I just finished "Debunking Economics" by Steve Keen. Kind of a mind blowing book for someone who studied economics. Keen gives an overview of the history that influenced modern economic thought, current economic theory (called neoclassical economics) and then shreds the foundation of neoclassical theory to pieces. He also takes a brief moment to shred the EMH as well as Marxist theory. He presents a brief overview of some "alternative theories" including the Austrian school.
This book answered a few questions that bothered me about how economics is taught. I think it'd be a fascinating read to anyone with a serious interest in economics. I can say that his description of how economics is taught and the culture of economists is consistent with my experiences.
Unfortunately his arguments are pretty complicated (it is an economics book) and I don't have the background to fully understand them (even after studying economics). If what he proposes it's true it shows a gaping whole in the economic theory which currently shapes policy and also blows apart the EMH.
Debunking Economics
Re: Debunking Economics
Thanks for the recommendation. I'll add it on my list.
Another book in the same vein is Economists and the Powerful, by Haring and Douglas. It doesn't talk so much about each theory's flaws as much as why some theories are discussed and developed (or not) more than others, why certain types of research will be financed and pursued but not others, the conflicts of interest of well know economists, etc. The tldr summary: economics is skewed to served the business class' interests.
Another book in the same vein is Economists and the Powerful, by Haring and Douglas. It doesn't talk so much about each theory's flaws as much as why some theories are discussed and developed (or not) more than others, why certain types of research will be financed and pursued but not others, the conflicts of interest of well know economists, etc. The tldr summary: economics is skewed to served the business class' interests.
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Riggerjack
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Re: Debunking Economics
I started with Von Mises, then Friedman, then Keynes.
I haven't read Keens, but I have heard him talking about economics in videos. I wasn't impressed. His critism seemed like it would fit right in on the McConnell economics chapter 1 and 2 threads. As though he couldn't understand the difference between assumptions used for models, and the minds that used the models. A carpenter uses a hammer, he isn't a hammer, nor is he restricted to a hammer.
Does he go anywhere with the book, or does he just tear down the work of others, assuming nobody else knows what he is talking about?
For what it's worth, I agree with loner that current economics, as taught, is focused on the perceived needs of businesses. The interesting fields have been left fallow, for lack of funding, and difficulty in measurement.
That's just a problem of personel and University politics. Time will fix both of those things.
I haven't read Keens, but I have heard him talking about economics in videos. I wasn't impressed. His critism seemed like it would fit right in on the McConnell economics chapter 1 and 2 threads. As though he couldn't understand the difference between assumptions used for models, and the minds that used the models. A carpenter uses a hammer, he isn't a hammer, nor is he restricted to a hammer.
Does he go anywhere with the book, or does he just tear down the work of others, assuming nobody else knows what he is talking about?
For what it's worth, I agree with loner that current economics, as taught, is focused on the perceived needs of businesses. The interesting fields have been left fallow, for lack of funding, and difficulty in measurement.
That's just a problem of personel and University politics. Time will fix both of those things.
Re: Debunking Economics
@RJ: The book is mostly a technical assault on neoclassical economics. In the end of the book he gives some examples of alternative models being explored at the fringes, though he acknowledges they are all underdeveloped.
The broadest summary I can give of the criticism in the book is that neoclassical economics is 1) Internally inconsistent; 2) has not acknowledged advances in mathematics since neoclassical models were created close to 100 years ago; 3) Yield poor and sometimes destructive (as in achieving the opposite effect intended) policy directives. He also attacks the culture of academic economics as self-reinforcing, intentionally confusing and inward facing (in line with what @Loner and @ RJ were saying). He argues that the neoclassical model was not meant to be a final model, but a step into the future using the best tools available at the time.
In terms of the neoclassical model, his argument is that, due to multiple inconsistencies, equilibrium never holds and system of static linear equations does not accurately model the market mechanism. He recommends utilizing advances in computer simulation and systems of nonlinear dynamic equations to more accurately model how markets work IRL.
Unlike a lot of folks who attack the neoclassical model based on assumptions, I think Keen has taken the time to understand the neoclassical model (he has a PhD in econ and is an econ professor). His argument is more complex than simply "these assumptions aren't consistent with reality," which of course yields the famous Friedman "inaccurate but useful" quote.
Having a complex argument and understanding the model he attacks doesn't make him correct. He suffers from the same problem as neoclassical economics, his arguments are just too complex to understand unless you understand what he's talking about at a high level and take the time to work everything out for yourself. For most this would take several years of dedicated work. I think he does do a good job of making his arguments understandable to a layperson (as something like McConnel and Brue does for neoclassical economics), but determining if his arguments hold or not....
The broadest summary I can give of the criticism in the book is that neoclassical economics is 1) Internally inconsistent; 2) has not acknowledged advances in mathematics since neoclassical models were created close to 100 years ago; 3) Yield poor and sometimes destructive (as in achieving the opposite effect intended) policy directives. He also attacks the culture of academic economics as self-reinforcing, intentionally confusing and inward facing (in line with what @Loner and @ RJ were saying). He argues that the neoclassical model was not meant to be a final model, but a step into the future using the best tools available at the time.
In terms of the neoclassical model, his argument is that, due to multiple inconsistencies, equilibrium never holds and system of static linear equations does not accurately model the market mechanism. He recommends utilizing advances in computer simulation and systems of nonlinear dynamic equations to more accurately model how markets work IRL.
Unlike a lot of folks who attack the neoclassical model based on assumptions, I think Keen has taken the time to understand the neoclassical model (he has a PhD in econ and is an econ professor). His argument is more complex than simply "these assumptions aren't consistent with reality," which of course yields the famous Friedman "inaccurate but useful" quote.
Having a complex argument and understanding the model he attacks doesn't make him correct. He suffers from the same problem as neoclassical economics, his arguments are just too complex to understand unless you understand what he's talking about at a high level and take the time to work everything out for yourself. For most this would take several years of dedicated work. I think he does do a good job of making his arguments understandable to a layperson (as something like McConnel and Brue does for neoclassical economics), but determining if his arguments hold or not....