Australian economist and author (born 1953)For the Scottish football manager and former player, see Steve Kean.

Steve Keen (born 28 March 1953) is an Australian economist and author. He considers himself a post-Keynesian, criticising neocl*ical economics as inconsistent, unscientific and empirically unsupported. The major influences on Keen's thinking about economics include John Maynard Keynes, Karl Marx, Hyman Minsky, Piero Sraffa, Augusto Graziani, Joseph Alois Schumpeter, Thorstein Veblen, and François Quesnay. Hyman Minsky's financial instability hypothesis forms the main basis of his major contribution to economics which mainly concentrates on mathematical modelling and simulation of financial instability. He is a notable critic of the Australian property bubble, as he sees it.

Keen was formerly an *ociate professor of economics at University of Western Sydney, until he applied for voluntary redundancy in 2013, due to the closure of the economics program at the university. In autumn 2014, he became a professor and Head of the School of Economics, History and Politics at Kingston University in London. He is also a fellow at the Centre for Policy Development.He has since taken retirement and is crowd source funded to undertake independent research as well as being a Distinguished Research Fellow at the Ins*ute for Strategy Resilience & Security, University College of London.

Contents

• 1 Early life and education
• 2 Economics
  • 2.1 Financial instability and debt deflation
  • 2.2 Debunking Economics
  • 2.3 Critique of neocl*ical theory of the firm
  • 2.4 Politics
  • 2.5 Views on the UK's EU referendum
• 3 Minsky software project
• 4 Criticism
• 5 Other publications
• 6 See also
• 7 References
• 8 External links

Early life and education

Keen was born in Sydney in 1953. His father was a bank manager. Keen graduated with a Bachelor of Arts in 1974 and a Bachelor of Laws in 1976, both from the University of Sydney. He then completed a Diploma of Education at the Sydney Teachers College in 1977.

In 1990, he completed a Master of Commerce in economics and economic history at the University of New South Wales. He completed his PhD in economics at the University of New South Wales in 1997.

Economics

Financial instability and debt deflation

Most of Steve Keen's recent work focuses on modeling Hyman Minsky's financial instability hypothesis and Irving Fisher's debt deflation. The hypothesis predicts an overly large private debt to GDP ratio, can cause deflation and depression. Here, the falling of the price level results in a continually rising real quan*y of outstanding debt. Moreover, the continued deleveraging of outstanding debts increases the rate of deflation. Thus, debt and deflation act on and react to one another, resulting in a debt-deflation spiral. The outcome is a depression. Steve Keen argues the current global economic crisis is the result of too much private debt.

Debunking Economics

Keen's full-range critique of neocl*ical economics is contained in his book Debunking Economics. Keen presents a wide variety of critiques on neocl*ical economic theory. He argues they show neocl*ical *umptions which are fundamentally flawed. Keen claims several neocl*ical *umptions are empirically unsupported (that is, they are unsupported by observable and repeatable phenomena) nor are they desirable for society at large (that is, they do not necessarily produce either efficiency or equity for the majority). He argues economists' overall conclusions are very sensitive to small changes in these *umptions.

Keen has attempted to counter Karl Marx's theory (in his view Marx's pre-1857 view, specifically) from a post-Keynesian perspective, by arguing machines can add more product-value over their operational lifetime than the total value of depreciation charged "during those *et lives".

For example, the total value of sausages produced by a sausage machine over its useful life might be greater than the value of the machine. Depreciation, he implies, was the weak point in Marx's social accounting system all along. Keen argues all factors of production can add new value to outputs. However he gives credit to Marx for contributing to the "financial instability hypothesis" of Hyman Minsky.

Keen's book closes with a survey of various schools of heterodox economics, concluding "None of these is at present strong enough or complete enough to declare itself a contender for the *le of 'the' economic theory of the 21st century." However, he argues neocl*ical economics is a degenerative research program, not generating new knowledge. It primarily grows a belt of protective auxiliary hypotheses to shield its core beliefs from critique. There is an accompanying website which provides more detailed mathematical expositions.

Critique of neocl*ical theory of the firm

Keen's work has also focused on refuting the neocl*ical theory of the firm, which argues firms will set marginal revenue equal to marginal cost. Keen notes empirical research finds real firms set price well above marginal cost: they charge a markup, often cost-plus pricing.

Keen's article on "profit maximisation, industry structure, and compe*ion" has had counter-arguments by Paul Anglin. Chris Auld has additionally shown that Keen & Standish's argument is inconsistent with standard *umptions used in perfect compe*ion, and their *ysis uses calculus improperly.

Politics

In August 2015, Keen endorsed Jeremy Corbyn's campaign in the Labour Party leadership election. As of October 2021, Keen plans to run as a senate candidate in the 2022 Australian federal election for The New Liberals in New South Wales.

Views on the UK's EU referendum

Keen was in favour of the UK leaving the European Union, stating mainstream economists were over-certain and exaggerating the likely effects following the country's withdrawal. Keen regards the open-borders free-movement policy of the EU as precipitate and unsustainable in the absence of a common fiscal policy; all the more so, given how migrants impose burdens on public services in destination countries also experiencing austerity.

He also states the Euro is destined to fail, not least because of the way it penalises recession-hit countries unable to pursue expansive fiscal policy, and indeed considers the whole EU project as a failed one destined for collapse.

Minsky software project

Recently, Keen commissioned the development of a software package called Minsky for visually modelling national economies, in a way that is intended to be more accurate than mainstream macroeconomic models – which he contends do not properly include debt and banking. He envisages it being used for both educational and research purposes.

The first phase of the development was funded by an academic research grant, as is typical for academic research projects – but in February 2013 Keen launched a crowdfunding project on Kickstarter to allow members of the public to contribute towards taking MINSKY to the next level of development. In the first 24 hours, this project raised approximately 15% of its funding target, and has since fully achieved its initial funding goal of $50,000.00.

Criticism

Chris Auld claims many of Keen's arguments in "Debunking Economics" against modern economics are invalid. He *erts Keen's critique of perfect compe*ion is based on mathematical mistakes, and misconceptions of basic microeconomics theory. Regarding Keen's critique modern economics does not consider dynamics, he claims this is wrong, even in undergraduate textbooks. He also *erts what he claims are mathematical flaws of the model Keen proposes.

Matthijs Krul maintains that Keen, while broadly accurate in his criticism of the neocl*ical synthesis, generally misrepresents Marx's views in Debunking Economics and in earlier work when *erting that, in the production of commodities, machinery produces more value than it costs.

Austrian School economists Robert P. Murphy and Gene Callahan claim Keen's 2001 book "suffers from many of the very faults of which he accuses the mainstream". They also claim that much of his work is "ideologically motivated even while criticising neocl*ical economics for being ideological". They praise his critique of perfect compe*ion and his chapter on dynamic vs. static models, whilst they criticise his attempts at objective value theory and what they claim is his misrepresentation of the Austrian School interpretation of Say's law.

Other publications

• Keen, Steve (2021). The New Economics. A manifesto. Polity. ISBN:9781509545292.
• Keen, Steve (2017). Can We Avoid Another Financial Crisis? Polity. ISBN:9781509513734.
• Keen, Steve (2015). Developing an economics for the post-crisis world. World Economics *ociation and College Publications. ISBN:9781848901865.
• Lee, Frederic S. and Steve Keen (2004): "The Incoherent Emperor: A Heterodox Critique of Neocl*ical Microeconomic Theory", Review of Social Economy, V. 62, Iss. 2: 169–199
• Co-editor of: Commerce, Complexity and Evolution: Topics in Economics, Finance, Marketing, and Management: Proceedings of the Twelfth International Symposium in Economic Theory and Econometrics. New York: Cambridge University Press. ISBN:0-521-62030-9.
• The Debunking Economics Podcast: with Phil Dobbie and Prof. Steve Keen (http://debunkingeconomics.com)

See also

• Paul Ormerod
• Hyman Minsky

References

External links

• Steve Keen's Patreon posts
• Steve Keen's Deb*ch blog
• Steve Keen on Twitter
• Steve Keen at the Ins*ute for New Economic Thinking