Read: Debunking Economics
Steve Keen’s Debunking Economics has the potential to greatly antagonize the reader, not just mainstream economists.
The book leaves me divided.
I like, I greatly appreciate the undertaking of pointing at all the flaws of economic theory – as it may be taught in many places – to improve our understanding of the real world. ‘Our’ as in the economic researcher and teacher, the student of economics, and the economic layperson. Yes, textbook economics has many flaws, over-simplifications that may lead us to wrong conclusions and thus policy measures if ‘we’ believe (too strongly) in them but over-simplifications that also may facilitate the understanding of specific economic mechanisms. There are many attempts to correct our economic model-theoretic view of the world. The current rise of behavioral economics is just one observable symptom of this change, of this advancement of (micro-)economic science. And, I guess the financial crisis will also lead to a change in macro-economic modelling.
I absolutely detest Keen’s writing style. He is condescending, not just with regard to the mainstream economics and economists that he is (rightly) criticizing. Also the reader has to feel like a little child that is guided through the world by a deeply disappointed, cynic great-uncle who was denied the one success that he so desperately strived for. This changes, however, dramatically to the better when he is not criticizing other’s economic modelling failures but is introducing his own macro-economic model that allowed him to predict the looming occurrence of a financial crisis.
If all of the book would have been written in this enthusiastic manner, with the desire to instruct, I would absolutely love this book. It’s not.
Nevertheless, the book is instructive and more of the many little flaws, the limitations of standard theory Keen is pointing out should be mentioned in textbooks, also in introductory textbooks, to stimulate a critical discussion and reflection of the material. I know I am often deviating from the text – have to, really.
Since I do not mention any details of the book’s content here, I want to at least point to a stimulating chapter by chapter discussion of Debunking Economics at Unlearning Economics.