Tuesday, 11 December 2012

Steve Keen, Bio

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Steve Keen
Post-Keynesian economics
Born(1953-03-28) March 28, 1953 (age 59)
OpposedNeoclassical economics
InfluencesHyman Minsky
Piero Sraffa
Joseph Schumpeter
François Quesnay
Irving Fisher
Basil Moore
ContributionsMathematical models of financial crises and debt-deflation
Steve Keen is a professor in economics and finance at the University of Western Sydney. He classes himself as a post-Keynesian, criticizing neoclassical economics as inconsistent, unscientific and empirically unsupported. The major influences on Keen's thinking about economics include John Maynard Keynes, Hyman Minsky, Piero Sraffa, Joseph Alois Schumpeter, and François Quesnay. He also gives credit to Marx for contributing to the "financial instability hypothesis" of Hyman Minsky.[1] His recent work mostly concentrates on mathematical modeling and simulation of financial instability. He is a Fellow at the Centre for Policy Development.



[edit] Education

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 with Honours in Economics and Economic History at the University of New South Wales. He completed his Doctor of Philosophy in Economics at the University of New South Wales in 1998.[2]

[edit] 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.[3][4] The hypothesis predicts that an overly large debt to GDP ratio can cause deflation and depression. Here, the falling of the price level results in a continually rising real quantity 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 that the current global economic crisis is the result of too much debt.

[edit] Debunking Economics

Keen's full-range critique of neoclassical economics is contained in his book Debunking Economics.[5] Keen presents a wide variety of critiques on neoclassical economic theory, and argues that they show neoclassical assumptions are fundamentally flawed. Keen claims that several neoclassical assumptions 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 that economists' overall conclusions are very sensitive to small changes in these assumptions.
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 title of ‘the’ economic theory of the 21st century." However, he argues that neoclassical economics is a degenerative research program, not generating new knowledge but growing a belt of protective auxiliary hypotheses to shield its core beliefs from critique. There is an accompanying web site which provides more detailed mathematical expositions.

[edit] Critique of neoclassical theory of the firm

Keen's work (as opposed to his popularization) has also focused on refuting the neoclassical theory of the firm, which argues that firms will set marginal revenue equal to marginal cost. Keen notes that empirical research finds real firms set price well above marginal cost: they charge a markup, often cost-plus pricing; compare fellow post-Keynesian Alfred Eichner, who also argued for markup pricing.
He cites Eiteman & Guthrie,[6] finding 89% of firms set prices above the level where marginal revenue is equal to marginal cost, as well as more recent work by Alan Blinder.[7]
Keen's article on "profit maximization, industry structure, and competition"[8] has had counter-arguments by Paul Anglin.[9]

[edit] Criticisms

Some reviewers contend that Keen has not shown what he claims, that he misrepresents economic theory, and that he gets basic mathematics wrong.[10]
Keen agrees that some more nuanced and qualified versions of neoclassical economics exist at very high levels. However he claims that his critique is aimed at the core neoclassical ideas that are taught in universities at undergraduate and postgraduate level and which are often used as the basis for policy prescriptions. As a cover blurb from Alan Isaac states, Keen's book is "A wide-ranging yet accessible critique of the staples of neoclassical pedagogy."
Matthijs Krul[11][12] maintains that Keen, while broadly accurate in his criticism of the neoclassical synthesis, generally misrepresents Marx's views in Debunking Economics and in earlier work when asserting that, in the production of commodities, machinery produces more value than it costs.[13]

[edit] Other publications

  • Lee, Frederic S. and Steve Keen (2004): "The Incoherent Emperor: A Heterodox Critique of Neoclassical 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.

[edit] See also

[edit] References

  1. ^ Keen, Steve The Debtwatch Manifesto 2012 http://www.debtdeflation.com/blogs/manifesto/
  2. ^ [1] University of Western Sydney profile
  3. ^ The Roving Cavaliers of Credit
  4. ^ Steve Keen (1995): "Finance and economic breakdown: modelling Minsky’s Financial Instability Hypothesis", Journal of Post Keynesian Economics, Vol. 17, No. 4, 607–635
  5. ^ Debunking Economics: The Naked Emperor of the Social Sciences (2001, Pluto Press Australia) ISBN 1-86403-070-4
  6. ^ Eiteman & Guthrie (1952): "The shape of the average cost curve", American Economic Review 42: 832–838
  7. ^ Blinder, Alan; et al. (1998): Asking about prices: a new approach to understanding price stickiness, Russell Sage Foundation, New York
  8. ^ Steve Keen & Russel Standish (2006):"Profit Maximization, Industry Structure, and Competition: A critique of neoclassical theory", Physica A 370: 81-85
  9. ^ Paul Anglin (2008): On the proper behavior of atoms: A comment on a critique Physica A 387: 277-280
  10. ^ David Stern, "BOOK REVIEWS: Debunking Economics", Ecological Economics Volume 39, Issue 2, November 2001,pages 319–320 [2]
  11. ^ Steve Keen’s Critique of Marx’s Theory of Value: A Rejoinder
  12. ^ Steve Keen’s critique of Marx’s Theory of Value: A rejoinder
  13. ^ Keen, S., "Use-value, Exchange-value, and the Demise of Marx's Labor Theory of Value", Journal of the History of Economic Theory, 15 (Spring 1993).

[edit] External links

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