BoM June 2017

Our June Book of the month is Debunking Economics by Steve Keen. Debunking Economics exposes what many non-economists may have suspected and a minority of economists have long known: that economic theory is not only unpalatable, but also plain wrong. When the original Debunking was published back in 2001, the market economy seemed invincible, and conventional ‘neoclassical’ economic theory basked in the limelight. Steve Keen argued that economists deserved none of the credit for the economy’s performance, and that ‘the false confidence it has engendered in the stability of the market economy has encouraged policy-makers to dismantle some of the institutions which initially evolved to try to keep its instability within limits’. That instability exploded with the devastating financial crisis of 2007, and now haunts the global economy with the prospect of another Depression. In this radically updated and greatly expanded new edition, Keen builds on his scathing critique of conventional economic theory whilst explaining what mainstream economists cannot: why the crisis occurred, why it is proving to be intractable, and what needs to be done to end it. Essential for anyone who has ever doubted the advice or reasoning of economists, Debunking Economics provides a signpost to a better future.

Comments

  1. Mark Crown -

    I read this book a number of years ago and it was so good I still remember a lot of it. It gave me the confidence to challenge the orthodox neo-liberal economics we have lived under for far too long. It even confirmed some of my own suspicions about what was wrong with neo-lib economics. I was also introduced to the concept of base money in the money supply (as central bank money) in this book – the first time I had read about it.

    The only slight criticism is that the book is largely a critique of ‘what is’ and does not go into too much detail about ‘what could be’ but Keen does have some good ideas when he does venture forth such as suggesting the locking in of investment for a minimum of 5 years to add more stability and fairness to the investment cycle which we now know is partly responsible for the transfer of wealth from the working class to the investor class.

    Luckily I later came across Richard Murphy’s ‘The Courageous State’ which satiated my desire for a more touchy-feely book on economics that delivered social fairness.

    Keen however is unrelenting in his ferreting out of neo-lib economic bullshit. He is almost gleeful in it’s defrocking and merciless in his erudition. For me, what stands out about the book is his exposition of how reductive neo-liberalism is – it over simplifies economic concepts to deliver ‘answers’ that are so one sided you just have to wonder how they took hold in the first place.

    The importance of this book (supported by a website) is that once you have grasped how stupid neo-lib economics is, you can then begin to think more freely about what the next period of economics needs to look like which I think will be a mixture of some good things that we have forgotten (Keynes) plus some new up to date problems that we have to address (lack of work due to technology).

    1. Charles Adams -

      I agree. Steve Keen has made a tremendous contribution to educating many about economics. As well as the books, his videos on youtube are worth watching. The MSM needs to wake up and give him a platform.

  2. Sean Danaher -

    Thanks Mark
    the editorial team though two of Richard’s books back to back would be excessive but I’m sure we will feature both the “Courageous State” and “The Joy of Tax” within the next few months. This is a fairly classic book and a good introduction.

  3. Mark Crown -

    Hi

    I was not suggesting at all that Richard’s books should be reviewed back to back Sean – just that his Courageous State book was the first serious book that I’d read that actually reified the human benefits and aspects of rejecting neo-liberal orthodoxy rather than the more technical aspects of ‘real’ economics rightfully discussed by people like Keen.

    May I suggest some other books?

    At the moment I am just finishing Michael Hudson’s ‘Super Imperialism’, This book – written by an American economic practitioner turned academic is explosive in its historical revelations about the UK’s ‘special relationship’ with the US Government (NOT the American people) regarding trade. Next up for me is Hudson’s ‘Killing the Host’ about the (still) destructive tendencies of the financial sector.

    Some other books that I would recommend are:

    ‘Extreme Money’ – Satyajit Das – if you want to know what actually happens within casino banking read this. Incredible. It should be stopped. Now. In fact, yesterday. Also check out his ‘Traders, Guns & Money’.

    ‘The Precariat’ – Guy Standing – Noam Chomsky of all people called this ‘a very important book’. Read it and find out why. It is basically a book about how to make poor people more right wing in the context of globalisation so that they effectively lock themselves into their situation politically forever.

    ‘Austerity: The history of a very dangerous idea’: – Mark Blyth – a most effecting debunking of the austerity argument ever. A ‘public good’ in its own right.

    ‘The Growth Illusion’ – Richard Douthwaite (RIP) – another book on my self imposed journey to find the truth – made a big impact on me. Also check out Lorenzo Fioramotti’s ‘Gross Domestic Problem’. Growth as it is now is a big lie.

    ‘The Ecology of Money’ – Richard Douthwaite – when I read this book I realised that I knew so little about the world. It was that good (or maybe I am just that thick?). And his idea of creating different interest rates for money based on what it is actually used for is so far ahead of the curve in my view and is likely to give our rentier culture nightmares – and rightly so. We need to try this sort of stuff out. Now.

    ’23 Things they don’t tell you about capitalism’ and ‘Economics – a users guide’- Ha-Joon Chang – patient and effective debunking of yet more received wisdom about modern economics. We do not hear enough of this bloke.

    ‘What money can’t buy’ – Michael Sandel – a treatise on modern market thinking and how its unthinking application to all aspects of life is deeply flawed. As close to poetry as Socratic dialectics can get. Beautifully written by a philosopher who is also an artist at heart. And hard to argue with.

    ‘Days of Destruction, Days of Revolt’ – Chris Hedges/Joe Sacco – an illustrated/written account of life in modern America where market needs come before human ones. Read this and think about comparisons with the North of the UK (‘sacrifice zones’). I was gobsmacked when I read this. Anyone who thought (like I did) that America was just some huge neo-lib archipelago cannot fail to be impressed by the revolutionary passion and the anger in this book and the desire for change.

    Can I also make another suggestion? There has since 2008 been a number of films and documentaries made that in my view NEED to be made available more widely to the public. I’d ask PP to consider reviewing with a view to recommending these for consumption:

    Documentaries:

    ‘Inside Job’ (USA, DVD)
    ‘The Flaw’ (USA, DVD)
    ‘The Four Horseman’ (DVD UK/US)
    ‘Capitalism: A Love Affair’ (DVD/US)
    ‘Princes of the Yen’ (Online film/US/EU?) I also have the book but have not read it yet.
    ‘Obama: Lifting the Veil’ (Online film/US – the first time I came across Bernie Saunders & Chris Hedges).
    ‘The Mayfair Set’ (Online/UK)
    ‘Inequality for All’ (DVD/US)

    Films

    ‘The Big Short’ – based on the Michael Lewis book about the 2008 crash – visceral story telling, fun, fast, informative, engaging, superbly acted and the Guardian gave it A- for accuracy. So there! And it has a long finish – only afterwards as you reflect on what you have seen do you realise that this surely must not be allowed to happen again.

    ‘Margin Call’ – I have just got acquainted with this and it is more micro than ‘The Big Short’. The US/UK cast are superb in this taut tale of what happens in the bowels of an investment bank as ‘the music stops’. Rumour is that it is based on Lehman brothers. It raises lots of questions about the crash (who were the victims really?) and makes clear that short term monetary profit is the root of all evil and the source of the prevention of the revelation of truth leading to change.

    So Sean, I’m sorry I’ve written too much and please be aware that I have not done so because I feel that PP is deficient in any way. You have all stepped up to the plate admirably but I do hope these can be shared here with others.

    1. Peter May -

      What an impressive selection. Thank you so much for your wide ranging suggestions – very interesting.
      And in passing I also think we should have different interest rates for different purposes! I’d never encountered anyone who was able to tell me exactly why it was such a bad idea. Look forward to reading somebody who can tell me it’s a good one!

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