Steve Keen: “Mainstream Economics” and Its Deadly Equilibrium Assumption

Yves here. Get a cup of coffee. This is a fast paced, information rich lecture in a series by Steve Keen for his introductory economics course. As you’ll see, this is one of his early, but essential topics: What is “mainstream economics” and why has it gone off the rails?

If you are familiar with his book Debunking Economics, you’ll recognize some of the themes here.

This is a very useful talk, since it goes into some of the dynamics within the discipline as well as probing its often dubious assumptions and results.

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    1. Chris Williams

      As an economist who was taught at the Australian National University in the 1980s, I know, now, that the profession has more in common with PolSci than it has to do with math. Yet, we had all those demand and supply graphs, ISLM, Phillips curves and so on. Very mathy, we even did Economic Stats, Accounting and Comp Sci just to round off the notion that Economic theories were like, say Physics, full of ‘laws’ that were immutable.

      Non economists, most of the rest of you, I hope, can only imagine what it feels like to know that much of what you read and thought about during those years of study was complete crap as the syllabus failed to account for fraud, corruption, how money and debt works in reality etc….

      The biggest lie is money and the notion that issuers of fiat currencies, sovereign governments, are like households and need to balance deficit spending by borrowing the shortfall in tax revenues.

      Hopefully, the new thinkers in the profession like Steve, can continue to spread their message

      1. Irrational

        Came to economics from physics and always thought economists’ ideas of mathematical rigour was hilarious! Especially all these DSE models – yeah sure, humans are like gas molecules – duh!

  1. Furzy Mouse

    Keen’s talk….cannot read the subtitles….the screen is too small, even when I go to YouTube…

    1. Vatch

      Have you tried your browser’s zoom function? This is often CTRL-Plus. CTRL-Minus reduces the size, and CTRL-Zero restores the default size.

    2. low_integer

      If you put your cursor on the bottom right corner of the video and click, the video will expand into full screen. It is one of the options in the bar that is only visible when your cursor is at the bottom of the video area, from which you can also turn the subtitles on and off. Also, press escape to exit full screen mode. Hope that makes sense.

      1. L.M. Dorsey

        Furzy Mouse is talking, I suspect, about the gray subtitles in the extended Dutch snippet that Keen embeds at the beginning of his presentation (why did he do this? why did he imagine it needed doing?). Even when Keen’s vid is fullscreen, his embed is a fraction of that, and is illegible. Unless, I guess, you are watching this on a 40″ monitor.

        Keen himself seems rushed and bored (or is it merely disgusted?) simultaneously. Meh.

        1. low_integer

          Ah yes, I see what you mean. I did think it was a bit incongruous that someone who provides so many interesting links to Yves wouldn’t know how to go into fullscreen mode…

          1. low_integer

            …and also that the subtitles I was talking about are easily visible, even at the size of the video embedded on this page. Mystery solved!

    3. ex-PFC Chuck

      I couldn’t read the subtitles on the Dutch video either.

      While we’re on the subject of less than perfect viewing experience, did anyone else encounter situations in which the audio kept on playing but the video froze? Happened to me several times on both the iPad and the XP Dell Desktop fossil. Random clicking on the screen got it started again.

  2. NOTaREALmerican

    And, don’t forget. Debt that can be rolled over is really an asset. They don’t tell ya that in e-con 101 !

  3. digi_owl

    Really brings home how much like a religion it is, where one guy’s assumption becomes established “fact”/doctrine some generations later.

  4. Knute Rife

    When I was an undergrad, I took macro and micro in very classical courses. It didn’t take long to see the “math” on the board was more conjuring than calculating. In law school I took Law and Economics from an econ prof. There were about three of us in the class who had any decent math. The prof’s “calculations” had us constantly looking at one another. One day she finally hit the limit. We pointed out to her that she had the central fraction reversed. She stood back and said (I kid you not), “Oh well, it doesn’t matter.” I turned down the sound on economic “calculations” in general after that.

    1. low_integer

      She would have hated me then, not that I’d be caught dead in an economics class, except those held by NC and peers of course. I sometimes correct my engineering professors on their math (I also make plenty of mistakes myself btw), because math is not subjective. I would not have been able to let that go until she either fixed it, or told me to leave. If it was the latter I would’ve still been telling her she was wrong as I walked out the door.

  5. MaroonBulldog

    The two schools of neoclassical economics in Hegelian Dialectic yields:

    Thesis: Freshwater
    Antithesis: Saltwater
    Synthesis: Bilge water

    At least Steve Keen is pumping the bilges, and that is a foremost service.

    1. skippy

      Hegelian Dialectic reformatted in numerical status whilst we wait for the singularity to come down off the mountain….

      Skippy… The best part is they’ll kill for it… enlightened indeed…

  6. Norb

    I appreciated the part where Steve discusses the Theory of Value. It seems to me that whoever controls the narrative on Value gains a powerful lever to move society.

    The questions of what to produce, how to produce it, and at what “cost” are the fundamental questions of life.

    The distortions of the neoclassical economists will loose power as more people realize how fraudulent their descriptions of the economy are and the contradictions with how the world actually operates become unavoidable.

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