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Blink 3 of 8 - The 5 AM Club
by Robin Sharma
Debunking Economics - Revised and Expanded Edition summary
Steve Keen
Brief summary
Debunking Economics by Steve Keen explores the flaws in traditional economic theories and offers an alternative perspective. It challenges the mainstream ideas and provides a thought-provoking analysis of the global economy.
Topics
Table of Contents
Debunking Economics - Revised and Expanded Edition
Summary of key ideas
Understanding the Flaws in Economic Theory
In Debunking Economics - Revised and Expanded Edition by Steve Keen, we are taken on a journey through the history of economic thought, starting with the classical economists like Adam Smith and David Ricardo. Keen argues that the foundation of modern economic theory, neoclassical economics, is built on a series of flawed assumptions. These assumptions include the belief in equilibrium, the idea that markets are always efficient, and the concept of rational expectations.
Keen explains that these assumptions are not only unrealistic but also dangerous. He argues that the belief in market equilibrium leads to the acceptance of excessive private debt, which can result in financial crises. He also criticizes the neoclassical theory of perfect competition, stating that it does not reflect the real-world market conditions, where firms have the power to set prices.
The Role of Money and Debt in the Economy
One of the key points Keen makes in Debunking Economics is the importance of money and debt in the economy. He argues that neoclassical economics fails to adequately account for the role of money and debt in the economy, leading to a misunderstanding of the causes of economic crises. Keen introduces the concept of endogenous money, which suggests that money is created by the banking system through the process of lending, rather than being controlled by the central bank.
Keen also emphasizes the role of private debt in driving economic cycles. He argues that during economic booms, the level of private debt increases, leading to a period of prosperity. However, when the level of debt becomes unsustainable, it can trigger a financial crisis, as seen in the 2008 global financial crisis. Keen's analysis challenges the traditional view that government debt is the primary driver of economic instability.
Challenging the Neoclassical View of the Firm
Keen further challenges the neoclassical view of the firm, which assumes that firms operate in a world of perfect competition and have perfect knowledge. He argues that this view does not reflect the reality of the business world, where firms have the power to set prices and often operate in imperfectly competitive markets. Keen introduces the concept of the 'Firm as a Monopoly Producer of a Unique Product', which he believes better reflects the real-world behavior of firms.
Keen also criticizes the neoclassical theory of production, which assumes that firms operate with a given level of technology and can easily substitute between different factors of production. He argues that this view does not account for the role of innovation and the non-substitutability of different factors of production in the real world.
Proposing an Alternative Economic Framework
In the latter part of Debunking Economics, Keen proposes an alternative economic framework based on the insights of the classical economists and the work of more recent heterodox economists. He argues for a more realistic view of the economy, which takes into account the role of money, debt, and imperfect competition. Keen also emphasizes the importance of understanding the economy as a complex, dynamic system, rather than a static equilibrium.
Keen's alternative framework also includes a more realistic view of the role of government in the economy. He argues that the government has a crucial role to play in stabilizing the economy and ensuring full employment, particularly during times of economic crisis. Keen's alternative framework challenges the traditional neoclassical view of the economy and offers a more realistic and nuanced understanding of economic dynamics.
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What is Debunking Economics - Revised and Expanded Edition about?
Debunking Economics - Revised and Expanded Edition by Steve Keen challenges traditional economic theories and offers a critical analysis of the flaws in mainstream economics. Through clear and accessible language, the book delves into topics such as financial instability, income distribution, and the role of money in the economy, providing a thought-provoking alternative perspective on how the economy really works.
Debunking Economics - Revised and Expanded Edition Review
Debunking Economics - Revised and Expanded Edition (2011) challenges conventional economic theories and provides an eye-opening critique of the field. Here's why this book is worth reading:
- With detailed analysis and extensive empirical evidence, it exposes the flaws of mainstream economics, offering a fresh perspective on the subject.
- It provides clear explanations of complex economic concepts, enabling readers to grasp the intricacies of the discipline.
- Through its engaging writing style and thought-provoking arguments, the book keeps readers captivated, ensuring that economics becomes anything but boring.
Who should read Debunking Economics - Revised and Expanded Edition?
- Students and academics interested in challenging traditional economic theories
- Individuals seeking a critical analysis of mainstream economic thinking
- Readers who want to gain a deeper understanding of the flaws and limitations of neoclassical economics
Categories with Debunking Economics - Revised and Expanded Edition
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Debunking Economics - Revised and Expanded Edition FAQs
What is the main message of Debunking Economics - Revised and Expanded Edition?
Debunking Economics - Revised and Expanded Edition challenges mainstream economic theories and provides an alternative framework for understanding the economy.
How long does it take to read Debunking Economics - Revised and Expanded Edition?
The reading time for Debunking Economics - Revised and Expanded Edition varies, but it typically takes several hours. However, you can read the Blinkist summary in just 15 minutes.
Is Debunking Economics - Revised and Expanded Edition a good book? Is it worth reading?
Debunking Economics - Revised and Expanded Edition is a must-read for those interested in economics. It offers a critical perspective and challenges conventional economic thinking.
Who is the author of Debunking Economics - Revised and Expanded Edition?
The author of Debunking Economics - Revised and Expanded Edition is Steve Keen.
What to read after Debunking Economics - Revised and Expanded Edition?
If you're wondering what to read next after Debunking Economics - Revised and Expanded Edition, here are some recommendations we suggest:
- Basic Economics by Thomas Sowell
- The Ascent of Money by Niall Ferguson
- Think and Grow Rich by Napoleon Hill
- The 4-Hour Workweek by Tim Ferriss
- Rich Dad, Poor Dad by Robert T. Kiyosaki
- Secrets of the Millionaire Mind by T. Harv Eker
- The Richest Man in Babylon by George S. Clason
- Business Adventures by John Brooks
- The Most Important Thing by Howard Marks
- More Money Than God by Sebastian Mallaby