector, challenges conventional wisdom and invites listeners to reconsider the fundamental nature of money and its role in economic transactions.

  • Environmental Considerations in Economics: Keen's emphasis on energy and environmental factors highlights the need for economics to address sustainability and ecological impacts, connecting economic theory to pressing global challenges.

  • Marxian Economics and Labor: The exploration of Marx's labor theory of value and its implications for understanding capitalism serves as a critical lens through which to analyze contemporary economic issues, particularly regarding labor rights and value creation.

  • Collective Intelligence vs. Individual Intelligence: Keen discusses the dichotomy between individual intelligence and collective decision-making, suggesting that while humans are capable of great individual insights, collective behavior can lead to destructive outcomes. This theme raises questions about how societies can harness individual creativity while mitigating collective irrationality.

  • The Future of AI and Consciousness: The conversation touches on the implications of artificial intelligence and the potential for machines to possess consciousness. Keen expresses skepticism about the feasibility of creating truly conscious machines, raising ethical considerations about the nature of intelligence and the responsibilities that come with it.