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Book Review: Steve Keen: The New Economics: A Manifesto, Polity Press, Cambridge, UK, 2021

Author

Listed:
  • Bichler, Shimshon
  • Nitzan, Jonathan

Abstract

Steve Keen's book, The New Economics: A Manifesto (2021), offers a new path for economics, and for good reason. In his view, neoclassicism, the paradigm that rules modern-day economics, has become a serious menace: "I regard Neoclassical economics as not merely a bad methodology for economic analysis, but as an existential threat to the continued existence of capitalism - and human civilization in general. It has to go. (155). " Strong words? Of course, but they are wholly warranted. Neoclassical economics is the official scientific underpinning of capitalism as well as its main ideological defence, and according to Keen, it fails in both tasks.2 Contrary to received opinion, neoclassicism cannot explain capitalism - either in detail or in the aggregate - and the policies it prescribes do not support but undermine the very system it defends. It must be scrapped, says Keen, and the purpose of his book is to explain why and outline what should come in its stead. Half a century worth of research and writing on the subject has made Keen one of the world's foremost critics of neoclassical economics. His previous bestseller, the rigorous-yet-accessible Debunking Economics (2011), dismantled neoclassical microeconomics. His new volume hammers its macro framework. The book focuses on three key issues: (1) the bizarre neoclassical perspective that money, credit and debt do not matter for the macroeconomy; (2) the neoclassical insistence that the economy's complex, nonlinear turbulences are best explained in linear, self-equilibrating terms; and (3) the fact that neoclassicists have hijacked the economics of climate change, using patently false assumptions to justify do-nothing policies with untold future consequences.

Suggested Citation

  • Bichler, Shimshon & Nitzan, Jonathan, 2022. "Book Review: Steve Keen: The New Economics: A Manifesto, Polity Press, Cambridge, UK, 2021," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue 102, pages 156-163.
    • Handle: RePEc:zbw:espost:267163
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    References listed on IDEAS

    as
    1. Steve Keen, 1995. "Finance and Economic Breakdown: Modeling Minsky’s “Financial Instability Hypothesis”," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 17(4), pages 607-635, July.
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    More about this item

    Keywords

    banks; climate; complex systems; credit; debt; finance; macroeconmics; money; neoclassical economics; policy;
    All these keywords.

    JEL classification:

    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • G01 - Financial Economics - - General - - - Financial Crises
    • G - Financial Economics
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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