{"id":85727,"date":"2025-09-10T07:02:50","date_gmt":"2025-09-10T06:02:50","guid":{"rendered":"https:\/\/www.taxresearch.org.uk\/Blog\/?p=85727"},"modified":"2025-09-10T07:11:44","modified_gmt":"2025-09-10T06:11:44","slug":"steve-keen-the-podcast","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2025\/09\/10\/steve-keen-the-podcast\/","title":{"rendered":"Steve Keen: the podcast"},"content":{"rendered":"<p><strong>Introduction<\/strong><\/p>\n<p>In this first podcast style interview between me and Steve Keen, the author of 'Debunking Economics', Steve recounts how early encounters with neoclassical and neoliberal economics, and the realities of firm behaviour, led him to reject economic fairy tales and become a rebel.<\/p>\n<p>His politics shifted too, from Vietnam-era conformity to organising for a political economy curriculum.<\/p>\n<p>Today his priority is climate change. Economists\u2019 models have trivialised existential risk and hobbled action with myths about government finance.<\/p>\n<p>Steve broadly agrees with MMT\u2019s \u201cspend first, tax later,\u201d but challenges Warren Mosler\u2019s theories on trade, all of which mean that in the longer term he plans a wider assault on comparative advantage.<\/p>\n<p>And, at the end of the interview, we made clear that this is the first of what might be a number of conversations with next up a discussion on double-entry as the missing economic grammar and how and why he created his RAVEL software to model it.<\/p>\n<p><iframe loading=\"lazy\" title=\"YouTube video player\" src=\"https:\/\/www.youtube.com\/embed\/hRQrY9GnYyc?si=_cHFwIyRhdqEnCiO\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p>The <strong>audio version<\/strong> of this podcast is here:<\/p>\n<p><iframe loading=\"lazy\" style=\"border: none; min-width: min(100%, 430px); height: 150px;\" title=\"Steve Keen: the podcast\" src=\"https:\/\/www.podbean.com\/player-v2\/?i=qmuf3-195d1d5-pb&amp;from=pb6admin&amp;share=1&amp;download=1&amp;rtl=0&amp;fonts=Arial&amp;skin=f6f6f6&amp;font-color=auto&amp;logo_link=episode_page&amp;btn-skin=c73a3a\" width=\"100%\" height=\"150\" scrolling=\"no\" data-name=\"pb-iframe-player\"><\/iframe><\/p>\n<p>This is a <strong>summary<\/strong> of our discussion. Given the length of the interview, we do not think that the transcript is useful.<\/p>\n<hr \/>\n<h2><b>Steve Keen: A Rebel Economist\u2019s Journey<\/b><\/h2>\n<p class=\"p3\">\u201cWhy are you a rebel?\u201d That was the question I put to Steve Keen in our recent conversation \u2013 and his answer is a story that throws light not just on his own career, but on the failures of mainstream economics, the importance of challenging orthodoxy, and the urgent need to rethink how we face crises like climate change.<\/p>\n<p class=\"p3\">Steve Keen, for those who don\u2019t know, is one of the world\u2019s most prominent heterodox economists. Author of 'Debunking Economics', he has spent decades dismantling the myths and false assumptions, and most especially the mythematics (as he calls it) of neoclassical theory. In our conversation, we explored how he came to that position, why he has refused to accept conventional wisdom, and where his attention is now focused.<\/p>\n<h3><b>The rebel\u2019s origins<\/b><\/h3>\n<p class=\"p3\">Steve began life intending to be a physicist. But a bad science teacher and a brilliant economics teacher diverted him into economics.<\/p>\n<p class=\"p3\">Like many students, he initially accepted what he was taught: that free markets deliver efficiency, that equilibrium is the natural state of the economy, and that trade unions and governments simply distort what would otherwise be perfection. Yet very early on he encountered contradictions. At Sydney University in the early 1970s, the neoclassical \u201ctakeover\u201d of the economics curriculum met resistance from a generation of heterodox lecturers. One of them, Frank Stilwell, taught a theorem that turned Keen\u2019s worldview upside down: <a href=\"https:\/\/en.wikipedia.org\/wiki\/Theory_of_the_second_best\" target=\"_blank\" rel=\"noopener\">the theory of the second best<\/a>.<\/p>\n<p class=\"p3\">This theory showed that removing a so-called \u201cdistortion\u201d like trade unions, without removing others like employer monopolies, could make social welfare worse, not better. The neat textbook diagrams collapsed. Steve recalls thinking: \"what the hell is going on here?\"<i><\/i><\/p>\n<h3><b>Discovering the lies in the textbooks<\/b><\/h3>\n<p class=\"p3\">Steve did not stop there. He went to the university library, read the original papers, and realised that his lecturer was right.<\/p>\n<p class=\"p3\">More shocks followed. He came across Paul Samuelson, the Nobel laureate and great defender of orthodoxy, conceding in 1966 that the neoclassical measurement of capital was incoherent. Yet when Keen looked back at Samuelson\u2019s famous textbook, none of this debate appeared.<\/p>\n<p class=\"p3\">The conclusion was unavoidable: economics students were being given a mendacious education. They were taught a simple, sanitised parable about supply and demand curves, while the real controversies and empirical failures were swept aside. And when empirical evidence was examined \u2013 for example, surveys showing that most firms experience falling costs rather than rising ones \u2013 the results simply did not support the theory.<\/p>\n<p class=\"p3\">For Steve, this was the moment he became a rebel.<\/p>\n<h3><b>A parallel journey<\/b><\/h3>\n<p class=\"p3\">I recognise Steve's story. I had been through a similar process myself: arriving at university, being told about perfect competition, perfect knowledge, and marginal cost pricing. Yet I had seen real businesses. I knew they didn\u2019t calculate marginal revenue or optimal output. They struck deals, guessed prices, and often pocketed cash off the books.<\/p>\n<p class=\"p3\">In other words, the theory and the reality were miles apart. Like Steve (but five years later than him, because I am that much younger), I concluded as a student that the economics we were being taught was, to put it bluntly, nonsense.<\/p>\n<h3><b>From rebellion to politics<\/b><\/h3>\n<p class=\"p3\">For Steve, this intellectual rebellion was reinforced by politics.<\/p>\n<p class=\"p3\">He arrived at university in 1971, with Australia still involved in the Vietnam War. Initially supportive of the war, he began reading history and discovered it was in fact an anti-colonial struggle in which his country was on the wrong side. That realisation, combined with sympathy for the Palestinian cause and other radical movements, transformed his worldview.<\/p>\n<p class=\"p3\">By 1973, Australian students were striking over curriculum control. At Sydney, economics students demanded change, leading to the eventual creation of a Department of Political Economy.<\/p>\n<p class=\"p3\">Steve helped organise an early radical economics conference. The experience convinced him that if he wanted change, he had to confront neoclassical theory at its roots.<\/p>\n<h3><b>A contrarian\u2019s path<\/b><\/h3>\n<p class=\"p3\">That contrarian instinct carried into his postgraduate work. With a group of students, he began reading Marx. He admired Marx\u2019s philosophical insight that use value and exchange value are incommensurable, and that surplus arises because labour (and indeed machines) produce more than the value they are paid for. But he also saw flaws. His Master\u2019s thesis showed where Marx contradicted his own labour theory of value.<\/p>\n<p class=\"p3\">As Steve joked, that means he has managed to annoy the neoclassicals, then the Marxists, and more recently even parts of the MMT community. His loyalty has never been to a school but to logic, empirics, and intellectual honesty.<\/p>\n<h3><b>Debunking economics<\/b><\/h3>\n<p class=\"p3\">The culmination of this work was 'Debunking Economics', the book that made his reputation. It showed in clear terms why the mathematical underpinnings of neoclassical economics collapse under scrutiny. The discipline parades its use of equations as if it were Newtonian physics \u2013 but as Steve likes to say, much of it is \u201cmathemagics\u201d, a conjuring trick built on assumptions that bear no relation to reality.<\/p>\n<p class=\"p3\">The result is zealotry: students are trained to believe capitalism is the best of all possible systems, and then spend careers defending a perfection that never existed.<\/p>\n<h3><b>Where Steve is now<\/b><\/h3>\n<p class=\"p3\">So where has the rebel arrived? Steve is blunt: his obsession is climate change. Economists, he argues, have trivialised the threat. Their models discount the risks, assume away catastrophe, and reassure policymakers that growth can continue unimpeded. That complacency, he says, has already cost us half a century of inaction.<\/p>\n<p class=\"p3\">His forthcoming book, 'How Economists Will Destroy Capitalism', will set out the case. But to win the argument, he also has to confront myths about government finance.<\/p>\n<p class=\"p3\">Neoclassical economics insists governments are like households: they must tax before they spend, they are constrained by budgets, they \u201ccannot afford\u201d to act. Steve, like me, knows this is false. Governments create money when they spend. Believing otherwise has meant cuts to education, health, and welfare \u2013 exactly when we need resources to fight the climate crisis.<\/p>\n<h3><b>Where MMT fits in<\/b><\/h3>\n<p class=\"p3\">Steve broadly supports Modern Monetary Theory on this point. He accepts Warren Mosler\u2019s crucial insight: governments spend first and tax later. But he challenges another of Mosler\u2019s slogans: that \u201cexports are a cost, imports are a benefit.\u201d In Steve\u2019s view, this contradicts the first insight when set out in accounting terms. A government deficit adds net assets to the private sector; a trade deficit destroys them.<\/p>\n<p class=\"p3\">For now, he treats this as secondary \u2013 because climate change will soon swamp any neat trade logic \u2013 but he is preparing a more systematic critique. Comparative advantage, the foundation of trade theory since Ricardo, will be in his sights too.<\/p>\n<p class=\"p3\"><b>The rebel\u2019s method<\/b><\/p>\n<p class=\"p3\">The thread running through Steve\u2019s career is his refusal to accept authority without proof. He does not just say \u201cI disagree\u201d; he works through the mathematics and the data to show why he disagrees. That is why he has become such a thorn in the side of the profession, and why he is respected by those who want realism back in economics.<\/p>\n<p class=\"p3\">His willingness to call out neoclassicals, Marxists, and MMTers alike comes from the same place: a belief that economics should be rooted in reality, not in a theology of markets.<\/p>\n<h3><b>Looking forward<\/b><\/h3>\n<p class=\"p3\">Our conversation ended with an agreement to continue. Next time we will talk about double entry bookkeeping \u2013 yes, the supposedly dull discipline that is in fact the key to understanding how money flows through an economy \u2013 and about Keen\u2019s software project, RAVEL, which models those flows.<\/p>\n<p class=\"p3\">But for now, the lesson from this discussion is clear. If economics is to have any role in building a future fit for humanity, it needs rebels like Steve Keen \u2013 people who ask awkward questions, who refuse to be silenced, and who insist that both logic and evidence must matter because if we do not rebel against the nonsense still taught to students today, then economics really may help destroy capitalism, and with it, the planet.<\/p>\n<hr \/>\n<p><b>Comments\u00a0<\/b><\/p>\n<p>When commenting, please take note of this blog\u2019s comment policy,\u00a0<a href=\"https:\/\/www.taxresearch.org.uk\/Blog\/about\/comments\/\">which is available here<\/a>. Contravening this policy will result in comments being deleted before or after initial publication at the editor\u2019s sole discretion and without explanation being required or offered.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Introduction In this first podcast style interview between me and Steve Keen, the author of &#8216;Debunking Economics&#8217;, Steve recounts how early encounters with neoclassical and<br \/><a class=\"moretag\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/2025\/09\/10\/steve-keen-the-podcast\/\"><em> Read the full article&#8230;<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[190,204,35,16,174,224,106],"tags":[],"class_list":["post-85727","post","type-post","status-publish","format-standard","hentry","category-economic-data","category-economic-justice","category-economics","category-ethics","category-modern-monetary-theory","category-neoliberalism","category-politics"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/85727","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=85727"}],"version-history":[{"count":6,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/85727\/revisions"}],"predecessor-version":[{"id":85769,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/85727\/revisions\/85769"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=85727"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=85727"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=85727"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}