Steve Keen

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Steve Keen bigraphy, stories - Economists

Steve Keen : biography

28 March 1953 –

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.Keen, Steve The Debtwatch Manifesto 2012 http://www.debtdeflation.com/blogs/manifesto/ His recent work mostly concentrates on mathematical modeling and simulation of financial instability. He is a Fellow at the Centre for Policy Development.

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.

MINSKY software project

See Minsky (economic model)

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 achieved its initial funding goal of $50,000.00.

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,Eiteman & Guthrie (1952): "The shape of the average cost curve", American Economic Review 42: 832–838 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.Blinder, Alan; et al. (1998): Asking about prices: a new approach to understanding price stickiness, Russell Sage Foundation, New York

Keen’s article on "profit maximization, industry structure, and competition"Steve Keen & Russel Standish (2006):, Physica A 370: 81-85 has had counter-arguments by Paul Anglin.Paul Anglin (2008): Physica A 387: 277-280

Debunking Economics

Keen’s full-range critique of neoclassical economics is contained in his book Debunking Economics. (2001, Pluto Press Australia) ISBN 1-86403-070-4 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 has attempted to counter Marx’s theory (in his view Marx’s pre-1857 view, specifically) from a post-Keynesian perspective, by arguing that machines can add more product-value over their operational lifetime than the total value of depreciation charged during those asset 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. Similar to John Roemer,John Roemer, "New Directions in Marxian Theory of Exploitation and Class", in John Roemer (ed.), Analytical Marxism (Cambridge: Cambridge University Press 1986), p. 100. Keen argues that all factors of production can add new value to outputs.