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Articles by Steve Keen
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Read More »A Simple Solution to the Banking Crisis That No Country Will Implement
March 21, 2023Though Silicon Valley Bank contributed to its own demise, the root cause of this crisis is the fact that private banks own government bonds. If they didn’t, then SVB would still be solvent.
Its bankruptcy was the result of the price of Treasury bonds falling, because The Federal Reserve increased interest rates. As interest rates rise, the value of Treasury Bonds falls. With the resale value of its bonds plunging, the total value of SVB’s assets (which were mainly Bonds, Reserves, and Loans to households and firms) fell below the value of its Liabilities (which are mainly the deposits of households and firms), and it collapsed.
Why do banks own government bonds? Largely, because of two laws: one that prevents the Treasury from having an
Read More »How does JK Galbraith’s The New Industrial Estate hold up after 6 decades?
March 4, 2023I was asked to contribute to an Italian online publication’s tribute to John Kenneth Galbraith, by answering some questions about the relevance of his major work The New Industrial State (Galbraith and Galbraith 1967) six decades later. These were my responses.
Reading The New Industrial State (Galbraith and Galbraith 1967) again, six decades after it was first published, highlighted for me just how far economic theory has retreated from reality since the 1960s.
The New Industrial State (hereinafter called TNIS) described the actual structure of a modern industrial economy. It has nothing to do with Alfred Marshall’s vision of a market economy, in which a multitude of small entrepreneurial firms sold homogenous goods
Read More »How does JK Galbraith’s The New Industrial Estate hold up, six decades on?
March 4, 2023I was asked to contribute to an Italian online publication’s tribute to John Kenneth Galbraith, by answering some questions about the relevance of his major work The New Industrial State (Galbraith and Galbraith 1967) six decades later. These were my responses.
Reading The New Industrial State (Galbraith and Galbraith 1967) again, six decades after it was first published, highlighted for me just how far economic theory has retreated from reality since the 1960s.
The New Industrial State (hereinafter called TNIS) described the actual structure of a modern industrial economy. It has nothing to do with Alfred Marshall’s vision of a market economy, in which a multitude of small entrepreneurial firms sold homogenous goods
Read More »Redirecting to Patreon
July 30, 2021If you’re looking for my latest work, please click here to go to my Patreon site. This site is maintained for historical reasons only.
Read More »Redirection
July 30, 2021I maintain this site for historical reasons only. If you’re looking for my latest work, please go to https://www.patreon.com/profstevekeen.
Read More »Discussing a Modern Debt Jubilee on Macro’n’Cheese
December 19, 2020I discuss a Modern Debt Jubilee On Macro’n’Cheese today, and this is a quick explanation of how it could be done.
Jubilees were common in antiquity. The Lord’s Prayer did not originally say “And forgive us our sins, as we have forgiven those who sin against us”, but “And forgive us our debts, as we also have forgiven our debtors”. But an old-fashioned Jubilee would reward those who gambled with borrowed money, and thus effectively penalise those who did not. It would also effectively bankrupt the banks, since their assets—our debts—would fall, while their liabilities—our deposits—would remain constant.
A Modern Debt Jubilee gets around both problems by:
Giving everyone, whether they borrowed or not, exactly the same amount of money; and
Replacing
To save the climate – don’t listen to mainstream economists
December 8, 2020Ann Pettifor’s The Coming First World Debt Crisis (Pettifor 2006) was the first book to warn of the approaching 2007 Global Financial Crisis. More than decade after that crisis, its cause—excessive private debt, created primarily to finance asset bubbles rather than productive investment—is still with us, while we are entrapped in a pandemic crisis, and on the cusp of a climatic one.Figure 1: Private debt levels over the history of capitalismLooking forward to the next ten years, and given so little has been done to stabilize the system, stagnation was the likely outcome of the residue of private debt, but Covid has altered the equation to make a crisis, without a boom before it, the likely outcome. The first two crises were ignored by mainstream economists and politicians until after
Read More »To save the climate – don’t listen to mainstream economists
December 8, 2020Ann Pettifor’s The Coming First World Debt Crisis (Pettifor 2006) was the first book to warn of the approaching 2007 Global Financial Crisis. More than decade after that crisis, its cause—excessive private debt, created primarily to finance asset bubbles rather than productive investment—is still with us, while we are entrapped in a pandemic crisis, and on the cusp of a climatic one.Figure 1: Private debt levels over the history of capitalismLooking forward to the next ten years, and given so little has been done to stabilize the system, stagnation was the likely outcome of the residue of private debt, but Covid has altered the equation to make a crisis, without a boom before it, the likely outcome. The first two crises were ignored by mainstream economists and politicians until after
Read More »To save the climate – don’t listen to mainstream economists
December 8, 2020Ann Pettifor’s The Coming First World Debt Crisis (Pettifor 2006) was the first book to warn of the approaching 2007 Global Financial Crisis. More than decade after that crisis, its cause—excessive private debt, created primarily to finance asset bubbles rather than productive investment—is still with us, while we are entrapped in a pandemic crisis, and on the cusp of a climatic one.
Figure 1: Private debt levels over the history of capitalism
Looking forward to the next ten years, and given so little has been done to stabilize the system, stagnation was the likely outcome of the residue of private debt, but Covid has altered the equation to make a crisis, without a boom before it, the likely outcome. The first two crises were ignored by mainstream economists and politicians until after
The Unreal Basis of Neoclassical Economics
January 22, 2019By Al Campbell, Ann Davis, David Fields, Paddy Quick, Jared Ragusett and Geoffrey Schneideroriginally posted hereIntroduction
Ten years after the financial crisis, we still find mainstream
economists engaging in overly simplistic analysis that does not
accurately capture the dynamics of the real world. People studying
economics need to know that the principles of mainstream economics are
hopelessly unrealistic. In this short article, we demonstrate that the
ten principles of economics in Gregory Mankiw’s best-selling textbook
are divorced from reality and reflect an extreme and unwarranted bias
towards unregulated markets.[ii] Mankiw’s “Ten Principles of Economics” should more accurately be titled “Ten Principles of Unrealistic Neoclassical Theory.”Mankiw’s Principle #1:
On the URPE Blog – The Video Edition
May 23, 2018The Dynamics of Capitalism: Money and Financialization
Greta Krippner – The Power of Abstraction: Marx on Money and Credit
Aaron Sahr – From Pen Strokes to Keystrokes: the Production of Money in Early and Contemporary Capitalism Michael Löwy: Marxism and Romantic Anticapitalism
Michael Löwy is Emeritus Research Director at the CNRS (French National Center for Scientific Research) Lecturer, École des Hautes Études en Sciences Sociales. Immanuel Wallerstein: The Contemporary Relevance of Marx
Immanuel Wallerstein – Marx’s Capital after 150 Years: Critique and Alternative to Capitalism (York University, Canada) Richard D. Wolff: Linking Trump and Marx’s Critique of Capitalism
Richard D. Wolff Professor of Economics Emeritus, University of Massachusetts, Amherst, and currently a Visiting
Capitalism is national & transnational, but what about the money?
June 27, 2017This is my short response, originally posted here, to William I. Robinson’s post here and Fred Magdoff’s note in the comment section of that post:While I generally agree with Robinson’s and Magdoff’s analyses, what is absent, specifically with respect to Robinson’s discussion, is a concrete assessment of the acute variables that measure the degree to which national States have the capacity to engage in power-maximizing behavior and, thus, pursue certain responses, i.e. imperialism, to the competitive nature of the capitalist world economy. Certain material capabilities of national States generate the space to be ‘constituted’, whereby they embody a structural authority to shape the framework of global economic relations. This structural authority is tied to the qualification to
Read More »Shutting down membership
June 7, 2017I have recently established a Patreon site https://www.patreon.com/ProfSteveKeen, where people can support my research and advocacy work with donations starting at $1/month. That is now where I will engage in conversation in response to posts. So if anyone here wants to continue a dialogue with me and others, please sign up there.
This site was flooded by a large number of spam users at the same time as I became unable to maintain my own role in discussions here, since I am just too damn busy in London. This has caused the site to be suspended three times by its ISP for performance issues. One more time and the account will be banned. I have therefore decided to delete all users on this site, bar those who have made posts (which is a handful of
Brexit debate in London May 31st
May 27, 2017I’m taking part in a debate on one of the major topics in this year’s election, Brexit, on May 31st at 7.30pm at Canham, 40 Sheen Lane, London SW14 8LW. The other speakers are Frances Coppola, and Angus Armstrong.
Frances Coppola is an economic commentator in print and frequently on the BBC.
Angus Armstrong is director of macro-economics at one of the top research institutions, the National Institute of Economic and Social Research founded in 1938.
Click here to buy tickets for this event.
Freezing site/Moving to Patreon & Profstevekeen
May 25, 2017I’m freezing this site and moving to both Patreon (https://www.patreon.com/ProfSteveKeen) and a new website http://www.profstevekeen.com/. There are several reasons:
This site’s signup security failed, and something like 50,000 bot-users have signed up. It’s just too cumbersome in WordPress to delete them selectively from here, so it’s easier to move to a new, clean site;
I used to be very active in discussions here, but the demands on my time became so excessive over time that I have virtually stopped participating;
I am going to retire from Kingston University next year (probably in July), and if I am to continue being a public intellectual and residing in London (which, whatever its other faults, is the best place in the world from which to be a
Discussing “Can we avoid another financial crisis?”
May 1, 2017From WEA Commentaries
My first book since Debunking Economics has just been released in the UK, and will come out in May in the USA. Can we avoid another financial crisis? is a brief (140 page, 25,000 word) explanation for the lay reader of how the 2008 crisis was caused by factors that mainstream economics ignores—fundamentally, the levels of private debt and credit-based demand—and why other countries that avoided a crisis in 2008 are likely to suffer a similar crisis in the near future.
My argument is based in equal measure on my interpretation and model of Hyman Minsky’s Financial Instability Hypothesis (though my book is equation-free), and my analysis of the role of endogenous money—which I now prefer to call “Bank Originated Money and Debt” or BOMD—in causing both economic booms and slumps. The book relies upon the statistical work of the BIS, which since 2014 has started publishing detailed databases on private debt, government debt, house prices, and recently consumer prices. This has made it possible for me to analyse the debt and credit dynamics of 43 countries to identify which have had a crisis, and which are likely to have one in the future.
What if my analysis is used for evil purposes?
April 21, 2017One of my Patrons posed a very good question to me: in a nutshell, how would I respond to a politician who took my ideas and perverted them for political gain? Here’s Andre’s full query:
Hi Steve, thank you, you’ve given me the gift of some of the most important ideas and explanations I’ve come across in my lifetime.
I was wondering how you might respond to a politician who misreads your latest book, and then declares:
1. People will love me, because Steve Keen says I can become known as a master of managing my country’s economy by engineering a private debt boom
2. People will love me, because when private debt eventually falters, Steve Keen says I get to tell everyone they get more government spending on them, because public debt is justified to offset lack of accelerating private debt
3. Even if some people grumble about me enlarging the state, they’ll definitely love me when I tell them they’re all getting tons of free money in a debt Jubilee straight into their bank account and/or their debts partially repaid for them.
4. Best of all, after a few days of announcing everyone gets more public spending and free money in their bank account, the country’s private debt load will be reduced enough that we can start another private debt boom!
a.
Can we avoid another financial crisis?
April 12, 2017Help me rebuild economics at https://www.patreon.com/ProfSteveKeen
Can we avoid another financial crisis?
In 2008, conventional economics led us blindfolded into the greatest economic crisis since the Great Depression. Almost a decade later, with the global economy wallowing in low growth that they can’t explain, mainstream economists are reluctantly coming to realise that their models are useless for understanding the real world.
How did mainstream economists not see the crisis coming? Was it unpredictable, as they now assert, or did their theory blind them to the real causes? Will another financial crisis occur?
These questions and others are asked and answered in Can we avoid another financial crisis? , a short (25,000 word) explanation for the lay reader of how we got into this economic mess, and why we are unlikely to get out of it.
The book is available now in the UK. It will come out in mid-May in the USA. A e-book version will also be available in May.
Support my work by becoming my Patron on Patreon. Economics is broken, and Universities won’t fund the repair job. Research funding is controlled by and goes overwhelmingly to Neoclassical economists.
Support me on Patreon
March 17, 2017Click here to support me on Patreon
As I explain in this video, government attempts to turn University entrance into a marketplace have had the unintended side-effect of undermining pluralist economics. The UK government has removed controls on the number of places that Universities can offer in first year courses, and as a result there has been an increase in humanities places offered by highly ranked Universities. Final year high school students have flocked to these Universities, and enrolments at lower-ranked Universities have fallen substantially.
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This has the side effect of undermining non-mainstream economics, just when the world has started to appreciate that another approach is needed. The reason is that over the last four decades, Neoclassical economists have driven out non-Neoclassical staff out of the most prestigious Universities. Only lower-ranked Universities gave non-Neoclassical staff a chance, which is why pluralist economics programs have developed there and nowhere else. Now these programs are under threat as a by-product of this attempt to create a University marketplace.
When I first came to Kingston in 2014, they were happy for me to spend much of my time engaging with the public through blog posts, media appearances, and public talks.
Infrastructure conference in Westminster Tuesday 24th
January 16, 2017A new organisation called NEKS (for “New Economic Knowledge Services”, see www.neks.ltd) is holding its inaugural conference on the economics of infrastructure In Westminster on Tuesday January 24th, and you should attend.
Why NEKS, and why Infrastructure? The economic importance of infrastructure is obvious, but the actual performance of infrastructure often differs radically from what is predicted when it is being planned. Three forms of delusion make many infrastructure projects far less beneficial than expected by their proponents: the complexity of execution is underestimated, the benefits are overestimated, and benefits are also calculated poorly using dodgy economic theory.
These are precisely the sort of issues that NEKS was formed to address. NEKS’s objective with this conference is to provide a real understanding of how complexity and uncertainty—including the impact of actual human behaviour and institutions—affect large public infrastructure projects. These issues are simply not adequately considered by the current “cost-benefit” method of evaluating projects, which relies heavily on mainstream economic concepts of marginal cost and marginal utility.