Steve Keen – Why Economists Disagree

If you are not an economist, this is a good introduction into political economy by Steve Keen.

Steve Keen is Professor at Kingston University, London

This first lecture for Kingston University’s introductory economics subject “Becoming an Economist” introduces the concepts of paradigms in sciences, and schools of thought within economics.

I make an analogy between how astronomy moved from Ptolemy’s paradigm of the Earth being the center of the Universe, to Copernicus’s of the Sun being the center of our Solar System, and how economics has reacted to the Global Financial Crisis in 2007/08, which was a serious anomaly for the dominant school of thought in economics, Neoclassical Economics.

A key anomaly for the Ptolemaic model was the discovery, via the telescope, of craters on the Moon, and of moons orbiting Jupiter and Saturn. If there were craters on the Moon, then there had to have been collisions between Heavenly Bodies, when Ptolemaic astronomers believed that The Heavens were perfect; and according to their paradigm, everything orbited The Earth: the Planets themselves should not have their own satellites.

Astronomy eventually reacted by rejecting the old Ptolemaic paradigm and adopting Copernicus’s, but the transition took centuries and was far from peaceful and polite. Economics is in a similar state today, after the financial crisis of 2007-08 which, according to Neoclassical Economics, couldn’t happen.

I make the point that every school of thought in economics starts from a legitimate question about the economy: no school of thought, from Marxism to Austrian economics, can be ruled out simply because they asked themselves a bad first question. From that first question, a way of thinking about the economy emerges, and that causes members of a school of thought to focus on some aspects of the economy and ignore others.

These other questions can’t be ignored however if the economy itself throws up something that a school of thought doesn’t expect, like the economic crisis of 2007-08 that Neoclassical Economists thought couldn’t happen, or the collapse of the Berlin Wall, which ended Socialism when Marxists thought that Socialism would take over from Capitalism.