Created by: gwideman, Dec 28, 2011 12:33 am
Revised by: gwideman, Aug 30, 2012 4:36 pm (6 revisions)

Page for collecting notes on the work of Steve Keen

Steve Keen in a nutshell

  • My summary of SK's two central underlying themes:
    • The economy is a dynamic system with feedbacks, and hence understanding it requires use of the tools customarily used for understanding dynamic systems: Differential (or difference) equations and simulations. Expect chaos and complexity until proven otherwise.
      • Point to emphasize this: If an economic model can't model periodic economic crises, then it's not a model of the real economy.
    • The role of money and finance in the economy is crucial (and played a crucial role in current crisis, and also 1929), but left out of traditional economic analysis.
      • So models and simulations must incorporate money and finance, in particular debt, how it's created, dynamics, and so on.

  • SK's books and courses pursue these subthemes
    • Critique of the overall neoclassical approach; micro and macro economics
      • Because the models aren't dynamic, they are based on assumptions of equilibria, and are thus too simple to model crises.
        • Crises are treated as unexpected disruptions from outside the system.
      • A separate line of critique against many individual components of traditional economics, showing that the theories don't even have correct internal logic
      • The absence of money and debt in traditional economics means that the impact of these features on the economy can't show up in traditional economics
    • Advocacy and simulation of dynamic models
      • Including money and debt behaviour.
      • Behavior of main variables of economic analysis (such as level of production, level of employment etc) will tend to cycle around attractors. There may be some points in the midrange of those cycles, but these are not equilibria.
      • SK derives models that often include components that are based on the observations of past economists, rethought and implemented "properly" in dynamic form.
      • Models with plausible dynamic components readily generate the variety of behavior seen in the real economy, both tranquil periods, and also crises.
    • Analysis of metrics of the economy, particularly ones which SK used to predict the current crisis.
      • Notably ratio of private debt to GDP.

Steve Keen websites

Steve Keen appearances

There are many on YouTube and elsewhere. I'm just going to link to ones to which I attach special significance.

Notable Publications and Videos