Written by John Lounsbury
This lecture by Steve Keen was presented last Friday 15 February at the University of Manchester. This lecture covers the traditional approaches of neoclassical economics (also called “mainstream economics”), which are based on assumed equilibrium of macroeconomic systems, and compares those results with examples of dynamic systems analysis which yield distinctly different results.
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The venue for this lecture is most appropriate to the subject. The University of Manchester is the home of a student revolt in 2012 which was a protest of the inadequacies of the economics curriculum. The students formed ‘The Post-Crash Economics Society‘ (which continues to this day and hosted this lecture). About “The P-C E Society”, from their website:
The economics we were learning seemed separate from the economic reality that the world was facing, and devoid from the crisis that had made many of us interested in economics to begin with. Through our own research, we began to learn more about economics. We examined how its mainstream had begun to be dominated by a certain kind of economics, often referred to as neoclassical, at the expense of other approaches. It was decided to set up a society that would bring this discussion to Manchester.
From Steve Keen’s Patreon website:
Virtually every time Neoclassical Economists explored the stability of an equilibrium in one of their models, they found it was unstable. How did they react to this discovery? By either ignoring it, or by using elaborate workarounds to avoid it. In the process, their analysis has gone from Walras’ original vision of a simple price adjustment process which could lead to all markets being in equilibrium at once, with agents knowing only their own tastes, their existing stocks of different commodities, and current prices, to a world inhabited by so-called “rational agents”, where the definition of “rational” is effectively “has the capacity to accurately predict the future”.
For economics to progress, the equilibrium fetish of Neoclassical Economics has to be abandoned. It is possible today to model capitalism as a dynamic, far-from-equilibrium, complex system that it a far better description of what it actually is.
The lecture is approximately 1 hour long followed by 30 minutes Q&A.
Source: YouTube
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