Progress Online recently posted an article about the financial crisis and how nobody saw it coming. One of the few economists who did predict the crisis is Australian academic and Zed author Steve Keen, who has just launched a revised second edition of his 2001 book Debunking Economics: The Naked Emperor Dethroned?
It was the Queen who asked the big question in the aftermath of the financial crisis – why did nobody see it coming? Many of the world’s most distinguished economists took upthe challenge, with varying degrees of success. The basic answer was that they couldn’t possibly have known. There was nothing in their experience or theories to prepare them for a freak event like the fall of Lehman Brothers.
Nothing short of a crystal ball would have enabled them to see the crisis coming. Nye Bevan’s words spring to mind: ‘why try to look into the crystal ball when you can read the book.’ The point is that these economists should have seen the crisis coming, since the data and the lessons of history were clear for anyone who cared to look. The fact that they didn’t reflects the sorry state of mainstream economics.
The article goes on to discuss the content of Keen's book, explaining in detail how the very foundations of neoclassical economics are based on faulty logic and barely any consideration of what actually goes on in the real world. Even what is taught as Keynesian economics is really a sanitised version, bereft of Keynes’ most salient insights.
Though the book may not be plain sailing if you don’t have a basic grounding in economics, it is a ‘must read’ for anyone with a serious interest in the ongoing debate on building a fresh alternative to an intellectually bankrupt neoliberal consensus. As Steve Keen would tell us ‘economics is simply too important to be left to economists.’
Debunking Economics – Revised and Expanded Edition is out now.