Steve Keen on Brexit

In the recent interview below:

Steve Keen: Real Media Interview

Nice interview of Steve Keen on the catastrophe of private debt and the rentier economy.

Steve Keen on Private Debt and Helicopter Money

Steve Keen was interviewed recently on various issues in the video below.

Steve Keen on the Nature and Burden of Private Debt

A brief and nice summary below.

Steve Keen on Loanable Funds and Endogenous Money

Steve Keen gives a lecture below on the macroeconomics of loanable funds and endogenous money using his program Minsky.

Steve Keen on the EU and Brexit

In the video below on RT.

Steve Keen on the History of Money and Banking

This is lecture 10 of Steve Keen’s course at Kingston University in the UK. This lecture concerns the history of money and the certain myths of fractional reserve banking.

Steve Keen on the Post Keynesians: Realism Uncertainty, Endogenous Money and Financial Instability

This is lecture 4 of Steve Keen’s course at Kingston University in the UK. It concerns the Post Keynesian school.

Meet the Renegades Interview with Steve Keen

An interesting interview below with Steve Keen on economics and the ideology of neoclassical theory.

Steve Keen on Minsky, the Great Depression and the Global Financial Crisis of 2008

This is lecture 6 of Steve Keen’s course on economics at Kingston University in the UK. It concerns the theories of Hyman Minsky, financial instability, the Great Depression and the global financial crisis of 2008.

Steve Keen on Why the Euro is Destroying Europe

Steve Keen speaks below on the catastrophe that is the Eurozone, and this is lecture 7 that is part of Keen’s course at Kingston University in the UK.

Steve Keen on Austrian Economics

Steve Keen gives an interesting lecture below on the Austrian school of economics.



Some critical points:

(1) it is an oversimplification to say that Austrians do not support equilibrium as the essential feature of a capitalist economy (see 2.20 onwards), though admittedly there is some balance in this point later on. In fact, it is really only the stream of Austrian economics connected with Ludwig Lachmann that questions whether a tendency to general equilibrium is a feature of real world capitalism. The other streams of Austrian theory are fully on board with the idea that capitalism has an inherent tendency towards an equilibrium state (usually Mises’ final state of rest), even if it never reaches it (see also here).

However, it is very curious indeed that Carl Menger’s original Austrian theory seems to have shunned modern general equilibrium theory in important ways.

(2) I am very much afraid that in a talk on Austrian economics a disproportionate amount of time is spent on Schumpeter. Schumpeter was not an Austrian, but an idiosyncratic neoclassical.

(3) for a more wide-ranging critique of Austrian economics, see my post here.

Steve Keen on Mathematics in Economics

This is a discussion by Steve Keen of mathematics in economics and the abuse of mathematics in neoclassical theory. More discussion of the issue here and here.

Steve Keen on Equilibrium Theory as a Bad Habit

This is a talk Steve Keen recently gave at Cartanega University in Colombia on the flaws of equilibrium modelling in neoclassical economics.

Steve Keen’s Talk “Will We Crash Again?”

Below is the video of Steve Keen’s recent talk at the FT/Alphaville conference in London, where he discusses why the world economy crashed in 2008, and why private-debt-induced stagnation is likely to be the fate of many Western countries for the foreseeable future. More details here.

One of his more interesting predictions is an economic crisis in China in the next 1 to 2 years, given China’s own sharply rising private debt to GDP ratio. Steve Keen also recommends Richard Vague’s book The Next Economic Disaster: Why It’s Coming and How to Avoid It (2014).

Steve Keen on Neoclassical Economics and an Alternative Monetary Macroeconomics

Steve Keen gives a talk below on neoclassical economics and an alternative monetary macroeconomics, held in Tel Aviv, Israel at the invitation of the Rethinking Economics Student Forum. More details here.

Steve Keen’s “A Marx for Post Keynesians”

Steve Keen’s paper “A Marx for Post Keynesians” can be found here:

Steve Keen, “A Marx for Post Keynesians,”
http://keenomics.s3.amazonaws.com/debtdeflation_media/papers/Amfpk.pdf

I have to admit I’ve only skimmed this before and some time ago, but I will look at its main points in what follows.

Keen argues that there are actually “two sets of axioms developed by Marx, but lost to Marxian political economy by its slavish adherence to the Labor Theory of Value” (Keen, “A Marx for Post Keynesians,” p. 1). One of these sets of axioms might be methodologically useful in Post Keynesian economics.

What Keen argues is this:

“Marx employed two distinct sets of axioms in his thinking. One set, which I will call Marx’s Labor Axioms, has been treated as Marxism’sole intellectual foundation since Hilferding’s 1904 rejoinder to Böhm-Bawerk. The other set, which I will call Marx's Commodity Axioms, was regarded by Marx as logically prior and superior to his Labor Axioms, though he believed--erroneously--that the two sets were consistent.” (Keen, “A Marx for Post Keynesians,” p. 4).

According to Keen, the Labour Axioms in Marx are as follows:

“1) Value is ‘socially necessary abstract labor-time’;
2) Under capitalism, when markets are in equilibrium, commodities exchange in proportion to the amount of value they contain;
3) Under capitalism, the ability to perform work, labor-power, has itself become a commodity;
4) In production, labor transfers its value directly to the product, while the commodities used up in production transfer their value indirectly;
5) Labor is unique because of the difference between the commodity sold by workers, labor-power, and the commodity consumed in production, labor itself.”
(Keen, “A Marx for Post Keynesians,” pp. 4–5).

Ultimately, this set of axioms is not valid, argues Keen, and there are other problems with Marx’s analysis, such as, for example, that his treatment of money in volume 1 of Capital is close to an orthodox quantity theory of money (Keen, “A Marx for Post Keynesians,” p. 12).

By contrast, Keen sees Marx’s “Commodity Axioms” as follows:

“1) The commodity is the essential unity in capitalism;
2) Commodities have two aspects: use-value and exchange-value;
3) Under capitalism, use-value and exchange-value are incommensurable, so that the use-value of a commodity plays no role in determining its exchange-value;
4) Use-value is an objective property of commodities, assessed however from the point of view of the consumer;
5) The exchange-value of a commodity is the exchange-value of the commodities used up in its production;
6) Under capitalism, the ability to perform work, labor-power, has itself become a commodity;
7) Capitalism has two main circuits, the Circuit of Commodity Capital (C--M--C), where the objective is the consumption of use-values, and of the Circuit of Money Capital (M--C--M+), where the objective is the production of surplus value.” (Keen, “A Marx for Post Keynesians,” pp. 5–6).

These axioms, amongst other things, lead to a “distinctly monetary view of capitalism which emanates from them” (Keen, “A Marx for Post Keynesians,” p. 9), which is compatible with Post Keynesian economics.

Keen analyses these commodity axioms and comes to the conclusion that

“The Commodity Axioms thus lead to the conclusion that surplus can be generated by all inputs to production, thus supporting the Neo-Ricardian and Post Keynesian approaches to production, and contradicting conventional Labor Theory of Value Marxism’s insistence that labor is the only such source. Marx’s attempt to avoid this conclusion in Capital was a logical failure, which nonetheless succeeded in convincing a century of Marxists (and their critics), chiefly by obscuring his Commodity Axioms, to leave only the Labor Axioms as his apparent legacy to economics (the historiography of this is covered in Keen 1993a and 1993b). Twentieth century Marxism thus developed--and foundered--on the basis of Marx’s Labor Axioms.” (Keen, “A Marx for Post Keynesians,” p. 9).

For example, by means of his labour axioms, Marx sees wages as determined by real phenomena: Marx’s view that the wage is on average the value of labour power which reduces to the subsistence wage is at variance with the Post Keynesian view that wages are fundamentally a monetary phenomenon determined by institutional factors (Keen, “A Marx for Post Keynesians,” p. 10). But Marx’s commodity axioms lead to the Post Keynesian view, unlike the labour axioms. Moreover, ultimately labour cannot be treated just as a commodity like any other (Keen, “A Marx for Post Keynesians,” p. 10).

Another useful insight that Marx had in his “Commodity Axioms” was that in capitalism the capitalists want more money as the ultimate aim of production, so that there is a “Circuit of Capital” in which money is used to buy factor input commodities and then these are used to create an output commodity which is then sold to obtain more money (which can be expressed as M – C – M). This insight was “about the only aspect of Marx’s thought for which Keynes expressed admiration” (Keen, “A Marx for Post Keynesians,” p. 7, n. 10).

I am not so sure about the value of these “Commodity Axioms.” Axiom (5) seems untrue to me, and would be better stated:

(5) in cost-based, mark-up price markets, the exchange-value of a commodity is based on total costs, but not identical to it.

Keen himself seems to admit that axiom 6 is unsatisfactory and proposes this axiom:

“1) Labor-power is both a commodity and a non-commodity, giving rise to a dialectic of labor, which determines the wage.” Keen, “A Marx for Post Keynesians,” p. 7, n. 11).

So, all in all, the case for basing Post Keynesian economics on the original “Commodity Axioms” seems problematic.

BIBLIOGRAPHY
Steve Keen, “A Marx for Post Keynesians,”
http://keenomics.s3.amazonaws.com/debtdeflation_media/papers/Amfpk.pdf

Steve Keen on how Money is Created

Steve Keen has a summary of what money is and how it is created here:

Steve Keen, “What Is Money And How Is It Created?,” Forbes, 28th February, 2015.

Steve Keen points to the work of Augusto Graziani, the Italian monetary circuit theorist, and gives an interesting, if perhaps a little idiosyncratic, perspective on what money is and the nature of a monetary production economy.

I think the whole discussion would benefit from distinguishing (1) high-powered money from (2) credit money. Any private-sector agent can create credit money, including negotiable bills of exchange, negotiable promissory notes, negotiable cheques, or bank money. The trouble is having your credit money (which is simply a promise to pay in a higher money that can finally extinguish debt at a later date) accepted as payment in a transaction, because that money creates a debt/credit relationship that almost always must be extinguished by high-powered money. High-powered money can be either (1) commodity money or (2) state-issued fiat money.

As an aside, one of Graziani’s most important books was The Monetary Theory of Production (Cambridge University Press, Cambridge, 2003).

Steve Keen on Greece, Austerity, and Post Keynesian Economics

Steve Keen recently gave a talk on Greece, austerity, and Post Keynesian economics for the Rethink­ing Eco­nom­ics stu­dent asso­ci­a­tion at the Lon­don School of Eco­nom­ics. You can get more background and lecture slides here. The video is below.

Steve Keen on Yanis Varoufakis

Steve Keen discusses Yanis Varoufakis’ contributions to economics (particularly his critique of game theory) in a fascinating article here:

Steve Keen, “My Friend Yanis, The Greek Minister Of Finance,” Forbes, 31 January, 2015.

More discussion in BBC interviews of Steve Keen here.