Renegade Economist- Steve Keen Interview

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darbikrash's picture
darbikrash
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Renegade Economist- Steve Keen Interview

Previous CM contributor and economist Steve Keen gives an insightful and eye opening interview.

xraymike79's picture
xraymike79
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Right Wing Demagoguery

Interesting observation he had on the rise of right wing demagoguery which has in it platform the blaming of the depressed economy on the middle class and the demonization of the welfare state which has been steadily deconstructed while the cronies at the top have looted the system. OWS seems to be a countersway to this danger.

The crisis will be blamed on the very people who have all along been the victims for the past 40 years.

Like most economists, he doesn't mention a whisper about across-the-board resource depletion in his talk. This is the real difference from the last downturn of the Great Depression. Debt jubilee sounds great but does it solve the greater problems of a system that externalizes all environmental problems.

plato1965's picture
plato1965
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XrayMike: Like most

XrayMike: Like most economists, he doesn't mention a whisper about across-the-board resource depletion in his talk. This is the real difference from the last downturn of the Great Depression. Debt jubilee sounds great but does it solve the greater problems of a system that externalizes all environmental problems.

 

 +1

 

 Just as Nature doesn't do bailouts, she doesn't do "pollution jubilees", fishery recapitalisations or dodo resurections.

 Those wider issues are where I lose the laissez faire and accept intelligent *limited* globalism.

 Where is the modern Jefferson or Franklin to frame a self evidently true global constitution...  *sigh*

 

 Man's got to know his limitations, as Clint said in Magnum Force.

 Just because it can't speak, doesn't mean it has no rights.. humanity isn't too big to fail.

 

 

 replace America with humanity in that speech.. and you have an equally powerful message.

 You are what you eat... keep eating fossil fuels.. become fossils.

 

darbikrash's picture
darbikrash
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I think Dr. Keen is being

I think Dr. Keen is being sold a little short here. I’ve spent a bit of time reviewing the materials on his website, and his focus is on creating a reliable economic model that describes the dynamic behavior of monetary systems.

In addition, he is a advocate of peak oil, and aware of the environmental ramifications of unlimited growth. Make no mistake though, he does not spend a great deal of time covering peak oil or the environment, actually, he is focused purely on macroeconomics and modeling the same. I think if you look over his material in detail this dedication to limiting growth by necessity comes through, although it takes some digging to find it.

Like a few other notable professors in current teaching positions, Keen makes his graduate level course material available on-line at no charge. I highly recommend sitting through a few sessions. 

One of the more eye opening statements he makes in his course material concerning the environment is associating pollution and waste to the 2nd Law of Thermodynamics in general, and to entropy in particular. He suggests an inverse relationship exists between the natural state of entropy which is disturbed during manufacturing to provide highly ordered goods, and the irrefutable tendency to return to a chaotic state in the form of pollution or other forms of waste. This is interesting as it suggests that some type of relationship can be constructed to directly allocate the waste byproducts of a contemplated production operation, and perhaps used on a macro scale to size and quantify global economy sustainable capacity.

He expands (briefly) on this point during the lecture linked below.

Beyond this curiosity, he is doing some real work constructing mathematically driven models of economic capitalism that are quite extraordinary. His work contains detailed and thorough examinations of most of the big names of economic theory from Adam Smith all the way to 20th century thinkers, and reduces these disparate theories into a modern day set of principles which he overlays with advanced mathematics (ordinary differential equations, or ODE). While not fully developed, the combination nets impressive results. During the above mentioned lecture he demonstrates:

-       That a credit based economy does not need to expand exponentially (or even expand at all) to create a measured and sustainable monetary system with positive cash flows- in fact there is no structural or intrinsic reason why a debt based economy cannot work at all, the reasons why these systems do not work are entirely behavioral. That statement right there ought to stop most anybody on this forum dead in their tracks- this is a big deal.

-       That a credit based economy can be examined a priori to predict accurately how the money flows work, and precisely to who’s advantage. Profit margins, loan interest rates, etc. can be entered and a full spectrum visualization (in real time) can be observed that can help determine the maximum  rates of interest that can be charged, profit margins, etc, to provide a construct that will not result in a runaway bubble/crash cycle, and can lead to a sustainable economy within a capitalistic framework, albeit highly managed.

In many camps there is vigorous debate as to whether or not capitalism can be made to work at all, given the resource constraints of our current situation and the limitations of free market principles in addressing these realties. If a case can be made to reconfigure capitalism to be workable in the context of limited resources and peak oil, then Keen’s work, in my opinion, presents the best chance we have to achieve it.

He is starting to get some traction in the roles of economic academia, and from the big boys as well, Soros just gave him a large grant to fund his work which has largely been bootstrapped on a typical university budget. So we will see how this plays out, for the time being his analytical software is a free download, and all his courses on economics are free. If you are not put off by a little math, and can hang in past the calculations, the conclusions are jaw dropping.

Link to the lectures that describe the referenced topics.

Behavioral Finance 8 

Link to all his online lectures:

http://www.debtdeflation.com/blogs/lectures/

 

Damnthematrix's picture
Damnthematrix
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sticking up for Keen

Thanks for sticking up for Keen DK.... and the links to his lectures.  You did a better job than I ever could have.  I have spent some time on his blog discussing stuff at the onset of the GFC (and not recently - the guys on there are too expert on economics for me!), and when I piped up and mention PO and LtG, several other posters jumped down my throat poo poo ing my ideas.  Steve keen actually came to my rescue, and said he was working on another book which mentioned resource depletion.  Because it was such a while ago (two years?) I wonder if this latest book he was launching on that clip is it...

Mike

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jumblies
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Damnthematrix wrote: Steve
Damnthematrix wrote:

Steve keen actually came to my rescue, and said he was working on another book which mentioned resource depletion.  Because it was such a while ago (two years?) I wonder if this latest book he was launching on that clip is it...

It's on my bookshelf to read so I'll let you know (expecting to start it in a week or so).

 

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