This is an in-depth interview with Steve Keen by Aaron Wissner (a mathematician), conducted in July 2012 while Keen was at the Fields Institute for Research in Mathematical Sciences (University of Toronto, Ontario, Canada).
A wide ranging interview on Minsky, debt, banks, and neoclassical theory. Highly recommended.
And I will post here a highly informal bonus interview here, where Keen talks about some personal issues and general economic issues:
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Macro does need micro foundations if it wants to better explain the economic realities of this world. Assuming rational expectations is hardly a micro-foundation concept, it is just neoclassical nonsense, but to assume that rational expectations = micro-foundations, and rational expectations are faulty thus micro-foundations aren't needed for macro is just as nonsensical
ReplyDelete"Macro does need micro foundations if it wants to better explain the economic realities of this world."
ReplyDeleteIt does eventually, but we have to accept that in the interim we do not have a full picture of the aggregation effects.
Macro from micro foundations is the Schrodingers Cat of economics. It is a reductio ad absurdum that demonstrates that we don't fully understand the effect of aggregation.
I'm sorry Neil, I don't get your Schrodingers Cat reference
ReplyDeleteJan said:I found this paper that i found very interesting by Paul Davidson: "GALBRAITH AND THE POST KEYNESIANS
ReplyDeletehttp://econ.bus.utk.edu/publications/davidsonpapers/France%20galbrAITHjpke.pdf
"I'm sorry Neil, I don't get your Schrodingers Cat reference"
ReplyDeleteSchrodingers Cat is a reductio ad absurdum to demonstrate the madness of trying to pretend that macroscopic entities have quantum states and the folly of relying on one particular answer to that question as though it can be the only possibility
It asks the question: when does a quantum system stop existing as a superposition of states and become one or the other? And then shows clearly why the 'when it is observed' orthodox answer isn't satisfactory.
Insisting on micro-foundations is exactly the same as insisting on the 'when it is observed' interpretation of state collapse.
The macroscopic models fit the data and the causality relationships and provide insights into policy space that could be used to better the quality of life of millions.
Both modelling approaches are fundamentally inaccurate, and therefore the information from both viewpoints is useful.
As a policy decision maker you then choose the one that helps you achieve your political ends - always appreciating that it is not the entire picture.
To suggest that we can't have full employment and price stability because your model shows it is impossible is to suggest that your model is accurate. It isn't accurate, and the data constantly shows that it isn't accurate.
I feel like from your analogy, you are insisting that this is a 'one or the other' choice. This is to say, we must either decide between 'your' macro concepts or 'my' subjectivism (ie emphasizing more the individual's decision and choice ).... Both may be useful but neither represent the full picture.
ReplyDeleteBut I do not mean to suggest this at all...nor do people that emphasize the micro, in the sense that I am using it, suggest this (Shackle, Lachmann, Wiseman etc). This is why, for example, Wiseman speaks of moving "beyond positive economics" and not necessarily rejecting it.
"I feel like from your analogy, you are insisting that this is a 'one or the other' choice"
ReplyDeleteYou may feel that, but I believe the point I made was that neither is the entire answer - ultimately just a set of opinions based on a bunch of deeply held beliefs.
Therefore you assess them based on the best human outcome and the evidence as filtered by those beliefs. And all that is then resolved via the political process.
There is always an alternative.
I understand that what you meant was that neither answer is the entire answer (the last sentence from my first paragraph implied that btw). But nevertheless, your reasoning to this conclusion is one where we have to decide for one or the other.
ReplyDeleteIsaac, just out of curiosity, are you a libertarian?
ReplyDeleteSome people think I am, some people think I am not.
Delete