Vol.1 No.9, 07 September 2001

Review: The Naked Emperor of the Social Sciences

The following is a review by Mihail Evans of a book by Steven Keen which should make make economists think the unthinkable: could they perhaps have got it wrong? And what are the consequences for us and for the world? And what if our realisation that people DO matter CAN allow us to change the behaviour of the economy without destroying free enterprise? This is what SANE believes, explores and advocates for the economies of the world, and specifically for South Africa.

Musings by SANE Views editor, Aart Roukens de Lange

by Steve Keen
ZED BOOKS 2001/15.95

There can be few critics of current environmental problems who have not, at one time or another, cast a deeply suspicious eye on the pronouncements of economists. But between the suspicion that the wool is being pulled over our eyes and being able to articulate our doubts lies a chasm littered with graphs, equations and miscellaneous mathematical detritus. The aim of Debunking Economics is to provide a much- needed guide through this terrain.

What is currently taught and studied in universities as economics is, in fact, just one particular school of economics, the neo-classical. It developed in the late 19th century and has almost totally dominated the discipline since the banishment of last remnants of Keynesianism in the 1970s. Its central dogmas are well known: people are inherently selfish and the economy, if left to itself, will find and maintain a stable position which promotes the common good.

Keen is scathing about how neo-classicism has maintained its dominance through the teaching of economics in a way that ignores the discipline's history and development. He is thus anxious not simply to criticise the neo-classical school but, in the second part of the book, to cover topics not normally taught in universities. Among the matters dealt with are the failure to theorise economies as moving rather than static, and the way in which the study of the economy as a whole has been ignored in favour of the creation of small-scale theoretical models.

Keen also demolishes the assertion that stock markets price correctly, pointing out that the theory on which this was based was developed by Irving Fisher in the 1920s and that he himself developed another theory following his personal loss of $100 million in the 1929 crash.

The work is clear and concise in its style with the aims and structure of each chapter being crisply spelled out in advance. Keen admits that there is no avoiding the difficulties and dullness of the subject matter yet he copes admirably with lightening even the stodgiest fare.

By providing in a single volume both an introduction and critique of the basics of neo-classical economics, as well as an outline of the various alternative schools, this book is a unique and valuable resource.

Mihail Dafydd Evans

Steve has done a website which contains material complementing the book, including a PowerPoint presentation on globalisation and free trade http://www.debunking-economics.com. Now is the time (post-Genoa, pre-Qatar) to attack the theoretical basis of neo-liberalism.

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