What is the score card for economics at the start of the new millennium? While there are many different schools of economic thought, it is the neo-classical school, with its alleged understanding and simplistic advocacy of the market, that has become equated in the public mind with economics. This book shows that virtually every aspect of conventional neo-classical economics' thinking is intellectually unsound. Steve Keen draws on an impressive array of advanced critical thinking. He constitutes a profound critique of the principle concepts, theories, and methodologies of the mainstream discipline. Keen raises grave doubts about economics' pretensions to established scientific status and its reliability as a guide to understanding the real world of economic life and its policy-making.
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Editorial Reviews
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"... this book is a unique and valuable resource." -- The Ecologist
From the Publisher
Debunking Economics exposes what many non-economists may have suspected and a minority of economists have long known: that economic theory is not only unpalatable, but also plain wrong. Many of the most cherished notions of conventional economics are based on reasoning that is internally inconsistent.
Debunking Economics explains why economists think the way they do, and points out the flaws in their thinking which they either don’t realize, don’t appreciate, or just plain ignore. Most of these flaws were established by dissident academic economists decades ago, yet modern economics pretends that it can continue with ‘business as usual’. In a profound irony, Debunking Economics shows that a discipline which labours the word ‘rational’ may be the most irrational of all. --This text refers to an out of print or unavailable edition of this title.
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Most Helpful Customer Reviews
47 of 51 people found the following review helpful
5.0 out of 5 stars
A crucial work for understanding the failures of neoclassical economics
March 4, 2006
By M. A. Krul
Format:Paperback
For people, like me, who had almost given up entirely on the academic field of Economics because of ridiculous theories and poor teaching, there is fortunately still Steve Keen. In this book, the Australian Keen shows the errors of the standard views of neoclassical (orthodox) economics.
Not just some side aspects of the theory, but the actual core views of economics as it is taught in universities everywhere unravels before your eyes. Keen masterfully applies both economic models and historical analysis to show that orthodox economists not only do not know what theories exist in their own field, but they also have no inkling of the history of economics and what this means for their approach. This, combined with a possibly even poorer understanding of the philosophy of science (Keen uses Milton Friedman as the main example, but more could have been named), leads to a series of ridiculous assumptions and even more ridiculous results. That the economists consistently ignore the way industrial managers and market analysts etc. do NOT apply their pet theories is just the icing on the cake.
The book is heavy reading for those with no knowledge of economics or maths, but certainly not impossible. A basic understanding of economics and mathematics as taught at high school level (at least in The Netherlands) goes a long way, and Keen fortunately writes well and attempts to avoid long mathematical proofs as much as possible.
The only downside to the book is that his treatment of alternative theories, especially the quite closely linked Austrian school of economics, is very short and vague. This leads to the impression that Keen knows what's wrong with neoclassics, but not what is to be done instead. Therefore, start by reading this book, but don't end there.
Not just some side aspects of the theory, but the actual core views of economics as it is taught in universities everywhere unravels before your eyes. Keen masterfully applies both economic models and historical analysis to show that orthodox economists not only do not know what theories exist in their own field, but they also have no inkling of the history of economics and what this means for their approach. This, combined with a possibly even poorer understanding of the philosophy of science (Keen uses Milton Friedman as the main example, but more could have been named), leads to a series of ridiculous assumptions and even more ridiculous results. That the economists consistently ignore the way industrial managers and market analysts etc. do NOT apply their pet theories is just the icing on the cake.
The book is heavy reading for those with no knowledge of economics or maths, but certainly not impossible. A basic understanding of economics and mathematics as taught at high school level (at least in The Netherlands) goes a long way, and Keen fortunately writes well and attempts to avoid long mathematical proofs as much as possible.
The only downside to the book is that his treatment of alternative theories, especially the quite closely linked Austrian school of economics, is very short and vague. This leads to the impression that Keen knows what's wrong with neoclassics, but not what is to be done instead. Therefore, start by reading this book, but don't end there.
57 of 65 people found the following review helpful
Format:Hardcover
This book provides a far more clear explanation of the ideas of standard economic theory (neo-classical economics) than do the standard texts (compare with Samuelson, Mankiw, or Barro, e.g.). The book explains utility maximization, indifference curves, and the assumptions underlying the standard economic model that is used by the IMF, the World Bank and all major western governments. Keen uses simple language that even the lay person can follow. The text should be standard reading for every student of elementary economics, but even an experienced economist like Alan Greenspan might benefit from the clarity of thought displayed therein.
Macroeconomic theory is covered from the right perspective, from the result of Sonnenshein et all which shows the basis in microeconomic theory for the standard macroeconomic model. Kirman is mentioned but his seminal connection of liquidity demand with uncertainty is not discussed. The work of Radner should have been included, but then Samuelson and Varian do not discuss Radner's contribution either.Chapter 7 presents the correct perspective on general equilibrium theory, with good advice for students of econ 101.Chapter 8 on Keynes is outstanding, presenting the clearest (and even correct!) textbook discussion of Keynes that I am aware of. Marx's contribution to the basis of capitalism, the recognition of the central role played by the profit motive, is also made apparent in the Keynsian context. The profit motive is ignored completely in Samuelson and the other standard texts, which discuss merely pure barter economies and leave out financial markets altogether. Hicks' interpretation of Keynes' ideas is also correctly presented. All in all, students of economics would be well advised to make Keen's book their main econ text.
20 of 21 people found the following review helpful
By Augustas B.
Format:Paperback
"Debunking Economics" is a critique of neoclassical economics by a Post Keynesian who likes Sraffa, math and dynamics as much as he dislikes neoclassical economics, equilibrium and statics.
The book has three main parts: Foundations, Complexities, and Alternatives. Foundations includes discussions of neoclassical supply, demand, perfect competition and monopoly, as well as the labour market. Complexities covers capital, assumptions, time, macroeconomics and financial markets. Finally, Alternatives part presents alternative financial theories and heterodox schools of economics, argues against Marxian economics and discusses the use and abuse of mathematics.
The idea behind the book is great. The execution itself, unfortunately, is a mixed bag. I found two chapters - Chapter 6 on capital and Chapter 13 on Marxian economics - to be almost unbearable. All the other chapters are more accessible and have promising arguments, albeit delivered in a mostly tedious manner. In this regard, Chapter 2 is quite representative of the whole book. It points out that in order to derive a smooth downward sloping market demand curve, economists assume homogeneous preferences, which amounts to having only one consumer in the market. Heterogeneous preferences would yield an unpredictable, messy curve with possibly more than one equilibrium. This interesting point is arrived at through a series of boring utility hills and indifference curves. Likewise, Chapter 8 presents a nice discussion of Walras and general equilibrium, but ends with a confused exposition of what temporal analysis in economics should be. Above all, in certain cases when the lay reader (who is supposedly the author's primary audience) might need some easing in (e.g. when Hicks and IS-LM are being discussed), Keen does that very little if at all. Without doubt, the delivery of the arguments could have been much better - much more focused, more accessible. Furthermore, some interesting points are left to be developed on the author's website. Why not use increasing returns to scale (which are otherwise taken so seriously by Keen) possible in this book and develop those issues here as well? I would argue that because of this lacking delivery, many otherwise solid arguments and points will be forgotten soon after being read by the lay reader.
Long story short: this book is a good idea executed in a sloppy manner.
The book has three main parts: Foundations, Complexities, and Alternatives. Foundations includes discussions of neoclassical supply, demand, perfect competition and monopoly, as well as the labour market. Complexities covers capital, assumptions, time, macroeconomics and financial markets. Finally, Alternatives part presents alternative financial theories and heterodox schools of economics, argues against Marxian economics and discusses the use and abuse of mathematics.
The idea behind the book is great. The execution itself, unfortunately, is a mixed bag. I found two chapters - Chapter 6 on capital and Chapter 13 on Marxian economics - to be almost unbearable. All the other chapters are more accessible and have promising arguments, albeit delivered in a mostly tedious manner. In this regard, Chapter 2 is quite representative of the whole book. It points out that in order to derive a smooth downward sloping market demand curve, economists assume homogeneous preferences, which amounts to having only one consumer in the market. Heterogeneous preferences would yield an unpredictable, messy curve with possibly more than one equilibrium. This interesting point is arrived at through a series of boring utility hills and indifference curves. Likewise, Chapter 8 presents a nice discussion of Walras and general equilibrium, but ends with a confused exposition of what temporal analysis in economics should be. Above all, in certain cases when the lay reader (who is supposedly the author's primary audience) might need some easing in (e.g. when Hicks and IS-LM are being discussed), Keen does that very little if at all. Without doubt, the delivery of the arguments could have been much better - much more focused, more accessible. Furthermore, some interesting points are left to be developed on the author's website. Why not use increasing returns to scale (which are otherwise taken so seriously by Keen) possible in this book and develop those issues here as well? I would argue that because of this lacking delivery, many otherwise solid arguments and points will be forgotten soon after being read by the lay reader.
Long story short: this book is a good idea executed in a sloppy manner.
Most Recent Customer Reviews
5.0 out of 5 stars
Required Reading for Everyone From Econ 101 Students to Top Economists
If I were asked what single expenditure a charitable organization could undertake to improve the world most efficiently, it would be to offer free copies of this book to any... Read more
Published 14 months ago by Stephen F. Roth
5.0 out of 5 stars
Devastating critique of neoclassical economics...
I was hesitant to purchase this book largely because of the title (which I know is just as irrational as judging a book by its cover, something I have been taught not to do). Read more
Published on January 2, 2011 by Brian C.
3.0 out of 5 stars
Economists Who Don't Make Contact With The Real World
I don't believe all the "clever" people on here, who are all very "articulate", and certainly like the sound of their own voices,really understand economics. Read more
Published on September 14, 2010 by Mr. S. C. Smith
5.0 out of 5 stars
Excellent Starting Point for those Who Doubt
I've read this book a couple of times, once when I was starting out trying to understand economics, once a bit later, after I had a fairly good understanding of what was going... Read more
Published on September 6, 2009 by Scot Griffin
2.0 out of 5 stars
Beats a Dead Horse and Lets the Live Horse Romp Free
I am an economist. I am painfully aware of the shortcomings of my field. I am aware also of several important purely scientific developments that are likely to dramatically improve... Read more
Published on June 11, 2009 by Herbert Gintis
5.0 out of 5 stars
Bankrupt Economics versus Real Economics
Steve Keen's book is so refreshing. Many people know that neoclassical, or Chicago School, economics is bunk, but not many know exactly why. Read more
Published on March 4, 2009 by Richard H. Burkhart
5.0 out of 5 stars
The Emperor Needs a Better Fig Leaf
This is an excellent critique of neo-classical economics. The author identifies himself as a "post-Keynesian. Read more
Published on September 28, 2008 by Jon Thomas
5.0 out of 5 stars
Real content
The headings of the book are strange but the real content deals with: aggregate demand, aggregate supply, perfect competition versus monopolies, labour market, role of capital, how... Read more
Published on June 29, 2006 by Kari Ranta
4.0 out of 5 stars
Economists are lousy mathematicians
Ever suspected that economists are full of it? Ever had an argument with an economist friend and been frustrated by the combination of condescension and cluelessness? Read more
Published on March 22, 2006 by Donald Hunt
1.0 out of 5 stars
Debunking "Debunking Economics"
Below are my comments about the book some of which I have presented at the online Steve Keen seminar on Hayek-List. Read more
Published on August 3, 2005 by N. Emrah AYDINONAT
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